The Centers for Medicare & Medicaid Services (CMS) recently released a proposed rule to update the Medicare fee-for-service prospective payment system (PPS) for inpatient rehabilitation facilities (IRFs) for fiscal year (FY) 2026.
Key provisions of the proposed rule include:
- Increasing the IRF PPS payment rate by a net 2.4% after all adjustments, from $18,907 to $19,364. IRFs that fail to comply with the CMS IRF Quality Reporting Program (QRP) requirements are subject to a two-percentage point reduction.
- Increasing the labor-related share from the current 74.4% to 74.5%.
- Decreasing the cost outlier threshold by 0.6% from the current $12,043 to $11,971 to achieve the 3% target for outlier payments as compared to aggregate IRF payments, decreasing the number of cases that qualify for outlier payments.
- Changes to the IRF QRP that propose to:
- Make optional the reporting of four standardized patient assessment data elements in the IRF Patient Assessment Instrument focused on social determinants of health beginning with Oct. 1, 2025 reporting. The items would be removed entirely by the FY 2028 IRF QRP.
- Remove two COVID-19 vaccination measures from the IRF QRP for FY 2026.
- Seek input on future IRF QRP measure concepts, reducing the burden of reporting patient assessment data and advancing digital quality measures in the IRF QRP.
The CMS is seeking comments on opportunities to streamline regulations and reduce administrative burdens on providers, suppliers, beneficiaries and other interested parties participating in the Medicare program.
The MHA will provide IRFs with a facility-specific impact analysis and additional details on the proposed rule in the near future. The MHA also encourages members to submit comments to the CMS by June 10 and to contact Vickie Kunz at the MHA with questions and issues identified by May 27.