Vol. 78 Tuesday, 

No. 151 August 6, 2013 

Part III 

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 2014; Rules 


tkelley on DSK3SPTVN1PROD with RULES2
47860 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 412 

[CMS–1448–F] 

RIN 0938–AR66 

Medicare Program; Inpatient 

Rehabilitation Facility Prospective 

Payment System for Federal Fiscal 

Year 2014 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Final rule. 

SUMMARY: This final rule updates the 

prospective payment rates for inpatient 

rehabilitation facilities (IRFs) for federal 

fiscal year (FY) 2014 (for discharges 

occurring on or after October 1, 2013 

and on or before September 30, 2014) as 

required by the statute. This final rule 

also revised the list of diagnosis codes 

that may be counted toward an IRF’s 

‘‘60 percent rule’’ compliance 

calculation to determine ‘‘presumptive 

compliance,’’ update the IRF facilitylevel adjustment factors using an 

enhanced estimation methodology, 

revise sections of the Inpatient 

Rehabilitation Facility-Patient 

Assessment Instrument, revise 

requirements for acute care hospitals 

that have IRF units, clarify the IRF 

regulation text regarding limitation of 

review, update references to previously 

changed sections in the regulations text, 

and revise and update quality measures 

and reporting requirements under the 

IRF quality reporting program. 

DATES: Effective Dates: The regulatory 

amendments in this rule are effective 

October 1, 2013, except for the 

amendment to § 412.25 which is 

effective October 1, 2014. 

Applicability Dates: The revisions to 

the list of diagnosis codes that are used 

to determine presumptive compliance 

under the ‘‘60 percent rule’’ are 

applicable for compliance review 

periods beginning on or after October 1, 

2014. The updated IRF prospective 

payment rates are applicable for IRF 

discharges occurring on or after October 

1, 2013 and on or before September 30, 

2014 (FY 2014). The changes to the 

Inpatient Rehabilitation Facility-Patient 

Assessment Instrument, the 

amendments to § 412.25, and the 

revised and updated quality measures 

and reporting requirements under the 

IRF quality reporting program are 

applicable for IRF discharges occurring 

on or after October 1, 2014. 

FOR FURTHER INFORMATION CONTACT: 

Gwendolyn Johnson, (410) 786–6954, 

for general information. 

Caroline Gallaher, (410) 786–8705, for 

information about the quality reporting 

program. 

Susanne Seagrave, (410) 786–0044 or 

Kadie Thomas, (410) 786–0468, 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 final rule are available 

through the Internet on the CMS Web 

site at http://www.cms.hhs.gov/ 

Medicare/Medicare-Fee-for-ServicePayment/InpatientRehabFacPPS/. 

Executive Summary 

A. Purpose 

This final rule updates the payment 

rates for inpatient rehabilitation 

facilities (IRFs) for federal fiscal year 

(FY) 2014 (that is, for discharges 

occurring on or after October 1, 2013 

and on or before September 30, 2014) 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 final rule, we use the methods 

described in the July 30, 2012 FY 2013 

IRF PPS notice (77 FR 44618) to update 

the federal prospective payment rates 

for FY 2014 using updated FY 2012 IRF 

claims and the most recent available IRF 

cost report data. We are also revising the 

list of diagnosis codes that are used to 

determine presumptive compliance 

under the ‘‘60 percent rule,’’ updating 

the IRF facility-level adjustment factors 

using an enhanced estimation 

methodology, revising sections of the 

Inpatient Rehabilitation Facility-Patient 

Assessment Instrument, revising 

requirements for acute care hospitals 

that have IRF units, clarifying the IRF 

regulation text regarding limitation of 

review, updating references to 

previously changed sections in the 

regulations text, and revising and 

updating quality measures and reporting 

requirements under the IRF quality 

reporting program. 

C. Summary of Costs, Benefits and 

Transfers 

Provision 

description Transfers 

FY 2014 IRF PPS payment rate update ............ The overall economic impact of this final rule is an estimated $170 million in increased payments from the Federal government to IRFs during FY 2014. 

Refinements to the presumptive compliance 

method under the ‘60 percent rule’.

The estimated FY 2015 impact of the refinements to the presumptive compliance method reflects a decrease of payments between $0 to $520 million, depending on the IRFs’ behavioral responses to the changes, with $520 million representing the upper bound. 

Provision description Costs 

New quality reporting program requirements ..... The total costs in FY 2015 for IRFs as a result of the new quality reporting requirements are 

estimated to be $9.2 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 

A. Proposed Updates to the IRF Federal 

Prospective Payment Rates for Federal 

Fiscal Year (FY) 2014 

B. Proposed Revisions to Existing 

Regulation Text 


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III. Analysis and Responses to Public 

Comments 

IV. Update to the Case-Mix Group (CMG) 

Relative Weights and Average Length of 

Stay Values for FY 2014 

V. Updates to the Facility-Level Adjustment 

Factors for FY 2014 

A. Background on Facility-Level 

Adjustments 

B. Updates to the IRF Facility-Level 

Adjustment Factors 

C. Budget Neutrality Methodology for the 

Updates to the IRF Facility-Level 

Adjustment Factors 

VI. FY 2014 IRF PPS Federal Prospective 

Payment Rates 

A. Market Basket Increase Factor, 

Productivity Adjustment, and Other 

Adjustment for FY 2014 

B. Secretary’s Final Recommendation 

C. Labor-Related Share for FY 2014 

D. Wage Adjustment 

E. Description of the IRF Standard 

Conversion Factor and Payment Rates for 

FY 2014 

F. Example of the Methodology for 

Adjusting the Federal Prospective 

Payment Rates 

VII. Update to Payments for High-Cost 

Outliers Under the IRF PPS 

A. Update to the Outlier Threshold 

Amount for FY 2014 

B. Update to the IRF Cost-to-Charge Ratio 

Ceiling and Urban/Rural Averages 

VIII. Refinements to the Presumptive 

Compliance Methodology 

A. Background on the Compliance 

Percentage 

B. Changes to the ICD–9–CM Codes That 

Are Used To Determine Presumptive 

Compliance 

IX. Non-Quality Related Revisions to IRF– 

PAI Sections 

A. Updates 

B. Additions 

C. Deletions 

D. Changes 

X. Technical Corrections to the Regulations 

at § 412.130 

XI. Revisions to the Conditions of Payment 

for IRF Units Under the IRF PPS 

XII. Clarification of the Regulations at 

§ 412.630 

XIII. Revision to the Regulations at § 412.29 

XIV. Revisions and Updates to the Quality 

Reporting Program for IRFs 

A. Background and Statutory Authority 

B. Quality Measures Previously Finalized 

and Currently in Use for the IRF Quality 

Reporting Program 

C. New IRF QRP Quality Measures 

Affecting the FY 2016 and FY 2017 IRF 

PPS Annual Increase Factor, and 

Subsequent Year Increase Factors 

D. Changes to the IRF–PAI That Are 

Related to the IRF Quality Reporting 

Program 

E. Change in Data Collection and 

Submission Periods for Future Program 

Years 

F. Reconsideration and Appeals Process 

G. Policy for Granting of a Waiver of the 

IRF QRP Data Submission Requirements 

in Case of Disaster or Extraordinary 

Circumstances 

H. Public Display of Data Quality Measures 

for the IRF QRP Program 

I. Method for Applying the Reduction to 

the FY 2014 IRF Increase Factor for IRFs 

That Fail To Meet the Quality Reporting 

Requirements 

XV. Miscellaneous Comments 

XVI. Provisions of the Final Regulations 

A. Payment Provision Changes 

B. Revisions to Existing Regulation Text 

XVII. Collection of Information Requirements 

A. ICRs Regarding IRF QRP 

B. ICRs Regarding Non-Quality Related 

Changes to the IRF–PAI 

XVIII. Regulatory Impact Analysis 

A. Statement of Need 

B. Overall Impacts 

C. Detailed Economic Analysis 

D. Alternatives Considered 

E. Accounting Statement 

F. Conclusion 

Regulation Text 

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 (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 IRF’s 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 IRF 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. The Web site is: http:// 

www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ 

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 


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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 final 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, and 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 final 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 

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. 


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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, 

November 16, 2010) 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 final 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 July 30, 2012 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 July 30, 2012 FY 2013 

IRF PPS notice (77 FR 44618). 

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 productivity adjustment for 

FY 2014 is discussed in section VI.A. of 

this final rule. Section 3401(d) of the 

Affordable Care Act requires an 

additional 0.3 percentage point 

adjustment to the IRF increase factor for 

FY 2014, as discussed in section VI.A. 

of this final 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 new 

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 will require 

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). Under section 

1886(j)(7)(D)(iii) of the Act, the 

Secretary is required to publish the 

measures that will be used in FY 2014 

no later than October 1, 2012. 

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. 

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- 

digit CMG number. The first digit is an 

alpha-character that indicates the 

comorbidity tier. The last 4 digits 


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47864 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 

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-digit 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, November 25, 2005). 

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 

healthcare 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 the FY 2014 IRF PPS proposed rule 

(78 FR 26880), we proposed to update 

the IRF Federal prospective payment 

rates, to revise the list of eligible 

International Classification of Diseases, 

Ninth Revision, Clinical Modification 

(ICD–9–CM) diagnosis codes that are 

used to determine presumptive 

compliance under the ‘‘60 percent rule,’’ 

to update the IRF facility-level 

adjustment factors, to revise the 

Inpatient Rehabilitation Facility-Patient 

Assessment Instrument (IRF–PAI), to 

revise requirements for acute care 

hospitals that have IRF units, clarify the 

IRF regulation text regarding limitation 

of review, and to revise and update 

quality measures and reporting 

requirements under the quality 

reporting program for IRFs. We also 

proposed to revise existing regulations 

text for the purpose of updating and 

providing greater clarity. These 

proposals were as follows: 

A. Proposed Updates to the IRF Federal 

Prospective Payment Rates for Federal 

Fiscal Year (FY) 2014 

The proposed updates to the IRF 

federal prospective payment rates for FY 

2014 were as follows: 

• Update the FY 2014 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 the FY 

2014 IRF PPS proposed rule (78 FR 

26880, 26885 through 26888). 

• Update the FY 2014 IRF PPS 

facility-level adjustment factors, using 

the most current and complete Medicare 

claims and cost report data with an 

enhanced estimation methodology, in a 

budget-neutral manner, as discussed in 

section IV of the FY 2014 IRF PPS 

proposed rule (78 FR 26880, 26888 

through 26890). 

• Update the FY 2014 IRF PPS 

payment rates by the proposed market 

basket increase factor, based upon the 

most current data available, with a 0.3 

percentage point reduction as required 

by sections 1886(j)(3)(C)(ii)(II) and 

1886(j)(3)(D)(iii) 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 the 

FY 2014 IRF PPS proposed rule (78 FR 

26880, 26890 through 26891). 

• Discuss the Secretary’s Proposed 

Recommendation for updating IRF PPS 

payments for FY 2014, in accordance 

with the statutory requirements, as 

described in section V of the FY 2014 

IRF PPS proposed rule (78 FR 26880 at 

26891). 

• Update the FY 2014 IRF PPS 

payment rates by the FY 2014 wage 

index and the labor-related share in a 

budget-neutral manner, as discussed in 

section V of the FY 2014 IRF PPS 

proposed rule (78 FR 26880, 26891 

through 26892). 

• Describe the calculation of the IRF 

Standard Payment Conversion Factor for 

FY 2014, as discussed in section V of 

the FY 2014 IRF PPS proposed rule (78 

FR 26880 at 26892). 

• Update the outlier threshold 

amount for FY 2014, as discussed in 

section VI of the FY 2014 IRF PPS 

proposed rule (78 FR 26880 at 26895). 

• Update the cost-to-charge ratio 

(CCR) ceiling and urban/rural average 

CCRs for FY 2014, as discussed in 

section VI of the FY 2014 IRF PPS 

proposed rule (78 FR 26880 at 26895). 

• Describe proposed revisions to the 

list of eligible ICD–9–CM diagnosis 

codes that are used to determine 

presumptive compliance under the 60 

percent rule in section VII of the FY 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 47865 

2014 IRF PPS proposed rule (78 FR 

26880, 26895 through 26906). 

• Describe proposed non-qualityrelated revisions to IRF–PAI sections in 

section VIII of the FY 2014 IRF PPS 

proposed rule (78 FR 26880, 26906 

through 26907). 

• 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 XIII of the 

FY 2014 IRF PPS proposed rule (78 FR 

26880, 26909 through 26922). 

B. Proposed Revisions to Existing 

Regulation Text 

In the FY 2014 IRF PPS proposed rule 

(78 FR 26880), we also proposed the 

following revisions to the existing 

regulations: 

• Revisions to § 412.25(a)(1)(iii) to 

specify a minimum required number of 

beds that are not excluded from the 

inpatient prospective payment system 

(IPPS) for a hospital that has an IRF 

unit, as described in section X of the FY 

2014 IRF PPS proposed rule (78 FR 

26880 at 26908). 

• Technical corrections to § 412.130, 

to reflect prior changes to the 

regulations at § 412.29 and § 412.30 that 

we made in the FY 2012 IRF PPS final 

rule (76 FR 47836), as described in 

section IX of the FY 2014 IRF PPS 

proposed rule (78 FR 26880, 26907 

through 26908). 

• Clarifications to § 412.630, to reflect 

the scope of section 1886(j)(8) of the 

Act, as described in section XI. of the 

FY 2014 IRF PPS proposed rule (78 FR 

26880 at 26908). 

• Revision to § 412.29(d), to clarify 

that Medicare requires the rehabilitation 

physician’s review and concurrence on 

the preadmission screening for 

Medicare Part A Fee-for-Service patients 

only, as described in section XII of the 

FY 2014 IRF PPS proposed rule (78 FR 

26880, 26908 through 26909). 

III. Analysis and Responses to Public 

Comments 

We received 47 timely responses from 

the public, many of which contained 

multiple comments on the FY 2014 IRF 

PPS proposed rule (78 FR 26880). We 

received comments from various trade 

associations, inpatient rehabilitation 

facilities, individual physicians, 

therapists, clinicians, health care 

industry organizations, law firms and 

health care consulting firms. The 

following sections, arranged by subject 

area, include a summary of the public 

comments that we received, and our 

responses. 

