Medicare: More Specific Criteria Needed to Classify Inpatient Rehabilitation Facilities
Published: 2005-04-22T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Medicare classifies inpatient rehabilitation facilities (IRF) using the "75 percent rule." If a facility can show that during 1 year at least 75 percent of its patients required intensive rehabilitation for 1 of 13 specified conditions, it may be classified as an IRF and paid at a higher rate than is paid for less intensive rehabilitation in other settings. Medicare payments to IRFs have grown steadily over the past decade. In this report, GAO (1) identifies the conditions--on and off the list--that IRF Medicare patients have and the number of IRFs that meet a 75 percent threshold, (2) describes IRF admission criteria and Centers for Medicare & Medicaid Services (CMS) review of admissions, and (3) evaluates use of a list of conditions in the rule. GAO analyzed data on Medicare patients (the majority of patients in IRFs) admitted to IRFs in FY 2003, spoke to IRF medical directors, and had the Institute of Medicine (IOM) convene a meeting of experts.
section_title: What GAO Found
paragraphs: In fiscal year 2003, fewer than half of all IRF Medicare patients were admitted for having a condition on the list in the 75 percent rule, and few IRFs admitted at least 75 percent of their patients for one of those conditions. The largest group of patients had orthopedic conditions, not all of which were on the list in the rule, which had been suspended in 2002. Almost half of all patients with conditions not on the list were admitted for orthopedic conditions, and among those the largest group was joint replacement patients. Although some joint replacement patients may need admission to an IRF, GAO's analysis showed that few of these patients had comorbidities that suggested a possible need for the IRF level of services. Additionally, GAO found that only 6 percent of IRFs in fiscal year 2003 were able to meet a 75 percent threshold. IRFs varied in the criteria used to assess patients for admission, and CMS has not routinely reviewed IRF admission decisions. IRF officials reported that the criteria they used to make admission decisions included patient characteristics such as function, as well as condition. CMS, working through its fiscal intermediaries, has not routinely reviewed IRF admission decisions. The experts IOM convened and other clinical and nonclinical experts GAO interviewed differed on whether conditions should be added to the list in the 75 percent rule but agreed that condition alone does not provide sufficient criteria to identify the types of patients appropriate for IRFs. The experts IOM convened questioned the strength of the evidence for adding conditions to the list, finding the evidence for certain orthopedic conditions particularly weak, and they called for further research to identify the types of patients that need inpatient rehabilitation and to understand the effectiveness of IRFs. Other experts did not agree on whether conditions, including a broader category of joint replacements, should be added to the list. Experts, including those IOM convened, generally agreed that condition alone is insufficient for identifying appropriate types of patients for inpatient rehabilitation, since within any condition only a subgroup of patients require the level of services of an IRF, and contended that functional status should also be considered.

section_title: Letter
paragraphs: Under authority provided in the Social Security Act, the Secretary defines a rehabilitation  hospital and unit. See 42 U.S.C. §1395ww(d)(1)(B) (2000).
Not all patients with a given condition may require the level of rehabilitation provided in  an IRF. For example, although a subset of patients who have had a stroke may require the  intensive level of care provided by an IRF, others may be less severely disabled and require  less intensive services.
Medicaid Services (CMS) relies on a regulation commonly known as the  “75 percent rule,” which was initially issued in 1983 and most recently  revised in 2004. The 2004 rule, which is being implemented over a 3-year  transition period, states that if a facility can show that during a 12-month  period at least 75 percent of all its patients, including its Medicare patients,  required intensive rehabilitation services for the treatment of at least 1 of  the 13 conditions listed in the rule, it may be classified as an IRF. The rule  allows the remaining 25 percent of patients to have other conditions not  listed in the rule. An IRF that does not comply with the requirements of  the 75 percent rule may lose its classification as an IRF and therefore no  longer be eligible for payment at a higher rate. In addition to the   75 percent rule, IRFs must meet six other facility criteria to be classified as  an IRF.
IRF compliance with the requirements of the rule has been problematic,  and some IRFs have questioned the requirements of the rule. CMS data  indicate that in 2002 only 13 percent of IRFs had at least 75 percent of  patients in 1 of the 10 conditions on the list at that time. CMS suspended  enforcement of the rule in 2002. IRF officials have contended that the list  of conditions in the rule should be updated because of changes in  medicine that have occurred since the list was established in 1983 and the  concomitant expansion of the population that could benefit from inpatient  rehabilitation services. They have noted that their patients are older than  the population served in 1983 and are surviving longer with conditions  they may not have survived in earlier years. CMS issued a final rule— effective July 1, 2004—that increased the number of conditions from 10 to  13, adding, for example, certain hip and knee joint replacements. The 2004  final rule also laid out a 3-year transition period during which enforcement  of the rule is to be resumed, with the threshold for percentage of patients  meeting the condition requirements being lowered to 50 percent for the  first year and rising in stages to reach 75 percent for the IRF’s cost  reporting period starting on or after July 2007.
IRFs need to be correctly classified to be distinguished from settings in  which less intensive rehabilitation is provided because the difference in  payments to IRFs and payments to these other settings can be substantial.  For example, the estimated Medicare per case payment in 2004 for a  patient who underwent a major joint and limb replacement of a lower  extremity was $17,135 to an IRF and $6,165 to a SNF. Similarly, the  estimated per case payment for a patient with a stroke was $34,196 to an  IRF and $8,905 to a SNF. Therefore, if IRFs are not correctly classified,  Medicare is at risk of making large overpayments to incorrectly classified  facilities. Medicare is also at risk of overpayment for individual patients in  an IRF if patients are admitted who could be treated in a less intensive  setting. IRFs are required to assess patients prior to admission to ensure  they require the level of services provided in an IRF, and CMS is  responsible for evaluating the appropriateness of individual admissions  after the patient has been discharged through reviews for medical  necessity conducted under contract by its fiscal intermediaries (FI).
The Conference Report that accompanied the Medicare Prescription Drug,  Improvement, and Modernization Act of 2003 directed us to issue a report,  in consultation with experts in the field of physical medicine and  rehabilitation, to assess whether the current list of conditions represents a  clinically appropriate standard for defining IRF services and, if not, to  determine which additional conditions should be added to the list. In this  report, we (1) identify the conditions that IRF Medicare patients have, the  number of these patients considered to have 1 of the 13 conditions, and  the number of IRFs that meet the requirements of the 75 percent rule;   (2) describe how IRFs assess patients for admission and whether CMS  reviews admission decisions; and (3) evaluate the approach of using a list  of conditions in the 75 percent rule to classify IRFs.
