With the publication of the final rule for inpatient rehabilitation facilities’ (IRFs’) Prospective Payment System for the 2017 fiscal year, the Centers for Medicare & Medicaid Services (CMS) continued to add quality reporting requirements to those already added by last year’s rule. The new final rule adopts the major provisions of the proposed rule and will be effective for the 2017 fiscal year, which begins Oct. 1, 2016 and runs through Sept. 30, 2017.

Several key provisions of the final rule are:

  • Updates to the federal prospective payment rates for 2017
  • Additional changes to the IRF Quality Reporting Program – some of which will include additional collection of data starting on Oct. 1.

Updates to the IRF Payment Rates for FY 2016

CMS estimates the overall economic impact of the final rule as a 1.9-percent increase in payment to IRFs, or approximately $145 million. 

The update to the standard payment rate includes an estimated 1.67-percent increase, which reflects an IRF-specific market basket estimate of 2.7 percent, Patient Protection and Affordable Care Act (PPACA) reductions of 0.3 percent for productivity and 0.75 percent for mandatory reductions required by the law, minor adjustments to the case mix group relative weights, and adjustments to the wage index and labor-related share percentages in the formula. The estimate for the overall impact also includes a 0.3-percent increase in aggregate payments due to updates in the outlier threshold.

And while the rule increases the IRF standard payment conversion rate from $15,478 to $15,708, IRFs are likely to be spending a higher-than-desirable portion of that $230 increase on implementation of a significantly higher number of quality measures.

Along with these changes, the CMG relative weights and average-length-of-stay tables have been updated based on the most recently available claims data and IRF cost reports. The revisions to resulted in the application of a 0.9981 budget neutrality factor for a reduction of 0.19 percent.

There were no changes to the facility-level adjustments, and these remain the same as they have been since 2014.

Additional Changes to the IRF Quality Reporting Program (QRP)

Quality measures added for the payment determination for 2018 and subsequent years to meet the resource use and other measure domains are as follows:

  • Medicare Spending Per Beneficiary – Post-Acute Care (PAC) IRF QRP
  • Discharge to Community – PAC IRF QRP
  • Potentially Preventable 30-Day Post-Discharge Readmission – IRF QRP
  • Potentially Preventable within Stay Readmission for IRFs 

These measures are claims-based measures and will require no additional data reporting directly by IRFs.

An additional quality measure was finalized for payment determinations for 2020 and subsequent years to meet the medication reconciliation domain: 

  • Drug Regimen Review Conducted with Follow-Up for Identified Issues.

This quality measure will be captured on the IRF-PAI document beginning Oct. 1, 2018. 

No Changes in the IRF QRP Data Completion Thresholds

Since 2015, IRFs have been required to meet or exceed two separate data completion thresholds: 

  • IRF-PAI data submitted through the QIES system must meet a 95-percent completion rate, or the IRF will be subject to the 2-percent reduction in the annual payment update (APU); and
  • For measures collected and submitted using the CDC National Healthcare Safety Net (NHSN), the threshold is 100 percent.

The final rule confirmed that CMS plans to apply these same thresholds to all measures adopted as the IRF QRP expands.

The Bottom Line

Quality measures and the management activities required to assure compliance with the thresholds for collection are growing annually, with no indication that there will be a slowing of requirements in the near future.  And we believe that while the rule does provide a minimal increase in payment for IRF claims, at least initially, it is likely that a substantial portion of the increase will be consumed by activities related to implementation of the documentation, data collection, and data verification processes required to accurately and consistently report the data. 

About the Author

Angela M. Phillips, PT, is president and chief executive officer of Images & Associates. A graduate of the University of Pennsylvania’s School of Allied Health Professions, she has more than 35 years of experience as a consultant, healthcare executive, hospital administrator, educator, and clinician. Ms. Phillips is one of the nation’s leading consultants assisting inpatient rehabilitation facilities in operating effectively under the Medicare Prospective Payment System (PPS) and in addressing key issues related to compliance.

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