IV. Update to the Case-Mix Group 

(CMG) Relative Weights and Average 

Length of Stay Values for FY 2014 

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 the FY 2014 IRF PPS proposed rule 

(78 FR 26880, 26885 through 26888), we 

proposed to update the CMG relative 

weights and average length of stay 

values for FY 2014. 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 2014, we proposed to use 

the FY 2012 IRF claims and FY 2011 

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 2012 IRF cost 

report data are available for analysis, but 

the majority of the FY 2012 IRF claims 

data are available for analysis. 

In the FY 2014 IRF PPS proposed rule 

(78 FR 26880, 26885 through 26888), we 

proposed to apply these data using the 

same methodologies that we have used 

to update the CMG relative weights and 

average length of stay values in the FY 

2011 notice (75 FR 42836), the FY 2012 

final rule (76 FR 47836), and the FY 

2013 notice (77 FR 44618). 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 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 2014 

CMG relative weights to the same 

average CMG relative weight from the 

CMG relative weights implemented in 

the July 30, 2012 FY 2013 IRF PPS 

notice (77 FR 44618). 

Consistent with the methodology that 

we have used to update the IRF 

classification system in each instance in 

the past, we proposed to update the 

CMG relative weights for FY 2014 in 

such a way that total estimated 

aggregate payments to IRFs for FY 2014 

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 2014 CMG relative weights, we use 

the following steps: 

Step 1. Calculate the estimated total 

amount of IRF PPS payments for FY 

2014 (with no changes to the CMG 

relative weights). 

Step 2. Calculate the estimated total 

amount of IRF PPS payments for FY 

2014 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 2014 with and 

without the changes to the CMG relative 

weights. 

Step 4. Apply the budget neutrality 

factor (1.0000) to the FY 2013 IRF PPS 

standard payment amount after the 

application of the budget-neutral wage 

adjustment factor. 

In section VI.E. of this final rule, we 

discuss the use of the existing 

methodology to calculate the standard 

payment conversion factor for FY 2014. 

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 2014. 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. 


tkelley on DSK3SPTVN1PROD with RULES2
47866 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 

TABLE 1—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 

Tier 1 Tier 2 Tier 3 None Tier 1 Tier 2 Tier 3 None 

0101 ....... Stroke M > 51.05 ......................................... 0.7983 0.7151 0.6539 0.6239 9 9 9 8 

0102 ....... Stroke M > 44.45 and M < 51.05 and C > 

18.5.

0.9911 0.8878 0.8118 0.7745 11 12 10 10 

0103 ....... Stroke M > 44.45 and M < 51.05 and C < 

18.5.

1.1608 1.0398 0.9508 0.9071 13 13 12 11 

0104 ....... Stroke M > 38.85 and M < 44.45 ................ 1.2212 1.0939 1.0002 0.9543 13 12 12 12 

0105 ....... Stroke M > 34.25 and M < 38.85 ................ 1.4275 1.2787 1.1692 1.1155 15 15 14 14 

0106 ....... Stroke M > 30.05 and M < 34.25 ................ 1.6285 1.4588 1.3339 1.2726 16 17 16 15 

0107 ....... Stroke M > 26.15 and M < 30.05 ................ 1.8385 1.6468 1.5059 1.4367 19 20 17 17 

0108 ....... Stroke M < 26.15 and A > 84.5 ................... 2.3157 2.0743 1.8967 1.8096 22 24 22 21 

0109 ....... Stroke M > 22.35 and M < 26.15 and A < 

84.5.

2.0990 1.8802 1.7192 1.6403 21 21 19 20 

0110 ....... Stroke M < 22.35 and A < 84.5 ................... 2.7382 2.4527 2.2427 2.1398 29 28 25 25 

0201 ....... Traumatic brain injury M > 53.35 and C > 

23.5.

0.8252 0.6953 0.6182 0.5757 10 10 8 8 

0202 ....... Traumatic brain injury M > 44.25 and M < 

53.35 and C > 23.5.

1.0549 0.8889 0.7904 0.7360 12 10 10 10 

0203 ....... Traumatic brain injury M > 44.25 and C < 

23.5.

1.2520 1.0550 0.9380 0.8735 15 13 12 11 

0204 ....... Traumatic brain injury M > 40.65 and M < 

44.25.

1.3077 1.1020 0.9798 0.9124 12 13 12 12 

0205 ....... Traumatic brain injury M > 28.75 and M < 

40.65.

1.5791 1.3307 1.1831 1.1017 17 16 14 14 

0206 ....... Traumatic brain injury M > 22.05 and M < 

28.75.

1.9472 1.6409 1.4589 1.3585 18 19 18 16 

0207 ....... Traumatic brain injury M < 22.05 ................ 2.5767 2.1713 1.9305 1.7977 33 26 21 20 

0301 ....... Non-traumatic brain injury M > 41.05 .......... 1.0984 0.9453 0.8469 0.7832 10 11 11 10 

0302 ....... Non-traumatic brain injury M > 35.05 and M 

< 41.05.

1.3755 1.1838 1.0606 0.9808 13 14 12 12 

0303 ....... Non-traumatic brain injury M > 26.15 and M 

< 35.05.

1.6219 1.3958 1.2506 1.1565 17 16 14 14 

0304 ....... Non-traumatic brain injury M < 26.15 .......... 2.1792 1.8755 1.6803 1.5539 24 21 19 18 

0401 ....... Traumatic spinal cord injury M > 48.45 ....... 1.1342 0.9427 0.8778 0.7849 12 12 11 10 

0402 ....... Traumatic spinal cord injury M > 30.35 and 

M < 48.45.

1.4129 1.1744 1.0936 0.9778 18 14 15 12 

0403 ....... Traumatic spinal cord injury M > 16.05 and 

M < 30.35.

2.3155 1.9246 1.7921 1.6024 26 24 20 20 

0404 ....... Traumatic spinal cord injury M < 16.05 and 

A > 63.5.

4.2535 3.5355 3.2921 2.9436 47 41 36 35 

0405 ....... Traumatic spinal cord injury M < 16.05 and 

A < 63.5.

3.4992 2.9086 2.7083 2.4216 37 32 33 27 

0501 ....... Non-traumatic spinal cord injury M > 51.35 0.8384 0.6587 0.6208 0.5653 9 9 8 8 

0502 ....... Non-traumatic spinal cord injury M > 40.15 

and M < 51.35.

1.1090 0.8712 0.8211 0.7477 12 11 10 10 

0503 ....... Non-traumatic spinal cord injury M > 31.25 

and M < 40.15.

1.4334 1.1261 1.0613 0.9664 15 13 13 12 

0504 ....... Non-traumatic spinal cord injury M > 29.25 

and M < 31.25.

1.6565 1.3014 1.2265 1.1168 14 16 14 14 

0505 ....... Non-traumatic spinal cord injury M > 23.75 

and M < 29.25.

1.9708 1.5483 1.4592 1.3287 21 18 17 16 

0506 ....... Non-traumatic spinal cord injury M < 23.75 2.7518 2.1619 2.0375 1.8553 30 25 23 22 

0601 ....... Neurological M > 47.75 ............................... 0.9645 0.7830 0.7227 0.6551 10 10 9 9 

0602 ....... Neurological M > 37.35 and M < 47.75 ....... 1.2974 1.0533 0.9721 0.8811 12 12 11 11 

0603 ....... Neurological M > 25.85 and M < 37.35 ....... 1.6228 1.3174 1.2159 1.1021 15 15 14 13 

0604 ....... Neurological M < 25.85 ............................... 2.1683 1.7603 1.6246 1.4726 22 19 18 17 

0701 ....... Fracture of lower extremity M > 42.15 ........ 0.9369 0.7995 0.7648 0.6945 10 10 10 9 

0702 ....... Fracture of lower extremity M > 34.15 and 

M < 42.15.

1.2132 1.0353 0.9904 0.8993 12 12 12 11 

0703 ....... Fracture of lower extremity M > 28.15 and 

M < 34.15.

1.4741 1.2579 1.2033 1.0927 15 15 14 13 

0704 ....... Fracture of lower extremity M < 28.15 ........ 1.8716 1.5971 1.5278 1.3874 18 18 18 17 

0801 ....... Replacement of lower extremity joint M > 

49.55.

0.7037 0.6193 0.5667 0.5186 7 8 7 7 

0802 ....... Replacement of lower extremity joint M > 

37.05 and M < 49.55.

0.9255 0.8145 0.7454 0.6821 10 10 9 9 

0803 ....... Replacement of lower extremity joint M > 

28.65 and M < 37.05 and A > 83.5.

1.2589 1.1078 1.0138 0.9277 12 14 13 12 

0804 ....... Replacement of lower extremity joint M > 

28.65 and M < 37.05 and A < 83.5.

1.1139 0.9803 0.8971 0.8209 11 12 11 10 


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Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 47867 

TABLE 1—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 

Tier 1 Tier 2 Tier 3 None Tier 1 Tier 2 Tier 3 None 

0805 ....... Replacement of lower extremity joint M > 

22.05 and M < 28.65.

1.3754 1.2104 1.1077 1.0136 15 15 13 12 

0806 ....... Replacement of lower extremity joint M < 

22.05.

1.6683 1.4682 1.3435 1.2294 17 17 15 15 

0901 ....... Other orthopedic M > 44.75 ........................ 0.9010 0.7452 0.6891 0.6241 10 9 9 8 

0902 ....... Other orthopedic M > 34.35 and M < 44.75 1.2081 0.9992 0.9241 0.8369 13 12 11 11 

0903 ....... Other orthopedic M > 24.15 and M < 34.35 1.5080 1.2472 1.1534 1.0446 15 15 14 13 

0904 ....... Other orthopedic M < 24.15 ........................ 1.9669 1.6268 1.5045 1.3626 20 19 17 16 

1001 ....... Amputation, lower extremity M > 47.65 ....... 1.0276 0.9345 0.8023 0.7417 12 11 10 10 

1002 ....... Amputation, lower extremity M > 36.25 and 

M < 47.65.

1.3077 1.1892 1.0210 0.9439 13 13 12 12 

1003 ....... Amputation, lower extremity M < 36.25 ....... 1.9362 1.7608 1.5117 1.3975 19 20 17 16 

1101 ....... Amputation, non-lower extremity M > 36.35 1.2199 1.1157 1.0302 1.0056 13 13 12 12 

1102 ....... Amputation, non-lower extremity M < 36.35 1.7115 1.5652 1.4454 1.4107 16 17 16 17 

1201 ....... Osteoarthritis M > 37.65 .............................. 0.9454 0.9411 0.8445 0.7724 9 11 10 10 

1202 ....... Osteoarthritis M > 30.75 and M < 37.65 ..... 1.1749 1.1695 1.0495 0.9599 14 14 13 12 

1203 ....... Osteoarthritis M < 30.75 .............................. 1.4677 1.4609 1.3110 1.1991 13 18 15 14 

1301 ....... Rheumatoid, other arthritis M > 36.35 ......... 1.1678 0.9974 0.9062 0.8219 12 10 11 10 

1302 ....... Rheumatoid, other arthritis M > 26.15 and 

M < 36.35.

1.5025 1.2832 1.1659 1.0575 16 15 14 13 

1303 ....... Rheumatoid, other arthritis M < 26.15 ......... 1.9254 1.6444 1.4941 1.3551 18 18 17 16 

1401 ....... Cardiac M > 48.85 ....................................... 0.8869 0.7263 0.6555 0.5937 9 9 8 8 

1402 ....... Cardiac M > 38.55 and M < 48.85 .............. 1.1928 0.9768 0.8816 0.7985 12 11 11 10 

1403 ....... Cardiac M > 31.15 and M < 38.55 .............. 1.4581 1.1941 1.0777 0.9761 14 14 12 12 

1404 ....... Cardiac M < 31.15 ....................................... 1.8587 1.5222 1.3738 1.2443 19 17 15 14 

1501 ....... Pulmonary M > 49.25 .................................. 1.0128 0.8635 0.7803 0.7474 10 9 9 9 

1502 ....... Pulmonary M > 39.05 and M < 49.25 ......... 1.2651 1.0787 0.9747 0.9336 12 12 11 11 

1503 ....... Pulmonary M > 29.15 and M < 39.05 ......... 1.5357 1.3094 1.1832 1.1333 15 14 13 13 

1504 ....... Pulmonary M < 29.15 .................................. 1.9057 1.6248 1.4683 1.4063 21 17 16 15 

1601 ....... Pain syndrome M > 37.15 ........................... 1.0707 0.8883 0.8327 0.7639 9 10 10 9 

1602 ....... Pain syndrome M > 26.75 and M < 37.15 .. 1.3889 1.1523 1.0802 0.9909 12 14 12 12 

1603 ....... Pain syndrome M < 26.75 ........................... 1.7566 1.4573 1.3662 1.2533 18 17 15 15 

1701 ....... Major multiple trauma without brain or spinal cord injury M > 39.25.1.1053 0.9551 0.8619 0.7769 11 12 11 10 

1702 ....... Major multiple trauma without brain or spinal cord injury M > 31.05 and M < 39.25.1.3905 1.2016 1.0843 0.9774 13 15 13 12 

1703 ....... Major multiple trauma without brain or spinal cord injury M > 25.55 and M < 31.05.1.6553 1.4304 1.2908 1.1635 17 16 15 14 

1704 ....... Major multiple trauma without brain or spinal cord injury M < 25.55.2.1005 1.8152 1.6380 1.4764 24 20 18 18 

1801 ....... Major multiple trauma with brain or spinal 

cord injury M > 40.85.

1.1378 1.0183 0.9216 0.7648 13 12 12 10 

1802 ....... Major multiple trauma with brain or spinal 

cord injury M > 23.05 and M < 40.85.

1.7508 1.5669 1.4182 1.1769 18 19 17 14 

1803 ....... Major multiple trauma with brain or spinal 

cord injury M < 23.05.

