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Review of Interrupted Stays at Inpatient Rehabilitation Facilities for Calendar Years 2004 and 2005

Inpatient rehabilitation facilities (IRF) did not always bill correctly for interrupted stays with discharge dates during calendar years 2004 and 2005. Our nationwide computer match showed that 448 IRFs billed incorrectly for 986 interrupted stays during that period. If a Medicare inpatient is discharged from an IRF and returns to the same IRF within 3 consecutive calendar days, the IRF should combine the interrupted stay into a single claim and receive a single discharge payment.

We determined that the correct value of the stays was $17.5 million, rather than the $21.7 million that the IRFs billed. As a result, Medicare made net overpayments of $4.2 million to the IRFs. The payment errors occurred because the IRFs did not have the necessary controls to identify or correctly bill interrupted stays. Additionally, until April 2005, the Common Working File did not have an edit designed to identify all interrupted stays billed as two or more claims. After its adoption, the new Common Working File edit effectively detected incorrectly billed interrupted stays and prevented overpayments to IRFs.

We recommended that CMS direct its fiscal intermediaries to recover the $4.2 million in net overpayments that our review identified. In its written comments on our draft report, CMS concurred with our recommendation.