We analyzed the 2003 data—the most recent data available at the time—using the 13  conditions in the current regulation even though in fiscal year 2003 there were 10  conditions on the list. used these codes to determine whether we considered the patient’s  primary or comorbid condition to be linked to a condition on the list in the  rule. We also obtained and analyzed Medicare claims records for fiscal  year 2003 to identify patients that had been discharged from an acute care  hospital to an IRF. We assessed the reliability of the IRF-PAI data by  interviewing agency officials knowledgeable about the data and by  interviewing other researchers who had conducted analyses using the IRF- PAI data. For both the IRF-PAI data and the claims data we performed  electronic testing of required data elements. We determined that the data  were sufficiently reliable for this analysis. Although we applied different  threshold levels to illustrate the impact of the transition period on the  number of IRFs that meet the requirements of the rule, we did not assess  the appropriateness of any threshold level. Our analyses used  administrative data only, and estimates could be different if medical  records were used.
To determine how IRFs assess patients for admission and whether CMS  reviews admission decisions, we conducted structured interviews. We  interviewed the medical director at each of 12 IRFs selected to vary by  region and level of compliance with the 75 percent rule. We also  interviewed the medical director (or designee) at each of the 10 FIs that  covered the states in which the 12 IRFs are located (out of a total of 30  FIs). In addition, we interviewed an official representing each of CMS’s 10  regional offices to determine whether any IRFs had ever been declassified  based on failure to comply with the 75 percent rule, and we interviewed  three insurers and one regional managed care organization about their  procedures for referring enrollees to IRFs.
To evaluate the approach of using a list of conditions in the 75 percent rule  to classify IRFs, we contracted with the Institute of Medicine (IOM) of The  National Academies to convene a 1-day meeting of clinical experts in  physical medicine and rehabilitation, including physicians, rehabilitation  nurses, physical therapists, occupational therapists, a speech and language  therapist, and clinical researchers in the field (referred to in this report as  “the experts IOM convened”).
In total, we talked with 106 individuals, of whom 65 were clinicians,  including the experts IOM convened. We conducted our work from May  2004 through April 2005 in accordance with generally accepted  government auditing standards. (For a complete description of our scope  and methodology, see app. II.)
subsections: section_title: Background
paragraphs: While the 75 percent rule has been in effect in one form or another for  over two decades, the current payment system and review procedures for  IRFs went into effect in recent years.
subsections: section_title: History of the 75 Percent Rule
paragraphs: The Social Security Amendments of 1983 changed the Medicare hospital  payment system from a cost-based retrospective reimbursement system to  a prospective system known as the inpatient prospective payment system  (IPPS), under which hospitals receive a per discharge payment for a  diagnosis-related group (DRG). However, the amendments excluded  “rehabilitation hospitals,” and so IRFs continued to be paid under a  reasonable-cost-based retrospective system. Before the IPPS was  implemented, CMS consulted with the Joint Commission on Accreditation  of Healthcare Organizations (JCAHO) and other accrediting organizations  to determine how to classify IRFs, that is, distinguish them from other  facilities for payment purposes. The 75 percent rule was established for  that purpose in 1983. To develop the original list of conditions in the 75  percent rule, CMS relied, in part, on information from the American  Academy of Physical Medicine and Rehabilitation, the American Congress  of Rehabilitation Medicine, the National Association of Rehabilitation  Facilities, and the American Hospital Association. According to CMS, the  conditions on the list accounted for approximately 75 percent of the  admissions to IRFs when the original list was developed. In January 2002 a  prospective payment system (PPS) was implemented for IRFs—known as  the inpatient rehabilitation facility prospective payment system (IRF PPS).
On June 7, 2002, CMS suspended the enforcement of the 75 percent rule  after its study of FIs, which have responsibility under contract with CMS  for verifying compliance with the rule, revealed that they were using  inconsistent methods to determine whether an IRF was in compliance and  that in some cases IRFs were not being reviewed for compliance at all.  Specifically, CMS found that only 20 of the 29 FIs conducted reviews for  IRF compliance with the 75 percent rule and that the FIs that did these  reviews used different methods and data sources. In 2004, CMS  standardized the verification process that the FIs were to use to determine  if an IRF met the classification criteria, including how to determine  whether a patient is considered to have 1 of the 13 conditions.
section_title: The 2004 Final Rule
paragraphs: When the final rule was made effective on July 1, 2004, a transition period  was established for IRFs to meet the requirements of the rule. In addition  to lowering and then increasing the threshold, the transition period allows  a patient to be counted toward the required threshold if the patient is  admitted for either a primary or comorbid condition on the list in the rule.  But at the end of the transition period, a patient cannot be counted toward  the required threshold on the basis of a comorbidity on the list in the rule.  The requirements of the transition period are as follows:    July 1, 2004, to June 30, 2005: 50 percent threshold, counting comorbidities    July 1, 2005, to June 30, 2006: 60 percent threshold, counting comorbidities    July 1, 2006, to June 30, 2007: 65 percent threshold, counting comorbidities  Effective July 1, 2007, the threshold will be 75 percent, not counting  comorbidities.
During the 3-year transition period, CMS plans to analyze claims and  patient assessment data to evaluate if and how the 75 percent threshold  should be modified. In addition, the agency has announced its willingness  to consider alternative policy proposals to the 75 percent rule submitted  during this period. In the past, CMS has declined requests to modify the  rule’s threshold or list of conditions, citing a lack of supporting or  objective data from the clinical community. However, in the final rule, the  agency solicited “objective data or evidence from well-designed research  studies” that would support a change in the rule’s 75 percent threshold or  list of conditions. Also, because of the relative absence of clinical  research studies in the peer-reviewed medical literature, CMS contracted  with NIH to convene one meeting of a research panel to review the current  medical literature and identify priorities for conducting studies on  inpatient rehabilitation.
section_title: Payment and Review for Medical Necessity
paragraphs: Beginning in January 2002, CMS implemented the IRF PPS to pay IRFs on  a per-discharge basis. Payment is contingent on an IRF’s completing a  patient assessment after admission and transmitting the resulting data to  CMS. The Inpatient Rehabilitation Facility—Patient Assessment  Instrument (IRF-PAI) includes identification of an impairment group code  that identifies the impairment group, or the condition that requires  admission to rehabilitation. The patient’s comorbidities are also recorded  on the IRF-PAI.
The impairment group code is combined with other information on the  IRF-PAI to classify the patient into 1 of 100 case-mix groups (CMG).  Patients are assigned to a CMG based on the impairment group code, age,  and levels of functional and cognitive impairment. The CMG determines  the payment the IRF will receive for a patient. Each CMG is weighted to  account for the relative difference in resource use across all CMGs. Within  each CMG, the weighting factors are “tiered” based on the estimated effect  of comorbidities. Each CMG has four payment tiers reflecting the level of  comorbidities.
