Inpatient Rehabilitation Facility Review Choice Demonstration: Pre-Claim Review Rules and How to Pass

The Inpatient Rehabilitation Facility (IRF) Review Choice Demonstration requires IRFs in participating states to have their Medicare claims reviewed either before final claim submission or after payment. CMS began the demonstration in Alabama in August 2023 and expanded it to Pennsylvania in June 2024, Texas in March 2026, and California in May 2026. In September 2026, CMS announced that, effective January 1, 2027, the demonstration will include all IRFs that bill Medicare Administrative Contractor (MAC) Jurisdiction J, regardless of where they are physically located.

The demonstration does not create new coverage or documentation requirements. Instead, it subjects every IRF claim to review against the existing requirements, which are among the most detailed in Medicare. IRFs that understand those requirements and build reliable documentation processes can achieve high affirmation rates and earn more flexible review options. IRFs that do not may face ongoing 100 percent review.

This article explains how the demonstration works, the IRF coverage criteria, what reviewers look for, and practical steps to pass pre-claim review. It is educational and does not replace legal or professional advice.

How the Demonstration Works

Initial Review Choices

When a state enters the demonstration, IRFs select one of two initial choices during a selection period:

• Choice 1: Pre-claim review. The IRF submits a request for provisional affirmation of coverage to the MAC before submitting the final claim. Services can begin before the request is submitted.

• Choice 2: Postpayment review. The IRF submits claims normally, and the MAC requests documentation and reviews claims after payment.

According to CMS's operational materials, IRFs that do not make a selection are assigned to postpayment review.

Pre-Claim Review Mechanics

Under pre-claim review, the IRF submits the medical record documentation supporting the stay. The MAC issues a decision of provisionally affirmed or non-affirmed, with reasons for non-affirmation. CMS materials state that IRFs may resubmit non-affirmed requests an unlimited number of times before submitting the claim. Claims associated with a provisionally affirmed request generally will not undergo further medical review except in limited circumstances. Claims submitted without a pre-claim review decision under Choice 1 undergo prepayment review.

The Affirmation Rate and Review Cycles

Every six months, the MAC calculates each IRF's pre-claim review affirmation rate or postpayment claim approval rate, based on a minimum of 10 requests or claims. CMS uses a sliding scale of target rates:

• First review cycle: 80 percent.

• Second review cycle: 85 percent.

• Third review cycle and after: 90 percent.

New IRFs are subject to the target rate for the cycle their state is in when they join.

Subsequent Review Choices

IRFs that meet the target rate may choose:

• Choice 1: Continue with pre-claim review.

• Choice 3: Selective postpayment review, in which a sample of claims is reviewed after payment.

• Choice 4: Spot check prepayment review, in which a small percentage of claims is reviewed before payment. CMS supporting materials describe the spot check as five percent of claims.

IRFs that do not meet the target rate, or do not submit enough requests or claims, must choose between pre-claim review and postpayment review again.

What the Results Show So Far

CMS has published cycle reports. In Alabama's first cycle, all 16 IRFs chose pre-claim review, and all met the 80 percent target. In Pennsylvania's first cycle, IRFs in pre-claim review averaged a 98 percent affirmation rate, and most chose to remain in pre-claim review even after qualifying for other options. In Alabama's third cycle, CMS reported 13 facilities in pre-claim review and 2 in spot check review. These results suggest that IRFs with strong documentation processes can achieve high affirmation rates, and that many value the payment certainty that pre-claim review provides.

The IRF Coverage Criteria

The demonstration applies the existing IRF coverage requirements at 42 CFR 412.622(a)(3) through (5) and Chapter 1, Section 110 of the Medicare Benefit Policy Manual. For an IRF admission to be reasonable and necessary, at the time of admission the patient must:

• Require the active and ongoing therapeutic intervention of multiple therapy disciplines, one of which must be physical therapy or occupational therapy.

• Generally require an intensive rehabilitation therapy program, which ordinarily means at least three hours of therapy per day at least five days per week, or in certain well-documented cases at least 15 hours of intensive therapy within a seven-consecutive-day period.

• Reasonably be expected to actively participate in and benefit significantly from the intensive program, with measurable improvement expected within a prescribed period of time.

• Require physician supervision by a rehabilitation physician, with face-to-face visits at least three days per week throughout the stay to assess the patient medically and functionally and modify the course of treatment as needed.

• Require an intensive and coordinated interdisciplinary approach to providing rehabilitation.