2.7973 2.5035 2.2659 1.8804 33 28 24 22 

1901 ....... Guillain Barre M > 35.95 ............................. 1.0836 0.9288 0.8847 0.8716 14 10 11 11 

1902 ....... Guillain Barre M > 18.05 and M < 35.95 ..... 2.1258 1.8221 1.7355 1.7097 23 21 19 20 

1903 ....... Guillain Barre M < 18.05 ............................. 3.5333 3.0287 2.8846 2.8418 56 32 31 30 

2001 ....... Miscellaneous M > 49.15 ............................. 0.8877 0.7267 0.6691 0.6107 9 9 8 8 

2002 ....... Miscellaneous M > 38.75 and M < 49.15 .... 1.1867 0.9714 0.8945 0.8164 12 11 11 10 

2003 ....... Miscellaneous M > 27.85 and M < 38.75 .... 1.4947 1.2235 1.1266 1.0283 15 14 13 12 

2004 ....... Miscellaneous M < 27.85 ............................. 1.9610 1.6051 1.4780 1.3490 20 18 17 15 

2101 ....... Burns M > 0 ................................................. 2.1953 1.5624 1.5111 1.4146 24 21 17 17 

5001 ....... Short-stay cases, length of stay is 3 days 

or fewer.

.............. .............. .............. 0.1538 .............. .............. .............. 3 

5101 ....... Expired, orthopedic, length of stay is 13 

days or fewer.

.............. .............. .............. 0.6617 .............. .............. .............. 8 

5102 ....... Expired, orthopedic, length of stay is 14 

days or more.

.............. .............. .............. 1.4346 .............. .............. .............. 17 

5103 ....... Expired, not orthopedic, length of stay is 15 

days or fewer.

.............. .............. .............. 0.7653 .............. .............. .............. 8 

5104 ....... Expired, not orthopedic, length of stay is 16 

days or more.

.............. .............. .............. 1.9685 .............. .............. .............. 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 the 

application of the revisions for FY 2014 

will affect particular CMG relative 


tkelley on DSK3SPTVN1PROD with RULES2
47868 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 

weight values, which affect the overall 

distribution of payments within CMGs 

and tiers. Note that, because we are 

implementing the CMG relative weight 

revisions in a budget-neutral manner (as 

described above), total estimated 

aggregate payments to IRFs for FY 2014 

will not be affected as a result of the 

CMG relative weight revisions. 

However, the revisions will affect the 

distribution of payments within CMGs 

and tiers. 

TABLE 2—DISTRIBUTIONAL EFFECTS OF THE CHANGES TO THE CMG RELATIVE WEIGHTS (FY 2013 VALUES COMPARED

WITH FY 2014 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% ............................................................................................................... 2,492 0.7 

Changed by less than 5% ............................................................................................................................... 363,629 98.7 

Decreased by between 5% and 15% .............................................................................................................. 2,118 0.6 

Decreased by 15% or more ............................................................................................................................ 97 0.0 

As Table 2 shows, almost 99 percent 

of all IRF cases are in CMGs and tiers 

that will experience less than a 5 

percent change (either increase or 

decrease) in the CMG relative weight 

value as a result of the revisions for FY 

2014. The largest increase in the CMG 

relative weight values that affects a 

particularly large number of IRF 

discharges is a 0.8 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 

2012 data, 19,981 IRF discharges (5.4 

percent of all IRF discharges) were 

classified into this CMG and tier. 

The largest decrease in a CMG relative 

weight value affecting the most cases is 

a 2.1 percent decrease in the CMG 

relative weight for CMG 0903—Other 

Orthopedic with a motor score between 

24.15 and 34.35—in the no comorbidity 

tier. In the FY 2012 IRF claims data, this 

change affects 7,047 cases (1.9 percent 

of all IRF cases). 

The changes in the average length of 

stay values for FY 2014, compared with 

the FY 2013 average length of stay 

values, are small and do not show any 

particular trends in IRF length of stay 

patterns. 

We received 3 comments on the 

proposed updates to the CMG relative 

weights and average length of stay 

values for FY 2014, which are 

summarized below. 

Comment: Several commenters 

supported the use of the same 

methodology that we used in the FY 

2011 notice, the FY 2012 final rule, and 

the FY 2013 notice to update the CMG 

relative weights and average length of 

stay values for FY 2014, using the most 

recent available data. However, one 

commenter expressed concern about 

changes to some of the specific CMG 

relative weights, indicating that some of 

the changes were not necessary and that 

others might affect whether or not the 

CMGs would be adequately 

compensating providers for treating 

certain types of patients requiring 

unusually high-cost treatments. 

Response: We believe that updating 

the relative weights using the most 

recent available data ensures that the 

payments per case continue to 

accurately reflect the costs of care 

provided in IRFs. Although we 

acknowledge the commenter’s concerns 

with some of the specific CMG relative 

weight changes, these changes are based 

on IRFs’ reported costs of care for these 

types of cases, and we believe that it is 

essential to recognize these reported 

costs to ensure that the CMG relative 

weights reflect as closely as possible the 

relative costs of treating different types 

of patients in IRFs. Further, we note that 

the IRF PPS high-cost outlier policy is 

designed to compensate IRFs for 

providing care to patients whose costs 

greatly exceed the average cost of a case 

in a particular CMG and tier. 

Comment: A few commenters 

requested that we outline the 

methodology used to calculate the 

average length of stay values. These 

same commenters agreed that the 

average length of stay values should 

only be used to determine when an IRF 

discharge meets the definition of a 

short-stay transfer, which results in a 

per diem case level adjustment, and are 

not intended to be used as clinical 

guidelines for patients’ lengths of stay in 

an IRF. 

Response: We will post our 

methodology for calculating the average 

length of stay values on the IRF PPS 

Web site at http://www.cms.gov/ 

Medicare/Medicare-Fee-for-ServicePayment/InpatientRehabFacPPS/ 

Research.html in conjunction with the 

publication of this final rule. 

We continue to support the 

commenters’ position that the average 

length of stay values in the rule are not 

intended as ‘‘targets’’ or as clinical 

guidelines for determining a patient’s 

length of stay in the IRF. A patient’s 

length of stay in the IRF should be 

determined by the patient’s individual 

care needs. 

Final Decision: After careful 

consideration of the public comments, 

we are finalizing our proposal to update 

the CMG relative weight and average 

length of stay values for FY 2014. These 

updates are effective October 1, 2013. 

V. Updates to the Facility-Level 

Adjustment Factors for FY 2014 

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. 


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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 at 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 

that the proposed updates would create 

for facilities with teaching programs and 

a higher disproportionate share of lowincome patients. 

B. Updates to the IRF Facility-Level 

Adjustment Factors 

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 

have shown that significant differences 

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 

and 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, high 

LIP 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. 

Therefore, in the FY 2014 IRF PPS 

proposed rule, we proposed to use the 

same methodology used in the FY 2010 

IRF PPS final rule (74 FR 39762), 

including the 3-year moving average 

approach, with the addition of this new 

control variable, which equals ‘‘1’’ if the 

facility is a freestanding IRF hospital 

and ‘‘0’’ if it is an IRF unit of an acute 

care hospital (or a CAH). We proposed 

to update the adjustment factors using 

the most recent three years’ worth of IRF 

claims data (FY 2010, FY 2011, and FY 

2012) and the most recent available 

corresponding IRF cost report data. As 

we did in the FY 2010 IRF PPS final rule 

(74 FR 39762), we also proposed to use 

the cost report data that corresponds 

with each IRF claim, when available. In 

the rare instances in which the 

corresponding year’s cost report data are 

not available, we proposed to use the 

most recent available cost report data, as 

we also did in the FY 2010 IRF PPS final 

rule (74 FR 39762). 

To calculate the updates to the rural, 

LIP, and teaching status adjustment 

factors for FY 2014, we use the 

following steps: 

[Steps 1 and 2 are performed 

independently for each of three years of 

IRF claims data: FY 2010, FY 2011, and 

FY 2012.] 

Step 1. Calculate the average cost per 

case for each IRF in the IRF claims data. 

Step 2. Use logarithmic regression 

analysis on average cost per case to 

compute the coefficients for the rural, 

LIP, and teaching status adjustments. 

We proposed to incorporate an 

additional indicator variable to account 

for whether a facility is a freestanding 

IRF hospital or a unit of an acute care 

hospital (or a CAH). 

Step 3. Calculate a simple mean for 

each of the coefficients across the three 

years of data (using logarithms for the 

LIP and teaching status adjustment 

coefficients (because they are 

continuous variables), but not for the 

rural adjustment coefficient (because the 

rural variable is either zero (if not rural) 

or 1 (if rural)). To compute the LIP and 

teaching status adjustment factors, we 

convert these factors back out of the 

logarithmic form. 

Based on this methodology, we 

proposed to update the rural adjustment 

factor for FY 2014 from 18.4 percent to 

14.9 percent. We proposed to update the 

LIP adjustment factor for FY 2014 from 

0.4613 to 0.3177 and the teaching status 

adjustment factor for FY 2014 from 

0.6876 to 1.0163. 

C. Budget Neutrality Methodology for 

the Updates to the IRF Facility-Level 

Adjustment Factors 

Consistent with the way that we 

implemented changes to the IRF facilitylevel adjustment factors (the rural, LIP, 

and teaching status adjustments factors) 

in the FY 2006 IRF PPS final rule (70 

FR 47880 and 70 FR 57166), which was 

the only year in which we updated 

these adjustment factors, we proposed 

to make changes to the rural, LIP, and 

teaching status adjustment factors for 

FY 2014 in such a way that total 

estimated aggregate payments to IRFs 

for FY 2014 would be the same with or 

without the proposed changes (that is, 

in a budget-neutral manner) by applying 

budget neutrality factors for each of 

these three changes to the standard 

payment amount. To calculate the 

budget neutrality factors used to update 

the rural, LIP, and teaching status 


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adjustment factors, we use the following 

steps: 

Step 1. Using the most recent 

available data (currently FY 2012), 

calculate the estimated total amount of 

IRF PPS payments that would be made 

in FY 2014 (without applying the 

changes to the rural, LIP, or teaching 

status adjustment factors). 

Step 2. Calculate the estimated total 

amount of IRF PPS payments that will 

be made in FY 2014 if the update to the 

rural adjustment factor were applied. 

Step 3. Divide the amount calculated 

in step 1 by the amount calculated in 

step 2 to determine the budget 

neutrality factor (1.0025) that will 

maintain the same total estimated 

aggregate payments in FY 2014 with and 

without the change to the rural 

adjustment factor. 

Step 4. Calculate the estimated total 

amount of IRF PPS payments that will 

be made in FY 2014 if the update to the 

LIP adjustment factor were applied. 

Step 5. Divide the amount calculated 

in step 1 by the amount calculated in 

step 4 to determine the budget 

neutrality factor (1.0171) that will 

maintain the same total estimated 

aggregate payments in FY 2014 with and 

without the change to the LIP 

adjustment factor. 

Step 6. Calculate the estimated total 

amount of IRF PPS payments that will 

be made in FY 2014 if the update to the 

teaching status adjustment factor were 

applied. 

Step 7. Divide the amount calculated 

in step 1 by the amount calculated in 

step 6 to determine the budget 

neutrality factor (0.9962) that will 

maintain the same total estimated 

aggregate payments in FY 2014 with and 

without the change to the teaching 

status adjustment factor. 

Step 8. Apply the budget neutrality 

factors for the updates to the rural, LIP, 

and teaching status adjustment factors 

to the FY 2013 IRF PPS standard 

payment amount after the application of 

the budget neutrality factors for the 

wage adjustment and the CMG relative 

weights. 

In section VI.E. of this final rule, we 

discuss the methodology for calculating 

the standard payment conversion factor 

for FY 2014. 

We received 19 comments on the 

proposed updates to the facility-level 

adjustment factors, which are 

summarized below. 

Comment: Several commenters 

expressed concerns about the financial 

impact that the reductions to the rural 

and LIP adjustments would have on 

individual IRFs. These commenters also 

expressed concerns about the potential 

effects of this policy change combined 

with possible state Medicaid expansions 

under the Affordable Care Act. These 

commenters suggested that we delay 

implementation until FY 2015, phase in 

the updates over multiple years, or 

implement a stop-loss policy to mitigate 

the financial impact of the changes. 

Response: Although we are mindful of 

the significant financial impacts on a 

small number of individual IRFs of 

finalizing these proposals, we believe 

that updating the facility level 

adjustments as proposed is necessary at 

this time to ensure that the adjustment 

factors reflect as accurately as possible 

the costs of providing IRF care across 

the full spectrum of IRF providers. In 

addition, we estimate that the maximum 

financial impact on any one facility 

from these proposed policy changes is 

similar to the financial impact that can 

result from annual fluctuations in the 

geographic wage index values, and we 

do not typically implement a delay or 

phase-in period to account for annual 

wage index fluctuations. 

Although we understand that 

providers are subject to multiple 

financial pressures in today’s economic 

climate, the policies established by this 

final rule are focused on providing 

accurate payment for Medicare Part A 

services provided in an IRF setting. 

However, we note that, to the extent that 

Medicaid coverage is expanded under 

the Affordable Care Act provisions, we 

believe that this could increase IRFs’ 

LIP percentages, potentially leading to 

higher LIP adjustment payments under 

the IRF PPS. We do not believe that 

such potential increases in spending for 

the LIP adjustment undercut the need to 

ensure that LIP adjustment payments 

are as fair and accurate as possible for 

FY 2014. 

Further, whereas the proposed 

updates to the facility-level adjustment 

factors would decrease payments to 

some IRFs, they would increase 

payments to other IRFs, by as much as 

16.8 percent. By updating the facilitylevel adjustment factors with the 

proposed methodology, we ensure that 

the adjustment factors reflect as 

accurately as possible the costs of 

providing IRF care across the full 

spectrum of IRF providers where 

individual providers may see an 

increase or decrease. In addition, 

because we update the rural and LIP 

adjustments in a budget-neutral manner, 

decreases to these adjustments result in 

increases to the base payment rates for 

all IRF providers, partially offsetting 

some of the decreases in the rural and 

LIP adjustment payments for the 

affected providers. Thus, we believe it is 

necessary to update the adjustments at 

this time, using the proposed new 

enhancement to the methodology, to 

pay providers as accurately and fairly as 

possible. 

