Pennsylvania-based Post Acute Medical has lost hundreds of thousands of dollars due to rejected Medicare claims because of a matter of mere minutes. Claims are rejected if patients miss just minutes of their minimum time for daily inpatient rehabilitation therapy.
Medicare pays for the therapy if beneficiaries participate at least three hours a day. But Post Acute Medical, a long-term acute-care facility operator, sees Medicare deny 20% to 25% of its inpatient rehab claims when patients miss that threshold by just minutes.
"Claims denied solely on therapy minutes don't take into consideration the medical necessity or medical conditions that justify the need for the rehab stay," said Kristen Smith, an executive vice president at Post Acute Medical.
Often when patients missed the time standard they would make it up on a subsequent day, but Medicare contractors would deny claims anyway, Smith said.
But that denial trend should change soon thanks to a recent CMS policy move. The agency has issued a notice that starting March 23, Medicare contractors can no longer deny a claim solely because the three-hour threshold is missed. Contractors will have to use clinical judgment to determine if inpatient rehab facility services are needed based on a patient's overall needs and treatment.
In 2015, Medicare spent $7.4 billion on fee-for-service inpatient rehabilitation facility care provided in about 1,180 such facilities nationwide, according to the Medicare Payment Advisory Commission. About 344,000 beneficiaries had more than 381,000 inpatient rehab facility stays. Medicare accounts for about 60% of IRF discharges.
Patients missed their three-hour rehab threshold due to bathroom breaks, being too ill to continue the session or receiving other medical screening or services during physical therapy times.
"The regulations have been interpreted in an absurdly rigid way," said Dr. Joel Stein, who specializes in physical medicine and rehabilitation at Weill Cornell Medicine in New York. "It was felt very much by clinicians that it was a sort of a gotcha game."
Stakes are high when it comes to these denials, as the contractors would deny claims for a patient's entire stay at a facility rather than just the session that missed the three-hour standard, according to Harriett Wall, a principal at LW Consulting. At Post Acute Medical, Smith said, the average denied claim per patient is $20,000.
Many of the denials that have occurred for a patient missing a few minutes of therapy have been overturned on appeal, according to Jane Snecinski, president of Post-Acute Advisors, a consulting firm. Giving the repeal backlog now plaguing administrative law judges, the new guidance may be an effort by CMS to relieve the burden on providers of appealing denied claims, Snecinski said.
Claim denials weren't the only consequence of the Medicare contractors' actions. In order to avoid the possibility of non-payment, some providers would direct patients in need of rehab to skilled-nursing facilities, where regulatory standards are lower and the therapy is less intensive, Stein said.
Stays at skilled-nursing facilities do tend to cost less than those at an inpatient rehab facilities. Across all clinical conditions, Medicare payment for patients treated in an IRF is, on average is about $6,000 higher than the payment for patients treated in a SNF, according to a study by commissioned by the ARA Research Institute, an affiliate of the American Medical Rehabilitation Providers Association.
However, that study also found that clinical outcomes tended to be better for patients who received care at an inpatient rehabilitation facility versus a skilled-nursing facility.
Stein worries that the CMS' decision to let contractors use their clinical judgment to determine the benefit of IRF may not totally address the claims denial issue. Contractors like recovery audit contractors have an incentive to deny claims, he said. "Inherently it's a conflict of interest as (the CMS) has established a situation where they're benefiting from denying claims, and that worries me."
Encompass Health, one of the nation's largest post-acute care operators, said Thursday it was pleased with the CMS' "initial step" to resolve the claims denials.
"Since it was issued recently and will not become effective until later this month, it is too early to say whether this change request guidance from CMS will sufficiently clarify and resolve the concerns," Casey Lassiter, Encompass' director of communications, said. "Like so many of these types of directives issued to CMS' contractors, whether the intended outcome is actually attained will be determined by how the Medicare administrative contractors interpret and apply it when reviewing claims for rehabilitation hospital care and services."
Still, overall providers and stakeholders are optimistic that patients will get the care they need in the appropriate setting.
"I hope that this is a sign that (the CMS) is seeing that patients do benefit from inpatient rehabilitation services and that they don't have to meet strict guidelines to be best served at that location," said Dr. Darryl Kaelin, medical director of the Frazier Rehab Institute and president of the American Academy of Physical Medicine & Rehabilitation.
An edited version of this story can also be found in Modern Healthcare's March 5 print edition.