Required Documentation

Preadmission Screening

Under 42 CFR 412.622(a)(4)(i), a comprehensive preadmission screening must be conducted by a licensed or certified clinician within the 48 hours immediately preceding the IRF admission, or within the 48 hours before admission with an update documented if the screening was done earlier. The screening must include a detailed and comprehensive review of each patient's condition and medical history, including the patient's prior level of function, expected level of improvement, expected length of time to achieve that improvement, risk for clinical complications, conditions that caused the need for rehabilitation, the treatments needed, expected frequency and duration of treatment, anticipated discharge destination, and anticipated post-discharge treatments. A rehabilitation physician must review and concur with the findings and results of the screening prior to the IRF admission, and the screening must be retained in the medical record.

Individualized Plan of Care

Under 42 CFR 412.622(a)(4)(ii), an individualized overall plan of care must be developed by a rehabilitation physician with input from the interdisciplinary team within four days of admission and retained in the record.

Admission Orders

Physician orders for the IRF admission must be in the record.

IRF-PAI

The IRF Patient Assessment Instrument must be completed and transmitted as required, and the information must be supported by the record.

Interdisciplinary Team Conferences

Under 42 CFR 412.622(a)(5), the interdisciplinary team must meet at least once a week, led by a rehabilitation physician, with participation by a registered nurse with specialized training or experience in rehabilitation, a social worker or case manager, and a licensed or certified therapist from each discipline treating the patient. Team conference documentation must show the meeting occurred, the participants, the patient's progress, problems, and changes to goals or treatment.

Physician Visits

Documentation must show face-to-face rehabilitation physician visits at least three days per week. CMS has allowed some of these visits to be conducted remotely through telehealth under certain conditions, so IRFs should follow current rules.

Therapy Records

Therapy evaluations, daily treatment notes with minutes and modes, and progress notes must support the intensity and the multiple-discipline requirement.

Common Non-Affirmation Reasons

Based on the coverage criteria and published demonstration materials, common reasons for non-affirmation include:

• Preadmission screening missing required elements, not completed within 48 hours, or not reviewed and concurred with by the rehabilitation physician before admission.

• Plan of care not completed within four days or missing physician involvement.

• Medical necessity not supported, such as a patient who could have been treated in a less intensive setting.

• Therapy intensity not supported, without a documented explanation when the three-hour rule was not met.

• Multiple therapy disciplines not documented.

• Rehabilitation physician visits fewer than three days a week.

• Team conference documentation missing or incomplete.

• Missing or illegible signatures and dates.

• Missing admission orders.

How to Pass Pre-Claim Review

Build a Standard Packet

Create a standard pre-claim review packet with a checklist and cover sheet. Include, in order:

• Admission orders.

• Preadmission screening with physician concurrence.

• Acute hospital records supporting the condition and need for rehabilitation.

• History and physical and post-admission documentation.

• Individualized plan of care.

• Rehabilitation physician progress notes showing visits at least three days a week.

• Therapy evaluations, daily notes, and minutes logs.

• Interdisciplinary team conference notes.

• Nursing documentation relevant to rehabilitation needs.

• IRF-PAI.

• Discharge summary and discharge plan.

Strengthen the Preadmission Screening

The preadmission screening is the foundation of IRF medical necessity. It should explain, in the patient's specific terms, why the patient needs intensive rehabilitation, why lower levels of care are not appropriate, the expected improvement, and the medical risks requiring physician supervision. Use a template that captures every required element and requires the physician's dated concurrence before admission.

Document Therapy Intensity and Exceptions

Track therapy minutes daily. When a patient does not receive three hours of therapy on a day, document the reason, such as a medical issue, and show the plan to resume. When using the 15-hours-in-seven-days option, document why the patient's condition required that schedule.

Document Physician Involvement

Rehabilitation physician notes should show face-to-face assessment, medical management, and changes to the rehabilitation plan. Notes should not be copied from day to day.

Document Team Conferences Thoroughly

Use a template that captures the date, participants and disciplines, progress toward goals, barriers, and decisions. The rehabilitation physician's leadership should be clear.

Review Before Submission

Have a trained reviewer check every packet against the checklist before submission. Fix gaps that can be legitimately addressed, such as missing pages or signatures through attestation where allowed.

Learn From Non-Affirmations

Track every non-affirmation reason. Look for patterns by physician, unit, or diagnosis, and retrain staff. Resubmit corrected requests promptly.

