# Vol. 79 Wednesday,

No. 88 May 7, 2014

Part II



# Department of Health and Human Services

Centers for Medicare & Medicaid Services

42 CFR Part 412 Medicare Program; Inpatient Rehabilitation Facility Prospective Payment System for Federal Fiscal Year 2015; Proposed Rule


### 26308 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules

**DEPARTMENT OF HEALTH AND**
**HUMAN SERVICES**

**Centers for Medicare & Medicaid**
**Services**

**42 CFR Part 412**

**[CMS–1608–P]**

**RIN 0938–AS09**

**Medicare Program; Inpatient Rehabilitation Facility Prospective**  **Payment System for Federal Fiscal**

**Year 2015**

**AGENCY :**  Centers for Medicare & Medicaid Services (CMS), HHS.

**ACTION :**  Proposed rule.

**SUMMARY :**  This proposed rule would update the prospective payment rates for inpatient rehabilitation facilities (IRFs) for federal fiscal year (FY) 2015 (for discharges occurring on or after October 1, 2014 and on or before September 30, 2015) as required by the statute. We are also proposing to collect data on the amount and mode (that is, Individual, Group, and Co-Treatment) of therapy provided in the IRF setting according to therapy discipline, revise the list of impairment group codes that presumptively meet the ‘‘60 percent rule’’ compliance criteria, provide for a new item on the Inpatient Rehabilitation Facility-Patient Assessment Instrument (IRF–PAI) form to indicate whether the prior treatment and severity requirements have been met for arthritis cases to presumptively meet the ‘‘60 percent rule’’ compliance criteria, and revise and update quality measures and reporting requirements under the IRF quality reporting program (QRP). In this proposed rule, we also address the implementation of the International Classification of Diseases, 10th Revision, Clinical Modification (ICD– 10–CM), for the IRF prospective payment system (PPS), effective when ICD–10–CM becomes the required
medical data code set for use on
Medicare claims and IRF–PAI
submissions.

**DATES :**  To be assured consideration,
comments must be received at one of the addresses provided below, no later than 5 p.m. on June 30, 2014.

**ADDRESSES :**  In commenting, please refer
to file code CMS–1608–P. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX)

transmission.

You may submit comments in one of four ways (please choose only one of the ways listed):

1. Electronically. You may submit electronic comments on this regulation to http://www.regulations.gov. Follow
the ‘‘Submit a comment’’ instructions.

2. By regular mail. You may mail written comments to the following
address ONLY:

Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS–1608– P, P.O. Box 8016, Baltimore, MD 21244–

8016.

Please allow sufficient time for mailed
comments to be received before the close of the comment period.

3. By express or overnight mail. You may send written comments to the following address ONLY:

Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS–1608– P, Mail Stop C4–26–05, 7500 Security Boulevard, Baltimore, MD 21244–1850.

4. By hand or courier. Alternatively, you may deliver (by hand or courier) your written comments ONLY to the following addresses prior to the close of the comment period:

a. For delivery in Washington, DC—
Centers for Medicare & Medicaid Services, Department of Health and Human Services, Room 445–G, Hubert H. Humphrey Building, 200 Independence Avenue SW., Washington, DC 20201.

(Because access to the interior of the Hubert H. Humphrey Building is not readily available to persons without Federal government identification, commenters are encouraged to leave their comments in the CMS drop slots located in the main lobby of the building. A stamp-in clock is available for persons wishing to retain a proof of filing by stamping in and retaining an extra copy of the comments being filed.)

b. For delivery in Baltimore, MD—
Centers for Medicare & Medicaid Services, Department of Health and Human Services, 7500 Security Boulevard, Baltimore, MD 21244–1850.

If you intend to deliver your comments to the Baltimore address, please call telephone number (410) 786– 7195 in advance to schedule your
arrival with one of our staff members.

Comments erroneously mailed to the addresses indicated as appropriate for hand or courier delivery may be delayed and received after the comment period

.

For information on viewing public comments, see the beginning of the

**SUPPLEMENTARY INFORMATION** section.

**FOR FURTHER INFORMATION CONTACT :**  Gwendolyn Johnson, (410) 786–6954, for general information. Charles Padgett, (410) 786–2811, for information about the quality reporting program. Kadie Thomas, (410) 786–0468, or Susanne Seagrave, (410) 786–0044, for information about the payment policies and the proposed payment rates.

**SUPPLEMENTARY INFORMATION :**  The IRF PPS Addenda along with other supporting documents and tables referenced in this proposed rule are available through the Internet on the
CMS Web site at http://www.cms.hhs.gov/Medicare/MedicareFee-for-Service-Payment/ InpatientRehabFacPPS/

.

Inspection of Public Comments: All
comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential
business information that is included in a comment. We post all comments
received before the close of the comment period on the following Web site as soon as possible after they have
been received: http:// www.regulations.gov. Follow the search
instructions on that Web site to view public comments.

Comments received timely will also be available for public inspection as they are received, generally beginning approximately 3 weeks after publication of a document, at the headquarters of
the Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view public comments, phone 1–800–743–3951.

Executive Summary

A. Purpose

This proposed rule updates the payment rates for inpatient rehabilitation facilities (IRFs) for federal fiscal year (FY) 2015 (that is, for discharges occurring on or after October 1, 2014, and on or before September 30, 2015) as required under section 1886(j)(3)(C) of the Social Security Act (the Act). Section 1886(j)(5) of the Act requires the Secretary to publish in the Federal Register on or before the August 1 that precedes the start of each fiscal year, the classification and weighting factors for the IRF prospective payment system’s (PPS) case-mix groups and a description of the methodology and data used in computing the prospective payment rates for that fiscal year.

B. Summary of Major Provisions

In this proposed rule, we use the
methods described in the FY 2014 IRF PPS final rule (78 FR 47860) to update the federal prospective payment rates for FY 2015 using updated FY 2013 IRF
claims and the most recent available IRF cost report data. We are also proposing
to collect data on the amount and mode


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(that is, Individual, Group, and CoTreatment) of therapy provided in the IRF setting according to therapy discipline, revise the list of impairment group codes that presumptively meet the ‘‘60 percent rule’’ compliance criteria, provide for a new item on the Inpatient Rehabilitation Facility-Patient Assessment Instrument (IRF–PAI)form to indicate whether the prior treatment and severity requirements have been met for arthritis cases to presumptively meet the ‘‘60 percent rule’’ compliance criteria, and revise and update quality measures and reporting requirements under the IRF QRP. In this proposed rule, we also address the implementation of the International Classification of Diseases, 10th Revision, Clinical Modification (ICD– 10–CM), for the IRF prospective payment system (PPS), effective when ICD–10–CM becomes the required
medical data code set for use on
Medicare claims and IRF–PAI
submissions.

C. Summary of Impacts

Provision description Transfers

FY 2015 IRF PPS payment rate update ............ The overall economic impact of this proposed rule is an estimated $160 million in increased payments from the Federal government to IRFs during FY 2015.

Provision description Costs

New quality reporting program requirements ..... The total costs in FY 2015 for IRFs as a result of the proposed new quality reporting requirements are estimated to be $852,238.

New Individual, Group, and Co-Treatment therapy reporting requirements. The total costs in FY 2016 for IRFs as a result of the proposed new Individual, Group, and CoTreatment reporting requirements are estimated to be $1.2 million.

To assist readers in referencing sections contained in this document, we are providing the following Table of

Contents.

Table of Contents

I. Background

A. Historical Overview of the Inpatient

Rehabilitation Facility Prospective Payment System (IRF PPS)
B. Provisions of the Affordable Care Act

Affecting the IRF PPS in FY 2012 and Beyond C. Operational Overview of the Current IRF

PPS II. Summary of Provisions of the Proposed
Rule III. Proposed Update to the Case-Mix Group (CMG) Relative Weights and Average Length of Stay Values for FY 2015 IV. Proposal to Freeze the Facility-Level Adjustment Factors at FY 2014 Levels A. Background on Facility-Level

Adjustments B. Proposal to Freeze the Facility-Level

Adjustment Factors at FY 2014 Levels V. Proposed FY 2015 IRF PPS Federal Prospective Payment Rates A. Proposed Market Basket Increase Factor,

Productivity Adjustment, and Other Adjustment for FY 2015 B. Development of an IRF-Specific Market

Basket C. Secretary’s Proposed Recommendation D. Proposed Labor-Related Share for FY

2015 E. Proposed Wage Adjustment F. Description of the Proposed IRF

Standard Conversion Factor and Payment Rates for FY 2015 G. Example of the Methodology for

Adjusting the Proposed Federal Prospective Payment RatesVI. Proposed Update to Payments for HighCost Outliers under the IRF PPS A. Proposed Update to the Outlier

Threshold Amount for FY 2015B. Proposed Update to the IRF Cost-toCharge Ratio Ceiling and Urban/Rural Averages VII. Proposed Refinements to the Presumptive Compliance Methodology A. Background on the Compliance

Percentage B. Proposed Changes to the Diagnosis

Codes That Are Used To Determine Presumptive Compliance C. Proposed Changes to the Impairment

Group Codes That Meet Presumptive Compliance Criteria VIII. Proposed Data Collection of the Amountand Mode (Individual, Group, and CoTreatment) of Therapy Provided in IRFs According to Occupational, Speech, and Physical Therapy Disciplines IX. Proposed Revision to the IRF–PAI to Add
Data Item for Arthritis Conditions X. International Classification of Diseases, 10th Revision, Clinical Modification (ICD–10–CM), Conversion A. Background on the Use of Diagnosis

Information in the IRF PPS B. Conversion of Diagnosis Information

from ICD–9–CM to ICD–10–CM for the

IRF PPS XI. Proposed Revisions and Updates to the Quality Reporting Program for IRFs A. Background and Statutory Authority B. Quality Measures Previously Finalized

for and Currently Used in the IRF Quality Reporting Program C. Proposed New IRF QRP Quality

Measures Affecting the FY 2017 Adjustments to the IRF PPS Annual Increase Factor and Beyond General
Considerations Used for Selection of Quality Measures for the IRF QRP D. IRF QRP Quality Measures and

Concepts under Consideration for Future

Years E. Proposed Timeline for Data Submission

for New IRF QRP Quality Measures Affecting the FY 2017 Adjustments to
the IRF PPS Annual Increase Factor F. Proposed Timing for New IRFs to Begin

Reporting Quality Data under the IRF QRP Affecting the FY 2017 Adjustments
to the IRF PPS Annual Increase Factor and Beyond G. Proposed IRF QRP Data Submission Exception or Extension Requirements for the FY 2017 Adjustments to the IRF PPS Annual Increase Factor and Beyond H. Proposed IRF QRP Data Submission

Exception or Extension Requirements for the FY 2017 Adjustments to the IRF PPS Annual Increase Factor and Beyond I. Public Display of Quality Measure Data

for the IRF QRP J. Proposed IRF QRP Data Completion

Thresholds for the FY 2016 Adjustments
to the IRF PPS Annual Increase Factor and Beyond K. Proposed Data Validation Process for the

FY 2017 Adjustments to the IRF PPS Annual Increase Factor and Beyond L. Application of the 2 Percentage Point

Reduction for IRF Providers that Fail to Meet the Above Proposed Data Accuracy
Threshold
M. Electronic Health Record and Health

Information Exchange N. Proposed Method for Applying the

Reduction to the FY 2015 IRF Increase
Factor for IRFs That Fail to Meet the Quality Reporting Requirements XII. Collection of Information Requirements

A. ICRs Regarding the IRF QRP B. ICRs Regarding Individual, Group, and

Co-Treatment Therapy Data on the IRF–

PAI XIII. Response to Public Comments XIV. Regulatory Impact Analysis

A. Statement of Need B. Overall Impacts C. Detailed Economic Analysis
D. Alternatives Considered E. Accounting Statement
F. Conclusion

Acronyms, Abbreviations, and Short

Forms

Because of the many terms to which we refer by acronym, abbreviation, or short form in this proposed rule, we are listing the acronyms, abbreviation, and
short forms used and their


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corresponding terms in alphabetical
order below.

The Act The Social Security Act ADC Average Daily Census
The Affordable Care Act Patient Protection

and Affordable Care Act (Pub. L. 111–148, enacted on March 23, 2010) AHA American Hospital Association
AHIMA American Health Information

Management Association ASCA Administrative Simplification

Compliance Act (Pub. L. 107–105, enacted on December 27, 2002)
BLS U.S. Bureau of Labor Statistics CAH Critical Access Hospitals CAUTI Catheter-Associated Urinary Tract

Infection
CBSA Core-Based Statistical Area CCR Cost-to-Charge Ratio
CDC The Centers for Disease Control and

Prevention

CDI Clostridium difficile Infection CFR Code of Federal Regulations CMG Case-Mix Group
CMS Centers for Medicare & Medicaid

Services DRA Deficit Reduction Act of 2005 (Pub. L.

109–171, enacted February 8, 2006) DSH Disproportionate Share Hospital DSH PP Disproportionate Share Patient

Percentage
EHR Electronic Health Record ESRD End-Stage Renal Disease FR Federal Register
FY Federal Fiscal Year GEMs General Equivalence Mappings
HAI Healthcare Associated Infection
HCP Health Care Personnel HHS U.S. Department of Health & Human

Services HIE Health Information Exchange HIPAA Health Insurance Portability and

Accountability Act of 1996 (Pub. L. 104– 191, enacted on August 21, 1996)
ICD–9–CM The International Classification

of Diseases, 9th Revision, Clinical
Modification
ICD–10–CM The International

Classification of Diseases, 10th Revision,
Clinical Modification ICRs Information Collection Requirements IGC Impairment Group Code IGI IHS Global Insight IPF Inpatient Psychiatric Facility IPPS Inpatient Prospective Payment System IQR Inpatient Quality Reporting Program IRF Inpatient Rehabilitation FacilityIRF–PAI Inpatient Rehabilitation FacilityPatient Assessment Instrument IRF PPS Inpatient Rehabilitation Facility

Prospective Payment System IRVEN Inpatient Rehabilitation Validation

and Entry LIP Low-Income Percentage
LPN Licensed Practical Nurse LTCH Long-Term Care Hospital
MAC Medicare Administrative Contractor MAP Measure Applications Partnership MA (Medicare Part C) Medicare Advantage MedPAC Medicare Payment Advisory

Commission MedPAR Medicare Provider Analysis and

Review

MDS Minimum Data Set MFP Multifactor Productivity MMSEA Medicare, Medicaid, and SCHIP Extension Act of 2007 (Pub. L. 110–173, enacted on December 29, 2007)
MRSA Methicillin-Resistant

Staphylococcus aureus MSA Metropolitan Statistical Area
MUC Measures under Consideration NHSN National Healthcare Safety Network NPP National Priorities Partnership NQF National Quality Forum OMB Office of Management and Budget
ONC Office of the National Coordinator for

Health Information Technology

PAI Patient Assessment Instrument
PPI Producer Price Index PPS Prospective Payment System PRA Paperwork Reduction Act of 1995

(Pub. L. 104–13, enacted on May 22, 1995)
PRRB Provider Reimbursement Review

Board QM Quality Measure QRP Quality Reporting Program RIA Regulatory Impact Analysis RIC Rehabilitation Impairment Category RFA Regulatory Flexibility Act (Pub. L. 96–

354, enacted on September 19, 1980) RN Registered NurseRPL Rehabilitation, Psychiatric, and LongTerm Care market basket
UMRA Unfunded Mandates Reform Act of

1995 (Pub. L. 104–4, enacted on March 22, 1995)

I. Background

A. Historical Overview of the Inpatient Rehabilitation Facility Prospective Payment System (IRF PPS)

Section 1886(j) of the Act provides for the implementation of a per-discharge prospective payment system (PPS) for inpatient rehabilitation hospitals and inpatient rehabilitation units of a hospital (collectively, hereinafter referred to as IRFs).

Payments under the IRF PPS encompass inpatient operating and capital costs of furnishing covered rehabilitation services (that is, routine, ancillary, and capital costs), but not direct graduate medical education costs, costs of approved nursing and allied health education activities, bad debts,
and other services or items outside the scope of the IRF PPS. Although a complete discussion of the IRF PPS provisions appears in the original FY 2002 IRF PPS final rule (66 FR 41316) and the FY 2006 IRF PPS final rule (70 FR 47880), we are providing below a general description of the IRF PPS for fiscal years (FYs) 2002 through 2013.

Under the IRF PPS from FY 2002 through FY 2005, as described in the FY 2002 IRF PPS final rule (66 FR 41316), the federal prospective payment rateswere computed across 100 distinct casemix groups (CMGs). We constructed 95 CMGs using rehabilitation impairment categories (RICs), functional status (both motor and cognitive), and age (in some cases, cognitive status and age may not be a factor in defining a CMG). In addition, we constructed five special CMGs to account for very short stays and for patients who expire in the IRF.

For each of the CMGs, we developed relative weighting factors to account for a patient’s clinical characteristics and expected resource needs. Thus, the weighting factors accounted for the
relative difference in resource use across all CMGs. Within each CMG, we created
tiers based on the estimated effects that
certain comorbidities would have on

resource use.

We established the federal PPS rates using a standardized payment conversion factor (formerly referred to as the budget-neutral conversion factor).For a detailed discussion of the budgetneutral conversion factor, please refer to our FY 2004 IRF PPS final rule (68 FR 45684 through 45685). In the FY 2006 IRF PPS final rule (70 FR 47880), we discussed in detail the methodology for determining the standard payment
conversion factor.

We applied the relative weighting factors to the standard payment conversion factor to compute the unadjusted federal prospective payment
rates under the IRF PPS from FYs 2002 through 2005. Within the structure of the payment system, we then made adjustments to account for interrupted stays, transfers, short stays, and deaths. Finally, we applied the applicable adjustments to account for geographic variations in wages (wage index), the percentage of low-income patients, location in a rural area (if applicable), and outlier payments (if applicable) to the IRFs’ unadjusted federal prospective payment rates.

For cost reporting periods that began on or after January 1, 2002, and before October 1, 2002, we determined the final prospective payment amounts using the transition methodology prescribed in section 1886(j)(1) of the Act. Under this provision, IRFs transitioning into the PPS were paid a
blend of the federal IRF PPS rate and the payment that the IRFs would have
received had the IRF PPS not been implemented. This provision also allowed IRFs to elect to bypass this blended payment and immediately be paid 100 percent of the federal IRF PPS rate. The transition methodology expired as of cost reporting periods beginning on or after October 1, 2002 (FY 2003), and payments for all IRFs now consist of 100 percent of the federal

IRF PPS rate.

We established a CMS Web site as a primary information resource for the
IRF PPS which is available at http://www.cms.gov/Medicare/Medicare-Feefor-ServicePayment/


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InpatientRehabFacPPS/index.html . The Web site may be accessed to download or view publications, software, data specifications, educational materials, and other information pertinent to the

IRF PPS.

Section 1886(j) of the Act confers broad statutory authority upon the Secretary to propose refinements to the
IRF PPS. In the FY 2006 IRF PPS final rule (70 FR 47880) and in correcting
amendments to the FY 2006 IRF PPS final rule (70 FR 57166) that we published on September 30, 2005, we
finalized a number of refinements to the IRF PPS case-mix classification system (the CMGs and the corresponding relative weights) and the case-level and facility-level adjustments. These refinements included the adoption of the Office of Management and Budget’s (OMB) Core-Based Statistical Area (CBSA) market definitions, modifications to the CMGs, tier comorbidities, and CMG relative weights, implementation of a new teaching status adjustment for IRFs, revision and rebasing of the market basket index used to update IRFpayments, and updates to the rural, lowincome percentage (LIP), and high-cost outlier adjustments. Beginning with the FY 2006 IRF PPS final rule (70 FR 47908 through 47917), the market basket index used to update IRF payments is a market basket reflecting the operating and capital cost structures for freestanding IRFs, freestanding inpatient psychiatric facilities (IPFs), and long-term care hospitals (LTCHs) (hereafter referred to as the rehabilitation, psychiatric, and long-term care (RPL) market basket). Any reference to the FY 2006 IRF PPS final rule in this proposed rule also includes the provisions effective in the correcting amendments. For a detailed discussion of the final key policy changes for FY 2006, please refer to the FY 2006 IRF PPS final rule (70 FR 47880 and 70 FR 57166).

In the FY 2007 IRF PPS final rule (71 FR 48354), we further refined the IRF PPS case-mix classification system (theCMG relative weights) and the caselevel adjustments, to ensure that IRF PPS payments would continue to reflect as accurately as possible the costs of
care. For a detailed discussion of the FY 2007 policy revisions, please refer to the FY 2007 IRF PPS final rule (71 FR 48354).

In the FY 2008 IRF PPS final rule (72 FR 44284), we updated the federal prospective payment rates and the outlier threshold, revised the IRF wage index policy, and clarified how we determine high-cost outlier payments
for transfer cases. For more information on the policy changes implemented for FY 2008, please refer to the FY 2008 IRF PPS final rule (72 FR 44284), in which we published the final FY 2008 IRF federal prospective payment rates.

After publication of the FY 2008 IRF PPS final rule (72 FR 44284), section 115 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (Pub. L. 110–173, enacted on December 29, 2007) (MMSEA), amended section 1886(j)(3)(C) of the Act to apply a zero percent increase factor for FYs 2008 and 2009, effective for IRF discharges occurring on or after April 1, 2008. Section 1886(j)(3)(C) of the Act required the Secretary to develop an increase factor to update the IRF federal prospective payment rates for each FY. Based on the legislative change to the increase factor, we revised the FY 2008 federal prospective payment rates for IRF discharges occurring on or after April 1, 2008. Thus, the final FY 2008 IRF federal prospective payment rates that were published in the FY 2008 IRF PPS final rule (72 FR 44284) were effective for discharges occurring on or after October 1, 2007, and on or before March 31, 2008; and the revised FY 2008 IRF federal prospective payment rates were effective for discharges occurring on or after April 1, 2008, and on or before September 30, 2008. The revised FY 2008 federal prospective payment rates are available on the CMS
Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/InpatientRehabFacPPS/DataFiles.html

.

In the FY 2009 IRF PPS final rule (73 FR 46370), we updated the CMG relative weights, the average length of stay values, and the outlier threshold; clarified IRF wage index policies regarding the treatment of ‘‘NewEngland deemed’’ counties and multicampus hospitals; and revised the regulation text in response to section
115 of the MMSEA to set the IRF compliance percentage at 60 percent (the ‘‘60 percent rule’’) and continue the practice of including comorbidities in the calculation of compliance percentages. We also applied a zero percent market basket increase factor for
FY 2009 in accordance with section 115
of the MMSEA. For more information on the policy changes implemented for FY 2009, please refer to the FY 2009 IRF PPS final rule (73 FR 46370), in which we published the final FY 2009 IRF federal prospective payment rates.

In the FY 2010 IRF PPS final rule (74 FR 39762) and in correcting
amendments to the FY 2010 IRF PPS final rule (74 FR 50712) that we published on October 1, 2009, we updated the federal prospective payment rates, the CMG relative weights, the average length of stay values, the rural, LIP, teaching status adjustment factors, and the outlier threshold; implemented new IRF coverage requirements for determining
whether an IRF claim is reasonable and necessary; and revised the regulation text to require IRFs to submit patient assessments on Medicare Advantage (MA) (Medicare Part C) patients for use in the 60 percent rule calculations. Any
reference to the FY 2010 IRF PPS final rule in this proposed rule also includes the provisions effective in the correcting
amendments. For more information on the policy changes implemented for FY 2010, please refer to the FY 2010 IRF PPS final rule (74 FR 39762 and 74 FR 50712), in which we published the final FY 2010 IRF federal prospective payment rates.

After publication of the FY 2010 IRF PPS final rule (74 FR 39762), section 3401(d) of the Patient Protection and Affordable Care Act (Pub. L. 111–148, enacted on March 23, 2010), as amended by section 10319 of the same Act and by section 1105 of the Health
Care and Education Reconciliation Act of 2010 (Pub. L. 111–152, enacted on March 30, 2010) (collectively, hereafter
referred to as ‘‘The Affordable Care Act’’), amended section 1886(j)(3)(C) of the Act and added section 1886(j)(3)(D) of the Act. Section 1886(j)(3)(C) of the Act requires the Secretary to estimate a multi-factor productivity adjustment to the market basket increase factor, and to apply other adjustments as defined by the Act. The productivity adjustment applies to FYs from 2012 forward. The other adjustments apply to FYs 2010 to

2019.

Sections 1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(i) of the Act defined the adjustments that were to be applied to
the market basket increase factors in
FYs 2010 and 2011. Under these provisions, the Secretary was required
to reduce the market basket increase factor in FY 2010 by a 0.25 percentage point adjustment. Notwithstanding this provision, in accordance with section 3401(p) of the Affordable Care Act, the adjusted FY 2010 rate was only to be applied to discharges occurring on orafter April 1, 2010. Based on the selfimplementing legislative changes to section 1886(j)(3) of the Act, we adjusted the FY 2010 federal prospective payment rates as required, and applied these rates to IRF discharges occurring on or after April 1, 2010, and on or before September 30, 2010. Thus, the final FY 2010 IRF federal prospective payment rates that were published in the FY 2010 IRF PPS final rule (74 FR 39762) were used for discharges occurring on or after October


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1, 2009, and on or before March 31, 2010, and the adjusted FY 2010 IRF federal prospective payment rates applied to discharges occurring on or after April 1, 2010, and on or before September 30, 2010. The adjusted FY 2010 federal prospective payment rates
are available on the CMS Web site at http://www.cms.gov/Medicare/ Medicare-Fee-for-Service-Payment/ InpatientRehabFacPPS/Data-Files.html

.

In addition, sections 1886(j)(3)(C) and (D) of the Act also affected the FY 2010
IRF outlier threshold amount because they required an adjustment to the FY 2010 RPL market basket increase factor, which changed the standard payment
conversion factor for FY 2010. Specifically, the original FY 2010 IRF
outlier threshold amount was determined based on the original
estimated FY 2010 RPL market basket increase factor of 2.5 percent and the standard payment conversion factor of $13,661. However, as adjusted, the IRF prospective payments are based on the adjusted RPL market basket increase factor of 2.25 percent and the revised standard payment conversion factor of $13,627. To maintain estimated outlier payments for FY 2010 equal to the established standard of 3 percent of total estimated IRF PPS payments for FY 2010, we revised the IRF outlier
threshold amount for FY 2010 for discharges occurring on or after April 1, 2010, and on or before September 30,
2010. The revised IRF outlier threshold amount for FY 2010 was $10,721.

Sections 1886(j)(3)(c)(ii)(II) and 1886(j)(3)(D)(i) of the Act also required the Secretary to reduce the market basket increase factor in FY 2011 by a 0.25 percentage point adjustment. The FY 2011 IRF PPS notice (75 FR 42836) and the correcting amendments to the FY 2011 IRF PPS notice (75 FR 70013) described the required adjustments to
the FY 2011 and FY 2010 IRF PPS federal prospective payment rates and
outlier threshold amount for IRF discharges occurring on or after April 1, 2010, and on or before September 30, 2011. It also updated the FY 2011 federal prospective payment rates, the CMG relative weights, and the average length of stay values. Any reference to
the FY 2011 IRF PPS notice in this proposed rule also includes the provisions effective in the correcting
amendments. For more information on the FY 2010 and FY 2011 adjustments or the updates for FY 2011, please refer to the FY 2011 IRF PPS notice (75 FR 42836 and 75 FR 70013).

In the FY 2012 IRF PPS final rule (76 FR 47836), we updated the IRF federal prospective payment rates, rebased and revised the RPL market basket, and established a new quality reporting program for IRFs in accordance with section 1886(j)(7) of the Act. We also revised regulation text for the purpose of updating and providing greater clarity. For more information on the policy changes implemented for FY 2012, please refer to the FY 2012 IRF PPS final rule (76 FR 47836), in which we published the final FY 2012 IRF federal prospective payment rates.

The FY 2013 IRF PPS notice (77 FR 44618) described the required adjustments to the FY 2013 federal prospective payment rates and outlier threshold amount for IRF discharges occurring on or after October 1, 2012, and on or before September 30, 2013. It also updated the FY 2013 federal prospective payment rates, the CMG relative weights, and the average length of stay values. For more information on the updates for FY 2013, please refer to the FY 2013 IRF PPS notice (77 FR 44618).

In the FY 2014 IRF PPS final rule (78 FR 47860), we updated the federal prospective payment rates, the CMG relative weights, and the outlier threshold amount. We also updated the facility-level adjustment factors using an enhanced estimation methodology, revised the list of diagnosis codes that count toward an IRF’s ‘‘60 percent rule’’ compliance calculation to determine ‘‘presumptive compliance,’’ revised sections of the Inpatient Rehabilitation Facility-Patient Assessment Instrument (IRF–PAI), revised requirements for acute care hospitals that have IRF units, clarified the IRF regulation text regarding limitation of review, updated references to previously changed sections in the regulations text, and revised and updated quality measures and reporting requirements under the IRF quality reporting program. For more information on the policy changes implemented for FY 2014, please refer to the FY 2014 IRF PPS final rule (78 FR 47860), in which we published the final FY 2014 IRF federal prospective payment rates.
B. Provisions of the Affordable Care Act Affecting the IRF PPS in FY 2012 and Beyond

The Affordable Care Act included several provisions that affect the IRF PPS in FYs 2012 and beyond. In addition to what was discussed above, section 3401(d) of the Affordable Care
Act also added section 1886(j)(3)(C)(ii)(I) (providing for a ‘‘productivity adjustment’’ for fiscal year 2012 and each subsequent fiscal year). The proposed productivity adjustment for FY 2015 is discussed in section V.A. of this proposed rule. Section 3401(d) of the Affordable Care Act requires an additional 0.2 percentage point adjustment to the IRF increase factor for FY 2015, as discussed in section V.A. of this proposed rule. Section 1886(j)(3)(C)(ii)(II) of the Act notes that the application of these adjustments to the market basket update may result in an update that is less than 0.0 for a fiscal year and in payment rates for a fiscal year being less than such payment rates for the preceding fiscal

year.

Section 3004(b) of the Affordable Care
Act also addressed the IRF PPS program. It reassigned the previously designated section 1886(j)(7) of the Act to section 1886(j)(8) and inserted a new section 1886(j)(7), which contains requirements for the Secretary to establish a quality reporting program for IRFs. Under that program, data must be
submitted in a form and manner and at a time specified by the Secretary. Beginning in FY 2014, section 1886(j)(7)(A)(i) of the Act requires the application of a 2 percentage point reduction of the applicable market
basket increase factor for IRFs that fail to comply with the quality data submission requirements. Application of the 2 percentage point reduction may result in an update that is less than 0.0 for a fiscal year and in payment rates for a fiscal year being less than such payment rates for the preceding fiscal year. Reporting-based reductions to the
market basket increase factor will not be cumulative; they will only apply for the
FY involved.

Under section 1886(j)(7)(D)(i) and (ii) of the Act, the Secretary is generally required to select quality measures for the IRF quality reporting program from those that have been endorsed by the consensus-based entity which holds a performance measurement contract under section 1890(a) of the Act. This contract is currently held by the National Quality Forum (NQF). So long as due consideration is given to
measures that have been endorsed or adopted by a consensus-based organization, section 1886(j)(7)(D)(ii) of the Act authorizes the Secretary to
select non-endorsed measures for specified areas or medical topics when there are no feasible or practical endorsed measure(s).

Section 1886(j)(7)(E) of the Act requires the Secretary to establish procedures for making the IRF PPS quality reporting data available to the public. In so doing, the Secretary must ensure that IRFs have the opportunity to review any such data prior to its release to the public. Future rulemaking will address these public reporting obligations.


### 26313 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules

C. Operational Overview of the Current

IRF PPS

As described in the FY 2002 IRF PPS final rule, upon the admission anddischarge of a Medicare Part A Fee-forService patient, the IRF is required to complete the appropriate sections of a patient assessment instrument (PAI), designated as the Inpatient Rehabilitation Facility-Patient Assessment Instrument (IRF–PAI). In addition, beginning with IRF discharges occurring on or after October 1, 2009, the IRF is also required to complete the appropriate sections of the IRF–PAI upon the admission and discharge of each Medicare Part C (Medicare Advantage) patient, as described in the FY 2010 IRF PPS final rule. All required data must be electronically encoded into the IRF–PAI software product. Generally, the software product includes patient classification programming called the Grouper software. The Grouper software uses specific IRF–PAI data elements to classify (or group) patients into distinct
CMGs and account for the existence of any relevant comorbidities.

The Grouper software produces a 5-
character CMG number. The first character is an alphabetic character that indicates the comorbidity tier. The last
4 characters are numeric characters that represent the distinct CMG number. Free downloads of the Inpatient Rehabilitation Validation and Entry (IRVEN) software product, including the Grouper software, are available on the
CMS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/InpatientRehabFacPPS/ Software.html

.

Once a Medicare Fee-for-Service Part A patient is discharged, the IRF submits
a Medicare claim as a Health Insurance Portability and Accountability Act of 1996 (Pub. L. 104–191, enacted on August 21, 1996) (HIPAA) compliant electronic claim or, if the Administrative Simplification Compliance Act of 2002 (Pub. L. 107– 105, enacted on December 27, 2002) (ASCA) permits, a paper claim (a UB– 04 or a CMS–1450 as appropriate) using
the five-character CMG number and sends it to the appropriate Medicare Administrative Contractor (MAC). In addition, once a Medicare Advantage patient is discharged, in accordance with the Medicare Claims Processing Manual, chapter 3, section 20.3 (Pub. 100–04), hospitals (including IRFs) must submit an informational-only bill (TOB 111), which includes Condition Code 04
to their Medicare contractor. This will ensure that the Medicare Advantage days are included in the hospital’s Supplemental Security Income (SSI)ratio (used in calculating the IRF lowincome percentage adjustment) for Fiscal Year 2007 and beyond. Claims submitted to Medicare must comply
with both ASCA and HIPAA.

