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irf pps

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On September 24, 2025, WellSky will be conducting a webinar on the fiscal year (FY) 2026 inpatient rehabilitation facility prospective payment system (IRF PPS) final rule that was released by the Centers for Medicare and Medicaid Services (CMS) in early August. The webinar will begin at 12:00 pm. There is no cost to participate in this webinar.

Topics will include:

  • The key changes in the 2026 IRF Final Rule impacting reimbursement;
  • The technical changes and their indirect effects on your program;
  • The amendments to the QRP and the appeal process; and
  • The latest concerns about potential IRF reimbursement denials.

To participate in the webinar, register here.

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The Centers for Medicare and Medicaid Services (CMS) released and published the fiscal year (FY) 2025 inpatient rehabilitation facility prospective payment system (IRF PPS) final rule in the August 6, 2024, Federal Register. Some of the key provisions contained in the provider rule are noted below.

Payment Updates

CMS estimates aggregate payments to IRFs will increase by 2.8 percent in FY 2025, compared to the 4.0 percent payment update that CMS finalized for FY 2024. This update is the result of an annual market basket update, reduced by a productivity adjustment, budget neutrality adjustments for changes to CMG weights and labor/wage changes, and adjustments to the outlier case threshold.

As in previous years, CMS will adopt new delineations for the Core-Based Statistical Areas (CBSA) as identified by the Office of Management and Budget (OMB). [Additional and more detailed information on these new CBSAs can be found in OMB Bulletin No. 23-01] These changes will result in certain counties being reclassified from urban to rural and vice-versa, as well as some counties shifting to different CBSAs. As a result, CMS projects that approximately 10 percent of providers will have a higher wage index, but 16 percent will face a decrease in wage index values (primarily for those reclassified as urban, thus losing the rural adjustment). Thus, CMS finalized a transitional “phase-out” policy for those negatively impacted, such that IRFs set to lose their rural adjustment will retain two-thirds of the adjustment in FY 2025, one-third of the adjustment in FY 2026, and fully “lose” the rural adjustment in FY 2027. CMS estimates that 8 IRFs would be reclassified as urban and thus lose the 14.9 percent rural adjustment.

CMS increased the outlier threshold amount from $10,423 for FY 2024 to $12,043 for FY 2025 (slightly lower than the proposed rule’s projection). This change will account for an estimated 0.2 percent decrease to aggregate payments across the IRF PPS in FY 2025.

Quality Reporting Program (QRP) Updates

CMS finalized its proposal to adopt four new items as Standardized Patient Assessment Data Elements (SPADE) under the social determinants of health (SDOH) category beginning with the FY 2028 IRF QRP: one Living Situation item; two Food items; and one Utilities item. CMS notes that these new SPADES are intended to assist IRFs in “better addressing those identified needs with the patient, their caregivers, and community partners during the discharge planning process, if indicated.”

Transportation Item Modification Finalized Beginning with the FY 2028 IRF QRP (October 1, 2026 Implementation)

Consistent with the AHC HRSN Screening Tool, CMS finalized a proposal to modify the A1250. Transportation item currently collected in the IRF–PAI in two ways: (1) revise the look-back period for when the patient experienced lack of reliable transportation; and (2) simplify the response options.

  • A1250. Transportation currently collected in the IRF-PAI asks: “Has lack of transportation kept you from medical appointments, meetings, work, or from getting things needed for daily living?” The response options are: (A) Yes, it has kept me from medical appointments or from getting my medications; (B) Yes, it has kept me from non-medical meetings, appointments, work, or from getting things that I need; (C) No; (X) Patient unable to respond; and (Y) Patient declines to respond.
  • The finalized Transportation item asks, “In the past 12 months, has a lack of reliable transportation kept you from medical appointments, meetings, work or from getting things needed for daily living?” The final response options are: (0) Yes; (1) No; (7) Patient declines to respond; and (8) Patient unable to respond.

Finalized Proposal to Remove the Admission Class Item From the IRF-PAI Beginning October 1, 2026, with Minor Modification

  • CMS asserts that the Admission Class Item is currently not used in the calculation of quality measures already adopted in the IRF QRP. It further notes that it is not used for previously established purposes unrelated to the IRF QRP, such as payment, survey, or care planning. This removal will be effective beginning with the FY 2028 IRF QRP (beginning with patients admitted on October 1, 2026); however, IRFs will not be required to collect this item beginning with patients admitted on October 1, 2024.

For additional information, CMS published a fact sheet that provides an overview of the provisions contained in the final rule.

