Inpatient rehabilitation facility (IRF) classification is the set of requirements in 42 CFR 412.29 that a rehabilitation hospital, or a rehabilitation unit of a hospital, must meet to be excluded from the prospective payment systems for acute hospitals and paid under the IRF prospective payment system (PPS). Integral Healthcare Solutions (IHS) drafts the criteria worksheet and the tracking, screening, visit and team conference procedures for a hospital planning, buying or testing an IRF unit. IHS is a consulting firm, not a law firm.
Last updated: November 2026
What does 42 CFR 412.29 require of an IRF?
An IRF must meet the requirements listed there to be excluded from the prospective payment systems described in 412.1(a)(1), which cover hospitals that are generally short-term, acute-care hospitals (42 CFR 412.1(a)), and to be paid under the IRF system in 412.1(a)(3).
Edition: current eCFR text of 42 CFR 412.29, page opened November 5, 2026; section last amended August 10, 2020 (85 FR 48462).
| Paragraph | What it requires |
|---|---|
| (a) | An IRF must have, or be part of a hospital that has, a hospital provider agreement under part 489. |
| (b) | Except for a new IRF or new IRF beds, a qualifying inpatient population over the most recent, consecutive and appropriate 12-month period. |
| (c) | For a new IRF or new IRF beds, a written certification of the population it intends to serve. |
| (d) | Screen each prospective patient’s condition and medical history for likely significant benefit from intensive inpatient hospital rehabilitation. A rehabilitation physician must approve each Medicare Part A fee-for-service screening before admission. |
| (e) | At least 3 face-to-face visits per week by a licensed physician with specialized inpatient rehabilitation training and experience must assess medical and functional status and adjust treatment as needed. Starting in the second week of admission, a non-physician practitioner may perform 1 required visit per week only if the IRF determines that the practitioner has that specialized training and experience and the duties fall within applicable state scope-of-practice law. A week means 7 consecutive calendar days (412.622). |
| (f), (g) | Qualified staff must provide rehabilitation nursing, physical therapy and occupational therapy, plus speech-language pathology, social, psychological (including neuropsychological), and orthotic and prosthetic services as needed. The director must be a state-licensed MD or DO, serve full-time in an IRF hospital or at least 20 hours weekly in a unit, and have at least 2 years of relevant inpatient rehabilitation medical-management training or experience after a one-year hospital internship. |
| (h), (i) | For each inpatient, a physician establishes, reviews and revises the treatment plan as needed with the professionals providing care. Record interdisciplinary progress toward goals and discharge plans in periodic clinical entries; hold team conferences at least weekly to assess treatment appropriateness. |
Paragraphs (d), (e), (h) and (i) contain an exception limited to care in a freestanding IRF hospital furnished solely to relieve acute hospital capacity in a state or region experiencing a surge as defined in 412.622, during the COVID-19 Public Health Emergency defined in 400.200 (both sources: current eCFR, page opened November 5, 2026). Paragraph (e) separately permits the specified telehealth services during that defined COVID-19 emergency. These clauses do not create exceptions for emergencies generally.
What is the 60 percent rule and which conditions count?
For cost reporting periods beginning on or after July 1, 2005, the IRF must show that over the period described in paragraph (b) it served an inpatient population of whom at least 60 percent required intensive rehabilitation services for treatment of one or more of the conditions in paragraph (b)(2).
The qualifying diagnoses and their clinical conditions are listed in 42 CFR 412.29(b)(2), current eCFR, page opened November 5, 2026. A diagnosis label alone does not establish eligibility: use the complete applicable entry, including its functional impairment, prior treatment, timing and improvement criteria. For joint replacement, the knee or hip replacement must occur during the acute hospitalization immediately before the IRF stay, plus at least one of these: bilateral knee or bilateral hip replacement in that admission, BMI of at least 50 on IRF admission, or age at least 85 on IRF admission.
Can a patient admitted for another condition count?
Yes, if all three comorbidity conditions in paragraph (b)(1) are met. The admitting condition is not on the (b)(2) list. The patient has a comorbidity that falls in one of the (b)(2) conditions. And the comorbidity has caused significant decline in functional ability such that, even without the admitting condition, the individual would require the intensive rehabilitation treatment unique to IRFs paid under subpart P that cannot be appropriately performed in “another care setting covered under this title.” Section 412.602 defines comorbidity.
Who needs it and what triggers it?
The first three situations are specified in 42 CFR 412.29(c). The fourth describes IHS’s service scope as of November 5, 2026.
- A new IRF has not been paid under the IRF PPS for at least 5 calendar years. Its new status runs from first Medicare participation as an IRF through the end of its first full 12-month cost reporting period (paragraph (c)(1)).
- New beds added to an existing IRF must meet applicable state Certificate of Need and licensure laws. They may be added once during a cost reporting period and remain new for its remainder. After beds are delicensed or decertified in that IRF, a full 12-month cost reporting period must elapse before new beds are added there; prior written CMS regional office approval verifies that interval. New beds enter paragraph (b) compliance calculations when added (paragraph (c)(2)).
- A change of ownership or leasing, or a merger. The IRF keeps its excluded status if the new owners accept assignment of the previous owners' Medicare provider agreement and the IRF continues to meet all payment requirements (paragraphs (c)(3) and (c)(4)). Section 489.18 defines change of ownership.
- An existing unit unsure of its population, since paragraph (b) looks back 12 months.
What happens if the population test is not met?
