CHA News

CMS Issues Inpatient Rehabilitation Facility Prospective Payment System Final Rule

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On July 27, the Centers for Medicare & Medicaid Services (CMS) issued the federal fiscal year (FFY) inpatient rehabilitation facility (IRF) prospective payment system (PPS) final rule. CMS estimates that total payments to IRFs in FFY 2024 will increase by 4% ($355 million) compared with 2023.  

Key provisions in the final rule include: 

  • Market Basket Update: CMS is increasing the IRF PPS market basket by 3.4% net of the Affordable Care Act-mandated productivity cut of .2%. This is an increase over the proposed rule’s net market basket update of 3%. 
  • Rebased Market Basket: CMS finalizes its proposal to adopt a 2021-based IRF market basket and finalizes changes to the market basket cost weights, price proxies, the market basket percentage increase, and labor-related share. 
  • Labor-Related Share: As a result of rebasing the market basket, CMS also finalizes an update to the wage index labor-related share. The final FFY 2024 labor-related share is 74.1%, which is a 1.2 percentage point increase relative to the FFY 2023 labor-related share of 72.9%. 
  • Faster Enrollment of New Excluded Units: Beginning in FFY 2024, CMS amends the regulations to allow hospitals to open a new excluded IRF unit at any time during the cost-reporting period rather than only at the start of a hospital’s cost-reporting period. This change will allow a hospital’s excluded IRF unit to start being paid under the IRF PPS if the hospital provides at least 30 days’ notice to the CMS Regional Office and Medicare Administrative Contractor.   
  • Inpatient Rehabilitation Facility Quality Reporting Program (QRP): The final rule adopts the discharge function score measure, a measure related to COVID-19 vaccination rates among patients, modifies the health care staff COVID-19 vaccination measure, removes three measures from the IRF QRP, and begins public reporting of the Transfer of Health information measure.  

CMS has also issued a fact sheet. CHA is reviewing the rule and will make a detailed summary available shortly.