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 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
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 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 26309 

(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 Rates 

VI. Proposed Update to Payments for HighCost Outliers under the IRF PPS 

A. Proposed Update to the Outlier 

Threshold Amount for FY 2015 

B. 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 Amount 

and 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 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
26310 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 

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 Facility 

IRF–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 Nurse 

RPL 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 rates 

were 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/


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 26311 

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 IRF 

payments, 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 (the 

CMG 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 ‘‘New 

England 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 or 

after 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 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
26312 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 

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. 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 26313 

C. Operational Overview of the Current 

IRF PPS 

As described in the FY 2002 IRF PPS 

final rule, upon the admission and 

discharge 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 for 

the 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. 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
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 CMG 

relative 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 and 

Average 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—PROPOSED RELATIVE WEIGHTS AND AVERAGE LENGTH OF STAY VALUES FOR CASE-MIX GROUPS

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 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 26315 

TABLE 1—PROPOSED RELATIVE WEIGHTS AND AVERAGE LENGTH OF STAY VALUES FOR CASE-MIX GROUPS—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 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
26316 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 

TABLE 1—PROPOSED RELATIVE WEIGHTS AND AVERAGE LENGTH OF STAY VALUES FOR CASE-MIX GROUPS—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 15 

1301 ....... 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 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 26317 

TABLE 1—PROPOSED RELATIVE WEIGHTS AND AVERAGE LENGTH OF STAY VALUES FOR CASE-MIX GROUPS—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 trauma 

without brain or spinal cord injury 

M>39.25.

1.0417 0.9291 0.8579 0.7871 11 11 10 10 

1702 ....... Major multiple trauma 

without 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 trauma 

without 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 trauma 

without 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 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
26318 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 

TABLE 1—PROPOSED RELATIVE WEIGHTS AND AVERAGE LENGTH OF STAY VALUES FOR CASE-MIX GROUPS—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—DISTRIBUTIONAL EFFECTS

OF THE PROPOSED CHANGES TO

THE CMG RELATIVE WEIGHTS

(FY 2014 Values Compared with FY 2015 

Values) 

Percentage 

change 

Number of 

cases 

affected 

Percentage 

of cases 

affected 

Increased by 

15% or more 0 0.0 

Increased 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 best 

methodology for calculating the facilitylevel adjustment factors. We based this 

decision, in part, on comments we 

received about the financial hardships 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 26319 

that the proposed updates would create 

for facilities with teaching programs and 

a 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 costs 

between 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. 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
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 cost 

weights 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 at 

http://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 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 26321 

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 in 

Table 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—PROPOSED FY 2015 IRF 

RPL LABOR-RELATED SHARE RELATIVE IMPORTANCE

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 anticipate 

using 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 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
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 conversion 

factor 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—CALCULATIONS TO DETERMINE THE PROPOSED FY 2015 

STANDARD PAYMENT CONVERSION

FACTOR

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 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 .................... × 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—PROPOSED FY 2015 PAYMENT RATES

CMG Payment rate 

Tier 1 

Payment rate 

Tier 2 

Payment rate 

Tier 3 

Payment rate no 

comorbidity 

0101 ................................................................................................. $11,935.41 $10,892.20 $9,906.69 $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 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 26323 

TABLE 5—PROPOSED FY 2015 PAYMENT RATES—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 8,541.56 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 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
26324 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 

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 (if 

applicable) to the wage, rural, and LIPadjusted federal prospective payment 

rates. Table 6 illustrates the components 

of the adjusted payment calculation. 

TABLE 6—EXAMPLE OF COMPUTING THE IRF FY 2015 FEDERAL PROSPECTIVE PAYMENT

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 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 26325 

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 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
26326 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 

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 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 26327 

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, we 

propose 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 CODES PROPOSED TO BE REMOVED FROM

‘‘ICD–9–CM CODES THAT MEET

PRESUMPTIVE COMPLIANCE CRITERIA’’ 

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). 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
26328 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 

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 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 26329 

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 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
26330 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 

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 different 

activities. 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 of 

minutes 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 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 26331 

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, result 

in 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 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
26332 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 

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 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 26333 

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 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
26334 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 

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 plans 

to 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 both 

residents 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 Unplanned 

Readmission 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 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 26335 

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 Given 

the 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 Given 

the 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 Given 

the 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 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
26336 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 

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—QUALITY MEASURES FINALIZED IN THE FY 2014 IRF PPS FINAL RULE AFFECTING THE FY 2016 AND 2017 

ADJUSTMENTS TO THE IRF ANNUAL INCREASE FACTORS AND SUBSEQUENT YEAR INCREASE FACTORS

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 NQF-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 consensus 

organization, 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 suitability 

for 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 07MYP2

pmangrum on DSK3VPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 26337 

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

infection.html. 

