On April 23, 2015, CMS issued (and this morning, published) a proposed rule that would update Medicare payment policies and rates for the Inpatient Rehabilitation Facility (IRF) Prospective Payment System (PPS) for FY 2016.  By comparing the estimated FY 2016 payments with those in FY 2015, CMS estimates the proposed rule would result in a $130 million increase for FY 2016 IRF PPS payments.  Under the proposed rule, CMS also proposes to revise and update quality measures and reporting requirements under the IRF Quality Reporting Program, adopt an IRF-specific market basket to determine the market basket update and labor-related share, and phase in the revised wage index changes. Comments on the proposed rule will be accepted until June 22, 2015.   

CMS estimates that the FY 2016 IRF update would be 1.9 percent, which includes a 2.7 percent market basket update, less a 0.6 percentage point multifactor productivity adjustment and a 0.2 percentage point legislative adjustment. After updating the outlier threshold, CMS estimates that the net revenue impact of the proposed rule for all IRFs would be a 1.7 percent payment increase when compared to payments in FY 2015.  In the proposed rule, CMS also recommends an IRF-specific market basket update, suggesting the adoption of a 2012-based IRF market basket that reflects data for both freestanding and hospital-based IRFs. CMS states that it used FY 2012 data because the Medicare cost reports for that year were the most recent, complete set of Medicare IRF cost report data available at the time.

Also included in the proposed rule are the addition of new quality measures that would impact payment determinations for FY 2018 and beyond, including: (1) All-Cause Unplanned Readmission Measure for 30 Days Post-Discharge from IRFs; and (2) Percent of Residents or Patients with Pressure Ulcers That Are New or Worsened.  CMS also proposes publicly displaying IRF quality data beginning in the fall of 2016 and eventually using a 5-star rating methodology. CMS suggests the initial public display of IRF performance on the following three quality measures: (1) Percent of Residents or Patients with Pressure Ulcers That Are New or Worsened (Short Stay); (2) National Healthcare Safety Network Catheter-Associated Urinary Tract Infection Outcome Measure; and (3) All-Cause Unplanned Readmission Measure for 30 Days Post Discharge From IRFs. 

CMS’s summary of the proposed rule may be found here.