CMS Releases FY23 Inpatient Rehabilitation Facility PPS Proposed Rule

CMS has released its proposed Inpatient Rehabilitation Facility (IRF) Prospective Payment System (PPS) rule for FY 2023, which included an increase in IRF payment rates and updates on the IRF Quality Reporting Program (QRP).

The rule publishing complies with legal requirements for CMS to update Medicare payment policies for IRFs on an annual basis.

CMS proposed a 2.8 percent increase in IRF PPS payment rates for FY 2023. This reflects the 3.2 percent update to the inpatient rehabilitation facility market basket and a 0.4 percent reduction for productivity adjustment.

The agency said that if more recent estimates of market basket updates or productivity adjustments become available, it will use this data to update the payment rate in the final rule.

The proposed rule also includes a modification to the outlier threshold, which will maintain outlier payments at 3.0 percent of total payments, the press release stated. This modification will lead to a 0.8 percent decrease in outlier payments.

Outlier payments from Medicare aim to protect hospitals from significant financial losses that result from patient cases that incur extraordinarily high costs.

After the outlier payment reduction, the overall IRF payments in FY 2023 will increase by 2.0 percent, or $170 million, CMS said.

In the FY 2022 IRF PPS proposed rule, CMS increased IRF payment rates by 2.2 percent and implemented a 0.3 percent reduction in outlier payments.

Like the recently proposed rule on hospice payment rates, CMS proposed a permanent 5 percent cap on annual IRF wage index decreases. With this cap, the agency aims to limit year-to-year changes in provider wage index payments associated with wage index changes.

The proposed rule also provided potential updates to the IRF Quality Reporting Program. IRFs that fail to meet reporting requirements may face a 2.0 percent reduction in their annual increase factor.

CMS plans to expand the IRF quality data reporting requirements, which currently apply to admitted patients with Medicare Part A fee-for-service and Medicare Part C.

The expansion would require inpatient rehab facilities to collect data on all IRF patients, regardless of their health plan. According to CMS, this proposed change would help ensure IRF patients receive the same quality of care and verify that provider metrics reflect performance across all IRF patients and not just those on Medicare Parts A and C.

IRF providers would have to start collecting patient assessment data for all admitted patients beginning on October 1, 2023, for the quality reporting requirement to take effect in FY 2025.

In addition to the QRP modification, CMS has requested stakeholder feedback on several changes to the program.

First, the agency requested information on including the National Healthcare Safety Network (NHSN) Healthcare-associated Clostridioides difficile Infection (HA-CDI) Outcome Measure as a digital measure in the IRF QRP. The measure tracks the development of C. difficile infections in IRF patients and would be the first digital measure in the IRF program.

CMS is also seeking feedback on how to go about developing and including health equity quality measures in the IRF QRP.

“We believe that a focused health equity measure would provide specific equity data that will help providers develop innovative and targeted interventions for impacted groups and would additionally provide transparency for beneficiaries,” the press release stated. “We also believe that by leveraging measures to give providers access to disparity information, they would be able to use this data to make informed decisions about their quality improvement initiatives.”

Apart from the IRF QRP, CMS requested stakeholder feedback on including discharge to home health in the IRF transfer payment policy following a recommendation from the Office of Inspector General.

In addition, the proposed rule is seeking comments about the methodology used to update facility-level adjustment factors, including rural, low-income, and teaching status adjustments. CMS plans to codify its IRF teaching status adjustment policy, aligning the IRF policies with the updated Inpatient PPS and Inpatient Psychiatric Facility PPS policies, the agency said.