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The Centers for Medicare and Medicaid Services (CMS) has released the fiscal year (FY) 2025 inpatient rehabilitation facility prospective payment system (IRF PPS) proposed rule. The proposed rule will be published in the March 29, 2024, Federal Register. A high-level overview of the proposed rule is provided below:

Payment Updates:

CMS estimates an overall increase in aggregate payments to IRFs by 2.5% or $255 million (compared to the 4% payment update in FY 2024).

Market basket update for IRF services is 3.2%. This will be reduced by a productivity adjustment of 0.4%, which would result in an overall 2.8% increase. These figures are likely to change due to updated forecasts.

CMS is proposing to update the outlier threshold amount from $10,423 (FY 2024) to $12,158 (FY 2025), which would account for an estimated 0.2 percent decrease to aggregate payments across the IRF PPS in FY 2025.

Quality Reporting Program (QRP) Updates:

CMS is proposing to make additions, modifications, and removals of some QRP measures. A proposal was included to collect four new Standardized Patient Assessment Data Elements (SPADE) in the IRF QRP to bolster the collection of information on social determinants of health (SDOH):

  • Living Situation: Requests regarding the current living situation;
  • 2 Food Items: Questions about food running out;
  • Utilities: Questions about threats to shutting off utilities; and
  • A modification to an existing SPADE on Transportation.

CMS is also proposing to remove the “Admission Class” from the IRF Patient Assessment Instrument (PAI).

Feedback is requested on future revisions to the IRF QRP, as well as feedback on the development of a five-star methodology for IRFs.

Additional information will be forthcoming. Comments on the proposed rule are due to CMS by the end of May.

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The Centers for Medicare and Medicaid Services (CMS) will be conducting a webinar on the inpatient rehabilitation facility prospective payment system (IRF PPS) coverage requirements. The webinar is scheduled for November 29, 2023, from 1:30 pm – 2:30 pm.

During this webinar, CMS will:

  • Review IRF PPS coverage requirements from pre-admission to discharge;
  • Provide a refresher on existing payment requirements; and
  • Answer common IRF PPS Helpdesk questions.

Following the webinar, CMS will post a recording on the IRF PPS web page. To participate in the webinar, register here.

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The Centers for Medicare and Medicaid Services (CMS) released the fiscal year (FY) 2024 inpatient rehabilitation facility (IRF) prospective payment system (PPS) final rule in the August 2, 2023, Federal Register. Some of the key provisions contained in the final rule include:

Payment and Coverage Provisions

  • FY 2024 Market Basket Update and Productivity Adjustment: For the FY 2024 IRF PPS payment adjustments, CMS estimates that ‎IRFs will see a 4.0 percent increase in total payments (totaling an increase of $355 million) ‎relative to FY 2023. This update is a result of a 3.6 percent market basket update, minus a ‎‎0.2 percent productivity adjustment.
  • 2021-Based IRF Market Basket: The final rule rebases and revises the IRF market ‎basket to reflect a 2021 base year (which reflects more recent data). ‎Moving forward, CMS says that it will “continue to monitor the Medicare cost report ‎data as they become available” and consider updates to the IRF market basket in future ‎rulemaking.‎
  • Case Mix Groups: Consistent with the proposed rule, CMS estimates that the vast ‎majority of cases will be in case mix groups (CMGs) and tiers that will see a ‎change of less than 5 percent in FY 2024. ‎
  • Outlier Threshold: CMS is finalizing the outlier threshold amount of $10,423, which is estimated to be ‎approximately 3 percent of the total estimated aggregate IRF payments in 2024. CMS also ‎notes that finalized changes in the Average Length of Stay (ALOS) values for FY 2024, ‎compared with FY 2023 ALOS values, are small and do not show any particular trends ‎in IRF length of stay patterns.
  • Wage Adjustments and Labor-Related Share: CMS finalized proposals to update the ‎wage index adjustments using the same methodology and factors as previous updates. ‎Based on forecasts, the total labor-related share for FY ‎‎2024 is 74.1 percent (the sum of 70.3 percent for operating costs and 3.8 percent for the labor-related share ‎of Capital-Related costs).
  • Impact Estimate: Overall, the estimated payments per discharge for IRFs in FY 2024 ‎are projected to increase by 4.0 percent, compared with the estimated payments in FY 2023. ‎IRF payments per discharge are estimated to increase by 4.0 percent in urban areas and 3.6 percent ‎in rural areas, compared with estimated FY 2023 payments. Payments per discharge to ‎rehabilitation units are estimated to increase 4.5 percent in urban areas and 3.9 percent in rural ‎areas. Payments per discharge to freestanding rehabilitation hospitals are estimated to ‎increase 3.7 percent in urban areas and 2.8 percent in rural areas.‎
  • Modifications for Excluded IRF Units: Consistent with the proposed rule, CMS is ‎finalizing new flexibilities for rehabilitation units that are seeking to be excluded from ‎the acute inpatient PPS and paid under the IRF PPS for the first time. Hospitals will now ‎be allowed to open a new IRF unit (and get paid as such) at any time within the cost ‎reporting year, instead of being limited to only the beginning of a cost reporting period. ‎The hospital must notify the CMS Regional Office and Medicare Administrative ‎Contractor (MAC) in writing at least 30 days before the change. If a unit becomes ‎excluded during a cost reporting year, that change must remain in effect at least through ‎the rest of that cost reporting period. ‎