CMS contracts with FIs, the entities that conduct compliance reviews, to  conduct reviews for medical necessity to determine whether an individual  admission to an IRF was covered under Medicare. FIs were specifically  authorized to conduct reviews for medical necessity for inpatient  rehabilitation services beginning in April 2002. According to the Medicare  Benefit Policy Manual, two basic requirements must be met if inpatient  hospital stays for rehabilitation services are to be covered: (1) the services  must be reasonable and necessary, and (2) it must be reasonable and  necessary to furnish the care on an inpatient hospital basis, rather than in  a less intensive facility, such as a SNF, or on an outpatient basis.  Determinations of whether hospital stays for rehabilitation services are  reasonable and necessary must be based on an assessment of each  beneficiary’s individual care needs.
section_title: Fewer Than Half of All IRF Medicare Patients in 2003 Were Admitted for Conditions on List in Rule, and Few IRFs Were Able to Meet a 75 Percent Threshold
paragraphs: Fewer than half of all IRF Medicare patients in fiscal year 2003 were  admitted for conditions on the list in the 75 percent rule. The patients  admitted in 2003 had a variety of conditions, not all of which were on the  list in the rule. Nearly half of the patients admitted for conditions not on  the list were admitted for orthopedic conditions. The largest group of  patients admitted for orthopedic conditions not on the list were admitted  for joint replacements that did not meet the list’s specific criteria for joint  replacement. Relatively few of these patients had comorbid conditions  that suggested a possible need for the intensive level of rehabilitation  provided in IRFs. Additionally, we found that based on the fiscal year 2003  data few IRFs were able to meet a 75 percent threshold.
subsections: section_title: Medicare Patients Admitted to IRFs in 2003 Had Variety of Conditions
paragraphs: Medicare patients were admitted to IRFs in fiscal year 2003 with a variety  of conditions, as defined by the impairment group codes we analyzed.  Forty-two percent of the 506,662 Medicare patients admitted to IRFs in  2003 were admitted with orthopedic conditions, representing the largest  category of patients. Figure 1 shows the distribution of all the conditions,  based on impairment group codes, for which patients were admitted to  IRFs in fiscal year 2003. The largest impairment group consisted of  patients admitted for joint replacement.
section_title: Fewer Than Half of All IRF Medicare Patients Were Admitted for Conditions on List in Rule
paragraphs: Fewer than half of the Medicare patients (222,316 of the 506,662 patients)  admitted in fiscal year 2003 were admitted for a primary condition that  was on the list in the 75 percent rule. Using the impairment group codes  assigned to these patients at the time of their admission, we determined  that in fiscal year 2003 less than 44 percent of IRF admissions had a  primary condition that was on the list in the rule. However, when  comorbid conditions that were on the list were counted—as they would be  during the transition period—the number of patients having a listed  condition rose to 311,740 (62 percent) of IRF patients in that year. (See  table 1.)
The amount of increase that occurred when comorbid conditions were  counted varied by impairment group. For some impairment groups, the  percentage of patients who had a condition on the list in the rule  substantially increased when comorbidities were counted. For example,  the percentage of joint replacement patients having a listed condition  increased from 13 percent to 51 percent by virtue of their comorbidities.  The comorbidity that qualified over 90 percent of this group was some  form of arthritis. In contrast, the increase was lower for patients in the  medically complex, cardiac, debility, pain syndrome, and pulmonary  disorder impairment groups, increasing between 14 percentage points and  22 percentage points. The comorbidity that qualified about one-third of  cardiac and debility patients was stroke, and the comorbidity that qualified  over one-third of pulmonary patients was a neurological condition.
section_title: Almost Half of IRF Medicare Patients That Did Not Have Condition on List in Rule Were Admitted for Orthopedic Conditions
paragraphs: Almost half of the 194,922 IRF Medicare patients that did not have a  condition on the list in the rule, either as a primary condition or as a  comorbid condition, were admitted for orthopedic conditions. (See fig. 2.)  The single largest group of patients who did not have a condition on the  list were the joint replacement patients whose condition did not meet the  list’s specific criteria for joint replacements. Over 30 percent of patients  who did not have a condition on the list had been admitted to IRFs for  joint replacement, with another 15 percent having been admitted for  “other orthopedic,” that is, any orthopedic condition other than hip  fractures or joint replacements. The next largest group, cardiac patients,  represented 12 percent.
section_title: Relatively Few Medicare Joint Replacement Patients in IRFs Had Comorbid Conditions That Suggested Possible Need for IRF Level of Services
paragraphs: Although some joint replacement patients may need the level of services  of an IRF, such as those who have a comorbid condition that significantly  affects their level of function, our analysis of the case-mix groups used for  payment purposes suggests that relatively few of the Medicare joint  replacement patients currently admitted by IRFs fit this description. In  particular, 87 percent of joint replacement patients admitted in fiscal year  2003 had unilateral procedures and were less than 85 years of age, and  thus did not fit the criteria for joint replacement on the list in the rule  based on their primary condition. Of the joint replacement patients who  did not fit the criteria based on their primary condition, over 84 percent  were in a payment tier with no comorbidities that affected costs.
section_title: Few IRFs Were Able to Meet a 75 Percent Threshold
paragraphs: Only 6 percent of IRFs were able to meet the requirements of full  implementation of the rule that would be in place at the end of the  transition period, that is, a 75 percent threshold not counting  comorbidities. Our analysis of fiscal year 2003 data for Medicare patients  admitted to IRFs, which used the current list of 13 conditions, showed that  as the threshold level increased from 50 percent to 75 percent and both  primary and comorbid conditions were counted, progressively fewer IRFs  were able to meet the higher threshold levels. (See table 2.) In addition,  when the count was based only on whether the patient’s primary condition  was on the list in the rule, as it would be after the transition period, even  fewer IRFs met the requirements of the rule. However, many IRFs were  able to meet the lower thresholds that would be in place earlier in the  transition period. Over 80 percent of IRFs were able to meet a 50 percent  threshold based on the primary conditions or comorbid conditions of the  patients they admitted in 2003.
Some IRF officials are concerned that they may have to limit admissions in  order to comply with the rule and that some IRFs may have to close or  reduce beds. Some of the IRF officials we interviewed reported that as  the threshold of the rule increases they expect to limit admissions for  patients with conditions not on the list in the rule. One IRF official  estimated that the facility’s revenues would decrease by 40 percent by the  third year of the rule’s transition period, severely harming the facility  financially and affecting access to care, and another IRF official reported  that the facility expected its census to drop by half, which would affect the  number of beds it could operate and staff it could employ. An IRF official  whose facility was meeting the 75 percent threshold said that if the facility  fell below the threshold, it would limit admissions to remain in  compliance.
