On April 22, 2011, CMS issued a proposed rule to update the Medicare rates for inpatient rehabilitation facilities (IRFs) in Fiscal Year (FY) 2012 and to establish a new IRF quality-reporting program authorized by the Affordable Care Act.

The proposed payment increase under the IRF PPS is 1.5 percent, an estimated $120 million nationwide which would apply to more than 1,200 Medicare-participating IRFs. With respect to the quality-reporting program, IRFs would be required to submit data on quality measures to CMS. If an IRF does not submit quality data, its payments would be reduced by two percentage points starting in FY 2014. “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,” said CMS Administrator Donald Berwick, M.D.

Another significant provision in the proposed rule, among others, includes a proposal to allow IRFs to receive temporary adjustments to their full-time equivalent intern and resident caps where they accept 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.

CMS will accept comments on the proposed rule until June 21, 2011, and the final rule will be issued by August 1, 2011. The CMS press release regarding the proposed changes for IRFs is available here.