Section 3 of the ASCA amends section 1862(a) of the Act by adding paragraph (22) which requires the Medicare program, subject to section 1862(h) of the Act, to deny payment under Part A or Part B for any expenses for items or
services ‘‘for which a claim is submitted
other than in an electronic form specified by the Secretary.’’ Section 1862(h) of the Act, in turn, provides that the Secretary shall waive such denial in
situations in which there is no method
available for the submission of claims in an electronic form or the entity submitting the claim is a small provider. In addition, the Secretary also has the authority to waive such denial ‘‘in such unusual cases as the Secretary finds appropriate.’’ For more information, see the ‘‘Medicare Program; Electronic
Submission of Medicare Claims’’ final rule (70 FR 71008). Our instructions for
the limited number of Medicare claims submitted on paper are available at http://www.cms.gov/manuals/ downloads/clm104c25.pdf

. Section 3 of the ASCA operates in the
context of the administrative simplification provisions of HIPAA, which include, among others, the requirements for transaction standards and code sets codified in 45 CFR, parts 160 and 162, subparts A and I through R (generally known as the Transactions Rule). The Transactions Rule requires covered entities, including covered health care providers, to conduct
covered electronic transactions according to the applicable transaction standards. (See the CMS program claim
memoranda at http://www.cms.gov/ ElectronicBillingEDITrans/ and listed in
the addenda to the Medicare Intermediary Manual, Part 3, section 3600).

The MAC processes the claim through its software system. This software system includes pricing programming
called the ‘‘Pricer’’ software. The Pricer software uses the CMG number, along with other specific claim data elements and provider-specific data, to adjust the IRF’s prospective payment for interrupted stays, transfers, short stays, and deaths, and then applies the applicable adjustments to account forthe IRF’s wage index, percentage of lowincome patients, rural location, and outlier payments. For discharges occurring on or after October 1, 2005, the IRF PPS payment also reflects the teaching status adjustment that became effective as of FY 2006, as discussed in the FY 2006 IRF PPS final rule (70 FR 47880).

II. Summary of Provisions of the Proposed Rule

In this proposed rule, we propose to update the IRF Federal prospective payment rates, collect data on the amount and mode (that is, Individual, Group, and Co-Treatment) of therapies provided in the IRF setting according to therapy discipline, revise the list of impairment group codes that presumptively meet the ‘‘60 percent rule’’ compliance criteria, provide for a
new item on the IRF–PAI form to indicate whether the prior treatment and severity requirements have been met for arthritis cases to presumptively meet the ‘‘60 percent rule’’ compliance criteria, and revise and update quality measures and reporting requirements under the IRF QRP. In this proposed rule, we also address the implementation of the International Classification of Diseases, 10th Revision, Clinical Modification (ICD– 10–CM), for the IRF prospective payment system (PPS), effective when ICD–10–CM becomes the required
medical data code set for use on
Medicare claims and IRF–PAI
submissions.

The proposed updates to the IRF federal prospective payment rates for FY
2015 are as follows:

• Update the FY 2015 IRF PPS relative weights and average length of stay values using the most current and complete Medicare claims and cost report data in a budget-neutral manner,
as discussed in section III of this proposed rule.

• Discuss our rationale for freezing the IRF facility-level adjustment factors at FY 2014 levels, as discussed in section IV of this proposed rule.

• Update the FY 2015 IRF PPS payment rates by the proposed market basket increase factor, based upon the most current data available, with a 0.2 percentage point reduction as required by sections 1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(iv) of the Act and a proposed productivity adjustment required by section 1886(j)(3)(C)(ii)(I) of the Act, as described in section V of this proposed rule.

• Discuss the Secretary’s Proposed Recommendation for updating IRF PPS payments for FY 2015, in accordance with the statutory requirements, as described in section V of this proposed
rule.

• Update the FY 2015 IRF PPS payment rates by the FY 2015 wage
index and the labor-related share in a budget-neutral manner, as discussed in section V of this proposed rule.


### 26314 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules

• Describe the calculation of the IRF Standard Payment Conversion Factor for FY 2015, as discussed in section V of this proposed rule.

• Update the outlier threshold amount for FY 2015, as discussed in section VI of this proposed rule.

• Update the cost-to-charge ratio (CCR) ceiling and urban/rural average CCRs for FY 2015, as discussed in section VI of this proposed rule.

• Describe proposed revisions to the list of eligible diagnosis codes that are used to determine presumptive compliance under the 60 percent rule in section VII of this proposed rule.

• Describe proposed revisions to the list of eligible impairment group codes that presumptively meet the ‘‘60 percent rule’’ compliance criteria in section VII of this proposed rule.

• Describe proposed data collection of the amount and mode (that is, of Individual, Group, and Co-Treatment) of therapies provided in IRFs according to occupational, speech, and physical therapy disciplines via the IRF–PAI in section VIII of this proposed rule.

• Describe a proposed revision to the
IRF–PAI to add a new data item for
arthritis conditions in section IX of this proposed rule.

• Describe the conversion of the IRF PPS to ICD–10–CM, effective when ICD– 10–CM becomes the required medical
data code set for use on Medicare claims and IRF–PAI submissions, in section X of this proposed rule.

• Describe proposed revisions and updates to quality measures and reporting requirements under the quality reporting program for IRFs in accordance with section 1886(j)(7) of the Act, as discussed in section XI of this proposed rule.

III. Proposed Update to the Case-Mix Group (CMG) Relative Weights and Average Length of Stay Values for FY

2015

As specified in § 412.620(b)(1), we calculate a relative weight for each CMG that is proportional to the resources needed by an average inpatient
rehabilitation case in that CMG. For example, cases in a CMG with a relative weight of 2, on average, will cost twice
as much as cases in a CMG with a relative weight of 1. Relative weights account for the variance in cost per discharge due to the variance in resource utilization among the payment groups, and their use helps to ensure that IRF PPS payments support beneficiary access to care, as well as provider efficiency.

In this proposed rule, we propose to update the CMG relative weights and average length of stay values for FY 2015. As required by statute, we always
use the most recent available data to update the CMG relative weights and average lengths of stay. For FY 2015, we propose to use the FY 2013 IRF claims and FY 2012 IRF cost report data. These data are the most current and complete data available at this time. Currently, only a small portion of the FY 2013 IRF cost report data are available for analysis, but the majority of the FY 2013
IRF claims data are available for analysis.

In this proposed rule, we propose to apply these data using the same methodologies that we have used to update the CMG relative weights and average length of stay values each fiscal year since we implemented an update to the methodology to use the more detailed cost-to-charge ratio (CCRs) data from the cost reports of IRF subprovider units of primary acute care hospitals,
instead of CCR data from the associated primary care hospitals, to calculate IRFs’ average costs per case, as
discussed in the FY 2009 IRF PPS final rule (73 FR 46372). In calculating the CMG relative weights, we use a hospital-specific relative value method to estimate operating (routine and ancillary services) and capital costs of IRFs. The process used to calculate the CMG relative weights for this proposed
rule is as follows:

Step 1. We estimate the effects that
comorbidities have on costs.

Step 2. We adjust the cost of each Medicare discharge (case) to reflect the effects found in the first step.

Step 3. We use the adjusted costs from the second step to calculate CMGrelative weights, using the hospitalspecific relative value method.

Step 4. We normalize the FY 2015 CMG relative weights to the same average CMG relative weight from the CMG relative weights implemented in the FY 2014 IRF PPS final rule (78 FR 47860).

Consistent with the methodology that we have used to update the IRF classification system in each instance in the past, we propose to update the CMG relative weights for FY 2015 in such a way that total estimated aggregate payments to IRFs for FY 2015 are the same with or without the changes (that is, in a budget-neutral manner) by applying a budget neutrality factor to the standard payment amount. To calculate the appropriate budget neutrality factor for use in updating the FY 2015 CMG relative weights, we use the following steps:

Step 1. Calculate the estimated total amount of IRF PPS payments for FY 2015 (with no changes to the CMG relative weights).

Step 2. Calculate the estimated total amount of IRF PPS payments for FY 2015 by applying the changes to the CMG relative weights (as discussed above).

Step 3. Divide the amount calculated in step 1 by the amount calculated in step 2 to determine the budget neutrality factor (1.0000) that would
maintain the same total estimated aggregate payments in FY 2015 with and without the changes to the CMG relative weights.

Step 4. Apply the budget neutrality factor (1.0000) to the FY 2014 IRF PPS standard payment amount after the application of the budget-neutral wage adjustment factor.

In section V.F. of this proposed rule, we discuss the proposed use of the existing methodology to calculate the standard payment conversion factor for

FY 2015.

Table 1, ‘‘Relative Weights andAverage Length of Stay Values for CaseMix Groups,’’ presents the CMGs, the comorbidity tiers, the corresponding relative weights, and the average length of stay values for each CMG and tier for FY 2015. The average length of stay for
each CMG is used to determine when an IRF discharge meets the definition of a short-stay transfer, which results in a per diem case level adjustment.



### TABLE 

### 1—P ROPOSED 

### R ELATIVE 

### W EIGHTS AND 

### A VERAGE 

### L ENGTH OF 

### S TAY 

### V ALUES FOR 

### C ASE 

### -M IX 

### G ROUPS

CMG CMG description (M=motor, C=cognitive, A=age) Relative weight Average length of stay

Tier1 Tier2 Tier3 None Tier1 Tier2 Tier3 None

0101 ....... Stroke M>51.05 ........... 0.7860 0.7173 0.6524 0.6255 9 10 8 8

0102 ....... Stroke M>44.45 and
M<51.05 and C>18.5. 0.9836 0.8977 0.8165 0.7829 11 11 10 10

0103 ....... Stroke M>44.45 and
M<51.05 and C<18.5. 1.1645 1.0627 0.9666 0.9268 12 14 12 12


### 26315 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules

TABLE 

### 1—P ROPOSED 

### R ELATIVE 

### W EIGHTS AND 

### A VERAGE 

### L ENGTH OF 

### S TAY 

### V ALUES FOR 

### C ASE 

### -M IX 

### G ROUPS 

### —Continued

CMG CMG description (M=motor, C=cognitive, A=age) Relative weight Average length of stay

Tier1 Tier2 Tier3 None Tier1 Tier2 Tier3 None

0104 ....... Stroke M>38.85 and

M<44.45. 1.2109 1.1051 1.0052 0.9638 13 13 12 12

0105 ....... Stroke M>34.25 and

M<38.85. 1.4154 1.2917 1.1750 1.1266 14 14 14 14

0106 ....... Stroke M>30.05 and

M<34.25. 1.6119 1.4710 1.3381 1.2829 16 16 15 15

0107 ....... Stroke M>26.15 and

M<30.05. 1.8023 1.6448 1.4961 1.4345 17 19 17 17

0108 ....... Stroke M<26.15 and

A>84.5. 2.2450 2.0488 1.8636 1.7868 22 23 21 21

0109 ....... Stroke M>22.35 and

M<26.15 and A<84.5. 2.0545 1.8749 1.7055 1.6352 19 20 19 19

0110 ....... Stroke M<22.35 and

A<84.5. 2.6893 2.4542 2.2324 2.1404 28 27 24 24

0201 ....... Traumatic brain injury
M>53.35 and C>23.5. 0.8151 0.6688 0.6000 0.5714 10 9 8 8

0202 ....... Traumatic brain injury
M>44.25 and
M<53.35 and C>23.5. 1.0534 0.8644 0.7755 0.7385 12 10 9 10

0203 ....... Traumatic brain injury
M>44.25 and C<23.5. 1.2101 0.9930 0.8909 0.8484 13 12 12 11

0204 ....... Traumatic brain injury
M>40.65 and
M<44.25. 1.3295 1.0909 0.9788 0.9321 12 13 12 12

0205 ....... Traumatic brain injury
M>28.75 and
M<40.65. 1.5842 1.2999 1.1663 1.1106 14 15 14 14

0206 ....... Traumatic brain injury
M>22.05 and
M<28.75. 1.9178 1.5737 1.4119 1.3445 19 18 16 16

0207 ....... Traumatic brain injury
M<22.05. 2.5453 2.0885 1.8738 1.7844 32 24 21 20

0301 ....... Non-traumatic brain injury M>41.05. 1.1082 0.9337 0.8460 0.7804 10 11 10 10

0302 ....... Non-traumatic brain injury M>35.05 and
M<41.05. 1.3856 1.1674 1.0578 0.9757 13 13 12 12

0303 ....... Non-traumatic brain injury M>26.15 and
M<35.05. 1.6437 1.3849 1.2548 1.1575 16 15 14 14

0304 ....... Non-traumatic brain injury M<26.15. 2.1604 1.8202 1.6492 1.5213 23 21 18 17

0401 ....... Traumatic spinal cord injury M>48.45. 1.0303 0.8804 0.8112 0.7252 12 12 10 9

0402 ....... Traumatic spinal cord injury M>30.35 and
M<48.45. 1.4049 1.2005 1.1061 0.9889 15 14 14 12

0403 ....... Traumatic spinal cord injury M>16.05 and
M<30.35. 2.3117 1.9754 1.8200 1.6271 26 21 20 20

0404 ....... Traumatic spinal cord injury M<16.05 and
A>63.5. 4.0674 3.4756 3.2022 2.8628 55 39 33 33

0405 ....... Traumatic spinal cord injury M<16.05 and
A<63.5. 3.2778 2.8009 2.5807 2.3071 26 34 29 25

0501 ....... Non-traumatic spinal cord injury M>51.35. 0.8442 0.6777 0.6206 0.5621 9 10 9 8

0502 ....... Non-traumatic spinal cord injury M>40.15
and M<51.35. 1.1667 0.9367 0.8578 0.7769 11 12 10 10

0503 ....... Non-traumatic spinal cord injury M>31.25
and M<40.15. 1.4465 1.1613 1.0635 0.9632 15 13 13 12

0504 ....... Non-traumatic spinal cord injury M>29.25
and M<31.25. 1.7058 1.3695 1.2541 1.1359 17 15 15 14

0505 ....... Non-traumatic spinal cord injury M>23.75
and M<29.25. 1.9486 1.5644 1.4326 1.2976 20 17 17 16


### 26316 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules

TABLE 

### 1—P ROPOSED 

### R ELATIVE 

### W EIGHTS AND 

### A VERAGE 

### L ENGTH OF 

### S TAY 

### V ALUES FOR 

### C ASE 

### -M IX 

### G ROUPS 

### —Continued

CMG CMG description (M=motor, C=cognitive, A=age) Relative weight Average length of stay

Tier1 Tier2 Tier3 None Tier1 Tier2 Tier3 None

0506 ....... Non-traumatic spinal cord injury M<23.75. 2.7276 2.1898 2.0054 1.8164 26 25 23 21

0601 ....... Neurological M>47.75 1.0352 0.8161 0.7540 0.6868 9 10 9 9 0602 ....... Neurological M>37.35
and M<47.75. 1.3349 1.0522 0.9722 0.8856 12 12 11 11

0603 ....... Neurological M>25.85
and M<37.35. 1.6799 1.3242 1.2235 1.1146 15 15 13 13

0604 ....... Neurological M<25.85 2.2001 1.7343 1.6023 1.4597 21 19 17 17
0701 ....... Fracture of lower extremity M>42.15. 0.9713 0.8055 0.7715 0.7028 10 9 10 9

0702 ....... Fracture of lower extremity M>34.15 and
M<42.15. 1.2457 1.0330 0.9894 0.9013 13 12 12 11

0703 ....... Fracture of lower extremity M>28.15 and
M<34.15. 1.5091 1.2514 1.1986 1.0918 15 15 14 13

0704 ....... Fracture of lower extremity M<28.15. 1.9413 1.6099 1.5419 1.4045 18 18 17 17

0801 ....... Replacement of lower extremity joint
M>49.55. 0.7445 0.6092 0.5625 0.5185 8 8 7 7

0802 ....... Replacement of lower extremity joint
M>37.05 and
M<49.55. 0.9928 0.8124 0.7502 0.6915 10 10 9 9

0803 ....... Replacement of lower extremity joint
M>28.65 and
M<37.05 and A>83.5. 1.3412 1.0975 1.0134 0.9341 13 13 12 12

0804 ....... Replacement of lower extremity joint
M>28.65 and
M<37.05 and A<83.5. 1.1854 0.9700 0.8957 0.8256 12 12 11 10

0805 ....... Replacement of lower extremity joint
M>22.05 and
M<28.65. 1.4747 1.2067 1.1142 1.0271 14 14 13 12

0806 ....... Replacement of lower extremity joint
M<22.05. 1.7716 1.4496 1.3386 1.2339 16 17 15 14

0901 ....... Other orthopedic

M>44.75. 0.9402 0.7560 0.7057 0.6382 10 9 9 8

0902 ....... Other orthopedic

M>34.35 and
M<44.75. 1.2419 0.9985 0.9321 0.8430 12 12 11 10

0903 ....... Other orthopedic

M>24.15 and
M<34.35. 1.5603 1.2546 1.1711 1.0591 15 14 14 13

0904 ....... Other orthopedic

M<24.15. 1.9832 1.5946 1.4885 1.3462 19 18 17 16

1001 ....... Amputation, lower extremity M>47.65. 1.0277 0.9349 0.8076 0.7385 11 12 10 10

1002 ....... Amputation, lower extremity M>36.25 and
M<47.65. 1.3191 1.1999 1.0365 0.9478 14 14 12 12

1003 ....... Amputation, lower extremity M<36.25. 1.8856 1.7152 1.4816 1.3549 18 19 17 16

1101 ....... Amputation, non-lower extremity M>36.35. 1.2651 1.0161 1.0058 0.8582 12 13 12 10

1102 ....... Amputation, non-lower extremity M<36.35. 1.8940 1.5211 1.5058 1.2848 17 19 16 15

1201 ....... Osteoarthritis M>37.65 1.0766 0.9493 0.8872 0.8243 10 11 11 10
1202 ....... Osteoarthritis M>30.75

and M<37.65. 1.2812 1.1296 1.0557 0.9809 11 12 12 12

1203 ....... Osteoarthritis M<30.75 1.6274 1.4349 1.3410 1.2459 13 16 15 151301 ....... Rheumatoid, other arthritis M>36.35. 1.2259 0.9876 0.8693 0.8186 12 12 10 10

1302 ....... Rheumatoid, other arthritis M>26.15 and
M<36.35. 1.5967 1.2864 1.1323 1.0662 17 14 13 13


### 26317 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules

TABLE 

### 1—P ROPOSED 

### R ELATIVE 

### W EIGHTS AND 

### A VERAGE 

### L ENGTH OF 

### S TAY 

### V ALUES FOR 

### C ASE 

### -M IX 

### G ROUPS 

### —Continued

CMG CMG description (M=motor, C=cognitive, A=age) Relative weight Average length of stay

Tier1 Tier2 Tier3 None Tier1 Tier2 Tier3 None

1303 ....... Rheumatoid, other arthritis M<26.15. 2.0339 1.6386 1.4424 1.3582 18 19 16 15

1401 ....... Cardiac M>48.85 ......... 0.9056 0.7331 0.6668 0.6050 9 10 8 8
1402 ....... Cardiac M>38.55 and

M<48.85. 1.1970 0.9689 0.8814 0.7997 12 11 11 10

1403 ....... Cardiac M>31.15 and

M<38.55. 1.4753 1.1943 1.0863 0.9857 14 13 12 12

1404 ....... Cardiac M<31.15 ......... 1.8546 1.5013 1.3656 1.2391 18 17 15 14 1501 ....... Pulmonary M>49.25 .... 0.9973 0.8152 0.7533 0.7276 10 10 9 8 1502 ....... Pulmonary M>39.05
and M<49.25. 1.2978 1.0608 0.9802 0.9468 13 11 11 10

1503 ....... Pulmonary M>29.15
and M<39.05. 1.5925 1.3017 1.2028 1.1618 15 14 13 13

1504 ....... Pulmonary M<29.15 .... 1.9673 1.6081 1.4859 1.4352 21 17 15 15 1601 ....... Pain syndrome
M>37.15. 0.9503 0.8819 0.8110 0.7629 10 10 9 10

1602 ....... Pain syndrome
M>26.75 and
M<37.15. 1.2558 1.1654 1.0717 1.0081 13 13 13 12

1603 ....... Pain syndrome
M<26.75. 1.5878 1.4735 1.3549 1.2746 14 17 16 15

1701 ....... Major multiple traumawithout brain or spinal cord injury
M>39.25. 1.0417 0.9291 0.8579 0.7871 11 11 10 10

1702 ....... Major multiple traumawithout brain or spinal cord injury
M>31.05 and
M<39.25. 1.3092 1.1676 1.0782 0.9892 13 14 13 12

1703 ....... Major multiple traumawithout brain or spinal cord injury
M>25.55 and
M<31.05. 1.5348 1.3689 1.2640 1.1597 16 16 15 14

1704 ....... Major multiple traumawithout brain or spinal cord injury
M<25.55. 1.9831 1.7687 1.6333 1.4984 20 20 18 17

1801 ....... Major multiple trauma with brain or spinal cord injury M>40.85. 1.0808 0.9559 0.8116 0.7275 11 12 10 9

1802 ....... Major multiple trauma with brain or spinal cord injury M>23.05
and M<40.85. 1.7023 1.5056 1.2782 1.1459 17 16 15 14

1803 ....... Major multiple trauma with brain or spinal cord injury M<23.05. 2.8280 2.5012 2.1235 1.9036 32 28 22 22

1901 ....... Guillain Barre M>35.95 1.0531 0.9468 0.9297 0.8892 15 10 13 11
1902 ....... Guillain Barre M>18.05

and M<35.95. 1.8830 1.6929 1.6623 1.5899 24 19 18 19

1903 ....... Guillain Barre M<18.05 3.3756 3.0347 2.9799 2.8501 43 31 36 31

2001 ....... Miscellaneous M>49.15 0.8847 0.7262 0.6693 0.6110 9 8 8 8

2002 ....... Miscellaneous M>38.75
and M<49.15. 1.1882 0.9753 0.8990 0.8206 12 11 11 10

2003 ....... Miscellaneous M>27.85
and M<38.75. 1.5077 1.2376 1.1407 1.0412 15 14 13 12

2004 ....... Miscellaneous M<27.85 1.9511 1.6015 1.4761 1.3474 20 18 16 15

2101 ....... Burns M>0 ................... 1.8268 1.7144 1.5550 1.3502 27 18 17 16 5001 ....... Short-stay cases, length of stay is 3 days or fewer. .................. .................. .................. 0.1545 .................. .................. .................. 2

5101 ....... Expired, orthopedic, length of stay is 13 days or fewer. .................. .................. .................. 0.6809 .................. .................. .................. 7

5102 ....... Expired, orthopedic, length of stay is 14 days or more. .................. .................. .................. 1.5543 .................. .................. .................. 16


### 26318 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules

TABLE 

### 1—P ROPOSED 

### R ELATIVE 

### W EIGHTS AND 

### A VERAGE 

### L ENGTH OF 

### S TAY 

### V ALUES FOR 

### C ASE 

### -M IX 

### G ROUPS 

### —Continued

CMG CMG description (M=motor, C=cognitive, A=age) Relative weight Average length of stay

Tier1 Tier2 Tier3 None Tier1 Tier2 Tier3 None

5103 ....... Expired, not orthopedic, length of stay is 15 days or fewer. .................. .................. .................. 0.7274 .................. .................. .................. 8

5104 ....... Expired, not orthopedic, length of stay is 16 days or more. .................. .................. .................. 1.9267 .................. .................. .................. 21

Generally, updates to the CMG relative weights result in some increases
and some decreases to the CMG relative weight values. Table 2 shows how we estimate that the application of the proposed revisions for FY 2015 would affect particular CMG relative weight values, which would affect the overall distribution of payments within CMGs and tiers. Note that, because we propose to implement the CMG relative weight revisions in a budget-neutral manner (as described above), total estimated aggregate payments to IRFs for FY 2015
would not be affected as a result of the proposed CMG relative weight revisions. However, the proposed
revisions would affect the distribution of payments within CMGs and tiers.



### TABLE 

### 2—D ISTRIBUTIONAL 

### E FFECTS

OF THE 

### P ROPOSED 

### C HANGES TO

THE 

### CMG R ELATIVE 

### W EIGHTS

(FY 2014 Values Compared with FY 2015 Values)

Percentage

change Number of

cases affected Percentage of cases affected

Increased by

15% or more 0 0.0Increased by between 5% and 15% ............... 1,096 0.3 Changed by less

than 5% ......... 379,524 99.3 Decreased by

between 5% and 15% ........ 1,610 0.4 Decreased by

15% or more 24 0.0

As Table 2 shows, more than 99 percent of all IRF cases are in CMGs and tiers that we estimate would experience less than a 5 percent change (either increase or decrease) in the CMG relative weight value as a result of the proposed revisions for FY 2015. The largest estimated increase in the proposed CMG relative weight values that would affect the largest number of IRF discharges is a 1.2 percent increase in the CMG relative weight value for CMG 0704—Fracture of lower extremity,
with a motor score less than 28.15—in the ‘‘no comorbidity’’ tier. In the FY 2013 claims data, 19,867 IRF discharges (5.2 percent of all IRF discharges) were
classified into this CMG and tier.

The largest estimated decrease in a CMG relative weight value that would affect the largest number of IRF cases is a 0.9 percent decrease in the CMG relative weight for CMG 0604— Neurological, with a motor score less than 25.85—in the ‘‘no comorbidity’’ tier. In the FY 2013 IRF claims data, this change would have affected 8,737 cases (2.3 percent of all IRF cases).

The proposed changes in the average length of stay values for FY 2015, compared with the FY 2014 average length of stay values, are small and do not show any particular trends in IRF length of stay patterns.

We invite public comment on our proposed update to the CMG relative weights and average length of stay
values for FY 2015.

IV.. Proposal To Freeze the FacilityLevel Adjustment Factors at FY 2014
Levels

A. Background on Facility-Level Adjustments

Section 1886(j)(3)(A)(v) of the Act confers broad authority upon the Secretary to adjust the per unit payment rate ‘‘by such . . . factors as the Secretary determines are necessary to properly reflect variations in necessary costs of treatment among rehabilitation facilities.’’ For example, we adjust the federal prospective payment amount
associated with a CMG to account for facility-level characteristics such as an IRF’s LIP, teaching status, and location in a rural area, if applicable, as described in § 412.624(e).

In the FY 2010 IRF PPS final rule (74 FR 39762), we updated the adjustment factors for calculating the rural, LIP, and teaching status adjustments based on the most recent three consecutive years’ worth of IRF claims data (at that time, FY 2006, FY 2007, and FY 2008) and the most recent available corresponding IRF cost report data. As discussed in the FY 2010 IRF PPS proposed rule (74 FR 21060 through 21061), we observed relatively large year-to-year fluctuations in the underlying data used to compute the adjustment factors, especially the teaching status adjustment factor. Therefore, we implemented a 3-year moving average approach to updating the facility-level adjustment factors in the FY 2010 IRF PPS final rule (74 FR 39762) to provide greater stability and predictability of Medicare payments for

IRFs.

Each year, we review the major components of the IRF PPS to maintain and enhance the accuracy of the payment system. For FY 2010, we implemented a change to our methodology that was designed to decrease the IRF PPS volatility by using a 3-year moving average to calculate the facility-level adjustment factors. For FY 2011, we issued a notice to update the payment rates, which did not include any policy changes or changes to the IRF facility-level adjustments. As we found that the implementation of the 3- year moving average did not fully address year-to-year fluctuations, in the FY 2012 IRF PPS proposed rule (76 FR 24214, 24225 through 24226), we analyzed the effects of having used a weighting methodology. The methodology assigned greater weight to
some facilities than to others in the regression analysis used to estimate the facility-level adjustment factors. As we found that this weighting methodology inappropriately exaggerated the cost differences among different types of IRF facilities, we proposed to remove the weighting factor from our analysis and update the IRF facility-level adjustment factors for FY 2012 using an unweighted regression analysis. However, after carefully considering all of the
comments that we received on the proposed FY 2012 updates to the facility-level adjustment factors, we decided to hold the facility-level adjustment factors at FY 2011 levels for
FY 2012 to conduct further research on the underlying data and the bestmethodology for calculating the facilitylevel adjustment factors. We based this decision, in part, on comments we received about the financial hardships


### 26319 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules

that the proposed updates would create for facilities with teaching programs anda higher disproportionate share of lowincome patients.

B. Proposal To Freeze the Facility-Level Adjustment Factors at FY 2014 Levels

Since the FY 2012 final rule (76 FR 47836), we have conducted further research into the best methodology to use to estimate the IRF facility-level adjustment factors, to ensure that the adjustment factors reflect as accurately as possible the costs of providing IRF care across the full spectrum of IRF providers. Our recent research efforts reflect the significant differences that
exist between the cost structures of freestanding IRFs and the cost structures of IRF units of acute care hospitals (and critical access hospitals, otherwise known as ‘‘CAHs’’). We have found that
these cost structure differences substantially influence the estimates of the adjustment factors. Therefore, we believe that it is important to control for
these cost structure differences between hospital-based and freestanding IRFs in our regression analysis, so that these differences do not inappropriately influence the adjustment factor estimates. In Medicare’s payment system for the treatment of end-stage renal disease (ESRD), we already control
for the cost structure differences between hospital-based and freestanding facilities in the regression analyses that are used to set payment rates. Also, we received comments from an IRF industry association on the FY 2012 IRF PPS proposed rule suggesting that the addition of this particular
control variable to the model could improve the methodology for estimating the IRF facility-level adjustment factors.

Thus, in the FY 2014 IRF PPS proposed rule, we proposed to add an indicator variable to our 3-year moving average methodology for updating the IRF facility-level adjustments that would have an assigned value of ‘‘1’’ if the facility is a freestanding IRF hospital or would have an assigned value of ‘‘0’’ if the facility is an IRF unit of an acute care hospital (or CAH). Adding this variable to the regression analysis
enables us to control for the differences in costs that are primarily due to the
differences in cost structures between freestanding and hospital-based IRFs, so
that those differences do not become inappropriately intertwined with our
estimates of the differences in costsbetween rural and urban facilities, highLIP percentage and low-LIP percentage facilities, and teaching and non-teaching facilities. Further, by including this variable in the regression analysis, we greatly improve our ability to predict an IRF’s average cost per case (that is, the R-squared of the regression model increases from about 11 percent to about 41 percent). In this way, it enhances the precision with which we can estimate the IRF facility-level adjustments.

In the FY 2014 IRF PPS final rule (78 FR 47860), we finalized our decision to add an indicator variable for a facility’s freestanding/hospital-based status to the payment regression, and, with that change, to update the IRF facility-level adjustment factors for FY 2014 using the same methodology, with the exception of adding the indicator variable, that we used in updating the FY 2010 IRF facility-level adjustment factors, including the 3-year moving average approach. Thus, in the FY 2014 IRF PPS final rule, we finalized a rural adjustment of 14.9 percent, a LIP adjustment factor of 0.3177, and a teaching status adjustment factor of
1.0163 for FY 2014.

Based on the substantive changes to the facility-level adjustment factors that were adopted in the FY 2014 final rule, we propose to freeze the facility-level adjustment factors for FY 2015 and all subsequent years at the FY 2014 levels
while we continue to monitor the most
current IRF claims data available and
evaluate the effects of the FY 2014 changes. Additionally, we want to allow providers time to acclimate to the FY 2014 changes. At such future time as our data analysis may indicate the need for further updates to the facility-level adjustment factors, we would propose to update the adjustment factors through notice and comment rulemaking.

We invite public comment on our proposal to freeze the facility-level adjustment factors at FY 2014 levels for FY 2015 and all subsequent years (unless and until we propose to update them again through future notice and comment rulemaking).

V. Proposed FY 2015 IRF PPS Federal Prospective Payment Rates

A. Proposed Market Basket Increase Factor, Productivity Adjustment, and Other Adjustment for FY 2015

Section 1886(j)(3)(C) of the Act requires the Secretary to establish an increase factor that reflects changes over time in the prices of an appropriate mix of goods and services included in the covered IRF services, which is referred to as a market basket index. According to section 1886(j)(3)(A)(i) of the Act, the increase factor shall be used to update the IRF federal prospective payment
rates for each FY. Sections 1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(iv) of the Act required the application of a 0.2 percentage point reduction to the market basket increase factor for FY 2015. In addition, section 1886(j)(3)(C)(ii)(I) of the Act requires the application of a productivity adjustment, as described below. Thus, in this proposed rule, we propose to update the IRF PPS payments for FY 2015 by a market basket increase factor based upon the most current data available, with a productivity adjustment as required by section 1886(j)(3)(C)(ii)(I) of the Act as described below and a 0.2 percentage point reduction as required by sections 1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(iv)
of the Act.

For this proposed rule, we propose to use the same methodology described in the FY 2012 IRF PPS final rule (76 FR 47836 at 47848 through 47863) to compute the FY 2015 market basket
increase factor and labor-related share. In that final rule, we described the market basket (referred to as the RPL market basket) as reflecting a FY 2008 base year. Based on IHS Global Insight’s first quarter 2014 forecast, the most
recent estimate of the 2008-based RPL
market basket increase factor for FY 2015 is 2.7 percent. IHS Global Insight (IGI) is an economic and financial forecasting firm that contracts with CMS to forecast the components of providers’
market baskets.

In accordance with section 1886(j)(3)(C)(ii)(I) of the Act, and using the methodology described in the FY 2012 IRF PPS final rule (76 FR 47836, 47858 through 47859), we propose to apply a productivity adjustment to the
FY 2015 RPL market basket increase
factor. The statute defines the productivity adjustment to be equal to the 10-year moving average of changes in annual economy-wide private
nonfarm business multifactor productivity (MFP) (as projected by the Secretary for the 10-year period ending with the applicable FY cost reporting period, or other annual period) (the ‘‘MFP adjustment’’). The Bureau of Labor Statistics (BLS) is the agency that publishes the official measure of private
nonfarm business MFP. We refer readers
to the BLS Web site at http:// www.bls.gov/mfp to obtain the historical BLS-published MFP data. The projection of MFP is currently produced by IGI, using the methodology described in the FY 2012 IRF PPS final rule (76 FR 47836, 47859). The most recent estimate of the MFP adjustment for FY 2015 (the 10-year moving average of MFP for the period ending FY 2015) is 0.4 percent, which was calculated using the methodology described in the FY 2012 IRF PPS final rule (76 FR 47836, 47858 through 47859) and is based on IGI’s first quarter 2014 forecast.


### 26320 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules

Thus, in accordance with section 1886(j)(3)(C) of the Act, we propose to base the FY 2015 market basket update,
which is used to determine the applicable percentage increase for the IRF payments, on the most recent
estimate of the FY 2008-based RPL market basket (currently estimated to be 2.7 percent based on IGI’s first quarter 2014 forecast). We propose to then reduce this percentage increase by the current estimate of the MFP adjustment for FY 2015 of 0.4 percentage point (the 10-year moving average of MFP for the period ending FY 2015 based on IGI’s first quarter 2014 forecast), which was
calculated as described in the FY 2012 IRF PPS final rule (76 FR 47836, 47859). Following application of the MFP, we propose to further reduce the applicable percentage increase by 0.2 percentage point, as required by sections 1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(iv) of the Act. Therefore, the current estimate of the proposed FY 2015 IRF update is 2.1 percent (2.7 percent market basket update, less 0.4 percentage point MFP adjustment, less 0.2 percentage point legislative adjustment). Furthermore, we also propose that if more recent data are subsequently available (for example, a
more recent estimate of the market basket and MFP adjustment), we would use such data, if appropriate, to
determine the FY 2015 market basket update and MFP adjustment in the final
rule.