IRFs have not generally been declassified based on the failure to comply  with the 75 percent rule, and CMS recently clarified instructions for FIs to  use to conduct compliance assessments. Officials from CMS’s 10 regional  offices reported that no IRFs had been declassified in at least the past 5  years. When CMS found that FIs were using different approaches to  conduct compliance assessments, it determined that one cause was that  the CMS manuals did not detail the methodology FIs should use to  perform the reviews. Following CMS’s modifications of the rule, it issued  new instructions in a program transmittal that defined and standardized  the procedures that FIs are to use to conduct compliance assessments,  and some FI officials we interviewed reported that instructions were  clearer and more detailed than in prior years.
section_title: IRFs Vary in the Criteria Used to Assess Patients for Admission, and CMS Does Not Routinely Review IRFs’ Admission Decisions
paragraphs: The criteria IRFs used to assess patients for admission varied by facility,  and CMS has not routinely reviewed IRFs’ admission decisions. In  particular, IRFs used a range of criteria in making admission decisions,  including patient characteristics such as function, in addition to condition.  Admission decisions may also be influenced by an IRF’s level of  compliance with the 75 percent rule’s list of conditions. CMS, working  through its FIs, has not routinely reviewed IRF admission decisions for  medical necessity, although the CMS officials reported that such reviews  could be used as a means to target problems.
subsections: section_title: IRFs Use Variety of Criteria, Including Functional Status, to Assess Patients for Admission
paragraphs: The IRF officials we interviewed varied in the criteria they used to  characterize the patients that were appropriate for admission. (See table  3.) The number of criteria they reported using ranged from two to six, with  no IRF reporting that it relied on a single criterion for admission.
Whereas some IRF officials reported that they used function to  characterize patients who were appropriate for admission (e.g., patients  with a potential for functional improvement), as shown in table 3, others  said they used function to characterize patients not appropriate for  admission (e.g., patients whose functional level was too high, indicating  that they could go home, or too low, indicating that they needed to be in a  SNF). In combination, all the IRF officials we interviewed evaluated a  patient’s function when assessing whether a patient needed the level of  services of an IRF, and almost half of the IRF officials interviewed stated  that function was the main factor that should be considered in assessing  the need for IRF services.
The IRF officials we interviewed reported that they did not admit all the  patients they assessed. They estimated that the proportion of patients they  assessed but did not admit ranged from 5 percent to 58 percent. Most  patients were admitted to IRFs from an acute care hospital, and the IRF  officials reported receiving referrals from as few as 1 hospital to as many  as 55 hospitals. The IRF typically received a request from a physician in  the acute care hospital requesting a medical consultation from an IRF  physician, or from a hospital discharge planner or social worker indicating  that they had a potential patient. An IRF staff member—usually a  physician and/or a nurse—conducted an assessment prior to admission  to determine whether to admit a patient.
section_title: Admission Decisions May Also Be Influenced by IRF’s Level of Compliance with Rule’s List of Conditions
paragraphs: In addition to individual patient characteristics, admission decisions may  also be influenced by an IRF’s level of compliance with the 75 percent  rule’s list of conditions. All the IRF officials we interviewed were able to  track their own facility’s compliance level regularly, and said they tracked  it generally on a daily, weekly, or monthly basis. Some IRF officials we  interviewed reported that the admission decision for a given patient may  be affected by the IRF’s compliance level at that time. For example, on a  day when the facility is at the required level of compliance a patient with a  certain condition that is not on the list in the rule may be admitted, but on  another day when the facility is below its compliance level a patient with  the same condition might not be admitted. Half of the IRF officials said  that when the rule is enforced they expect they will try to admit more  patients with conditions on the list in the rule.
section_title: CMS Has Not Routinely Reviewed Admission Decisions
paragraphs: CMS, working through its FIs, has not routinely reviewed IRF admission  decisions for medical necessity. Among the 10 FI officials we interviewed,  over half were not conducting reviews of patients admitted to IRFs. Those  that were doing reviews used different approaches for selecting records to  be reviewed, such as focusing only on the largest IRFs that failed to  comply with the rule or requesting a few records from each IRF in its  service area. CMS officials estimated that less than 1 percent of  admissions in facilities excluded from IPPS, such as IRFs, are reviewed,  and reported that such reviews could be used as a means to target  problems or vulnerabilities.
Among the experts IOM convened and other experts we interviewed, it  was stated that because there has been no routine review for medical  necessity in IRFs, some IRFs have become “sloppy” in their admitting  practices and have taken a “laissez-faire attitude” toward admitting  patients. This perspective is borne out through ad hoc studies done by  three FIs that found inadequate justification for admission. For example,  in one study an FI official reviewed about 3,000 medical charts and  reported that the need for inpatient rehabilitation was unclear in about   30 percent to 40 percent of the IRF patients’ charts reviewed. The other  two FIs reviewed fewer cases, but found a higher proportion of patients in  IRFs who did not appear to need inpatient rehabilitation.
In contrast to CMS’s approach, private payers rely on individual  preauthorization to ensure that the most appropriate patients are admitted  to IRFs. Of the three major insurers and one managed care plan whose  officials we interviewed, all required preauthorization for each admission  to an IRF when determining whether a specific patient should be admitted,  judging each case individually. In making their decisions, they relied on a  variety of factors, which differed from payer to payer, including diagnosis,  symptoms, treatment plan, the need for and the patient’s ability to  participate in 3 hours of daily therapy, the need for care by a physiatrist,  and the potential for an IRF admission to provide an earlier discharge  from the acute care hospital (compared to a possibly longer stay in the  acute care hospital with discharge to home or a SNF). Three private  payers we spoke with indicated that IRFs are generally paid on a per diem  basis, and all said that patients are monitored by the insurer or health plan  throughout their IRF stay.
section_title: Experts Differed on Adding Conditions to List in Rule but Agreed That Condition Alone Does Not Provide Sufficient Criteria
paragraphs: The experts IOM convened and other experts we interviewed differed on  whether conditions should be added to the list in the 75 percent rule but  agreed that condition alone does not provide sufficient criteria to identify  the types of patients appropriate for IRFs. The experts IOM convened  questioned the strength of the evidence for adding conditions to the list.  They reported that the evidence on the benefits of IRF services— particularly for certain orthopedic conditions—is variable, and they called  for further research. Other experts did not agree on whether conditions,  including a broader category of joint replacements, should be added to the  list. The experts IOM convened and other experts agreed that condition  alone is insufficient for identifying appropriate patients and contended  that functional status should also be considered. The experts IOM  convened suggested factors to use in classifying IRFs, including both  patient and facility characteristics.
subsections: section_title: Experts IOM Convened Questioned Evidence for Adding Conditions to List in Rule, Finding Evidence for Certain Orthopedic Conditions Particularly Weak, and Called for More Research
paragraphs: The experts IOM convened generally questioned the strength of the  evidence for the conditions suggested for addition to the list in the rule.  Some of them reported that there was little information available on the  need for inpatient rehabilitation for cardiac, transplant, pulmonary, or  oncology patients. One of them stated that inpatient rehabilitation may be  the best way of caring for patients who have weakened physically due to  long hospital stays but added that “we simply do not know.” The same  expert also cited a study that showed that inpatient rehabilitation services  made a difference for patients with metastatic spine cancer and noted that  this result was unexpected and could indicate that “clinical intuition” on  the benefits of inpatient rehabilitation may not always be reliable.
