MedPAC Issues Draft IRF Payment Recommendations

At the December 4, 2025, Medicare Payment Advisory Commission (MedPAC) annual session on payment adequacy for Medicare providers, draft fiscal year (FY) 2027 payment recommendations were issued. The recommendations, “Assessing Payment Adequacy and Updating Payments: Inpatient Rehabilitation Facility (IRF) Services,” were shared. Included in their presentation were their findings on admissions, financial performance by IRF provider type, quality metrics, and other relevant data points. In addition to the payment-focused sessions, the meeting included a general session on post-acute care trends and “key issues,” which compared various patient- and payment-focused data across IRFs, skilled nursing facilities (SNF), and home health agencies (HHA).

During the IRF payment session, MedPAC advanced a draft recommendation calling for Congress to reduce the 2026 Medicare base payment rate for IRFs by 7 percent in FY 2027. This draft recommendation is identical to last year’s recommendation and marks an increase over the FY 2025 recommendation (a 5% cut to the Medicare base payment rate) and the FY 2024 finalized recommendation (3% cut).

MedPAC’s recommendations are advisory in nature, and most of MedPAC’s work can only be implemented via Congressional action. RCPA will monitor the status of these recommendations through close collaboration with the American Medical Rehabilitation Providers Association (AMRPA).