On April 23 the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule outlining payment and policy changes affecting inpatient rehabilitation facilities (IRFs) and the IRF Quality Reporting Program (IRF QRP).

The proposed rule would update for fiscal year (FY) 2016 Medicare payment rates for IRFs under the IRF prospective payment system (IRF PPS). IRF PPS payments would increase 1.7 percent relative to payments in FY 2015, an estimated 1.9 percent increase factor reduced by 0.2 percent due to updating the outlier threshold. Beginning in FY 2015, CMS froze the facility-level adjustment factors at the FY 2014 levels, which would continue for FY 2016. CMS also finalizes the conversion from ICD-9-CM to ICD-10-CM for the IRF PPS; starting October 1, 2015, ICD-10-CM  will be the required medical data code set to submit Medicare claims and IRF-Patient Assessment Instruments (IRF-PAI).  For FY 2016, CMS proposes an IRF-specific market basket based on 2012 data using both freestanding and hospital-based IRFs’ FY 2012 Medicare cost report data.  The FY 2016 IRF market basket update is currently forecasted at 2.7 percent and the FY 2016 labor-related share (LRS) is currently forecasted to be 69.6 percent.

CMS also proposes to adopt the 2003 Office of Management and Budget (OMB)’s changes related to the delineation of Metropolitan Statistical Areas, Micropolitan Statistical Areas, and Combined Statistical Areas, and related guidance on uses of the delineation of these areas for the FY 2016 IRF PPS wage index update.  These changes would result in 19 IRFs having their status changed from rural to urban, causing a loss of the 14.9 percent rural adjustment.  These 19 IRFs would be gradually phased out of their rural adjustment over a three-year period by receiving 2/3 of rural adjustment in FY 2016, 1/3 of rural adjustment in FY 2017 and zero rural adjustment in FY 2018.

Under the IRF QRP, IRFs are required to report data that satisfy domains under the Improving Medicare Post-Acute Care Transformation Act of 2014.  CMS proposes that IRFs adopt measures that satisfy three of the quality domains: 1) skin integrity and changes in skin integrity; 2) functional status, cognitive function, and changes in function and cognitive function; and 3) incident of major falls.  IRFs that fail to submit this required quality data to CMS will be subject to a two percentage point reduction to their applicable FY annual increase factor.

The proposed rule can be accessed in the Federal Register and a CMS Fact Sheet is also available.

Public comments are due by June 22, 2015.

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