For conditions currently on the list in the rule, the experts IOM convened  reported varying degrees of strength in the evidence on the benefits of IRF  services. Although the experts IOM convened did not comment on every  condition on the list, the group generally agreed that the data on the  benefits of intensive inpatient rehabilitation for stroke are  “incontrovertible.” For certain other conditions on the list, such as spinal  cord injury and traumatic brain injury, they reported that it is reasonable  to expect intensive inpatient rehabilitation to provide good outcomes  because these patients need intensive training about self-care and patients  with traumatic brain injury may also require behavioral services. One  expert questioned the strength of the evidence related to hip fractures,  saying it was unclear whether patients with a hip fracture would be better  served by sending them home right away, by putting them in an IRF, or by  giving them some combination of intensive inpatient rehabilitation, home  health care, or care in a SNF.
The condition the experts IOM convened discussed most was joint  replacement, which was the most common condition for patients admitted  to IRFs and is included on the list of conditions in the rule but only under  certain circumstances. In general, they reported that, except for a few  subpopulations, uncomplicated unilateral joint replacement patients rarely  need to be admitted to an IRF. For example, one of the experts said that  admission to an IRF of a healthy person with an uncomplicated joint  replacement is an example of a practice that is not evidence-based, and  others said that there are no data and little evidence on the effectiveness  of intensive inpatient rehabilitation for elective joint replacement patients.  Another expert stated that the evidence on the benefits of IRF services for  hip fracture and joint replacement patients is “very, very weak,” that  orthopedics is the “heart of the issue” related to the list of conditions in  the rule, and that a panel of clinicians should be convened to focus solely  on the orthopedic conditions.
Most of the experts IOM convened called for more research in several  areas, including which types of patients can be treated best in IRFs and the  effectiveness of IRFs in comparison with other settings of care. CMS has  also identified questions for a future research agenda that can assess the  efficacy of rehabilitation services in various settings. CMS may also  undertake other activities, such as periodically holding additional  meetings with researchers or encouraging observational studies, as well as  soliciting comments from the public for additional studies.
section_title: IRF Officials Differed on Whether Conditions, Including More Broadly Defined Joint Replacement, Should Be Added to List in Rule
paragraphs: There was no general agreement among the IRF officials we consulted on  whether conditions should be added to the list in the rule, and if so, which  conditions. In our interviews with IRF officials, three-quarters identified  various conditions that should be added. Of these, all suggested the  addition of cardiac conditions, and some identified other conditions, such  as pulmonary conditions, transplants, and more joint replacements than  are currently on the list. The reasons these IRF officials gave for adding  these conditions included that these patients can become weakened  physically during a hospital stay and need services in an IRF to regain their  strength and also that their experience shows they can achieve good  outcomes for these patients. The remaining IRF officials said no  conditions should be added. Some reasons they cited were that these  patients can be treated in a less intensive setting, the conditions are too  broad to be meaningful, and using a list of conditions is the wrong  approach. IRF officials differed regarding the addition of joint replacement  patients. Half of them suggested that joint replacement be more broadly  defined to include more patients, saying, for example, that the current  requirements were too restrictive and arbitrary, and a couple of them said  that unilateral joint replacement patients are not generally appropriate for  IRFs.
section_title: Experts Contended That Functional Status, in Addition to Condition, Should Be Used to Identify Appropriate Types of Patients for Intensive Inpatient Rehabilitation
paragraphs: The experts IOM convened contended that condition alone was  insufficient for identifying which patients, or types of patients, required  the level of services available in an IRF and generally agreed that  functional status should also be used. A patient’s condition was perceived  as an acceptable starting point to understanding patient needs and as a  way to characterize the patients served by IRFs. But the experts IOM  convened generally agreed that condition, by itself, was insufficient and  that more information was needed. They said that condition alone fails to  identify the subgroup within each condition that is most appropriate for  intensive inpatient rehabilitation. For example, one of them noted that  although an IRF could be filled with patients that have conditions on the  list in the rule, the patients could be completely inappropriate for that  setting. Another expert at the meeting reported general agreement among  the group that using diagnosis alone is not sufficient.
In addition to the experts convened by IOM, other experts we interviewed  also said that condition alone was insufficient because having a condition  on the list in the rule does not automatically indicate the need for intensive  inpatient rehabilitation (e.g., even though stroke is on the list, only a  subgroup of stroke patients require IRF services) and having a condition  not on the list does not necessarily mean the patient does not need IRF  services (e.g., although there is no cardiac condition on the list, a  subgroup of cardiac patients need the level of services of an IRF). In  addition, the FI and IRF officials we interviewed generally reported as well  that condition alone was insufficient. Over half the FI officials we  interviewed said that condition is insufficient by itself to determine the  need for intensive inpatient rehabilitation, and some said that diagnosis is  only a starting point. As noted earlier, all the IRF officials reported using a  variety of criteria, beyond condition, to assess patients for admission,  including function.
Among the experts convened by IOM, functional status was identified  most frequently as the information required in addition to condition. Half  of the experts IOM convened commented on the need to add information  about functional status, such as functional need, functional decline, motor  and cognitive function, and functional disability. To measure both  diagnosis and function, one of them suggested using the case-mix groups  because they combine both dimensions.
Experts we interviewed also raised some concerns, however, about using  function as a measure of need for intensive inpatient rehabilitation. The  concerns voiced by the FI officials we interviewed included the potential  for abuse by qualifying more patients for admissions and the potential for  difficulty in adjudicating claims. One FI official said that moving toward an  assessment of functional status would require a better instrument than  currently exists. Another expert we interviewed said that using only  functional status could lead to including custodial patients that are  currently in SNFs. Officials at CMS also expressed concerns regarding  how to measure the need for intensive inpatient rehabilitation based on  functional status because a patient can have a low functional status but  not need intensive inpatient rehabilitation.
section_title: Experts IOM Convened Suggested Factors to Consider Using to Classify IRFs
paragraphs: Almost all the experts IOM convened said that IRF classification should  include characteristics of the patients served, but a couple said that IRF  classification should not include patient characteristics. Among those  expressing the need to use patient characteristics, function was identified  most often, although it was mentioned that it would be hard to  operationalize. Some of the experts IOM convened also suggested that the  percentage threshold be set at a lower level than 75 percent (for example,  60 percent or 65 percent) as a compromise until more information  becomes available to modify the list in the rule.
