Proposed Rule to Boost Medicare Inpatient Rehab Payments by 3%

A new proposed rule from CMS would increase payments to inpatient rehabilitation facilities (IRFs) by $335 million next fiscal year. The draft regulation would also update quality reporting and new unit requirements when finalized.

CMS released the proposed rule “Medicare Program; Inpatient Rehabilitation Facility Prospective Payment System for Federal Fiscal Year 2024 and Updates to the IRF Quality Reporting Program” for public inspection on the Federal Register on Monday. It is slated for publication on April 7.

In the rule, CMS said it plans to increase Prospective Payment System (PPS) rates for IRFs by 3.0 percent based on the proposed market basket update of 3.2 percent less a proposed 0.2 percentage point productivity adjustment.

The draft regulation also contains an outlier threshold adjustment to maintain outlier payments at 3.0 percent of total payments. The adjustment would result in a 0.7 percentage point increase in outlier payments.

Last year, CMS finalized a 3.2 percent, or $275 million, increase in IRF payments. The updates received pushback from the American Hospital Association (AHA), which said the update did not reflect the financial challenges hospitals are facing. About half of US hospitals finished in the red last year because of rising costs and labor woes, healthcare consulting firm Kaufman Hall reports.

In total, CMS expects IRF payments to grow by 3.7 percent in fiscal year (FY) 2024 compared to FY 2023. However,  the agency clarified that the offered PPS rate update is subject to change if new data on the market basket or IRF productivity becomes available.

CMS rebases and revises the IRF market basket about every four years to reflect current cost structures for the facilities. The proposed rule would adopt a 2021-based IRF market basket and include changes to the market basket cost weights, price proxies, market basket update, and labor-related share.

Additionally, the proposed rule would make it easier for hospitals to open new IRF units.

Under the rule, hospitals would be able to open new units and start billing under the IRF PPS at any time during the cost reporting period as long as hospitals notify the CMS Regional Office and their Medicare Administrative Contractor. Hospitals would have 30 days before the date of change to inform the appropriate offices.

The proposal aims to alleviate unnecessary burden on hospitals and expand access to care, CMS said.

Additionally, the proposed rule would make several updates to the IRF Quality Reporting Program (QRP), including two new measures and one modified measure.

CMS has proposed to adopt the “Discharge Function Score” measure starting with the FY 2025 QRP. The measure evaluates functional status using the percentage of IRF patients who meet or exceed an expected discharge function score. The measure would replace the “Application of Percent of Long-Term Care Hospital Patients with an Admission and Discharge Functional Assessment and a Care Plan (Application of Functional Assessment/Care Plan)” measure, which the proposed rule would also eliminate.

The QRP would also add the “COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date (Patient/Resident COVID-19 Vaccine)” measure, which reports the percentage of stays in which patients in an IRF are up-to-date with recommended COVID-19 vaccinations under the Centers for Disease Control and Prevention’s (CDC’s) most recent guidance. The measure would be added in FY 2026.

Other QRP measure updates, to start in FY 2025, include:

• Modification of the “COVID-19 Vaccination Coverage among Healthcare Personnel (HCP COVID-19 Vaccine)” measure to require IRFs to report the cumulative number of healthcare professionals who are up-to-date with recommended COVID-19 vaccinations according to CDC guidance
• Removal of the “IRF Functional Outcome Measure: Change in Self-Care Score for Medical Rehabilitation Patients (Change in Self-Care Score)” measure
• Removal of the “IRF Functional Outcome Measure: Change in Mobility Score for Medical Rehabilitation Patients (Change in Mobility Score)” measure

The proposed rule would also launch public reporting of the Transfer of Health Information to the Provider—PAC Measure and the Transfer of Health Information to the Patient—PAC Measure starting with the September 2024 refresh of Care Compare.