The Centers for Medicare & Medicaid Services (CMS) recently released a proposed rule to update the Medicare fee-for-service (FFS) prospective payment system for inpatient rehabilitation facilities (IRF) for fiscal year (FY) 2027.
Key provisions of the proposed rule include:
- Increasing the inpatient rehabilitation facilities’ prospective payment system payment rate by a net 2.6% after all adjustments, from $19,371 to $19,881. Facilities that fail to comply with CMS quality reporting requirements are subject to a two-percentage-point reduction.
- Using fiscal year 2025 claims and fiscal year 2024 cost report data to update case mix group weights and average lengths of stay.
- Increasing the labor-related share from 74.4% to 74.5%.
- Continuing to use pre-reclassification and pre-floor hospital inpatient prospective payment system wage indexes while soliciting input on alternative data sources, such as Bureau of Labor Statistics data, for the wage index.
- Decreasing the cost outlier threshold by 14.3%, from $10,141 to $8,689, to achieve the 3% target for outlier payments compared with aggregate payments.
- Updating and clarifying coverage rules, including:
- Requiring all therapies to be initiated within 36 hours of admission, with therapy evaluations qualifying as initiation under this clarification.
- Requiring preadmission screening documentation to include the patient’s current functional status upon admission.
- Requiring the initial interdisciplinary team meeting to occur within four days of admission, with subsequent meetings held weekly.
- Shortening the timeframe to submit quality reporting data following the end of each quarter from 4.5 months to 45 days, beginning with fiscal year 2029. For example, data from the quarter ending March 31, 2027, would be due to CMS by May 17, 2027.
- Requesting information on modernizing the prospective payment system, including replacing the current system with new clinical categories and comorbidity score groupings.
The MHA will provide facilities with a facility-specific impact analysis and additional details on the proposed rule in the near future. Members are encouraged to submit comments to CMS by June 1 and notify Vickie Kunz of any issues identified by May 22.