The experts IOM convened who opposed using patient characteristics to  classify IRFs suggested that IRFs be classified with just the other six  facility criteria, potentially looking at state licensure requirements for  additional facility criteria that could be applied specifically to IRFs. These  experts (as well as others we interviewed) said that no other facility is  classified using both patient and facility characteristics and that IRFs are  unique in being subjected to this approach. However, Medicare does  classify other facilities that are exempt from IPPS using a characteristic  about the patients served in those facilities. Furthermore, other experts  at the meeting did not agree that the six certification criteria were  sufficient for distinguishing IRFs since long-term care hospitals could  likely meet these criteria as well.
section_title: Conclusions
paragraphs: Our analysis of Medicare data shows that there are Medicare patients in  IRFs who may not need the intensive level of rehabilitation services these  facilities offer. Just over half of all Medicare patients admitted to IRFs in  fiscal year 2003 were admitted for a condition that was not on the list in  the 75 percent rule. Of those patients whose primary or comorbid  condition was not on the list, the largest group was joint replacement  patients whose condition did not fit the list’s specific criteria for joint  replacement. The experts IOM convened and other experts we interviewed  reported that unilateral, uncomplicated joint replacement patients rarely  need to be in an IRF. These experts also reported that patients who may  not need to be in an IRF may have been admitted because CMS has not  been routinely reviewing the IRFs’ admission decisions to determine  whether they were medically justified. Increased scrutiny of individual  admissions through routine reviews for medical necessity following  patient discharge could be used to target problems and vulnerabilities and  thereby reduce the number of inappropriate admissions in the future.
While some patients do not need to be in an IRF, the need for IRF services  may be more difficult to determine for other patients. The experts  convened by IOM called for more research to understand the effectiveness  of intensive inpatient rehabilitation, reporting that the evidence for the  effectiveness of IRF services varied in strength for conditions on the list  and was particularly weak for certain orthopedic conditions. CMS has also  recognized the need for more research in this area and asked NIH to  convene one meeting to help identify research priorities for inpatient  rehabilitation. Research studies that can produce information on a timely  basis, such as observational studies or meetings of clinical experts with  specialized expertise, would be especially helpful in this effort.
The presence of patients in IRFs who may not need that level of services  and the calls for more research on the effectiveness of inpatient  rehabilitation lead us to conclude that greater clarity is needed in the rule  about what types of patients are most appropriate for rehabilitation in an  IRF. There was general agreement among the experts we interviewed,  including the experts convened by IOM, that condition alone is not  sufficient to identify the most appropriate types of patients since within  any condition only a subgroup of patients require the level of services of  an IRF. We believe that if condition alone is not sufficient to identify the  most appropriate types of patients, it would not be useful to add more  conditions to the list at the present time. There was also general  agreement among the experts that more information is needed to  characterize appropriate types of patients, and the most commonly  identified factor was functional status. However, some of the experts  convened by IOM recognized the challenge of operationalizing a measure  of function, and some experts questioned the ability of current assessment  tools to predict which types of patients will improve if treated in an IRF.  Despite the challenge, more clearly delineating the most appropriate types  of patients would offer more direction to IRFs—and to the health  professionals that refer patients to them—about which types of patients  can be treated in IRFs.
We believe that action to conduct reviews for medical necessity and to  produce more information about the effectiveness of inpatient  rehabilitation could support future efforts to refine the rule over time to  increase its clarity about which types of patients are most appropriate for  IRFs. These actions could help to ensure that Medicare does not pay IRFs  for patients who could be treated in a less intensive setting and does not  misclassify facilities for payment.
section_title: Recommendations for Executive Action
paragraphs: To help ensure that IRFs can be classified appropriately and that only  patients needing intensive inpatient rehabilitation are admitted to IRFs, we  recommend that the CMS Administrator take three actions:    CMS should ensure that FIs routinely conduct targeted reviews for  medical necessity for IRF admissions.
CMS should conduct additional activities to encourage research on the  effectiveness of intensive inpatient rehabilitation and the factors that  predict patient need for intensive inpatient rehabilitation.
CMS should use the information obtained from reviews for medical  necessity, research activities, and other sources to refine the rule to  describe more thoroughly the subgroups of patients within a condition  that are appropriate for IRFs rather than other settings, and may consider  using other factors in the descriptions, such as functional status.
section_title: Agency Comments and Comments from National Associations and Our Evaluation
paragraphs: In commenting on a draft of this report, CMS stated that our work would  be of assistance to the agency in examining issues related to patient  coverage and the classification of inpatient rehabilitation facilities. CMS  generally agreed with our recommendations and provided technical  comments, which were incorporated as appropriate. CMS agreed that  targeted reviews for medical necessity are necessary and said that it  expected its contractors to direct their scarce resources toward areas of  risk. CMS said that it has expanded its efforts to provide greater oversight  of IRF admissions through local policies that have been implemented or  are being developed by the FIs. CMS also agreed with our  recommendation to encourage additional research and noted that it has  expanded its activities to guide future research efforts by encouraging  government research organizations, academic institutions, and the  rehabilitation industry to conduct both general and targeted research.  CMS said that it would collaborate with NIH to determine how best to  promote research. CMS also stated that, while it expected to follow our  recommendation to describe subgroups of patients within a medical  condition, it would need to give this action careful consideration because  it could result in a more restrictive policy than the present regulations.  CMS noted that future research could guide the agency’s descriptions of  subgroups. Although CMS indicated its intention to follow this  recommendation, we clarified the language in the recommendation to  encourage CMS to obtain research and other information to undertake this  effort. CMS’s written comments are reprinted in appendix IV.
We also received oral comments on a draft of this report from  representatives of the American Hospital Association, the American  Medical Rehabilitation Providers Association, and the Federation of  American Hospitals. All three groups noted that we applied the criteria for  a rule that was effective July 1, 2004, to data from fiscal year 2003, when  IRFs were operating under a different list of conditions. They stated that a  difference between the lists of conditions in these 2 years was in the  definition of polyarthritis, which affected the circumstances under which  joint replacement patients were counted under the rule. They reported  that in fiscal year 2003, IRFs admitted Medicare joint replacement patients  who they believed were within the criteria of the rule in effect at that time,  but may not have been within the criteria of the rule that took effect July 1,  2004. In its technical comments, CMS also raised concerns about our use  of fiscal year 2003 data. We analyzed the admission of joint replacement  patients to IRFs and found no material change between the same time  periods in 2003 and 2004, as noted in the report. In addition, all three  groups supported the call for more research. The three groups also  provided technical comments, which we incorporated where appropriate.
We are sending copies of this report to the Administrator of CMS and  other interested parties. We will also make copies available to others on  request. In addition, the report will be available at no charge on the GAO  Web site at http://www.gao.gov.
