Fact Sheets

Proposed Fiscal Year 2018 Payment and Policy Changes for Medicare Inpatient Rehabilitation Facilities (CMS-1671-P), and releases Request for Information

Proposed Fiscal Year 2018 Payment and Policy Changes for Medicare Inpatient Rehabilitation Facilities (CMS-1671-P), and releases Request for Information

On April 27, 2017, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule outlining proposed fiscal year (FY) 2018 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 2018 proposals are summarized below.

Request for Information (RFI)

In addition to the proposed rule, CMS is releasing a Request for Information to welcome continued feedback on the Medicare Program. CMS is committed to maintaining flexibility and efficiency throughout the Medicare program. Through transparency, flexibility, program simplification and innovation, we aim to transform the Medicare program and promote the availability of high value and efficiently-provided care for its beneficiaries.

We would like to start a national conversation about improving the health care delivery system and about how Medicare can contribute to making the delivery system less bureaucratic and complex, and how we can reduce burden for clinicians, providers and patients in a way that increases quality of care and decreases costs – and thereby making the health care system more effective, simple and accessible while maintaining program integrity and preventing fraud. 

CMS is soliciting ideas for regulatory, sub-regulatory, policy, practice and procedural changes to better accomplish these goals. Ideas could include recommendations regarding payment system re-design, elimination or streamlining of reporting, monitoring and documentation requirements, operational flexibility, feedback mechanisms and data sharing that would enhance patient care, supporting doctor-patient relationship in care delivery, and facilitating patient-centered care. They could also include recommendations regarding when and how CMS issues regulations and policies, and how CMS can simplify rules and policies for Medicare beneficiaries, clinicians, providers and suppliers.

In responding to the RFI, CMS should be provided with clear and concise proposals that include data and specific examples. If the proposals involve novel legal questions, analysis regarding CMS’ authority is welcome. CMS will not respond to RFI comment submissions in the final rule, but rather will actively consider all input in developing future regulatory proposals or future sub-regulatory guidance.

Proposed Updates to IRF Payment Rates:

Update to the payment rates under the IRF PPS. For FY 2018, CMS is proposing to update IRF PPS payments to reflect a 1.0 percent increase factor, in accordance with section 411(b) of the Medicare and CHIP Reauthorization Act of 2015. As we estimate that outlier payments in FY 2017 are 3 percent of total payments, we do not anticipate any change in aggregate outlier payments for FY 2018, resulting in an overall update of 1.0 percent (or $80 million), relative to payments in FY 2017.

No changes to the facility-level adjustments. For FY 2018, 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. FY 2018 is the third and final year of the phase-out of the 14.9 percent rural adjustment for the 20 IRF providers that were designated as rural in FY 2015 and changed to urban under the new Office of Management and Budget (OMB) delineations in FY 2016. Thus, we will no longer apply a rural adjustment for these IRFs. 

Proposed Removal of 25 Percent Payment Penalty for Late Transmissions of the IRF-PAI:

Under the IRF PPS, we currently apply a 25 percent payment penalty to IRF patient assessment instrument (IRF-PAI) submissions that are not timely transmitted to our data repository. We are proposing to eliminate this 25 percent payment penalty.

Proposed Refinements to the 60 Percent Rule Presumptive Methodology:

On October 1, 2015, Medicare transitioned from ICD-9-CM to ICD-10-CM. In the FY 2014 IRF PPS final rule (78 FR 47860) and the FY 2015 IRF PPS final rule (80 FR 45872), we stated that after the adoption of the ICD‑10‑CM medical code set, we would review the presumptive methodology lists in ICD-10-CM (once we had enough ICD-10-CM data available) and make any necessary changes. Over the past year we have performed a comprehensive analysis of the lists with our clinicians and input from industry stakeholders, and are proposing necessary refinements to the lists to ensure that they continue to reflect the list of 60 percent rule qualifying conditions in 42 CFR412.29(b)(2). For FY 2018, we are proposing the following refinements to the ICD-10-CM lists used in determining IRFs’ presumptive compliance to ensure that these lists reflect as accurately as possible the types of patients that should count presumptively toward the 60 percent rule:

