U.S. DEPARTMENT OF HEALTH & HUMAN SERVICES 
 
 
  OFFICE OF INSPECTOR GENERAL 
   
Case Review of Inpatient 
Rehabilitation Hospital 
Patients Not Suited for 
Intensive Therapy 
 
  SUZANNE MURRIN 
OEI-06-16-00360  DEPUTY INSPECTOR GENERAL FOR 
DECEMBER 2016  EVALUATION AND INSPECTIONS  REPORT IN BRIEF
 
Case Review of Inpatient Rehabilitation Hospital Patients 
 
Not Suited for Intensive Therapy 
Key Points  Why We Did This Review 
 Patients who were not  Inpatient rehabilitation (rehab) hospitals are freestanding facilities that 
suited for intensive rehab  specialize in providing intensive rehab therapy to patients recovering from 
therapy had physical  illness, injury, or surgery.  This intensive therapy requires endurance that some 
limitations and lacked  patients receiving post-acute care do not have, potentially causing those 
endurance.  patients to be better suited for an alternate setting such as a skilled nursing 
facility.  Medicare criteria for admission to post-acute care help ensure that 
 Inpatient rehab hospitals  patients receive the most appropriate care for their conditions and needs.  In 
kept some patients who  conducting a medical review for a separate evaluation to identify adverse 
were unsuited for intensive  events in inpatient rehab hospitals, physician reviewers found a small number 
therapy for extended  of hospital stays in which the patients appeared to be unsuited for intensive 
periods of time.  therapy.  In response, we extended our medical review to provide additional 
information about these stays in which patients were unable to actively 
 Some of the patients who 
participate in and benefit significantly from intensive therapy. 
were unsuited for intensive 
therapy were in very poor  How We Did This Review 
condition and died within  We contracted with physicians to review medical records for a sample of 
weeks of being admitted to  patients admitted to inpatient rehab hospitals during March 2012.  The 
inpatient rehab hospitals.  physicians identified 39 inpatient rehab hospital stays in which patients were 
unable to actively participate in and benefit significantly from intensive 
 
therapy.  For these stays, the physician reviewers identified factors that 
 
contributed to the patients inability to participate and benefit.  We also 
 
analyzed claims data to determine whether inpatient rehab hospitals kept these 
 
unsuitable patients for extended periods of time. 
 
  What We Conclude 
  Most patients (32 of 39 stays) who physician reviewers determined were not 
  suited for intensive rehab therapy remained in inpatient rehab hospitals for 
  extended periods of time, including some who were in very poor condition.  
  We encourage the Centers for Medicare & Medicaid Services to consider 
  providing additional technical assistance to ensure that Medicare patients are 
  placed in the most appropriate setting for post-acute care, and that inpatient 
  rehab hospitals do not admit patients who are unable to participate in and 
  benefit from intensive therapy.  An Office of Inspector General audit that is 
  currently in progress will provide a national assessment of the proportion of 
  inpatient rehab stays that do not comply with all Medicare coverage and 
December 2016  documentation criteria.
OEI-06-16-00360 
The full report can be found at http://oig.hhs.gov/OEI-06-16-00360.  T C  
ABLE OF  ONTENTS
 
