On April 3,
the Centers for Medicare and Medicaid Services (CMS) issued a
proposed rule (
fact sheet) to update the Inpatient Rehabilitation Facility (IRF) Prospective Payment System (PPS) and the IRF Quality Reporting Program (QRP) for fiscal year (FY) 2024. CMS is proposing to
increase IRF PPS payment rates by 3.0 percent, which would increase IRF payments by an estimated 3.7 percent, or $335 million, relative to FY 2023. The agency is additionally proposing updates to the
case-mix groups (CMG) relative weights as well as the
IRF market basket cost weights under the proposed rule.
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Background. In 2001, CMS published a PPS for IRFs which became effective in 2002. CMS is required to complete rulemaking updates to the IRF PPS each year. The agency sets base payment rates along with certain adjustments based on case mix and whether the IRF is a teaching hospital.
This proposed rule puts forth modifications to the IRF QRP for FYs 2025 and 2026, including an adjustment to the COVID-19 Vaccination Coverage among Healthcare Personnel measure which would require reporting of the cumulative number of health care personnel who are up to date with the recommended COVID-19 vaccination. Relatedly, CMS is seeking public comment on ways in which to select and prioritize IRF QRP quality measures and concepts moving forward. The agency is additionally proposing to adjust the outlier threshold to maintain outlier payments at three percent of total payments, representing a 0.7 percentage point increase in outlier payments. Further, CMS is soliciting comments on its proposal to adjust the excluded unit regulation, which would apply to IRFs and IPFs if finalized.
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What’s Next? The proposed rule is scheduled for publication in the Federal Register on April 7, 2023. Comments on the proposed rule will be accepted through June 2, 2023.
Key policies in this proposed rule include:
IRF PPS Payment Update — This proposed rule would increase IRF PPS payment rates by 3.0 percent, based primarily on the proposed IRF market basket increase factor of 3.2 percent, reduced by a 0.2 productivity adjustment. Notably, this rate is lower than that finalized in FY 2023, which instituted a 3.9 percent payment rate increase based on a market basket of 4.2 percent with a 0.3 percent productivity adjustment. This proposed adjustment would increase IRF payments by an estimated 3.7 percent, or $335 million, over FY 2023 levels. Notably, the agency is proposing to use more recent data, if available and appropriate, to determine the FY 2024 market basket update and productivity adjustment figures within the final rule. Additionally, CMS is proposing an adjustment to calculations for outlier payments, in that the outlier threshold would be modified to maintain outlier payments at three percent of total payments — a 0.7 percentage point increase in outlier payments.
Excluded Unit Regulation — Current regulations limit when a hospital can be paid under the IRF or IPF PPS for services that are provided in an excluded unit, and CMS notes that hospitals have been voicing concerns that these regulations are unnecessarily restrictive. In response to stakeholders, the agency is proposing changes to provide more flexibility for hospitals to open excluded units without exacerbating Medicare contractors’ administrative efforts to comply with regulations. These changes, if finalized, would apply to IRFs and IPFs. CMS is soliciting comments on consolidating a regulatory provision that would apply to both IRF and IPF units.
Case Mix Update — CMS is proposing to update the CMG relative weights, proportional to the resources needed by an average inpatient rehabilitation case, and average length of stay (ALOS) values for FY 2024. For these FY 2024 values, CMS is using FY 2022 IRF claims and FY 2021 IRF cost report data until more recent data becomes available before the final rule is published. CMS will continue to use the same methodologies to apply these data as they have used to update the values since the last implementation update. This method includes the use of a hospital-specific relative value method to estimate operating and capital costs of IRFs. CMS is soliciting comments on the proposed updates to the CMG relative weights and FY 2024 ALOS values.
IRF Market Basket Rebase — In FY 2024, CMS is proposing to update the IRF market basket cost weights from a 2016 base year to a 2021 base year. The 2021 base year will reflect 2021 Medicare hospital cost-report data. The proposed update incorporates previous public comments noting recent increased rates of contract labor. To address these comments, CMS is proposing to update the IRF market base year to reflect the most recent and complete set of Medicare cost report data. CMS will continue to monitor changes to the IRF market basket and will propose any additional changes in future rulemaking. CMS’ proposed methodologies for developing the 2021-based IRF market basket are similar to the 2016-based weights and will be calculated using the same seven major cost categories. Additionally, the majority of the 2021-based market basket cost weights will be derived by dividing the 2021 cost of each cost category by the 2021 total Medicare allowable costs. CMS is seeking public comments on the proposed methodology for developing the 2021-based IRF market basket.
IRF QRP — This proposed rule puts forth modifications to the IRF QRP for FYs 2025 and 2026. Notably, CMS is seeking public comment on ways in which to select and prioritize IRF QRP quality measures and concepts.
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FY 2025 IRF QRP — Specifically, the FY 2025 IRF QRP would alter the COVID-19 Vaccination Coverage among Healthcare Personnel measure to require that IRFs report the cumulative number of health care personnel that are up to date with the recommended COVID-19 vaccination as per the Centers for Disease Control and Prevention’s (CDC) most recent guidance. Currently, IRFs are only required to report whether health care personnel have received the primary vaccination series for COVID-19. Additionally, the Discharge Function Score measure would be adopted in FY 2025, effectively replacing the Application of Percent of Long-Term Care Hospital Patients with an Admission and Discharge Functional Assessment and a Care Plan measure. Further, beginning in FY 2025, two additional measures would be removed under the proposed rule: (1) the IRF Functional Outcome Measure: Change in Self-Care Score for Medical Rehabilitation Patients measure; and (2) the IRF Functional Outcome Measure: Change in Mobility Score for Medical Rehabilitation Patients measure.
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FY 2026 IRF QRP — If finalized, beginning with the FY 2026, IRF QRP, the COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date measure would be adopted, which would publicly report the percentage of patients in IRFs that are up to date with the recommended COVID-19 vaccination as per the CDC’s most recent guidance. Such data would be collected via a new standardized item on the IRF Patient Assessment Instrument. Public reporting of the Transfer of Health Information to the Patient-Post-Acute Care (PAC) and Transfer of Health Information to the Provider-PAC measures, as well as the Discharge Function Score measure, would be adopted under the proposed rule as well.
Health Equity — In the FY 2023 IRF PPS proposed rule, the agency solicited public comments on ways in which to advance health equity, which it intends to consider as it develops policies to carry out this objective. Within the FY 2024 proposed rule, CMS reaffirms its commitment to health equity, outlining several priorities of the agency over the coming years. In particular, the agency points toward the
CMS Framework for Health Equity, which prioritizes the: (1) strengthening of assessment infrastructure; (2) development of synergies to promote structural change; and (3) identification and elimination of barriers in access to care for beneficiaries, among other items.