If a new IRF or new beds are paid under the IRF system for a cost reporting period under paragraph (c), but the inpatient population actually treated during that period does not meet paragraph (b), payments are adjusted retroactively under 42 CFR 412.130.
How IHS helps
IHS runs a gap assessment against each paragraph of 42 CFR 412.29, maps your evidence, drafts what is missing and mock-reviews sample admissions with your physicians. Thomas G. Goddard, JD, PhD, IHS founder and former URAC Chief Operating Officer and General Counsel, leads the work. This line sits in Compliance Services.
What IHS drafts
- A criteria worksheet tracking each admission against the (b)(2) list and the comorbidity conditions, with an admission data-tracking procedure.
- The screening, physician visit, plan of treatment and weekly team conference procedures, plus a certification worksheet for a new unit and a checklist for an ownership change or merger.
What you supply
You supply each admission’s clinical classification, the physician screening approvals, your record-system data and the certification signature.
The real limit
IHS does not decide clinical content, guarantee any payment or review outcome, or contact CMS, the Medicare contractor or any other authority for the hospital.
What to have ready
Gather these records against 42 CFR 412.29, current eCFR, page opened November 5, 2026; the paragraph references below identify each item’s governing provision.
- The IRF’s or its parent hospital’s provider agreement under part 489 (paragraph (a)).
- For an existing IRF, the 12-month period to review and the (b)(2) condition or comorbidity record for each admission in it (paragraph (b)).
- For a new IRF or new beds, the first-participation or bed-addition date, Certificate of Need and licensure status, any delicensing or decertification dates and the CMS regional office approval (paragraph (c)).
- Your screening form and the rehabilitation physician’s preadmission approval record for each Medicare Part A fee-for-service admission (paragraph (d)).
- Your physician visit schedule and the director of rehabilitation’s hours, licensure and experience (paragraphs (e), (g)).
- Plans of treatment and team conference records for a patient sample (paragraphs (h), (i)).
- For a sale, lease or merger, documents showing whether the new owners accept assignment of the provider agreement (paragraphs (c)(3), (c)(4)).
The free introductory call is where IHS walks through the list with you.
How it compares
IHS does not tell you which to choose.
- IRF classification: this page addresses 412.29; it is not a complete account of every IRF PPS payment requirement. New-bed compliance calculations begin when beds are added.
- Acute hospital payment: 412.29(c)(3) specifies payment under 412.1(a)(1) when an IRF undergoing a change of ownership or leasing does not continue to meet IRF PPS payment requirements.
- CARF accreditation: a voluntary private program, covered on the CARF page.
What it costs
42 CFR 412.29 is a Medicare payment classification rule, and the section text carries no application fee or other authority fee.
IHS scopes each engagement after a free introductory call.
What this is not
- It is not legal advice. IHS is a consulting firm, not a law firm; the hospital's counsel advises on legal questions.
- It is not a guarantee of any classification or payment outcome and does not cover Medicare contractor review methods or CMS manuals.
- IHS does not contact, submit to or correspond with CMS, the Medicare contractor or any state agency.
Frequently asked questions
What is the 60 percent rule for inpatient rehabilitation facilities?
The 60 percent population test is in 42 CFR 412.29(b)(1) for cost reporting periods beginning on or after July 1, 2005. Subject to paragraph (c)’s new-IRF and new-bed provisions, the IRF must show that at least 60 percent of its inpatient population required intensive rehabilitation for listed conditions during its most recent consecutive, appropriate 12-month period, as defined by CMS or the Medicare contractor.
Which conditions count toward the 60 percent?
Paragraph (b)(2) lists thirteen, some with qualifiers. A patient admitted for another condition counts only if all three comorbidity conditions in paragraph (b)(1) are met.
What does a new IRF unit have to certify?
The IRF must certify in writing that its intended inpatient population meets paragraph (b). For a new IRF, certification applies through the end of its first full 12-month cost reporting period; for new beds, through the end of the cost reporting period in which they are added. New beds enter paragraph (b) compliance calculations when added.
What happens if the unit does not meet the population test?
Paragraph (j) applies when a new IRF or new beds receive IRF PPS payment for a cost reporting period under paragraph (c), but the population actually treated in that period fails paragraph (b). Payments are then adjusted retroactively under 42 CFR 412.130.
What must preadmission screening and physician visits look like?
Under 412.29(d), screen each prospective patient for likely significant benefit and obtain rehabilitation physician approval before each Medicare Part A fee-for-service admission. Under (e), at least 3 weekly face-to-face visits by a licensed physician with specialized inpatient rehabilitation training and experience assess medical and functional status and adjust treatment as needed. From the second week (7 consecutive calendar days per week), an IRF-determined specialist non-physician practitioner may perform 1 visit weekly within applicable state scope-of-practice law. The defined COVID-19 PHE exceptions in (d) and (e), including (e)’s telehealth provision, remain part of those paragraphs.
What changes with a merger or change of ownership?
Under paragraphs (c)(3) and (c)(4), retaining excluded status requires the new owners to accept assignment of the previous owners' Medicare provider agreement. The IRF must also continue to meet all requirements for payment under the IRF PPS.
What does IHS draft and what do physicians approve?
Integral Healthcare Solutions (IHS) drafts the criteria worksheet and tracking, screening, visit and team conference procedures. Your clinicians approve clinical content; a rehabilitation physician approves each Medicare Part A fee-for-service preadmission screening, and the hospital signs any certification.
Does IHS deal with the Medicare contractor or CMS?
No. IHS does not contact, submit to or correspond with CMS, the Medicare contractor or any other authority for the hospital.