Background  Page 1 
Findings    Page 4 
Conclusion  Page 6 
Acknowledgments  Page 7 
Endnotes  Page 8  B  
ACKGROUND
Objective 
To examine inpatient rehabilitation (rehab) hospital stays for patients who were unable to participate in 
and benefit from the intensive rehab therapy provided. 
Providers of Post-Acute Care 
Providers of post-acute care offer recuperation and rehab services to Medicare beneficiaries, typically 
after stays in acute-care hospitals.  These providers include skilled nursing facilities (SNFs), home health 
agencies, long-term care hospitals, hospital-based rehab units (i.e., rehab units that are part of acute-care 
or critical access hospitals), and freestanding inpatient rehab hospitals (i.e., rehab facilities that are not 
managed as units within other hospitals).  In fiscal year (FY) 2012, many more SNFs than inpatient rehab 
hospitals billed Medicare for post-acute care (14,938 SNFs, versus 234 inpatient rehab hospitals).  SNF 
patients are typically older, frailer, and more likely to report poor health status and to be disabled than 
patients in other post-acute settings.1  In contrast, inpatient rehab hospitals treat patients who can tolerate 
intensive rehab therapy and gain from it.2 
The different types of post-acute-care providers often treat patients with similar conditions; Medicare 
pays different amounts depending on the setting.  For example, Medicare pays 40 to 50 percent more for 
patients recovering from strokes and hip replacements in hospital-based rehab units and inpatient rehab 
hospitals than it does for those in SNFs.3  In FY 2012, SNFs received an average reimbursement of 
$12,000 per admission, compared to $17,000 for inpatient rehab hospitals.4, 5 
Inpatient Rehabilitation Hospitals 
Inpatient rehab hospitals are freestanding facilities that specialize in providing intensive rehab therapy to 
patients recovering from illness, injury, or surgery.  In contrast, hospital-based rehab units provide the 
same type of care as inpatient rehab hospitals and are reimbursed through the same prospective payment 
system, but are located within a larger hospitalan acute-care hospital or critical access hospitaland 
are managed as part of that hospital.  In FY 2012, hospital-based rehab units constituted approximately 
80 percent of the market for intensive inpatient rehab therapy; inpatient rehab hospitalsthe focus of this 
studyconstituted the remaining 20 percent.6   
Admission to Inpatient Rehabilitation Hospitals 
The criteria for Medicare coverage of post-acute care help ensure that patients receive the most 
appropriate level of care for their needs.7  The primary distinction between inpatient rehab hospitals and 
other settings for post-acute care is the intensity of the rehab therapy provided.8  One requirement of the 
Medicare coverage criteria is that patients, at the time of admission, can be reasonably expected to 
actively participate in, and benefit significantly from, an intensive rehabilitation therapy program.9  
Intensive therapy differs from the therapy provided in other settings for post-acute care in that it generally 
requires substantial time (at least 3 hours of therapy per day, 5 days per week); a coordinated, 
interdisciplinary approach among multiple therapies (e.g., physical therapy, occupational therapy); and 
rehab physician supervision.10  This intensive therapy is beyond the endurance level of some patients 
receiving post-acute care, potentially causing them to be better candidates for an alternate setting such as 
CASE REVIEW OF INPATIENT REHAB HOSPITAL PATIENTS NOT SUITED FOR INTENSIVE THERAPY (OEI-06-16-00360)    1  B  
ACKGROUND
SNFs.  Centers for Medicare & Medicaid Services (CMS) policy stipulates that intensive therapy must 
never exceed the post-acute patients level of need or tolerance, or compromise the patients safety.11 
To be eligible for Medicare payment for a beneficiarys stay, inpatient rehab hospitals must complete 
a preadmission screening and post-admission evaluation to document that the patient meets the Medicare 
coverage criteria (listed above) and must include this documentation in the patients medical record.12  
To assess whether a patient is a suitable candidate for an inpatient rehab hospital, rehab clinicians conduct 
a preadmission screening to evaluate the patients condition and need for rehab therapy.13  Then, within 
the first 24 hours after the patients admission, a rehab physician conducts a post-admission evaluation of 
the patient.  This post-admission evaluation includes an assessment of the preadmission screening and of 
the patients current status, and it is used by the rehab physician to develop the patients expected course 
of treatment.14 
In rare cases, a patients preadmission screening could indicate that the patient is a suitable candidate for 
the inpatient rehab hospital but the post-admission evaluation could find that the patient is not able to 