Quality Reporting Program (QRP) Provisions: ‎CMS finalized all of the proposed changes related to quality measures for the IRF QRP put forth in the proposed ‎rule. The following changes have been finalized for the IRF QRP:

  • Implementation of the New COVID-19 Vaccine for Patients: Data collection for the ‎‎“Percent of Patients/Residents Who Are Up-to-Date” will be placed on an updated IRF-‎Patient Assessment Instrument (PAI) and begin with discharges on or after October 1, 2024, for use in the FY 2026 IRF ‎QRP.‎
  • Update of the COVID-19 Vaccination Measure for Healthcare Personnel: CMS ‎finalized its proposed modification of the COVID-19 Vaccination Coverage among‎ ‎Healthcare Personnel (HCP COVID-19 Vaccine) measure‎ to include the CDC “up-to-‎date” consideration for reporting purposes. Data collection for this modification is to ‎begin October 1, 2023, for use in the FY 2025 IRF QRP.‎
  • Implementation of the New Discharge Function Score Measure: No new data ‎collection is required, but the calculations and reporting of this measure will begin with ‎discharges on or after October 1, 2023, for use in the FY 2025 IRF QRP.‎
  • Measure Removal: Three measures have been removed from the IRF QRP and will no ‎longer require the collection of certain data elements for discharges on or after October ‎‎1, 2023:‎
    • Application of Percent of Long-Term Care Hospital Patients with an Admission ‎and Discharge Functional Assessment and a Care Plan That Addresses Function;
    • IRF Functional Outcome Measure: Change in Self-Care Score for Medical ‎Rehabilitation Patients (CBE #2633)‎; and
    • IRF Functional Outcome Measure: Change in Mobility Score for Medical ‎Rehabilitation Patients (CBE #2634)‎.
  • New Public Reporting: CMS announced the start of public reporting for the following ‎measures:‎
    • Transfer of Health (TOH) Information to the Provider — Post-Acute Care (PAC) ‎Measure (TOH-Provider) beginning with September 2025 Care Compare refresh ‎‎(even though proposed rule and other language in final rule stated September ‎‎2024 Care Compare refresh)‎. CMS staff has been alerted to this discrepancy.
    • TOH Information to the Patient — PAC Measure (TOH-Patient) beginning with ‎September 2025 Care Compare refresh (even though proposed rule and other ‎language in final rule stated September 2024 Care Compare refresh)‎.
    • Discharge Function Score Measure — Beginning with the September 2024 Care ‎Compare refresh or as soon as technically feasible.‎
    • COVID-19 Vaccine: Percent of Patients/Residents Who Are Up-to-Date Measure — Beginning with the September 2025 Care Compare refresh or as soon as ‎technically feasible.‎

CMS also released a fact sheet on the final rule. The data files associated with the final rule, including the wage index tables, the rate setting data for each IRF, and the ‎final tables for case-mix groups, relative weights, and average lengths of stay are also available. Unless otherwise ‎noted above, the provisions in the final rule will take effect on October 1, 2023. ‎

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Late yesterday, the Centers for Medicare and Medicaid Services (CMS) issued the fiscal year (FY) 2024 inpatient rehabilitation facility prospective payment system (IRF PPS) proposed rule.

The proposed rule includes a 3.7 percent payment increase, compared to the 3.9 percent payment update that CMS finalized for FY 2023. This payment update reflects the effects of the proposed IRF market basket update for FY 2024 of 3.0 percent, which is based on the proposed IRF market basket increase factor (3.2 percent), productivity adjustment (0.2 percent), and outlier payment increase (0.7 percent).
** Please note that these figures are subject to change in the final rule if updated forecasts become available, which typically occurs.

