The IRF Nationwide Audit Could Reveal Prime Audit Targets

Recently, I was emailed a question from, presumably, a listener of Monitor Mondays. He wanted to know whether I had commented on the nationwide audits on all Inpatient Rehabilitation facilities (IRFs) scheduled to occur this year.

Specifically, he asked whether “OIG’s (the U.S. Department of Health and Human Services Office of Inspector General) work plan (for) 2024 includes a national audit of IRFs. To what degree are there ‘known’ actions by OIG, and (do you have any) knowledge of any OIG IRF ‘movement’?”

I think that there are “knowns” in any OIG IRF audit. Just like it is a known that there was going to be a total solar eclipse earlier this week, depending on your location. IRFs provide intensive inpatient rehabilitation therapy for patients who have complex nursing, medical management, and rehabilitation needs that require hospital-level treatment.

In the 2021 fiscal year, Medicare paid approximately $8.7 billion for 373,000 IRF stays nationwide. The Centers for Medicare & Medicaid Services (CMS) has consistently found high IRF error rates through its Comprehensive Error Rate Testing (CERT) program.

For an IRF claim to be considered reasonable and necessary, it must meet certain coverage and documentation requirements. CMS issued findings of a nationwide audit of IRF claims in September 2018, titled Many Inpatient Rehabilitation Facility Stays Did Not Meet Medicare Coverage and Documentation Requirements (A-01-15-00500), that found that medical record documentation for 175 of 220 sampled IRF stays did not support that the IRF care was reasonable and necessary, in accordance with Medicare requirements. Our Hospital Compliance audits also frequently include IRF claims, and have similarly found high error rates.

In response to these findings, IRF stakeholders have stated that Medicare audit contractors and OIG have misconstrued the IRF coverage regulations. To better understand which claims IRFs believe are properly payable by Medicare, OIG stated that it needs more information from the IRF stakeholders. CMS plans to determine whether there are areas in which the agency can clarify Medicare IRF claims payment criteria. In addition, CMS will follow up on recommendations from the prior IRF audit, A-01-15-00500, in 2018. This audit will be an independent performance audit, in accordance with Generally Accepted Government Auditing Standards.

According to an online source, there are 1,225 IRFs in the country. I am not sure whether that is entirely accurate, but if it is, I wonder whether CMS or its contracted vendors can complete an audit of all IRFs in a year. Maybe CMS doesn’t expect to. This CMS website also lists all general information for every IRF, a list of IRFs with data on the number of times people with Medicare who had certain medical conditions were treated last year, and national data on the quality of patient care measures shown on Inpatient Rehabilitation Facility Compare. The issues that I just raised, patient care, whether certain conditions were treated, and re-admittance, will be prime targets for IRF audits. Medical necessity and eligibility criteria will also be audited.

On March 27, CMS issued a proposed rule (CMS-1804-P) that provides proposals for the 2025 fiscal year Inpatient Rehabilitation Facility Quality Reporting Program (IRF QRP). This proposed rule includes three new assessment items in the Social Determinants of Health (SDOH) category: (1) Living Situation, (2) Food, and (3) Utilities. CMS is also proposing to modify the Transportation item and remove the Admission item from the IRF-Patient Assessment Instrument (PAI).

I hope you had fun watching the eclipse, regardless of your location.