Comment: Several commenters did 

not support our proposal to include an 

indicator variable for an IRF’s 

freestanding/hospital-based status in the 

regression model, based on their belief 

that such variables should only be 

included if they are used as payment 

adjusters. These commenters further 

suggested that CMS pursue further 

analysis to explain the fluctuations in 

the teaching status adjustment factor 

over time. One commenter 

recommended that CMS cap the IRF 

teaching status adjustment factor at the 

same level as the IPPS IME adjustment, 

the IPF teaching status adjustment, or 

some combination of these adjustments. 

Response: We appreciate the 

commenters’ concerns and 

recommendations. However, given that 

our analysis showed large differences in 

cost structures between freestanding 

and hospital-based IRFs, and that a 

significant amount of the differences in 

costs between different types of IRFs 

(for example, urban/rural, teaching/nonteaching, and high LIP percentage/low 

LIP percentage) can be attributed 

instead to a facility’s freestanding/ 

hospital-based status, we believe that 

we would be remiss in not accounting 

for this indicator variable in the 

regression analysis. Thus, we believe 

that the inclusion of the indicator 

variable enables us to more precisely 

and accurately calculate each of the 

facility-level adjustment factors. 

For several reasons, however, we do 

not believe that a facility’s freestanding/ 

hospital-based status can be used as a 

payment adjuster at this time. First, we 

do not know how much of the higher 

costs we observe in hospital-based IRFs 

can be attributed to the actual costs of 

treating patients in hospital-based 

settings (versus freestanding settings) 

and how much of the higher costs result 

from a hospital’s decisions about 

allocating costs among its different 

components. Secondly, the IRF PPS has 

traditionally treated freestanding IRF 

hospitals and IRF units of acute care 

hospitals (or CAHs) the same for 

Medicare payment purposes. Thus, we 

do not believe it is appropriate to 

introduce a freestanding/hospital-based 

payment adjuster for the IRF PPS 

without substantial evidence that a 

change in policy is warranted at this 

time. However, we do believe that it is 

necessary to recognize the important 

differences in cost structures of the two 

types of facilities in order to pay IRFs 

as accurately and fairly as possible 

under the IRF PPS. 


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As one commenter suggested, we have 

done extensive analysis to uncover the 

reasons for the fluctuations in the IRF 

teaching status adjustment factor over 

time. Our analysis shows that such 

fluctuations are related primarily to the 

fact that there are relatively few IRF 

teaching facilities (around 110 in each 

year), and therefore fluctuations in the 

teaching status of one or two of these 

IRFs will be evident in overall 

fluctuations in the teaching adjustment 

factor over time. Specifically, we found 

that one IRF did not report training any 

interns and residents from 2007 through 

2009, then reported relatively large 

intern and resident to average daily 

census ratios in 2010 and 2011, and 

then did not report training any interns 

and residents after 2011. This one 

provider appears to have contributed to 

swings in the overall teaching status 

adjustment factor over time. However, 

we have no reason to believe that any 

of the teaching status information for 

this provider is incorrect, and therefore 

believe that including this data is 

appropriate. 

Further, our analysis of the IRF 

teaching adjustment trends shows no 

significant cause for concern in terms of 

unusually high or increasing Medicare 

payments for this adjustment over time. 

We found that the number of IRFs 

receiving this adjustment and the 

Medicare payments per IRF for this 

adjustment have remained very stable 

over time. Total Medicare spending for 

the IRF teaching adjustment peaked at 

$78 million (almost 9 percent of total 

IRF PPS payments) for 124 facilities in 

FY 2006, and fell to $56 million (6 

percent of total IRF PPS payments) for 

111 facilities in FY 2012. The average 

Medicare payment to an individual IRF 

for the teaching status adjustment 

decreased from $773,000 in FY 2006 to 

$508,000 in FY 2012. The average 

number of interns and residents relative 

to an IRF’s average daily census (the 

factor on which an IRF’s teaching status 

adjustment is based) was 0.12 in FY 

2006, and declined to 0.11 in FY 2012. 

Given the small magnitude of the IRF 

teaching status adjustment relative to 

total IRF expenditures, the lack of 

growth in spending for this adjustment, 

and the need to ensure that IRFs are 

adequately compensated for training a 

new generation of physicians in the 

rehabilitation of Medicare beneficiaries 

in the IRF setting, we believe that 

continued funding of this adjustment is 

beneficial to the Medicare program and 

Medicare beneficiaries. 

As one commenter suggested, we 

explored the possibility of capping the 

IRF teaching status adjustment at the 

level of either the IPPS capital or 

operating IME adjustments. However, 

either of these options would decrease 

the IRF teaching status adjustment 

factor to such an extremely low level 

(0.03 or 0.04 compared with the current 

0.6876) that the additional payment per 

facility would not be enough to 

adequately compensate or encourage the 

training of a new generation of 

physicians in the rehabilitation of 

Medicare beneficiaries in the IRF 

setting. While capping the adjustment at 

the amount currently reflected in the 

inpatient psychiatric facility teaching 

status adjustment (0.5150) would seem 

to provide greater compensation than 

capping at either the IPPS capital or 

operating IME adjustment levels, at this 

time there is not enough evidence to 

believe that teaching costs or 

compensation should be the same for 

these settings. In fact, inpatient 

psychiatric facilities are not similar to 

IRFs in the types of patients they treat 

or the types of services they provide, so 

we cannot find any logical justification 

for capping the IRF teaching status 

adjustment factor at the teaching status 

adjustment factor used in the IPF PPS. 

Comment: One commenter requested 

clarification on the 3-year moving 

average approach, including how the 

approach is used and whether or not the 

IRF area wage index adjustment is 

included as one of the adjustments that 

we estimate using this approach. 

Response: The 3-year moving average 

approach was implemented to decrease 

year-to-year fluctuations in the facilitylevel adjustment factors. The IRF area 

wage index adjustment is not included 

in the facility-level adjustments that we 

estimate using a 3-year moving average 

approach. 

Comment: Several commenters 

requested more information about the 

methodology used to compute the IRF 

facility-level adjustments, and the data 

to enable providers to replicate our 

analysis. In addition, one commenter 

requested that we provide the estimates 

that were averaged over the 3-year 

period to obtain the facility-level 

adjustment factors, and that we run our 

regression analysis on three years’ worth 

of pooled discharge data instead of 

averaging each year’s regression 

coefficients over three years. 

Response: Our regression analysis for 

computing the IRF facility-level 

adjustments was posted on the IRF PPS 

Web site at http://www.cms.gov/ 

Medicare/Medicare-Fee-for-ServicePayment/InpatientRehabFacPPS/ 

Downloads/Facility-PaymentAdjustment_KJS.pdf in 2011. As we 

discussed in the proposed rule, the only 

change to this regression analysis would 

be the addition of an indicator variable 

for an IRF’s freestanding/hospital-based 

status, which would equal ‘‘1’’ if the IRF 

was a freestanding facility and ‘‘0’’ if the 

IRF was a hospital-based facility. The 

data that we used to analyze the 

adjustments is available from the IRF 

rate-setting files on the IRF PPS Web 

site at http://www.cms.gov/Medicare/ 

Medicare-Fee-for-Service-Payment/ 

InpatientRehabFacPPS/Data-Files.html. 

The annual IRF facility-level adjustment 

factor estimates are presented below in 

Table 3. For this final rule, we averaged 

the estimates for FY 2010, FY 2011, and 

FY 2012. 

TABLE 3—ANNUAL IRF FACILITY-LEVEL ADJUSTMENT FACTOR ESTIMATES

FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 

LIP .................................................................... 0.4172 0.5107 0.3865 0.4898 0.4866 0.1594 0.2702 0.5538 

Teaching .......................................................... 1.5155 0.6732 1.0451 0.4045 1.5678 0.3597 0.6326 2.6930 

Rural ................................................................. 0.1860 0.1856 0.1765 0.1898 0.2123 0.1608 0.1516 0.1356 

Additionally, we investigated another 

commenter’s suggestion that we reduce 

the annual fluctuation in the adjustment 

factors by performing the regression 

analysis on three years’ worth of pooled 

discharge data instead of averaging each 

year’s regression coefficients over three 

years. We tried the approach that the 

commenter suggested, and it did not 

materially change our estimates. 

Final Decision: After careful 

consideration of the public comments, 

we are finalizing our proposal 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 


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facility-level adjustment factors, 

including the 3-year moving average 

approach. This results in 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. These updates are 

effective October 1, 2013. 

VI. FY 2014 IRF PPS Federal 

Prospective Payment Rates 

A. Market Basket Increase Factor, 

Productivity Adjustment, and Other 

Adjustment for FY 2014 

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)(iii) 

of the Act required the application of a 

0.3 percentage point reduction to the 

market basket increase factor for FY 

2014. In addition, section 

1886(j)(3)(C)(ii)(I) of the Act requires the 

application of a productivity 

adjustment, as described below. Thus, 

in the FY 2014 IRF PPS proposed rule, 

we proposed to update the IRF PPS 

payments for FY 2014 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 0.3 percentage 

point reduction as required by sections 

1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(iii) 

of the Act. 

For this final rule, we use the same 

methodology described in the FY 2012 

IRF PPS final rule (76 FR 47836 at 

47848 through 47863) to compute the 

FY 2014 market basket increase factor 

and labor-related share. In that final 

rule, we rebased the RPL market basket 

from a 2002 base year to a 2008 base 

year. Based on IHS Global Insight’s 

second quarter 2013 forecast, the most 

recent estimate of the 2008-based RPL 

market basket increase factor for FY 

2014 is 2.6 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 apply a 

productivity adjustment to the FY 2014 

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 2014 (the 10-year moving average 

of MFP for the period ending FY 2014) 

is 0.5 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 second quarter 2013 

forecast. 

Thus, in accordance with section 

1886(j)(3)(C) of the Act, we base the FY 

2014 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 2.6 percent 

based on IGI’s second quarter 2013 

forecast). We then reduce this 

percentage increase by the current 

estimate of the MFP adjustment for FY 

2014 of 0.5 percentage point (the 10- 

year moving average of MFP for the 

period ending FY 2014 based on IGI’s 

second quarter 2013 forecast), which 

was calculated as described in the FY 

2012 IRF PPS final rule (76 FR 47836, 

47859). Following application of the 

MFP, we further reduce the applicable 

percentage increase by 0.3 percentage 

point, as required by sections 

1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(iii) 

of the Act. Therefore, the current 

estimate of the FY 2014 IRF update is 

1.8 percent (2.6 percent market basket 

update, less 0.5 percentage point MFP 

adjustment, less 0.3 percentage point 

legislative adjustment). 

B. Secretary’s Final Recommendation 

For FY 2014, 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 is 

proposing to update IRF PPS payment 

rates for FY 2014 by an adjusted market 

basket increase factor of 1.8 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 2014. 

We received 5 comments on the 

proposed market basket increase factor, 

MFP adjustment, other adjustments for 

FY 2014, and the Secretary’s proposed 

recommendation, which are 

summarized below. 

Comment: One commenter supported 

our proposal to update the IRF PPS 

payment rates for FY 2014 by the 

adjusted market basket estimate. 

Another commenter noted that MedPAC 

recommended a 0 percent update for 

IRFs for FY 2014, but recognized that 

CMS does not have the statutory 

authority to apply a different update 

factor to IRF PPS payment rates than is 

specified in statute. Several other 

commenters expressed concerns about 

the applicability of the MFP adjustment 

to the IRF setting, indicating that the 

unique services provided in IRFs do not 

lend themselves to the efficiency gains 

that are implied by the application of a 

MFP adjustment. These commenters 

recommended that we continue to 

monitor the impact of the MFP 

adjustment on IRFs and communicate 

our findings to the Congress. 

Response: We appreciate the 

commenters’ concerns. As these 

commenters noted, we are bound in 

these matters by the statute. However, 

we will continue to monitor the effects 

of the annual updates to the IRF PPS 

payment rates, and will communicate 

our findings as appropriate. 

Comment: One commenter expressed 

concern about our use of some of the 

underlying cost categories, weights, and 

price proxies from the acute care 

hospital data, when the necessary RPLspecific data are not available, and 

suggested that we consider collecting 

additional information on the IRF cost 

reports prior to our next rebasing of the 

RPL market basket, so that we will not 

have to use the IPPS data for this 

purpose anymore. 

Response: As stated in the FY 2012 

IRF 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, which includes a new worksheet 

(Worksheet S–3, part V) which 

identifies the contract labor costs and 

benefit costs for the hospital complex 

and is applicable to sub-providers and 

units. Prior to any future rebasings, we 

plan to review any contract labor and 

benefit cost data submitted by RPL 

providers to determine the 

appropriateness of using this 


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information in the derivation of updated 

market basket cost weights. 

Final Decision: After careful 

consideration of the public comments, 

we are finalizing our decision to update 

IRF PPS payment rates for FY 2014 

based on the most recent estimate of the 

FY 2008-based RPL market basket 

(currently estimated to be 2.6 percent 

based on IGI’s second quarter 2013 

forecast). We then reduce this 

percentage increase by the current 

estimate of the MFP adjustment for FY 

2014 of 0.5 percentage point (the 10- 

year moving average of MFP for the 

period ending FY 2014 based on IGI’s 

second quarter 2013 forecast), which 

was calculated as described in the FY 

2012 IRF PPS final rule (76 FR 47836, 

47859). Following application of the 

MFP adjustment, we further reduce the 

applicable percentage increase by 0.3 

percentage point, as required by 

sections 1886(j)(3)(C)(ii)(II) and 

1886(j)(3)(D)(iii) of the Act. Therefore, 

the FY 2014 IRF update is 1.8 percent 

(2.6 percent market basket update, less 

0.5 percentage point MFP adjustment, 

less 0.3 percentage point legislative 

adjustment). 

C. Labor-Related Share for FY 2014 

The labor-related share for FY 2014 is 

updated using the methodology 

described in the FY 2012 IRF PPS final 

rule (76 FR 47836, 47860 through 

47863). Using this method and IGI’s 

second quarter 2013 forecast of the 

2008-based RPL market basket, the IRF 

labor-related share for FY 2014 is the 

sum of the FY 2014 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 2014. As 

shown in Table 4, the FY 2014 laborrelated share is 69.494 percent. 

