The Centers for Medicare & Medicaid Services recently released the fiscal year (FY) 2027 final rule for inpatient rehabilitation facilities (IRF), updating Medicare fee-for-service prospective payment system rates and policies. The final rule is effective Oct. 1.
Key provisions include:
- Increasing the IRF prospective payment system payment rate by a net 2.6% after all adjustments, from $19,371 to $19,868. IRFs that fail to comply with CMS IRF Quality Reporting Program requirements are subject to a two-percentage-point reduction.
- Using FY 2025 IRF claims and FY 2024 IRF cost report data to update case-mix group weights and average lengths of stay.
- Decreasing the labor-related share slightly, from 74.4% to 74.3%.
- Continuing to use the pre-reclassification and pre-floor hospital inpatient prospective payment system wage indexes.
- Decreasing the cost outlier threshold by 12.7%, from $10,141 to $8,857, to maintain outlier payments at 3% of aggregate IRF payments.
- Updating and clarifying IRF coverage rules, including:
- Requiring all therapy treatments and evaluations to begin within 36 hours of admission, with CMS clarifying that therapy evaluations qualify as initiation of therapy.
- Amending preadmission screening regulations to require documentation of the patient’s current functional status upon admission.
- Requiring the initial interdisciplinary team meeting to occur within four days of admission, with subsequent team meetings held weekly.
- Shortening the timeframe to submit IRF Quality Reporting Program data after the end of each quarter from 4.5 months to 45 days, beginning with the FY 2029 IRF Quality Reporting Program. For example, IRF-Patient Assessment Instrument data from the quarter ending March 31, 2027, would be due to CMS by May 17, 2027.
The MHA will provide IRFs with an updated facility-specific impact analysis and additional details on the final rule in the near future. Members with questions should contact the MHA Health Finance team.
The Centers for Medicare & Medicaid Services recently released the fiscal year (FY) 2027 final rule for inpatient rehabilitation facilities (IRF), updating Medicare fee-for-service prospective payment system rates and policies. The final rule is effective Oct. 1.