We invite public comment on these proposals.

B. Development of an IRF-Specific
Market Basket

In the FY 2010 IRF PPS proposed rule (74 FR 21062), we expressed our interest in exploring the possibility of creating a stand-alone, or IRF-specific, market
basket that reflects the cost structures of only IRF providers. We noted that, of the available options, one would be to join the Medicare cost report data from freestanding IRF providers with data from hospital-based IRF providers. We
indicated that an examination of the Medicare cost report data comparing freestanding and hospital-based IRFs
revealed considerable differences
between the two for cost levels and cost structures. At that time, we stated that we were unable to fully explain the
differences in costs between freestanding and hospital-based IRFs and solicited comments regarding our findings. We summarized and responded to several public comments we received on the potential creation of
a stand-alone IRF market basket in the FY 2010 IRF final rule (74 FR 39776 through 39778). At that time, we stated the need for further research regarding
the differences in cost levels and cost structures between freestanding IRFs and hospital-based IRFs.

Since the FY 2010 IRF PPS final rule was published, we have made significant progress on the development of a stand-alone, or IRF-specific, market
basket. Our research has focused on addressing several concerns regarding the use of the hospital-based IRF Medicare cost report data in the calculation of the major market basket cost weights. As discussed above, one
concern is the cost level differences for hospital-based IRFs relative to freestanding IRFs that were not readily explained by the specific characteristics of the individual providers and the patients that they serve (for example, characteristics related to case mix, urban/rural status, teaching status). Furthermore, we are concerned about the variability in the cost report data among these hospital-based IRF providers and the potential impact on the market basket cost weights. These
concerns led us to consider whether it is appropriate to use the universe of IRF providers to derive an IRF-specific
market basket.

Recently, we have investigated the use of regression analysis to evaluate the effect of including hospital-based IRF Medicare cost report data in the
calculation of cost distributions. We created preliminary regression models to try to explain variations in costs per discharge across both freestanding and hospital-based IRFs. These models were intended to capture the effects of facility-level and patient-level characteristics (for example, wage index, urban/rural status, ownership status, length-of-stay, occupancy rate, case mix, and Medicare utilization) on IRF costs per discharge. Using the results from the preliminary regression analyses, we identified smaller subsets of hospital-based and freestanding IRF providers where the predicted costs per discharge using the regression model closely matched the actual costs per discharge for each IRF. We then derived different sets of cost distributions using (1) these subsets of IRF providers and (2) the entire universe of freestanding and hospital-based IRF providers (including those IRFs for which the variability in cost levels remains unexplained). After comparing these sets of cost distributions, the differences were not substantial enough for us to
conclude that the inclusion of those IRF providers with unexplained variability
in costs in the calculation of the cost distributions is a major cause of

concern. Another concern with incorporating the hospital-based IRF data in the derivation of an IRF-specific market basket is the complexity of the Medicare cost report data for these providers. The freestanding IRFs independently submit a Medicare cost report for their facilities, making it relatively straightforward to obtain the cost categories necessary to determine the major market basket cost weights. However, cost report data submitted for a hospital-based IRF are embedded in the Medicare cost report submitted for the entire hospital facility in which the IRF is located. Therefore, adjustments
would have to be made to obtain costweights that represent just the hospitalbased IRF (as opposed to the hospital as a whole). For example, ancillary costs for services such as therapy, radiology, and laboratory services for the entire hospital would need to be appropriately converted to a value that only represents the hospital-based IRF unit’s costs. The preliminary method we have developed to allocate these costs is complex and still needs to be fully evaluated before we are ready to propose an IRF-specific
market basket that would reflect both hospital-based and freestanding IRF
data.

In our ongoing research, we are also evaluating the differences in salary costs as a percent of total costs for both hospital-based and freestanding IRFs. Salary costs are historically the largest component of the market baskets. Based on our review of the data reported on the applicable Medicare cost reports, our initial findings (using the preliminary allocation method as discussed above) have shown that the hospital-based IRF salary costs as a percent of total costs tend to be lower than those of freestanding IRFs. We are still evaluating the method for deriving salary costs as a percent of total costs,
and one of the main issues is to further investigate the percentage of ancillary costs that should be appropriately allocated to the IRF salary costs for the hospital-based IRF, as discussed above.

Also, as stated in the FY 2012 IRF PPS final rule (76 FR 47836, 47851), effective for cost reports beginning on or after May 1, 2010, we finalized a revised Hospital and Hospital Health Care Complex Cost Report, Form CMS 2552– 10 (74 FR 31738). The report is available
for download from the CMS Web site athttp://www.cms.gov/Research-StatisticsData-and-Systems/Files-for-Order/ CostReports/Hospital-2010-form.html

. The revised Hospital and Hospital Health Care Complex Cost Report includes a new worksheet (Worksheet S–3, part V) that identifies the contract
labor costs and benefit costs for the


### 26321 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules

hospital/hospital care complex, is applicable to sub-providers and units. As we gain access to the data reported by IRFs on this new form, we plan to evaluate the appropriateness of using
these data to derive benefits and contract labor cost weights for the
market basket instead of the data and methods currently used for the RPL market basket. This includes comparing
these data with costs submitted on the other forms composing the Medicare cost report.

For the reasons discussed above,
while we believe we have made significant progress on the development of an IRF-specific market basket, we believe that further research is required at this time. As a result, we are not proposing an IRF-specific market basket for FY 2015. We plan to complete our research during the remainder of this year and, provided that we are prepared to draw conclusions from our research, may propose an IRF-specific market basket for the FY 2016 rulemaking cycle. We welcome public comments on the initial findings discussed above.

C. Secretary’s Proposed
Recommendation

For FY 2015, the Medicare Payment Advisory Commission (MedPAC) recommends that a 0 percent update be applied to IRF PPS payment rates. As discussed above, and in accordance with sections 1886(j)(3)(C) and 1886(j)(3)(D) of the Act, the Secretary proposes to update IRF PPS payment rates for FY 2015 by an adjusted market basket increase factor of 2.1 percent, as section 1886(j)(3)(C) of the Act does not provide the Secretary with the authority to apply a different update factor to IRF PPS payment rates for FY 2015.

We invite public comment on the Secretary’s proposed recommendation.

D. Proposed Labor-Related Share for FY

2015

We propose to update the laborrelated share for FY 2015 using the methodology described in the FY 2012 IRF PPS final rule (76 FR 47836, 47860 through 47863). Using this method and IGI’s first quarter 2014 forecast of the 2008-based RPL market basket, the proposed IRF labor-related share for FY
2015 is the sum of the FY 2015 relative importance of each labor-related cost category. This figure reflects the different rates of price change for these cost categories between the base year (FY 2008) and FY 2015. As shown inTable 3, the proposed FY 2015 laborrelated share is 69.538 percent. We propose that if a more recent estimate of
the FY 2015 labor-related share is subsequently available, we would use such data, if appropriate, to determine
the FY 2015 labor-related share in the
final rule.



### TABLE 

### 3—P ROPOSED 

### FY 2015 IRF

RPL L ABOR 

### -R ELATED 

### S HARE 

### R EL



### ATIVE 

### I MPORTANCE

Proposed FY 2015 relative importance labor-related share

Wages and Salaries ................. 48.409 Employee Benefits .................... 13.016
Professional Fees: Labor-Related ...................................... 2.065
Administrative and Business .... Support Services ...................... 0.417
All Other: Labor-Related Services ........................................ 2.070

Subtotal ............................. 65.977

Labor-Related Portion of Capital Costs (.46) ....................... 3.561

Total Labor-Related

Share ...................... 69.538

Source: IHS Global Insight, Inc. First quarter 2014 forecast; Historical Data through 4th quarter 2013.

We invite public comment on the proposed IRF labor-related share for FY

2015.

E. Proposed Wage Adjustment

Section 1886(j)(6) of the Act requires the Secretary to adjust the proportion of
rehabilitation facilities’ costs attributable to wages and wage-related costs (as estimated by the Secretary from time to time) by a factor (established by the Secretary) reflecting the relative hospital wage level in the geographic area of the rehabilitation facility compared to the national average wage level for those facilities. The Secretary is required to update the IRF PPS wage
index on the basis of information available to the Secretary on the wages and wage-related costs to furnish rehabilitation services. Any adjustment or updates made under section 1886(j)(6) of the Act for a FY are made in a budget-neutral manner.

For FY 2015, we propose to maintain the policies and methodologies
described in the FY 2012 IRF PPS final rule (76 FR 47836, at 47863 through 47865) related to the labor market area definitions and the wage index methodology for areas with wage data. Thus, we propose to use the CBSA labor
market area definitions and the FY 2014 pre-reclassification and pre-floor hospital wage index data. In accordance with section 1886(d)(3)(E) of the Act, the FY 2014 pre-reclassification and pre-floor hospital wage index is based on data submitted for hospital cost reporting periods beginning on or after October 1, 2009, and before October 1, 2010 (that is, FY 2010 cost report data).

The labor market designations made by the OMB include some geographic areas where there are no hospitals and, thus, no hospital wage index data on
which to base the calculation of the IRF PPS wage index. We propose to continue to use the same methodology
discussed in the FY 2008 IRF PPS final rule (72 FR 44299) to address those geographic areas where there are no hospitals and, thus, no hospital wage
index data on which to base the
calculation for the FY 2015 IRF PPS wage index.

In accordance with our established methodology, we have historically adopted any CBSA changes that are published in the OMB bulletin that corresponds with the hospital wage data used to determine the IRF PPS wage
index. The OMB bulletins are available

at http://www.whitehouse.gov/omb/
bulletins/index.html

.

In keeping with the established IRF PPS wage index policy, we propose to use the prior year’s (FY 2014) pre-floor, pre-reclassified hospital wage index data to derive the FY 2015 applicable IRF PPS wage index. We anticipateusing the FY 2014 pre-floor, prereclassified hospital wage index data to derive the applicable IRF PPS wage index for FY 2015. We note, however,that the FY 2014 pre-floor, prereclassified hospital wage index does
not use OMB’s new 2010 Census-based area delineations, which were outlined in the February 28, 2013, OMB Bulletin 13–01, as we did not receive these changes in time to incorporate them into the FY 2014 hospital wage index. We
therefore intend to consider the incorporation of these CBSA changes during the development of the FY 2015 hospital wage index. Assuming that we
would continue to follow our established methodology for the IRF PPS wage index, this means that the 2010 Census-based CBSA changes
would not be considered for inclusion in the IRF PPS wage index until FY

2016.

To calculate the wage-adjusted facility payment for the payment rates set forth in this proposed rule, we multiply the unadjusted Federal payment rate for IRFs by the FY 2015 labor-related share
based on the FY 2008-based RPL market basket (69.538 percent) to determine the labor-related portion of the standard payment amount. We then multiply the labor-related portion by the applicable IRF wage index from the tables in the addendum to this proposed rule. These


### 26322 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules

tables are available through the Internet
on the CMS Web site at http://www.cms.hhs.gov/Medicare/MedicareFee-for-Service-Payment/ InpatientRehabFacPPS/. Table A is for urban areas, and Table B is for rural

areas.

Adjustments or updates to the IRF wage index made under section 1886(j)(6) of the Act must be made in a budget-neutral manner. We calculate a proposed budget-neutral wage adjustment factor as established in the FY 2004 IRF PPS final rule (68 FR 45689), codified at § 412.624(e)(1), as described in the steps below. We use the listed steps to ensure that the proposed FY 2015 IRF standard payment conversion factor reflects the update to the wage indexes (based on the FY 2010 hospital cost report data) and the proposed labor-related share in a budget-neutral manner:

Step 1. Determine the total amount of the estimated FY 2014 IRF PPS rates, using the FY 2014 standard payment
conversion factor and the labor-related share and the wage indexes from FY 2014 (as published in the FY 2014 IRF PPS final rule (78 FR 47860)).

Step 2. Calculate the total amount of estimated IRF PPS payments using the FY 2015 standard payment conversionfactor and the proposed FY 2015 laborrelated share and CBSA urban and rural wage indexes.

Step 3. Divide the amount calculated in step 1 by the amount calculated in step 2. The resulting quotient is the FY 2015 budget-neutral wage adjustment
factor of 1.0018. Step 4. Apply the FY 2015 budgetneutral wage adjustment factor from step 3 to the FY 2014 IRF PPS standard payment conversion factor after the application of the adjusted market basket update to determine the FY 2015 standard payment conversion factor.

We discuss the calculation of the proposed standard payment conversion
factor for FY 2015 in section V.F. of this proposed rule.

We invite public comment on the proposed IRF wage adjustment for FY

2015.
F. Description of the Proposed IRF
Standard Conversion Factor and Payment Rates for FY 2015

To calculate the proposed standard payment conversion factor for FY 2015, as illustrated in Table 4, we begin by applying the proposed adjusted market
basket increase factor for FY 2015 that was adjusted in accordance with sections 1886(j)(3)(C) and (D) of the Act, to the standard payment conversion factor for FY 2014 ($14,846). Applying the proposed 2.1 percent adjusted
market basket increase factor for FY 2015 to the standard payment conversion factor for FY 2014 of $14,846 yields a standard payment amount of $15,158. Then, we apply the proposed budget neutrality factor for the FY 2015 wage index and labor-related share of 1.0018, which results in a standard payment amount of $15,185. We next apply the proposed budget neutrality
factors for the revised CMG relative weights of 1.0000, which results in the proposed standard payment conversion factor of $15,185 for FY 2015. 

### TABLE 

### 4—C ALCULATIONS TO 

### D ETER



### MINE THE 

### P ROPOSED 

### FY 2015
S TANDARD 

### P AYMENT 

### C ONVERSION 

### F ACTOR

Explanation for adjustment Calculations

Standard Payment Conversion Factor for FY 2014 .... $14,846

Market Basket Increase Factor for FY 2015 (2.7 percent), reduced by a 0.4 percentage point reductionfor the productivity adjustment as required by section 1886(j)(3)(C)(ii)(I) of the Act, and reduced by 0.2 percentage points inaccordance with paragraphs 1886(j)(3)(C) and (D) of the Act .................... × 1.0210 Budget Neutrality Factor for

the Wage Index and
Labor-Related Share ......... × 1.0018 Budget Neutrality Factor for

the Revisions to the CMG Relative Weights ............... × 1.0000 Proposed FY 2015 Standard

Payment Conversion Factor ...................................... = $15,185

We invite public comment on the proposed FY 2015 standard payment

conversion factor.

After the application of the proposed CMG relative weights described in Section III of this proposed rule, to the proposed FY 2015 standard payment conversion factor ($15,185), the resulting proposed unadjusted IRF prospective payment rates for FY 2015

are shown in Table 5.



### TABLE 

### 5—P ROPOSED 

### FY 2015 P AYMENT 

### R ATES

CMG Payment rate Tier 1 Payment rate Tier 2 Payment rate Tier 3 Payment rate no comorbidity

0101 ................................................................................................. $11,935.41 $10,892.20 $9,9 06.69 $9,498.22 0102 ................................................................................................. 14,935.97 13,631.57 12,398.55 11,888.34 0103 ................................................................................................. 17,682.93 16,137.10 14,677.82 14,073.46 0104 ................................................................................................. 18,387.52 16,780.94 15,263.96 14,635.30 0105 ................................................................................................. 21,492.85 19,614.46 17,842.38 17,107.42 0106 ................................................................................................. 24,476.70 22,337.14 20,319.05 19,480.84 0107 ................................................................................................. 27,367.93 24,976.29 22,718.28 21,782.88 0108 ................................................................................................. 34,090.33 31,111.03 28,298.77 27,132.56 0109 ................................................................................................. 31,197.58 28,470.36 25,898.02 24,830.51 0110 ................................................................................................. 40,837.02 37,267.03 33,898.99 32,501.97 0201 ................................................................................................. 12,377.29 10,155.73 9,111. 00 8,676.71 0202 ................................................................................................. 15,995.88 13,125.91 11,775.97 11,214.12 0203 ................................................................................................. 18,375.37 15,078.71 13,528.32 12,882.95 0204 ................................................................................................. 20,188.46 16,565.32 14,863.08 14,153.94 0205 ................................................................................................. 24,056.08 19,738.98 17,710.27 16,864.46 0206 ................................................................................................. 29,121.79 23,896.63 21,439.70 20,416.23 0207 ................................................................................................. 38,650.38 31,713.87 28,453.65 27,096.11 0301 ................................................................................................. 16,828.02 14,178.23 12,846.51 11,850.37 0302 ................................................................................................. 21,040.34 17,726.97 16,062.69 14,816.00 0303 ................................................................................................. 24,959.58 21,029.71 19,054.14 17,576.64 0304 ................................................................................................. 32,805.67 27,639.74 25,043.10 23,100.94 0401 ................................................................................................. 15,645.11 13,368.87 12,318.07 11,012.16 0402 ................................................................................................. 21,333.41 18,229.59 16,796.13 15,016.45 0403 ................................................................................................. 35,103.16 29,996.45 27,636.70 24,707.51


### 26323 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules

TABLE 

### 5—P ROPOSED 

### FY 2015 P AYMENT 

### R ATES 

### —Continued

CMG Payment rate Tier 1 Payment rate Tier 2 Payment rate Tier 3 Payment rate no comorbidity

0404 ................................................................................................. 61,763.47 52,776.99 48,625.41 43,471.62 0405 ................................................................................................. 49,773.39 42,531.67 39,187.93 35,033.31 0501 ................................................................................................. 12,819.18 10,290.87 9,423. 81 8,535.49 0502 ................................................................................................. 17,716.34 14,223.79 13,025.69 11,797.23 0503 ................................................................................................. 21,965.10 17,634.34 16,149.25 14,626.19 0504 ................................................................................................. 25,902.57 20,795.86 19,043.51 17,248.64 0505 ................................................................................................. 29,589.49 23,755.41 21,754.03 19,704.06 0506 ................................................................................................. 41,418.61 33,252.11 30,452.00 27,582.03 0601 ................................................................................................. 15,719.51 12,392.48 11,449.49 10,429.06 0602 ................................................................................................. 20,270.46 15,977.66 14,762.86 13,447.84 0603 ................................................................................................. 25,509.28 20,107.98 18,578.85 16,925.20 0604 ................................................................................................. 33,408.52 26,335.35 24,330.93 22,165.54 0701 ................................................................................................. 14,749.19 12,231.52 11,715.23 10,672.02 0702 ................................................................................................. 18,915.95 15,686.11 15,024.04 13,686.24 0703 ................................................................................................. 22,915.68 19,002.51 18,200.74 16,578.98 0704 ................................................................................................. 29,478.64 24,446.33 23,413.75 21,327.33 0801 ................................................................................................. 11,305.23 9,250.70 8,541.5 6 7,873.42 0802 ................................................................................................. 15,075.67 12,336.29 11,391.79 10,500.43 0803 ................................................................................................. 20,366.12 16,665.54 15,388.48 14,184.31 0804 ................................................................................................. 18,000.30 14,729.45 13,601.20 12,536.74 0805 ................................................................................................. 22,393.32 18,323.74 16,919.13 15,596.51 0806 ................................................................................................. 26,901.75 22,012.18 20,326.64 18,736.77 0901 ................................................................................................. 14,276.94 11,479.86 10,716 .05 9,691.07 0902 ................................................................................................. 18,858.25 15,162.22 14,153.94 12,800.96 0903 ................................................................................................. 23,693.16 19,051.10 17,783.15 16,082.43 0904 ................................................................................................. 30,114.89 24,214.00 22,602.87 20,442.05 1001 ................................................................................................. 15,605.62 14,196.46 12,263.41 11,214.12 1002 ................................................................................................. 20,030.53 18,220.48 15,739.25 14,392.34 1003 ................................................................................................. 28,632.84 26,045.31 22,498.10 20,574.16 1101 ................................................................................................. 19,210.54 15,429.48 15,273.07 13,031.77 1102 ................................................................................................. 28,760.39 23,097.90 22,865.57 19,509.69 1201 ................................................................................................. 16,348.17 14,415.12 13,472.13 12,517.00 1202 ................................................................................................. 19,455.02 17,152.98 16,030.80 14,894.97 1203 ................................................................................................. 24,712.07 21,788.96 20,363.09 18,918.99 1301 ................................................................................................. 18,615.29 14,996.71 13,200.32 12,430.44 1302 ................................................................................................. 24,245.89 19,533.98 17,193.98 16,190.25 1303 ................................................................................................. 30,884.77 24,882.14 21,902.84 20,624.27 1401 ................................................................................................. 13,751.54 11,132.12 10,125 .36 9,186.93 1402 ................................................................................................. 18,176.45 14,712.75 13,384.06 12,143.44 1403 ................................................................................................. 22,402.43 18,135.45 16,495.47 14,967.85 1404 ................................................................................................. 28,162.10 22,797.24 20,736.64 18,815.73 1501 ................................................................................................. 15,144.00 12,378.81 11,438.86 11,048.61 1502 ................................................................................................. 19,707.09 16,108.25 14,884.34 14,377.16 1503 ................................................................................................. 24,182.11 19,766.31 18,264.52 17,641.93 1504 ................................................................................................. 29,873.45 24,419.00 22,563.39 21,793.51 1601 ................................................................................................. 14,430.31 13,391.65 12,315.04 11,584.64 1602 ................................................................................................. 19,069.32 17,696.60 16,273.76 15,308.00 1603 ................................................................................................. 24,110.74 22,375.10 20,574.16 19,354.80 1701 ................................................................................................. 15,818.21 14,108.38 13,027.21 11,952.11 1702 ................................................................................................. 19,880.20 17,730.01 16,372.47 15,021.00 1703 ................................................................................................. 23,305.94 20,786.75 19,193.84 17,610.04 1704 ................................................................................................. 30,113.37 26,857.71 24,801.66 22,753.20 1801 ................................................................................................. 16,411.95 14,515.34 12,324.15 11,047.09 1802 ................................................................................................. 25,849.43 22,862.54 19,409.47 17,400.49 1803 ................................................................................................. 42,943.18 37,980.72 32,245.35 28,906.17 1901 ................................................................................................. 15,991.32 14,377.16 14,117.49 13,502.50 1902 ................................................................................................. 28,593.36 25,706.69 25,242.03 24,142.63 1903 ................................................................................................. 51,258.49 46,081.92 45,249.78 43,278.77 2001 ................................................................................................. 13,434.17 11,027.35 10,163 .32 9,278.04 2002 ................................................................................................. 18,042.82 14,809.93 13,651.32 12,460.81 2003 ................................................................................................. 22,894.42 18,792.96 17,321.53 15,810.62 2004 ................................................................................................. 29,627.45 24,318.78 22,414.58 20,460.27 2101 ................................................................................................. 27,739.96 26,033.16 23,612.68 20,502.79

5001 ................................................................................................. 2,346.08

5101 ................................................................................................. 10,339.47

5102 ................................................................................................. 23,602.05

5103 ................................................................................................. 11,045.57

5104 ................................................................................................. 29,256.94


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G. Example of the Methodology for Adjusting the Proposed Federal Prospective Payment Rates

Table 6 illustrates the methodology for adjusting the proposed federal prospective payments (as described in sections V.A. through V.F. of this proposed rule). The following examples are based on two hypothetical Medicare beneficiaries, both classified into CMG 0110 (without comorbidities). The proposed unadjusted federal prospective payment rate for CMG 0110 (without comorbidities) appears in
Table 6.

Example: One beneficiary is in Facility A, an IRF located in rural Spencer County, Indiana, and another beneficiary is in Facility B, an IRF located in urban Harrison County, Indiana. Facility A, a rural non-teaching hospital has a Disproportionate Share Hospital (DSH) percentage of 5 percent (which would result in a LIP adjustment of 1.0156), a wage index of 0.8513, and a rural adjustment of 14.9 percent. Facility B, an urban teaching hospital, has a DSH percentage of 15 percent (which would result in a LIP adjustment of 1.0454 percent), a wage index of 0.8852, and a teaching status adjustment
of 0.0784.

To calculate each IRF’s labor and nonlabor portion of the Federal prospective payment, we begin by taking the unadjusted Federal prospective payment rate for CMG 0110 (without comorbidities) from Table 5. Then, we multiply the proposed labor-related share for FY 2015 (69.538 percent)
described in section V.D. of this proposed rule by the proposed unadjusted federal prospective payment rate. To determine the non-labor portion of the proposed federal prospective payment rate, we subtract the labor portion of the proposed federal payment from the proposed unadjusted federal prospective payment.

To compute the proposed wageadjusted federal prospective payment, we multiply the labor portion of the proposed federal payment by the appropriate wage index found in tables
A and B. These tables are available through the Internet on the CMS Web site at http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-ServicePayment/InpatientRehabFacPPS/. The resulting figure is the wage-adjusted labor amount. Next, we compute the proposed wage-adjusted federal payment by adding the wage-adjusted labor amount to the non-labor portion.

Adjusting the proposed wage-adjusted federal payment by the facility-level adjustments involves several steps. First, we take the wage-adjusted Federal prospective payment and multiply it by the appropriate rural and LIP adjustments (if applicable). Second, to determine the appropriate amount of additional payment for the teaching status adjustment (if applicable), we multiply the teaching status adjustment(0.0784, in this example) by the wageadjusted and rural-adjusted amount (if applicable). Finally, we add the additional teaching status payments (ifapplicable) to the wage, rural, and LIPadjusted federal prospective payment rates. Table 6 illustrates the components of the adjusted payment calculation.



### TABLE 

### 6—E XAMPLE OF 

### C OMPUTING THE 

### IRF FY 2015 F EDERAL 

### P ROSPECTIVE 

### P AYMENT

Step Rural facility A (Spencer Co., IN) Urban facility B (Harrison Co., IN)

1 ............. Unadjusted Federal Prospective Payment .......................................................................... . ... $32,501.97 .... $32,501.97

2 ............. Labor Share ......................................................................................................

................... × 0.69538 × 0.69538 3 ............. Labor Portion of Federal Payment ................................................................................. ...... = $22,601.22 = $22,601.22 4 ............. CBSA-Based Wage Index (shown in the Addendum, Tables 1 and 2) .............................. × 0.8513 × 0.8852 5 ............. Wage-Adjusted Amount ............................................................................................. .......... = $19,240.42 = $20,006.60

6 ............. Non-Labor Amount ................................................................................................. .............. + $9,900.75 + $9,900.75 7 ............. Wage-Adjusted Federal Payment .................................................................................... .... = $29,141.17 = $29,907.35 8 ............. Rural Adjustment .................................................................................................

................. × 1.149 × 1.000 9 ............. Wage- and Rural-Adjusted Federal Payment ...................................................................... = $ 33,483.20 = $29,907.35 10 ........... LIP Adjustment ....................................................................................................

................. × 1.0156 × 1.0454 11 ........... FY 2015 Wage-, Rural- and LIP-Adjusted Federal Prospective Payment Rate ................. = $34,005.54 = $31,265.14 12 ........... FY 2015 Wage- and Rural-Adjusted Federal Prospective Payment ................................... .... $33,483.20 .... $29,907.35 13 ........... Teaching Status Adjustment ........................................................................................

........ × 0 × 0.0784 14 ........... Teaching Status Adjustment Amount ................................................................................. . = $0.00 = $2,344.74 15 ........... FY 2015 Wage-, Rural-, and LIP-Adjusted Federal Prospective Payment Rate ................ + $34,005.54 + $31,265.14 16 ........... Total FY 2015 Adjusted Federal Prospective Payment ...................................................... = $34,005. 54 = $33,609.88

Thus, the proposed adjusted payment for Facility A would be $34,005.54, and the proposed adjusted payment for Facility B would be $33,609.88.

VI. Proposed Update to Payments for High-Cost Outliers under the IRF PPS

A. Proposed Update to the Outlier Threshold Amount for FY 2015

Section 1886(j)(4) of the Act provides the Secretary with the authority to make payments in addition to the basic IRF prospective payments for cases incurring extraordinarily high costs. A case qualifies for an outlier payment if
the estimated cost of the case exceeds the adjusted outlier threshold. We calculate the adjusted outlier threshold by adding the IRF PPS payment for the case (that is, the CMG payment adjusted by all of the relevant facility-level adjustments) and the adjusted threshold amount (also adjusted by all of the relevant facility-level adjustments). Then, we calculate the estimated cost of a case by multiplying the IRF’s overall CCR by the Medicare allowable covered charge. If the estimated cost of the case is higher than the adjusted outlier threshold, we make an outlier payment for the case equal to 80 percent of the
difference between the estimated cost of
the case and the outlier threshold.

In the FY 2002 IRF PPS final rule (66 FR 41362 through 41363), we discussed our rationale for setting the outlier
threshold amount for the IRF PPS so that estimated outlier payments would equal 3 percent of total estimated payments. For the 2002 IRF PPS final rule, we analyzed various outlier policies using 3, 4, and 5 percent of the total estimated payments, and we concluded that an outlier policy set at 3 percent of total estimated payments would optimize the extent to which we
could reduce the financial risk to IRFs of caring for high-cost patients, while still providing for adequate payments for all other (non-high cost outlier)

cases.

Subsequently, we updated the IRF
outlier threshold amount in the FYs


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2006 through 2014 IRF PPS final rules
and the FY 2011 and FY 2013 notices (70 FR 47880, 71 FR 48354, 72 FR 44284, 73 FR 46370, 74 FR 39762, 75 FR 42836, 76 FR 47836, 76 FR 59256, and 77 FR 44618, 78 FR 47860, respectively) to maintain estimated outlier payments at 3 percent of total estimated payments.
We also stated in the FY 2009 final rule (73 FR 46370 at 46385) that we would continue to analyze the estimated outlier payments for subsequent years and adjust the outlier threshold amount as appropriate to maintain the 3 percent target.

To update the IRF outlier threshold amount for FY 2015, we propose to use
FY 2013 claims data and the same methodology that we used to set the
initial outlier threshold amount in the FY 2002 IRF PPS final rule (66 FR 41316 and 41362 through 41363), which is also the same methodology that we used to update the outlier threshold amounts for FYs 2006 through 2014. Based on an analysis of this updated data, we estimate that IRF outlier payments as a percentage of total estimated payments are approximately 2.9 percent in FY 2014. Therefore, we propose to update the outlier threshold amount to $9,149 to maintain estimated outlier payments at approximately 3 percent of total estimated aggregate IRF payments for

FY 2015.

We invite public comment on the proposed update to the FY 2015 outlier
threshold amount to maintain estimated outlier payments at approximately 3 percent of total estimated IRF payments.

B. Proposed Update to the IRF Cost-toCharge Ratio Ceiling and Urban/Rural Averages

In accordance with the methodology
stated in the FY 2004 IRF PPS final rule (68 FR 45674, 45692 through 45694), we apply a ceiling to IRFs’ CCRs. Using the methodology described in that final rule, we propose to update the national urban and rural CCRs for IRFs, as well as the national CCR ceiling for FY 2015, based on analysis of the most recent data that is available. We apply the
national urban and rural CCRs in the following situations:

• New IRFs that have not yet
submitted their first Medicare cost report.

• IRFs whose overall CCR is in excess of the national CCR ceiling for FY 2015,
as discussed below.

• Other IRFs for which accurate data
to calculate an overall CCR are not
available.

Specifically, for FY 2015, based on our estimates, we propose a national average CCR of 0.571 for rural IRFs, which we calculated by taking an average of the CCRs for all rural IRFs using their most recently submitted cost report data. Similarly, based on our estimates, we propose a national average CCR of 0.456 for urban IRFs, which we calculated by taking an average of the CCRs for all urban IRFs using their most recently submitted cost report data. We apply weights to both of these averages using the IRFs’ estimated costs, meaning that the CCRs of IRFs with higher costs factor more heavily into the averages
than the CCRs of IRFs with lower costs. For this proposed rule, we have used the most recent available cost report data (FY 2012). This includes all IRFs whose cost reporting periods begin on or after October 1, 2011, and before October 1, 2012. If, for any IRF, the FY 2012 cost report was missing or had an ‘‘as submitted’’ status, we used data from a previous fiscal year’s (that is, FY 2004 through FY 2011) settled cost report for that IRF. We do not use cost report data from before FY 2004 for any IRF because changes in IRF utilization since FY 2004 resulting from the 60 percent rule and IRF medical review activities suggest that these older data do not adequately reflect the current
cost of care.

In accordance with past practice, we propose to set the national CCR ceiling
at 3 standard deviations above the mean CCR. Using this method, the proposed national CCR ceiling would be 1.64 for FY 2015. This means that, if an
individual IRF’s CCR exceeds this proposed ceiling of 1.64 for FY 2015, we would replace the IRF’s CCR with the appropriate proposed national average CCR (either rural or urban, depending on the geographic location of the IRF). We calculated the proposed national CCR ceiling by:

Step 1. Taking the national average CCR (weighted by each IRF’s total costs, as discussed above) of all IRFs for which we have sufficient cost report data (both rural and urban IRFs combined).

Step 2. Estimating the standard deviation of the national average CCR computed in step 1.

Step 3. Multiplying the standard deviation of the national average CCR computed in step 2 by a factor of 3 to compute a statistically significant reliable ceiling.

Step 4. Adding the result from step 3 to the national average CCR of all IRFs for which we have sufficient cost report data, from step 1.

We propose that the proposed national average rural and urban CCRs and the proposed national CCR ceiling in this section will be updated in the
final rule if more recent data become available to use in these analyses. We invite public comment on the proposed update to the IRF CCR ceiling and the urban/rural averages for FY

2015.

VII. Proposed Refinements to the Presumptive Compliance Methodology

A. Background on the Compliance Percentage

The compliance percentage has been part of the criteria for defining IRFs since implementation of the Inpatient Prospective Payment System (IPPS) in 1983. In the September 1, 1983, interim final rule with comment period (48 FR 39752), which allowed IRFs to be paid separately from the IPPS, the initial compliance percentage was set at 75 percent. The 1983 interim rule stipulated that in accordance with sections 1886(d)(1)(B) and 1886(d)(1)(B)(ii) of the Act, a rehabilitation hospital and a
rehabilitation unit were excluded from the IPPS. Sections 1886(d)(1)(B) and 1886(d)(1)(B)(ii) of the Act also give the Secretary the discretion to define a rehabilitation hospital and unit.

