Final Fiscal Year 2016 Payment and Policy Changes for Medicare Inpatient Rehabilitation Facilities (CMS-1624-F)
Overview
On July 31, 2015, the Centers for Medicare & Medicaid Services (CMS) issued a final rule outlining fiscal year (FY) 2016 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 2016 final policies are summarized below.
Changes to IRF payment policies and rates:
Changes to the payment rates under the IRF PPS. CMS is updating the IRF PPS payments for FY 2016 to reflect an estimated 1.7 percent increase factor (reflecting a new IRF-specific market basket estimate of 2.4 percent, reduced by a 0.5 percentage point multi-factor productivity adjustment and a 0.2 percentage point reduction required by law). An additional 0.1 percent increase to aggregate payments due to updating the outlier threshold results in an overall update of 1.8 percent (or $135 million), relative to payments in FY 2015.
No changes to the facility-level adjustments. As stated in the FY 2015 IRF PPS final rule (79 FR 45872, 45882 through 45883), CMS froze the facility-level adjustment factors at the FY 2014 levels for FY 2015 and all subsequent years, unless and until we propose to update them again through future notice and comment rulemaking. For FY 2016, CMS will continue to hold the facility-level adjustment factors at the FY 2014 levels as we continue to monitor the most current IRF claims data available to assess the effects of the FY 2014 changes.
ICD-10-CM Conversion. In the FY 2015 IRF PPS final rule (79 FR 45872), CMS finalized conversions from the International Classification of Diseases, 9th Revision, Clinical Modification (ICD-9-CM) to the International Classification of Diseases, 10th Revision, Clinical Modification (ICD-10-CM) for the IRF PPS, which will be effective when ICD-10-CM becomes the required medical data code set for use on Medicare claims and IRF PAI submissions. CMS reminds providers of IRF services that the implementation date for ICD-10-CM is October 1, 2015.
IRF-specific Market Basket. For FY 2016, CMS is finalizing an IRF-specific market basket to replace the Rehabilitation, Psychiatric and Long-Term Care (RPL) market basket. The IRF market basket is based on 2012 data (the RPL market basket is based on 2008 data). The IRF market basket is derived from using both freestanding and hospital-based IRFs’ FY 2012 Medicare cost report data.
Below are estimates of the IRF-specific market basket and labor share:
- The FY 2016 IRF market basket increase is 2.4 percent (compared to 2.4 percent for FY 2016 for the RPL market basket) based on IHS Global Insight’s first quarter 2015 forecast.
- The FY 2016 labor-related share (LRS) is 71.0 percent (compared to 69.294 percent for FY 2015 which used the 2008-based RPL market basket).
Changes to the Wage Index. On February 28, 2013, the Office of Management and Budget (OMB) issued OMB Bulletin No. 13-01, which contained a number of significant changes related to the delineation of Metropolitan Statistical Areas, Micropolitan Statistical Areas, and Combined Statistical Areas, and guidance on uses of the delineation of these areas. To align with these changes, CMS is adopting the newest OMB delineations for the FY 2016 IRF PPS wage index. CMS also is implementing these changes using a 1-year transition with a 50/50 blended wage index for all providers. The FY 2016 wage index for each provider will consist of a blend of fifty percent of the FY 2016 wage index using the current OMB delineations and fifty percent of the FY 2016 wage index using the revised OMB delineations.
The adoption of revised OMB delineations for the FY 2016 IRF PPS wage index will result in 19 IRF providers having their status changed from rural to urban. While the urban wage index is typically higher than the rural wage index, under the IRF PPS, the shift to urban status results in providers losing a 14.9 percent rural adjustment. As such, CMS is finalizing the proposal that these 19 IRF providers transitioning from rural to urban status be provided with a gradual phase out of their rural adjustment over a three-year period. Specifically, CMS is finalizing the recommendation that these providers receive two-thirds of the rural adjustment in FY 2016, one-third of the rural adjustment in FY 2017, and no rural adjustment in FY 2018.
Changes to the IRF Quality Reporting Program (QRP):
The Improving Medicare Post-Acute Care Transformation Act of 2014 (the “IMPACT” Act) added Section 1899B to the Social Security Act (the Act) to require that IRFs report data on measures that satisfy measure domains specified in the Act. These same measures are to be implemented in Long-term Care Hospitals (LTCHs), IRFs, Skilled Nursing Facilities and Home Health Agencies. This final rule adopts measures that satisfy three of the quality domains required by the IMPACT Act in FY 2016: skin integrity and changes in skin integrity; functional status, cognitive function, and changes in function and cognitive function; and incidence of major falls. IRFs that fail to submit the required quality data to CMS will be subject to a 2 percentage point reduction to their applicable FY annual increase factor.
Finalized Changes:
The domains specified by the IMPACT Act and the quality measures finalized are as follows:
- Domain 1. Skin integrity and changes in skin integrity:
- Quality Measure: “Percent of Residents or Patients with Pressure Ulcers That Are New or Worsened” (NQF #0678)
- Domain 2. Functional status, cognitive function, and changes in function and cognitive function:
- Quality Measure: Application of the “Percent of Long-Term Care Hospital Patients With an Admission and Discharge Functional Assessment and a Care Plan that Addresses Function” (NQF #2631; Endorsed on July 23, 2015)
- Domain 3. Incidence of major falls:
- Quality Measure: Application of the “Percent of Residents Experiencing One or More Falls with Major Injury” (NQF #0674)
In addition to the measures listed above, we are adopting four additional functional status quality measures, as well as finalizing the previously finalized quality measure “All-Cause Unplanned Readmission Measure for 30 Days Post Discharge from Inpatient Rehabilitation Facilities” (NQF #2502) in order to establish its newly NQF-endorsed status.
Further, we will begin publically reporting IRF quality data in fall 2016. Our policy for public reporting includes a 30-day period for review and correction of quality data prior to public display.
Finally, we are temporarily suspending our previously finalized data validation policy. CMS is suspending this policy in order to allow time to develop a more comprehensive policy that potentially decreases the burden on IRF providers, allows us to establish an estimation of accuracy related to quality data submitted to CMS, and facilitates the alignment of the IRF validation policy with that of other CMS quality reporting programs policies.
The final IRF PPS rule can be downloaded from the Federal Register at: http://www.federalregister.gov/public-inspection. The rule will publish in the August 06, 2015 Federal Register and the rule will be effective October 01, 2015.
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