Nationwide Review of Compliance With the Interrupted Stay Provision of the Inpatient Rehabilitation Facility Prospective Payment System for Calendar Years 2002 and 2003

EXECUTIVE SUMMARY:

The objective of this audit was to determine whether inpatient rehabilitation facilities (IRFs) billed claims in compliance with Medicare prospective payment system regulations for interrupted stays.  Through a nationwide computer match designed to identify interrupted stays billed as multiple claims, we found that IRFs did not always bill claims in compliance with Medicare prospective payment system regulations for interrupted stays.  Specifically, during calendar years 2002 and 2003, Medicare made net overpayments of $5.9 million to 589 IRFs for interrupted stays billed as 2 or more claims.  We recommended that the Centers for Medicare & Medicaid Services (CMS):  (1) direct its fiscal intermediaries to recover the $5.9 million in net overpayments identified in our review, (2) use the results of this review to clarify guidance to IRFs regarding the correct billing of interrupted stays, (3) strengthen the edit in its Common Working File to detect all interrupted stays incorrectly billed as two or more claims and prevent associated payments, and (4) instruct its fiscal intermediaries to conduct matches similar to the one that we conducted to identify additional payment errors for claims after December 31, 2003.  CMS agreed with our recommendations to recover the overpayments and clarify guidance to the IRFs.  Additionally, CMS stated that it had implemented the recommended edit in its Common Working File as of April 1, 2005.  CMS did not agree with our recommendation to instruct its fiscal intermediaries to conduct matches similar to the one that we conducted for payment errors that occurred before the edit was implemented.

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