participate in or benefit from intensive therapy.  In these cases, Medicare requires that the inpatient rehab 
hospital immediately begin the process of discharging the patient.  Because another setting for post-acute 
care may not be immediately available, Medicare allows the inpatient rehab hospital to continue treating 
the patient until the hospital finds another setting.  In these cases, Medicare will pay claims submitted by 
inpatient rehab hospitals for the first 3 days of the patients stay.15 
Office of Inspector General Work Related to Inpatient Rehab Hospital Requirements 
In February 2013, the Office of Inspector General (OIG) published a report that reviewed claims for one 
hospital-based rehab unit to determine compliance with the 2010 Medicare documentation requirements 
for inpatient rehab services.16  OIG found that for 98 of the 100 claims reviewed, this hospital-based 
rehab unit did not comply with Medicare documentation requirements.  OIG found that for these 
98 claims, the rehab unit improperly received a total of more than $2.7 million in Medicare payments.  
OIG recommended that the hospital develop and implement procedures to ensure that it bills Medicare 
only for inpatient rehab services that comply with Medicare documentation requirements.   
In 2016, OIG published a series of reports that determined whether three individual hospitals complied 
with Medicare requirements for billing inpatient and outpatient services, including inpatient rehab 
services.17  OIG found that each of the three hospitals submitted claims for inpatient rehab services that 
did not meet Medicare criteria and that they improperly received payments for these claims.  OIG 
recommended that each hospital strengthen controls to ensure full compliance with Medicare 
requirements. 
The findings from the 2013 and 2016 reports prompted OIG to conduct a nationwide audit to determine 
whether hospital-based rehab units and freestanding inpatient rehab hospitals billed for inpatient rehab 
services in compliance with Medicare documentation and coverage requirements, and to examine how 
noncompliance affects Medicare costs.  This audit is currently in progress; OIG anticipates completing it 
in 2017. 
CASE REVIEW OF INPATIENT REHAB HOSPITAL PATIENTS NOT SUITED FOR INTENSIVE THERAPY (OEI-06-16-00360)    2  B  
ACKGROUND
Methodology 
We conducted this assessment following a study of adverse events in inpatient rehab hospitals, titled 
Adverse Events in Rehabilitation Hospitals:  National Incidence Among Medicare Beneficiaries 
(OEI-06-14-00110).18  In reviewing the medical records for 426 stays to identify adverse events, 
physician reviewers found a small number of cases in which the patients appeared unable to participate in 
and benefit from intensive therapy.  In response, we extended our medical record review to provide 
additional information about inpatient rehab hospital stays in which patients were unable to actively 
participate in and benefit significantly from intensive therapy. 
We contracted with three physician reviewersa geriatrician, a physiatrist, and a physiatrist who is also 
a neurologistto review the medical records for the patients in such stays.19  Physician reviewers had 
access to complete medical records for the sampled beneficiaries stays in inpatient rehab hospitals, 
including preadmission screening information, post-admission evaluations, and notes from scheduled 
therapy.  Physician reviewers paid particular attention to therapy notes recorded during the first 3 days of 
each inpatient rehab hospital stay.   
Physician reviewers identified 39 inpatient rehab hospital stays in which patients were unable to actively 
participate in and benefit significantly from intensive therapy.  For these stays, we describe factors that 
our physician reviewers identified as having contributed to the patients inability to fully participate in 
intensive rehab therapy.  We also analyzed claims data to determine whether inpatient rehab hospitals 
kept these patients for extended periods of time, which we defined as a stay lasting longer than 3 days. 
Limitations 
Our findings are limited to beneficiaries who were discharged from acute-care hospitals and admitted to 
inpatient rehab hospitals during March 2012.  The findings may not be reflective of a different month. 
We did not assess whether patients in our sample met all Medicare coverage criteria for admission to 
inpatient rehab hospitals or whether the medical records for the patients in our sample contained the 
proper documentation to support admission to an inpatient rehab hospital.  Additionally, we did not assess 
the cost implications to Medicare of patients who were placed in inpatient rehab hospitals but were not 
suited for intensive rehab therapy.  These considerations will be addressed in OIGs nationwide audit that 
is currently in progress. 
Standards 
This study was conducted in accordance with the Quality Standards for Inspection and Evaluation issued 
 