CMS is making a number of changes to the Quality Reporting Program (QRP), including the future addition of a discharge function score measure and patient-level COVID vaccination measure as well as a modification of the current healthcare personnel COVID-19 vaccination measure to reflect the latest vaccination recommendations.

In addition, CMS is proposing to allow hospitals to open a new IRF unit and begin being paid under the IRF PPS at any time during the cost reporting period (rather than the current restrictive enrollment rules). The proposed rule does not address any of the COVID-19 PHE waivers, including the three-hour rule and virtual team conferences, nor does it include any further discussion of the expanded transfer policy (to include certain discharges under the care of home health) that was the subject of a Request for Information (RFI) in last year’s rule.

A more detailed and extensive summary of the proposed rule will be forthcoming.

The proposed rule will be published in the Federal Register for April 7, 2023. Comments on the proposed rule will be considered until 5:00 pm on June 2, 2023. For additional information, CMS also released a fact sheet.

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The Centers for Medicare and Medicaid Services (CMS) has released the fiscal year (FY) 2023 inpatient rehabilitation facility prospective payment system (IRF PPS) final rule that was published in today’s Federal Register. Some of the key provisions contained in the final rule are provided below:

Final FY 2023 Payment Updates
CMS estimates overall payments to IRFs will increase by 3.2 percent compared to FY 2022 levels (higher than the 2 percent estimated in the proposed rule). This update is the result of a 4.2 percent update to the IRF market basket reduced by a 0.3 percent productivity adjustment, which is required by law. As a result of this market basket increase and a few small budget neutrality adjustments, the standard payment conversion factor will increase from $17,240 to $17,878. ‎CMS is also adjusting the outlier threshold, which it says will reduce overall payments by 0.6 percent. CMS says the 3.2 percent overall increase will result in $275 million in increased payments to IRFs compared to 2022.

Proposed Expansion of IRF Transfer Policy to Include Home Health Services
CMS issued a Request for Information (RFI) in the proposed rule regarding the potential expansion of the current IRF transfer payment policy to include home health services. For background, IRFs receive a reduced case mix group (CMG) payment rate under the IRF transfer policy when the patient’s discharge occurs earlier than the average length of stay (for that respective CMG and tier) and the patient is discharged to a certain setting (an IRF, acute-care hospital, LTCH, nursing home that takes Medicare and Medicaid payment). The policy currently does not apply to home health.

The RFI in this year’s rule followed a December 2021 Office of Inspector General (OIG) report finding that Medicare could have saved over $993 million had the IRF transfer policy been expanded to include home health services (based on 2017 and 2018 data). The OIG therefore recommends that CMS explore ways to capture early discharges to home health care in the current policy, which CMS referenced in the proposed rule. Following a review of concern cited in stakeholder comments, CMS is not moving forward with any changes to the transfer policy at this time.

IRF Quality Reporting Program Changes & Requests for Information All-Payer IRF-PAI Reporting Proposal
CMS proposed to require collection of the IRF-PAI for all IRF patients, including those without Medicare, beginning with the FY 2025 IRF QRP (with data collection to begin on October 1, 2023). Currently the IRF-PAI is only required to be collected for Medicare Part A (fee-for-service) and Part C (Medicare Advantage) beneficiaries. In response to comments, CMS opted to finalize the proposal but with a revised implementation date. IRFs will now be required to collect IRF-PAIs on all patients, regardless of payer, for the FY 2026 IRF QRP (data collection to begin on October 1, 2024).

RFI on Future QRP Measure Expansions
CMS had issued a Request for Information (RFI) related to measures/concepts for use in the QRP in future years in the proposed rule. The agency specifically requested information on a cross-setting function measure that would include self-care and mobility items, and development of a patient-level COVID-19 vaccination measure. CMS referenced several of AMRPA’s comments, including concerns that IRF stays are typically not long enough to adequately capture COVID-19 vaccination for patients. CMS did not provide a response to comments but affirmed the agency would use the stakeholder feedback to inform future rulemaking.

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On March 31, 2022, the Centers for Medicare and Medicaid Services (CMS) released the fiscal year (FY) 2023 inpatient rehabilitation facility prospective payment system (IRF PPS) proposed rule.