A hospital or unit deemed excluded from the IPPS and paid under the IRF PPS must meet the general requirements in subpart B and subpart P of part 412. Subject to the special payment provisions of § 412.22(c), a hospital or unit must meet the general criteria set forth in § 412.22 and in the regulations at § 412.23(b), § 412.25, and § 412.29 that specify the criteria for a provider to be classified as a rehabilitation hospital or unit. Hospitals and units meeting these criteria are eligible to be paid on a prospective payment basis as an IRF
under the IRF PPS.

The 1983 interim final rule stipulated that one of the criteria for being classified as an IRF was that, during the facility’s most recently completed 12- month cost reporting period, the hospital must be primarily engaged in furnishing intensive rehabilitation services, as demonstrated by patient medical records, indicating that at least 75 percent of the IRF’s patient population were treated for one or more of the 10 medical conditions specified in the regulation that typically required the intensive inpatient rehabilitation treatment provided in an IRF. These criteria, along with other related criteria, distinguished an inpatient rehabilitation hospital or unit from a hospital that furnished general medical or surgical services, as well as rehabilitation services. We believed then, as we do now, that by examining the types of conditions for which a hospital’s inpatients are treated, and the proportion of patients treated for


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conditions that typically require intensive inpatient rehabilitation, we would be able to distinguish those hospitals in which the provision of rehabilitation services was primary rather than secondary. Thus, Medicare pays for rehabilitation services at IRFs at a higher rate than other hospitals because IRFs are designed to offer specialized inpatient rehabilitation care to patients with intensive needs.

The original medical conditions specified under the compliance percentage, or ‘‘75 percent rule,’’ were stroke, spinal cord injury, congenital deformity, amputation, major multiple trauma, fracture of femur (hip fracture), brain injury, and polyarthritis (including rheumatoid arthritis). In the January 3, 1984, final rule (49 FR 234), we expanded the list of eligible medical conditions to include neurological disorders (including multiple sclerosis, motor neuron diseases, polyneuropathy, muscular dystrophy, and Parkinson’s disease) and burns. In the May 7, 2004 final rule (69 FR 25752), we modified and expanded the list of eligible medical conditions by removing polyarthritis and substituting three more clearly defined arthritis-related
conditions. The three conditions that replaced polyarthritis included the following:

• Active, polyarticular rheumatoid arthritis, psoriatic arthritis, and seronegative arthropathies resulting in significant functional impairment of ambulation and other activities of daily living, which has not improved after an appropriate, aggressive, and sustained course of outpatient therapy services or
services in other less intensive rehabilitation settings immediately preceding the inpatient rehabilitation admission, or which results from a systemic disease activation immediately before admission, but has the potential to improve with more intensive
rehabilitation.

• Systemic vasculidities with joint inflammation, resulting in significant functional impairment of ambulation and other activities of daily living, which has not improved after an appropriate, aggressive, and sustained course of outpatient therapy services or
services in other less intensive rehabilitation settings immediately preceding the inpatient rehabilitation admission, or which results from a systemic disease activation immediately before admission, but has the potential to improve with more intensive
rehabilitation.

• Severe or advanced osteoarthritis (osteoarthrosis or degenerative joint disease) involving three or more major joints (elbow, shoulders, hips, or knees) with joint deformity and substantial loss of range of motion, atrophy, significant functional impairment of ambulation and other activities of daily living, which has not improved after an appropriate, aggressive, and sustained course of outpatient therapy services or
services in other less intensive rehabilitation settings immediately preceding the inpatient rehabilitation admission, but has the potential to improve with more intensive rehabilitation. (A joint replaced by a prosthesis is no longer considered to have osteoarthritis, or other arthritis, even though this condition was the reason for the joint replacement.)

In the May 7, 2004 final rule (69 FR 25752), a 13th condition was also added to include patients who undergo knee and/or hip joint replacement during an acute hospitalization immediately preceding the inpatient rehabilitation stay and also meet at least one of the following specific criteria:

• Underwent bilateral knee or hip joint replacement surgery during the acute hospitalization immediately preceding the IRF admission.

• Are extremely obese patients as measured by the patient’s Body Mass Index (BMI) of at least 50, at the time
of admission to the IRF.

• Are patients considered to be ‘‘frail elderly,’’ as determined by a patient’s age of 85 or older, at the time of admission to the IRF (the provision currently states only that the patients be age 85 or older at the time of admission to the IRF).

In 2002, we surveyed Medicare fiscal intermediaries to determine how they were enforcing the 75 percent rule. Although the 75 percent rule was one of the criteria that were used to distinguish an IRF from an acute care hospital from 1983 to 2004, we found evidence that
different fiscal intermediaries were enforcing the rule differently. We found fiscal intermediaries were using
inconsistent methods to determine whether IRFs were in compliance with the regulation, and that some IRFs were not being reviewed for compliance at
all. This led to concerns that some IRFs might have been out of compliance with the regulation and inappropriately classified as IRFs, while other IRFs may have been held to overly high standards. Because of these concerns we sought to
establish a more uniform enforcement of the 75 percent rule.

In the May 16, 2003, IRF PPS proposed rule (68 FR 26786), we solicited comments on the regulatory requirements of the 75 percent rule. Though we did not, at that time, propose amending the regulatory requirements for the 75 percent rule located in then § 412.23(b)(2), we did propose to amend these requirements in the September 9, 2003, proposed rule titled, ‘‘Medicare Program; Changes to the Criteria for Being Classified as an Inpatient Rehabilitation Facility’’ (68 FR 53266). In that rule, we proposed some revisions to the 75 percent rule, including lowering the compliance percentage to 65 percent during a 3-year transition period for cost reporting periods between January 1, 2004, and January 1, 2007. Also, in response to comments on the September 9, 2003, proposed rule and as stated above, the May 7, 2004, final rule (69 FR 25752) expanded the number of medical
conditions that would meet the compliance percentage from 10 to 13 and provided that patient comorbidities may also be included in determining an IRF’s compliance with the requirements during the transition period.

In the September 9, 2003, proposed rule, we defined a ‘‘comorbidity’’ as a specific patient condition that is secondary to the patient’s principal diagnosis or impairment that is the primary reason for the inpatient rehabilitation stay. In the May 7, 2004, rule, we adopted the provision to use a patient with a comorbidity counting towards the compliance threshold during the transition period. In the determination of the compliance percentage, a patient comorbidity counts toward the percentage if the comorbidity falls in one of the conditions specified at § 412.29(b)(2)
and has caused significant decline in functional ability in the individual that even in the absence of the admitting condition, the individual would require
the intensive rehabilitation treatment that is unique to IRFs.

Anticipating that IRFs needed some time to adjust and adapt their processes to the changes in the enforcement of the 75 percent rule, in the May 7, 2004 final rule, we provided IRFs with a 3-year phase-in period (cost reporting periods beginning on or after July 1, 2004, through July 1, 2007) to establish the compliance threshold of 75 percent of the IRF’s total patient population. The 3-year phase-in period was intended to begin with cost reporting periods on or after July 1, 2004, with the threshold at 50 percent of the IRF’s population and gradually increase to 60 percent, then to 65 percent, and then to expire with cost reporting periods beginning on or after July 1, 2007, when the compliance percentage would once again be at 75 percent.

Section 5005 of the Deficit Reduction Act of 2005 (DRA) (Pub. L. 109–171, enacted February 8, 2006) and section 1886(d)(1)(B) of the Act modified the


### 26327 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules

provisions of the 75 percent rule originally specified in the May 7, 2004, final rule. To reflect these statutory changes, in the August 7, 2007, final rule (72 FR 44284), we revised the regulations to prolong the overall duration of the phased transition to the full 75 percent threshold by stipulating
that an IRF must meet the full 75 percent compliance threshold as of its first cost reporting period that starts on or after July 1, 2008. We also extended the policy of using a patient’s comorbidities to the extent they met the conditions as outlined in the regulations to determine compliance with the
classification criteria at then § 412.23(b)(2)(1) to the first cost reporting period that starts on or after July 1, 2008.

Subsequently, section 115 of the
MMSEA amended section 5005 of the
DRA to revise elements of the 75 percent rule that are used to classify IRFs. In accordance with the statute, in the August 8, 2008, final rule (73 FR 46370), we revised the compliance rate
that IRFs must meet to be excluded from the IPPS and be paid under the IRF PPS to 60 percent for cost reporting periods beginning in or after July 1, 2006. Also, in accordance with the statute, we required that patient comorbidities that satisfy the criteria as specified at then § 412.23(b)(2)(i) [now located at § 412.29(b)(1) and § 412.29(b)(2)] be
included in calculations used to
determine whether an IRF meets the 60 percent compliance percentage for cost reporting periods beginning on or after July 1, 2007. As a result of these changes, the requirements started being referred to as the ‘‘60 percent rule,’’ instead of the ‘‘75 percent rule.’’ The regulations finalized in the FY 2009 IRF PPS Final Rule (73 FR 46370) continue
to be in effect.

Though an IRF must serve an inpatient population of whom at least 60 percent meet the compliance percentage criteria specified at § 412.29(b), the existing regulation allows for 40 percent of reasonable and necessary admissions to an IRF to fall outside of the 13 qualifying medical conditions. Still, the ‘‘60 percent rule’’ is one of the primary ways we distinguish an IRF from an acute care hospital. As Medicare payments for IRF services are generally significantly higher than Medicare payments for similar services provided in acute care hospital settings, we believe that it is important to maintain and enforce the criteria for medical conditions that may be counted toward an IRF’s compliance calculation for the 60 percent rule to ensure that the higher Medicare payments are appropriately allocated to those providers that are providing IRFlevel services.

B. Proposed Changes to the Diagnosis
Codes That Are Used To Determine Presumptive Compliance

In the FY 2014 IRF PPS final rule (78 FR 47860, 47881 through 47895), we revised the list of ICD–9–CM diagnosis
codes that are used to determine presumptive compliance, effective for compliance review periods beginning on or after October 1, 2014. These revisions were based on an analysis of
the ICD–9–CM code list that determined the clinical appropriateness of each
individual ICD–9–CM code’s inclusion on the list. As a result of this analysis,
we also intended to remove all of the status post-amputation diagnoses codes, but these codes were inadvertently
omitted from the FY 2014 IRF PPS proposed and final rules. These codes, listed in Table 7, are used to indicate that a patient has the sequela or residual
effect of a condition.

As we stated in the FY 2014 IRF PPS final rule (78 FR 47860, at 47881), the ICD–9–CM diagnosis codes included on
the ‘‘ICD–9–CM Codes That Meet Presumptive Compliance Criteria’’ list
are ones that demonstrate that the patient meets criteria for the medical conditions that may be counted toward an IRF’s compliance percentage under the presumptive compliance methodology. Further, we stated that the underlying premise of the presumptive compliance methodology list is that it represents particular diagnosis codes that, if applicable to a given patient, would more than likely mean that the patient required intensive rehabilitation
services in an IRF for treatment of one or more of the conditions specified at § 412.29(b)(2) or that they had a comorbidity that caused significant decline in functional ability such that, even in the absence of the admitting condition, the patient would require the
intensive rehabilitation treatment that is unique to IRFs and cannot be appropriately treated in another care setting. For the reasons described below,
we do not believe that the ICD–9–CM diagnosis codes listed in Table 7 meet
either of these criteria. We believe it is impossible to determine, from the presence of such diagnosis codes alone, whether a patient with an amputation status or prosthetic fitting and adjustment needs has a condition for which he or she would qualify for treatment in an IRF. Some patients with an amputation status or prosthetic fitting and adjustment needs will not require close medical supervision by a physician or weekly interdisciplinary team conferences to achieve their goals, while others may require these services.
We believe that rehabilitation associated with an amputation status or prosthetic fitting and adjustment needs does not necessarily need to be accompanied by the close medical management provided in IRFs, as long as the patient does not have any additional comorbidities that have caused significant decline in his or her functional ability that, in the absence of an amputation status or prosthetic fitting and adjustment needs,
would necessitate treatment in an IRF. That is to say, a patient’s need for
intensive rehabilitation services provided in an IRF may depend on other conditions which cannot be solely identified through the presence of an amputation status or prosthetic fitting and adjustment diagnosis code. If a patient with one of the diagnosis codes
listed in Table 7 has additional
comorbidities that would necessitate treatment in an IRF, then those additional comorbidities would qualify the patient for inclusion in the calculation of the IRF’s compliance percentage under the presumptive compliance methodology. Thus, wepropose the removal of the status postamputation diagnosis codes listed in
Table 7 from the list of ‘‘ICD–9–CM Codes That Meet Presumptive Compliance Criteria.’’ This proposed
removal would be effective for compliance review periods beginning on or after October 1, 2014, and the changes would be incorporated into the ICD–10 lists (discussed below) when ICD–10–CM becomes the required
medical data code set for use on
Medicare claims and IRF–PAI submissions. We invite public comment on the proposed changes to the diagnosis codes that are used to determine presumptive compliance.



### TABLE 

### 7—ICD–9–CM C ODES 

### P RO



### POSED 

### T O 

### B E 

### R EMOVED 

### F ROM 

### ‘‘ICD–9–CM C ODES 

### T HAT 

### M EET 

### P RESUMPTIVE 

### C OMPLIANCE 

### C RI



### TERIA 

### ’’

ICD–9–CM code Diagnosis

V49.65 ..... Below elbow amputation status. V49.66 ..... Above elbow amputation status. V49.67 ..... Shoulder amputation status. V49.73 ..... Foot amputation status. V49.74 ..... Ankle amputation status. V49.75 ..... Below knee amputation status. V49.76 ..... Above knee amputation status. V49.77 ..... Hip amputation status.V52.0 ....... Fitting and adjustment of artificial arm (complete) (partial).V52.1 ....... Fitting and adjustment of artificial leg (complete) (partial).


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C. Proposed Changes to the Impairment Group Codes That Meet Presumptive Compliance Criteria

An ‘‘impairment group code’’ is not an ICD diagnosis code, but part of a separate unique set of codes specifically developed for the IRF PPS for assigning the primary reason for admission to an
IRF. These codes are listed in the IRF– PAI Training Manual ( see section II, item #21, and Appendix A). The IRF– PAI Training Manual is available through the Internet on the CMS Web

site at http://www.cms.gov/Medicare/ Medicare-Fee-for-Service-Payment/ InpatientRehabFacPPS/IRFPAI.html

.

If an IRF is eligible to use the presumptive methodology to evaluate its compliance with the 60 percent rule,
all of its IRF–PAI assessments from the most recently completed 12-month compliance review period are examined (with the use of a computer program) to determine whether they contain any of the codes listed on the presumptive methodology lists (that is, ‘‘ICD–9–CM Codes That Meet Presumptive Compliance Criteria’’ and ‘‘Impairment Groups That Meet Presumptive Compliance Criteria’’). Each selected assessment is presumptively categorized as either meeting or not meeting the IRF 60 percent rule requirements based upon the primary reason for the patient to be treated in the IRF (the impairment group) and the ICD diagnosis codes listed as either the etiologic diagnosis (the etiologic problem that led to the condition for which the patient is receiving rehabilitation) or one of 25
comorbidities on the assessment.

Not all impairment group codes (IGC) meet the presumptive compliance criteria. The underlying premise of the list of eligible IGCs that are used to determine presumptive compliance (similar to the diagnosis codes listed in
‘‘ICD–9–CM Codes That Meet Presumptive Compliance Criteria’’) includes particular IGCs that, if applicable to a given patient, would more than likely mean that the patient required intensive rehabilitation
services for treatment of one or more of the conditions specified at § 412.29(b)(2). The current list of eligible IGCs that meet presumptive compliance criteria, Appendix B: Impairment Group Codes That Meet Presumptive Compliance Criteria, can be downloaded from the October 1, 2007, IRF Compliance Rule Specification Files on the Medicare IRF
PPS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/InpatientRehabFacPPS/
Criteria.html . Again, this list contains only those IGCs that meet the presumptive compliance criteria.

1. Proposed Removal of IGCs for Unilateral Upper Extremity Amputations and Arthritis From Appendix B: Impairment Group Codes That Meet Presumptive Compliance

Criteria

In the FY 2014 IRF PPS final rule (78 FR 47889 through 47895), we finalized (applicable for compliance review periods beginning on or after October 1, 2014) the removal of certain ICD–9–CM codes for unilateral upper extremity amputations from the list of ‘‘ICD–9–CM Codes That Meet Presumptive Compliance Criteria’’ because we believed that it is impossible to determine, from the presence of such ICD–9–CM codes alone, whether a patient with such a unilateral upper extremity amputation has a condition
for which he or she would need
intensive rehabilitation services for
treatment of one or more of the conditions specified in § 412.29(b)(2). Further, we stated that a patient’s need for intensive inpatient rehabilitative
services for the treatment of one or more of these conditions would depend on the presence of additional comorbidities that caused significant decline in his or her functional ability to an extent that
would necessitate treatment in an IRF. If the patient has one or more of the
comorbidities on the list of ‘‘ICD–9–CM Codes That Meet Presumptive Compliance Criteria,’’ then the patient would already qualify as meeting the presumptive compliance criteria. We concluded that if the diagnosis codes for such a patient’s comorbidities do not appear on the list of ‘‘ICD–9–CM Codes That Meet Presumptive Compliance Criteria,’’ then the patient could still be
considered for inclusion in the IRF’s compliance percentage following
medical review and confirmation that they meet the criteria for one or more of
the medical conditions in the regulations.

In the FY 2014 IRF PPS final rule (78 FR 47887 through 47895), we also finalized (applicable for compliance review periods beginning on or after October 1, 2014) the removal of ICD–9– CM diagnosis codes for arthritis
conditions from the list of ‘‘ICD–9–CM Codes That Meet Presumptive Compliance Criteria’’ because the inclusion of patients with these medical conditions in the presumptive compliance calculation of the IRF’s compliance percentage is conditioned on those patients meeting the described severity and prior treatment requirements. However, the ICD–9–CM diagnosis codes that reflect these arthritis and arthropathy conditions do not provide any information about the severity of the condition or whether the prior treatment requirements were met. Therefore, we stated in the FY 2014 IRF
PPS final rule that we believe that additional information beyond the presence of the code is necessary to
determine if the medical record would support inclusion of individuals with the arthritis and arthropathy conditions outlined in our regulations under § 412.29(b)(2)(x) through § 412.29(b)(2)(xii) in the presumptive compliance calculation of the facility’s compliance percentage. For this reason,
we finalized the removal of the ICD–9– CM diagnosis codes associated with the
medical conditions outlined in our regulations under § 412.29(b)(2)(x) through § 412.29(b)(2)(xii) from the list
of ‘‘ICD–9–CM Codes That Meet Presumptive Compliance Criteria.’’ However, we also stated that we expect that the MACs will be able, upon medical review, to include those patients in a facility’s compliance percentage upon confirmation that the severity and prior treatment requirements were met.

Consistent with our rationale in the FY 2014 IRF PPS final rule for removing the ICD–9–CM diagnoses codes for unilateral upper extremity amputations and the arthritis and arthropathy conditions, we propose to make conforming changes to the IGCs by proposing the removal of four IGCs from Appendix B: Impairment Group Codes That Meet Presumptive Compliance Criteria. Thus, we propose to remove the following codes from Appendix B: Impairment Group Codes That Meet Presumptive Compliance Criteria:

• IGC 0005.1—Unilateral Upper Limb Above the Elbow (AE),

• IGC 0005.2—Unilateral Upper Limb Below the Elbow (BE),

• IGC 0006.1—Rheumatoid Arthritis,
and

• IGC 0006.9—Other Arthritis.

2. Other Proposed Changes to Appendix B: Impairment Group Codes That Meet Presumptive Compliance Criteria

We propose to revise Appendix B: Impairment Group Codes That Meet Presumptive Compliance Criteria by revising the diagnosis codes listed as exclusions on the table and by revising
the title of the table.

In the FY 2014 IRF PPS final rule (78 FR 47860, 47881 through 47895), we finalized (applicable for compliance review periods beginning on or after October 1, 2014) the removal of certain
ICD–9–CM codes from the list of ‘‘ICD– 9–CM Codes That Meet Presumptive Compliance Criteria.’’ Accordingly, we


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propose to exclude these diagnosis codes from counting if they are the patient’s Etiologic Diagnosis (that is, the etiologic problem that led to the condition for which the patient is receiving rehabilitation). That is, a given
IGC that would otherwise meet the presumptive compliance criteria will not meet such criteria if the patient has one of the ‘‘excluded’’ Etiologic Diagnoses for that IGC.

In addition, in the FY 2014 IRF PPS final rule (78 FR 47860, 47883), we implemented a change in the titles of some tables used in the presumptive compliance methodology to no longer use alphabet characters or the ‘‘Appendix’’ labels to identify these
tables. Consistent with the intent to reduce confusion among tables, and effective October 1, 2014, we propose to identify Appendix B: Impairment Group Codes That Meet Presumptive Compliance Criteria as ‘‘Impairment Group Codes That Meet Presumptive Compliance Criteria.’’

This new proposed table, ‘‘Impairment Group Codes That Meet Presumptive Compliance Criteria,’’ also lists Etiologic Diagnosis codes that are excluded from counting under related
IGCs in ICD–10–CM code format. For example, ICD–10–CM code G72.3, ‘‘Periodic Paralysis’’ is an excluded Etiologic Diagnosis code under IGC 0003.8, ‘‘Neuromuscular Disorders.’’ Further, to accommodate the proposed Etiologic Diagnosis code exclusions, we
have reformatted this table. A revised table containing the proposed ‘‘Impairment Group Codes That Meet Presumptive Compliance Criteria,’’ with the additional proposed ICD–10–CM Etiologic Diagnosis exclusions described in this section, can be viewed on the
Medicare IRF PPS Web site at http://www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ InpatientRehabFacPPS/Data-Files.html

. The proposed changes to the table, ‘‘Impairment Group Codes That Meet Presumptive Compliance Criteria,’’ would be effective for compliance review periods beginning on or after October 1, 2014. We invite public comment on the proposed changes to the impairment group codes that meet presumptive compliance criteria.

VIII. Proposed Data Collection of the Amount and Mode (Individual, Group, and Co-Treatment) of Therapy Provided in IRFs According to Occupational, Speech, and Physical Therapy Disciplines

Prior to the implementation of the IRF PPS in January 2002, Medicare payment for IRF services under section 101(a) of the Tax Equity and Fiscal Responsibility Act of 1982 (Pub. L. 97–248, enacted September 3, 1982) was based on the reasonable costs incurred in furnishing services to Medicare beneficiaries, subject to a limit on allowable costs per discharge. Thus, for therapy services,
Medicare reimbursed IRFs based on the reasonable costs incurred in furnishing appropriate levels of Individual Therapy or Group Therapy, which meant that
IRFs had limited financial incentives to provide more of one type of therapy than another. We presumed that decisions about the mode of therapy delivery were likely to be based on the needs of the patient and on the best way to assist patients in meeting their individualized rehabilitation goals.
With the advent of the IRF PPS beginning in January 2002, Medicare began reimbursing IRFs using a set prospective payment amount that was
intended to cover the costs of all treatment and services, including therapy services, provided to patients in
the IRF. This increased the financial incentives for IRFs to give patients more Group Therapy and less Individual Therapy, because Individual Therapy is more costly to provide. Although we
know that the financial incentives for the provision of Individual Therapy and Group Therapy changed, we do not know whether IRFs provided different modes of therapy in response to the new
incentives or how much Individual Therapy and Group Therapy IRFs currently provide. Medicare does not currently collect data on the amount of Individual, Group, and Co-Treatment Therapies, according to therapy discipline, that IRFs are currently providing. We believe that it is important to begin collecting these data
to determine what services Medicare is paying for under the IRF prospective payment system, which would allow us to analyze whether we are paying appropriately for services currently rendered by IRFs. Medicare administrative data (such as the IRF claims data) do not currently provide
the level of detailed information about the mode and type of therapy provided that we require to perform these analyses. Thus, this proposed new data
collection will assist us in the development of appropriate coverage and payment criteria for the provision of Group Therapy in the IRF setting. We believe that these coverage and payment criteria are important to balance the beneficial aspects of Group Therapy for certain patients in certain instances with the IRF requirements for an intensive rehabilitation therapy

program. In the FY 2010 IRF PPS proposed rule (74 FR 21070, 21071) in which we proposed a revised set of Medicare coverage requirements for IRF services,
we discussed the relative value of Individual Therapy versus Group Therapy in the IRF setting. To improve our understanding of when Group Therapy is most appropriate in IRFs, we solicited comments in that proposed rule on the types of patients for whom Group Therapy is appropriate, and the specific amount of Group Therapy that may be beneficial for these types of patients. Subsequently, we discussed
the comments in the FY 2010 IRF PPS final rule (74 FR 39796, 39797). Although the comments on the FY 2010 IRF PPS proposed rule did not offer any clinical study results or any data that would be helpful to us in developing coverage and payment criteria for the provision of Group Therapy in IRFs, the comments did suggest an important role for Group Therapy in the provision of therapies in IRFs. However, the majority of commenters remarked that Group Therapy should be limited in some way. Many commenters agreed that Group Therapy is a good adjunct to Individual Therapy, but should not be the primary source of therapy services provided in
IRFs. Several commenters
recommended that we limit the amount of Group Therapies provided in IRFs,
and that we also limit the number of patients who can participate in a Group Therapy session. Commenters also suggested that Group Therapy sessions should be comprised of patients with similar diagnoses. We agreed with the commenters that Group Therapy should not be the primary source of therapy given to patients in IRFs. Group Therapy should be used in IRFs primarily as an adjunct to Individual Therapy services, which is the standard of care in IRFs, as Group Therapy may not uniformly represent the level of intensive rehabilitation therapy required and paid for in the IRF setting. In the final rule, we also stated that we would consider adopting specific coverage and payment criteria for Group Therapy practice in IRFs through future rulemaking.

When an authorized clinician deems it to be necessary, we continue to believe that Group Therapy can serve as an appropriate mode of therapy delivery that can be beneficial to the particular needs of IRF patients as an adjunct to Individual Therapy. Anecdotally, we understand that Group Therapy remains a widely used mode of therapy in the IRF setting. But as we stated in the FY 2010 IRF PPS final rule, we believe that it would be inappropriate for IRFs to


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provide essentially all therapy in the form of Group Therapy because we do
not believe that this is in the best interest of the patients, or that it reflects
the services for which the IRF prospective payment system was established to pay. Therefore, to better understand the ways in which therapy services are currently being provided in IRFs, we propose to add a new Therapy
Information Section to the IRF–PAI to record the amount and mode of therapy(that is, Individual, Group, CoTreatment) patients receive in each therapy discipline (that is, physical therapy, occupational therapy, and speech-language pathology).

For purposes of recording therapy services in IRFs, we propose to define Individual Therapy as the provision of therapy services by one licensed or certified therapist (or licensed therapy assistant, under the appropriate
direction of a licensed or certified therapist) to one patient at a time (this
is sometimes referred to as ‘‘one-onone’’ therapy). We propose to define Group Therapy as the provision of therapy services by one licensed or certified therapist (or licensed therapy assistant, under the appropriate
direction of a licensed or certified therapist) to between 2 and 6 IRF patients at one time, regardless of whether those 2 to 6 IRF patients are performing the same activity or differentactivities. We propose to define CoTreatment as the provision of therapy services by more than one licensed or certified therapist (or licensed therapy assistant, under the appropriate direction of a licensed therapist) from different therapy disciplines to one patient at the same time. For example,
Co-Treatment could involve one physical therapist and one occupational therapist working with one patient at the same time to achieve the patient’s goals. Because Co-Treatment is appropriate for specific clinical
circumstances and is not suitable for all patients, its use should be limited.

We propose to collect this information in a new Therapy Information Section on the IRF–PAI, which would be effective for IRF discharges beginning on or after October 1, 2015. The proposed new Therapy Information Section would be completed as part of the patient’s discharge assessment. In this new proposed section, the IRF would record how many minutes of Individual, Group, and Co-Treatment therapies the patient received, according to each therapy discipline (that is, physical therapy, occupational therapy, and speech-language pathology), during the first week (7 calendar day period) of the IRF stay; how many minutes of Individual, Group, and Co-Treatment therapies the patient received, according to each therapy discipline, during the second week (7 calendar day period) of the IRF stay; and the average number ofminutes of Individual, Group, and CoTreatment therapies the patient received, according to each therapy discipline, during all subsequent weeks (7 calendar day periods) of the IRF stay,beginning with the third week. For CoTreatment, each therapist would record the amount of time spent with the patient. That is, if a physical therapist and an occupational therapist both worked with the patient from 9:00 a.m. to 9:30 a.m., then each therapist would record 30 minutes with the patient in
the Co-Treatment section of the IRF– PAI. The draft of the proposed IRF–PAI
for FY 2016 that would include this new proposed Therapy Information Section
is available for download from the IRF
PPS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/InpatientRehabFacPPS/
IRFPAI.html in conjunction with the publication of this proposed rule. We propose to use these data for the following purposes:

• To analyze the types of therapy services Medicare is currently paying for under the IRF prospective payment system; and

• To monitor the amount of therapy given and the use of different therapy modes in IRFs to support future rulemaking in this area.

For example, we are considering using these data to propose limits on the amount of Group Therapy that may be provided in IRFs through future rulemaking. One such limit that we are currently considering is that an IRF patient may receive no more than 25 percent of his or her total therapy treatment time in Group Therapy, similar to the limit that currently exists in the skilled nursing facility (SNF) setting, as discussed in the SNF PPS and Consolidated Billing final rule (64 FR 41644, 41662). We specifically solicit public comment on all of these proposals, including whether 25 percent is the most appropriate limit to establish for the IRF setting.

IX. Proposed Revision to the IRF–PAI
To Add Data Item for Arthritis
Conditions

In the FY 2014 IRF PPS final rule (78 FR 47860, 47881 through 47895), we revised the list of ICD–9–CM diagnosis
codes that are used to determine presumptive compliance, effective for compliance review periods beginning on or after October 1, 2014. As part of these revisions, we removed all of the
ICD–9–CM codes for arthritis conditions because we found that such codes did not provide any information as to whether the patients met the severity and prior treatment requirement portions of the criteria for the medical conditions that may be counted toward an IRF’s compliance percentage under the presumptive compliance method. As
we said in the FY 2014 IRF PPS final rule, we did not adopt any and all arthritis conditions in the May 7, 2004, final rule (69 FR 25752). Rather, we only provided for those patients with certain
kinds of arthritic conditions that met defined severity and prior treatment requirements. We anticipated that less
severe arthritic conditions could be satisfactorily managed outside of IRFs since these cases would not require the intensive therapy provided in the inpatient rehabilitation setting.

We received a number of comments
on the removal of the ICD–9–CM codes for arthritis, with the majority of commenters suggesting that these changes would increase the use of the medical review method, which is more
burdensome for both CMS and for IRFs. Several commenters suggested that IRFs should not be required to undergo a ‘‘full medical review’’ if they fail to meet the required compliance percentage using the presumptive compliance method. Instead, they suggested use of a ‘‘limited medical review’’ in which only arthritis and systemic vasculidities cases would be
reviewed. We said in the FY 2014 IRF
PPS final rule that we would use the time afforded by the 1-year delayed implementation to consider the feasibility of minimizing any burdens created by the operational aspects of this policy.

In keeping with what we stated in the FY 2014 IRF PPS final rule, we propose
to add an item to the IRF–PAI form for an IRF to record the specific arthritis diagnosis code(s) for each patient that meets the severity and prior treatment requirements outlined in the regulation. By coding arthritis diagnosis codes in this section, the IRF would be indicating that the patient’s arthritis conditions have met all of the severity and prior treatment requirements (as outlined in regulation at § 412.29(b)(2)(x) through § 412.29(b)(2)(xii)) to be counted toward an IRF’s compliance percentage under the presumptive compliance method. This new proposed item would be
added to the IRF–PAI form for IRF discharges occurring on or after October 1, 2015. The purpose of this new proposed item is to provide us with the additional severity and prior treatment information necessary for us to identify the arthritis diagnoses that are appropriate to count toward an IRF’s


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compliance percentage under the presumptive compliance method, thus reducing the medical review burden. If an IRF’s presumptive compliance percentage is below the compliance threshold (currently, 60 percent), but inclusion of the arthritis codes reported in this new proposed data item would result in the IRF’s presumptive compliance percentage meeting or exceeding the compliance threshold, then we propose to perform a ‘‘limited’’ medical review on a statistically valid random sample of the cases documented
under this new item to ensure that the severity and prior treatment requirements were actually met. The number of cases from the statistically valid random sample that are found to meet the severity and prior treatment requirements will be extrapolated to the
total number of cases documented under this new item (that is, if 70 percent of the cases in the statistically valid random sample are found to meet the severity and prior treatment requirements, then we will presume that 70 percent of all of the cases
documented in the new item met the severity and prior treatment requirements). If the IRF’s presumptive compliance percentage meets or exceeds the compliance threshold (currently, 60 percent) with the addition of the compliant cases documented under the new item, then the IRF will be presumed to meet the 60 percent rule requirements and will not be subject to
additional medical review for that compliance review period. However, if the number of compliant cases
documented under the new item does not result in the IRF’s presumptive compliance percentage meeting or exceeding the compliance threshold (currently 60 percent), then the normal medical review procedures for IRFs not meeting the compliance threshold (currently 60 percent) under the presumptive compliance method will apply. A draft of the proposed IRF–PAI for FY 2016, with the proposed new item, is available for download on the
IRF PPS Web site at http://www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ InpatientRehabFacPPS/IRFPAI.html in conjunction with the release of this proposed rule.

We believe that the proposed new item, supported by the reduced medical review burden, minimizes the increase in burden from this policy while still allowing us to ensure that the arthritis diagnosis codes that are included in the calculation of an IRF’s compliance percentage under the presumptive compliance method actually meet the severity and prior treatment regulatory requirements.

X. International Classification of Diseases, 10th Revision, Clinical Modification (ICD–10–CM), Conversion

A. Background on the Use of Diagnosis Information in the IRF PPS

As described in section I.C. of this proposed rule, IRFs are required to complete the appropriate sections of a patient assessment instrument (PAI), designated as the Inpatient Rehabilitation Facility-Patient Assessment Instrument (IRF–PAI), upon the admission and discharge of a Medicare Part A Fee-for-Service patient. In addition, beginning with IRF discharges occurring on or after October 1, 2009, the IRF is also required to complete the appropriate sections of the IRF–PAI upon the admission and discharge of each Medicare Part C (Medicare Advantage) patient, as
described in the FY 2010 IRF PPS final rule (74 FR 39762, 39798 through 39800). Several sections of the IRF–PAI (currently, items #22, 24, 46, and 47) require IRFs to report diagnosis information for patients. Until ICD–10– CM becomes the required medical data
code set for use on Medicare claims and IRF–PAI submissions, we will continue
to use the ICD–9–CM medical data code set. Medicare uses the diagnosis
information recorded on the IRF–PAI for the following purposes:

1. To case-mix adjust the IRF PPS payment for a patient by assigning the patient to an appropriate payment tier based on the patient’s comorbidities.

