Inpatient rehab facilities get a 2.8% proposed increase for 2025

Photo: Adene Sanchez/Getty Images 

Inpatient rehabilitation facilities get a payment rate increase of 2.8% for 2025 in a proposed rule released late Wednesday.

The amount is based on a proposed market basket update of 3.2%, less a proposed 0.4% point productivity adjustment.

If more recent data become available, such as a more recent estimate of the market basket update or productivity adjustment, CMS would consider this to determine the 2025 market basket percentage increase and the productivity adjustment in the final rule. 

In the proposed rule, CMS updates the outlier threshold to maintain outlier payments at 3% of total payments. The proposed technical rate setting changes would result in a preliminary estimated increase in IRF payments of $255 million for 2025. This reflects a $280 million increase from the update to the payment rates and a $25 million decrease due to the proposed update to the outlier threshold.

WHY THIS MATTERS

The Centers for Medicare and Medicaid Services issued the proposed rule to update Medicare payment policies and rates under the Inpatient Rehabilitation Facility (IRF) Prospective Payment System and the IRF Quality Reporting Program for fiscal year 2025. 

In the pay-for-reporting program, IRFs that do not meet reporting requirements are subject to a two-percentage-point reduction in their Annual Increase Factor. 

This year's proposal includes an update to the wage index using the Core-Based Statistical Areas defined within the OMB Bulletin 23-01 and provides a transition for those IRFs that lose the rural adjustment due to their labor market area transitioning from rural to urban. For FY 2025, CMS estimates that eight IRFs will change their status from rural to urban.

The wage index uses the most recent Office of Management and Budget statistical area delineations based on the 2020 Decennial Census, which revises the existing core-based statistical areas. 

Any wage index decreases will be mitigated by the permanent 5% cap on negative wage index changes, regardless of the underlying reason for the decrease, CMS said.

In addition, CMS is proposing to phase out the rural adjustment for IRFs that transition from rural to urban status under the new Core-Based Statistical Areas. These IRFs would receive two-thirds of the rural adjustment in 2025, one-third of the rural adjustment in 2026 and no rural adjustment in 2027. 

"This approach is consistent with how we implemented this policy in FY 2016," CMS said. 

CMS is also seeking feedback with two Requests for Information on quality measure concepts under consideration for future years and a star rating system for publicly reporting IRF quality reporting measures on Care Compare.

Specifically, CMS seeks feedback on the measure concepts of vaccination composite, pain management and depression.
 
Currently, inpatient rehabilitation facilities do not have a star rating system. The agency is seeking feedback on developing a five-star methodology for IRFs that can meaningfully distinguish quality of care offered by providers and would also be reported on both Care Compare and the Provider Data Catalog. 

Quality Reporting Changes

For the Quality Reporting Program, CMS proposes the adoption of four new items beginning for the 2028 reporting year, beginning with patients admitted on October 1, 2026. These include standardized patient assessment data elements for Social Determinants of Health categories in Living Situation, Food and Utilities. 

Beginning with the FY 2028 reporting year (beginning with residents admitted on October 1, 2026), CMS is proposing a modification of the Transportation item under the SDOH category. The proposed Transportation item modification would improve and align data collection by: Clarifying the look-back period for when a patient experienced a lack of reliable transportation; simplifying the response options for patients; and revising assessment item collection so that it is taken at admission only, rather than at both admission and discharge.

Also, beginning in 2028 (beginning with residents admitted on October 1, 2026), CMS proposes removing the "Admission Class" assessment item collected at admission.

THE LARGER TREND

The payment increases proposed for 2025 as compared to last year's final payment rule show CMS for 2024 updated the payment rate by 3.4% based on a market basket of 3.6% reduced by a 0.2 percentage-point productivity adjustment.

That final rule included an adjustment to the outlier threshold to maintain outlier payments at 3% of total payments. Overall IRF payments for FY 2024 increased by 4%, or $355 million, relative to payments in FY 2023. 
 

Email the writer: SMorse@himss.org