by the Council of the Inspectors General on Integrity and Efficiency.
CASE REVIEW OF INPATIENT REHAB HOSPITAL PATIENTS NOT SUITED FOR INTENSIVE THERAPY (OEI-06-16-00360)    3  F  
INDINGS
Patients who were not suited for intensive rehab therapy had physical 
limitations and lacked endurance 
Physicians identified 39 inpatient rehab hospital stays involving patients who were not suited for intensive 
therapy.  For the 39 stays, physician reviewers identified factors affecting the patients ability to 
participate in and/or benefit from therapy.  The factors affecting the most patients were pre-existing 
physical limitations and lack of endurance.  Overall, these factors fell into four categories (and physicians 
often cited more than one factor for each patient): 
 Pre-existing physical limitationsFor 30 of the 39 stays, physical limitations restricted the 
patients ability to participate in therapy.  These physical limitations included pre-existing 
functional disabilities, limited mobility, and inability to carry out activities of daily living 
(e.g., getting in and out of bed; dressing; bathing; eating; and using the bathroom).  Patients with 
physical limitations had comorbidities such as cerebral palsy, degenerative joint disease, and 
morbid obesity. 
 Lack of enduranceFor 27 of the 39 stays, inadequate physical endurance limited the patients 
ability to participate in intensive therapy.  For example, one patient was severely compromised by 
muscle weakness and malnutrition at admission. 
 Unresolved health problemsFor 21 of the 39 stays, unresolved health problems limited the 
patients ability to participate in therapy.  Medical records for these patients described problems 
such as inadequate recovery from a prior illness or surgery; uncontrolled pain; debilitation from 
cancer; and pressure ulcers.  For example, one patient had not adequately recovered from numerous 
cardiac issues (including arrhythmia, mitral insufficiency, and congestive heart failure) to fully 
participate in therapy at the time of admission to an inpatient rehab hospital.  In another instance, 
a patient had uncontrolled pain from a chronic pain disorder (reflex sympathetic dystrophy 
syndrome), compounded by experimental chemotherapy to treat metastatic colon cancer. 
 Altered mental statusFor 18 of the 39 stays, altered mental status limited the patients ability to 
participate in therapy.  Medical records for the patients in this category described cognitive 
problems such as delirium and dementia.  For example, one patient was difficult to rouse and 
unable to remain alert during therapy due to significant delirium.  Another patient had severe 
dementia and was unable to follow commands during therapy. 
Inpatient rehab hospitals kept some patients who were unsuited for 
intensive therapy for extended periods of time 
Physician reviewers determined that for 32 of the 39 stays in which they deemed patients to be unsuited 
for intensive therapy, the patients remained in the inpatient rehab hospitals for extended periods of time 
(which we defined as stays lasting longer than 3 days) despite being unable to participate in and benefit 
CASE REVIEW OF INPATIENT REHAB HOSPITAL PATIENTS NOT SUITED FOR INTENSIVE THERAPY (OEI-06-16-00360)    4  F  
INDINGS
from the intensive therapy.  The average length of stay in the inpatient rehab hospitals for these 
32 patients was 15 days, with a range from 5 days to 24 days. 
Some of the patients who were unsuited for intensive therapy were in very 
poor condition and died within weeks of being admitted to inpatient rehab 
hospitals 
For 7 of the 39 stays in which patients were unable to actively participate in and benefit from intensive 
therapy, the medical records indicated that the patients were in exceptionally poor condition and died 
within a few weeks after being admitted to an inpatient rehab hospital.  In all seven cases, patients were 
unable to participate in therapy and were kept in inpatient rehab hospitals for longer than 3 days.  One of 
the patients was recovering from a stroke and had multiple comorbidities, including complications of 
paralysis of one side of the body, pneumonia, and a Stage II pressure ulcer.  Upon arrival at the inpatient 
rehab hospital, the patient was too lethargic to provide a history and was unable to follow commands.  
Despite being unable to participate in therapy, the patient spent 11 days at the inpatient rehab hospital 
before being discharged to hospice, dying there 8 days later.  In another case, a patient was admitted to an 
inpatient rehab hospital while undergoing palliative chemotherapy for advanced metastatic cancer.  The 
patient was significantly fatigued and sedated from narcotics given for pain.  The patient was discharged 
after 13 days in the inpatient rehab hospital and died 4 days later. 
 
