On April 23, 2015, CMS released its proposed rule to update Medicare prospective payment system (PPS) rates for inpatient rehabilitation facilities (IRFs) for FY 2016, which begins October 1, 2015. CMS estimates that rates would increase by 1.7% overall ($130 million) under the proposed rule compared to FY 2015 levels. This proposed increase reflects a 2.7% market basket update (using a proposed new IRF-specific market basket) that is reduced by a 0.6 percentage point multi-factor productivity adjustment and an additional 0.2 percentage point reduction required by the Affordable Care Act, with an additional 0.2% decrease resulting from an update to the outlier threshold.

CMS proposes to revise quality measures and reporting requirements under the IRF quality reporting program, including adopting measures to satisfy the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act). Specifically, CMS is proposing to adopt measures in the following three domains for FY 2016: (1) skin integrity and changes in skin integrity; (2) incidence of major falls; and (3) functional status, cognitive function, and changes in function and cognitive function. The reporting of data for these measures would affect the payment determination for FY 2018 and subsequent years. These measures are also being implemented for long-term care hospitals, skilled nursing facilities, and home health agencies. CMS also is proposing other IRF quality provisions, including implementing public reporting of IRF quality data beginning in 2016 and temporarily suspending a current quality data validation policy. In addition, the proposed rule would phase in revised wage index changes. CMS is not proposing changes to the facility-level adjustment factors for FY 2016; CMS will maintain the facility-level adjustment factors at FY 2014 levels.  The official version of the proposed will be published on April 27, 2015, and comments will be accepted until June 22, 2015.