TABLE 4—FY 2014 IRF RPL LABOR-RELATED SHARE RELATIVE IMPORTANCE

FY 2014 Relative 

importance laborrelated share 

Wages and Salaries ...................................................................................................................................................................... 48.394 

Employee Benefits ......................................................................................................................................................................... 12.963 

Professional Fees: Labor-Related ................................................................................................................................................. 2.065 

Administrative and Business Support Services ............................................................................................................................. 0.415 

All Other: Labor-Related Services ................................................................................................................................................. 2.080 

Subtotal .......................................................................................................................................................................................... 65.917 

Labor-Related Portion of Capital Costs (.46) ................................................................................................................................ 3.577 

Total Labor-Related Share ..................................................................................................................................................... 69.494 

Source: IHS Global Insight, Inc. 2nd quarter 2013 forecast; Historical Data through 1st quarter, 2013. 

We received 1 comment on the 

proposed update to the IRF labor-related 

share, which is summarized below. 

Comment: One commenter expressed 

general concern with the proposed 

decrease in the IRF labor-related share 

from FY 2013 to FY 2014. 

Response: We believe that the 

methodology for determining the laborrelated share is technically appropriate, 

as it estimates the proportion of IRF 

costs that are labor-intensive and vary 

with, or are influenced by, the local 

labor market. The methodology for 

determining the proposed IRF laborrelated share for FY 2014 is the same 

general method that was used to derive 

the FY 2013 IRF PPS labor-related share. 

That is, the labor-related share is equal 

to the sum of the relative importance of 

each labor-related cost category in the 

RPL market basket. We calculate the 

labor-related relative importance for FY 

2014 in four steps. First, we compute 

the FY 2014 price index level for the 

total market basket and each cost 

category of the market basket. Second, 

we calculate a ratio for each cost 

category by dividing the FY 2014 price 

index level for that cost category by the 

total market basket price index level. 

Third, we determine the FY 2014 

relative importance for each cost 

category by multiplying this ratio by the 

base year (FY 2008) weight. Finally, we 

add the FY 2014 relative importance for 

each of the labor-related cost categories. 

The purpose of the relative importance 

is to capture the different rates of price 

change for each of the market basket 

cost categories between the base year 

(FY 2008 for IRFs) and FY 2014. 

Therefore, to the extent an individual 

price proxy for a specific cost category 

is projected to grow faster from FY 2008 

to FY 2014 relative to the proxies for 

other cost categories, the relative 

importance for that category in FY 2014 

will be higher than the base year cost 

weight in FY 2008. 

Final Decision: After consideration of 

the public comments received, we are 

finalizing our decision to update IRF 

labor-related share for FY 2014 using 

the methodology described in the FY 

2012 IRF PPS final rule (76 FR 47836, 

47860 through 47863) and IGI’s second 

quarter 2013 forecast of the 2008-based 

RPL market basket. The FY 2014 laborrelated share is 69.494 percent. 

D. 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 2014, we are maintaining the 

policies and methodologies described in 

the FY 2012 IRF PPS final rule (76 FR 

47836, at 47863 through 47865) relating 

to the labor market area definitions and 

the wage index methodology for areas 

with wage data. Thus, we are using the 

CBSA labor market area definitions and 

the FY 2013 pre-reclassification and 

pre-floor hospital wage index data. In 

accordance with section 1886(d)(3)(E) of 

the Act, the FY 2013 pre-reclassification 

and pre-floor hospital wage index is 

based on data submitted for hospital 

cost reporting periods beginning on or 

after October 1, 2008, and before 

October 1, 2009 (that is, FY 2009 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 


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47874 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 

which to base the calculation of the IRF 

PPS wage index. We will 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 in which to 

base the calculation for the FY 2014 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 will use the 

prior year’s (FY 2013) pre-floor, prereclassified hospital wage index data to 

derive the FY 2014 applicable IRF PPS 

wage index. We anticipate using the FY 

2014 pre-floor, pre-reclassified hospital 

wage index data to derive the applicable 

IRF PPS wage index for FY 2015. We 

note, however, that the FY 2014 prefloor, pre-reclassified 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. This bulletin 

contains a number of significant 

changes. For example, there are new 

CBSAs, counties that change from urban 

to rural, counties that change from rural 

to urban, and existing CBSAs that are 

being split apart. The OMB Bulletin 

with these changes was not published in 

time for incorporation into the FY 2014 

pre-floor, pre-reclassified hospital wage 

index, since the proposed rule was 

already in the advanced stages of 

development at that time and the 

changes and their ramifications would 

need to be extensively reviewed and 

verified prior to their inclusion in the 

rule. 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 final rule, we multiply the 

unadjusted Federal payment rate for 

IRFs by the FY 2014 labor-related share 

based on the FY 2008-based RPL market 

basket (69.494 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 final rule. These 

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 

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 FY 2014 IRF standard payment 

conversion factor reflects the update to 

the wage indexes (based on the FY 2009 

hospital cost report data) and the laborrelated share in a budget-neutral 

manner: 

Step 1. Determine the total amount of 

the estimated FY 2013 IRF PPS rates, 

using the FY 2013 standard payment 

conversion factor and the labor-related 

share and the wage indexes from FY 

2013 (as published in the July 30, 2012 

FY 2013 IRF PPS notice (77 FR 44618)). 

Step 2. Calculate the total amount of 

estimated IRF PPS payments using the 

FY 2013 standard payment conversion 

factor and the FY 2014 labor-related 

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 

2014 budget-neutral wage adjustment 

factor of 1.0010. 

Step 4. Apply the FY 2014 budgetneutral wage adjustment factor from 

step 3 to the FY 2013 IRF PPS standard 

payment conversion factor after the 

application of the adjusted market 

basket update to determine the FY 2014 

standard payment conversion factor. 

We received 3 comments on the 

proposed FY 2014 IRF PPS wage index, 

which are summarized below. 

Comment: Several commenters 

recommended that we develop a new 

methodology for area wage adjustment 

that eliminates hospital wage index 

reclassifications for all hospitals and 

reduces the problems associated with 

annual fluctuations in wage indices and 

across geographic boundaries. These 

commenters also recommended that we 

consider wage index policies under the 

current IPPS because IRFs compete in a 

similar labor pool as acute care 

hospitals. The commenters suggested 

that the IPPS wage index policies would 

allow IRFs to benefit from the IPPS 

reclassification and/or floor policies. 

The commenters further recommended 

that until a new wage index system is 

implemented, we institute a 

‘‘smoothing’’ variable to the current 

process to reduce the fluctuations IRFs 

annually experience. 

Response: We note that the IRF PPS 

does not account for geographic 

reclassification under sections 

1886(d)(8) and (d)(10) of the Act, and 

does not apply the ‘‘rural floor’’ under 

section 4410 of Public Law 105–33 

(BBA). Furthermore, as we do not have 

an IRF-specific wage index, we are 

unable to determine at this time the 

degree, if any, to which a geographic 

reclassification adjustment or a ‘‘rural 

floor’’ policy under the IRF PPS would 

be appropriate. The rationale for our 

current wage index policies is fully 

described in the FY 2006 final rule (70 

FR 47880, 47926 through 47928). 

Finally, although some commenters 

recommended that we adopt the IPPS 

wage index policies such as 

reclassification and floor policies, we 

note that the Medicare Payment 

Advisory Commission (MedPAC’s) June 

2007 report to the Congress, titled 

‘‘Report to Congress: Promoting Greater 

Efficiency in Medicare,’’ recommends 

that Congress ‘‘repeal the existing 

hospital wage index statute, including 

reclassification and exceptions, and give 

the Secretary authority to establish new 

wage index systems.’’ We continue to 

believe that adopting the IPPS wage 

index policies, such as reclassification 

or floor, would not be prudent at this 

time because MedPAC suggests that the 

reclassification and exception policies 

in the IPPS wage index alter the wage 

index values for one-third of IPPS 

hospitals. As one commenter noted, we 

have research currently under way to 

examine alternatives to the wage index 

methodology, including the issues the 

commenters mentioned about ensuring 

that the wage index minimizes 

fluctuations, matches the costs of labor 

in the market, and provides for a single 

wage index policy. Section 3137(b) of 

the Affordable Care Act required us to 

submit a report to the Congress by 

December 31, 2011 that includes a plan 

to reform the hospital wage index 

system. The report that we submitted is 

available online at http://www.cms.gov/ 

Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/WageIndex-Reform.html. 

We enlisted the help of Acumen, LLC 

to assist us in meeting the requirements 

of section 106(b)(2), Division B, Title I 

of the Tax Relief and Health Care Act of 

2006 (Pub. L. 109–432, enacted on 

December 20, 2006) (TRCA). Acumen, 

LLC conducted a study of both the 

current methodology used to construct 

the Medicare wage index and the 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 47875 

recommendations reported to Congress 

by MedPAC. Parts 1 and 2 of Acumen’s 

final report, which analyzes the 

strengths and weaknesses of the data 

sources used to construct the CMS and 

MedPAC indexes, is available online at 

http://www.acumenllc.com/reports/cms. 

The report took MedPAC’s 2009 

recommendations on the Medicare wage 

index classification system into account, 

and includes a proposal to revise the 

IPPS wage index system. MedPAC’s 

recommendations were noted in the FY 

2009 IPPS final rule (75 FR 48434 at 

48563). The proposal considered each of 

the following: 

• The use of Bureau of Labor 

Statistics data or other data or 

methodologies to calculate relative 

wages for each geographic area. 

• Minimizing variations in wage 

index adjustments between and within 

MSAs and statewide rural areas. 

• Methods to minimize the volatility 

of wage index adjustments while 

maintaining the principle of budget 

neutrality. 

• The effect that the implementation 

of the proposal would have on health 

care providers in each region of the 

county. 

• Issues relating to occupational mix, 

such as staffing practices and any 

evidence on quality of care and patient 

safety, including any recommendations 

for alternative calculations to the 

occupational mix. 

• The provision of a transition period. 

We plan to monitor the efforts to 

develop an alternative wage index 

system for the IPPS closely and 

determine the impact or influence they 

may have on the IRF PPS wage index. 

Final Decision: After consideration of 

the public comments received, we have 

decided to continue to use the policies 

and methodologies described in the FY 

2008 IRF PPS final rule relating to the 

wage index methodology for areas 

without wage data. For FY 2014, we are 

maintaining the policies and 

methodologies described in the FY 2012 

IRF PPS final rule (76 FR 47836, at 

47836 through 47865) relating to the 

labor market area definitions and the 

wage index methodology for areas with 

wage data. Therefore, this final rule 

continues to use the Core-Based 

Statistical Area (CBSA) labor market 

area definitions and the prereclassification and pre-floor hospital 

wage index data based on 2009 cost 

report data. However, we will continue 

to monitor the IPPS wage index to 

identify any policy changes that may be 

appropriate for IRFs. 

We discuss the calculation of the 

standard payment conversion factor for 

FY 2014 in section VI.E. of this final 

rule. 

E. Description of the IRF Standard 

Conversion Factor and Payment Rates 

for FY 2014 

To calculate the standard payment 

conversion factor for FY 2014, as 

illustrated in Table 5, we begin by 

applying the adjusted market basket 

increase factor for FY 2014 that was 

adjusted in accordance with sections 

1886(j)(3)(C) and (D) of the Act, to the 

standard payment conversion factor for 

FY 2013 ($14,343). Applying the 1.8 

percent adjusted market basket increase 

factor for FY 2014 to the revised 

standard payment conversion factor for 

FY 2013 of $14,343 yields a standard 

payment amount of $14,601. Then, we 

apply the budget neutrality factor for the 

FY 2014 wage index and labor-related 

share of 1.0010, which results in a 

standard payment amount of $14,616. 

We next apply the budget neutrality 

factors for the revised CMG relative 

weights of 1.0000, which results in a 

standard payment conversion factor of 

$14,616 for FY 2014. 

We then apply the budget neutrality 

factors for the facility adjustments. 

Applying the budget neutrality factor for 

the revised rural adjustment of 1.0025 

results in a standard payment 

conversion factor of $14,652. We then 

apply the budget neutrality factor for the 

revised LIP adjustment of 1.0171 

resulting in a standard payment 

conversion factor of $14,903. Lastly, we 

apply the budget neutrality factor for the 

revised teaching adjustment of 0.9962 

which results in a final standard 

payment conversion factor for FY 2014 

of $14,846. 

TABLE 5—CALCULATIONS TO DETERMINE THE FY 2014 STANDARD PAYMENT CONVERSION FACTOR

Explanation for adjustment Calculations 

Standard Payment Conversion Factor for FY 2013 .................................................................................................................... $14,343 

Market Basket Increase Factor for FY 2014 (2.6 percent), reduced by 0.3 percentage point in accordance with sections 

1886(j)(3)(C) and (D) of the Act and a 0.5 percentage point reduction for the productivity adjustment as required by section 1886(j)(3)(C)(ii)(I) of the Act .............................................................................................................................................. × 1.018 

Budget Neutrality Factor for the Wage Index and Labor-Related Share .................................................................................... × 1.0010 

Budget Neutrality Factor for the Revisions to the CMG Relative Weights ................................................................................. × 1.0000 

Budget Neutrality Factor for the Update to the Rural Adjustment Factor ................................................................................... × 1.0025 

Budget Neutrality Factor for the Update to the LIP Adjustment Factor ...................................................................................... × 1.0171 

Budget Neutrality Factor for the Update to the Teaching Status Adjustment Factor ................................................................. × 0.9962 

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

After the application of the CMG 

relative weights described in Section IV 

of this final rule, to the FY 2014 

standard payment conversion factor 

($14,846), the resulting unadjusted IRF 

prospective payment rates for FY 2014 

are shown in Table 6. 

