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Starting later this month, Medicare contractors will have to use clinical judgment — rather than clock minutes — to deny inpatient rehab services.

The Centers for Medicare & Medicaid has issued new guidance to clarify instructions for conducting medical review of therapy claims in the case of intensive services.

The notice, which sets a start date of March 23 for the new interpretation, means Medicare contractors can no longer deny a claim solely because the three-hour threshold is missed. Instead, they’ll have to take into consideration a patient’s overall needs and treatment plan.

Until now, Medicare has paid for therapy if beneficiaries get at least three hours of direct care daily. But many providers have complained that their claims have been denied when they missed the threshold by mere minutes, even if that time was made up on subsequent days.

Post Acute Medical, a long-term acute-care facility operator, told Modern Healthcare that contractors have rejected up to a quarter of its inpatient rehab claims.

“Claims denied solely on therapy minutes don’t take into consideration the medical necessity or medical conditions that justify the need for the rehab stay,” Kristen Smith, an executive vice president at Post Acute Medical, told the magazine.

Patients might miss the three-hour minimum rehab due to bathroom breaks, illness or receiving other needed medical services during designated therapy sessions.

Rigid claim denials — and a backlogged appeals process — aren’t the only fallout created by the Medicare contractors’ evaluations.

Joel Stein, M.D., specializes in physical medicine and rehabilitation at Weill Cornell Medicine. He told Modern Healthcare that some providers would guide patients in need of intensive rehab to skilled nursing facilities, where regulatory standards are lower, to avoid the possibility of non-payment.

“Inherently it’s a conflict of interest as (the CMS) has established a situation where they’re benefiting from denying claims, and that worries me,” Stein said.