2. To determine, using the presumptive compliance method, whether an IRF presumptively meets the 60 percent rule requirements in § 412.29(b).

As described in more detail in the FY 2002 IRF PPS final rule (66 FR 41316), we developed a list of diagnosis codes (previously, ICD–9–CM codes) that, if coded as a comorbidity in item #22 on a patient’s IRF–PAI, result in that patient being assigned to one of three higher-paying payment tiers under the
IRF PPS. In the FY 2006 IRF PPS final rule (70 FR 57166), we updated and revised the list of diagnosis codes (at that time, ICD–9–CM codes). We refer to the current list of diagnosis codes that, if present on a patient’s IRF–PAI, resultin the patient being assigned to a higherpaying tier as the ‘‘List of Comorbidities’’ in this proposed rule.

In addition to determining the appropriate tier assignment for case-mix adjusting IRF PPS payments, the diagnosis coding on the IRF–PAI is also used within the presumptive compliance method that typically serves as the first step in determining an IRF’s compliance with the 60 percent rule. As
discussed in more detail in section VII. of this proposed rule, the presumptive compliance method is one of two ways that Medicare’s contractors may evaluate an IRF’s compliance with the 60 percent rule (the other method is called the medical review method). The diagnosis coding on the IRF–PAI assessments from an IRF’s most recently completed 12-month compliance review period are examined (with the use of a computer program) to determine whether they contain any of the diagnosis codes that are listed in the
‘‘ICD–9–CM Codes That Meet Presumptive Compliance Criteria’’ (which is also known as the presumptive methodology list).

Additionally, the computer program examines the impairment group codes,
which are not ICD–9–CM or ICD–10–CM codes, but are instead part of a separate unique set of codes specifically developed for the IRF PPS for assigning the primary reason for admission to an IRF. The computer program compares the impairment group codes listed in item #21 to the list of ‘‘Impairment Group Codes That Meet Presumptive Compliance Criteria’’ to determine whether the patient’s impairment group code presumptively meets the 60 percent rule requirements. In certain cases, the list of ‘‘Impairment Group Codes That Meet Presumptive Compliance Criteria’’ contain Etiologic Diagnosis exclusions. For example, impairment group code 0005.4, which represents a unilateral lower limb amputation below the knee is included on the list of ‘‘Impairment Group Codes that Meet Presumptive Compliance Criteria,’’ unless the associated Etiologic Diagnosis recorded on the patient’s IRF– PAI in item #22 is 895.0 (under ICD–9– CM), which indicates a traumatic amputation of the toe or toes. Therefore, the list of ‘‘Impairment Group Codes That Meet Presumptive Compliance Criteria’’ contains diagnosis code information (currently ICD–9–CM codes) in addition to impairment group
codes.

As these lists all contain diagnosis code information (currently in the form of ICD–9–CM diagnosis codes) that is used to case-mix adjust payments, to determine an IRF’s presumptive compliance with the 60 percent rule, and to assist IRFs in accurately completing the impairment group code information on the IRF–PAI, the lists
must all be converted to ICD–10–CM for the IRF PPS to assign payments and classify IRF facilities appropriately when ICD–10–CM becomes the required


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medical data code set for use on
Medicare claims and IRF–PAI
submissions.

B. Conversion of Diagnosis Information From ICD–9–CM to ICD–10–CM for the

IRF PPS

In the September 5, 2012, final rule, ‘‘Administrative Simplification: Adoption of a Standard for a Unique Health Plan Identifier; Addition to the
National Provider Identifier Requirements; and a Change to the Compliance Date for the International Classification of Diseases, 10th Edition (ICD–10–CM and ICD–10–PCS) Medical Data Code Sets’’ (77 FR 54664), The Department of Health and Human Services announced a delay in the implementation of the ICD–10–CM and ICD–10–PCS code sets from October 1, 2013 to October 1, 2014. The transition to the ICD–10 code sets is required for entities covered by the Health Insurance Portability and Accountability Act of 1996 (HIPAA). On April 1, 2014, the Protecting Access to Medicare Act of 2014 (PAMA) (Pub. L. 113–93) was enacted. Section 212 of PAMA, titled ‘‘Delay in Transition from ICD–9 to ICD–10 Code Sets,’’ provides that ‘‘[t]he Secretary of Health and Human Services may not, prior to October 1, 2015, adopt
ICD–10 code sets as the standard for code sets under section 1173(c) of the Social Security Act (42 U.S.C. 1320d– 2(c)) and section 162.1002 of title 45, Code of Federal Regulations.’’ As of now, the Secretary has not implemented this provision under HIPAA.

We are addressing the conversion of
ICD–9–CM to ICD–10–CM codes for the IRF PPS in this proposed rule, but in light of PAMA, the effective date of those changes would be the date when ICD–10–CM becomes the required
medical data code set for use on
Medicare claims and IRF–PAI submissions. Until that time, we would continue to require use of the ICD–9–
CM codes for the IRF PPS.

CMS, along with our support contractor 3M, has spent several years implementing a process for the
transition from the use of ICD–9–CM diagnosis codes to ICD–10–CM codes within both the IRF PPS Grouper and the software for evaluating IRFs’ compliance with the 60 percent rule. As
this will be the first time that ICD–10–
CM codes have been used for the IRF PPS, we invite public comment on our translation of the diagnosis code lists

into ICD–10–CM.

To ensure a smooth transition from the use of ICD–9–CM diagnosis codes to ICD–10–CM codes for the IRF PPS, we propose to use the converted ICD–10–
CM lists that are available for download from the CMS Web site at http://www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ InpatientRehabFacPPS/Data-Files.html when ICD–10–CM becomes the required
medical data code set for use on
Medicare claims and IRF–PAI
submissions. To convert these lists from ICD–9–CM to ICD–10–CM, we used the General Equivalence Mappings (GEMs) that were developed as a tool to assist in converting ICD–9–CM-based applications to ICD–10–CM. The GEMs tool is a comprehensive translation dictionary that was developed over a 3- year period by CMS and the Centers for Disease Control and Prevention (CDC), with input from both the American Hospital Association and the American Health Information Management Association (AHIMA). They can be used to translate any ICD–9–CM-based data
into ICD–10–CM. For more information on GEMs, please refer to the General Equivalence Mappings Frequently Asked Questions Booklet, which is
available for download from the CMS
Web site at http://www.cms.gov/Medicare/Coding/ICD10/ICD-10-MSDRG-Conversion-Project.html . Like a translation dictionary, the GEMs tool is based on the complete meaning of a given code, where ‘‘meaning’’ refers to the correspondence between the official documents (tabular and index) that
define each code set. The GEMs tool contains a complete and comprehensive bidirectional set of mappings between
ICD–9–CM and ICD–10–CM.

Our intention in converting the ICD– 9–CM diagnosis codes to ICD–10–CM diagnosis codes within the IRF PPS was
for the converted codes to reflect the same ‘‘meaning’’ as the original codes. That is, except for the specific changes to the ‘‘Impairment Group Codes that Meet Presumptive Compliance Criteria’’
list and to the ‘‘ICD–9–CM Codes that Meet Presumptive Compliance Criteria’’
list described in section VII of this proposed rule, we did not intend to add conditions to, or delete conditions from,
the ICD–9–CM codes used in the IRF PPS. Thus, for all IRF lists containing an ICD–9–CM code, we used the 2014 GEMs, which can be downloaded from
the CMS Web site at http:// www.cms.gov/Medicare/Coding/ICD10/
2014-ICD-10-CM-and-GEMs.html to create a translation list, and then we
reviewed and revised that translation
list to ensure that all of the codes on the new ICD–10–CM list reflect as closely as possible the same ‘‘meaning’’ as the codes that were present on the old ICD– 9–CM list. We invite public comment on
our translation of the lists into ICD–10–
CM for the IRF PPS. The majority of ICD–9–CM codes have straightforward translation alternative(s) in ICD–10–CM, where the diagnoses classified to a given ICD–9–CM code are replaced by one or more ICD–10–CM codes. Wherever possible, we erred on the side of including a given ICD–10– CM code if we believed that a patient
coded with that ICD–10–CM code would have been correctly coded with the associated ICD–9–CM prior to the
transition from ICD–9–CM to ICD–10– CM. Our intent is that the meaning of the diagnosis codes is thereby unchanged because all of the patient records that would have been correctly coded using the ICD–9–CM codes are correctly coded using one or more of the specific ICD–10–CM codes. For example, the ICD–9–CM code 582.1, ‘‘Human herpesvirus 6 encephalitis,’’ translates directly to the ICD–10–CM code B1001, ‘‘Human herpesvirus 6 encephalitis.’’

Below, we note two issues within ICD–10–CM coding that differ from ICD–9–CM coding, and therefore, require special attention to ensure correct coding of patient diagnoses
under ICD–10–CM.

• Combination Diagnosis Codes in
ICD–9–CM and ICD–10–CM —Both ICD–
9–CM and ICD–10–CM contain diagnosis codes called combination codes, meaning that one code contains two or more diagnoses. Typically, one diagnosis in the combination code is a chronic disease, such as diabetes, and the other diagnosis is an associated manifestation or complication of the disease, such as diabetic nephropathy.

ICD–10–CM contains many new
combination codes that are not
contained in ICD–9–CM. In terms of a coded record, this means that the same diagnoses coded with one ICD–10–CM combination code may require two or more ICD–9–CM codes to capture a comparable level of detail. In addition,
ICD–9–CM contains combination codes with diagnosis terminology that was revised or deleted from ICD–10–CM, with the result that the same diagnoses coded with one ICD–9–CM code may require two or more ICD–10–CM codes to capture a comparable level of detail. For example, ICD–9–CM code 115.11, ‘‘Infection by Histoplasma duboisii, meningitis’’ translates to a pair of ICD– 10–CM codes, ‘‘B39.5—Histoplasmosis
duboisii’’ and code ‘‘G02—Meningitis in other infectious and parasitic diseases classified elsewhere.’’ In such instances, the intent of our policy is unchanged because the patient records that would have been correctly coded using the single ICD–9–CM code will now be correctly coded using a combination of ICD–10–CM codes. Furthermore, in


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such instances, to maintain the same meaning and reflect the same diagnoses as the ICD–9–CM code, we require the patient’s IRF–PAI record to have all of
the relevant combination of ICD–10–CM codes present to reflect the condition on the list. If only one of the ICD–10–CM codes that is required to reflect the
condition on the list is included on the IRF–PAI, then the record will not accurately reflect the same diagnoses as the ICD–9–CM code. We note that, in some cases, IRFs may need to use a
combination of ICD–10–CM codes to represent an Etiologic Diagnosis on the IRF–PAI form. For this reason, we will add additional spaces to the Etiologic Diagnosis field (Item #22) on the IRF– PAI, effective October 1, 2015. The new IRF–PAI form for IRF discharges occurring on or after October 1, 2015, is
available for download from the CMS
Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/InpatientRehabFacPPS/
IRFPAI.html

.

• Seventh Character Extensions in

ICD–10–CM —Certain codes in ICD–10– CM require the use of a seventh character in the code, where each
seventh character of the code has one of the following meanings:

++ The seventh character ‘‘A’’ in the code indicates that the diagnosis is an
initial encounter.

++ The seventh character ‘‘D’’ in the code indicates that the patient is receiving aftercare for the injury or
illness.

++ The seventh character ‘‘S’’ in the code indicates that the patient no longer requires care for any aspect of the initial injury or illness itself, but that the patient is receiving care for a late effect of the injury or illness.

In the IRF PPS context, these seventh character extensions only apply to ICD– 10–CM diagnosis codes related to certain types of injuries. The corresponding ICD–9–CM diagnosis codes that are currently listed on the ‘‘List of Comorbidities,’’ ‘‘ICD–9–CM Codes That Meet Presumptive Compliance Criteria,’’ and ‘‘Impairment Group Codes That Meet Presumptive Compliance Criteria’’ only map to the
seventh character extensions of ‘‘A’’ and ‘‘S,’’ but not to the seventh character extension of ‘‘D,’’ using the GEMs tool. Thus, including codes under ICD–10–
CM with the seventh character extension of ‘‘D’’ would mean adding
conditions to the lists that were not
included on the lists under ICD–9–CM. As we indicated previously, we did not intend to add, delete, or alter the
conditions included on these lists in transitioning from ICD–9–CM to ICD– 10–CM. Thus, we are not including ICD–10–CM codes with the seventh
character extension of ‘‘D’’ on the ICD–
10–CM versions of the ‘‘List of Comorbidities,’’ ‘‘ICD–9–CM Codes That Meet Presumptive Compliance Criteria,’’ or ‘‘Impairment Group Codes That Meet Presumptive Compliance Criteria.’’ In the IRF context, we define the patient as having a current diagnosis requiring the
use of the seventh character extension of ‘‘A’’ if the patient requires current treatment for the injury and if the diagnosis has a direct effect on the patient’s rehabilitation therapy program
in the IRF.

In addition, ICD–10–CM injury codes specify that traumatic fractures are coded using the appropriate seventh
character extension for an initial encounter, where each seventh
character of the code has one of the following meanings:

• The seventh character ‘‘A’’ in the code indicates that the diagnosis is an
initial encounter for closed fracture.

• The seventh character ‘‘B’’ in the code indicates that the diagnosis is an initial encounter for open fracture.

• The seventh character ‘‘C’’ in the code indicates that the diagnosis is an initial encounter for open fracture type IIIA, IIIB, or IIIC.

We used the GEMs tool and the guiding rationales described above to translate the following lists of ICD–9– CM diagnosis codes for the IRF PPS into lists of ICD–10–CM diagnosis codes:

• List of Comorbidities—This file contains the list of comorbidities (ICD– 9–CM codes) that are used to determine placement in tiers within the IRF Grouper software. Placement in one of the higher-paying tiers, which is triggered by the presence of one of the comorbidities on this list, results in a higher prospective payment amount for
the IRF.

• ICD–9–CM Codes that Meet Presumptive Compliance Criteria—This file contains the list of diagnoses (ICD– 9–CM codes) that are used for determining presumptive compliance with the IRF 60 percent rule.

• Impairment Group Codes that Meet Presumptive Compliance Criteria—This
file contains the list of IGCs that meet presumptive compliance criteria for the 60 percent rule. While the IGC codes themselves are not ICD–9–CM diagnosis codes, the file contains a list of Etiologic Diagnosis codes (ICD–9–CM codes) that are excluded from particular IGCs. That is, a given IGC that would otherwise meet the presumptive compliance
criteria will not meet such criteria if the patient has one of the ‘‘excluded’’ Etiologic Diagnoses for that IGC.

The converted ICD–10–CM code
tables associated with each of these lists are available for download from the
CMS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/InpatientRehabFacPPS/DataFiles.html in conjunction with this proposed rule. We invite public comment on our proposed translation of the lists into ICD–10–CM, effective when ICD–10–CM becomes the required
medical data code set for use on
Medicare claims and IRF–PAI
submissions.

XI. Proposed Revisions and Updates to the Quality Reporting Program for IRFs

A. Background and Statutory Authority

Section 3004(b) of the Affordable Care Act added section 1886(j)(7) to the Act, which requires the Secretary to implement a quality reporting program (QRP) for IRFs. This program applies to freestanding IRF hospitals, as well as
IRF units that are affiliated with acute care facilities, which includes critical access hospitals (CAHs).

Beginning in FY 2014, section 1886(j)(7)(A)(i) of the Act requires the reduction of the applicable IRF PPS annual increase factor, as previously modified under section 1886(j)(3)(D) of the Act, by 2 percentage points for any
IRF that fails to submit data to the Secretary in accordance with requirements established by the Secretary for that fiscal year. Section 1886(j)(7)(A)(ii) of the Act notes that this reduction may result in the increase factor being less than 0.0 for a fiscal year, and in payment rates under subsection (j) for a fiscal year being less than such payment rates for the preceding fiscal year. Any reduction based on failure to comply with the reporting requirements is, in accordance with section 1886(j)(7)(B) of the Act, limited to the particular fiscal year
involved. The reductions are not to be
cumulative and will not be taken into account in computing the payment amount under subsection (j) for a subsequent fiscal year.

Section 1886(j)(7)(C) of the Act requires that each IRF submit data to the Secretary for quality measures specified by the Secretary. The required quality
measure data must be submitted to the Secretary in a form, manner, and time specified by the Secretary.

The Secretary is generally required to specify measures that have been endorsed by the entity with a contract under section 1890(a) of the Act. This contract is currently held by the National Quality Forum (NQF), which is a voluntary consensus standard-setting organization. The NQF was established to standardize health care quality measurement and reporting through its


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consensus development process. Additional information regarding NQF and its consensus development process
is available at http:// www.qualityforum.org/Measuring

_ Performance/Measuring

_ Performance.aspx

.

We have generally adopted NQFendorsed measures in our reporting programs. However, section 1886(j)(7)(D)(ii) of the Act provides that ‘‘[i]n the case of a specified area or medical topic determined appropriate by the Secretary for which a feasible and practical measure has not been endorsed by the entity with a contract under section 1890(a) [of the Act], the Secretary may specify a measure that is not so endorsed as long as due consideration is given to measures that have been endorsed or adopted by a consensus organization identified by the Secretary.’’

Section 1886(j)(7)(E) of the Act requires the Secretary to establish procedures for making data submitted under the IRF QRP available to the public. The Secretary must ensure that each IRF is given the opportunity to review the data that is to be made public prior to the publication or posting of
this data.

We seek to promote higher quality
and more efficient health care for all patients who receive care in acute and post-acute care settings. Our efforts are, in part, effectuated by quality reporting programs coupled with the public reporting of data collected under those programs. The initial framework of the IRF QRP was established in the FY 2012 IRF PPS final rule (76 FR 47873).

B. Quality Measures Previously Finalized for and Currently Used in the IRF Quality Reporting Program

1. Measures Finalized in the FY 2012
IRF PPS Final Rule

In the FY 2012 IRF PPS final rule (76 FR 47874 through 47878), we adopted applications of 2 quality measures for use in the first data reporting cycle of the IRF QRP: (1) An application of Catheter-Associated Urinary Tract Infection (CAUTI) for Intensive Care Unit Patients (NQF#0138); and (2) an application of Percent of Residents with
Pressure Ulcers That Are New or Worsened (Short-Stay) (NQF #0678). We adopted applications of these 2 measures because neither of them, at the time, was endorsed by the NQF for the IRF setting. We also discussed our plansto propose a 30-Day All-Cause RiskStandardized Post-IRF Discharge Hospital Readmission Measure. 2. Measures Finalized in the CY 2013
OPPS/ASC Final Rule

In the CY 2013 OPPS/ASC final rule (77 FR 68500 through 68507), we adopted:

• Updates to the CAUTI measure to reflect the NQF’s expansion of this quality measure to the IRF setting, replacing our previous adoption of an application of the quality measure for the IRF QRP;

• A policy that would allow any quality measure adopted for use in the IRF QRP to remain in effect until the measure was actively removed, suspended, or replaced (and specifically applied this policy to the CAUTI and
Pressure Ulcer measures that had already been adopted for use in the IRF QRP); and

• A subregulatory process to incorporate NQF updates to IRF quality measure specifications that do not substantively change the nature of the

measure.

At the time of the CY 2013 OPPS/ASC final rule, the NQF had endorsed the
Pressure Ulcer measure for the IRF setting, and retitled it to cover bothresidents and patients within LongTerm Care Hospitals (LTCH) and IRF settings, in addition to the Nursing Home/Skilled Nursing Facility setting. Although the quality measure had been expanded to the IRF setting, we concluded that it was not possible to adopt the NQF-endorsed measure
Percent of Residents or Patients with
Pressure Ulcers That Are New or Worsened (Short-Stay) (NQF #0678) because it is a risk-adjusted measure, and the ‘‘Quality Indicator’’ section of
the IRF–PAI did not contain the data
elements that would be needed to calculate a risk-adjusted quality measure. As a result, we decided to: (1) adopt an application of the Pressure
Ulcer measure that was a non-riskadjusted Pressure Ulcer measure (numerator and denominator data only); (2) collect the data required for the numerator and the denominator using the current version of the IRF–PAI; (3) delay public reporting of Pressure Ulcer
measure results until we could amend
the IRF–PAI to add the data elements necessary for risk-adjusting the Pressure Ulcer measure, and then (4) adopt the NQF-endorsed version of the measure covering the IRF setting through rulemaking (77 FR 68507).

a. National Healthcare Safety Network (NHSN) Catheter Associated Urinary Tract Infection (CAUTI) Outcome Measure (NQF #0138)

In the CY 2013 OPPS/ASC final rule, we adopted the current version of NHSN CAUTI Outcome Measure (NQF #0138) (replacing an application of this measure that we initially adopted in the FY 2012 IRF PPS (76 FR 47874 through 47886)). The NQF-endorsed measure applies to the FY 2015 adjustments to
the IRF PPS annual increase factor and all subsequent annual increase factors (77 FR 68504 through 68505).

Since the publication of the CY 2013 OPPS/ASC final rule, the NHSN CAUTI quality measure has not changed, and it remains an active part of the IRF QRP.
Additional information about this
measure can be found at http:// www.qualityforum.org/QPS/0138 . Our procedures for data submission for this
measure have also remained the same.
IRFs should continue to submit their
CAUTI measure data to the Centers for Disease Control and Prevention (CDC) NHSN. Details regarding submission of
IRF CAUTI data to the NHSN can be
found at the NHSN Web site at http:// www.cdc.gov/nhsn/inpatient-rehab/
index.html

. b. Application of Percent of Residents or
Patients With Pressure Ulcers That Are New or Worsened (Short-Stay) (NQF #0678)

In the CY 2013 OPPS/ASC final rule (77 FR 68500 through 68507), we adopted a non-risk-adjusted application of this measure using the 2012 version
of the IRF–PAI.

3. Measures Finalized in the FY 2014
IRF/PPS Final Rule

For the FY 2016 adjustments to the IRF PPS annual increase factor, in addition to retaining the previously
discussed CAUTI and Pressure Ulcer measures, we finalized the adoption of
one new measure: Influenza Vaccination Coverage among Healthcare Personnel (NQF #0431) (78 FR 47902 through 47921). In addition, for the FY 2017 adjustments to the IRF PPS annual increase factor, we adopted three quality measures: (1) All-Cause UnplannedReadmission Measure for 30 Days PostDischarge from Inpatient Rehabilitation Facilities; (2) Percent of Residents or
Patients Who Were Assessed and Appropriately Given the Seasonal Influenza Vaccine (Short-Stay) (NQF #0680); and (3) the NQF-endorsed
version of Percent of Residents or
Patients with Pressure Ulcers That are New or Worsened (Short-Stay) (NQF #0678).

a. Influenza Vaccination Coverage Among Healthcare Personnel (NQF #0431)

In the FY 2014 IRF PPS final rule (78 FR 47905 through 47906), we adopted the CDC developed Influenza


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Vaccination Coverage among Healthcare Personnel (NQF #0431) quality measure that is currently collected by the CDC via the NHSN. This measure reports on the percentage of IRF health care personnel (HCP) who receive the
influenza vaccination.

In the FY 2014 IRF PPS final rule, we
finalized that the Influenza Vaccination Coverage among Healthcare Personnel (NQF #0431) measure have its own reporting period to align with the influenza vaccination season, which is defined by the CDC as October 1 (or when the vaccine becomes available) through March 31. We further finalized
that IRFs will submit their data for this measure to the NHSN ( http:// www.cdc.gov/nhsn/ ). The National Healthcare Safety Network (NHSN) is a
secure Internet-based healthcareassociated infection tracking system maintained by the CDC and can be utilized by all types of health care facilities in the United States, including
IRFs. The NHSN collects data via a webbased tool hosted by the CDC. Information on the NHSN system, including protocols, report forms, and guidance documents, can be found at http://www.cdc.gov/nhsn/. NHSN will
submit the HCP influenza vaccination adherence percentage data to CMS on behalf of the facility. We also finalized that for the FY 2016 adjustments to the IRF PPS annual increase factor, data collection will cover the period from October 1, 2014 (or when the vaccine becomes available) through March 31,

2015.

Details related to the use of the NHSN
for data submission and information on definitions, numerator data, denominator data, data analyses, and measure specifications for the Influenza Vaccination Coverage among Healthcare Personnel (NQF #0431) measure can be
found at http://www.cdc.gov/nhsn/ inpatient-rehab/hcp-vacc/index.html

. Because IRFs are already using the
NHSN for the submission of CAUTI measure data, the additional
administrative burden related to data
collection and submission for this measure under the IRF QRP should be
minimal.

While IRFs can enter information in NHSN at any point during the influenza
vaccination season for the Influenza Vaccination Coverage among Healthcare Personnel (NQF #0431) measure, data submission is only required once per influenza vaccination season, unlike the CAUTI measure, which is the other quality measure finalized for the IRF QRP that utilizes the CDC NHSN. We
finalized that the final deadline for data submission associated with this quality measure will be May 15th of each year. Also, the data collection period for this quality measure is not 12 months, as with other measures, but is approximately 6 months (that is, October 1, or when the vaccine becomes available, through March 31 of the following year). This data collection period is applicable only to Influenza Vaccination Coverage among Healthcare Personnel (NQF #0431), and is not applicable to any other IRF QRP measures, proposed or adopted, unless explicitly stated. The measure specifications for this measure can be
found at http://www.cdc.gov/nhsn/ inpatient-rehab/hcp-vacc/index.html
and at http://www.qualityforum.org/ QPS/0431

. b. All-Cause Unplanned Readmission Measure for 30 Days Post-Discharge From Inpatient Rehabilitation Facilities (NQF #2502, Review Pending)

In the FY 2014 IRF PPS final rule (78 FR 47906 through 47910), we adopted an All-Cause Unplanned Readmission Measure for 30 Days Post-Discharge from Inpatient Rehabilitation Facilities.This quality measure estimates the riskstandardized rate of unplanned, allcause hospital readmissions for cases discharged from an IRF who were readmitted to a short-stay acute care hospital or LTCH, within 30 days of an IRF discharge. We noted that this is a
claims-based measure that will not require reporting of new data by IRFs
and thus will not be used to determine IRF reporting compliance for the IRF QRP. Please note that this measure is not NQF-endorsed, but it was submitted by CMS to the NQF for review on February 5, 2014 ( http:// www.qualityforum.org/All-Cause

_ Admissions

_ and

_Readmissions

_ Measures.aspx).

c. Percent of Residents or Patients Who Were Assessed and Appropriately Giventhe Seasonal Influenza Vaccine (ShortStay) (NQF #0680)

In the FY 2014 IRF PPS final rule (78 FR 47906 through 47911), we adopted
the Percent of Residents or Patients Who Were Assessed and Appropriately Giventhe Seasonal Influenza Vaccine (ShortStay) (NQF #0680) measure for the IRF QRP, and we will collect the data for this measure through the addition of data items to the ‘‘Quality Indicator’’
section of the IRF–PAI.

We also added the data elements needed for this measure, as an influenza data item set, to the ‘‘Quality Indicator’’ section of the IRF–PAI, and data for this measure will be collected using this
revised version of the IRF–PAI. The
revised IRF–PAI will become effective on October 1, 2014. These data elements are harmonized with data elements (O0250: Influenza Vaccination Status) from the Minimum Data Set (MDS) 3.0
and the LTCH CARE Data Set Version 2.01, and the specifications and data
elements for this measure are available

at http://www.cms.gov/Medicare/ Medicare-Fee-for-Service-Payment/ InpatientRehabFacPPS/IRFPAI.html.

For purposes of this quality measure,
the influenza vaccination season takes place from October 1 (or when the vaccine becomes available) through March 31 each year. The measure calculation and public reporting of this measure (once public reporting is implemented) will also be based on the influenza vaccination season, starting on October 1 (or when the vaccine becomes available) and ending on March 31 of the subsequent year.

The IRF–PAI Training Manual indicates how providers should complete these items during the time period outside of the vaccination season (that is, prior to October 1, or when the vaccine becomes available, and after March 31 of the following year). The measure specifications for this measure,
Percent of Residents or Patients Who Were Assessed and Appropriately Giventhe Seasonal Influenza Vaccine (ShortStay) (NQF #0680), can be found on the
CMS Web site at http://www.cms.gov/Medicare/Quality-Initiatives-PatientAssessment-Instruments/ NursingHomeQualityInits/ NHQIQualityMeasures.html . Additional
information on this measure can also be
found at http://www.qualityforum.org/ QPS/0680

. d. Percent of Residents or Patients With
Pressure Ulcers That Are New or Worsened (Short-Stay) (NQF #0678)— Adoption of the NQF-Endorsed Version
of This Measure

In the FY 2014 IRF PPS final rule (78 FR 47911 through 47912), we adopted the NQF-endorsed version of the
Percent of Residents or Patients with
Pressure Ulcers That Are New or Worsened (Short-Stay) (NQF #0678), with data collection beginning October 1, 2014, using the revised version of the IRF–PAI, for quality reporting affecting the FY 2017 adjustments to the IRF PPS annual increase factor and subsequent year annual increase factors. We noted in the rule that, until September 30, 2014, IRFs should continue to submit pressure ulcer data using the version of the IRF–PAI released on October 1, 2012, for the purposes of data submission requirements for the FY 2015 and FY 2016 adjustments to the
annual IRF PPS increase factor.

In the FY 2014 IRF PPS final rule (78 FR 47912 through 47916), we also


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1 Gorwitz RJ, Kruszon-Moran D, McAllister SK, et al. Changes in the prevalence of nasal colonization with Staphylococcus aureus in the United States, 2001–2004. J Infect Dis 2008; 197: 1226–34.

2 Department of Health and Human Services.
National Action Plan to Prevent HealthcareAssociated Infections: Roadmap to Elimination. adopted a revised version of the IRF– PAI starting October 1, 2014, for the FY 2017 adjustments to the IRF PPS annual increase factor and subsequent year

annual increase factors.



### TABLE 

### 8—Q UALITY 

### M EASURES 

### F INALIZED IN THE 

### FY 2014 IRF PPS F INAL 

### R ULE 

### A FFECTING THE 

### FY 2016 AND 

### 2017
A DJUSTMENTS TO THE 

### IRF A NNUAL 

### I NCREASE 

### F ACTORS AND 

### S UBSEQUENT 

### Y EAR 

### I NCREASE 

### F ACTORS

NQF measure
ID Measure title

NQF #0431 ....... Influenza Vaccination Coverage among Healthcare Personnel +

. NQF #0680 ....... Percent of Residents or Patients Who Were Assessed and Appropriately Given the Seasonal Influenza Vaccine (Short-Stay). NQF #0678 ....... Percent of Residents or Patients with Pressure Ulcers That Are New or Worsened (Short-Stay)*—Adoption of the NQ F-Endorsed Version of this Measure. NQF #2502** .... All-Cause Unplanned Readmission Measure for 30 Days Post-Discharge from Inpatient Rehabilitation Facilities.

+ Using the CDC NHSN * Using October 1, 2014, release of the IRF–PAI ** Not NQF-endorsed, CMS submitted for NQF review on February 5, 2014.

C. Proposed New IRF QRP Quality Measures Affecting the FY 2017 Adjustments to the IRF PPS Annual Increase Factor and Beyond General Considerations Used for Selection of Quality Measures for the IRF QRP

In the FY 2014 IRF PPS final rule (78 FR 47094) we noted that the successful development of an IRF quality reporting program that promotes the delivery of high-quality health care services in IRFs is our paramount concern. We discussed
several of the factors we had taken into account in selecting measures to propose and finalize. We do wish to note here that, in our measure selection activities for the IRF QRP, we must take into consideration input we receive from a multi-stakeholder group, the Measure Applications Partnership (MAP), which is convened by the NQF as part of a pre-rulemaking process that we have established and are required to
follow under section 1890A of the Act. The MAP is a public-private partnership comprised of multi-stakeholder groups convened by the NQF for the primary purpose of providing input to CMS on the selection of certain categories of quality and efficiency measures, as required by section 1890A(a)(3) of the Act. By February 1 of each year, the NQF must provide MAP input to CMS. We have taken the MAP’s input into consideration in selecting measures for this rule. Input from the MAP is located

at https://www.qualityforum.org/
Publications/2014/01/MAP

_PreRulemaking

_Report

__ 2014

_ Recommendations

_ on

_Measures

_ for

_ More

_ than

_ 20

_Federal

_Programs.aspx

. We also take into account national priorities, such as those established by the National Priorities Partnership (NPP) at http://www.qualityforum.org/ Setting

_Priorities/NPP/National

_ Priorities

_Partnership.aspx , the HHS Strategic Plan at http://www.hhs.gov/ secretary/about/priorities/ priorities.html , the National Strategy for Quality Improvement in Health Care at http://www.ahrq.gov/workingforquality/ nqs/nqs2012annlrpt.pdf , and the CMS Quality Strategy at http://www.cms.gov/Medicare/Quality-Initiatives-PatientAssessment-Instruments/QualityInitiativesGenInfo/CMS-QualityStrategy.html

.

To the extent practicable, we have sought to adopt measures that have been endorsed by a national consensusorganization, recommended by multistakeholder organizations, and developed with the input of providers, purchasers/payers, and other
stakeholders.

For the FY 2017 adjustments to the IRF PPS annual increase factor, in addition to retaining the previously discussed CAUTI, Pressure Ulcer, Patient Influenza (NQF #0680), Healthcare Personnel Influenza (NQF #0431), and Hospital Readmission (NQF #2502) quality measures, we propose to adopt two new quality measures: (1) National Healthcare Safety Network (NHSN) Facility-Wide Inpatient Hospital-Onset Methicillin-Resistant Staphylococcus aureus (MRSA) Bacteremia Outcome Measure (NQF #1716), and (2) National Healthcare Safety Network (NHSN) Facility-Wide Inpatient Hospital-Onset Clostridium difficile Infection (CDI) Outcome Measure (NQF #1717). These quality
measures are discussed in more detail
below.