Choosing Between Pre-Claim and Postpayment Review

Pre-claim review offers payment certainty: once provisionally affirmed, claims are generally protected from further medical review. It also allows unlimited resubmissions. Postpayment review lets claims be paid first, but denials result in overpayments that must be appealed, and appeals take time. Most IRFs in published cycle results have chosen pre-claim review. Each IRF should consider its documentation reliability, cash flow, and staff capacity.

Appeals

A non-affirmed pre-claim review decision is not an initial determination and cannot be appealed. However, the IRF can resubmit an unlimited number of times before submitting the claim. If an IRF submits a claim after a non-affirmation, the claim will be denied, and the denial can be appealed through the standard Medicare appeals process under 42 CFR Part 405, Subpart I. Postpayment denials can also be appealed.

Preparing Before Your State Joins

IRFs that bill Jurisdiction J, including those in Georgia and Tennessee and IRFs located elsewhere that bill through that jurisdiction, will join the demonstration on January 1, 2027, with a selection period from November 13 to December 14, 2026. Facilities preparing to join should:

• Review the CMS operational guide and frequently asked questions.

• Conduct an internal audit of recent IRF records against the coverage criteria.

• Build packet templates and checklists.

• Train admissions, physician, therapy, nursing, and case management staff.

• Designate a demonstration coordinator.

• Set up the MAC portal and submission workflows.

• Decide on an initial review choice during the selection period.

A Hypothetical Example

An IRF entering the demonstration audits 40 recent records and finds that a quarter of preadmission screenings lacked documentation of the physician's concurrence before admission and that team conference notes rarely documented all required disciplines. The IRF revises its screening template to require physician sign-off before admission, adopts a team conference template, trains staff, and implements a pre-submission checklist review. In its first cycle, its affirmation rate exceeds 90 percent, and it qualifies for subsequent review choices.

How Reviewers Read the Preadmission Screening

Reviewers often start with the preadmission screening because it sets out the reasons the IRF expected the patient to need and benefit from intensive rehabilitation. A screening that reads like a generic referral summary is a common weakness. Strong screenings describe the patient's prior level of function in concrete terms, such as walking in the community without a device or living alone and managing medications, and contrast it with the current level of function, such as needing moderate assistance for transfers. They identify medical conditions that require rehabilitation physician oversight, such as unstable blood pressure, diabetes requiring insulin adjustment, wound care, or pain management, and they explain why a less intensive setting would not meet the patient's needs. They state expected improvement, an estimated length of stay, and the anticipated discharge destination.

Reviewers then compare the screening with what happened after admission. If the patient participated in three hours of therapy, improved as expected, and had physician visits addressing medical issues, the record supports the admission decision. If the patient could not tolerate therapy for many days or had few medical needs, reviewers may question whether the admission was reasonable and necessary. The admission decision is judged based on what was known at the time, so documenting the reasoning before admission is critical.

Medical Necessity Versus Technical Requirements

Non-affirmations fall into two broad groups. Technical problems, such as a screening completed outside the 48-hour window, a plan of care completed late, or a missing signature, can be prevented with reliable processes and checklists. Medical necessity problems, such as a patient who did not need the intensive program or who could not participate, require better clinical decision making at admission and better documentation of reasoning. IRFs should track both groups separately, because the fixes are different.

Common Myths About the Demonstration

Myth: The Demonstration Adds New Rules

CMS states that the demonstration does not create new documentation requirements. It reviews claims against existing rules.

Myth: Postpayment Review Is Easier

Postpayment review delays scrutiny but does not reduce it. Denials become overpayments that must be appealed.

Myth: Meeting the Target Once Ends the Demonstration

IRFs that meet the target can choose lighter review options, but compliance is recalculated every six months, and spot checks continue.

Myth: Resubmissions Hurt Nothing

Resubmissions are unlimited, but they consume staff time and delay billing. Getting it right the first time is the goal.

Questions Leadership Should Ask

• What is our current affirmation rate, and what are the top non-affirmation reasons?

• Does every preadmission screening have physician concurrence before admission?

• Are plans of care completed within four days?

• Do physician notes show visits at least three days a week?

• Do team conference notes document all required participants?

• Who reviews packets before submission?

• Are we prepared for the January 2027 Jurisdiction J expansion if it affects us?

Key Takeaways

• The demonstration covers Alabama, Pennsylvania, Texas, and California, and expands to all IRFs billing Jurisdiction J on January 1, 2027.

• IRFs choose pre-claim or postpayment review, and target rates rise from 80 to 90 percent.

• Existing coverage criteria under 42 CFR 412.622 drive every decision.

