IRF Denials for Medical Necessity: Can We Defend Our Admissions?

With an expected ramp-up in audits and denials for care across all healthcare services in the coming months, we continue to hear questions related to how Medicare views “medical necessity” for an inpatient rehabilitation facility (IRF) stay. And we continue see issues arise over an acute, biased definition of “medical necessity,” even though Medicare has consistently provided clarification that IRF care is not predicated on the presence of acute medical conditions. Despite these clarifications, IRFs are still experiencing denials based on medical review opinions indicating that a patient does not require IRF services because they do not require management of acute medical conditions.  

While many of these denials are overturned on appeal, the administrative burden of appeals can be cumbersome and time-consuming.  Below is a summary of the clarifications we utilize in appealing cases for our clients, as well as some suggestions for how each organization can improve documentation to help prevent denials.

Medicare Clarifications Related to This Issue

Medicare has addressed this issue in several documents that provide guidance on coverage requirements. The most significant include:

  • The Medicare Benefits Policy Manual, Section 110.2
  • The Complete List of IRF Clarifications – a summary document of clarifications that CMS has provided in response to questions from the industry
What Does the Benefit Policy Manual Say?

Section 110.2 details that in order to be considered “reasonable and necessary” (note the change in language to “reasonable and necessary,” which is also used in other Medicare documents when referring to IRF care), the documentation in the patient’s medical record must “demonstrate a reasonable expectation that the following criteria were met at the time of admission to the IRF:”

  • The patient must require the active and ongoing therapeutic intervention of multiple therapy disciplines.
  • The patient must generally require an intensive rehabilitation therapy program.
  • The patient must reasonably be expected to actively participate in and benefit significantly from the intensive rehabilitation therapy program.
  • The patient must require physician supervision by a rehabilitation physician “to assess the patient both medically and functionally, as well as to modify the course of treatment as needed to maximize the patient’s capacity to benefit from the rehabilitation process.”
  • The patient must require an intensive and coordinated interdisciplinary approach.

None of these requirements include the need for acute medical issues for the care to be covered. The focus of an IRF admission is on improving function based on the patient’s complex needs – some of which may be medical issues, but there is nothing in the Manual to indicate that they must be complex in nature, in order to merit coverage. The complexity of the patient’s needs can be related to functional needs and the skilled management of the rehabilitation program, which utilizes a team approach wherein all disciplines reinforce skill sets learned with other disciplines. We find that this is complexity is often missed by medical reviewers who are more familiar with dealing with acute hospital cases, rather than rehabilitation programs.

Complete List of IRF Clarifications

Medicare has consolidated a number of clarifications related to IRF coverage into the “Complete List of IRF Clarifications” found on the Centers for Medicare & Medicaid Services (CMS) website at [link]. In Section 9 of this document, CMS addresses medical necessity, and clarifies that there was no intent to limit coverage to patients with acute impairments:

Once again, Medicare notes that the IRF benefit may be used to address functional decline.

Keys to Successful Documentation of Complexity

Integral to all the documentation and guidance related to coverage is the need for “complexity.” Clearly documenting that complexity will assist the IRF in preventing – and, most certainly, in appealing – denials of IRF claims. The following are some ways to document the complexity of services provided:

  • Rehabilitation Physician Management:
    • Ensure that the face-to-face visits address any changes in the plan to achieve functional goals, particularly when a patient might be progressing slower than expected.
    • Document “coordination” of services from any medical consultants.
    • Address any family issues impacting care and discharge.
  • Rehabilitation Therapies
    • Document the complex issues related to the care provided, including but not limited to these examples:
      • Physical therapy should document ambulation training, including adjustments to stance, balance, deficits in areas of gait (such as heel-strike to toe off), and other factors that require correction of technique rather than simply reporting verbal cues. Fall prevention and recovery are appropriate for most patients with functional deficits and should be addressed as needed.
      • Occupational therapy should describe energy conservation and activity modifications necessary to complete tasks.
      • Speech and language therapy should support cognitive skill sets required to complete the rehab program (sequencing, memory, understanding, etc.), in addition to documentation of swallowing, language, and cognition.
    • In addition to documenting repetitions and intensity of activity, focus on quality of the activity and impact to the patient of failure to succeed (falls, injury, etc.)
  • Rehabilitation Nursing
    • Focus documentation on “rehabilitation nursing” involvement in reinforcing skills sets learned in therapy, patient and family education in lifestyle modifications, and safety management, in addition to routine medical procedures.
  • Case Management
    • Address social issues related to discharge to home or other environments, including the complexities of special equipment and/or environmental adaptations that will promote patient success at home.
Do Not Accept a Denial without Appealing

Finally, if you receive a denial based on the lack of significant medical issues, appeal. Many appeals are being won at higher levels based on the coverage guidelines we have referenced here.


Programming Note: Angela Phillips is a member of the RACmonitor editorial board and will be reporting this story live during Monitor Mondays, Oct. 19, 2020, 10 a.m. EST.


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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