On March 31, 2022, the Centers for Medicare & Medicaid Services (CMS) released the fiscal year (FY) 2023 proposed Inpatient Rehabilitation Facilities (IRFs) payment rule. The proposed rule includes the annual payment update and proposals related health equity in the IRF Quality Reporting Program. CMS released a fact sheet accompanying the rule.
This proposed rule is scheduled to be published in the Federal Register on April 6, 2022, and comments are due by May 31, 2022.
Inpatient Rehabilitation Facilities To Get A $170M Increase in Payments
CMS proposes to update IRF payments overall by 2.0 percent, or an $170 million increase, for FY 2023. There are currently 1,115 IRFs, 52 percent of which are nonprofit facilities, and Medicare payment constitutes the majority of these IRFs’ revenues.
CMS will continue to update the case-mix group (CMG) relative weights in a budget neutral manner, using the FY 2021 IRF claims and FY 2020 IRF cost report data, which CMS states are the most current and complete data available. CMS proposes that if more recent data becomes available, that will be used to determine 2023 CMG relative weights in the final rule. CMS indicates that 99.3 percent of all IRF cases are in CMGs that will experience a less than 5 percent change as a result of the update.
If finalized, these updates will be effective for discharges on and after October 1, 2022 to September 30, 2023.
CMS Proposes Permanent Cap on Wage Index Changes
Beginning FY 2023 and thereafter, CMS proposes to make permanent a 5 percent cap on any wage index decrease from the prior year, regardless of the reason for the decrease. CMS has also proposed the same permanent cap on wage index changes for other post-acute care facilities, including hospices and inpatient psychiatric facilities.
CMS did not apply a cap to the reduction in the wage index for FY 2022. CMS states that this proposal is an acknowledgement of stakeholder comments to the FY 2022 IRF final payment rule that CMS should protect IRFs from payment volatility and extend the 1-year transition period it had adopted in FY 2021 so that wage index values do not change by more than 5 percent from year-to-year. If finalized, beginning October 1, 2022, CMS would ensure the wage index applied is not less than 95 percent of the wage index applied to that IRF in the previous year.
CMS Seeks Input On Including Home Health in IRF Transfer Policy
CMS is considering including home health in the IRF transfer policy based on a recent Officer of the Inspector General (OIG) recommendation[1] that early discharges to home health care should be part of the IRF transfer payment policy. The 2021 OIG report found that if CMS had expanded its IRF transfer payment policy to include early discharges to home health, this would have resulted in an estimated savings of $993 million to Medicare over two years.
Originally, CMS did not include early discharges to home health as part of the IRF transfer payment policy due to lack of home health claims data. At the time, the home health payment system was newly established, but that is no longer a concern for CMS. While CMS is not proposing to include early discharges to home health as part of the IRF transfer payment policy for FY 2023, CMS is seeking input from stakeholders for future rulemaking.
CMS Considers Updates to the Quality Reporting program, with Focus on Health Equity Measures
CMS does not propose any new measures for the IRF QRP for FY 2023. However, CMS proposes a change to the IRF Quality Reporting Program (QRP) beginning FY 2025 and also puts forth several request for information (RFIs) for future updates to the IRF QRP.
The IRF QRP is a pay-for-reporting program and IRFs that do not meet required reporting thresholds will continue to incur a 2.0 percentage point reduction in their Annual Increase Factor (AIF).
CMS Wants to Expand Quality Data Reporting to All IRF Patients
CMS proposes that the IRF Patient Assessment Instrument (IRF-PAI) assessment should be collected from every patient receiving care in an IRF, regardless of payer type, beginning in FY 2025 IRF QRP. Currently, IRFs are only required to adhere to quality data reporting standards for admitted patients with Medicare fee-for-service (FFS) and Medicare Part C. This expansion is intended to support equitable health care outcomes by allowing providers to make informed decisions and promotes provider accountability in identifying and addressing health disparities.
CMS Reiterates Commitment to Address Health Equity and Quality Disparities in Request for Information
CMS requests information on a general framework to assess healthcare disparities across CMS quality programs, as well as in the IRF QRP and other measurement guidelines.
CMS’s framework for assessing healthcare quality disparities focuses on five considerations:
- Using measure stratification to measure healthcare disparities and identify goals.
- Development of principles to inform priorities for measure stratification.
- Development of principles for identifying social risk and demographic variables and their data sources to be used in reporting. CMS outlines different data sources and strengths and limitations associated with various methods.
- Development of a reporting approach that allows CMS to identify meaningful performance differences at the program level.
- Methods for reporting the disparity measures. CMS notes the importance of reporting both stratified measure data and overall measure data to provide greater detail on healthcare quality across subgroups.
CMS outlines two methods for assessing healthcare quality disparities in the IRF QRP. For the first method, CMS notes IRFs may face challenges in identifying factors that are contributing to health disparities. CMS suggests the agency could utilize a provider-specific method to estimate how differences across subgroups stem from specific factors. For the second method, CMS would use specific health equity[2] quality measures that would be developed for the IRF QRP or adapted from existing CMS measures on health equity.
CMS Considers Future Quality Measure Concepts in Request for Information
CMS requests information on the importance, relevance, applicability, and appropriateness of the following quality measure concepts:
- Cross-Setting Function. This measure that would incorporate domains of self-care and mobility.
- Health Equity. These structural measures could include assessing a provider’s leadership in advancing equity goal advancement or their progress towards achieving equity priorities.
- PAC – COVID-19 Vaccination Coverage among Patients. This measure would assess whether IRF patients are current on their COVID-19 vaccine.
CMS will use the information for future quality measure development efforts in the QRP.
Future Measure Concepts Under Consideration for the IRF QRP
| Quality Measure Concepts |
| Cross-Setting Function |
| Health Equity Measures |
| PAC – COVID-19 Vaccination Coverage among Patients |
| Source: CMS. Medicare Program; Inpatient Rehabilitation Facility Prospective Payment System for Federal Fiscal Year 2023 and Updates to the IRF Quality Reporting Program |
CMS Considers Inclusion of Digital Quality Measure in Request for Information
CMS is also considering adopting a future NHSN Healthcare-Associated Clostridioides difficile[3] Infection Outcome measure in the IRF QRP that would utilize electronic health record (EHR) derived data. CMS requests information on the submission of IRF quality data via electronic health record under the IRF QRP. Specifically, CMS is interested in the following:
- Would IRFs support utilizing IRF HER as a mechanism of data collection and submission for IRF QRP measures?
- Would the IRFs support exposing data to a locally-installed Measure Calculation Tool (MCT)?
- Is a transition period necessary and how long of a transition would be necessary?
- Are there any vendors that would be interested or willing to participate in pilots or voluntary electronic submission of duality data?
- Are there any anticipated challenges and solutions to these challenges?
CMS will consider this information in future rulemaking.
[1] Office of the Inspector General. December 7, 2021 Early Discharges From Inpatient Rehabilitation Facilities to Home Health Services [Report No. A-01-20-00501] https://oig.hhs.gov
[2] CMS has defined health equity as “the attainment of the highest level of health for all people, where everyone has a fair and just opportunity to attain their optimal health regardless of race, ethnicity, disability, sexual orientation, gender identity, socioeconomic status, geography, preferred language, or other factors that affect access to care and health outcomes.” https://www.cms.gov/pillar/health-equity#.
[3] Clostridioides difficile is responsible for a spectrum of infections that can in some situations lead to sepsis or death.