• The preadmission screening, plan of care, physician visits, team conferences, and therapy intensity are the core of every packet.

• Checklists, pre-submission review, and analysis of non-affirmations drive high affirmation rates.

Staffing the Demonstration

Pre-claim review adds a recurring workload. IRFs should plan for staff to assemble packets, track submissions and decisions, manage resubmissions, and analyze results. Many IRFs assign a coordinator who works closely with admissions, physicians, therapy leaders, and health information management. Clear ownership prevents delays that can hold up billing and cash flow, and regular reporting to leadership keeps the program on track.

Physician Engagement

Rehabilitation physicians play a central role in IRF compliance. They must concur with preadmission screenings before admission, develop the plan of care, conduct face-to-face visits, and lead team conferences. IRFs should share affirmation results with physicians, review non-affirmations involving physician documentation, and provide templates that make required elements easy to capture. Physician leaders can also help set clinical admission criteria that reflect the coverage rules.

Monitoring After Qualifying for Lighter Review

IRFs that move to selective postpayment review or spot check review should keep their internal pre-submission checks in place. Compliance is recalculated every six months, and a drop below the target rate returns the IRF to full review. Continued internal audits, tracking of any denials, and periodic retraining help maintain performance. IRFs should also watch for changes in CMS guidance and MAC education, which may clarify how reviewers apply the criteria, and should update templates and checklists when guidance changes.

Frequently Asked Questions

Which states are in the IRF Review Choice Demonstration?

Alabama, Pennsylvania, Texas, and California, with expansion to all IRFs billing MAC Jurisdiction J effective January 1, 2027.

Does the demonstration create new documentation requirements?

No. It applies existing IRF coverage and documentation requirements.

What affirmation rate must IRFs meet?

80 percent in the first cycle, 85 percent in the second, and 90 percent in the third and later cycles, based on at least 10 requests or claims.

Can non-affirmed requests be resubmitted?

Yes, an unlimited number of times before the claim is submitted.

Can a non-affirmation be appealed?

Not directly. If a claim is submitted and denied, the denial can be appealed.

Conclusion

The IRF Review Choice Demonstration applies existing coverage rules to every claim, and it is expanding rapidly. IRFs that build complete preadmission screenings, timely plans of care, documented physician visits and team conferences, and well-supported therapy records, and that review packets before submission, can achieve high affirmation rates and more flexible review options. Facilities in or entering the demonstration should prepare now.

How HealthBridge Can Help

HealthBridge is a healthcare management consulting firm that helps IRFs prepare for and succeed in the Review Choice Demonstration through readiness audits, template and checklist design, staff training, pre-submission packet reviews, non-affirmation analysis, and appeals support. If your IRF is in or entering the demonstration, please get in touch with us. We will be happy to help you with this topic.

References

• Centers for Medicare & Medicaid Services. Review Choice Demonstration for Inpatient Rehabilitation Facility Services. https://www.cms.gov/data-research/monitoring-programs/medicare-fee-service-compliance-programs/prior-authorization-pre-claim-review-initiatives/review-choice-demonstration-inpatient-rehabilitation-facility-services

• Centers for Medicare & Medicaid Services. IRF Review Choice Demonstration Frequently Asked Questions. https://www.cms.gov/files/document/irf-rcd-faqs.pdf

• Centers for Medicare & Medicaid Services. IRF Review Choice Demonstration Operational Guide. https://www.cms.gov/files/document/irf-rcd-operational-guide.pdf

• Centers for Medicare & Medicaid Services. IRF RCD Alabama Cycle 1 Report. https://www.cms.gov/files/document/irf-rcd-alabama-cycle-1-report.pdf

• Centers for Medicare & Medicaid Services. Alabama IRF Cycle 3 Report. https://www.cms.gov/files/document/alabama-irf-cycle-3-report.pdf

• Centers for Medicare & Medicaid Services. IRF RCD Pennsylvania Cycle 1 Report. https://www.cms.gov/files/document/irf-rcd-pennsylvania-cycle-1-report.pdf

• Electronic Code of Federal Regulations. 42 CFR 412.622, Basis of Payment. https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-B/part-412/subpart-P/section-412.622

• Centers for Medicare & Medicaid Services. Medicare Benefit Policy Manual, Chapter 1, Inpatient Hospital Services Covered Under Part A. https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/bp102c01.pdf

• Electronic Code of Federal Regulations. 42 CFR Part 405, Subpart I, Determinations, Redeterminations, Reconsiderations, and Appeals Under Original Medicare. https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-B/part-405/subpart-I