1. Proposed Quality Measure #1: National Healthcare Safety Network (NHSN) Facility-Wide Inpatient Hospital-Onset Methicillin-Resistant Staphylococcus aureus (MRSA) Bacteremia Outcome Measure (NQF #1716)

NHSN Facility-Wide Inpatient Hospital-Onset MRSA Bacteremia Outcome Measure (NQF #1716) is a measure of hospital-onset unique blood source MRSA laboratory-identified events among all inpatients in the facility. This measure was adopted by the Hospital Inpatient Quality Reporting (IQR) Program in the FY 2012 IPPS/ LTCH PPS final rule (76 FR 51630, 51645) for the FY 2015 payment determination, with data collection beginning on January 1, 2013. It was also adopted by the LTCH Quality Reporting Program in the FY 2014 IPPS/ LTCH PPS final rule (78 FR 50712 through 50717) for the FY 2017 payment determination, with data collection beginning on January 1, 2015. This measure was developed by the CDC and is NQF-endorsed. We included the proposed MRSA measure in the December 1, 2013, Measures under Consideration (MUC) list. The MAP conditionally supported the direction of this quality measure, noting that the measure is not ready for implementation and suggesting that we harmonize this
measure with other infection measures. We respectfully disagree with the position of the MAP, as the MRSA measure is fully endorsed by the NQF for various settings, including the IRF setting, which speaks to its suitabilityfor use in that setting. Methicillinresistant Staphylococcus aureus (S. aureus) infections are caused by a strain
of S. aureus bacteria that has become resistant to antibiotics commonly used

to treat S. aureus infections. Between 2003 and 2004, an estimated 4.1 million persons in the United States had nasal
colonization with MRSA. 1 In addition, in 2005 there were an estimated 94,000
invasive MRSA infections in the United States, which were associated with an estimated 18,000 deaths. 2 HealthcareVerDate Mar<15>2010 15:15 May 06, 2014 Jkt 232001 PO 00000 Frm 00030 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2pmangrum on DSK3VPTVN1PROD with PROPOSALS2

### 26337 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules

Available at http://www.hhs.gov/ash/initiatives/hai/ infection.html

.

3 Centers for Disease Control and Prevention. State Has Implemented a MRSA Prevention
Collaborative. Available at http://www.cdc.gov/hai/ stateplans/states-w-MRSA-collaborative.html.

4 Centers for Disease Control and Prevention. People at Risk of Acquiring MRSA Infections.
Available at http://www.cdc.gov/mrsa/index.html

.

5 Centers for Disease Control and Prevention. Management of Multidrug-Resistant Organisms in Healthcare Settings, 2006. Available at http:// www.cdc.gov/hicpac/pdf/guidelines/ MDROGuideline2006.pdf

.

6 Rabinowitz RP, Kufera JA, Makely MJ. A Hidden Reservoir of Methicillin-resistant Staphylococcus aureus and Vancomyvin-resistant Enterococcus in Patients Newly Admitted to an Acute Rehabilitation Hospital. Physical Medicine & Rehabilitation 2012 (4):18–22.

7 Bernard SL, Dalton K, Lenfestey N F, Jarrett NM, Nguyen KH, Sorensen AV, Thaker S, West ND. Study to support a CMS Report to Congress: Assess feasibility of extending the hospital-acquired conditions—present on admission IPPS payment policy to non-IPPS payment environments. Prepared for the Centers for Medicare & Medicaid Services (CMS Contract No. HHSM–500–T00007).

2011. 8 National Quality Forum. Measure Applications Partnership Pre-Rulemaking Report: 2014 Recommendations of Measures Under Consideration by HHS: February 2014. Available at: https://www.qualityforum.org/Publications/2014/
01/MAP

_Pre-Rulemaking

_Report

__ 2014

_ Recommendations

_ on

_Measures

_ for

_More

_ than

_ 20

_Federal

_Programs.aspx

.

9 McDonald LC, Coignard B, Dubberke E, et al.
Recommendations for surveillance of Clostridium difficile -associated disease. Infect Control Hosp Epidemiol 2007;28:140–145. Available at: http:// www.jstor.org/stable/pdfplus/10.1086/ 511798.pdf?acceptTC=true

.

10 Centers for Disease Control and Prevention. Investigating Clostridium difficile Infections Across
the U.S. Available at http://www.cdc.gov/hai/eip/ pdf/Cdiff-factsheet.pdf

.

11 Department of Health and Human Services.
National Action Plan to Prevent Health CareAssociated Infections: Roadmap to Elimination.
Available at http://www.hhs.gov/ash/initiatives/hai/ infection.html

.

12 Centers for Disease Control and Prevention. Making Health Care Safer: Stopping C. difficile
Infections. Available at: http://www.cdc.gov/ VitalSigns/HAI/index.html

.

13 Centers for Disease Control and Prevention. Investigating Clostridium difficile Infections Across
the U.S. Available at: http://www.cdc.gov/hai/eip/ pdf/Cdiff-factsheet.pdf

.

14 Centers for Disease Control and Prevention. QuickStats: Rates of Clostridium difficile Infection Among Hospitalized Patients Aged ≥ 65 Years,* by Age Group—National Hospital Discharge Survey, United States, 1996–2009. MMWR, 60(34); 1171.
Available at: http://www.cdc.gov/mmwr/preview/
mmwrhtml/mm6034a7.htm

.

15 Centers for Disease Control and Prevention. Making Health Care Safer: Stopping C. difficile
Infections. Available at: http://www.cdc.gov/ VitalSigns/HAI/index.html

.

16 Aron J. Hall, Aaron T. Curns, L. Clifford McDonald, Umesh D. Parashar, and Ben A. Lopman. The Roles of Clostridium difficile and Norovirus Among Gastroenteritis-Associated Deaths in the United States, 1999–2007. Clinical Infectious Diseases 2012;55(2):216–23 Published by Oxford University Press on behalf of the Infectious Diseases Society of America 2012. DOI: 10.1093/cid/cis386.

17 Dubberke ER, Reske KA, Olsen MA, McDonald LC, Fraser VJ. Short- and long-term attributable
costs of Clostridium difficile-associated disease in nonsurgical inpatients. Clin Infect Dis 2008;
46:497–504. Available at: http:// cid.oxfordjournals.org/content/46/4/497.long

. associated MRSA infections occur frequently in patients whose treatment involves the use of invasive devices,
such as catheters or ventilators.

Currently, there are 22 States that have implemented a MRSA Prevention Collaborative, and at least 15 states that have reporting mandates for MRSA
bacteremia in NHSN. 3 For Medicare populations, MRSA infection is associated with increased cost, hospital length of stay, morbidity, and mortality. MRSA infections can be a consequence of poor quality of care. 4 5 Older adults and patients in health care settings are most vulnerable to MRSA infections, as these patients may have weakened immune systems. A recent study reported that 9.2 percent of patients without a history of MRSA tested positive for MRSA at the time of the IRF
admission. 6 We also recently analyzed
IRF claims submitted to Medicare during CY 2009. According to our analysis, IRFs reported a total of 3,464 cases of MRSA in 2009, including cases either present on admission or acquired during the IRF stay (‘‘present on
admission’’ indicators for ICD–9 codes are not available on the IRF claims) 7

. We believe it is important to collect data on MRSA infections acquired during the IRF stay, because MRSA infection is associated with increased cost, hospital length of stay, morbidity, and mortality.

We propose to use the CDC/NHSN
data collection and submission framework for reporting of the proposedNHSN Facility-Wide Inpatient HospitalOnset MRSA Bacteremia Outcome Measure (NQF #1716). This is the same framework currently used for reporting the CAUTI (NQF #0138) and Influenza Vaccination Coverage among Healthcare Personnel (NQF #0431) quality
measures. Details related to the procedures for using the NHSN for data
submission and information on definitions, numerator data, denominator data, data analyses, and measure specifications for the proposedNHSN Facility-Wide Inpatient HospitalOnset MRSA Bacteremia Outcome Measure (NQF #1716) can be found at http://www.qualityforum.org/QPS/1716
and http://www.cdc.gov/nhsn/inpatientrehab/mdro-cdi/index.html . For January 2012 through January 2013, anestimated 15 IRFs reported laboratoryidentified MRSA event data into NHSN.
We refer readers to section XI.B.3.a. of this proposed rule for more information
on data collection and submission. We invite public comment on this proposed
measure and on data collection and submission procedures for the proposed measure for the FY 2017 adjustments to
the IRF PPS annual increase factor and subsequent year increase factors.

2. Proposed Quality Measure #2: National Healthcare Safety Network (NHSN) Facility-Wide Inpatient Hospital-Onset Clostridium difficile Infection (CDI) Outcome Measure (NQF #1717)

NHSN Facility-Wide Inpatient Hospital-Onset CDI Outcome Measure(NQF #1717) is a measure of hospitalonset CDI laboratory-identified events among all inpatients in the facility. This measure was adopted by the Hospital IQR Program in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51630 through 51631) for the FY 2015 payment determination, with data collection having begun on January 1, 2013. It was also adopted by the LTCHQR program
in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50712 through 50717) for the FY 2017 payment determination, with data collection beginning on January 1, 2015. This measure wasdeveloped by the CDC and is NQFendorsed. We included the proposed CDI measure in the December 1, 2013, MUC list. The MAP supported this

measure. 8 CDI can cause a range of serious symptoms, including diarrhea, serious intestinal conditions, sepsis, and
death. 9 In the United States, CDI is responsible for an estimated 337,000 infections and 14,000 deaths annually. 10 According to the HHS National Action
Plan to Prevent Health Care-Associated Infections, CDI rates have increased in recent years. 11 The CDC estimates that CDIs cost more than $1 billion in additional health care costs each year. 12 In recent years, CDIs have become more frequent, more severe, and more difficult to treat. Mortality rates for CDIs are highest in elderly patients. 13 Rates of CDI among hospitalized patients aged 65 years and older increased 200 percent between 1996 and 2009, while
deaths related to CDIs increased 400 percent between 2000 and 2007, partly attributed to a stronger germ strain. 14 15 Further, the emergence and continued
rise of CDI as a leading cause of gastroenteritis hospitalizations and deaths, particularly in the elderly, has
been documented. 16 CDI is associated with increased patient care costs, hospital lengths of stay, morbidity, and mortality. CDI can be a consequence of poor quality of care for Medicare patients. 17

Illness from CDI most commonly affects older adults in hospitals or in facilities with longer lengths of stay, where germs spread more easily,


### 26338 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules

18 Centers for Disease Control and Prevention. Frequently Asked Questions about Clostridium

difficile for Healthcare Providers. Available at: http://www.cdc.gov/HAI/organisms/cdiff/Cdiff

_ faqs

_HCP.html

.

19 Marciniak C, Chen D, Stein A, et al. Prevalence

of Clostridium Difficile Colonization at Admission to Rehabilitation. Archives of Physical Medicine and Rehabilitation 2006; 87(8):1086–1090.

20 Bernard SL, Dalton K, Lenfestey N F, Jarrett NM, Nguyen KH, Sorensen AV, Thaker S, West ND. Study to support a CMS Report to Congress: Assess feasibility of extending the hospital-acquired conditions—present on admission IPPS payment policy to non-IPPS payment environments. Prepared for the Centers for Medicare & Medicaid
Services (CMS Contract No. HHSM–500–T00007).

2011.

21 Centers for Disease Control and Prevention. State Has Implemented a C. diff Prevention

Collaborative. Available at: http://www.cdc.gov/hai/ stateplans/states-w-CDI-collaborative.html

. antibiotic use is more common, and people are especially vulnerable to
infection. 18 Considering CDIs are increasing in all health care facilities, and the IRF population is highly vulnerable to CDI, it is important to
measure these rates in IRFs. 19 According to an analysis of ICD–9 codes reported on Medicare claims, IRFs reported 7,720
cases of CDI-associated disease in

2009. 20 Currently, the ‘‘present on
admission’’ indicators for ICD–9 codes
are not available on IRF claims. Therefore, we are unable to determine whether the 7,720 reported cases of CDI were present on admission or acquired during the IRF stay. There is evidence that CDIs are preventable, and therefore, surveillance and measuring infection rates is important to reducing infectionsand improving patient safety. Thirtyseven states have implemented a C. difficile Prevention Collaborative, and at least 15 states have reporting mandates
for CDI LabID Events in NHSN. 21 The goal for this proposed CDI measure is to collect and publicly report IRF data on
CDIs so that IRFs will be better informed
about the incidence of this condition and better equipped to prevent it.

We propose to use the CDC/NHSN
data collection and submission framework for reporting of the proposedNHSN Facility-Wide Inpatient HospitalOnset CDI Outcome Measure (NQF #1717). This framework is currently used for reporting the CAUTI (NQF #0138) and Influenza Vaccination Coverage among Healthcare Personnel (NQF #0431) measures. Details related to the procedures for using the NHSN
for data submission and information on definitions, numerator data, denominator data, data analyses, and measure specifications for the proposedNHSN Facility-Wide Inpatient HospitalOnset CDI Outcome Measure (NQF #1717) can be found at http:// www.qualityforum.org/QPS/1717 andhttp://www.cdc.gov/nhsn/inpatientrehab/mdro-cdi/index.html . We invite public comment on this proposed quality measure and on data collection and submission procedures for the proposed quality measure for the FY 2017 adjustments to the IRF PPS annual increase factor and subsequent year

increase factors.

D. IRF QRP Quality Measures and Concepts Under Consideration for

Future Years

We are considering whether to propose one or more of the quality measures and quality measure topics listed in Table 9 for future years in the IRF QRP. We invite public comment on these quality measures and quality measure topics, specifically comments regarding the clinical importance of reported measure data, the feasibility of

measure data collection and implementation, current use of reported measure data, and usefulness of the reported measure data to inform quality of care delivered to IRF patients.



### TABLE 

### 9—F UTURE 

### M EASURES AND 

### M EASURE 

### T OPICS 

### U NDER 

### C ONSIDERATION FOR 

### P ROPOSAL FOR THE 

### IRF Q UALITY 

### R EPORTING 

### P ROGRAM

**National Quality Strategy Priority: Patient Safety**

Application of Percent of Residents Experiencing One or More Falls with Major Injury (Long-Stay) (NQF #0674).

**National Quality Strategy Priority: Patient and Caregiver-Centered Care**

Application of Percent of Residents Who Self-Report Moderate to Severe Pain (Short-Stay) (NQF #0676). Not Endorsed/Under Development—IRF Functional Outcome Measure: Change in Mobility Score for Medical Rehabilitation Patients. Not Endorsed/Under Development—IRF Functional Outcome Measure: Change in Self-Care Score for Medical Rehabilitation Patients. Not Endorsed/Under Development—IRF Functional Outcome Measure: Discharge Mobility Score for Medical Rehabilitation Patients. Not Endorsed/Under Development—IRF Functional Outcome Measure: Discharge Self-Care Score for Medical Rehabilitation Patients.

In particular, we are considering whether to propose one or more of the following measures for future year IRP PPS increase factors: (1) IRF Functional Outcome Measure: Change in Mobility
Score for Medical Rehabilitation Patients; (2) IRF Functional Outcome Measure: Change in Self-Care Score for Medical Rehabilitation Patients; (3) IRF Functional Outcome Measure: Discharge Mobility Score for Medical Rehabilitation Patients; (4) IRF Functional Outcome Measure: Discharge
Self-Care Score for Medical Rehabilitation Patients; (5) Application of the Percent of Residents Experiencing One or More Falls with Major Injury (Long-Stay) (NQF #0674); and (6) Application of Percent of Residents Who Self-Report Moderate to Severe Pain (Short-Stay) (NQF #0676).

IRFs are designed to provide intensive rehabilitation services to patients. Patients seeking care in IRFs are those whose illness, injury, or condition has resulted in a loss of function, and for whom rehabilitative care is expected to help regain that function. Examples of
conditions treated in IRFs include stroke, spinal cord injury, hip fracture, brain injury, neurological disorders, and other diagnoses characterized by loss of
function.

Given that the primary goal of rehabilitation is improvement in functional status, IRF clinicians have traditionally assessed and documented patients’ functional statuses at admission and discharge to evaluate the
effectiveness of the rehabilitation care provided to individual patients, as well
as the effectiveness of the rehabilitation unit or hospital overall. In addition,
research results have found differences in IRF patients’ functional outcomes,
and thus we believe there is an opportunity for improvement in this area. Differences in IRF patients’ functional outcomes have been found by geographic region, insurance type, and race/ethnicity after adjusting for key patient demographic characteristics and admission clinical status. This supports the need to monitor IRF patients’


### 26339 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules

22 Reistetter TA, Karmarkar AM, Graham JE, et al. Regional variation in stroke rehabilitation

outcomes. Arch Phys Med Rehabil. 95(1):29–38, Jan.

2014. 23 O’Brien SR, Xue Y, Ingersoll G, et al. Shorter length of stay is associated with worse functional

outcomes for medicare beneficiaries with stroke. Physical Therapy. 93(12):1592–1602, Dec. 2013. 24 O’Brien SR, Xue Y, Ingersoll G, et al. Shorter length of stay is associated with worse functional

outcomes for medicare beneficiaries with stroke. Physical Therapy. 93(12):1592–1602, Dec. 2013. functional outcomes. For example,

Reistetter 22 examined discharge motor function and functional gain among IRF patients with stroke and found statistically significant differences in functional outcomes by U.S. geographic region, by insurance type, and race/ ethnicity group after risk adjustment. O’Brien and colleagues 23 found
differences in functional outcomes across race/ethnicity groups in their analysis of Medicare assessment data for patients with stroke after risk adjustment. O’Brien and colleagues 24 also noted that the overall IRF length of stay decreased 1.8 days between 2002 and 2007 and that shorter IRF stays were significantly associated with lower functioning at discharge.

We are currently developing 4 functional status quality measures for the IRF setting:

(1) Quality Measure: IRF Functional Outcome Measure: Change in Mobility
Score for Medical Rehabilitation
Patients for Medical Rehabilitation Patients;

(2) Quality Measure: IRF Functional Outcome Measure: Change in Self-Care
Score for Medical Rehabilitation
Patients for Medical Rehabilitation Patients;

(3) Quality Measure: IRF Functional Outcome Measure: Discharge Mobility
Score for Medical Rehabilitation Patients for Medical Rehabilitation Patients; and

(4) Quality Measure: IRF Functional Outcome Measure: Discharge Self-Care
Score for Medical Rehabilitation
Patients for Medical Rehabilitation

Patients.

We invite public comment on our intent to propose these measures for the FY 2019 adjustments to the IRF PPS annual increase factor and subsequent year increase factors. The draft measure specifications for these measures are posted at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/IRFQuality-Reporting-ProgramDetails.html . The development of these measures is expected to be completed in 2014, at which time they will be submitted to the NQF, the entity with a contract under section 1890(a) of the Act, for review.

E. Proposed Timeline for Data Submission for New IRF QRP Quality Measures Affecting the FY 2017 Adjustments to the IRF PPS Annual

Increase Factor

We propose the following data submission timeline for the quality measures that we have proposed for the FY 2017 adjustments to the IRF PPS annual increase factor. We propose that IRFs would be required to submit data on admissions and discharges occurring between January 1, 2015, and December 31, 2015 (CY 2015), for the FY 2017 adjustments to the IRF PPS annual increase factor. We propose this proposed time frame because we believe this will provide sufficient time for IRFs and CMS to put processes and procedures in place to meet the additional quality reporting requirements. Given these measures are collected through the CDC’s NHSN, and IRFs are already familiar with the NHSN reporting system, as they currently report the CAUTI measure, we believe this proposed timeframe will allow IRFs ample opportunity to begin reporting the newly proposed MRSA bacteremia and CDI measures, should they be finalized. We also propose that the quarterly data submission deadlines for the FY 2017 adjustments to the IRF PPS
annual increase factor occur approximately 135 days after the end of each quarter, as outlined in the Table 10. Each quarterly deadline would be the date by which all data collected during the preceding quarter would be required to be submitted to us for measures using the IRF–PAI and to the CDC for measures using the NHSN. We invite public comment on these proposed timelines for data submission for the proposed IRF QRP quality measures for the FY 2017 adjustments to
the IRF PPS annual increase factor.



### TABLE 10—P ROPOSED 

### T IMELINES FOR 

### S UBMISSION OF 

### IRF QRP Q UALITY 

### D ATA 

### U SING 

### CDC/NSHN FOR 

### FY 2017 A D



### JUSTMENTS TO THE 

### IRF PPS A NNUAL 

### I NCREASE 

### F ACTOR 

### : N ATIONAL 

### H EALTH 

### S AFETY 

### N ETWORK 

### (NHSN) F ACILITY 

### W IDE 

### I NPATIENT 

### H OSPITAL 

### -O NSET 

### M ETHICILLIN 

### -R ESISTANT 

### Staphylococcus aureus (MRSA) B ACTEREMIA 

### O UTCOME 

### M EASURE 

### (NQF #1716) AND 

### N ATIONAL 

### H EALTHCARE 

### S AFETY 

### N ETWORK 

### (NHSN) F ACILITY 

### -W IDE 

### I NPATIENT 

### H OS



### PITAL 

### -O NSET 

### Clostridium difficile I NFECTION

[(CDI) Outcome Measure (NQF #1717)]

Quarter CDC/NHSN data collection period CDC/NHSN data submission deadline

**FY 2017 Increase Factor**

Quarter 1 ................... January 1, 2015—March 31, 2015 .................................................................................................. August 15, 2015. Quarter 2 ................... April 1, 2015—June 30, 2015 ......................................................................................................... November 15, 2015. Quarter 3 ................... July 1, 2015—September 30, 2015 ................................................................................................ February 15, 2016. Quarter 4 ................... October 1, 2015—December 31, 2015 ........................................................................................... May 15, 2016.



### TABLE 

### 11—S UMMARY OF 

### IRF QRP M EASURES 

### A FFECTING THE 

### FY 2017 A DJUSTMENTS TO THE 

### IRF PPS A NNUAL 

### I NCREASE 

### F ACTOR AND 

### S UBSEQUENT 

### Y EAR 

### I NCREASE 

### F ACTORS

Continued IRF QRP Measure Affecting the FY 2015 Adjustments to the IRF PPS Annual Increase Factor and Subsequent Year Increase Factors:

• NQF #0138: National Health Safety Network (NHSN) Catheter-Associated Urinary Tract Infection (CAUTI) Outcome Measure + Continued IRF QRP Measure Affecting the FY 2016 Adjustments to the IRF PPS Annual Increase Factor and Subsequent Year Increase Factors:

• NQF #0431: Influenza Vaccination Coverage among Healthcare Personnel +


### 26340 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules

TABLE 

### 11—S UMMARY OF 

### IRF QRP M EASURES 

### A FFECTING THE 

### FY 2017 A DJUSTMENTS TO THE 

### IRF PPS A NNUAL 

### I NCREASE 

### F ACTOR AND 

### S UBSEQUENT 

### Y EAR 

### I NCREASE 

### F ACTORS 

### —Continued

Continued IRF QRP Measures Affecting the FY 2017 Adjustments to the IRF PPS Annual Increase Factor and Subsequent Year Increase Factors:

• NQF #2502: All-Cause Unplanned Readmission Measure for 30 Days Post-Discharge from Inpatient Rehabilitation Facilities

¥ **

• NQF #0680: Percent of Residents or Patients Who Were Assessed and Appropriately Given the Seasonal Influenza Vaccine (ShortStay)*

• NQF #0678: Percent of Residents or Patients with Pressure Ulcers That Are New or Worsened (Short-Stay)* New IRF QRP Measures Affecting the FY 2017 Adjustments to the IRF PPS Annual Increase Factor and Subsequent Year Increase Facto rs

• NQF #1716: National Healthcare Safety Network (NHSN) Facility-Wide Inpatient Hospital-Onset Methicillin-Resistant Staphylococcus

aureus (MRSA) Bacteremia Outcome Measure

• NQF #1717: National Healthcare Safety Network (NHSN) Facility-Wide Inpatient Hospital-Onset Clostridium difficile Infection (CDI) Outcome Measure

+ Using CDC/NHSN. * Using the IRF–PAI released October 1, 2014.

¥ Medicare Fee-for-Service claims data. ** Not NQF-endorsed, CMS submitted the measure for NQF review on February 5, 2014.

F. Proposed Timing for New IRFs To Begin Reporting Quality Data Under the IRF QRP Affecting the FY 2017 Adjustments to the IRF PPS Annual Increase Factor and Beyond

For the FY 2017 FY 2017 adjustments
to the IRF PPS annual increase factor and subsequent year increase factors, we propose that new IRFs be required to begin reporting quality data under the IRF QRP by no later than the first day of the calendar quarter subsequent to the quarter in which they have been designated as operating in the CASPER system. We invite public comment on this proposed timing for new IRFs to begin reporting quality data under the IRF QRP.

G. Proposed IRF QRP Reconsideration and Appeals Procedures for the FY 2016 Adjustments to the IRF PPS Annual Increase Factor and Beyond

1. IRF QRP Reconsideration and Appeals for the FY 2014 and FY 2015 Adjustments to the IRF PPS Annual

Increase Factor

In the FY 2014 IRF PPS final rule (78 FR 47919), we finalized a voluntary process that allowed IRF providers the opportunity to seek reconsideration of our initial noncompliance decision for the FY 2014 and FY 2015 adjustments
to the IRF PPS annual increase factor. We stated that we would notify IRFs found to be noncompliant with the IRF QRP reporting requirements that they may be subject to the 2-percentage point
reduction to their IRF PPS annual increase factor. The purpose of this notification is to put the IRF on notice of the following: (1) that the IRF has been identified as being noncompliant with the IRF QRP reporting requirements for a given reporting period; (2) that the IRF will be scheduled to receive a 2-percentage point reduction to its IRF PPS annual increase factor for the applicable fiscal year; (3) that the IRF may file a request
for reconsideration if it believes that the finding of noncompliance is erroneous, or that if it was noncompliant, it had a valid and justifiable excuse for this noncompliance; and (4) that, to receive reconsideration, the IRF must follow a defined process on how to file a request for reconsideration, which will be
described in the notification. This defined process for filing a request for
reconsideration was described on the
CMS Web site at http://www.cms.gov/Medicare/Quality-Initiatives-PatientAssessment-Instruments/IRF-QualityReporting/

.

We further stated that upon the conclusion of our review of each request for reconsideration, we would render a decision. We may reverse our initial finding of noncompliance if: (1) The IRF provides adequate proof of full compliance with all IRF QRP reporting requirements during the reporting period; or (2) the IRF provides adequate proof of a valid or justifiable excuse for noncompliance if the IRF was not able to comply with the requirements during the reporting period. We will uphold our initial finding of noncompliance if the IRF cannot show any justification for noncompliance.

If an IRF is dissatisfied with either our initial finding of noncompliance or a
CMS decision rendered at the reconsideration level, it can appeal the
decision with the Provider Reimbursement Review Board (PRRB) under 42 CFR part 405, subpart R. We recommended, however, that IRF providers submit requests for reconsideration to us before submitting appeals to the PRRB. We noted that this order of appeals has had good success under other established quality reporting programs and, from an IRF perspective, it allows for the opportunity to resolve issues earlier in the process, when we have dedicated
resources to consider all reconsideration requests before payment changes are applied to the IRF’s annual payment.

2. IRF QRP Program Reconsideration and Appeals Procedures for the FY 2016 Adjustments to the IRF PPS Annual Increase Factor and Beyond

For the FY 2016 adjustments to the
IRF PPS annual increase factor and subsequent year increase factors, we propose to adopt an updated process, as described below, that will enable an IRF to request a reconsideration of our initial noncompliance decision in the
event that an IRF believes that it was incorrectly identified as being subject to the 2-percentage point reduction to its
IRF PPS annual increase factor due to noncompliance with the IRF QRP reporting requirements for a given reporting period.

For the FY 2016 adjustments to the
IRF PPS annual increase factor and subsequent year increase factors, we propose that an IRF would receive a notification of noncompliance if we
determine that the IRF did not submit
data in accordance with section 1886(j)(7)(C) of the Act for the applicable fiscal year, and therefore, that the IRF is subject to a 2-percentage point reduction in the applicable IRF PPS annual increase factor as required by section 1886(j)(7)(A)(i) of the Act. We would only consider requests for reconsideration once a provider has been found to be noncompliant and not before. IRFs would have 30 days from
the date of the initial notification of noncompliance to review the CMS
determination and submit to us a request for reconsideration. This proposed time frame would allow us to
balance our desire to ensure that IRFs have the opportunity to request
reconsideration with our need to complete the reconsideration process and provide IRFs with our decision in a timely manner. Notifications of noncompliance and any subsequent


### 26341 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules

notifications from CMS would be sent via a traceable delivery method such as certified U.S. mail or registered U.S. mail. We would not accept any requests
for reconsideration that are submitted after the 30-day deadline.

We further propose that as part of the IRF’s request for reconsideration, the IRF would be required to submit all supporting documentation and evidence demonstrating (1) full compliance with all IRF QRP reporting requirements during the reporting period or (2) a valid or justifiable excuse for noncompliance if the IRF was not able to comply with the requirements during the reporting period. We would be unable to review any reconsideration request that fails to provide the necessary documentation and evidence along with the request. The documentation and evidence may include copies of any communications that demonstrate its compliance with all IRF QRP reporting requirements, as well as any other records that support the IRF’s rationale for seeking reconsideration. A sample list of the proposed acceptable supporting documentation and evidence, as well as instructions for IRF providers to retrieve copies of the data submitted to CMS for the appropriate program year, can be
found on the CMS Web site at http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/
Reconsideration-and-Disaster-WaiverRequests.html

.

We propose that providers may withdraw reconsideration requests at any time and may file new requests within the proposed 30-day deadline. We also propose that, in very limited circumstances, we may extend the proposed deadline for submitting reconsideration requests. It would be the responsibility of a provider to request an extension and demonstrate that extenuating circumstances existed that prevented the filing of the reconsideration request by the proposed deadline. We would not respond to any other types of requests, such as requests
for administrative review of the methodology and standards that determine the quality reporting requirements.

We propose that an IRF provider wishing to request a reconsideration of our initial noncompliance determination would be required to do so by submitting an email to the following email address: IRFQRPReconsiderations@cms.hhs.gov

. Any request for reconsideration submitted to us by an IRF would be required to follow the guidelines
outlined on the CMS Web site athttp://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/
Reconsideration-and-Disaster-WaiverRequests.html

.

Following receipt of a request for reconsideration, we will provide—

• An email acknowledgment, using the contact information provided in the reconsideration request, to the CEO or CEO-designated representative that the request has been received; and

• Once we have reached a decision regarding the reconsideration request,
an email to the IRF CEO or CEOdesignated representative, using the contact information provided in the reconsideration request, regarding our
decision.

We propose to require any IRF that believes it was incorrectly identified as being subject to the 2-percentage point
reduction to its IRF PPS annual increase factor to submit a request for
reconsideration and receive a decision on that request before the IRF can file an appeal with the PRRB, as authorized by the Administrative Procedure Act. If
the IRF is dissatisfied with the decision rendered at the reconsideration level, the IRF could appeal the decision with the PRRB under § 405.1835. We believe this proposed process is more efficient and less costly for us and for IRFs
because it decreases the number of PRRB appeals by resolving issues earlier in the process. Additional information about the reconsideration process including requirements for submitting reconsideration request is posted on the
CMS Web site at http://www.cms.gov/Medicare/Quality-Initiatives-PatientAssessment-Instruments/IRF-QualityReporting/Reconsideration-andDisaster-Waiver-Requests.html . We invite public comment on the proposed procedures for reconsideration and appeals.

G. Proposed IRF QRP Data Submission Exception or Extension Requirements for the FY 2017 Adjustments to the IRF PPS Annual Increase Factor and Beyond

For the IRF QRP’s data submission exception or extension requirements for the FY 2017 adjustments to the IRF PPS annual increase factor and subsequent year increase factors, we propose to continue using the IRF QRP’s disaster waiver requirements that were adopted in the FY 2014 IRF PPS final rule (78 FR 47920) for the FY 2015 adjustments
to the IRF PPS annual increase factor and subsequent year increase factors, which are outlined below, with the exception that the phrase ‘‘exception or
extension’’ will be substituted for the word ‘‘waiver.’’ We also propose, for the FY 2017 adjustments to the IRF PPS annual increase factor and subsequent year increase factors, that we may grant an exception or extension to IRFs if we determine that a systemic problem with one of our data collection systems directly affected the ability of the IRF to
submit data. Because we do not anticipate that these types of systemic errors will happen often, we do not anticipate granting an exception or extension on this proposed basis frequently. We propose that if we make the determination to grant an exception or extension, we would communicate this decision through routine
communication channels to IRFs and vendors, including, but not limited to, issuing memos, emails, and notices on
the CMS Web site at http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/
index.html

.

In the FY 2014 IRF PPS final rule (78 FR 47920), we finalized a process for IRF providers to request and for us to grant exceptions or extensions for the quality data reporting requirements of the IRF QRP for one or more quarters, beginning with the FY 2015 adjustments
to the IRF PPS annual increase factor and subsequent year increase factors, when there are extraordinary circumstances beyond the control of the provider.

In the event that an IRF seeks to request an exception or extension for quality reporting purposes, the IRF must request an exception or extension within 30 days of the occurrence of an extraordinary event by submitting a written request to CMS via email to the IRF QRP mailbox at IRFQRPReconsiderations@cms.hhs.gov

. Exception or extension requests sent to us through any other channel will not be considered as a valid request for an exception or extension from the IRF QRP reporting requirements for any adjustment to the IRF PPS annual increase factor. The written request
must contain all of the finalized requirements in the FY 2014 IRF PPS final rule (78 FR 47920) and on the CMS
Web site at http://www.cms.gov/Medicare/Quality-Initiatives-PatientAssessment-Instruments/IRF-QualityReporting/Reconsideration-andDisaster-Waiver-Requests.html . When an exception or extension is granted, an IRF will not incur payment reduction penalties for failure to comply with the requirements of the IRF QRP, for the time frame specified by CMS. If an IRF is granted an exception, we will not require that the IRF submit any quality data for a given period of time. If we grant an extension to an IRF, the IRF will still remain responsible for submitting quality data collected during


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the time frame in question, although we will specify a revised deadline by which the IRF must submit this quality data.

It is important to note that requesting an exception or extension from the requirements of the IRF QRP is separate and distinct from purpose and requirements of § 412.614, which outline the requirements to follow if an IRF is requesting a waiver regarding consequences of failure to submit complete and timely IRF–PAI payment data specified in that regulation. IRFs that have filed and were granted an IRF–
PAI waiver in accordance with § 412.614 may so indicate when requesting an exception or extension from the IRF QRP requirements, but the
submission of an IRF–PAI waiver request pursuant to § 412.614 will not be considered a valid request for an exception or extension from the IRF QRP requirements. To request an exception or extension from the IRF QRP requirements, the previously discussed process must be followed.