TABLE 6—FY 2014 PAYMENT RATES

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

0101 ................. $11,851.56 $10,616.37 $9,707.80 $9,262.42 

0102 ................. 14,713.87 13,180.28 12,051.98 11,498.23 

0103 ................. 17,233.24 15,436.87 14,115.58 13,466.81 

0104 ................. 18,129.94 16,240.04 14,848.97 14,167.54 

0105 ................. 21,192.67 18,983.58 17,357.94 16,560.71 

0106 ................. 24,176.71 21,657.34 19,803.08 18,893.02 

0107 ................. 27,294.37 24,448.39 22,356.59 21,329.25 

0108 ................. 34,378.88 30,795.06 28,158.41 26,865.32 


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47876 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 

TABLE 6—FY 2014 PAYMENT RATES—Continued 

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

0109 ................. 31,161.75 27,913.45 25,523.24 24,351.89 

0110 ................. 40,651.32 36,412.78 33,295.12 31,767.47 

0201 ................. 12,250.92 10,322.42 9,177.80 8,546.84 

0202 ................. 15,661.05 13,196.61 11,734.28 10,926.66 

0203 ................. 18,587.19 15,662.53 13,925.55 12,967.98 

0204 ................. 19,414.11 16,360.29 14,546.11 13,545.49 

0205 ................. 23,443.32 19,755.57 17,564.30 16,355.84 

0206 ................. 28,908.13 24,360.80 21,658.83 20,168.29 

0207 ................. 38,253.69 32,235.12 28,660.20 26,688.65 

0301 ................. 16,306.85 14,033.92 12,573.08 11,627.39 

0302 ................. 20,420.67 17,574.69 15,745.67 14,560.96 

0303 ................. 24,078.73 20,722.05 18,566.41 17,169.40 

0304 ................. 32,352.40 27,843.67 24,945.73 23,069.20 

0401 ................. 16,838.33 13,995.32 13,031.82 11,652.63 

0402 ................. 20,975.91 17,435.14 16,235.59 14,516.42 

0403 ................. 34,375.91 28,572.61 26,605.52 23,789.23 

0404 ................. 63,147.46 52,488.03 48,874.52 43,700.69 

0405 ................. 51,949.12 43,181.08 40,207.42 35,951.07 

0501 ................. 12,446.89 9,779.06 9,216.40 8,392.44 

0502 ................. 16,464.21 12,933.84 12,190.05 11,100.35 

0503 ................. 21,280.26 16,718.08 15,756.06 14,347.17 

0504 ................. 24,592.40 19,320.58 18,208.62 16,580.01 

0505 ................. 29,258.50 22,986.06 21,663.28 19,725.88 

0506 ................. 40,853.22 32,095.57 30,248.73 27,543.78 

0601 ................. 14,318.97 11,624.42 10,729.20 9,725.61 

0602 ................. 19,261.20 15,637.29 14,431.80 13,080.81 

0603 ................. 24,092.09 19,558.12 18,051.25 16,361.78 

0604 ................. 32,190.58 26,133.41 24,118.81 21,862.22 

0701 ................. 13,909.22 11,869.38 11,354.22 10,310.55 

0702 ................. 18,011.17 15,370.06 14,703.48 13,351.01 

0703 ................. 21,884.49 18,674.78 17,864.19 16,222.22 

0704 ................. 27,785.77 23,710.55 22,681.72 20,597.34 

0801 ................. 10,447.13 9,194.13 8,413.23 7,699.14 

0802 ................. 13,739.97 12,092.07 11,066.21 10,126.46 

0803 ................. 18,689.63 16,446.40 15,050.87 13,772.63 

0804 ................. 16,536.96 14,553.53 13,318.35 12,187.08 

0805 ................. 20,419.19 17,969.60 16,444.91 15,047.91 

0806 ................. 24,767.58 21,796.90 19,945.60 18,251.67 

0901 ................. 13,376.25 11,063.24 10,230.38 9,265.39 

0902 ................. 17,935.45 14,834.12 13,719.19 12,424.62 

0903 ................. 22,387.77 18,515.93 17,123.38 15,508.13 

0904 ................. 29,200.60 24,151.47 22,335.81 20,229.16 

1001 ................. 15,255.75 13,873.59 11,910.95 11,011.28 

1002 ................. 19,414.11 17,654.86 15,157.77 14,013.14 

1003 ................. 28,744.83 26,140.84 22,442.70 20,747.29 

1101 ................. 18,110.64 16,563.68 15,294.35 14,929.14 

1102 ................. 25,408.93 23,236.96 21,458.41 20,943.25 

1201 ................. 14,035.41 13,971.57 12,537.45 11,467.05 

1202 ................. 17,442.57 17,362.40 15,580.88 14,250.68 

1203 ................. 21,789.47 21,688.52 19,463.11 17,801.84 

1301 ................. 17,337.16 14,807.40 13,453.45 12,201.93 

1302 ................. 22,306.12 19,050.39 17,308.95 15,699.65 

1303 ................. 28,584.49 24,412.76 22,181.41 20,117.81 

1401 ................. 13,166.92 10,782.65 9,731.55 8,814.07 

1402 ................. 17,708.31 14,501.57 13,088.23 11,854.53 

1403 ................. 21,646.95 17,727.61 15,999.53 14,491.18 

1404 ................. 27,594.26 22,598.58 20,395.43 18,472.88 

1501 ................. 15,036.03 12,819.52 11,584.33 11,095.90 

1502 ................. 18,781.67 16,014.38 14,470.40 13,860.23 

1503 ................. 22,799.00 19,439.35 17,565.79 16,824.97 

1504 ................. 28,292.02 24,121.78 21,798.38 20,877.93 

1601 ................. 15,895.61 13,187.70 12,362.26 11,340.86 

1602 ................. 20,619.61 17,107.05 16,036.65 14,710.90 

1603 ................. 26,078.48 21,635.08 20,282.61 18,606.49 

1701 ................. 16,409.28 14,179.41 12,795.77 11,533.86 

1702 ................. 20,643.36 17,838.95 16,097.52 14,510.48 

1703 ................. 24,574.58 21,235.72 19,163.22 17,273.32 

1704 ................. 31,184.02 26,948.46 24,317.75 21,918.63 

1801 ................. 16,891.78 15,117.68 13,682.07 11,354.22 

1802 ................. 25,992.38 23,262.20 21,054.60 17,472.26 

1803 ................. 41,528.72 37,166.96 33,639.55 27,916.42 

1901 ................. 16,087.13 13,788.96 13,134.26 12,939.77 


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TABLE 6—FY 2014 PAYMENT RATES—Continued 

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

1902 ................. 31,559.63 27,050.90 25,765.23 25,382.21 

1903 ................. 52,455.37 44,964.08 42,824.77 42,189.36 

2001 ................. 13,178.79 10,788.59 9,933.46 9,066.45 

2002 ................. 17,617.75 14,421.40 13,279.75 12,120.27 

2003 ................. 22,190.32 18,164.08 16,725.50 15,266.14 

2004 ................. 29,113.01 23,829.31 21,942.39 20,027.25 

2101 ................. 32,591.42 23,195.39 22,433.79 21,001.15 

5001 ................. ................................................ ................................................ ................................................ 2,283.31 

5101 ................. ................................................ ................................................ ................................................ 9,823.60 

5102 ................. ................................................ ................................................ ................................................ 21,298.07 

5103 ................. ................................................ ................................................ ................................................ 11,361.64 

5104 ................. ................................................ ................................................ ................................................ 29,224.35 

F. Example of the Methodology for 

Adjusting the Federal Prospective 

Payment Rates 

Table 7 illustrates the methodology 

for adjusting the federal prospective 

payments (as described in sections VI.A. 

through VI.D. of this final rule). The 

following examples are based on two 

hypothetical Medicare beneficiaries, 

both classified into CMG 0110 (without 

comorbidities). The 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 0.8472, 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 0.8862, 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 6. Then, we 

multiply the labor-related share for FY 

2014 (69.494 percent) described in 

section VI.C. of this final rule by the 

unadjusted federal prospective payment 

rate. To determine the non-labor portion 

of the federal prospective payment rate, 

we subtract the labor portion of the 

federal payment from the unadjusted 

Federal prospective payment. 

To compute the wage-adjusted federal 

prospective payment, we multiply the 

labor portion of the 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/MedicareFee-for-Service-Payment/Inpatient

RehabFacPPS/. The resulting figure is 

the wage-adjusted labor amount. Next, 

we compute the wage-adjusted federal 

payment by adding the wage-adjusted 

labor amount to the non-labor portion. 

Adjusting the 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 7 illustrates the components 

of the adjusted payment calculation. 

TABLE 7—EXAMPLE OF COMPUTING THE IRF FY 2014 FEDERAL PROSPECTIVE PAYMENT

Steps Rural facility A 

(Spencer Co., IN) 

Urban facility B 

(Harrison Co., IN) 

1 .................. Unadjusted Federal Prospective Payment ..................................................................... $31,767.47 $31,767.47 

2 .................. Labor Share .................................................................................................................... × 0.69494 × 0.69494 

3 .................. Labor Portion of Federal Payment ................................................................................. = $22,076.49 = $22,076.49 

4 .................. CBSA Based Wage Index (shown in the Addendum, Tables 1 and 2) ......................... × 0.8472 × 0.8862 

5 .................. Wage-Adjusted Amount ................................................................................................. = $18,703.20 = $19,564.19 

6 .................. Non-labor Amount .......................................................................................................... + $9,690.98 + $9,690.98 

7 .................. Wage-Adjusted Federal Payment .................................................................................. = $28,394.18 = $29,255.17 

8 .................. Rural Adjustment ............................................................................................................ × 1.1493 × 1.000 

9 .................. Wage- and Rural-Adjusted Federal Payment ................................................................ = $32,633.43 = $29,255.17 

10 ................ LIP Adjustment ............................................................................................................... × 1.0156 × 1.0454 

11 ................ FY 2014 Wage-, Rural- and LIP-Adjusted Federal Prospective Payment Rate ............ = $33,142.51 = $30,583.35 

12 ................ FY 2014 Wage- and Rural-Adjusted Federal Prospective Payment ............................. $32,633.43 $29,255.17 

13 ................ Teaching Status Adjustment .......................................................................................... × 0 × 0.0784 

14 ................ Teaching Status Adjustment Amount ............................................................................. = $0.00 = $2,293.61 

15 ................ FY 2014 Wage-, Rural-, and LIP-Adjusted Federal Prospective Payment Rate ........... + $33,142.51 + $30,583.35 

16 ................ Total FY 2014 Adjusted Federal Prospective Payment ................................................. = $33,142.51 = $32,876.96 

Thus, the adjusted payment for 

Facility A would be $33,142.51, and the 

adjusted payment for Facility B would 

be $32,876.96. 

We did not receive any comments 

specifically on the FY 2014 IRF PPS 

Federal prospective payment rates. 


tkelley on DSK3SPTVN1PROD with RULES2
47878 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 

VII. Update to Payments for High-Cost 

Outliers Under the IRF PPS 

A. Update to the Outlier Threshold 

Amount for FY 2014 

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 

2006 through 2012 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, 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 2014, we proposed to use 

FY 2012 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 2013. Based on an 

analysis of this updated data, we 

estimate that IRF outlier payments as a 

percentage of total estimated payments 

are approximately 2.5 percent in FY 

2014. This estimated percentage 

changed more than usual between the 

proposed rule and the final rule due to 

the use of updated data for the final rule 

(from 2.8 percent in the proposed rule 

to 2.5 percent in the final rule). Our 

analysis indicates that this change was 

due to a larger-than-usual change in 

individual IRFs’ CCRs between the 

proposed rule and the final rule. This 

may be the result of outlier 

reconciliation policies that we recently 

implemented for the IRF PPS that result 

in more current CCRs being used to 

calculate the outlier payments. Based on 

our updated estimates, then, we update 

the outlier threshold amount to $9,272 

to maintain estimated outlier payments 

at approximately 3 percent of total 

estimated aggregate IRF payments for 

FY 2014. 

We received 4 comments on the 

update to the outlier threshold amount 

for FY 2014, which are summarized 

below. 

Comment: Several commenters 

expressed support for the proposed 

update to the outlier threshold amount 

to maintain estimated IRF outlier 

payments for FY 2014 at 3 percent of 

total IRF PPS payments. However, 

several other commenters expressed 

concerns that actual IRF outlier 

payments in recent years have tended to 

fall below 3 percent of total IRF PPS 

payments. These commenters requested 

that we evaluate the IRF PPS outlier 

policy to ensure that it is working as 

intended, adopt similar changes in the 

IRF PPS outlier calculation that are 

proposed for the FY 2014 IPPS outlier 

calculation, and incorporate any unused 

outlier payments from years in which 

aggregate outlier payments are below 

the 3 percent target back into the IRF 

PPS base payments for subsequent 

years. One commenter also suggested 

that we lower the outlier pool from 3 

percent to 1.5 or 2 percent, and add the 

money back into the IRF PPS base 

payment amount. 

Response: We will continue to 

monitor our IRF outlier policies to 

ensure that they continue to compensate 

IRFs for treating unusually high-cost 

patients and, thereby, promote access to 

care for patients who are likely to 

require unusually high-cost care. At this 

time, we do not have any indications to 

suggest that the outlier pool would be 

better set at 1.5 or 2 percent than at 3 

percent. 

We do not make adjustments to IRF 

PPS payment rates for the sole purpose 

of accounting for differences between 

projected and actual outlier payments. 

We use the best available data at the 

time to establish an outlier threshold for 

IRF PPS payments prior to the 

beginning of each fiscal year so that 

estimated outlier payments for that 

fiscal year will equal 3 percent of total 

estimated total IRF PPS payments. We 

evaluate the status of our outlier 

expenditures annually and if there is a 

difference from our projection, that 

information is used to make a 

prospective adjustment to lower or raise 

the outlier threshold for the upcoming 

fiscal year. We do not make 

retrospective adjustments. If outlier 

payments for a given year turn out to be 

greater than projected, we do not recoup 

money from hospitals; if outlier 

payments for a given year are lower than 

projected, we do not make an 

adjustment to account for the difference. 

Payments for a given discharge in a 

given fiscal year are generally intended 

to reflect or address the average costs of 

that discharge in that year; that goal 

would be undermined if we adjusted 

IRF PPS payments to account for 

‘‘underpayments’’ or ‘‘overpayments’’ in 

IRF outliers in previous years. 

We also note that the IPPS outlier 

payments are not calculated using the 

same methodology as the IRF PPS 

outlier calculations, so recently 

implemented and proposed changes to 

the IPPS methodology for calculating 

outlier payments would not be 

applicable for the IRF PPS unless we 

were to change our entire methodology 

for calculating IRF outlier payments to 

mirror the IPPS methodology, which we 

are not considering at this time. 

