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CMS Issues FY 2023 Inpatient Rehabilitation Facility Prospective Payment System Update Proposed Rule

For CEOs, CFOs, CMOs, CNOs, COOs, quality & patient safety staff

The Centers for Medicare & Medicaid Services (CMS) has released its proposed rule updating payments to inpatient rehabilitation facilities (IRFs) for fiscal year (FY) 2023. Comments on the proposed rule are due by 2 p.m. (PT) on May 31. 

For FY 2023, CMS proposes to update the IRF prospective payment system payment rates by 2.8% based on the IRF market basket update of 3.2% less a 0.4 percentage point productivity adjustment. In addition, the proposed rule contains an adjustment to the outlier threshold to maintain outlier payments at 3% of total payments. This adjustment will result in a 0.8 percentage point decrease in outlier payments. Overall, CMS estimates IRF payments for FY 2023 would increase by 2% (or $170 million) relative to payments in FY 2022. 

To mitigate volatility in the IRF wage index, the rule proposes a budget-neutral approach to smooth changes. CMS proposes to permanently cap negative wage index changes greater than a 5% decrease from the prior year. This cap would apply regardless of the underlying reason for the decrease. The rule also codifies CMS’ existing IRF teaching status adjustment policy and clarifies other teaching status adjustment policies. 

In the proposed rule, CMS includes one proposal related to the IRF Quality Reporting Program (QRP). The agency proposes to expand the IRF quality data reporting requirements to all IRF patients regardless of payer. The requirements currently apply to all admitted Medicare IRF patients (Parts A and C). This expanded quality reporting requirement would take effect starting with the FY 2025 IRF QRP. If finalized, providers would need to start collecting the IRF Patient Assessment Instrument on all patients receiving care in an IRF, regardless of payer, beginning on Oct. 1, 2023. 

The proposed rule also seeks comments and includes requests for information on the following topics related to payment and quality. These include: 

  • Methodology for Updating the Facility-Level Adjustment Factors: CMS seeks comments on the methodology used to determine the facility-level adjustment factors. 
  • Inclusion of Home Health in IRF Transfer Policy: Based on recommendations from the Office of Inspector General, CMS plans to analyze home health claims to determine if it should include patients discharged to home health in the IRF transfer policy. The proposed rule seeks comment to inform this analysis and potential future rulemaking. 
  • Inclusion of the NHSN Healthcare-associated C. difficile Infection Outcome Measure in the IRF QRP: CMS requests information on the inclusion of the National Healthcare Safety Network (NHSN) Healthcare-associated Clostridioides difficile Infection Outcome Measure as a digital quality measure in the IRF QRP. 
  • Principles for Measuring Equity and Health Care Quality Disparities: The proposed rule requests information on developing and including health equity quality measures for the IRF QRP. 

Additional information on the proposed rule is available in a CMS fact sheet.