CMS issued a proposed rule on April 21 outlining proposed fiscal year (FY) 2017 Medicare payment policies and rates for the Inpatient Rehabilitation Facility Prospective Payment System (IRF PPS) and the IRF Quality Reporting Program (IRF QRP). The FY 2017 proposals are summarized below.

Proposed Updates to IRF payment rates:

Updates to the payment rates under the IRF PPS. For FY 2017, CMS is proposing to update the IRF PPS payments to reflect an estimated 1.45 percent increase factor (reflecting an IRF-specific market basket estimate of 2.7 percent, reduced by a 0.5 percentage point multi-factor productivity adjustment and a 0.75 percentage point reduction required by law). CMS is proposing that if more recent data becomes available (for example, a more recent estimate of the market basket or multifactor productivity adjustment), it would be used to determine the FY 2017 update in the final rule. An additional 0.2 percent increase to aggregate payments due to updating the outlier threshold results in an overall update of 1.6 percent (or $125 million), relative to payments in FY 2016.

No changes to the facility-level adjustments.For FY 2017, CMS will continue to maintain the facility-level adjustment factors at current levels as we continue to monitor the most current IRF claims data available to assess the effects of the FY 2014 changes.

Rural Adjustment Transition.In FY 2016, CMS finalized a three-year phase out of the 14.9 percent rural adjustment for 19 IRF providers that changed status from rural to urban due to the adoption of the newest Office of Management and Budget (OMB) delineations. FY 2017 represents the second year of the three-year phase-out, in which these 19 previously-identified IRF providers will receive one-third of the 14.9 percent rural adjustment.

Proposed Changes to the IRF Quality Reporting Program (QRP):

Beginning in FY 2014, any IRF that does not submit the required data to CMS receives a 2.0 percentage point decrease in its annual increase factor for payments under the IRF PPS. The Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act) requires the continued specification of quality measures, as well as resource use and other measures, for the IRF QRP.

In order to satisfy the requirements of the IMPACT Act, CMS is proposing four claims-based measures for inclusion in the IRF QRP for the FY 2020 and FY 2018 payment determination and subsequent years and one new assessment-based quality measure for inclusion in the IRF QRP for FY 2020 and subsequent years, respectively:

1. Discharge to Community – Post Acute Care (PAC) IRF QRP (claims-based);
2. Medicare Spending Per Beneficiary (MSPB) – Post-Acute Care (PAC) IRF QRP (claims-based);
3. Potentially Preventable 30 Day Post-Discharge Readmission Measure for IRFs (claims-based);
4. Potentially Preventable Within Stay Readmission Measure for IRFs (claims-based); and
5. Drug Regimen Review Conducted with Follow-Up for Identified Issues (assessment-based).

Pending final data analysis, CMS is also proposing to add four new measures to IRF QRP public reporting on a CMS website, such as Hospital Compare, by Fall 2017.  In addition, we propose to extend the timeline for submission of exception and extension requests for extraordinary circumstances from 30 days to 90 days from the date of the qualifying event. We are also clarifying the previously finalized review and correction period in advance of IRF QRP public reporting in order to emphasize its alignment with the Hospital Inpatient Quality Reporting Program’s policies and practices.

CMS will accept comments on the proposed rule until June 20, 2016. The proposed IRF PPS rule can be downloaded from the Federal Register at https://www.federalregister.gov/articles/2016/04/25/2016-09397/medicare-program-inpatient-rehabilitation-facility-prospective-payment-system-for-federal-fiscal