Final Decision: Having carefully 

considered the public comments 

received, we are reducing the outlier 

threshold amount to $9,272 to maintain 

estimated outlier payments at 3 percent 

of total estimated aggregate IRF 

payments for FY 2014. This update is 

effective October 1, 2013. We will 

continue to monitor trends in IRF 

outlier payments to ensure that they are 

working as intended to compensate IRFs 

for treating exceptionally high-cost IRF 

patients. 

B. Update to the IRF Cost-to-Charge 

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 update the national urban and 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 47879 

rural CCRs for IRFs, as well as the 

national CCR ceiling for FY 2014, 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 2014, 

as discussed below. 

• Other IRFs for which accurate data 

to calculate an overall CCR are not 

available. 

Specifically, for FY 2014, we estimate 

a national average CCR of 0.643 for rural 

IRFs, which we calculate by taking an 

average of the CCRs for all rural IRFs 

using their most recently submitted cost 

report data. Similarly, we estimate a 

national average CCR of 0.516 for urban 

IRFs, which we calculate 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 final rule, we 

have used the most recent available cost 

report data (FY 2011). This includes all 

IRFs whose cost reporting periods begin 

on or after October 1, 2010, and before 

October 1, 2011. If, for any IRF, the FY 

2011 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 2010) 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 

will set the national CCR ceiling at 3 

standard deviations above the mean 

CCR. Using this method, the national 

CCR ceiling is set at 1.57 for FY 2014. 

This means that, if an individual IRF’s 

CCR exceeds this ceiling of 1.57 for FY 

2014, we will replace the IRF’s CCR 

with the appropriate national average 

CCR (either rural or urban, depending 

on the geographic location of the IRF). 

We estimate the 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 did not receive any comments on 

the proposed updates to the IRF CCR 

ceilings and urban/rural averages. 

Final Decision: We did not receive 

any comments on the IRF CCR ceiling 

or urban/rural averages. Therefore, we 

are finalizing the national average urban 

CCR at 0.516, the national average rural 

CCR at 0.643, and the national CCR 

ceiling at 1.57 percent for FY 2014. 

These updates are effective October 1, 

2013. 

VIII. 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 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 

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 


tkelley on DSK3SPTVN1PROD with RULES2
47880 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 

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 

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 


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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. Changes to the ICD–9–CM Codes That 

Are Used To Determine Presumptive 

Compliance 

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). IRFs may only be 

evaluated using the presumptive 

compliance method if their Medicare 

Fee-for-Service and Medicare Advantage 

patient populations make up over half 

of their total patient population, so that 

the Medicare populations can be 

presumed to be representative of the 

IRF’s total patient population. If an IRF 

is eligible to have its compliance under 

the 60 percent rule measured using the 

presumptive compliance method, under 

the rule, it is given the option of 

whether the Medicare contractor will 

review all of the IRF’s discharges from 

that period, or all admissions from that 

period. All of its IRF–PAI assessments 

in the chosen category from the most 

recently completed 12 month 

compliance review period are then 

examined (with the use of a computer 

program) to determine whether they 

contain any of the ICD–9–CM 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). Each selected assessment is 

categorized as either meeting or not 

meeting the criteria for the medical 

conditions that may be counted towards 

the IRF’s 60 percent rule compliance 

calculation based on coded information 

about the primary reason the patient 

was admitted to the IRF (the impairment 

group) and the ICD–9–CM 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 the 

comorbidities listed on the assessment. 

An impairment group code is not an 

ICD–9–CM 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. Those ICD–9–CM diagnosis codes 

that appear on the patient’s IRF–PAI 

assessment as either the etiologic 

diagnosis or comorbid conditions that 

are also listed in ‘‘ICD–9–CM Codes 

That Meet Presumptive Compliance 

Criteria’’ are deemed to demonstrate 

that the patient meets the criteria for the 

medical conditions that may be counted 

toward the IRF’s compliance percentage 

under the presumptive compliance 

method of calculating the compliance 

percentage. The current presumptive 

compliance list 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-Service-Payment/Inpatient

RehabFacPPS/Criteria.html. The ICD–9– 

CM Codes That Meet Presumptive 

Compliance Criteria that takes what we 

are finalizing in this rule into account 

can be downloaded from the Medicare 

IRF PPS Web site at http://

www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/InpatientRehab

FacPPS/Data-Files.html. We will build 

our ICD–10–CM version of the 

presumptive methodology list off of this 

document. 

The underlying premise of the 

presumptive 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 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 

inpatient rehabilitation facilities and 

cannot be appropriately performed in 

another care setting. 

Recently, we began a close 

examination of the list of ICD–9–CM 

codes that are currently deemed to meet 

the criteria for the medical conditions 

that may be counted toward an IRF’s 

compliance with the 60 percent rule 

under the presumptive compliance 

method to begin the process of 

converting this code list to ICD–10–CM. 

Upon this examination, we found that 

changes over time (including changes in 

the use of the individual codes, changes 

in clinical practice, changes in the 

frequency of various types of illness and 

disability, and changes to the 

application of 60 percent rule itself) 

supported our updating the ICD–9–CM 

codes that are deemed appropriate to 

count toward a facility’s 60 percent rule 

compliance calculation. Such updates 

would ensure that the codes better 

reflect the regulations at § 412.29(b). 

Our review included taking a fresh 

look at the regulations in § 412.29(b), 

which revealed that the following parts 

of the regulation were not being 

adequately addressed in the current 

application of the presumptive method 

of calculating compliance with the IRF 

60 percent rule: 

• The details of the requirements in 

paragraph § 412.29(b)(1), which specify 

that the IRF must serve ‘‘an inpatient 

population of whom at least 60 percent 

required intensive rehabilitation 

services for treatment of one or more of 

the conditions specified . . .’’, and 

• The details of the requirements 

regarding the specific conditions under 

which a patient’s comorbidity may be 

used to show that a patient meets the 60 

percent rule criteria, specifically that, 

‘‘The comorbidity 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 

inpatient rehabilitation 

facilities . . .and that cannot be 

appropriately performed in another care 

setting . . .’’ 

These requirements must be met in 

conjunction with a patient having one of 

the 13 conditions listed in § 412.29(b)(2) 

for the case to meet the 60 percent rule 

compliance criteria. It is not enough for 

the patient to just have one of the 13 

conditions. Mindful of these 

requirements, we took a fresh look at the 

ICD–9–CM codes on the presumptive 

methodology list. 

Further, the regulations in § 412.29 

also specify that the arthritis conditions 

only meet the 60 percent rule 

compliance criteria if certain severity 

and prior treatment criteria are met. It 

is impossible to discern from the ICD– 

9–CM codes alone whether or not the 

required severity and prior treatment 

criteria are met for those patients being 

treated for arthritis conditions. This 

type of information can only be assessed 

on medical review. Thus, we found that 

the presence of the ICD–9–CM code, by 

itself, cannot always allow us to 

presume that patients meet all of the 

requirements for being counted toward 

a facility’s meeting the 60 percent rule 

requirements. As such, we believe that 

certain ICD–9–CM codes currently on 

the presumptive methodology list do 

not necessarily demonstrate a patient’s 

meeting the medical condition 

(including severity and prior treatment) 

requirements for inclusion in a facility’s 


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60 percent compliance calculation 

under the presumptive compliance 

method, and, as such, should be 

removed from the presumptive 

methodology list to better reflect the 

regulations. 

Therefore, we performed a clinical 

analysis of the ICD–9–CM code list to 

determine the clinical appropriateness 

of each individual ICD–9–CM code’s 

inclusion on the list, and a statistical 

analysis of the ICD–9–CM diagnoses 

code list to enhance our understanding 

of how individual ICD–9–CM codes are 

being used by IRFs. Based on these 

analyses, we proposed specific revisions 

to the ICD–9–CM code list that are 

described below in sections VIII.B.1 

through VIII.B.6 of this final rule. 

We received 39 public comments on 

the proposed changes to the 

presumptive methodology list, which 

are summarized below. 

Comment: Several commenters stated 

that section 5005 of the DRA of 2005, 

and section 115 of the MMSEA of 2007 

‘‘codified’’ the 13 qualifying medical 

conditions that were originally adopted 

in our May 7, 2004 final rule and that 

were still in the regulations in effect as 

of January 1, 2007, and froze the 

compliance threshold at 60 percent. 

These commenters also expressed the 

belief that CMS does not have the legal 

authority to make changes to the 

presumptive methodology list as 

proposed and must appeal to Congress 

to make such changes. One commenter 

stated that Congress ‘‘was clear in the 

statute’’ that for purposes of 

determining a facility’s compliance 

under the presumptive compliance 

method, that CMS should utilize the 

May 7, 2004 final rule and the 13 

qualifying medical conditions described 

in that final rule. 

Response: While the commenters are 

correct that the DRA of 2005 and the 

MMSEA of 2007 both referenced the 

regulatory text that was adopted in the 

May 7, 2004 final rule, or the rule itself, 

we disagree with the assertion that the 

proposed changes to the ‘‘ICD–9–CM 

Codes That Meet Presumptive 

Compliance Criteria’’ list are in 

contravention of section 5005 of the 

DRA as amended by section 115 of 

MMSEA. Additionally, as we did not 

propose any changes to the compliance 

threshold (it remains at 60 percent), the 

comments regarding the 60 percent 

threshold are outside the scope of this 

rule. 

Subsection (a) of section 5005 of the 

DRA stipulated that the Secretary 

should apply the applicable percent ‘‘in 

the classification criterion used under 

the IRF regulation (as defined in 

subsection (c)) to determine whether a 

hospital or unit of a hospital is an 

inpatient rehabilitation facility under 

the Medicare program under title XVIII 

of the Social Security Act.’’ Subsection 

(c) of section 5005 of the DRA then 

stated that ‘‘[f]or purposes of subsection 

(a), the term ‘‘IRF regulation’’ means the 

rule published in the Federal Register 

on May 7, 2004. . . .’’ 

Even if we were to agree with 

commenters’ assertions that this crossreference froze the medical conditions 

that could be considered for the 75- 

percent compliance rule to the 13 

medical conditions listed in the May 7, 

2004 final rule, however, it would not 

follow that Congress froze the subregulatory means of verifying 

compliance with the severity and prior 

treatment requirements that were 

contained in that final rule. We disagree 

with any assertion that the proposed 

removal of certain ICD–9–CM codes 

from the sub-regulatory listing of codes 

that presumptively count toward the 

IRF compliance calculation under the 

presumptive compliance method would, 

in fact or effect, remove any of the 13 

qualifying medical conditions under the 

classification criteria established in our 

May 7, 2004 final rule (69 FR 25752). 

Rather, it merely means that the medical 

review method would need to be used. 

For example, the ‘‘arthritis’’ categories 

in the May 7, 2004 final rule only 

included those arthritis patients that 

meet the severity and pretreatment 

conditions specified in the regulations 

prior to the patient’s admission to the 

IRF. See, the former 42 CFR 

§ 412.23(b)(2)(iii)(L), which can be 

found at 69 FR 25772. As such, the 

severity and pretreatment requirements 

were part of the defined condition, and 

any sub-regulatory procedures to 

implement these regulatory conditions 

would have to take into account the 

need to ensure compliance with these 

severity and pretreatment requirements. 

Furthermore, while the May 7, 2004 

final rule noted that CMS would be 

issuing sub-regulatory guidance to its 

contractors that were to be tasked with 

the administration of the verification 

process for these requirements, the 

substance of such processes is not in the 

final rule. What are in the rule, 

however, are multiple statements that 

ICD–9–CM diagnosis codes alone would 

not, in the absence of additional clinical 

data, demonstrate compliance with the 

severity and pre-treatment 

requirements. Some other mechanism, 

such as medical review, was 

contemplated from the outset for these 

conditions (69 FR 25752, 25755 and 

25761). 

Thus, we have not proposed changes 

to the criteria established in the May 7, 

2004 final rule. It remains as a list of 13 

medical conditions, at times, paired 

with additional severity and prior 

treatment requirements. And, with the 

exception of discussion about imputing 

the Medicare portion of a facility’s 

patient population compliance 

percentage to the entire population 

when the Medicare population 

represents the majority of that facility’s 

patients, it did not discuss, let alone 

‘‘codify’’ the methods we would use to 

verify IRFs’ compliance percentages. 

Rather, we merely stated in that rule 

that we would issue instructions to the 

FIs that serve as the Medicare 

contractors and provide guidance to the 

clinical/medical FI personnel 

responsible for performing the 

compliance reviews to ensure that they 

use a method that consistently counts 

only cases with a diagnosis that both 

serves as the basis for intensive 

rehabilitation services and meets one of 

the 13 qualifying medical conditions; 

noted that we were still determining 

how best to provide guidance to the FIs 

on how to identify patients that fall into 

the 13 medical conditions; noted that 

we would not be providing ICD–9–CM 

codes in response to a commenter 

because diagnosis would be only one 

aspect of the FI’s determination; and 

stated that FIs would also ‘‘review 

information to assess (1) the medical 

necessity of rehabilitation in an 

inpatient setting; (2) the severity of the 

specific condition(s); (3) the patient’s 

function; and (4) the capacity of the 

patient to participate in intensive 

rehabilitation and benefit from it.’’ 

As such, we believe that the proposed 

removal of some of the ICD–9–CM codes 

in our sub-regulatory presumptive 

methodology list is consistent with the 

legislation and the May 7, 2004 

regulation. We have not proposed the 

revision of the list of 13 medical 

conditions or the severity and prior 

treatment requirements that were paired 

with those conditions. For example, 

consistent with the severity and 

pretreatment requirements defined in 

the regulations (which are currently 

located at § 412.29(b)(2)(x) through 

§ 412.29(b)(2)(xiii), we proposed the 

removal of the ‘‘arthritis’’ ICD–9–CM 

codes because those codes do not 

provide the pertinent information 

necessary to assess whether the 

applicable severity and prior treatment 

requirements for those conditions have 

been met. If and when the severity and 

pretreatment requirements are 

confirmed using the medical review 

method, however, patients with those 

arthritis conditions will be counted 

toward the IRF’s compliance threshold. 


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In this manner, we administratively 

apply the regulation as codified and as 

outlined in the May 7, 2004 final rule. 

