CMS Announces Start Date for IRF Claims Review Demo

Inpatient rehabilitation facilities (IRFs) will have their Medicare claims reviewed either before or after payment as part of a demonstration CMS intends to take nationwide.

CMS recently announced on its website the Review Choice Demonstration (RCD) for IRF Services will launch on August 21, 2023, in Alabama. IRF providers will need to choose between 100 percent pre-claim review or 100 percent post-payment review via the Palmetto GBA Provider Portal between July 7, 2023, and August 6, 2023.

The RCD for IRF Services aims to ensure Medicare payment integrity by improving provider compliance with Medicare program rules and reducing the number of appeals for Medicare IRF claims. CMS says the demonstration will not alter the Medicare IRF benefit, nor should it delay care for Medicare beneficiaries.

Instead, CMS says on its website that the risk-based demonstration "protects our programs' sustainability for future generations by serving as a responsible steward of public funds."

Under RCD for IRF Services, IRF providers billing Medicare will select from the pre-claim or post-payment reviews for the first six months. After that, IRF providers demonstrating compliance with Medicare program rules through their pre-claim review affirmation rates or post-payment review approval rates will have additional review options. Those include full pre-claim review, selective post-payment review, and spot check pre-payment review.

CMS intends to update the website for the demonstration with additional resources in the coming weeks. IRF providers can already download an "IRF RCD Process Flow Chart" on the website.

The federal agency intends to expand the RCD for IRF Services to additional states in the future in a move the American Hospital Association (AHA) says will increase administrative burdens on providers.

"This demonstration threatens access to care for seriously ill and injured Medicare beneficiaries, and will further tax rehabilitation hospitals and units that are already facing critical staffing difficulties," Ashley Thompson, AHA's senior vice president for public policy analysis and development, said in response to CMS' announcement. "We will continue to urge CMS to reconsider or significantly scale back this demonstration to ensure continued access to hospital-level post-acute care."

CMS first proposed the RCD for IRF Services demonstration in 2021, which raised concerns from healthcare trade associations since the industry was still in the middle of the COVID-19 public health emergency. IRFs saw an influx of patients with or recovering from COVID-19 and patients struggling with the long-term effects of the virus, which required specialized care.

Like many other healthcare facilities, IRFs also deal with significant staffing and supply shortages amid the case-mix changes, AHA told CMS back in October 2021.

AHA also contended that past claim review programs—which used nurse auditors—led to consistently inaccurate audit results. AHA and other industry stakeholders fear that nurse or therapist auditors used for the upcoming demonstration will not understand the nuances of IRF care, leading to high error rates and unreliable results.

IRF audits already have high error rates, according to AHA, which identified an 84 percent error rate among the cases the Office of the Inspector General (OIG) reviewed for a September 2018 report. That report found that four out of five IRF stays were not medically necessary or did not have the appropriate documentation to support medical necessity.