The History of the 75‐Percent Rule: Three Decades Past and an Uncertain Future

Abstract

Our story begins on July 30th, 1965, in Independence, Missouri. President Lyndon Baines Johnson is about to sign amendments to the Social Security Act: Titles 18 and 19, which will create Medicare and Medicaid. President Johnson flew to Independence to honor former President Harry S. Truman, who was too ill to travel to Washington, DC. Truman had proposed government-financed health insurance in the late 1940s, during his presidency. The large oak desk on which Johnson signed Medicare and Medicaid into law is displayed prominently in the Truman Library in Independence.The Health Care Financing Administration (HCFA) was created to administer Medicare and Medicaid. Because the national headquarters of the Social Security Administration was headquartered in Baltimore, MD, the HCFA was established there in 1977. When the Academy needed a physiatrist to attend a meeting at HCFA in Baltimore on short notice, I became the "go-to" guy.In 1978, HCFA asked the American Academy of Physical Medicine and Rehabilitation (AAPM&R) to create a committee charged with developing criteria for inpatient rehabilitation facilities or units that would distinguish them from medical-surgical units. The AAPM&R's Rehabilitation Criteria Committee for the Professional Standards Review Organization hospital review system had 8 members, and I was asked to chair the Committee.The Committee identified 3 criteria for admission to a rehabilitation hospital or unit:(1) The patient is medically stable; (2) There is a reasonable expectation that the patient would experience significant functional improvement in a reasonable period of time; and (3) The patient is expected to be able to tolerate and participate in 3 hours of daily therapy [1].The Committee was also asked to identify the 10 most common inpatient rehabilitation diagnoses that would characterize the population of a rehabilitation facility or hospital. We went around the room and identified the following diagnoses: stroke, spinal cord injury, congenital deformity, amputation, major multiple trauma, fracture of the femur, brain injury, polyarthritis, neurological disorders, and burns. When we submitted our report to HCFA, I recalled the words from Lincoln's Gettysburg Address: "The world will little note nor long remember what we say here." Lincoln and I were both wrong [2].When Medicare was passed into law in 1965, it was estimated that the program's annual cost would be $10 billion by 1990. With an aging population, and an explosion of hightech medical advances and procedures, however, Medicare costs skyrocketed. By 1985, Medicare's annual costs exceeded $70 billion. The single largest cost was inpatient hospital care, accounting for approximately 40% of the total.In 1985, in an attempt to control hospital costs, HCFA created the Prospective Payment System, based on Diagnostic Related Groups (PPS-DRG). No longer would Medicare pay hospitals on a per-diem basis. Rather, the hospital would be paid a lump sum for each diagnosis, based on national data. Thus, if a hospital discharged the patie...

Inpatient rehabilitation facilities

“…The 60% rule is a regulation-based entirely upon opinion. [30] There have been only 3 studies evaluating the 3-hour rule. Neither this study nor the study of Johnston and Miller [4] found that patients whose treatments are consistent with the 3-hour rule have better outcomes than patients who receive a little less therapy time than is required by the rule.…”

History and Efficacy of the “Three‐Hour Rule”

“…The three‐hour rule was originally discussed in a meeting in 1978, according to Dr. Leon Reinstein 1 . The American Academy of Physical Medicine & Rehabilitation (AAPM&R) formed a rehabilitation criteria committee in collaboration with the Peer Standards Review Organization (PSRO) to come up with criteria for admission to a rehabilitation unit.…”

“…1 The American Academy of Physical Medicine & Rehabilitation (AAPM&R) formed a rehabilitation criteria committee in collaboration with the Peer Standards Review Organization (PSRO) to come up with criteria for admission to a rehabilitation unit. The criteria that they initially identified included: (1) The patient was medically stable, (2) there was a reasonable expectation that the patient would experience significant functional improvement in a reasonable period of time, (3) the patient was expected to be able to tolerate and participate in 3 hours of combined PT, OT, speech therapy (ST), and/or prosthetic/orthotic services daily. The committee was also asked to come up with the seven most common diagnoses that were treated in the rehab program, and the Health Care Financing Administration (HCFA) 75% rule soon followed.…”

“…This commentary provides the views and perspectives of the authors who have worked with various rehabilitation providers over the past 45 years on Medicare compliance, appeals of payment denials, and the development of outcome measures for inpatient rehabilitation facilities (IRFs). 1,2 In 1976, California acute rehabilitation programs were reviewed by two Blue Cross consultants working for Medicare, a physical therapist and an occupational therapist. Charts were reviewed onsite, both for discharged patients and patients who were currently being treated.…”

Comparison of postarthroplasty functional outcomes in skilled nursing facilities among Medicare and Managed Care beneficiaries

“…Medicare's “75% rule” stipulated that, to qualify as an IRF, 75% of a facility's patient census must be admitted with 1 of 13 diagnoses, including hip fracture, polyarticular rheumatoid arthritis, and severe osteoarthritis [6] . In 2005, this was amended to a revised 60% rule, and consequently, more of these patients were diverged from the IRF to the SNF for post-TJA care [7] .…”