Inpatient rehab facilities get 3% payment increase
CMS finalized the update to the IRF PPS payment rates by 3%, based on the final IRF market basket update of 3.5%.
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In a new rule this week, the Centers for Medicare and Medicaid Services finalized an update to Medicare payment policies and rates under the Inpatient Rehabilitation Facility (IRF) Prospective Payment System (PPS) and the IRF Quality Reporting Program (QRP) for fiscal year 2025, updating PPS payment rates by 3%.
CMS finalized the update to the IRF PPS payment rates by 3% based on the final IRF market basket update of 3.5%, less a 0.5 percentage point productivity adjustment. It also finalized updates to the outlier threshold to maintain outlier payments at 3% of total payments.
The agency predicts the final technical rate setting changes will result in an estimated increase in IRF payments of $280 million for FY 2025. This reflects a $300 million increase from the update to the payment rates and a $20 million decrease due to the update to the outlier threshold.
The final rule includes annual updates to the prospective payment rates, the outlier threshold, the case-mix-group relative weights and average length of stay values, the wage index and associated impact analyses.
In addition, the rule includes an update to the IRF PPS wage index using the latest Core-Based Statistical Areas (CBSAs) from the Office of Management and Budget and provides a transition for those IRFs who lose the rural adjustment due to their labor market area transitioning from rural to urban.
The IRF QRP is a pay-for-reporting program. IRFs that do not meet reporting requirements are subject to a two percentage-point reduction in their Annual Increase Factor.
For FY 2025, CMS is updating the IPF PPS payment rates by 2.8%, based on the 2021-based IPF market basket increase of 3.3%, reduced by a 0.5 percentage point productivity adjustment. Additionally, CMS is updating the outlier threshold so that estimated outlier payments remain at 2.0% of total payments. CMS estimates that updating the outlier threshold will result in a 0.3% decrease in aggregate payments. Total estimated payments to IPFs are estimated to increase by 2.5%, or $65 million, in FY 2025 relative to IPF payments in FY 2024.
Inpatient psychiatric facilities get a 2.8% increase in the final rule. This is based on the 2021-based IPF market basket increase of 3.3%, reduced by a 0.5 percentage-point productivity adjustment. Additionally, CMS is updating the outlier threshold so that estimated outlier payments remain at 2% of total payments. CMS estimates that updating the outlier threshold will result in a 0.3% decrease in aggregate payments. Total estimated payments to IPFs are estimated to increase by 2.5%, or $65 million, in 2025 relative to 2024.
WHAT'S THE IMPACT? IRF QRP
Beginning with the FY 2028 IRF QRP (beginning with patients admitted on October 1, 2026), CMS is finalizing the adoption of four new items in the IRF-PAI as standardized patient assessment data elements under the Social Determinants of Health category: living Situation (one item), food (two items) and utilities (one item).
Identifying and collecting patients' health-related social needs (HRSNs) these items may assist IRFs in better addressing those identified needs with the patient, their caregivers and community partners during the discharge planning process, CMS said.
Also beginning at that time, CMS is finalizing a modification of the Transportation item in the IRF-PAI, collected under the SDOH category. As part of routine item and measure monitoring work, CMS said it identified an opportunity to improve the data collection for that item.
Specifically, the agency said the finalized modification of the Transportation item will improve and align data collection in three ways. It will: specify the look-back period for identifying if and when a patient experienced a lack of reliable transportation; simplify the response options for the patient; and require collection at admission only (rather than at admission and discharge), which CMS expects to decrease provider burden, since the current assessment item is collected at both admission and discharge.
CMS is also removing the Admission Class assessment item collected at admission from the IRF-PAI item set, as the agency determined this item is currently not used in calculating quality measures already adopted in the IRF QRP – or for purposes unrelated to the IRF QRP, such as payment, survey or care planning.
THE LARGER TREND
In the proposed rule release in March, CMS gave inpatient rehab facilities a 2.8% increase for 2025.
Last year, inpatient rehabs got a 4% increase in the final rule for 2024.
Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.