Some of the key provisions contained in this proposed rule include:

Proposed Updates to the FY 2023 IRF PPS Payment Policies
CMS is proposing to update the IRF PPS payment rates by 2.8 percent based on the IRF market basket update of 3.2 percent less than a 0.4 percentage point productivity adjustment. CMS is proposing that if more recent data becomes available (for example, a more recent estimate of the market basket update or productivity adjustment), they would use this data, if appropriate, to determine the FY 2023 market basket update and the productivity adjustment in the final rule. In addition, the proposed rule contains an adjustment to the outlier threshold to maintain outlier payments at 3.0 percent of total payments. This adjustment will result in a 0.8 percentage point decrease in outlier payments. The estimated overall IRF payments for FY 2023 would increase by 2.0 percent (or $170 million), relative to payments in FY 2022.

Proposed Permanent Cap on Wage Index Decreases
CMS is proposing a permanent 5 percent cap on annual wage index decreases to smooth year-to-year changes in providers’ wage index payments.

Soliciting Comments on the Office of Inspector General (OIG) Recommendation to Include Home Health in the IRF Transfer Policy
A recent Office of Inspector General (OIG) report that evaluated early discharges from IRFs to home health recommended that CMS expand the IRF transfer payment policy to apply to early discharges to home health. CMS is requesting feedback from stakeholders about potentially including home health in the IRF transfer payment policy, as recommended by OIG. CMS plans to analyze home health claims to determine the appropriateness of including home health in the IRF transfer policy, and is seeking comments to inform this future analysis and any potential future rulemaking.

Soliciting Comments on the Methodology for Updating the Facility-Level Adjustment Factors
CMS is seeking public comments regarding the methodology used to determine the facility-level adjustment factors and suggestions for what may be driving the variability in the IRF teaching status adjustment factor.

IRF Teaching Status Adjustment Policy
CMS is proposing to codify the longstanding IRF teaching status adjustment policy in regulation and clarify certain teaching status adjustment policies.

Proposed Updates to the IRF Quality Reporting Program (QRP)
The IRF QRP is a pay-for-reporting program. IRFs that do not meet reporting requirements are subject to a 2.0 percentage point reduction in their Annual Increase Factor (AIF). CMS is proposing one policy change and is initiating three Requests for Information (RFIs) related to the IRF QRP.

Quality Data Reporting on All IRF Patients Regardless of Payer
CMS is proposing to expand the IRF qualify data reporting requirements, which currently apply to all admitted IRF patients with Medicare Part A fee-for-service (FFS) and Medicare Part C, such that IRFs would begin collecting data on all IRF patients, regardless of payer. This policy proposal would help to ensure all IRF patients are receiving the same quality of care and that provider metrics reflect performance across the spectrum of IRF patients. CMS is proposing that this expanded quality reporting requirement would take effect starting with the FY 2025 IRF QRP, meaning providers would need to start collecting the IRF-Patient Assessment Instrument (PAI) assessment on all patients receiving care in an IRF, regardless of payer, beginning on October 1, 2023.

Inclusion of the National Healthcare Safety Network (NHSN) Healthcare-Associated Clostridioides difficile (C. difficile) Infection Outcome Measure in the IRF QRP — Request for Information (RFI)
CMS is seeking stakeholder feedback on the future inclusion of the National Healthcare Safety Network (NHSN) Healthcare-associated Clostridioides difficile Infection (HA-CDI) Outcome Measure as a digital quality measure in the IRF QRP. This measure tracks the development of new C. difficile infection among patients already admitted to IRFs, using algorithmic determinations from data sources widely available in electronic health records. This measure improves on the existing NHSN Facility-wide Inpatient Hospital-onset Clostridium difficile Infection (CDI) Outcome Measure (NQF #1717) by requiring both microbiologic evidence of C. difficile in stool and evidence of antimicrobial treatment. Through this RFI, CMS would like to assess the feasibility of this digital measure in IRFs. If this type of measure is proposed and finalized in a future rule, this would be the first digital measure in the IRF QRP.

Overarching Principles for Measuring Equity and Healthcare Quality Disparities Across CMS Quality Programs — Request for Information (RFI)
CMS is committed to achieving equity in health care outcomes for beneficiaries. In this RFI, CMS provides an update on the equity work that is occurring across CMS. Included are: plans to expand the quality reporting programs to allow CMS to provide more actionable, comprehensive information on health care disparities; measuring health care disparities through quality measurement and reporting these results to providers; and providing an update on our methods and research around measure development and disparity reporting.

The proposed rule will be published in the April 6 Federal Register. Comments on the proposed rule are due by May 31, 2022.

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