  • Addressing certain ICD-10-CM diagnosis codes for patients with traumatic brain injury and hip fracture conditions.
  • Identifying major multiple trauma codes that did not translate exactly (one-for-one) between ICD-9-CM and ICD-10-CM.
  • Removing certain non-specific and arthritis diagnosis codes that were inadvertently re-introduced through the ICD-10-CM conversion process.
  • Removing one ICD-10-CM code (G72.89 – Other specified myopathies), that was identified through our analysis and input from our clinicians as being inappropriately applied to patients with generalized weakness, instead of to patients with clinically identified myopathies. When inappropriately applied in this manner, the code does not represent a condition that presumptively requires intensive rehabilitation. 

Solicitation of Comments Regarding the Criteria Used to Classify Facilities for Payment Under the IRF PPS

In the proposed rule, we are soliciting public comments from stakeholders on the 60 percent rule, including but not limited to the list of conditions, to assist us in generating ideas and information for analyzing refinements and updates to the criteria used to classify facilities for payment under the IRF PPS.

Proposed Technical IRF Process Revisions:

We are proposing the following technical process revisions:

  • Proposed Removal of Voluntary Item for Swallowing Status From IRF-PAI—We are proposing removal of a voluntary item for swallowing status (Item #27) from the IRF-PAI as it is duplicative with a recently added item in the Quality Indicators section.
  • Proposed Sub-regulatory Process for Certain Updates to Presumptive Methodology Diagnosis Code Lists —We are proposing to establish a formal process to distinguish between non-substantive updates to the ICD-10-CM codes on the lists used to determine IRFs’ presumptive compliance with the 60 percent rule that would be applied through a sub-regulatory process, and substantive revisions to the ICD-10-CM codes on the lists that would only be proposed and finalized through notice and comment rulemaking. The proposed sub-regulatory process would be used to update the ICD-10-CM codes on the presumptive methodology lists to ensure that they reflect the most current ICD-10 medical code data sets, which are typically updated effective October 1 of each year.
  • Proposed Use of IRF-PAI Data to Determine Patient Body Mass Index (BMI) Greater Than 50 for Cases of Lower Extremity Single Joint Replacement—We are proposing to use the height/weight items (items #25A and 26A) on the IRF-PAI to calculate patients’ BMI, and to use this information to determine and presumptively count lower-extremity joint replacement patients with a BMI greater than 50 toward an IRF’s presumptive compliance percentage, in accordance with the regulations at 412.29(b)(2)(xiii)(B).

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

Under the IRF QRP, the applicable annual payment update for any IRF that did not submit the required data to CMS is reduced by two percentage points. In this FY 2018 proposed rule, CMS is proposing to replace the current pressure ulcer measure with an updated version of that measure. In addition, CMS is proposing to remove the All-Cause Unplanned Readmission measure. CMS is also proposing to begin publically reporting six new measures for display on the IRF Compare Website by fall 2018. 

Beginning with FY 2019 IRF QRP, standardized patient assessment data must be reported by IRFs. We propose to satisfy this requirement using the data submitted on the existing pressure ulcer measure. For the FY 2020 program year, CMS is proposing that IRFs begin reporting standardized patient assessment data with respect to 5 specified patient assessment categories required by law that include:

1. functional status;
2. cognitive function;
3. special services, treatments and interventions;
4. medical conditions and co-morbidities; and
5. impairments. 

Lastly, CMS is making proposals with respect to the applicability of current procedural requirements.

CMS will accept comments on the proposed rule until June 27, 2017. The proposed IRF PPS rule can be downloaded from the Federal Register at:  

It will publish in the April 27, 2017 Federal Register.