3Centers 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. 

4Centers for Disease Control and Prevention. 

People at Risk of Acquiring MRSA Infections. 

Available at http://www.cdc.gov/mrsa/index.html. 

5Centers 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. 

6Rabinowitz 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. 

7Bernard 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. 

8National 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. 

9McDonald 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. 10Centers 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. 12Centers for Disease Control and Prevention. 

Making Health Care Safer: Stopping C. difficile 

Infections. Available at: http://www.cdc.gov/

VitalSigns/HAI/index.html. 

13Centers 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. 

14Centers 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. 

15Centers for Disease Control and Prevention. 

Making Health Care Safer: Stopping C. difficile 

Infections. Available at: http://www.cdc.gov/

VitalSigns/HAI/index.html. 

16Aron 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 proposed 

NHSN 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 proposed 

NHSN 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, an 

estimated 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 was 

developed 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, 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
26338 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 

18Centers 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. 

19Marciniak 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. 

20Bernard 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. 

21Centers 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 infections 

and 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 proposed 

NHSN 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 proposed 

NHSN Facility-Wide Inpatient HospitalOnset CDI Outcome Measure (NQF 

#1717) can be found at http://

www.qualityforum.org/QPS/1717 and 

http://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—FUTURE MEASURES AND MEASURE TOPICS UNDER CONSIDERATION FOR PROPOSAL FOR THE IRF QUALITY

REPORTING PROGRAM

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’ 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 26339 

22Reistetter TA, Karmarkar AM, Graham JE, et al. 

Regional variation in stroke rehabilitation 

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

2014. 

23O’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. 

24O’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—PROPOSED TIMELINES FOR SUBMISSION OF IRF QRP QUALITY DATA USING CDC/NSHN FOR FY 2017 ADJUSTMENTS TO THE IRF PPS ANNUAL INCREASE FACTOR: NATIONAL HEALTH SAFETY NETWORK (NHSN) FACILITYWIDE 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)] 

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—SUMMARY OF IRF QRP MEASURES AFFECTING THE FY 2017 ADJUSTMENTS TO THE IRF PPS ANNUAL

INCREASE FACTOR AND SUBSEQUENT YEAR INCREASE FACTORS

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+


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
26340 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 

TABLE 11—SUMMARY OF IRF QRP MEASURES AFFECTING THE FY 2017 ADJUSTMENTS TO THE IRF PPS ANNUAL

INCREASE FACTOR AND SUBSEQUENT YEAR INCREASE FACTORS—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 Factors 

• 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 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 26341 

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 at 

http://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 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
26342 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 

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 for 

payment 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 quality 

measure 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 07MYP2

pmangrum on DSK3VPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 26343 

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 at 

http://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 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
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 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 26345 

25The 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 of 

patient 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 Incentive 

Programs, 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 the 

preceding 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—CALCULATIONS TO DETERMINE THE ADJUSTED FY 2015 

STANDARD PAYMENT CONVERSION

FACTOR FOR IRFS THAT FAILED TO

MEET THE QUALITY REPORTING REQUIREMENT

Explanation for 

adjustment Calculations 

Standard Payment Conversion Factor for FY 

2014 ............................ $14,846 

TABLE 12—CALCULATIONS TO DETERMINE THE ADJUSTED FY 2015 

STANDARD PAYMENT CONVERSION

FACTOR FOR IRFS THAT FAILED TO

MEET THE QUALITY REPORTING REQUIREMENT—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 0.2 

percentage point in accordance with sections 

1886(j)(3)(C) and (D) 

of the Act and further 

reduced by 2 percentage points for IRFs 

that failed to meet the 

quality 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 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
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 year3 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 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 26347 

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 Given 

the 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-Wide 

Inpatient 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 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
26348 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 

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 Act 

requires 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 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 26349 

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, 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
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. 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 26351 

TABLE 13—IRF IMPACT TABLE FOR FY 2015 (COLUMNS 4–9 IN %) 

Facility classification Number of 

IRFs 

Number of 

cases Outlier 

Adjusted 

market basket increase 

factor for FY 

2015 1

FY 2015 

CBSA wage 

index 

and 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 2.2 

Disproportionate 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 

1This 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 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
26352 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 

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 present 

the 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 proposed 

updates 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 present 

the 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 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 26353 

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—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED EXPENDITURES

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. 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2
26354 Federal Register / Vol. 79, No. 88 / Wednesday, May 7, 2014 / Proposed Rules 

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 


pmangrum on DSK3VPTVN1PROD with PROPOSALS2