Acute, Inpatient Geriatric Rehab: Will we be Here for Our Patients in the Future?

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On July 30, 1965, President Lyndon B. Johnson signed into law two Social Security Amendments, Title XVIII, which created Medicare, and Title XIX, which created Medicaid. Medicare was a federal health insurance entitlement program for the elderly (age 65 years or older), and Medicaid was a combined federal and state health insurance social welfare program for the poor. In 1966, the first year of Medicare and Medicaid together represented 2% of the annual federal budget of the United States. During congressional hearings on Medicare in 1965, the Congressional Budget Office projected that by 1990, annual costs for Medicare would be $10 billion.

Actually, by 1985, Medicare spending had already exceeded $70 billion. What to do? In 1985, the Health Care Financing Administration (HCFA, the predecessor of the Centers for Medicare and Medicaid Services) changed Medicare from a per-diem (day) payment to hospitals to the Prospective Payment System (PPS) based on Diagnosis-Related Groups (DRG). The hospital would be paid a lump sum for each diagnosis based on national data. If the hospital discharged the patient earlier, the hospital made money; if the hospital discharged the patient later, the hospital lost money. Three specialties were exempted from this new system: pediatrics, because there were too few Medicare patients, and psychiatry and physical medicine and rehabilitation, both of which were thought to not fit the “medical model.”

That same year, at the request of HCFA, the American Academy of Physical Medicine and Rehabilitation established the Rehabilitation Criteria Committee, which I chaired. We were asked to develop Rehabilitation Patient Admission Criteria and Rehabilitation Facility Criteria to allow HCFA to distinguish an exempt Inpatient Rehabilitation Facility (IRF) or unit from an acute care Medical-Surgical Unit.

In our meeting at Chicago's O'Hare Airport, we agreed that Rehabilitation Patient Admission Criteria should include “medical stability,” “a reasonable expectation that the patient will experience significant functional improvement within a reasonable period of time,” and that “the patient can tolerate and participate in a total of three hours of combined physical therapy and occupational therapy each day.” We were also asked to identify the 10 most common inpatient rehabilitation diagnoses. In going around the table at the meeting, we came up with, stroke, spinal cord injury, congenital deformity, amputation, major multiple trauma, fracture of the femur, brain injury, polyarthritis, neurological disorders, and burns. While reviewing the minutes of the meeting on the flight home, I thought of Lincoln's words at Gettysburg: “The world will little note, nor long remember what we say here.” Obviously he was wrong and boy, so was I!

Significantly, HCFA took the list of our 10 diagnoses and arbitrarily established Rehabilitation Facility Criteria. In order for an IRF to qualify for a PPS-DRG exemption for each 12-month period, 75% of the patients must have 1 of the 10 diagnoses that we have identified by consensus at the meeting.

By 2000, HCFA and Medicare were facing a “perfect storm.” The U.S. population older than 65 years of age had exceeded 38 million. Hi-tech medicine was creating many complex medical and surgical patients, such as those undergoing total joint replacements, cardiac surgery, and transplant surgery. In 1985, very few such patients were in IRFs. By 2000, they were being admitted to IRFs in record numbers. As a result, the number of PPS-DRG exempt IRFs tripled from 357 in 1985 to 1048 in 2000 and inpatient rehabilitation beds tripled from 14,000 in 1985 to 41,000 in 2000. Annual inpatient rehabilitation discharges had dramatically increased 8-fold from 54,000 in 1985 to 411,000 in 2000.

Also, by 2000, Medicare and Medicaid, which had accounted for 2% of the annual federal budget during the first year in 1966, were now consuming a staggering 22% of the annual federal budget. More significantly for inpatient rehab, a review of the top 10 most expensive conditions billed to Medicare in 2000 revealed osteoarthritis (including total joint replacements) at number 5 ($13 billion annually) and rehabilitation care at number 10 ($8 billion annually). Unfortunately, inpatient geriatric rehabilitation was now on the national radar screen.

Between 1985 and 2000, “the 75% Rule,” which could decertify an IRF that did not meet the Rehabilitation Facility Criteria, was rarely enforced. However, by 2000, faced with these skyrocketing costs, the Centers for Medicare and Medicaid Services (CMS, the successor to HCFA) began to vigorously enforce “the 75% Rule” and to decertify IRFs in which fewer than 75% of their annual admissions consisted of diagnoses from the “HCFA 10.” In response, the rehabilitation community organized a massive, grass-roots campaign to modify strict enforcement of “the 75% Rule.”

This effort culminated in a town-hall meeting at CMS Headquarters in Baltimore, Maryland, on May 19th, 2003. There were 40 speakers, including several from the Academy, 400 people in the audience, and 700 people on speakerphones. The goal of the rehab community was to replace the “HCFA 10” medical diagnosis list with criteria that would reflect impairments and functional deficits. Our fallback position was that the “HCFA 10” list of medical diagnoses was 20 years old and needed to be updated to reflect current complex medical and surgical patients. It was emphasized again and again how today's rehabilitation inpatients are coming to IRFs “sooner and sicker.”

Nevertheless, in July, 2004, CMS issued its Final Rule. The “HFCA 10” diagnoses were not replaced by impairments and functional deficits, and no new diagnoses (complex medical and surgical patients) were added. The diagnosis of polyarthritis was expanded to include only knee or hip total joint replacement patients that meet rigid criteria, such as bilateral joint replacement surgery or extreme obesity with a body mass index exceeding 50, or the “frail elderly” at age 85 or older. The “75% Rule” would be set at 50% in July, 2004 and gradually phased in to 75% by July 1st, 2008.

This implementation had an immediate negative effect on IRFs. Admissions of total joint replacement patients and complex medical patients (not included in the “HCFA 10”) decreased significantly. By 2006, there was a 7% decrease in IRF beds from 41,000 to 38,000 and a 20% decrease in IRF annual rehabilitation discharges from 510,000 to 412,000 in 2006. The rapid growth in IRFs from 357 in 1984 to 1048 in 2000 was halted by 2004 and had leveled off at 1236 in 2006.

As a result, the rehabilitation community petitioned the U.S. Congress. S.543 and H.R. 1459, “Preserving Patient Access to Inpatient Rehabilitation Act of 2007” was passed by the U.S. Congress and signed into law by President George W. Bush on December 29th, 2007. It froze the “75% Rule” at 60%.

In 2008, Medicare was expected to spend approximately $500 billion, an amount equal to the total cost of the first 5 years of the war in Iraq. As the first of the 78 million “baby boomers,” (those born in the United States between 1946 and 1964) enter Medicare in January 2011, Medicare expenses will further escalate. It is estimated that by the year 2020, 89 million Americans (25% of the entire population) will be older than the age of 65 and in Medicare. Medicare's 2020 budget is expected to exceed $1 trillion. In Medicare's March 25th, 2008 Annual Report, the trustees concluded that the Medicare trust fund reserves that pays hospital benefits (Part A) will be wiped out by the year 2019.

Like the monster in the horror movie who is not really dead at the end of the film, President George W. Bush is proposing cutting $182 billion from Medicare over the next 5 years, including reinstating “the 75% Rule.” How many more times will we be able to postpone “the 75% Rule” from being implemented at 75%? Unless we are able to prove that inpatient geriatric rehab is necessary and cost-effective, will CMS stop funding inpatient geriatric rehabilitation altogether by 2020? Will 1985-2005 be fondly remembered as the “Golden Age of Acute, Inpatient Geriatric Rehab”?

• ⁎ Disclosure: nothing to disclose