Like many other Medicare providers, inpatient rehabilitation facilities (IRFs) will soon be subject to quality reporting requirements. In addition to the usual annual updates of the IRF rates addressed in the proposed rule for Federal Fiscal Year 2012 published in the April 29, 2011 Federal Register, CMS is taking steps to implement a quality reporting program for IRFs, as mandated by the Affordable Care Act. CMS also has proposed to ease rules for qualifying as a new IRF and for changes in size and square footage for both IRFs and inpatient psychiatric facilities (IPFs). Comments are due by June 21, 2011.

IRF Annual Update

The proposed rate changes for IRFs include:

- A projected 1.5 percent increase in IRF rates, based on a rebased and revised market basket update of 2.8 percent reduced by 1.3 percentage points as mandated by the Affordable Care Act.

- A revision to the method used to calculate the three-year moving average for the rural, low-income percentage (LIP) and teaching status adjustments, by replacing the weighting factor in the regression analysis used for each adjustment with an equal weighting of all facilities. This proposal would result in an 18.7 percent increase of payments to IRFs in rural areas for FY 2012 and a decrease of the LIP adjustment factor from 0.4613 to 0.1897.

- A temporary increase in the FTE intern and resident cap when an IRF accepts displaced interns and residents because another IRF closes or closes a medical residency training program.