The Centers for Medicare & Medicaid Services (CMS) recently released a final rule to update the Medicare fee-for-service prospective payment system (PPS) for inpatient rehabilitation facilities (IRF) for federal fiscal year (FY) 2025.
Key provisions of the rule include:
- Increasing the IRF PPS payment rate by a net 2% after all adjustments, from $18,541 to $18,907. IRFs that fail to comply with the CMS IRF Quality Reporting Program (QRP) requirements are subject to a two-percentage point reduction.
- Updating the wage index using the most recent Office of Management and Budget statistical area delineations based on the 2020 Decennial Census.
- Increasing the labor-related share from the current 74.1% to 74.4%.
- Increasing the cost outlier threshold by 15.5% from the current $10,423 to $12,043 to achieve the 3% target for outlier payments, as compared to aggregate IRF payments, decreasing the number of cases that qualify for outlier payments.
- Updating the case mix group relative weights and average length of stay values using FY 2023 IRF claims and FY 2022 IRF cost report data.
- Requiring IRFs to report four new items (beginning with patients admitted Oct. 1, 2026) using the IRF-Patient Assessment Instrument (IRF-PAI) as standardized patient assessment data elements under the social determinants of health (SDOH) category beginning with the FY 2028 IRF QRP including:
- One item for living situation.
- Two items for food.
- One item for utilities.
- Modifying the Transportation item collected in the IRF-PAI under the SDOH category beginning with patients admitted Oct. 1, 2026
- Continuing to evaluate, refine and develop new measures for the IRF QRP to ensure Medicare patients and caregivers have meaningful information to make informed decisions.
- Creating a five-star IRF QRP rating system to distinguish between quality of care offered by providers.
The MHA will provide IRFs with an updated facility-specific impact analysis and additional details on the final rule, effective Oct. 1, in the near future. Members with questions should contact Vickie Kunz at the MHA.