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The Inpatient Rehabilitation Facility (IRFs) Prospective Payment System (PPS) final rule for the 2018 federal fiscal year was published May 3, 2017, and comments are due no later than June 26.

Specifically, the final rule:

  • Updates the federal prospective payment rates for 2018
  • Removes the 25-percent payment penalty for late transmission
  • Removes the voluntary swallowing status item (Item 27) from the IRF-PAI
  • Revises the ICD-10 codes used to determine presumptive compliance with the 60-percent rule
  • Solicits comments regarding the criteria used to classify facilities for payment under the IRF PPS
  • Provides for automatic annual updates to presumptive methodology diagnosis code lists for non-substantive changes
  • Provides for the use of height/weight items on the IRF-PAI to determine BMI greater than 50 for cases of single-joint replacement under presumptive compliance; and
  • Revises and updates quality measures and reporting requirements

While these changes are not excessive, also included in the proposed rule are adjustments for 2019 and 2020, including standardized patient assessment data.

This article will address several key components of the proposed rule; however, we urge IRFs to take advantage of the opportunity to comment on potential changes and/or refinements to the 60-percent rule.

Updates to the Federal Prospective Payment Rates

Consistent with prior years, these regulations update the CMG payment rates, including adjustments to 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 IRF payments for a given CMG.   

The Centers for Medicare & Medicaid Services (CMS) estimates an overall increase in IRF PPS payments of 1.0 percent, or approximately $80 million, although IRFs that have not submitted the required quality data will be subject to a 2.0-percent decrease in the annual update. Under the proposed rule, the standard payment conversion rate will increase from $15,708 in 2017 to $15,835 in 2018. 

Removal of the 25-Percent Payment Penalty for Late Transmission

CMS is recommending the removal of this penalty based on the presumption that IRFs are financially motivated to file timely claims for IRF patients, and to reduce the administrative burden on IRFs when they need to apply for a waiver due to extraordinary situations beyond their control. 

Removal of the Voluntary Swallowing Status Item from the IRF-PAI

Because this information is duplicative of information that is required in the quality indicators section of the IRF-PAI, CMS is proposing removal of the voluntary scoring item for swallowing status in Item 27.

Revisions to the ICD-10 Codes Used to Determine Compliance with 60-Percent Rule

With the implementation of ICD-10, IRFs began identifying issues with presumptive compliance, particularly for patients with traumatic brain injury and hip fracture codes. The proposed changes to the ICD-10 lists to be used in determining presumptive compliance include the following:

  • Addressing certain ICD-10-CM diagnosis codes for patients with traumatic brain injury (TBI) and hip fracture conditions
  • Identifying major multiple trauma codes that did not translate exactly (one-for-one) between ICD-9-CM and ICD-10-CM
  • Removing certain non-specific arthritis diagnosis codes that were inadvertently reintroduced through the ICD-10-CM conversion process
  • Removing one ICD-10-CM code (G72.89 – Other specified myopathies) that CMS believes is being inappropriately applied to patients with generalized weakness instead of those with clinically identified myopathies

Removal of some of the exclusion codes for TBI and hip fracture will likely be welcomed by IRFs, which found drops in their level of presumptive compliance in these categories following the implementation of ICD-10. An example of types of codes that will be removed from the exclusion list is the exclusion code for “unspecified part of the neck of the femur,” which has been problematic for many.

Comments Regarding Criteria Used to Classify Facilities for Payment Under the IRF PPS

In the proposed rule, CMS asks for “public comments from stakeholders on the 60-percent rule, including but not limited to the list of conditions, to assist us in generating ideas and information for analyzing refinements and updates to the criteria used to classify facilities for payment under the IRF PPS.” 

Recent studies and MedPAC’s own report to Congress concluded that:

  • In considering changes to the 60-percent rule, CMS should establish policies that ensure the availability of IRF services to beneficiaries whose intensive rehabilitation needs cannot be adequately served in other settings.
  • CMS should ensure that criteria for IRF classification focus on the intensity-of-service needs that justify the higher IRF payment rate.
  • An IRF stay is not needed for all patients with rehabilitation-type diagnosis.
  • Patient characteristics, such as medical comorbidities, prognosis for improvement, and cognitive deficits, are important to consider when identifying appropriate IRF patients.

Since the patient population requiring and most likely to benefit from intensive IRF services has changed dramatically since the inception of the CMS Diagnostic Categories rule in the 1980s, IRFs should not miss this opportunity to speak out on the classification criteria, which include diagnostic lists that are now significantly outdated and limit patient access to IRF services. Additionally, there is an opportunity for IRFs to better define the functional characteristics, comorbid conditions, and service requirements that distinguish care in the IRF from that provided in other post-acute settings.

Automatic Annual Updates to Presumptive Methodology Diagnosis Code Lists

CMS is proposing to establish a formal process to distinguish between non-substantive updates to the ICD-10-CM codes on the lists used to determine IRFs’ presumptive compliance with the 60-percent rule and more substantive revisions to the ICD-10-CM codes on the lists that would only be proposed and finalized through notice and comment rulemaking. These proposed sub-regulatory processes would be used to update the ICD-10-CM codes on the presumptive methodology lists to ensure that they reflect the most current ICD-10 medical code data sets.

Use of Height/Weight from the IRF-PAI to Determine BMI >50 for Cases of Single-Joint Replacement

CMS is proposing to use height and weight information that is already being captured on the IRF-PAI document to calculate BMI and to use this information to determine and presumptively count lower-extremity joint replacement patients with a BMI greater than 50.

Revisions and Updates on Quality Measures and Reporting Requirements

CMS is proposing to replace the current pressure ulcer measure with an updated version of that measure, to remove the All-Cause Unplanned Readmission measure, and to begin publicly reporting six new measures for display on the IRF Compare website by fall 2018. 

Standardized Patient Assessment Data

CMS proposes that beginning with the 2019 IRF QRP, standardized patient assessment data must be reported by IRFs. These include:

  • For FY 2019 IRF-QRP, standardized patient assessment data (which would include data submitted on the existing pressure ulcer measure)
  • For the FY 2020 program year, IRFs would begin reporting standardized patient assessment data with respect to five specified patient assessment categories required by law, including the following:
    • Functional status;
    • Cognitive function;
    • Special services, treatments, and interventions;
    • Medical conditions and co-morbidities; and
    • Impairments.

The Bottom Line

While the proposed changes are for the most part positive for IRFs, there appears to be no lessening of reporting requirements, now and in the future. More importantly, the request for comments related to the 60-percent rule – both related to the list of conditions and the characteristics of IRF patients – is a welcome one, and IRFs should actively participate in responding to this call.


Angela Phillips, PT

Angela M. Phillips, PT, is President & Chief Executive Officer of Images & Associates. A graduate of the University of Pennsylvania, School of Allied Health Professions, she has almost 45 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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