If you or your staffs have any questions about this report, please call me at  (202) 512-7114 or Linda T. Kohn at (202) 512-4371. The names of other staff  members who made contributions to this report are listed in appendix V.
section_title: Appendix I: List of Conditions in CMS’s 75 Percent Rule
paragraphs: A facility may be classified as an IRF if it can show that, during a 12-month  period at least 75 percent of all its patients, including its Medicare  patients, required intensive rehabilitation services for the treatment of one  or more of the following conditions:  1.  Stroke.  2.  Spinal cord injury.  3.  Congenital deformity.  4.  Amputation.  5.  Major multiple trauma.  6.  Fracture of femur (hip fracture).  7.  Brain injury.  8.  Neurological disorders (including multiple sclerosis, motor neuron  diseases, polyneuropathy, muscular dystrophy, and Parkinson’s  disease).
9.  Burns.  10. Active, polyarticular rheumatoid arthritis, psoriatic arthritis, and  seronegative arthropathies resulting in significant functional  impairment of ambulation and other activities of daily living that have  not improved after an appropriate, aggressive, and sustained course of  outpatient therapy services or services in other less intensive  rehabilitation settings immediately preceding the inpatient  rehabilitation admission or that result from a systemic disease  activation immediately before admission, but have the potential to  improve with more intensive rehabilitation.  11. Systemic vasculidities with joint inflammation, resulting in significant  functional impairment of ambulation and other activities of daily living  that have not improved after an appropriate, aggressive, and sustained  course of outpatient therapy services or services in other less intensive  rehabilitation settings immediately preceding the inpatient  rehabilitation admission or that result from a systemic disease  activation immediately before admission, but have the potential to  improve with more intensive rehabilitation.  12. Severe or advanced osteoarthritis (osteoarthritis or degenerative joint  disease) involving two or more major weight bearing joints (elbow,  shoulders, hips, or knees, but not counting a joint with a prosthesis)  with joint deformity and substantial loss of range of motion, atrophy of  muscles surrounding the joint, significant functional impairment of  ambulation and other activities of daily living that have not improved  after the patient has participated in an appropriate, aggressive, and  sustained course of outpatient therapy services or services in other  less intensive rehabilitation settings immediately preceding the  inpatient rehabilitation admission but have the potential to improve  with more intensive rehabilitation. (A joint replaced by a prosthesis no  longer is considered to have osteoarthritis, or other arthritis, even  though this condition was the reason for the joint replacement.)  13. Knee or hip joint replacement, or both, during an acute hospitalization  immediately preceding the inpatient rehabilitation stay and also meet  one or more of the following specific criteria:  a.  The patient underwent bilateral knee or bilateral hip joint  replacement surgery during the acute hospital admission  immediately preceding the IRF admission.  b.  The patient is extremely obese, with a body mass index of at least  50 at the time of admission to the IRF.  c.  The patient is age 85 or older at the time of admission to the IRF.
section_title: Appendix II: Scope and Methodology
paragraphs: In undertaking this work, we analyzed data on Medicare patients admitted  to inpatient rehabilitation facilities (IRF) and also interviewed a wide  variety of experts in the field to obtain various perspectives. We used  several different sources of data, including data from the Centers for  Medicare & Medicaid Services (CMS) about Medicare patients admitted to  IRFs; interviews with officials at IRFs, fiscal intermediaries (FI), CMS  regional offices, and private insurers; a 1-day meeting of clinical experts in  the field of physical medicine and rehabilitation; and interviews with other  clinical and nonclinical experts and researchers in the field of  rehabilitation as well as officials from professional associations of various  disciplines involved in inpatient rehabilitation. In total, during this  engagement, we spoke with 106 individuals, of whom 65 were clinicians.  We conducted our work from May 2004 through April 2005 in accordance  with generally accepted government auditing standards.
To identify the conditions that IRF patients have, we obtained from CMS  the Inpatient Rehabilitation Facility—Patient Assessment Instrument (IRF- PAI) records for all IRF admissions of Medicare patients for fiscal year  2003 (October 1, 2002, to September 30, 2003), which have data on patient  age and sex, impairment group code and case-mix group (CMG)  classification, and comorbid conditions. To assess whether individual  patients were considered to have 1 of the 13 conditions defined by the list  of conditions in CMS’s 75 percent rule, we applied the criteria laid out in  CMS’s Medicare Claims Processing Manual. This document lists the  specific impairment group codes and ICD-9-CM diagnostic codes for  comorbid conditions entered into the patient’s IRF-PAI record that were  used to identify patients who belonged in the 13 conditions. We  conducted our analyses on Medicare patients only because CMS records  contained data on the largest number of IRFs and the majority of patients  in IRFs are covered by Medicare. Prior work by RAND found that the  percentage of Medicare patients with the conditions on the list in the rule  was a good predictor of the percentage of total patients in the conditions  on the list in the rule. We analyzed these data at the patient level to  compare compliance with the rule across impairment groups. To permit a  discrete assignment of each patient to one impairment group, we gave  priority to the impairment group code designated at admission. To assess  the extent to which Medicare patients in IRFs with joint replacements had  comorbidities, we examined their distribution among the four payment  tiers assigned under the prospective payment system for IRFs. The  assigned CMG in the IRF-PAI data set includes a letter prefix that indicates  that the patient either had no comorbidities related to the cost of  providing inpatient rehabilitation or had one or more comorbidities  expected to have a low, medium, or high impact on those costs. We  calculated the proportion of joint replacement patients that fell into the  no-comorbidity group, both overall and within each of the six joint  replacement CMGs. To do our supplementary analysis on a sample of 2004  data, we compared the proportion of Medicare patients admitted to an IRF  whose primary condition was joint replacement from July through  December 2003 to the proportion of such patients from July through  December 2004, using data from IRF-PAI records. We computed the  proportion of Medicare patients admitted to IRFs that were joint  replacement patients, ranked the facilities according to the proportion of  Medicare joint replacement patients in 2003, and calculated the difference  across the two time periods.
To determine the number of IRFs that met the requirements of the   75 percent rule, we aggregated Medicare patients treated at the same IRF  and calculated the total percentage of each IRF’s patients that were  admitted with a primary condition or a comorbid condition on the list in  the rule. We examined the distribution of compliance levels across IRFs,  applying the different thresholds that the rule phases in over several years,  but we did not assess the appropriateness of any threshold level. To  determine whether any IRFs had ever been declassified based on failure to  comply with the 75 percent rule, we interviewed officials at CMS’s 10  regional offices.