Additionally, in the FY 2014 IRF PPS final rule (78 FR 47920), we finalized a policy that allowed us to grant waivers (which we are proposing to now call exceptions or extensions) to IRFs that have not requested them if we determine that an extraordinary circumstance, such as an act of nature, affects an entire region or locale. We
stated that if this determination was made, we would communicate this decision through routine
communication channels to IRFs and vendors, including, but not limited to, issuing memos, emails, and notices on
the CMS Web site at http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/
index.html

.

We invite public comment on these proposals regarding the IRF QRP’s data submission exception or extension requirements for the FY 2017 adjustments to the IRF PPS annual increase factor and subsequent year
increase factors.

I. Public Display of Quality Measure Data for the IRF QRP

Under section 1886(j)(7)(E) of the Act, the Secretary is required to establish procedures for making data submitted under the IRF QRP available to the public. Section 1886(j)(7)(E) of the Act also requires these procedures to ensure that each IRF provider has the opportunity to review the data that is to be made public for its facility, prior to such data being made public. Section 1886(j)(7)(E) of the Act requires the Secretary to report quality measures that
relate to services furnished in IRFs on the CMS Web site at http://www.cms.hhs.gov/Medicare/MedicareFee-for-Service-Payment/ InpatientRehabFacPPS/

.

Currently, the Agency is developing plans regarding the implementation of these provisions. We appreciate the need for transparency into the processes and procedures that will be implemented to allow for the public reporting of the IRF QRP data and to afford providers the opportunity to preview that data before it is made public. At this time, we have not established procedures or timelines for public reporting of data, but we intend to make the public aware of our strategy in the future. We welcome public
comments on what we should consider when developing future proposals related to public reporting.

J. Proposed IRF QRP Data Completion Thresholds for the FY 2016 Adjustments
to the IRF PPS Annual Increase Factor and Beyond

Beginning in FY 2014, section 1886(j)(7)(A)(i) of the Act requires the reduction of the applicable IRF PPS annual increase factor, as previously modified under section 1886(j)(3)(D) of the Act, by 2 percentage points for any IRF that fails to submit data on quality measures specified by the Secretary in
accordance with the form and manner specified by the Secretary for that fiscal year. To date, we have not established a standard for compliance other than that IRF providers submit all applicable required data for all finalized IRF QRP quality measures, by the previously finalized quarterly deadlines. We have also specifically required monthly submission of such quality data for the
healthcare-associated infection or vaccination data, which is reported to the CDC. In reaction to the input received from our stakeholders seeking additional specificity related to required IRF QRP compliance affecting FY
annual increase factor determinations and, due to the importance of ensuring the integrity of quality data submitted to CMS, we are proposing to set specific IRF QRP thresholds for completeness of provider quality data beginning with data affecting the FY 2016 annual
increase factor determination and beyond.

1. The CMS IRF QRP, through the FY 2012 IRF PPS final rule, CY 2013 OPPS/ ASC final rule, and FY 2014 IRF PPS final rule, requires providers to submit quality data using 2 separate data collection/submission mechanisms; measures collected using the quality
indicator section of the IRF–PAI are submitted through the CMS Quality Improvement Evaluation System (QIES); and measures stewarded by the Centers
for Disease Control and Prevention (CDC) (Healthcare Acquired Infection (HAI) measures and vaccination measures) are submitted using the CDC’s National Healthcare Safety Network (NHSN). While CMS has also previously finalized a claims-based measure (All-Cause Unplanned Readmission Measure for 30 Days Post Discharge from Inpatient Rehabilitation Facilities), such measures do not require IRFs to actually submit quality data to CMS, as they are calculated using
claims data submitted to CMS forpayment purposes. Thus, with claimsbased measures, there is no quality data to which we could apply the proposed data completion thresholds. To ensure that IRF providers are meeting an acceptable standard for completeness of submitted data, we are proposing that
for the FY 2016 annual increase factor and beyond, IRF providers meet or exceed two separate program thresholds: one threshold for quality measures data collected using the quality indicator section of the IRF–PAI and submitted through QIES; and a second threshold for quality measures data collected and submitted using the CDC’s NHSN. We are proposing that
IRFs must meet or exceed both
thresholds discussed below to avoid receiving a 2 percentage point reduction
to their IRF PPS annual increase factor for a given FY beginning with FY 2016. We are proposing to hold IRF providers
accountable for two different data completion thresholds for each of the
two data submission mechanisms: a 95 percent data completion threshold for data collected using the quality
indicator items on the IRF–PAI and submitted through QIES; and a 100 percent threshold for data collected and submitted through the CDC’s NHSN. We have chosen to hold providers to the lower threshold of 95 percent for the quality indicator items on the IRF–PAI, as there has to be some margin for error related to IRF patients that have been discharged emergently or against medical advice, as these situations make
it more difficult to collect and submit the mandatory IRF–PAI quality indicator items at discharge. We do not believe the same impediments exist for the infection, vaccination or other quality measures data that IRFs submit to the CDC’s NHSN. Proposed IRF QRP Completion Threshold for the Required Quality Indicator Data Items on the IRF–

PAI

The quality indicator section of the IRF–PAI is composed of data collection items designed to inform qualitymeasure calculations, including riskVerDate Mar<15>2010 15:15 May 06, 2014 Jkt 232001 PO 00000 Frm 00036 Fmt 4701 Sfmt 4702 E:\FR\FM\07MYP2.SGM 07MYP2pmangrum on DSK3VPTVN1PROD with PROPOSALS2

### 26343 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules

adjustment calculations as well as internal consistency checks for logical inaccuracies. We propose that beginning with quality data affecting the FY 2016
IRF PPS annual increase factor and beyond, IRF providers must meet or exceed a proposed IRF–PAI quality indicator data completion threshold of 95 percent. We propose to assess the completeness of submitted data by verifying that, for all IRF–PAI Assessments submitted by any given IRF, at least 95 percent of those IRF–PAI Assessments must have 100 percent of the mandatory quality indicator data items completed where, for the purposes of this proposed rule, ‘‘completed’’ is defined as having provided actual patient data as opposed to a non-informative response, such as a dash (-), that indicates the IRF was unable to provide patient data. The proposed threshold of 95 percent is based on the need for complete records, which allows appropriate analysis of quality measure data for the purposes of updating quality measure specifications as they undergo yearly and triennial
measure maintenance reviews with the NQF. Additionally, complete data is needed to understand the validity and reliability of quality data items, including risk-adjustment models. Finally we want to ensure complete quality data from IRF providers, which will ultimately be reported to the public, allowing our beneficiaries to gain an understanding of provider performance related to these quality metrics, and helping them to make
informed health care choices. Our data suggests that the majority of current IRF providers are in compliance with, or exceeding this proposed threshold already. However, we take comment on circumstances that might prevent IRFs from meeting this level of compliance. All items that we propose to require under the IRF QRP are identified in Chapter 4 of the IRF PAI Training Manual, which is available for
download on the CMS Web site athttp://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/index.html?redirect=/IRF-QualityReporting/. We additionally propose that any IRF that does not meet the proposed requirement that 95 percent of
all IRF–PAI assessments submitted contain 100 percent of all required quality indicator data items, will be subject to a reduction of 2 percentage points to the applicable FY IRF PPS annual increase factor beginning with FY 2016. To establish this program threshold, we analyzed IRF–PAI quality
indicator data item submissions from January 2013 through September 2013, and we believe that the majority of IRF providers will be able to meet the proposed 95 percent data completion
threshold. It is our intent to raise this threshold over the next 2 years, through the rulemaking process. We are proposing that this threshold will have to be met by IRFs, in addition to the CDC NHSN threshold discussed below, to avoid receiving a 2 percentage point reduction to the applicable FY IRF PPS
annual increase factor.

2. IRF QRP Data Completion Threshold for Measures Submitted Using the
Centers for Disease Control and Prevention (CDC) National Healthcare Safety Network (NHSN)

The CMS IRF QRP, through the FY 2012 IRF PPS final rule, CY 2013 OPPS/ ASC final rule, and FY 2014 IRF PPS final rule, requires that IRFs submit CDC-stewarded quality measure data using the CDC’s NHSH, including data for the previously finalized CAUTI and Influenza Vaccination Coverage Among Healthcare Personnel (HCP) quality measures. More specifically, we require that IRFs follow CDC quality measure protocols, which require them to complete all data fields required for
both numerator and denominator data within NHSN, including the ‘‘no events’’ field for any month during
which no infection events were identified. IRFs are required to submit this data on a monthly basis (except for the HCP measure, which is only required to be reported once per year). However, IRFs have until the associated quarterly deadline (135 calendar days beyond the end of each CY quarter) by which to report infection data to the
CDC for each of the 3 months within any give quarter. For more information on the IRF QRP quarterly deadlines, we refer you to Table 10 in section XI.E of this proposed rule. We are proposing that, beginning with FY 2016 IRF PPS annual increase factor and beyond, this previously finalized requirement for monthly reporting must be met, in addition to the proposed IRF–PAI quality indicator data item completion threshold discussed above, to avoid a 2 percentage point reduction to the applicable FY IRF PPS annual increase factor. That is, we propose that IRFs must meet a threshold of 100 percent for measures submitted via the NHSN, achieved by submitting relevant
infection or vaccination data for each month of any given CY, in addition to meeting the above proposed data item completion threshold for required quality indicator items on the IRF–PAI. As the IRF QRP expands and IRFs begin reporting measures that were previously finalized, but not yet implemented, or newly proposed and finalized measures, we propose to apply this same
threshold.

a. Application of the 2 Percentage Point
Reduction for IRF Provider That Fail To Meet the Above Proposed Data Completion Thresholds

Above we have proposed that IRFs must meet two separate data completion thresholds to avoid a 2 percentage point reduction to their applicable FY annual increase factor; a data completion threshold of 95 percent for those mandatory data elements collected using the quality indicator items on the IRF–PAI and submitted through QIES; and a second data completion threshold of 100 percent for quality measure data submitted through the CDC’s NHSN. We are proposing that these data completion thresholds must be met in addition to the below proposed data accuracy validation threshold of 75 percent, to avoid a 2 percentage point reduction to their applicable FY annual increase factor. While we propose that IRFs must meet both the proposed data completion and data accuracy thresholds, IRFs cannot have their applicable annual increase factor reduced twice. That is, should an IRF provider fail to meet either one or both of the proposed thresholds, they will only receive one reduction of 2 percentage points to their applicable FY
annual increase factor.

We invite comment on this proposal.

K. Proposed Data Validation Process for the FY 2017 Adjustments to the IRF PPS Annual Increase Factor and Beyond

Historically, we have built consistency and internal validation
checks into our data submission specifications to ensure that the basic
elements of the IRF–PAI assessment conform to requirements such as proper format and facility information. These
internal validation checks are automated and occur during the provider submission process, and help ensure the integrity of the data submitted by providers by rejecting submissions or issuing warnings when provider data contain logical
inconsistencies. These edit checks are further outlined in the Inpatient Rehabilitation Facility-Patient

Assessment Instrument Data Submission Specifications, which are
available for download at http://www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ InpatientRehabFacPPS/Software.html

.

Validation is intended to provide added assurance of the accuracy of the data that will be reported to the public


### 26344 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules

as required by section 1886(j)(7)(E) of the Act. We propose, for the FY 2016 adjustments to the IRF PPS annual increase factor and subsequent years, to validate the data submitted for quality purposes. Initially, for FY 2016 this data accuracy validation will apply only to the quality indicator items on the IRF–
PAI that inform the measure Percent of
Patients or Residents with Pressure Ulcers that are New or Worsened (NQF #0678), including those mandatory data
elements that inform the measure calculation, as well as those that inform internal consistency checks for logical inaccuracies. As the IRF QRP expands, and as IRFs begin to submit additional data using the quality indicator section of the IRF–PAI, we propose to include
those additional data elements in this validation process. We will inform any such expansion of this validation process prior to its occurrence through
our routine channels of communication including, but not limited to the IRF QRP Web site, CMS open door forums, national IRF provider trainings, and the Medicare Learning Network Newsletter.

We propose to validate the data
elements submitted to CMS for Percent
of Residents or Patients with Pressure
Ulcers that are New or Have Worsened (Short-Stay) (NQF #0678) under the IRF QRP by requesting the minimum chart data necessary to confirm a statistically valid random sample of 260 providers. From those 260 providers, 5 IRF–PAI assessments submitted through National
Assessment Collection Database will be randomly selected. In accordance with § 164.512 (d)(1)(iii) of the HIPAA Privacy Rule, we will request from these providers the specified portions of the 5 Medicare patient charts that correspond to the randomly selected assessments, which will need to be copied and
submitted via traceable mail to a CMS contractor for validation. We propose that the specific portions of the 5 beneficiary charts will be identified in the written request, but may include: admission and discharge assessments, relevant nursing notes following the admission, relevant nursing notes preceding the discharge, physician admission summary and discharge summary, and any Assessment of Pressure Ulcer Form the facility may utilize. We propose that the CMS contractor will utilize the portions of the patient charts to compare that information with the quality data
submitted to CMS. Differences that
would affect measure outcomes or
measure rates would be identified and reported to CMS. These differences
could include but are not limited to unreported worsened pressure ulcers. We propose that all data that has been
submitted to the National Assessment Collection Database under the IRF QRP would be subject to the data validation process. Specifically, we propose that the contractor will request copies of the randomly selected medical charts from each facility via certified mail (or other traceable methods that require a facility representative to sign for CMS correspondence), and the facility will have 45 days from the date of the request (as documented on the request letter) to submit the requested records to the contractor. If the facility does not comply within 30 days, the contractor
will send a second certified letter to the facility, reminding the facility that it must return copies of the requested medical records within 45 calendar days following the date of the initial contractor medical record request. If the facility still does not comply, then the contractor will assign a ‘‘zero’’ score to each measure in each missing record. If, however, the facility does comply, the
contractor will review the data submitted by the facility using the IRF– PAI for the mandatory data elements
associated with the Pressure Ulcer measure, until such time that IRFs begin to submit additional quality measures that are collected using the quality
indicator section of the IRF–PAI. Initially, this review will consist solely of those mandatory data elements that inform the pressure ulcer measure calculations, as well as those that inform checks for logical inconsistencies. As IRFs begin to report additional finalized measures, CMS intends to propose expanding this validation process to other such
measures at that time. The contractor will then calculate the percentage of matching data elements which will
constitute a validation score. Because we would not be validating all records,
we would need to calculate a confidence interval that incorporates a potential sampling error.

To receive the full FY 2016 IRF annual increase factor, we are proposing that IRFs in the random sample must attain at least a 75 percent validation score, based upon our validation process, which will use charts requested from patient assessments submitted for FY 2014. We will calculate a 95 percent
confidence interval associated with the observed validation score. If the upper
bound of this confidence interval is below the 75 percent cutoff point, we will not consider a hospital’s data to be ‘‘validated’’ for payment purposes. For example, for a provider who submits all 5 of their charts, each with 9 elements, the provider’s score will be based on 45 possible opportunities to report correctly or incorrectly. If the provider correctly scored on 40 of the 45 elements, then their reliability would be 89 percent (40/45). The upper bound of

the confidence interval takes into account sampling error and would be higher than this estimated reliability, in this case 96 percent. This number is greater than or equal to 75 percent. Therefore the provider passes validation. We propose that providers failing the validation requirements would be subject to a 2 percentage point reduction to their applicable annual increase factor. In addition, all providers validated would receive educational feedback, including specific

case details.

L. Application of the 2 Percentage Point Reduction for IRF Providers That Fail To Meet the Above Proposed Data Accuracy Threshold

Above we have proposed that IRFs must meet a data accuracy threshold of 75 percent to avoid receiving a 2 percentage point reduction to their applicable FY annual increase factor. We are proposing that this proposed data accuracy threshold of 75 percent

must be met in addition to the above proposed data completion thresholds (95 percent for data collected using the quality indicator items on the IRF–PAI and submitted using QIES, and 100 percent for data submitted using the CDC’s NHSN), to avoid receiving a 2 percentage point reduction to their applicable FY annual increase factor. While we propose that IRFs must meet both the proposed data accuracy and data completion thresholds, IRFs cannot have their applicable annual payment update reduced twice. That is, should an IRF provider fail to meet either one or both of the proposed thresholds (data completion and/or data accuracy), they will only receive one reduction of 2 percentage points to their applicable FY
annual increase factor.

We invite public comment on this proposal and suggestions to improve the utility of the approach and/or reduce
the burden on facilities.

M. Electronic Health Record and Health Information Exchange

We believe that all patients, their families, and their healthcare providers should have consistent and timely
access to their health information in a standardized format that can be securely exchanged between the patient, providers, and others involved in the


### 26345 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules

25 The Department of Health & Human Services August 2013 Statement, ‘‘Principles and Strategies for Accelerating Health Information Exchange. patient’s care. 25 We are committed to accelerating health information exchange (HIE) through the use of electronic health records (EHRs) and other types of health information technology (HIT) across the broader care continuum through a number of initiatives including: (1) Alignment of incentives and payment adjustments to encourage provider adoption and optimization of HIT and HIE services through Medicare and Medicaid payment policies; (2) adoption of
common standards and certification requirements for interoperable HIT; (3) support for privacy and security ofpatient information across all HIEfocused initiatives; and (4) governance
of health information networks. These initiatives are designed to improve care delivery and coordination across the entire care continuum and encourage HIE among all health care providers, including professionals and hospitals eligible for the Medicare and Medicaid EHR Incentive Programs and those who are not eligible for the EHR Incentive programs. To increase flexibility in the regulations for certification and expand HIT certification, the Office of the
National Coordinator for Health Information Technology (ONC) has issued a proposed rule concerning a voluntary 2015 Edition of EHR
certification criteria that would more easily accommodate HIT certification for technology used in other types of health care settings where individual or institutional health care providers are not typically eligible for incentive payments under the EHR IncentivePrograms, such as long-term and postacute care and behavioral health settings.

We believe that HIE and the use of certified EHRs by IRFs (and other providers ineligible for the Medicare and Medicaid EHR Incentive programs) can effectively and efficiently help providers improve internal care delivery practices, support management of patient care across the continuum, and enable the reporting of electronically specified clinical quality measures (eCQMs). More information on the
identification of EHR certification criteria and development of standards applicable to IRFs can be found at:

• http://healthit.gov/policyresearchers-implementers/standardsand-certification-regulations

• http://www.healthit.gov/facas/ FACAS/health-it-policy-committee/ hitpc-workgroups/certificationadoption • http://wiki.siframework.org/LCC

+LTPAC+Care+Transition+SWG

• http://wiki.siframework.org/ Longitudinal+Coordination+of+Care

We are soliciting feedback during public comment to this FY 2015 IRF PPS proposed rule on the feasibility and desirability of electronic health record adoption and use of HIE in IRFs. We are also interested in public comment on the need to develop electronic clinical quality measures, and the benefits and limitations of implementing these measures for IRF providers.

N. Proposed Method for Applying the
Reduction to the FY 2015 IRF Increase Factor for IRFs That Fail To Meet the Quality Reporting Requirements

As previously noted, section 1886(j)(7)(A)(i) of the Act requires the application of a 2-percentage point reduction of the applicable market
basket increase factor for IRFs that fail to comply with the quality data submission requirements. In compliance with 1886(j)(7)(A)(i) of the Act, we will apply a 2-percentage point reduction to the applicable FY 2015 market basket increase factor (2.1 percent) in calculating an adjusted FY 2015 standard payment conversion factor to apply to payments for only those IRFs that failed to comply with the data submission requirements. As previously noted, application of the 2-percentage point reduction may result in an update that is less than 0.0 for a fiscal year and in payment rates for a fiscal year being less than such payment rates for thepreceding fiscal year. Also, reportingbased reductions to the market basket increase factor will not be cumulative; they will only apply for the FY
involved. Table 12 shows the calculation of the adjusted FY 2015 standard payment conversion factor that will be used to compute IRF PPS payment rates for any IRF that failed to meet the quality reporting requirements for the period from January 1, 2013, through December 31, 2013.



### TABLE 

### 12—C ALCULATIONS 

### T O 

### D ETER



### MINE THE 

### A DJUSTED 

### FY 2015
S TANDARD 

### P AYMENT 

### C ONVERSION 

### F ACTOR FOR 

### IRF S 

### T HAT 

### F AILED 

### T O 

### M EET THE 

### Q UALITY 

### R EPORTING 

### R E



### QUIREMENT

Explanation for

adjustment Calculations

Standard Payment Conversion Factor for FY 2014 ............................ $14,846 

### TABLE 

### 12—C ALCULATIONS 

### T O 

### D ETER



### MINE THE 

### A DJUSTED 

### FY 2015
S TANDARD 

### P AYMENT 

### C ONVERSION 

### F ACTOR FOR 

### IRF S 

### T HAT 

### F AILED 

### T O 

### M EET THE 

### Q UALITY 

### R EPORTING 

### R E



### QUIREMENT

### —Continued

Explanation for

adjustment Calculations

Market Basket Increase

Factor for FY 2015 (2.7 percent), reduced by 0.4 percentage point reduction for the productivity adjustment as required by section 1886(j)(3)(C)(ii)(I) of the Act, reduced by 0.2percentage point in accordance with sections 1886(j)(3)(C) and (D)
of the Act and furtherreduced by 2 percentage points for IRFs
that failed to meet thequality reporting requirement .................... X 1.0010 Budget Neutrality Factor

for the Wage Index

and Labor-Related
Share ........................... X 1.0018 Budget Neutrality Factor

for the Revisions to the CMG Relative Weights X 1.0000 Proposed Adjusted FY

2015 Standard Payment Conversion Factor ................................ = $14,888

We invite public comment on the proposed method for applying the
reduction to the FY 2015 IRF increase
factor for IRFs that fail to meet the quality reporting requirements.

XII. Collection of Information Requirements

Under the Paperwork Reduction Act of 1995, we are required to provide 60 days’ notice in the Federal Register and solicit public comment before a collection of information requirement is submitted to the Office of Management and Budget (OMB) for review and approval. To fairly evaluate whether an
information collection should be approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995 requires that we solicit comment on the following issues:

• The need for the information collection and its usefulness in carrying out the proper functions of our agency.

• The accuracy of our estimate of the
information collection burden.

• The quality, utility, and clarity of
the information to be collected.

• Recommendations to minimize the
information collection burden on the


### 26346 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules

affected public, including automated collection techniques.

This proposed rule does not impose any new information collection requirements as outlined in the regulation text. However, this proposed rule does [propose changes to]
associated information collections that are not discussed in the regulation text
contained in this document. The following is a discussion of these information collections, some of which have already received OMB approval.

We are soliciting public comments on each of these issues for the following
sections of this document that contain information collection requirements (ICRs).

A. ICRs Regarding the IRF QRP

1. Updates to IRF QRP

We propose 2 new measures for use in the IRF QRP that will affect the
increase factor for FY 2017. These quality measures are: National Healthcare Safety Network (NHSN) Facility-Wide Inpatient Hospital-Onset
Methicillin-Resistant Staphylococcus

aureus (MRSA) Bacteremia Outcome Measure (NQF #1716) and National Healthcare Safety Network (NHSN) Facility-Wide Inpatient Hospital-Onset Clostridium difficile Infection (CDI) Outcome Measure (NQF #1717). We propose that these measures would be
collected via the CDC’s NHSN data submission system ( http://www.cdc.gov/
nhsn/). The NHSN is a secure, Internetbased healthcare-associated infection tracking system that is maintained and managed by the CDC.

There are currently approximately 1,140 IRFs in the United States paid under the IRF PPS that are already required to submit CAUTI data to the CDC’s NHSN. We believe that any burden increase related to complying with the IRF QRP requirements for
submission of the MRSA bacteremia and
CDI measures will be minimal for those IRFs that are already familiar with the NHSN submission process, for several reasons. First, these IRFs have already completed the initial setup and have become familiar with reporting data in the NHSN system due to the requirement to report the CAUTI measure. Second, due to their participation in a wide range of mandatory reporting and quality improvement programs, there are 15 states with mandate for IRFs to report
MRSA bacteremia data and CDI data into the NHSN. The most significant burden associated with these quality
measures is the time and effort associated with collecting and submitting the data on the MRSA and CDI measures for IRFs that are not currently reporting any measures data into the CDC’s NHSN system.

Based on submissions to the NHSN,
we now estimate that each IRF will execute approximately 5 NHSN submissions per month: 1 MRSA bacteremia event, 1 C. difficile event and 3 CAUTI events (60 events per IRF annually). This equates to a total of approximately 68,400 submissions of events to the NHSN from all IRFs per year. The CDC estimated the public reporting burden of the collection of
information for each measure to include the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing
the collection of information. MRSA
and C. difficile are estimated to be an average of 15 minutes per response (10 minutes of clinical (registered nurse) time, and 5 minutes of clerical (Medical
Records or Health Information Technician); CAUTI is estimated to be an average of 29 minutes per response. Each IRF must also complete a Patient Safety Monthly Reporting Plan
estimated at 35 minutes and a Denominator for Specialty Care Area, which is estimated at 5 hours per month. Based on this estimate, we expect each IRF would expend 7.53 hours per month reporting to the NHSN. Additionally, each IRF must submit the
Healthcare Worker Vaccination measure, which the CDC estimates will
take 10 minutes of clerical time. Based on this estimate, we expect each IRF would expend 78.97 clinical hours per year reporting to the NHSN, or 90,026 hours for all IRFs. According to the US Bureau of Labor and Statistics, the mean hourly wage for a registered nurse (RN) is $33.13; the mean hourly wage for a
medical records and health information technician is $16.81. However, to account for overhead and fringe benefits, we have double the mean hourly wage, making it $66.26 for an RN and $33.62 for a Medical Record or
Health Information Technician. We estimate that the annual cost per each IRF would be $5,162.09 and that the total yearly cost to all IRFs for the
submission of data to NHSN would be $5,882,782.60. While the quality measures previously discussed are subject to the PRA, we believe that the associated burden is approved under OMB control number 0920–0666, with an expiration date of November, 31,

2016.

In the FY 2014 IRF PPS rule (78 FR 47923 through 47925), we provided burden estimates for measures adopted in that rule. Updated Collection of Information Requirements for each of
those measures is described below:

a. All-Cause Unplanned Readmission Measure for 30 Days Post Discharge From Inpatient Rehabilitation Facilities

As stated in the FY 2014 IRF PPS rule (78 FR 47923 through 47925), data for
this measure will be derived from Medicare claims, and therefore, will not add any additional reporting burden for

IRFs.

b. Percent of Residents or Patients With
Pressure Ulcers That Are New or Have Worsened (Short-Stay) (NQF #0678)

We expect that the admission and discharge pressure ulcer data will be collected by a clinician such as an RN because the assessment and staging of pressure ulcers requires a high degree of clinical judgment and experience. We estimate that it will take approximately 10 minutes of time by the RN to perform the admission pressure ulcer
assessment. We further estimate that it
will take an additional 15 minutes of time to complete the discharge pressure
ulcer assessment.

We estimate that there are 359,000 IRF–PAI submissions per year 3 and that there are 1,140 IRFs in the U.S. reporting quality data to CMS. Based on these figures, we estimate that each IRF will submit approximately 315 IRF– PAIs per year. Assuming that each IRF– PAI submission requires 25 minutes of time by an RN at an average hourly wage of $66.26 (including fringe benefits and overhead), to complete the ‘‘Quality Indicator’’ section, the yearly cost to each IRF would be $8,696.63 and
the annualized cost across all IRFs would be $9,914,158.20.

We also expect that most IRFs will use administrative personnel, such as a medical secretary or medical data entry clerk, to perform the task of entering the IRF–PAI pressure ulcer Assessment data. We estimate that this data entry
task will take no more than 3 minutes for the ‘‘Quality Indicator’’ section of
each IRF–PAI record or 15.75 hours for each IRF annually. The average hourly wage for a Medical Records & Health Information Technician is $33.62 (including fringe benefits and overhead). Again, as we noted above, there are approximately 359,000 IRF– PAI submissions per year and 1,140 IRFs reporting quality data to CMS. Given this wage information, the
estimated total annual cost across all reporting IRFs for the time required for entry of pressure ulcer data into the IRF–PAI by a medical record or health information technician (including fringe benefits and overhead) is $603,652.80. We further estimate the average yearly


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cost to each individual IRF to be
$529.52.

We estimate that the combined
annualized time burden related to the pressure ulcer data item set for work performed, by the both clinical and administrative staff, will be 147 hours for each individual IRF and 167,580
hours across all IRFs. The total
estimated annualized cost for collection and submission of pressure ulcer data is $9,226.15 for each IRF and $10,517,811
across all IRFs. We estimate the cost for each pressure ulcer submission to be
$29.29.

c. Percent of Residents or Patients Who Were Assessed and Appropriately Giventhe Seasonal Influenza Vaccine (ShortStay) (NQF #0680)

IRFs are already required to complete
and transmit certain IRF–PAI data on all
Medicare Part A Fee-for-Service and Medicare Part C (Medicare Advantage) patients to receive payment from Medicare. We estimate that completion
of the Patient Influenza measure data items will take approximately 5 minutes to complete. The Patient Influenza item set consists of three data items (for example, questions). Each item is straightforward and does not require physical assessment of the patient for completion. We estimate that it will take approximately 0.7 minutes to complete each item, or 2.1 minutes to complete
all items related to the Patient Influenza measure. However, in some cases, the person completing this item set may need to consult the patient’s medical record to obtain data about the patient’s influenza vaccination. Therefore, we
have allotted an additional 1.66 minutes per item, for a total of 7.1 minutes to complete the Patient Influenza measure
data items.

We have noted above that there are approximately 359,000 IRF–PAIs completed annually across all 1,140 IRFs that report IRF quality data to
CMS. This breaks down to approximately 315 IRF–PAIs completed by each IRF yearly. We estimate that the annual time burden for reporting the Patient Influenza measure data is 42,481
hours across all IRFs in the U.S. and
37.26 hours for each individual IRF. Again, we have estimated the mean hourly wage for an RN (including fringe benefits and overhead) to be $66.26. Taking all of the above information into consideration, we estimate the annual
cost across all IRFs for the submission
of the Patient Influenza measure data to be $2,814,791.06. We further estimate
the cost for each individual IRF to be $2,469.11.

Lastly, we propose to validate data submitted to CMS by requesting portions of patient’s charts be copied
and mailed to a CMS validation
contractor. We estimate the size of each section we propose to request as follows: We anticipate that the first 3 days of nurses notes will be approximately 15 pages; the last 3 days of nurses notes will be approximately 10 pages; the physician or physician’s assistant’s admission history and physical will be approximately 30 pages; the physician or physician’s assistant’s discharge summary will be approximately 15 pages; nurses admission database is approximately 40 pages; pressure ulcer assessment assessments will be approximately 30 pages; physicians progress notes will be approximately 30 pages; physicians orders will be approximately 30 pages and lab reports to be approximately 70 pages. We estimate the total submission to be approximately 270 pages in length.
The FY 2013 IPPS/LTCH PPS final rule (77 FR 53745) estimates the appropriate
cost for chart submission to be 12 cents per page and $4.00 shipping. Two hundred seventy pages at a rate of $0.12 per page with a $4.00 shipping cost would be $36.40 per chart. We propose that 260 providers will be randomly selected for validation, and we propose to request 5 charts from each selected provider for a total cost of $47,320 for all IRF providers, or $182.00 for any randomly selected IRF provider.

2. Effects of Updates to the IRF QRP

In section XI of this proposed rule, we propose to add 2 new quality measures to the IRF QRP. These measures include: National Healthcare Safety Network (NHSN) Facility-WideInpatient Hospital-Onset MethicillinResistant Staphylococcus aureus (MRSA) Bacteremia Outcome Measure (NQF #1716) and National Healthcare Safety Network (NHSN) Facility-Wide Inpatient Hospital-Onset Clostridium difficile Infection (CDI) Outcome Measure (NQF #1717). As previously noted, we estimate that each IRF will execute approximately 2 NHSN submissions (1 MRSA bacteremia event
and 1 C. difficile event) per month (24 events per IRF annually). This equates to a total of approximately 27,360
submissions of HAI data to NHSN from all IRFs per year. We estimate that each
NHSN modules for the MRSA and C. difficile measures will take approximately 15 minutes to complete.
This time estimate consists of 10
minutes of clinical time needed to
collect the clinical data and 5 minutes of clerical time necessary to enter the
data into the NHSN. Based on this estimate, we expect each IRF will expend 8 clinical hours and 4 clerical hours for a total of 12 hours per year reporting to NHSN for MRSA
bacteremia and CDI. The total estimated annual hourly burden on all IRFs in the United States for reporting MRSA
bacteremia and CDI data to NHSN is 13,680 hours. The average hourly wage
for Medical Records or Health Information Technicians is $33.62 (including fringe benefits and overhead) and $66.26 (including fringe benefits and overhead) for a Registered Nurse. We estimate that the annual cost per each IRF will be $664.56 and the total yearly cost to all IRFs for the submission
of MRSA bacteremia and CDI data to NHSN will be $757,598.40.

B. ICRs Regarding Individual, Group, and Co-Treatment Therapy Data on the

IRF–PAI

As stated in section VIII of this proposed rule, we are proposing a new Therapy Information Section for the IRF–PAI that will require IRF providers to submit data regarding the amount and mode (that is, Individual, Group, and Co-Treatment) of therapy that patients are receiving and in which therapy discipline (PT, OT, speech/language) beginning on October 1, 2015.

Under Medicare’s conditions of participation for hospitals that provide rehabilitation, physical therapy, occupational therapy, audiology, or speech pathology services at § 482.56, the provision of care and the personnel qualifications must be in accordance with national acceptable standards of practice and must also meet the requirements at § 409.17, according to which IRFs are required to furnish physical therapy, occupational therapy or speech-language pathology services under a plan that, among other things, ‘‘[p]rescribes the type, amount, frequency, and duration of the physical therapy, occupational therapy, or speech-language pathology services to be furnished to the individual.’’ (Such services may also be furnished under plan requirements specific to the payment policy under which the services are rendered, if applicable.) In addition, the IRF coverage requirements at § 412.622(a)(3)(ii), (4), require the IRF to document that the patient ‘‘[g]enerally requires and can reasonably be expected to actively participate in, and benefit from, an intensive rehabilitation therapy program.’’ As Medicare already requires extensive documentation of the type, amount, frequency and duration of physical therapy, occupational therapy, or speech-language pathology services
furnished to individuals in the IRF setting, we do not believe that IRFs will incur any additional burden related to


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the collection of the data for the proposed new Therapy Information
Section. In accordance with 5 CFR 1320.3(b)(2), we believe the burden associated with this requirement is exempt from the PRA as it is a usual and customary business practice. The time, effort, and financial resources necessary to comply with this requirement would
be incurred in the course of each IRF conducting its normal business

activities.

