On May 2, 2013, CMS released a proposed rule [PDF] for the Inpatient Rehabilitation Facility Prospective Payment System for fiscal year (FY) 2014.  The proposed rule sets forth Medicare payment policies and rates governing inpatient rehabilitation facilities (IRFs) and certain modifications to the IRF Quality Reporting Program (QRP).

Updated Payment Rates under IRF PPS

As proposed, the rule would update Medicare IRF prospective payment system (PPS) rates for FY 2014. According to CMS projections, aggregate payments to IRFs will increase by $105 million, or 2.0 percent, due to a 1.8 percent payment update. In addition, CMS proposes to update the outlier threshold to increase IRF PPS payments by approximately 0.2 percent.

Revisions to the “60-Percent Rule”

To qualify for IRF PPS rates — which are higher than the hospital inpatient PPS rates — an inpatient hospital must establish that at least 60 percent of its patients meet certain criteria evidencing a presumptive need for intensive inpatient rehabilitation. To this end, an inpatient hospital may establish compliance through either a medical review or the “presumptive” method, in which a patient’s diagnosis codes are compared against a “presumptive compliance” list that includes 13 conditions.

For the first time since 2004, CMS intends to make important modifications to the presumptive methodology policies. For FY 2014, CMS proposes to delete several codes from the “presumptive compliance” list because the described conditions would not prove compliance without additional facts that would have to be drawn from a patient’s medical record. In addition, CMS proposes to revise the list of codes so that it only includes those codes that can be identified presumptively as representing the 13 conditions requiring intensive rehabilitation. The proposed revisions will concern diagnosis codes for the non-specific, arthritis, unilateral upper extremity, and congenital anomalies categories.

Proposed Revisions to the IRF Quality Reporting Program

The IRF Quality Reporting Program, which was originally authorized under the Affordable Care Act, is designed to promote higher quality and more efficient health care for patients receiving care in acute and post-acute settings. CMS is proposing changes to the program, by continuing to use the Catheter-Associated Urinary Tract Infection (CAUTI) outcome measure, adopting the NQF-endorsed version of the Percent of Residents or Patients with Pressure Ulcers that are New or Worsened (Short Stay) measure, and adding the following three new quality measures: (1) NQF #0680 Percent of Resident or Patients Who Were Assessed and Appropriately Given the Seasonal Influenza Vaccine (Short-Stay); (2) NQF #0431 Influenza Vaccination Coverage Among Healthcare Personnel; and (3) All-Cause Unplanned Readmission Measure for an Unplanned Readmission Measure for 30 Days Post Discharge from Inpatient Rehabilitation Facilities. Finally, CMS is proposing to revise the IRF Patient Assessment Instrument (IRF-PAI) to include data elements needed to accommodate risk adjustment and to facilitate implementation of the NQF-endorsed pressure ulcer measure. CMS is proposing to revise the pressure ulcer question set on the IRF-PAI to better reflect current medical practice.

Ober|Kaler’s Comments

Although it offers a variety of reforms, the proposed rule is primarily intended to ensure accurate reimbursement for IRF services and to enhance quality measurement and reporting standards. In addition, the rule would usher in the first significant changes to presumptive methodology policies in a decade. IRF stakeholders that may be affected by these changes are encouraged to submit comments as part of the deliberative rulemaking process.

The final rule was published in the Federal Register on May 8, 2013. CMS will accept public comments on the proposals until July 1, 2013.