Proposed Rule to Update Inpatient Rehabilitation Facilities Payment for FY 2023

The Centers for Medicare & Medicaid Services (CMS) recently released a proposed rule to update the Medicare fee-for-service (FFS) prospective payment system (PPS) for inpatient rehabilitation facilities (IRFs) for fiscal year (FY) 2023, which begins Oct. 1, 2022. Key highlights of the proposal include a/an:

  • 2.7% increase to the IRF standard federal rate for providers in compliance with the CMS IRF quality reporting program (QRP), resulting in a proposed rate of $17,698, up from the current $17,240, for IRFs that comply with the IRFQRP.
  • Update to the case mix group relative weights using updated FY 2021 claims and the most recent cost report data.
  • Permanent policy to smooth the impact of year-to-year payment reductions related to decreases in the wage index. The CMS is proposing that an IRF’s wage index for FY 2023 and subsequent years would not be less than 95% of its prior year wage index.
  • Increase in the labor-related share from the current 72.9% to 73.2%, which will increase payments for IRFs with a wage index greater than 1.0.
  • 37% increase in the outlier threshold amount from the current $9,491 to $13,038 to maintain estimated outlier payments at 3% of total estimated aggregate IRF PPS payments. This will result in fewer cases being eligible for an outlier payment.
  • Modification to existing facility payment adjustments for teaching, low-income and rural IRFs.
  • Update to the existing policy affecting displaced medical residents.
  • Solicitation of comments on expanding the current IRF transfer policy to include discharges to home health as recommended by the Office of Inspector General.
  • Requirement that IRFs collect quality data on all patients, regardless of payer, beginning Oct. 1, 2023.
  • Request for information on some quality reporting-related topics:
    • Potential inclusion of an updated healthcare-associated infection measure in the IRFQRP. The National Healthcare Safety Network Healthcare-associated Clostridioides difficile Infection Outcome Measure would use data from electronic health records.
    • Feedback on strategies to improve measurement of disparities in healthcare outcomes. The CMS requests input on its framework to collect, stratify and report quality performance data across programs, as well as specific methods the agency could use with the IRFQRP.

The MHA will review details of the proposed rule and provide IRFs with an estimated impact analysis for Medicare FFS patients soon. The CMS is accepting comments until May 31. Members with questions should contact Vickie Kunz at the MHA.