We anticipate that it will take approximately 4 minutes to retrieve the therapy data from the patient’s medical record and transfer the required data to
the IRF–PAI for submission. We believe this task can be completed by any
clinician in the IRF. To calculate the burden, we obtained hourly wage rates for social worker assistants, licensed practical nurses (LPN), recreational therapists, social workers, dietitians and nutritionists, RN, speech language pathologists, audiologists, occupational therapists, and physical therapists, all of whom may complete the IRF–PAI, from the Bureau of Labor Statistics ( http:// www.bls.gov/ooh/healthcare/
home.htm ). The $26.52 rate is a blend of all of these categories, and reflects the fact that IRF providers have historically
used all of these clinicians for preparation and coding of the IRF–PAI. However, to account for overhead and fringe benefits, we double the average rate, making it $53.04. On average, an IRF submits roughly 300 IRF–PAIs annually and when multiplied by 4 minutes to complete the proposed new Therapy Information Section, the total estimated annual hour burden per each
IRF is 20 hours. We estimate the total cost burden to each IRF for reporting the proposed therapy data will be $1,060 annually. Since there are a total of 1,140 IRFs, we estimate the total burden cost across all IRFs for submitting therapy data is $1.2 million.

We will be submitting a revision of
the IRF–PAI information collection request currently approved under OMB
control number 0938–0842.

If you comment on these information collection and recordkeeping requirements, please submit your comments electronically as specified in
the ADDRESSES section of this proposed rule.

XIII. Response to Public Comments

Because of the large number of public comments we normally receive on Federal Register documents, we are not able to acknowledge or respond to them individually. We will consider all comments we receive by the date and time specified in the **DATES** section of this preamble, and, when we proceed with a subsequent document, we will respond to the comments in the preamble to that document.

XIV. Regulatory Impact Analysis

A. Statement of Need

This proposed rule updates the IRF prospective payment rates for FY 2015 as required under section 1886(j)(3)(C) of the Act. It responds to section 1886(j)(5) of the Act, which requires the Secretary to publish in the Federal Register on or before the August 1 that precedes the start of each fiscal year, the classification and weighting factors for the IRF PPS’s case-mix groups and a description of the methodology and data used in computing the prospective payment rates for that fiscal year.

This proposed rule implements sections 1886(j)(3)(C) and (D) of the Act. Section 1886(j)(3)(C)(ii)(I) of the Actrequires the Secretary to apply a multifactor productivity adjustment to the market basket increase factor, and to apply other adjustments as defined by the Act. The productivity adjustment applies to FYs from 2012 forward. The other adjustments apply to FYs 2010 through 2019.

This proposed rule also adopts some policy changes within the statutory discretion afforded to the Secretary under section 1886(j) of the Act. We propose to collect data on the amount and mode (that is, Individual, Group, and Co-Treatment) of therapy provided in the IRF setting according to therapy discipline, revise the list of impairment group codes that presumptively meet the 60 percent rule compliance criteria, provide for a new item on the IRF–PAI form to indicate whether the prior treatment and severity requirements have been met for arthritis cases, and revise and update quality measures and reporting requirements under the IRF quality reporting program. In this proposed rule, we also address the implementation of the International Classification of Diseases, 10th Revision, Clinical Modification (ICD– 10–CM) for the IRF prospective payment system (PPS), effective when ICD–10– CM becomes the required medical data
code set for use on Medicare claims and
IRF–PAI submissions.

B. Overall Impacts

We have examined the impacts of this proposed rule as required by Executive Order 12866 (September 30, 1993, Regulatory Planning and Review), Executive Order 13563 on Improving Regulation and Regulatory Review (January 18, 2011), the Regulatory Flexibility Act (September 19, 1980, Pub. L. 96–354) (RFA), section 1102(b) of the Act, section 202 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104–4), Executive Order 13132 on Federalism (August 4, 1999), and the Congressional Review Act (5 U.S.C. 804(2)).

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. A regulatory impact analysis (RIA) must be prepared for a major proposed rule with economically significant effects ($100 million or more in any 1 year). We estimate the total impact of the proposed policy updates described in this proposed rule by comparing the estimated payments in FY 2015 with those in FY 2014. This analysis results in an estimated $160 million increase for FY 2015 IRF PPS payments. As a result, this proposed rule is designated as economically ‘‘significant’’ under section 3(f)(1) of Executive Order 12866, and hence a major rule under the Congressional Review Act. Also, the rule has been reviewed by OMB.

The Regulatory Flexibility Act (RFA) requires agencies to analyze options for regulatory relief of small entities, if a rule has a significant impact on a
substantial number of small entities. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small governmental jurisdictions. Most IRFs and most other providers and suppliers are small entities, either by having revenues of $7 million to $35.5 million or less in any 1 year depending on industry classification, or by being nonprofit organizations that are not dominant in their markets. (For details, see the Small
Business Administration’s final rule that
set forth size standards for health care industries, at 65 FR 69432 at http:// www.sba.gov/sites/default/files/files/

Size

_ Standards

_ Table.pdf , effective March 26, 2012.) Because we lack data on individual hospital receipts, we
cannot determine the number of small proprietary IRFs or the proportion of
IRFs’ revenue that is derived from Medicare payments. Therefore, we assume that all IRFs (an approximate total of 1,100 IRFs, of which approximately 60 percent are nonprofit facilities) are considered small entities and that Medicare payment constitutes


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the majority of their revenues. The Department of Health and Human Services generally uses a revenue impact of 3 to 5 percent as a significance
threshold under the RFA. As shown in Table 13, we estimate that the net revenue impact of this proposed rule on
all IRFs is to increase estimated payments by approximately 2.2 percent. However, we find that certain categories of IRF providers would be expected to experience revenue impacts in the 3 percent range. We estimate a 3.8 percent overall impact for four rural IRFs in the Pacific region, and a 3 percent increase
for 141 urban IRFs in the Middle Atlantic region and 27 rural IRFs in the West North Central region. As a result, we anticipate this proposed rule adopts a net positive impact on a substantial
number of small entities. Medicare
Administrative Contractors are not
considered to be small entities.
Individuals and States are not included in the definition of a small entity.

In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of
a substantial number of small rural hospitals. This analysis must conform to the provisions of section 603 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a Metropolitan Statistical Area and has
fewer than 100 beds. As discussed in detail below, the rates and policies set forth in this proposed rule will not have a significant impact (not greater than 3 percent) on rural hospitals based on the
data of the 165 rural units and 17 rural hospitals in our database of 1,140 IRFs
for which data were available.

Section 202 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104–04, enacted on March 22, 1995) also requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation. In 2014, that threshold level is approximately $141 million. This proposed rule will not impose spending costs on state, local, or tribal governments, in the aggregate, or by the private sector, of greater than $141 million.

Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a final rule that imposes substantial direct requirement costs on state and local governments, preempts state law, or otherwise has federalism implications. As stated above, this proposed rule will
not have a substantial effect on state and local governments, preempt state law, or otherwise have a federalism implication.

C. Detailed Economic Analysis

1. Basis and Methodology of Estimates

This proposed rule sets forth proposed policy changes and updates to
the IRF PPS rates contained in the FY 2014 IRF PPS final rule (78 FR 47860). Specifically, this proposed rule updates the CMG relative weights and average length of stay values, the wage index, and the outlier threshold for high-cost cases. This proposed rule also applies a MFP adjustment to the FY 2015 RPL
market basket increase factor in
accordance with section 1886(j)(3)(C)(ii)(I) of the Act, and a 0.2 percentage point reduction to the FY
2015 RPL market basket increase factor
in accordance with sections 1886(j)(3)(C)(ii)(II) and (D)(iv) of the Act. Further, this proposed rule proposes additional changes to the presumptive methodology and additional therapy and quality data collection that are expected to result in some additional financial effects on IRFs. In addition,
section XI of this rule discusses the implementation of the required 2 percentage point reduction of the market basket increase factor for any IRF that fails to meet the IRF quality reporting requirements, in accordance with section 1886(j)(7) of the Act.

We estimate that the impact of the proposed changes and updates described in this proposed rule will be a net estimated increase of $160 million in payments to IRF providers. This
estimate does not include the estimated impacts of the additional proposed changes to the presumptive compliance method and the additional therapy and quality data collection, as discussed in section 8 of this Economic Analysis. In addition, it does not include the implementation of the required 2 percentage point reduction of the market basket increase factor for any IRF that fails to meet the IRF quality reporting requirements (as discussed in section 9 of this Economic Analysis). The impact analysis in Table 13 of this proposed rule represents the projected effects of the updates to IRF PPS payments for FY 2015 compared with the estimated IRF PPS payments in FY 2014. We determine the effects by estimating payments while holding all other payment variables constant. We use the best data available, but we do not attempt to predict behavioral responses to these changes, and we do not make adjustments for future changes
in such variables as number of discharges or case-mix. We note that certain events may combine to limit the scope or accuracy of our impact analysis, because such an analysis is future-oriented and, thus, susceptible to forecasting errors because of other changes in the forecasted impact time period. Some examples could be legislative changes made by the Congress to the Medicare program that would impact program funding, or changes specifically related to IRFs. Although some of these changes may not necessarily be specific to the IRF PPS, the nature of the Medicare program is such that the changes may interact, and the complexity of the interaction of these changes could make it difficult to predict accurately the full scope of the impact upon IRFs.

In updating the rates for FY 2015, we are proposing standard annual revisions described in this proposed rule (for example, the update to the wage and market basket indexes used to adjust the federal rates). We are also implementing a productivity adjustment to the FY
2015 RPL market basket increase factor
in accordance with section 1886(j)(3)(C)(ii)(I) of the Act, and a 0.2 percentage point reduction to the FY
2015 RPL market basket increase factor
in accordance with sections 1886(j)(3)(C)(ii)(II) and (D)(iv) of the Act.
We estimate the total increase in payments to IRFs in FY 2015, relative to FY 2014, will be approximately $160
million.

This estimate is derived from the application of the FY 2015 RPL market basket increase factor, as reduced by a productivity adjustment in accordance with section 1886(j)(3)(C)(ii)(I) of the Act, and a 0.2 percentage point
reduction in accordance with sections 1886(j)(3)(C)(ii)(II) and (D)(iv) of the Act, which yields an estimated increase in aggregate payments to IRFs of $155 million. Furthermore, there is an additional estimated $5 million increase in aggregate payments to IRFs due to the proposed update to the outlier threshold amount. Outlier payments are estimated to increase under this proposal from approximately 2.9 percent in FY 2014 to 3.0 percent in FY 2015. Therefore, summed together, we estimate that these updates will result in a net increase in estimated payments of $160 million
from FY 2014 to FY 2015.

The effects of the proposed updates that impact IRF PPS payment rates are shown in Table 13. The following proposed updates that affect the IRF PPS payment rates are discussed separately below:

• The effects of the proposed update to the outlier threshold amount, from approximately 2.9 percent to 3.0 percent of total estimated payments for FY 2015,


### 26350 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules

consistent with section 1886(j)(4) of the

Act.

• The effects of the proposed annual market basket update (using the RPL market basket) to IRF PPS payment rates, as required by section 1886(j)(3)(A)(i) and sections 1886(j)(3)(C) and (D) of the Act, including a productivity adjustment in
accordance with section 1886(j)(3)(C)(i)(I) of the Act, and a 0.2 percentage point reduction in accordance with sections 1886(j)(3)(C) and (D) of the Act.

• The effects of applying the proposed budget-neutral labor-related share and wage index adjustment, as required under section 1886(j)(6) of the

Act.

• The effects of the proposed budgetneutral changes to the CMG relative weights and average length of stay values, under the authority of section 1886(j)(2)(C)(i) of the Act.

• The total change in estimated payments based on the proposed FY 2015 payment changes relative to the estimated FY 2014 payments.

2. Description of Table 13

Table 13 categorizes IRFs by geographic location, including urban or rural location, and location for CMS’s 9 census divisions (as defined on the cost report) of the country. In addition, the
table divides IRFs into those that are separate rehabilitation hospitals (otherwise called freestanding hospitals in this section), those that are rehabilitation units of a hospital (otherwise called hospital units in this section), rural or urban facilities, ownership (otherwise called for-profit, non-profit, and government), by teaching status, and by disproportionate share patient percentage (DSH PP). The top row of Table 13 shows the overall impact on the 1,140 IRFs included in the analysis.

The next 12 rows of Table 13 contain IRFs categorized according to their geographic location, designation as either a freestanding hospital or a unit of a hospital, and by type of ownership; all urban, which is further divided into urban units of a hospital, urban freestanding hospitals, and by type of ownership; and all rural, which is
further divided into rural units of a hospital, rural freestanding hospitals, and by type of ownership. There are 958
IRFs located in urban areas included in our analysis. Among these, there are 731 IRF units of hospitals located in urban areas and 227 freestanding IRF hospitals
located in urban areas. There are 182
IRFs located in rural areas included in our analysis. Among these, there are 165 IRF units of hospitals located in rural areas and 17 freestanding IRF hospitals
located in rural areas. There are 401 forprofit IRFs. Among these, there are 337
IRFs in urban areas and 64 IRFs in rural areas. There are 670 non-profit IRFs. Among these, there are 564 urban IRFs
and 106 rural IRFs. There are 69 government-owned IRFs. Among these,
there are 57 urban IRFs and 12 rural

IRFs.

The remaining four parts of Table 13 show IRFs grouped by their geographic location within a region, by teaching status, and by DSH PP. First, IRFs located in urban areas are categorized for their location within a particular one of the nine Census geographic regions. Second, IRFs located in rural areas are categorized for their location within a particular one of the nine Census geographic regions. In some cases, especially for rural IRFs located in the New England, Mountain, and Pacific regions, the number of IRFs represented is small. IRFs are then grouped by teaching status, including non-teaching IRFs, IRFs with an intern and resident to average daily census (ADC) ratio less than 10 percent, IRFs with an intern and resident to ADC ratio greater than or equal to 10 percent and less than or equal to 19 percent, and IRFs with an intern and resident to ADC ratio greater than 19 percent. Finally, IRFs are grouped by DSH PP, including IRFs with zero DSH PP, IRFs with a DSH PP less than 5 percent, IRFs with a DSH PP between 5 and less than 10 percent,
IRFs with a DSH PP between 10 and 20 percent, and IRFs with a DSH PP greater than 20 percent.

The estimated impacts of each policy described in this proposed rule to the facility categories listed above are
shown in the columns of Table 13. The description of each column is as
follows:

• Column (1) shows the facility classification categories described
above. • Column (2) shows the number of IRFs in each category in our FY 2013 analysis file.

• Column (3) shows the number of cases in each category in our FY 2013 analysis file.

• Column (4) shows the estimated effect of the proposed adjustment to the
outlier threshold amount.

• Column (5) shows the estimated effect of the proposed update to the IRF PPS payment rates, which includes a productivity adjustment in accordance with section 1886(j)(3)(C)(ii)(I) of the Act, and a 0.2 percentage point
reduction in accordance with sections 1886(j)(3)(C)(ii)(II) and (D)(iv) of the Act.

• Column (6) shows the estimated effect of the proposed update to the IRF labor-related share and wage index, in a budget-neutral manner.

• Column (7) shows the estimated effect of the proposed update to the CMG relative weights and average length of stay values, in a budget-neutral

manner.

• Column (8) compares our estimates of the payments per discharge, incorporating all of the proposed policies reflected in this proposed rule
for FY 2015 to our estimates of payments per discharge in FY 2014.

The average estimated increase for all IRFs is approximately 2.2 percent. This
estimated net increase includes the effects of the proposed RPL market
basket increase factor for FY 2015 of 2.7 percent, reduced by a productivity adjustment of 0.4 percentage point in
accordance with section 1886(j)(3)(C)(ii)(I) of the Act, and further reduced by 0.2 percentage point in
accordance with sections 1886(j)(3)(C)(ii)(II) and (D)(iv) of the Act. It also includes the approximate 0.1 percent overall estimated increase in estimated IRF outlier payments from the proposed update to the outlier threshold amount. Since we are making the proposed updates to the IRF wage index and the CMG relative weights in a budget-neutral manner, they will not be expected to affect total estimated IRF payments in the aggregate. However, as described in more detail in each section, they will be expected to affect the estimated distribution of payments among providers.


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TABLE 

### 13—IRF I MPACT 

### T ABLE FOR 

### FY 2015 (C OLUMNS 

### 4–9 IN 

### %)

Facility classification Number of IRFs Number of

cases Outlier Adjustedmarket basket increase factor for FY
2015 1 FY 2015 CBSA wage indexand laborshare CMG Total percent change

(1) (2) (3) (4) (5) (6) (7) (9)

Total ......................................................... 1,140 387,651 0.1 2.1 0.0 0.0 2.2 Urban unit ................................................ 731 178,428 0.2 2.1 0.1 0.0 2.3 Rural unit .................................................. 165 26,350 0.2 2.1

¥ 0.1 0.1 2.3 Urban hospital .......................................... 227 177,235 0.0 2.1 0.0 0.0 2.0 Rural hospital ........................................... 17 5,638 0.0 2.1

¥ 0.2 0.0 2.0 Urban For-Profit ....................................... 337 165,022 0.1 2.1

¥ 0.2 0.0 2.0
Rural For-Profit ........................................ 64 12,457 0.1 2.1

¥ 0.2 0.1 2.1 Urban Non-Profit ...................................... 564 175,036 0.1 2.1 0.2 0.0 2.4 Rural Non-Profit ....................................... 106 17,626 0.2 2.1 0.0 0.1 2.4
Urban Government .................................. 57 15,605 0.1 2.1

¥ 0.1 0.0 2.2
Rural Government .................................... 12 1,905 0.2 2.1

¥ 0.6 0.1 1.9 Urban ....................................................... 958 355,663 0.1 2.1 0.0 0.0 2.2 Rural ......................................................... 182 31,988 0.1 2.1

¥ 0.1 0.1 2.3 Urban by region: Urban New England ......................... 30 16,895 0.1 2.1 0.4

¥ 0.1 2.5 Urban Middle Atlantic ....................... 141 58,236 0.1 2.1 0.8 0.0 3.0 Urban South Atlantic ......................... 138 64,527 0.1 2.1

¥ 0.1

¥ 0.1 2.0 Urban East North Central ................. 180 53,150 0.1 2.1

¥ 0.2 0.0 2.0
Urban East South Central ................ 50 24,427 0.1 2.1

¥ 0.5

¥ 0.1 1.6
Urban West North Central ................ 73 18,609 0.1 2.1

¥ 0.4 0.0 1.8 Urban West South Central ............... 173 70,843 0.1 2.1

¥ 0.3 0.1 2.0
Urban Mountain ................................ 72 23,013 0.1 2.1

¥ 0.7 0.0 1.5 Urban Pacific .................................... 101 25,963 0.2 2.1 0.6 0.0 2.9 Rural by region: Rural New England ........................... 5 1,263 0.1 2.1 0.0

¥ 0.1 2.1
Rural Middle Atlantic ......................... 15 2,550 0.1 2.1 0.5 0.2 2.9
Rural South Atlantic .......................... 24 6,009 0.1 2.1

¥ 0.1 0.1 2.2
Rural East North Central .................. 31 5,224 0.1 2.1

¥ 0.2 0.1 2.1
Rural East South Central .................. 21 3,493 0.1 2.1

¥ 0.2 0.1 2.2
Rural West North Central ................. 27 3,451 0.2 2.1 0.5 0.1 3.0
Rural West South Central ................. 48 8,949 0.1 2.1

¥ 0.4 0.2 1.9
Rural Mountain ................................. 7 667 0.3 2.1

¥ 0.1 0.0 2.4
Rural Pacific ...................................... 4 382 0.4 2.1 1.2 0.0 3.8 Teaching Status: Non-teaching ..................................... 1,030 341,633 0.1 2.1 0.0 0.0 2.2
Resident to ADC less than 10% ....... 58 30,509 0.1 2.1 0.3

¥ 0.1 2.4
Resident to ADC 10%-19% .............. 40 14,166 0.2 2.1

¥ 0.1

¥ 0.1 2.1 Resident to ADC greater than 19% .. 12 1,343 0.1 2.1 0.1 0.0 2.2Disproportionate Share Patient Percentage (DSH PP):

DSH PP = 0% ................................... 42 7,793 0.2 2.1 0.1 0.1 2.5 DSH PP less than 5% ...................... 178 61,772 0.1 2.1 0.1 0.1 2.4 DSH PP 5%–10% ............................. 337 134,924 0.1 2.1

¥ 0.2 0.0 2.1 DSH PP 10%–20% ........................... 359 123,942 0.1 2.1 0.1 0.0 2.3 DSH PP greater than 20% ............... 224 59,220 0.1 2.1

¥ 0.1

¥ 0.1 2.1

1 This column reflects the impact of the RPL market basket increase factor for FY 2015 (2.7 percent), reduced by a 0.4 percentage point reduction for the productivity adjustment as required by section 1886(j)(3)(C)(ii)(I) of the Act, and reduced by 0.2 percentage points in accordance with paragraphs 1886(j)(3)(C) and (D) of the Act.

3. Impact of the Proposed Update to the

Outlier Threshold Amount

The estimated effects of the proposed update to the outlier threshold adjustment are presented in column 4 of

Table 13. In the FY 2014 IRF PPS final rule (78 FR 47860), we used FY 2012 IRF claims data (the best, most complete data available at that time) to set the

outlier threshold amount for FY 2014 so that estimated outlier payments would equal 3 percent of total estimated payments for FY 2014. For this proposed rule, we are updating our analysis using FY 2013 IRF claims data and, based on this updated analysis, we estimate that IRF outlier payments as a percentage of total estimated IRF payments are 2.9 percent in FY 2014. Thus, we propose to adjust
the outlier threshold amount in this proposed rule to set total estimated outlier payments equal to 3 percent of total estimated payments in FY 2015. The estimated change in total IRF payments for FY 2015, therefore, includes an approximate 0.1 percent increase in payments because the estimated outlier portion of total payments is estimated to increase from approximately 2.9 percent to 3 percent.

The impact of this proposed outlier adjustment update (as shown in column 4 of Table 13) is to increase estimated overall payments to IRFs by about 0.1 percent. We estimate the largest increase in payments from the update to the
outlier threshold amount to be 0.4 percent for rural IRFs in the Pacific region. We do not estimate that any group of IRFs would experience a


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decrease in payments from this proposed update.

4. Impact of the Proposed Market Basket Update to the IRF PPS Payment Rates

The estimated effects of the proposed market basket update to the IRF PPS payment rates are presented in column 5 of Table 13. In the aggregate the proposed update would result in a net 2.1 percent increase in overall estimated payments to IRFs. This net increase
reflects the estimated RPL market basket
increase factor for FY 2014 of 2.7 percent, reduced by the 0.2 percentage point in accordance with sections 1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(iv) of the Act, and further reduced by a 0.4 percentage point productivity adjustment as required by section 1886(j)(3)(C)(ii)(I) of the Act.

5. Impact of the Proposed CBSA Wage
Index and Labor-Related Share

In column 6 of Table 13, we presentthe effects of the proposed budgetneutral update of the wage index and labor-related share. The proposed changes to the wage index and the
labor-related share are discussed together because the wage index is applied to the labor-related share portion of payments, so the proposed changes in the two have a combined effect on payments to providers. As
discussed in section V.D. of this proposed rule, we propose to increase
the labor-related share from 69.494 percent in FY 2014 to 69.538 percent in

FY 2015.

In the aggregate, since these proposedupdates to the wage index and the laborrelated share are applied in a budgetneutral manner as required under section 1886(j)(6) of the Act, we do not estimate that these proposed updates would affect overall estimated payments to IRFs. However, we estimate that these proposed updates would have small distributional effects. For example, we estimate the largest increase in payments from the proposed update to the CBSA wage index and labor-related share of 1.2 percent for rural IRFs in the Pacific region. We estimate the largest decrease in payments from the update to the CBSA wage index and labor-related share to be a 0.7 percent decrease for
urban IRFs in the Moumethodntain region.

6. Impact of the Proposed Update to the CMG Relative Weights and Average Length of Stay Values.

In column 7 of Table 13, we presentthe effects of the proposed budgetneutral update of the CMG relative weights and average length of stay values. In the aggregate, we do not estimate that these updates will affect overall estimated payments of IRFs. However, we do expect these updates to

have small distributional effects. The largest estimated increase in payments is a 0.2 percent increase in rural Middle

Atlantic and rural West South Central IRFs. Urban areas in New England, South Atlantic, and East South Central and rural New England are estimated to experiences a 0.1 percent decrease in payments due to the CMG relative weights change.

7. Effects of the Proposed Changes to the Presumptive Compliance Method for Compliance Review Periods Beginning on or After October 1, 2014

As discussed in section VII. of this proposed rule, we are proposing some additional changes to the presumptive compliance method for compliance review periods beginning on or after October 1, 2014. We do not estimate that the proposed removal of the ‘‘amputation status’’ codes will have any significant financial effects on IRFs, as our data analysis indicates that IRFs are almost never using these codes. Similarly, we do not estimate that the proposed exclusion of the non-specific Etiologic Diagnosis codes from the IGCs will have any significant financial effects on IRFs, as we estimate that IRFs will be able to switch to using the more specific codes that are available for the Etiologic Diagnoses instead.

We do, however, believe that there

could be a financial effect on IRFs from the proposed removal of the Unilateral Upper Extremity Amputations and Arthritis IGCs from the presumptive compliance method, as the removal of these IGCs from presumptively counting toward meeting the 60 percent rule compliance threshold could result in more IRFs failing to meet the requirements solely on the basis of the presumptive compliance method and being required to be evaluated using the

medical review method. We estimate

that these effects would be concentrated in approximately 10 percent of IRFs that admit a high number of patients with Unilateral Upper Extremity Amputation and Arthritis conditions, and that the effects would vary substantially among

IRFs. As discussed in section IX. of this proposed rule, we are proposing an

additional IRF–PAI item for arthritis cases, the purpose of which is to mitigate some of the financial effects for these IRFs while still allowing Medicare to ensure that the regulatory requirements are being met. 8. Effects of New Proposed Therapy
Information Section

Because the type, amount, frequency, and duration of therapy provided in
IRFs is documented in detail in the IRF medical records as part of the requirements for meeting Medicare’s conditions of participation and IRF coverage requirements, we estimate that the additional costs incurred by IRFs for FY 2016 for the new proposed Therapy
Information Section of the IRF–PAI
would be based on the 4 additional minutes per IRF–PAI form to transfer
the information from the IRF medical
record to the IRF–PAI form. We estimate
that this would result in an additional cost of $1.2 million to all IRFs for FY

2016.

9. Effects of Updates to the IRF QRP

As discussed in section XI.A. of this proposed rule and in accordance with section 1886(j)(7) of the Act, we will implement a 2 percentage point
reduction in the FY 2015 increase factor for IRFs that have failed to report the required quality reporting data to us during the most recent IRF quality reporting period. In section XI.A of this proposed rule, we discuss how the 2 percentage point reduction will be applied. Only a few IRFs received the 2 percentage point reduction in the FY 2014 increase factor for failure to report the required quality reporting data last year, and we would anticipate that even
fewer IRFs will receive the reduction for FY 2015 as they are now more familiar with the IRF QRP reporting requirements.

In sections XI.K and XI.L of this proposed rule, we discuss our proposal to adopt a new data completion threshold as well as a new data accuracy validation policy. While we cannot
estimate the increase in the number of IRFs that will not meet our proposed requirements at this time, we believe that these proposal, if finalized, may
increase the number of IRFs that receive a 2 percent point reduction to their FY
annual increase factor for FY 2016 and beyond. Thus, we estimate that this policy will increase impact on overall IRF payments, by increasing the rate of non-compliance by an estimated 5 percent, for FY 2016 and beyond, decreasing the number of IRF providers
that will receive their full annual increase factor for FY 2016 and beyond.

In this FY 2015 IRF PPS rule, we proposed to adopt two new quality measures (MRSA and CDI), as well as a new data accuracy validation policy. Together, we estimate that these proposals will increase the cost to all IRF providers by $852,238 annually for


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the cost to each IRF provider by $747.57 annually. This is average increase of approximately 4.43 percent to all IRF providers over the FY 2014 burden. While we also propose to adopt a data completion threshold policy, this policy, if finalized, will have no associated cost burden beyond that discussed in the first paragraph of this section (XIV.C.9).

We intend to closely monitor the effects of this new quality reporting program on IRF providers and help perpetuate successful reporting outcomes through ongoing stakeholder education, national trainings, CMS Open Door Forums, and general and technical help desks.

D. Alternatives Considered

As stated in section XIV.B. of this proposed rule, we estimate that the proposed changes discussed in the rule would result in a significant economic impact on IRFs. The overall impact on
all IRFs is an estimated increase in FY 2015 payments of $160 million (2.2 percent), relative to FY 2014. The following is a discussion of the
alternatives considered for the IRF PPS updates contained in this proposed rule.

Section 1886(j)(3)(C) of the Act requires the Secretary to update the IRF PPS payment rates by an increase factor that reflects changes over time in the prices of an appropriate mix of goods
and services included in the covered IRF services. Thus, we did not consider alternatives to updating payments using
the estimated RPL market basket increase factor for FY 2015. However, as noted previously in this proposed rule, section 1886(j)(3)(C)(ii)(I) of the Act requires the Secretary to apply a productivity adjustment to the market basket increase factor for FY 2015, and sections 1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(iv) of the Act require the Secretary to apply a 0.2 percentage point reduction to the market basket increase factor for FY 2015. Thus, in accordance with section 1886(j)(3)(C) of the Act, we proposed to update IRF federal prospective payments in this proposed rule by 2.1 percent (which equals the 2.7 percent estimated RPL
market basket increase factor for FY 2015 reduced by 0.2 percentage points, and further reduced by a 0.4 percentage point productivity adjustment as required by section 1886(j)(3)(C)(ii)(I) of the Act).

We considered maintaining the existing CMG relative weights and average length of stay values for FY 2015. However, in light of recently
available data and our desire to ensure that the CMG relative weights and average length of stay values are as reflective as possible of recent changes in IRF utilization and case mix, we believe that it is appropriate to propose to update the CMG relative weights and average length of stay values at this time to ensure that IRF PPS payments continue to reflect as accurately as possible the current costs of care in

IRFs.

We considered updating facility-level adjustment factors for FY 2015. However, as discussed in more detail in section IV.B. of this proposed rule, we believe that freezing the facility-level adjustments at FY 2014 levels for FY 2015 and all subsequent years (unless and until the data indicate that they need to be further updated) will allow us an opportunity to monitor the effects of the substantial changes to the adjustment factors for FY 2014, and will allow IRFs time to adjust to last year’s changes.

We considered maintaining the existing outlier threshold amount for FY 2015. However, analysis of updated FY
2013 data indicates that estimated outlier payments would be lower than 3 percent of total estimated payments for FY 2015, by approximately 0.1 percent, unless we updated the outlier threshold amount. Consequently, we propose adjusting the outlier threshold amount in this proposed rule to reflect a 0.1 percent increase thereby setting the total outlier payments equal to 3 percent, instead of 2.9 percent, of aggregate estimated payments in FY 2015.

We considered not proposing further changes to the presumptive compliance method in this proposed rule. However, to be consistent with the changes to the presumptive compliance method that we implemented in the FY 2014 IRF PPS final rule, and to correct some inadvertent omissions in last year’s final rule, we believe it is important to propose further changes in this proposed rule.

We considered not proposing the new Therapy Information Section on the IRF–PAI. However, we believe that it is vitally important for Medicare to better understand the ways in which therapy services are currently being provided in IRFs and, most importantly, what we are paying for with the Medicare spending on IRF services. We encourage comments on this proposed approach.

E. Accounting Statement

As required by OMB Circular A–4 (available at http:// www.whitehouse.gov/sites/default/files/
omb/assets/omb/circulars/a004/a4.pdf ), in Table 14, we have prepared an accounting statement showing the classification of the expenditures associated with the provisions of this proposed rule. Table 14 provides our
best estimate of the increase in Medicare payments under the IRF PPS as a result of the proposed updates presented in this proposed rule based on the data for 1,140 IRFs in our database. In addition, Table 14 presents the costs associated with the proposed new IRF quality reporting program and therapy reporting requirements for FY 2015.



### TABLE 

### 14—A CCOUNTING 

### S TATEMENT 

### : C LASSIFICATION OF 

### E STIMATED 

### E XPENDITURES

**Change in Estimated Transfers from FY 2014 IRF PPS to FY 2015 IRF PPS**

Category Transfers

Annualized Monetized Transfers .............................................................. $160 million.
From Whom to Whom? ............................................................................ Federal Government to IRF Medicare Providers.

**FY 2015 Cost to Updating the Quality Reporting Program:**

Category Costs

Cost for IRFs to Submit Data for the Quality Reporting Program ........... $852,238.

**FY 2016 Cost for Therapy Data Collection**

Category Costs

Cost for IRFs to Submit Therapy Data $1.2 million.


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F. Conclusion

Overall, the estimated payments per discharge for IRFs in FY 2015 are projected to increase by 2.2 percent, compared with the estimated payments in FY 2014, as reflected in column 9 of Table 13. IRF payments per discharge are estimated to increase by 2.2 percent in urban areas and by 2.3 percent in rural areas, compared with estimated FY 2014 payments. Payments per discharge
to rehabilitation units are estimated to increase 2.3 percent in urban and rural areas. Payments per discharge to freestanding rehabilitation hospitals are estimated to increase 2.0 percent in
urban and rural areas.

Overall, IRFs are estimated to experience a net increase in payments as a result of the proposed policies in proposed rule. The largest payment increase is estimated to be a 3.8 percent
increase for rural IRFs located in the Pacific region.

Authority: Catalog of Federal Domestic Assistance Program No. 93.773, Medicare— Hospital Insurance; and Program No. 93.774, Medicare—Supplementary Medical Insurance Program.

Dated: April 16, 2014.
Marilyn Tavenner,
Administrator, Centers for Medicare &
Medicaid Services.

Approved: April 17, 2014.

Kathleen Sebelius,

Secretary.

[FR Doc. 2014–10321 Filed 5–1–14; 4:15 pm]

**BILLING CODE 4120–01–P**