Fiscal Year 2024 Inpatient Rehabilitation Facility Prospective Payment System Proposed Rule (CMS-1781-P)
On April 3, 2023, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule to update Medicare payment policies and rates under the Inpatient Rehabilitation Facility (IRF) Prospective Payment System (PPS) and the IRF Quality Reporting Program (QRP) for fiscal year (FY) 2024. CMS is publishing this proposed rule in accordance with the legal requirements to update Medicare payment policies for IRFs on an annual basis.
For FY 2024, CMS is proposing to update the IRF PPS payment rates based on the proposed IRF market basket update, less a proposed productivity adjustment. The proposed rule includes annual updates to the prospective payment rates, the outlier threshold, the case-mix-group relative weights and average length of stay values, the wage index, and associated impact analysis. In addition, the rule includes a proposal to revise and rebase the IRF market basket, as well as a proposal to modify its regulations to allow hospitals to open and begin billing Medicare for an excluded IRF unit anytime within the cost reporting year.
CMS is also proposing two new and one modified measure proposals for the IRF Quality Reporting Program (QRP). In addition, CMS is proposing three measure removals and is proposing one public reporting policy.
This fact sheet discusses the provisions of the proposed rule. The FY 2024 Inpatient Rehabilitation Facility Prospective Payment System proposed rule (CMS-1781-P) can be downloaded from the Federal Register at https://www.federalregister.gov/public-inspection/2023-06968/medicare-program-inpatient-rehabilitation-facility-prospective-payment-system-for-federal-fiscal .
Proposed Updates to the FY 2024 IRF PPS Payment Policies
For FY 2024, CMS is proposing to update the IRF PPS payment rates by 3.0 percent based on the proposed IRF market basket update of 3.2 percent less a proposed 0.2 percentage point productivity adjustment. CMS is proposing that if more recent data become available (for example, a more recent estimate of the market basket update or productivity adjustment), CMS would use these data, if appropriate, to determine the FY 2024 market basket update and the productivity adjustment in the final rule. In addition, the proposed rule contains an adjustment to the outlier threshold to maintain outlier payments at 3.0 percent of total payments. This adjustment would result in a 0.7 percentage point increase in outlier payments. CMS estimates that overall IRF payments for FY 2024 would increase by 3.7 percent (or $335 million) relative to payments in FY 2023.
Proposed Modification to the Excluded Unit Regulation
CMS proposes to allow hospitals to open a new IRF unit and begin being paid under the IRF PPS at any time during the cost reporting period, provided the hospital notifies the CMS Regional Office and the Medicare Administrative Contractor in writing at least 30 days before the date of the change and maintains the information needed to accurately determine the costs attributable to the IRF unit. Such a change would also remain in effect for the rest of the cost reporting period. CMS believes this will alleviate unnecessary burden and administrative complexity placed upon hospitals and increase access to care.
Rebase and Revise the IRF Market Basket
Approximately every four years, CMS rebases and revises the IRF market basket used to update IRF PPS payments to reflect more recent data on IRF cost structures. CMS last rebased and revised the IRF market basket in the FY 2020 IRF PPS rule, where CMS adopted a 2016-based IRF market basket. The proposal for FY 2024 would be to adopt a 2021-based IRF market basket and includes proposed changes to the market basket cost weights, price proxies, market basket update, and labor-related share.
Proposed Updates to the IRF QRP
The IRF QRP is a pay-for-reporting program. IRFs that do not meet reporting requirements are subject to a two-percentage point reduction in their Annual Increase Factor.
In the FY 2024 IRF PPS proposed rule, CMS is proposing to:
- Adopt the Discharge Function Score measure beginning with the FY 2025 QRP. This measure assesses functional status by assessing the percentage of IRF patients who meet or exceed an expected discharge function score, and uses mobility and self-care items already collected on the IRF Patient Assessment Instrument (IRF-PAI). The adoption of this measure would replace the Application of Percent of Long-Term Care Hospital Patients with an Admission and Discharge Functional Assessment and a Care Plan (Application of Functional Assessment/Care Plan) measure, as discussed below.
- Adopt the COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date (Patient/Resident COVID-19 Vaccine) measure beginning with the FY 2026 IRF QRP. The measure reports the percentage of stays in which patients in an IRF are up-to-date with recommended COVID-19 vaccinations in accordance with the Centers for Disease Control and Prevention’s (CDC’s)most recent guidance. Data would be collected using a new standardized item on the IRF-PAI.
- Modify the COVID-19 Vaccination Coverage among Healthcare Personnel (HCP COVID-19 Vaccine) measure beginning with the FY 2025 IRF QRP. This measure tracks the percentage of healthcare personnel (HCP) in IRFs who are considered up to date with recommended COVID-19 vaccination in accordance with the CDC’s most recent guidance. The prior version of this measure reported only on whether HCP had received the primary vaccination series for COVID-19, while the proposed modification of this measure would require IRFs to report the cumulative number of HCP who are up-to-date with recommended COVID-19 vaccinations in accordance with the CDC’s most recent guidance.
- Remove three measures from the IRF QRP beginning with the FY 2025 IRF QRP. The measures we are proposing to remove are: (1) the Application of Functional Assessment/Care Plan measure; (2) the IRF Functional Outcome Measure: Change in Self-Care Score for Medical Rehabilitation Patients (Change in Self-Care Score) measure; and (3) the IRF Functional Outcome Measure: Change in Mobility Score for Medical Rehabilitation Patients (Change in Mobility Score) measure. We propose removal of the Application of Functional Assessment/Care Plan measure because it meets conditions for measure removal factors one (that is, measure performance among IRFs is so high and unvarying that meaningful distinctions in improvements in performance can no longer be made) and six (that is, the proposed DC Function measure is more strongly associated with desired patient functional outcomes). We propose removal of the Change in Self-Care Score and Change in Mobility Score measures because they meet the condition for measure removal factor eight (that is, the costs associated with a measure outweigh the benefits of its use in the IRF QRP). Additionally, the Change in Self-Care Score and Change in Mobility Score measures are similar or duplicative of other measures within the IRF QRP.
- Begin the public reporting of the Transfer of Health Information to the Provider—PAC Measure and the Transfer of Health Information to the Patient—PAC Measure beginning with the September 2024 Care Compare refresh or as soon as possible. These measures report the percentage of patient stays with a discharge assessment indicating that a current reconciled medication list was provided to the subsequent provider or to patients or their families or caregivers at discharge or transfer.