Daunting Changes Loom for IRFs in 2022

Audit and regulatory challenges that were ever-present in years past only seem primed to increase over the new year.

The long-awaited implementation of the Inpatient Rehabilitation Facility Patient Assessment Instrument (IRF-PAI) 4.0 will occur for all discharges on or after Oct. 1, 2022. In case you missed it, the change was included in the 2022 Home Health Final Rule – an interesting place to address it. The Centers for Medicare & Medicaid Services (CMS) believes that IRFs now have the resources needed for training, updates, and workflow to complete the updated assessments. Additionally, we believe that this is a strong indication of CMS’s focus on moving forward with data collection to address the social determinants of health (SDoH), as updated quality measurements include several of them.

Next up, in the December MedPAC public meeting, there was a recommendation for a 5-percent reduction in Medicare payment for IRFs in FY 2022. This recommendation is consistent with update reports from earlier in 2021.  While we have seen this same recommendation for payment reduction for several consecutive years, there appears to be strong support from several of the commissioners, based on their questions and comments, as noted in the meeting transcript, and this issue certainly bears watching. The Commission did acknowledge increased costs associated with COVID in 2022.

And if payment pushback isn’t enough, we have a pending demonstration project that would require 100-percent review of IRF claims in a certain sample group. The Proposed Review Choice Demonstration for IRFs is still looming, and will have a significant impact. The comment period that ended in October featured extremely strong opposition from both provider and patient advocacy groups, for many reasons, including the impact of the public health emergency (PHE) and patient access to care. If implemented, the demonstration would last five years, beginning with four states – Alabama, Pennsylvania, Texas, and California – and expand to all IRFs located in states covered by Medicare Administrative Contractor (MAC) jurisdictions JJ, JL, JH, and JE. So, if your MAC is Noridian, Novitas, or Palmetto, you would eventually be involved. Each IRF would choose either 100-percent pre-claim review or 100-percent post-payment review, and would be locked into this method until they meet the 90-percent threshold for affirmation. The review would cover six-month cycles. If the IRF reaches 90-percent affirmation based on a minimum of 10 pre-claim requests or claims submitted, they may opt-out of future reviews, except for a 5-percent spot-check of claims. 

And of course, as we’ve already heard, there are ongoing audits. The U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) continues to review IRF claims, with alarming denial rates mainly due to “medical necessity,” often based on claims for which the IRF did not demonstrate at the time of admission that the patient met the requirements noted in the Medicare Benefits Policy Manual. Targeted Probe-and-Educate (TPE) audits, routine MAC audits, Comprehensive Error Rate Testing (CERT) audits, and Recovery Audit Contractor (RAC) reviews continue, and the denial reasons are fairly consistent across the reviews. If there is such as term as “appeal fatigue,” I suspect that IRFs are experiencing it.

Finally, IRFs need to continue to evaluate how they support quality patient care and throughput, as we continue through the COVID PHE, including COVID-specific rehab programs and utilization of the available waivers – which we predict, will be extended. 

Beyond the regulatory issues, IRFs are also experiencing workforce issues – another challenge in providing quality care.

Your focus for 2022 should include reviewing your processes for the updated IRF-PAI, checking your documentation – particularly the preadmission assessment – to be certain it supports the admission as reasonable and necessary, and be prepared to appeal while continuing to be on the watch for changes.

All things considered, 2022 looks to be a challenging year for all of us, so buckle up, strap on your helmet, and get ready for another wild ride.


Angela Phillips, PT

Angela M. Phillips, PT, is President & Chief Executive Officer of Images & Associates. A graduate of the University of Pennsylvania, School of Allied Health Professions, she has almost 45 years of experience as a consultant, healthcare executive, hospital administrator, educator, and clinician. Ms. Phillips is one of the nation’s leading consultants assisting Inpatient Rehabilitation Facilities in operating effectively under the Medicare Prospective Payment System (PPS) and in addressing key issues related to compliance.

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