Our analyses rely on Medicare billing information, and we determined that  these data were sufficiently reliable for this analysis. We followed the  instructions CMS provided to FIs to “presumptively verify compliance”  using the list of codes in the Medicare Claims Processing Manual to  estimate how many patients have one of the conditions on the list in the  rule as recorded on the IRF-PAI instrument. FIs use the list of codes in this  manual as a first step to estimate how many patients have one of the  conditions on the list in the rule. To assess the reliability of the IRF-PAI  records for our data analyses, we interviewed two researchers who had  experience using the IRF-PAI data set, and performed electronic testing of  the required data elements, including impairment codes, comorbid  conditions, and admission dates. We examined the IRF-PAI data set and  found few missing or invalid entries for the variables we used. We did not  compare the information entered on the IRF-PAI to medical records. All of  these analyses encompassed services provided in facilities located in the  50 states and the District of Columbia.
To determine how IRFs assess patients for admission and how CMS  reviews admission decisions for medical necessity, we interviewed the  medical directors at 12 IRFs and the medical director or designee at 10 FIs.  We used data from the RAND Corporation’s “Case Mix Certification Rule  for Inpatient Rehabilitation Facilities” (2003), prepared under contract to  CMS, to select our respondents out of a total of more than 1,200 IRFs.  RAND had analyzed the level of compliance of each IRF with the rule  using the 10 conditions on the list at that time. We used RAND data to  create a sampling frame to select IRFs to interview, but we did not rely on  RAND’s data for any findings or conclusions. We matched facilities with  data from the IRF-PAI to identify them and sorted them by zip code  according to the Northeast, Midwest, South, and West regions as defined  by the U.S. Census Bureau. Within each region, we selected IRFs with a  high, median, and low level of compliance with the 75 percent rule. We  identified the median complier in each region, and if necessary adjusted  the selection of IRFs to (1) avoid interviewing more than one IRF in the  same state and (2) provide a selection of for-profit, freestanding, and rural  facilities. If a selected provider was unwilling or unable to participate in  the interview, we substituted the IRF next on the list that was most similar  in characteristics to the facility originally chosen. We conducted a  structured interview with the medical director of each facility, and  provided unstructured time at the end of the interview for the respondent  to raise other issues. For nonclinical questions that the medical directors  were unable to answer, we spoke to a member of the administrative team.  We identified the areas covered in the interviews through background  interviews with professional associations, advocacy groups, CMS, and  experts in inpatient rehabilitation and health policy research, and  pretested the interview protocol with two IRFs not included in our sample.
The FIs we selected to interview were those that serviced the states in  which the IRFs we selected were located. Because some FIs serviced more  than one state, our selection yielded 10 FIs (out of a total of 30). To  facilitate our interviews, we spoke with the appropriate CMS regional  office, which notified an official at each FI about this engagement. We  conducted a structured interview with the medical director or designee  regarding (1) appropriate patients for inpatient rehabilitation, (2) the list  of conditions in the rule, (3) assessment for compliance, and (4) reviews  for medical necessity. We pretested the interview protocol with three FIs  that were not included in our sample. We also spoke with FI officials who  had been identified as being interested in inpatient rehabilitation. All FI  officials had the opportunity to discuss issues other than those we  highlighted. To compare Medicare’s approach to the approaches of other  payers, we selected a convenience sample of three insurers and one  regional managed care organization to learn about their activities  regarding inpatient rehabilitation. We interviewed officials from these  payers, asking how they identified facilities for intensive inpatient  rehabilitation, and how they identified appropriate patients for such  services.
Our interviews do not represent all concerns or experiences of inpatient  rehabilitation facilities, FIs, or private payers, and the answers to the  structured interviews were not restricted to Medicare patients. Because  we were directed to examine the 75 percent rule and not directly to  evaluate the relative value of inpatient rehabilitation, we did not ask  questions about the full spectrum of postacute care.
To evaluate the approach of using a list of conditions in the 75 percent rule  to classify IRFs, we contracted with the Institute of Medicine (IOM) of The  National Academies to convene a 1-day meeting of clinical experts broadly  representative of the field of physical medicine and rehabilitation. We  identified for IOM the categories of participants preferred at the meeting.  To identify specific participants, IOM obtained input from us, IOM  members, advocacy groups, and individual experts in the field. It identified  a pool of participants according to the preferred categories. In total, 14  experts participated: 4 practicing physicians, 2 physical therapists, 2  occupational therapists, 1 speech therapist, 2 nurses, 1  physician/researcher in postacute care, 1 physician/researcher from a  research institute, and 1 health services researcher. The meeting was  facilitated by a physician/researcher with expertise in Medicare payment  policy. Invitations to participate were issued by IOM. Participants were  invited as individual experts, not as organizational representatives. The  group was not asked to reach consensus on any issues, and IOM was not  asked to produce or publish a report of the meeting. We observed the  meeting and subsequently reviewed the transcript and audiotape of the  meeting, listed the individual comments made during the meeting, and  grouped the comments around a limited number of themes. The comments  from the meeting of the experts IOM convened represent their individual  statements and not a consensus of the group as a whole. In convening the  meeting, IOM was not able to get participation of clinical experts who  were not employed in IRFs (such as referring physicians or therapists in  acute care settings) and a private payer. The comments of participants  should not be interpreted to represent the views of IOM or all clinical  experts in the field of rehabilitation.
To examine the proportion of Medicare patients discharged from hospitals  with different diagnosis-related groups (DRG) who went to IRFs for  postacute care, we obtained CMS’s Medicare Provider Analysis and  Review (MEDPAR) file that contained all Medicare inpatient discharges  from both acute care hospitals and IRFs for fiscal year 2003. This file  provided information on patient admission and discharge dates from acute  care hospitals and rehabilitation facilities along with the DRG assigned for  each acute care stay. We identified all the patients who entered IRFs  within 30 days of their hospital discharge during fiscal year 2003 and  calculated the frequencies for each DRG among them. We then selected  the 19 DRGs that represented at least 1 percent of IRF admissions from  acute care hospitals. Next we determined the total number of hospital  discharges with those DRGs and computed the proportion of patients in  each of these DRGs that were admitted to an IRF within 30 days. The  analysis of acute hospital discharges required that we use the separate  MEDPAR file that had information on inpatient DRGs and on patients who  did not enter IRFs as well as those who did. The MEDPAR analysis may  therefore reflect a slightly different IRF patient population from that  reflected in the analyses conducted with the IRF-PAI data set. Apparent  variations in the admission dates recorded for IRF patients in the two sets  of data prevented us from combining data from each into one consolidated  data set.
section_title: Appendix III: Rates of IRF Medicare Admissions from Hospitals by Top 19 DRGs of Patients Admitted to IRFs, Fiscal Year 2003
section_title: Appendix IV: Comments from the Centers for Medicare & Medicaid Services
section_title: Appendix V: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Acknowledgments
paragraphs: Manuel Buentello, Behn Kelly, Ba Lin, Eric Peterson, Kristi Peterson, and  Roseanne Price made key contributions to this report.