CASE REVIEW OF INPATIENT REHAB HOSPITAL PATIENTS NOT SUITED FOR INTENSIVE THERAPY (OEI-06-16-00360)    5  C  
ONCLUSION
In examining the medical records of Medicare patients admitted to freestanding inpatient rehab hospitals, 
physician reviewers found 39 patients who were unsuited for intensive therapy because of physical 
limitations and lack of endurance.  Most of these patients remained in inpatient rehab hospitals for 
extended periods of time, including some who were in very poor condition.  We encourage CMS 
to consider providing additional technical assistance to ensure that Medicare patients are placed in the 
most appropriate setting for post-acute care, and that inpatient rehab hospitals do not admit patients who 
are unable to participate in and benefit from intensive therapy.  An OIG audit that is currently in progress 
will provide a national assessment of the proportion of inpatient rehab stays that do not comply with all 
Medicare coverage and documentation criteria, including stays in hospital-based rehab units and inpatient 
rehab hospitals. 
This report is being issued directly in final form because it contains no recommendations.  If you have 
comments or questions about this report, please provide them within 60 days.  Please refer to report 
number OEI-06-16-00360 in all correspondence. 
 
CASE REVIEW OF INPATIENT REHAB HOSPITAL PATIENTS NOT SUITED FOR INTENSIVE THERAPY (OEI-06-16-00360)    6  A  
CKNOWLEDGMENTS
This report was prepared under the direction of Ruth Ann Dorrill, Regional Inspector General for 
Evaluation and Inspections in the Dallas regional office. 
Jennifer Hagen served as the project leader for this study.  Other Office of Evaluation and Inspections 
staff from the Dallas regional office who conducted the study include Amy Ashcraft and Nathan Dong.  
Central Office staff who provided support include Joe Chiarenzelli, Kevin Farber, Evan Godfrey, 
Althea Hosein, and Christine Moritz.
CASE REVIEW OF INPATIENT REHAB HOSPITAL PATIENTS NOT SUITED FOR INTENSIVE THERAPY (OEI-06-16-00360)    7  E  
NDNOTES
 
 
1 Medicare Payment Advisory Commission (MedPAC), Report to the Congress:  Medicare Payment Policy, March 2014, 
pp. 185-186. 
2 CMS, Medicare Benefit Policy Manual, ch. 1,  110.2.2.  MedPAC, Report to the Congress:  Medicare Payment Policy, 
March 2014, p. 244. 
3 MedPAC, Report to the Congress:  Medicare Payment Policy, March 2014, p. 171. 
4 The $12,000 figure for average reimbursement for SNFs is the average of the top and bottom quartiles that MedPAC 
presented in its Report to the Congress: Medicare Payment Policy, March 2014, p. 198. 
5 The $17,000 figure for average reimbursement for inpatient rehab hospitals is based on OIG analysis of FY 2012 Medicare 
claims data.  See also OIG, Adverse Events in Rehabilitation Hospitals:  National Incidence Among Medicare Beneficiaries, 
OEI-06-14-00110, July 2016. 
6 MedPAC, Report to the Congress:  Medicare Payment Policy, March 2014, p. 243. 
7 All requirements specified in 42 CFR  412.622(a)(3), (4), and (5) must be met to ensure that inpatient rehab hospital care is 
reasonable and necessary under Section 1862(a)(1)(A) of the Social Security Act (74 Fed. Reg. 39762, 39788 (Aug. 7, 2009)), 
as interpreted by the Medicare Benefit Policy Manual, ch. 1,  110. 
8 CMS, Medicare Benefit Policy Manual, ch. 1,  110.2.2. 
9 42 CFR  412.622(a)(3)(ii); CMS, Medicare Benefit Policy Manual, ch. 1,  110.2. 
10 42 CFR  412.622(a)(3); CMS, Medicare Benefit Policy Manual, ch. 1,  110.2. 
11 CMS, Medicare Benefit Policy Manual, ch. 1,  110.2.2. 
12 42 CFR  412.622(a)(4); CMS, Medicare Benefit Policy Manual, ch. 1,  110.1. 
13 42 CFR  412.622(a)(4)(i); CMS, Medicare Benefit Policy Manual, ch. 1,  110.1.1. 
14 42 CFR  412.622(a)(4)(ii); CMS, Medicare Benefit Policy Manual, ch. 1,  110.1.2. 
15 CMS, Medicare Benefit Policy Manual, ch. 1,  110.1.2.  The day of admission is considered the first day.  
16 OIG, Norwalk Hospital Did Not Comply With Medicare Inpatient Rehabilitation Facility Documentation Requirements, 
A-01-11-00531, February 2013. 
17 OIG, Medicare Compliance Review of University of Minnesota Medical Center for 2012 and 2013, A-05-14-00050, 
January 2016.  OIG, Medicare Compliance Review of Hennepin County Medical Center for 2012 and 2013, A-05-14-00048, 
February 2016.  OIG, Medicare Compliance Review of New York Presbyterian Hospital for 2011 and 2012, A-02-13-01027, 
August 2016. 
18 In our study Adverse Events in Rehabilitation Hospitals:  National Incidence Among Medicare Beneficiaries 
(OEI-06-14-00110), we found that an estimated 29 percent of Medicare beneficiaries experienced adverse or temporary harm 
events during their stays in rehab hospitals. 
19 Two of the three physician reviewers also participated as reviewers for the study Adverse Events in Rehabilitation Hospitals:  
National Incidence Among Medicare Beneficiaries (OEI-06-14-00110). 
CASE REVIEW OF INPATIENT REHAB HOSPITAL PATIENTS NOT SUITED FOR INTENSIVE THERAPY (OEI-06-16-00360)    8