The Inpatient Rehabilitation Facility (IRFs) Prospective Payment System for Federal Fiscal Year 2016 recently released has no real surprises.  The Final Rule adopts the major provisions of the proposed rule and will be effective for FY 2016 that begins Oct. 1, 2015 and extends through Sept. 30, 2016.

Key provisions of the Final Rule include the following:

  • Adoption of the IRF-Specific Market Basket
  • Updates to the Federal Prospective Payment Rates for FY 2016 using the IRF-Specific Market Basket
  • Continued Freeze of the Facility-Level Adjustment Factors
  • Adoption of the Revisions to the Core Based Statistical Areas (CBSA)
  • Revisions and Updates to Quality Measures and Quality Reporting requirements for the future.

IRF-Specific Market Basket

In the Rule, CMS has finalized the creation of an IRF specific market basket to replace the previously adopted Rehabilitation, Psychiatric, and Long-Term Care (RPL) market basket.  The combination of market basket updates, productivity adjustments and updates to the outlier thresholds will result in an overall update of 1.8 percent, relative to payments in FY 2015.

Updates to the Federal Prospective Payment Rates for FY 2016

As discussed in our article on the Proposed Rule, the Final Rule updates the CMG payment rates including adjustments to the relative weights and average length of stay values for individual CMGs as well as adjustments to the wage index and labor-related share amounts for calculating the individual IRFs payment for a given CMG.   

Due to the adoption of the IRF-Specific Market Rate, the IRF Standard Payment Rate will increase from $15,198 in FY 2015 to $15,478 in FY 2016 that is slightly less than the amount indicated in the Proposed Rule.

Facility-Level Adjustment Factors

There were no changes made in Facility-Level Adjustment factors and these remain frozen as indicated in the FY 2014 final rule. 

Adoption of the Revisions to the Core Based Statistical Areas (CBSA)

 The changes in Core Based Statistical Areas (CBSA) as well as changes in classification for some IRFs from rural-to-urban or urban-to-rural were adopted without change. Additionally, the proposed transition periods were accepted as written.

Revisions and Update Related to Quality Measures and Reporting

The rule finalized six new measures that would assess functional status and falls with injury. Those six measures would be tied to FY 2018 payment and include:

  • An application of Percent of Residents Experiencing One or More Falls with Major Injury (Long Stay) (NQF #0674)
  • An application of Percent of LTCH Patients with an Admission and Discharge Functional Assessment and a Care Plan that Addressed Function (NQF #2631)
  • Change in self-care score for medical rehabilitation patients (NQF #2633)
  • Change in mobility score for medical rehabilitation patients (NQF #2634)
  • Discharge self-care score for medical rehabilitation patients (NQF #2635)
  • Discharge mobility score for medical rehabilitation patients (NQF #2636)

These quality measure are a result of the requirement specified in the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act) which requires that IRFs report data on measures in order to collect standardized data across a number of post-acute care settings, including home health, inpatient rehabilitation, skilled nursing and long term care hospitals.

Public Reporting

The rule finalizes public reporting of IRF quality data on Hospital Compare beginning in the fall of 2016 with initial reportable data from 2015 data collection efforts and include:  New or worsened pressure ulcers, CAUTI Outcome Measures and the All-Cause Unplanned Readmission Measure for 30 Days Post-Discharge from IRFs.

Other Requirements Effective Oct. 1, 2015

As a reminder, additional requirements for IRFs that are effective October 1, 2015 include:

  • Utilization of ICD-10-CM for Medicare Claims and IRF-PAI Submission.

Lists that include the codes utilized for Presumptive Eligibility of the CMS-13 requirements and for qualification of Tier Level payment for comorbid conditions are available for download at the CMS Web site at:

  • Requirement to Record Modes and Minutes of Therapy Services
  • Completion of the Attestation Statement for Certain Arthritis Conditions

About the Author

Angela M. Phillips, PT, is president and chief executive officer of Images & Associates.  A graduate of the University of Pennsylvania, 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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