Press release



Correction- April 25, 2011


The Centers for Medicare & Medicaid Services (CMS) today issued a proposed rule that would update Medicare payment policies and rates for inpatient rehabilitation facilities (IRFs) in Fiscal Year (FY) 2012.   The rule proposes to increase payment rates under the IRF Prospective Payment System (PPS) by a projected 1.8 percent —an estimated $120 million nationwide. The projected update reflects a rebased and revised market basket specific to IRFs, inpatient psychiatric facilities, and long-term care hospitals (the RPL market basket) — currently estimated at 2.8 percent for FY 2012 ‑ less a 1.3 percentage point reduction mandated by the Affordable Care Act, plus 0.3 percentage points due to a proposed adjustment to the outlier threshold.


The proposed rule, which would apply to more than 1,200 Medicare-participating IRFs, including approximately 200 freestanding IRFs and approximately 1,000 IRF units in acute care hospitals and critical access hospitals, seeks to establish a new quality reporting system authorized by the Affordable Care Act. 


“The proposed rule would extend Medicare’s ongoing efforts to use its payments to encourage better care for beneficiaries who are treated in inpatient rehabilitation facilities,” said CMS Administrator Donald Berwick, M.D.  “The measures IRFs would report under the proposed rule will pave the way for Medicare to work with IRFs to improve patient safety, prevent patients from picking up new illnesses during a hospitalization, and provide well-coordinated person-and-family-centered care.”


The proposed quality reporting system is aligned with the goals of the Partnership for Patients, a new public-private partnership that will help improve the quality, safety, and affordability of health care for all Americans.  Initially, IRFs would submit data on two quality measures, “urinary catheter-associated urinary tract infection” and “pressure ulcers that are new or have worsened.”  These proposed measures represent two of the nine conditions the Partnership has identified as important places to begin in efforts to reduce harms to patients.  A third measure that is currently under development is also discussed as a potential measure for future rulemaking cycles.  It would address readmissions within 30 days to another inpatient stay, whether in an acute care hospital, rehabilitation facility, or other setting. 


IRFs that do not submit quality data would see their payments reduced by two percentage points beginning in FY 2014.   CMS anticipates adding measures for reporting in the future through rulemaking.  CMS also plans to establish a process for making the measures data available to the public.  As with other data published on the CMS website, IRFs choosing to report quality data would have an opportunity to review the data for accuracy before it became public.


Other provisions in the proposed rule include proposals to:


  • Update the case-mix group (CMG) relative weights using FY 2010 IRF claims and FY 2009 IRF cost report data, and to set the high cost outlier threshold at $11,822 for FY 2012, compared with $11,410 for FY 2011.  The proposed threshold is projected to maintain outlier payments at three percent of total payments under the IRF PPS in FY 2012.


  • Continue using the pre-reclassified and pre-floor hospital wage data to determine the proposed FY 2012 rates.  For this proposed rule, CMS used the final FY 2011 hospital inpatient prospective payment system (IPPS) pre-reclassified and pre-floor wage data.  CMS is also proposing to update the rural, low-income patient (LIP), and teaching status adjustment factors using the most recent three years of data (FYs 2008 through 2010).


  • Allow IRFs to receive temporary adjustments to their full-time equivalent (FTE) intern and resident caps if they take on interns and residents who are unable to complete their training because the IRF that had been training them either closed or ended its resident training program.


“IRFs need to be at the forefront of the quality movement because they play such a critical role in patient care,” said Dr. Berwick.  “They’re called on to meet the needs of some of our most vulnerable patients, and they’re responsible for making sure each one of them meets their rehabilitation goals and makes real progress towards improved functional independence.”


            CMS will accept comments on the proposed rule until June 21, 2011, and will address all comments in a final rule to be issued by Aug. 1, 2011.


            The proposed rule went on display today at the Federal Register’s Public Inspection Desk and will be available under “Special Filings,” until publication date of April 29, 2011 at:


For more information, please see: