Oasis Point Rehabilitation Hospital

The 40% Rule allows for patients with non-qualifying diagnoses (i.e., those not listed under the 60% Rule) to be admitted to an IRF if their medical and rehabilitation needs meet Medicare's criteria for inpatient rehabilitation. These patients often have complex conditions or comorbidities that justify the need for intensive therapy and close medical supervision.

The 40% Rule gives IRFs flexibility to admit patients who may not fall under the predefined list of qualifying conditions but still demonstrate a clear need for IRF-level care.

Key Medicare Requirements for 40% Rule Patients

To admit patients under the 40% Rule, the following criteria must be met and documented clearly:

1. Medical Necessity:

   The patient must require intensive rehabilitation services that cannot be safely or effectively provided in a lower level of care (e.g., SNF, home health, or outpatient therapy).

2. Functional Deficits:

   The patient must have significant impairments in mobility, self-care, or cognitive/communication abilities that require therapy.

3. Interdisciplinary Approach:

   The patient must require the involvement of at least two therapy disciplines (e.g., PT, OT, SLP).

4. Rehabilitation Goals:

   Goals must be specific, measurable, and achievable within the IRF setting.

5. Close Medical Supervision:

   The patient must require frequent physician oversight and monitoring of their condition.

Examples of Diagnoses That Qualify Under the 40% Rule

Patients with the following diagnoses may qualify under the 40% Rule, provided their documentation supports medical necessity and the need for intensive rehabilitation:

• Post-COVID-19 Syndrome (with severe deconditioning or functional deficits)
• Chronic Obstructive Pulmonary Disease (COPD) (with significant deconditioning)
• Guillain-Barré Syndrome (with progressive weakness and mobility impairments)
• Cancer and Cancer-Related Debility (e.g., post-surgery or chemotherapy with severe functional decline)
• Cardiac Conditions (e.g., post-cardiac surgery with significant deconditioning)
• Severe Deconditioning (e.g., after prolonged hospitalization or critical illness)
• Chronic Pain Syndromes (e.g., fibromyalgia with functional limitations)
• Burns (not meeting the 60% Rule threshold)

Since these diagnoses are not automatically recognized by Medicare under the 60% Rule, documentation must be thorough and compelling to justify their admission to an IRF.

Use this checklist to ensure your pre-screen documentation for 40% Rule patients is complete and compelling:

The following case studies illustrate how to properly document patients with non-qualifying diagnoses under the 40% Rule:

The following examples compare poor documentation with good documentation for patients under the 40% Rule. Each example highlights common weaknesses in poor documentation and demonstrates how to improve it to meet Medicare compliance standards.

For patients who fall under the 40% Rule, a thorough pre-screen is even more critical than for 60% Rule patients. Since these diagnoses are not automatically qualifying, the burden of proof for medical necessity is higher.

Key Elements of a Thorough Pre-Screen for 40% Rule Patients

1. Comprehensive Medical History

   Document the full medical history, including the primary diagnosis, comorbidities, and recent hospitalizations or procedures. Include specific dates, treatments, and complications.

2. Detailed Functional Assessment

   Conduct a thorough assessment of the patient's current functional status, including specific assistance levels for transfers, ambulation, and ADLs. Use standardized measures when possible (e.g., FIM scores, strength measurements).

3. Prior Level of Functioning

   Document the patient's functional status before the onset of the condition or recent decline. This establishes the baseline and rehabilitation potential.

4. Medical Complexity

   Clearly describe the medical complexities that require physician oversight and cannot be managed in a lower level of care.

5. Rehabilitation Potential

   Assess and document the patient's potential for functional improvement with intensive rehabilitation.

6. Interdisciplinary Needs

   Specify which therapy disciplines are required and why their coordination is necessary for the patient's recovery.

Pre-Screen Interview Questions for 40% Rule Patients

Use these questions during your pre-screen interview to gather the necessary information:

• What was the patient's functional status before their current condition? Were they independent, or did they use assistive devices?
• What specific functional deficits is the patient currently experiencing? (Ask for details about transfers, ambulation, ADLs, etc.)
• What medical complications or comorbidities does the patient have that require close physician monitoring?
• Why would the patient not be appropriate for a skilled nursing facility or home health services?
• Has the patient received therapy in another setting? If so, what were the outcomes and why was it insufficient?
• What are the patient's specific rehabilitation goals and expected timeframe for achievement?
• What therapy disciplines will be required to address the patient's needs?
• What is the discharge plan for the patient after IRF care?

1. The 40% Rule allows for flexibility in admitting patients with non-qualifying diagnoses, provided their medical necessity and rehabilitation needs are clearly documented.
2. Strong documentation must emphasize the complexity of the patient's condition and the need for IRF-level care.
3. Use detailed descriptions of functional deficits, interdisciplinary care, and measurable goals to justify admission.
4. Medicare auditors will closely review these cases, so thorough and precise documentation is critical to avoid claim denials.
5. A comprehensive pre-screen is essential for identifying appropriate patients and documenting their needs accurately.
6. Always include specific assistance levels, measurable deficits, and clear justification for why a lower level of care is not appropriate.
7. Document the need for physician oversight and interdisciplinary care in detail.
8. Use case studies and examples of good documentation as templates for your own documentation.