Fact Sheets

Fiscal Year 2020 Payment and Policy Changes for Medicare Inpatient Rehabilitation Facilities (CMS-1710-F)

Fiscal Year 2020 Payment and Policy Changes for Medicare Inpatient Rehabilitation Facilities (CMS-1710-F)

On July 31, 2019, the Centers for Medicare & Medicaid Services (CMS) issued a final rule that updates Medicare payment policies and rates for facilities under the Inpatient Rehabilitation Facility Prospective Payment System (IRF PPS) and the Inpatient Rehabilitation Quality Reporting Program (IRF QRP) for fiscal year (FY) 2020. This final rule moves the agency closer to unified post-acute care payment and updates IRF payment rates as required by statute. 

Strengthening Medicare:

We are continuing our efforts towards the eventual transition to a unified post-acute care system, through updates to the data used for IRF payments, including revising the case-mix groups (CMGs), updating the CMG relative weights and average length of stay values, and using concurrent inpatient prospective payment system (IPPS) wage index data for the IRF PPS to align wage index data across settings of care.  

This fact sheet discusses the major provisions of the final rule.  The final rule can be downloaded from the Federal Register at:

Updates to IRF Payment Rates:

For FY 2020, CMS is finalizing updates to the IRF PPS payment rates using the most recent data to reflect an estimated 2.5 percent increase factor (reflecting an IRF-specific market basket increase factor of 2.9 percent, reduced by a 0.4 percentage point multifactor productivity adjustment). CMS projects that IRF payments will increase by 2.5 percent (or $210 million) for FY 2020, relative to payments in FY 2019. The updated IRF PPS payment rates will strengthen Medicare’s relationships with providers by increasing their payment rates to reflect the cost of inflation and in turn, help to ensure high-quality care and patient safety.

Case-Mix Group Revisions (using FY 2017 and FY 2018 data):

In the FY 2019 IRF PPS final rule (83 FR 38514), CMS finalized the removal of the Functional Independence Measure (FIM) items from the IRF patient assessment instrument beginning on October 1, 2019 to reduce regulatory burden for providers. The removal of the FIM items necessitates using different items from the quality indicator section of the IRF patient assessment instrument (quality indicator items) that capture similar information on functional status to classify patients into payment groups. Therefore, we also finalized the use of certain quality indicator data items for payment purposes beginning on October 1, 2019. 

In the FY 2019 final rule, we stated that we would conduct our analysis to revise the case-mix groups using two years of data (FY 2017 and FY 2018) and that we would propose any necessary revisions to the case-mix groups through rulemaking prior to effective date of the use of these quality indicator items on October 1, 2019.  The use of the quality indicator data items requires some minor changes to the payment groups and the associated payments for each group to ensure that payments accurately reflect the costs of caring for patients in each of the updated payment groups, and moves us a step closer to unified post-acute care payment.  We believe beneficiaries and taxpayers would benefit from unified post-acute care payment because beneficiaries would have a wider choice of post-acute care providers. 

For FY 2020, we are finalizing revisions to the case-mix groups based on two years of data (FY 2017 and FY 2018) from the quality indicator data items and updating the relative weights and average length of stay values associated with the revised case-mix groups beginning on October 1, 2019. Although we proposed to use a weighted motor score to assign patients to CMGs, we are finalizing the use of an unweighted motor score beginning with FY 2020 to ease providers’ transition to the use of the quality indicator data items for payment purposes beginning on October 1, 2019. We are also finalizing the removal of one item from the motor score.

Rebase and Revise the IRF Market Basket:

We are rebasing and revising the IRF market basket to reflect a 2016 base year.  The forecasted 2016-based IRF market basket update for FY 2020 is 2.9 percent.  The forecasted multifactor productivity adjustment for FY 2020 is 0.4 percent.  The labor-related share will increase from 70.5 percent in FY 2019 to 72.7 percent in FY 2020. 

Clarification of “Rehabilitation Physician”:

We are amending the regulations to clarify that the determination as to whether a physician qualifies as a rehabilitation physician (that is, a licensed physician with specialized training and experience in inpatient rehabilitation) is to be determined by the IRF, as the provider is in the best position to make that determination.  

Ensuring Quality:

We are finalizing 2 new quality measures to implement the final requirements of the Improving Medicare Post-Acute Transformation (IMPACT) Act.  Those two measures are: 1) Transfer of Health Information (TOH) from IRF to another Provider and 2) Transfer of Health Information (TOH) from IRF to the Patient.

IRF Quality Reporting Program (QRP):

In this final rule, we are adopting two new quality measures that satisfy the IMPACT Act domain pertaining to the transfer of health information when a patient is transferred or discharged from the IRF to another PAC provider or the home of the individual. Specifically, both of these measures would assess whether the IRF provides a reconciled medication list at the time of transfer or discharge. They also support the CMS Meaningful Measures initiative of promoting effective communication and coordination of care, specifically the meaningful measure area of the transfer of health information and interoperability.

In addition, CMS is adopting a number of standardized patient assessment data elements (SPADEs). These SPADEs assess key domain areas including functional status, cognitive function and mental status, special services, treatments and interventions, medical conditions and comorbidities, impairments, and social determinants of health (SODH). The addition of these SPADEs to the IRF-Patient Assessment Instrument (IRF-PAI) will improve coordination of care and enable communication between PAC providers and other members of the healthcare community, aligning with CMS’s strategic initiative to improve interoperability.

CMS is also updating the specifications for the Discharge to Community PAC IRF QRP measure to exclude baseline nursing home residents.  We are also finalizing our policy to no longer publish a list of compliant IRFs on the IRF QRP website. We proposed to collect standardized patient assessment data and other data required to calculate quality measures using the IRF PAI on all patients, regardless of the patient’s payer; however, in response to stakeholder feedback, we have decided not to finalize this proposal.  


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