CMS not convinced 75% rule should be changed

October enforcement date set

It makes sense to the rehab field that the 75% rule for qualification as an inpatient rehabilitation facility should be changed. A rehab coalition has waged an all-out campaign to convince the Centers for Medicare & Medicaid Services (CMS) to change the 75% rule before October, when CMS plans to begin "aggressive enforcement."

But the rehab field’s position doesn’t seem to make sense to CMS. Tom Barker, special assistant to the administrator, says he has yet to be convinced that the rule needs to be changed.

"No one has convinced me there is anything wrong with the existing 75% rule other than possibly the definition of polyarthritis," Barker says. "I really, truly don’t understand why we would scrap a regulation that, as far as I have been able to determine in the many, many meetings I’ve had on this, has worked perfectly well, with one exception, for 20 years — and replace it with a brand-new definition that quite likely is going to have unpredictable outcomes. I feel pretty strongly about that."

The rehab field was eagerly awaiting a proposed rule on the subject from CMS at Rehab Continuum Report’s press time. Rehab advocates were to have another chance to present their opinions on the subject at a May 19 town hall meeting scheduled by CMS in Baltimore. But there was no indication that CMS was planning to do anything other than begin aggressive enforcement of the 75% rule in October. Barker says the proposed rule would not discuss polyarthritis or any specific diagnoses but instead would address the subject of compliance.

CMS to resume suspended enforcement of rule

"We have found what appears to be pretty significant non-compliance with the rule as we understand the current interpretation of the rule," Barker says. "We announced close to a year ago that we were going to suspend enforcement of it. All we’re proposing to do is to begin re-enforcing the rule. We’re doing it because it’s the law."

Barker emphasizes that there "appears" to be non-compliance. "I don’t think we can flatly say there is widespread non-compliance," he says. "There appears to be non-compliance, but I can’t accuse the field of non-compliance with the rule because I think there is some limitation on the data that we have."

Organizations such as the American Hospital Association (AHA), the American Medical Rehabilitation Providers Association, and the American Academy of Physical Medicine and Rehabilitation, as well as a number of state associations and individual providers, have joined forces to effect change in the 75% rule. In 1978, the Health Care Financing Administration (HCFA, now renamed CMS) developed screening criteria for admission to rehab hospitals. A list was established of the 10 most common conditions resulting in admission (known as the HCFA-10): stroke, spinal cord injury, congenital deformity, amputation, major multiple trauma, fracture of femur, brain injury, polyarthritis, neurological disorders, and burns. CMS requires that at least 75% of patients fall into one of those 10 diagnoses in order for the hospital to be paid as an inpatient rehabilitation facility.

AHA attacks fundamental inconsistency’

The rehab field asserts that rehabilitation has drastically changed since the 1970s and now includes cardiac, pulmonary, transplant, and cancer patients whose diagnoses are not part of the HCFA-10. Advocates say the problem could be fixed if CMS would use the 21 rehabilitation impairment categories (RICs) that were established for the prospective payment system instead of the HCFA-10. "CMS designed the prospective payment system, and the field agrees it’s a workable system. Yet they have a different set of rules for determining eligibility to be billed under that system. We feel that’s a fundamental inconsistency," says Rochelle Archuleta, senior associate director for policy development—post-acute care for the AHA in Washington, DC.

But CMS doesn’t see it that way. Barker says CMS is "disinclined" to substitute the RICs for the HCFA-10. "I do not find the arguments that the field has made particularly persuasive," Barker says. "To the best of my understanding, that’s not what the problem is. Changing the definition of rehab hospitals to use the 21 RICs would drastically expand the number of hospitals that could qualify as rehab hospitals, and I’m not certain that’s appropriate public policy."

Barker says the main problem he can see is the definition of polyarthritis, one of the HCFA-10 categories. An apparent lack of consistency in defining polyarthritis among fiscal intermediaries around the country is what originally led CMS to suspend enforcement of the 75% rule. That’s the topic on which CMS most wants to hear input from the field. "As far as I’ve been able to determine, the problem that hospitals have with the 75% rule is what constitutes polyarthritis," Barker says. "No one has convinced me that there’s any problem other than that, so I don’t know why you would throw open the definition of rehab hospitals, and completely throw out a definition that’s worked pretty well for 20 years and replace it with something completely untested."

Compliance will be difficult

Theresa Edelstein, vice president of continuing care services for the New Jersey Hospital Association in Princeton, NJ, says that without a better definition of polyarthritis before October, it will be hard to comply with the rule. "My advice is to closely monitor your patients to make sure compliance won’t be a question mark. Be mindful of that single-knee replacement, and make sure the physician provides documentation for polyarthritis if it exists," she says.

Ken Aitchison, president and CEO of Kessler Rehabilitation Corporation in West Orange, NJ, says the majority of rehab facilities will find themselves non-compliant when CMS begins enforcing the rule. "This will decimate the industry," says Aitchison. "If the rule is enforced as it is now defined, it will significantly restrict access for patients. Hospitals will risk losing Medicare participation, and some will have to deny care to certain patients in order to stay within that 75%. If I’m at 24.999% and the next person through the door will put me over, I’ll have to deny care. There shouldn’t be an artificial barrier like that."

Need More Information?

  • Tom Barker, Special Assistant to the Administrator, Centers for Medicare & Medicaid Services, 7500 Security Blvd., Baltimore, MD 21244-1850. Telephone: (202) 690-0056.
  • Rochelle Archuleta, Senior Associate Director, American Hospital Association. Telephone: (202) 626-2320. E-mail:
  • Theresa Edelstein, Vice President of Continuing Care Services, New Jersey Hospital Association, 760 Alexander Road, P.O. Box 1, Princeton, NJ 08543-0001. Telephone: (609) 275-4102.
  • Ken Aitchison, President and CEO, Kessler Rehabilitation Corporation, Suite 275, 300 Executive Drive, West Orange, NJ 07052. Telephone: (973) 243-8501. E-mail: