On July 31, 2024, CMS published a final rule updating the Medicare rates and policies applicable to inpatient rehabilitation facilities (IRFs) under the IRF Prospective Payment System (PPS) and the IRF Quality Reporting Program (QRP) for fiscal year (FY) 2025 (the Final Rule). A summary of the Final Rule is available below.
Updates to IRF PPS Payment Policies
CMS finalized a 3.0% increase to the IRF PPS payment rate, reflecting a market basket increase of 3.5% less a 0.4 percentage point productivity adjustment. CMS also finalized updates to the outlier threshold to maintain outlier payments at 3% of total payments. CMS estimates an increase in IRF payments of $280 million in FY 2025, up from $255 million in the proposed rule.
Final Wage Index Update
CMS finalized the IRF PPS wage index using the Core-Based Statistical Areas (CBSAs) defined within OMB Bulletin 23-01. The Final Rule establishes a permanent 5% cap on annual wage index decreases to mitigate the impact of yearly changes in IRF payments.
CMS also finalized the end of the rural adjustment for IRFs that transition from rural to urban status under the new CBSAs. For FY 2025, CMS estimates that eight IRFs will change their status from rural to urban. These IRFs will receive two-thirds of the rural adjustment in FY 2025, one-third of the rural adjustment in FY 2026, and no rural adjustment in FY 2027.
Updates to the IRF QRP
Beginning with the FY 2028 IRF QRP (beginning with patients admitted on October 1, 2026), CMS made the following changes to the IRF QRP:
- Adopted four new items in the IRF-Patient Assessment Instrument (PAI): (1) Living Situation (one item), (2) Food (two items), and (3) Utilities (one item);
- Modified the Transportation item in the IRF-PAI, collected under the SDOH category; and
- Removed the Admission Class assessment item collected at admission from the IRF-PAI item set.
Requests for Information (RFIs)
CMS received feedback on the following RFIs, which will develop potential policies for rulemaking in future years:
- Future measure concepts for the IRF QRP, including vaccination composite, pain management and depression; and
- Creation of an IRF QRP Star Rating System to be reported on Care Compare and the Provider Data Catalog.
The fact sheet for the IRF PPS and QRP Final Rule is available here.
The Final Rule will be published in the Federal Register on August 6, 2024. A copy of the Final Rule is available here.