Ultimately, the code refinements to the 

ICD–9–CM Codes That Meet 

Presumptive Compliance Criteria list 

will ensure that the codes represent the 

types of medical conditions that we 

believe clearly, and without further 

evidence, can be found to indicate that 

the criteria for the medical conditions 

that may be counted toward the 60 

percent rule compliance calculation 

have been met, and, therefore, that the 

presumptive compliance method can be 

used to include that individual in the 

IRF’s compliance percentage. 

Comment: Several commenters 

suggested that we delay these 

refinements to the presumptive 

compliance list until next year when the 

implementation of ICD–10–CM is 

planned. Commenters also stated that 

making these changes effective for 

discharges on or after October 1, 2013 

will cause significant disruption for 

providers. One commenter asked for 

clarification regarding how the 

proposed changes would be 

implemented, specifically whether the 

prior list would be applied for the first 

part of a facility’s fiscal year and the 

new list be applied for the second part. 

Several commenters asked that we 

provide a 6-month transition period to 

implement these changes. 

Response: We considered the impact 

that our proposals would have on IRF 

providers if we were to make the 

changes effective for FY 2014 instead of 

in FY 2015 when we plan to move to 

ICD–10–CM. We believed that a gradual 

approach allowing IRF providers time to 

adjust their coding practices in response 

to the specific changes made to the 

presumptive methodology list before 

also moving to ICD–10–CM was the 

appropriate course of action. However, 

we recognize that IRFs may need more 

time to adjust to the changes to the 

presumptive methodology list. In 

recognition of these concerns, we will 

adopt these changes, but only apply the 

revised list to compliance review 

periods beginning on or after October 1, 

2014. This will eliminate any problems 

associated with changing lists in the 

middle of a fiscal year. 

Comment: One commenter supported 

our efforts to refine the list of ICD–9– 

CM codes in the presumptive 

methodology list. But, the commenter 

also stated that a better overall system 

would be one in which payment 

systems would be focused on patientbased criteria at the level of the episode 

of care or other broader site-neutral 

systems; however, within the current 

payment system, they supported CMS’ 

efforts to improve accuracy in 

determining the need for the intensive 

inpatient rehabilitation services that 

IRFs provide. Further, the commenter 

stated that by ‘‘requiring IRFs to use 

more detailed coding, we could 

potentially collect information on IRF 

patients that would differentiate them 

from patients with similar conditions 

who are treated in other settings (for 

example, skilled nursing facilities, home 

health agencies, or outpatient therapy 

providers).’’ 

Response: We thank the commenter 

for their support of our efforts to refine 

the presumptive methodology list so 

that it reflects codes that truly indicate 

compliance with the 60 percent rule 

criteria for inclusion in the compliance 

calculation. Additionally, we thank the 

commenter for their suggestions as the 

agency continues research efforts into 

broader site-neutral payment systems. 

Comment: Several commenters stated 

that they had concerns about the 

viability of the ‘‘60 percent rule.’’ One 

commenter stated that the 60 percent 

rule should be repealed or modified in 

that the current classification criteria do 

not reflect the full range of factors that 

contribute to a patient’s need for 

intensive inpatient rehabilitation. The 

commenter also stated that if we 

continue to use the 60 percent rule, then 

the list of 13 qualifying medical 

conditions under the 60 percent rule 

should be expanded to include patients 

with the following conditions: 

orthopedic/joint/limb replacement 

patients, post-transplant patients, 

patients with chronic pulmonary and 

cardiac conditions, and medically 

complex patients. 

Response: We appreciate the 

commenters’ suggestions, and will take 

these suggestions into account in future 

analyses. However, since we did not 

propose any modifications to the 

qualifying medical conditions for the 60 

percent rule, these comments are 

beyond the scope of this final rule. 

Comment: One commenter stated that 

we should clarify the alphabet 

designations for appendices associated 

with IRF–PAI completion because in 

our rules (this year and in past 

rulemakings) we have used the same 

alphabet character for more than one 

list. 

Response: We agree that the alphabet 

designations used for appendices in the 

IRF PPS may lead to confusion because 

appendices for several tables are listed 

with the same alphabet character. 

Appendix C: ICD–9–CM Codes That 

Meet Presumptive Compliance Criteria 

is used to determine an IRF’s 

presumptive compliance with the 60 

percent rule. However, there is also the 

list of comorbidities (ICD–9–CM codes) 

that is used to determine placement in 

tiers, Appendix C—List of 

Comorbidities. Beginning with the 

publication of this rule, we will no 

longer use alphabet characters to 

identify these appendices. Beginning 

with this final rule and related subregulatory guidance, we will refer to the 

two lists by their titles, without the 

Appendix labels. 

Comment: One commenter 

recommended that in lieu of removing 

the ICD–9–CM codes from the ICD–9– 

CM Codes That Meet Presumptive 

Compliance Criteria, CMS should 

establish modifiers that could be 

entered on the IRF–PAI to indicate that 

the patient meets the requirements for 

the medical conditions that may be 

included in the IRF’s presumptive 

compliance method’s compliance 

calculation. The commenter offered the 

following example that is used on 

claims: the KX modifier with respect to 

outpatient therapy services to indicate 

that a patient qualifies for an exception 

to the therapy caps on the claim. The 

commenter stated that using modifiers 

would ensure that ‘‘clinically 

appropriate’’ records would count under 

the presumptive compliance method 

compliance calculations without having 

to do medical review. 

Response: We appreciate the 

commenter’s suggestion. However, we 

note that the presumptive compliance 

method relies on information recorded 

on the IRF–PAI, rather than information 

from the IRF claim. The purpose of the 

IRF–PAI is to collect the clinical 

characteristics of the patient for use in 

care planning, payment, and quality 

reporting and therefore we believe it 

presents a more accurate and 

comprehensive record of the medical 

conditions of the patient, which is 

important when the record is then used 

to calculate the presumptive compliance 

percentage. Thus, we do not currently 

use and are not planning in the future 

to use, the IRF claim for the 

presumptive compliance method. Thus, 

a modifier applied to the coding on the 

claim, similar to the KX modifier for 

outpatient therapy services, is not useful 

in this context, and we do not currently 

have a similar mechanism for modifying 

codes on the IRF–PAI. However, we will 

take the commenter’s suggestions into 

consideration. We believe that a delayed 

implementation of the changes to the 

presumptive compliance list of ICD–9– 

CM codes will allow us additional time 

to study ways to minimize the burden 

of the operational aspects of the changes 

to the presumptive compliance 

methodology. 


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Comment: Several commenters stated 

that we have incorrectly applied a 

medical necessity measurement (the 

coverage criteria) to the 60 percent rule. 

One commenter stated that we conflated 

individualized medical necessity review 

with the presumptive compliance 

method’s review. Another commenter 

requested that we distinguish between 

the policies for IRF classification criteria 

and medical necessity coverage criteria 

in the final rule. 

Response: We disagree with the 

commenters; we are not conflating the 

criteria for the medical conditions that 

may be counted under the presumptive 

method to determine compliance with 

the 60 percent rule with the coverage 

criteria. IRF coverage criteria are not 

used to determine IRF classification. As 

we stated in the August 7, 2009 final 

rule (74 FR 39762), we do not intend for 

any IRF to lose its classification status 

because an individual patient does not 

meet the coverage criteria. Failure to 

meet the coverage criteria in a particular 

case will only result in the denial of the 

IRF’s claim for the services provided to 

that patient, not in a change in the 

classification of the facility. 

Comment: Several commenters 

expressed concerns that, in the 

proposed rule, we changed our policy 

articulated in previous rules of 

distinguishing IRFs from other care 

settings by identifying certain 

conditions that ‘‘typically require’’ 

intensive inpatient rehabilitation. 

Specifically, commenters asserted that 

we have deviated from the policy 

standard of serving those with 

conditions that ‘‘typically required’’ an 

IRF-level of service. The commenters 

point to our statement in the proposed 

rule that ‘‘[i]t is not enough for the 

patient to just have one of the 13 

conditions’’ to indicate that we 

proposed adding additional criteria to 

the medical conditions that may be 

counted under the presumptive 

compliance method. For example, the 

commenters believed that we had 

proposed adding a new criterion by 

indicating that beyond having one of the 

13 medical conditions, we now 

proposed to require that patients need 

intensive inpatient rehabilitation 

services. According to the commenters, 

this is inconsistent with the history of 

the 60 percent rule and our own 

interpretations of the policy in previous 

rulemaking. 

Response: We disagree with the 

commenters’ assertions that we have 

introduced new criteria to the 

presumptive compliance method of 

determining whether an IRF has met the 

criteria for a given medical condition 

such that the individual with that 

condition may be counted toward the 

IRF’s 60 percent rule compliance 

percentage. Section 412.29 outlines the 

requirements for a facility to be 

classified for payment under the IRF 

PPS. Within this section, the regulations 

at § 412.29(b)(1) require the IRF to 

demonstrate that it ‘‘served an inpatient 

population of whom at least 60 percent 

required intensive rehabilitation 

services for treatment of one or more of 

the conditions specified at paragraph 

(b)(2) . . . (emphasis added). As such, 

the ‘‘intensive rehabilitation service 

needs’’ criterion is part of the original 

criteria for the medical conditions that 

can be counted toward an IRF’s 60 

percent rule compliance rate. We also 

point out that this particular part of the 

regulation read the same in the May 7, 

2004 final rule (then codified in 

§ 412.23(b)(2)(i), now codified in 

§ 412.29(b)(1)). Thus, our statement in 

the proposed rule was consistent with 

what has been our stated policy since 

the May 7, 2004 final rule. 

We also disagree with any assertion 

that the proposed changes to the 

presumptive methodology list are an 

indication that we have departed from 

historical discussions outlined in the 

preamble of previous rules. As we stated 

previously, we are not revising the 

criteria that govern the 13 medical 

conditions that may be counted toward 

an IRF’s 60 percent rule compliance 

percentage. In the preamble of the May 

7, 2004 final rule, when discussing how 

CMS contractors would administratively 

identify patients with the 13 medical 

conditions, we specifically declined to 

provide a list of ICD–9–CM codes 

because ICD–9–CM codes alone are not 

always enough to ascertain whether 

someone falls into one of the 13 medical 

condition categories. As such, the 

regulations have never included such a 

list. Rather, we use a bifurcated subregulatory approach with a presumptive 

compliance method and a medical 

review compliance method. We 

continue to believe that the 13 medical 

conditions that are listed in regulation 

at § 412.29(b)(2) are conditions that 

‘‘typically’’ require the level of intensive 

rehabilitation that provide the basis of 

need to differentiate the services offered 

in IRFs from those offered in other care 

settings. 

Comment: One commenter requested 

that we make available the methodology 

that was used to assess the ‘‘clinical 

appropriateness’’ determinations for the 

ICD–9–CM codes that were proposed for 

removal. 

Response: To analyze the ‘‘clinical 

appropriateness’’ of the ICD–9–CM 

codes on the list used to determine 

compliance under the presumptive 

compliance method, we used the 

extensive clinical and coding expertise 

available within CMS’s staff. Our 

clinical staff went through the current 

list code-by-code to determine whether, 

in their professional judgment, a 

particular ICD–9–CM code’s use would 

indicate a patient’s presumptive need 

for intensive inpatient rehabilitation for 

one of the 13 medical conditions listed 

in 412.29(b)(2), absent additional 

information about a particular patient’s 

clinical condition and rehabilitation 

needs. The details of our clinical 

rationale for each of the proposed 

changes to the ICD–9–CM codes used to 

determine compliance percentages 

under the presumptive compliance 

method were presented in the FY 2014 

IRF PPS proposed rule (78 FR 26880 at 

26895 through 26906) and are further 

reflected in this final rule. We also used 

the public comments we received on the 

FY 2014 IRF PPS proposed rule (78 FR 

26880) to further refine our clinical 

analysis, in that we used a lot of the 

input from commenters in forming our 

final decisions regarding which ICD–9– 

CM codes to retain on the list and which 

to proceed to remove from the list. As 

discussed in detail below, in some cases 

we agreed with the commenter’s input 

and have added codes back to the list, 

as appropriate. 

Comment: Several commenters 

requested that we make an IRF’s 

presumptive testing data available to 

that IRF to allow the IRF to monitor its 

presumptive compliance with the 60 

percent rule. 

Response: Until now, we did not have 

the capability within our data system for 

securely communicating information 

about an IRF’s individual IRF–PAI 

submissions back to that IRF. We are in 

the process of developing such a system, 

and will consider the feasibility of 

incorporating a report of an IRF’s 

compliance percentage into this new 

system. 

1. Non-Specific Diagnosis Codes 

We believe that highly descriptive 

coding provides the best and clearest 

way to document the appropriateness of 

a given patient’s admission, and would 

improve our ability to use the 

presumptive compliance method of 

calculating a facility’s 60 percent rule 

compliance percentage. Therefore, 

whenever possible, we believe that the 

most specific code that describes a 

medical disease, condition, or injury 

should be used to document diagnoses 

on the IRF–PAI. Generally, 

‘‘unspecified’’ codes are used when 

there is a lack of information about 

location or severity of medical 

conditions in the medical record. 


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However, site and/or severity of 

condition is often an important 

determinant in assessing whether a 

patient’s principal or secondary 

diagnosis falls into the 13 qualifying 

medical conditions that may be counted 

toward the facility’s 60 percent rule 

compliance percentage under the 

presumptive compliance method. For 

this reason, we believe that specific 

diagnosis codes that narrowly identify 

anatomical sites where disease, injury, 

or condition exist should be used when 

coding patients’ conditions on the IRF– 

PAI whenever such codes are available. 

Furthermore, on the same note, we 

believe that one should also include on 

the IRF–PAI the more descriptive ICD– 

9–CM code that indicates the degree of 

injury in instances of burns. In 

accordance with these principles, we 

proposed to remove non-specific codes 

from the list, ICD–9–CM Codes That 

Meet Presumptive Compliance Criteria, 

in instances in which more specific 

codes are available as we believe 

imprecise codes would inappropriately 

categorize an overly broad segment of 

the patient population as having the 

conditions required for inclusion in a 

facility’s presumptive compliance 

calculation, which would result in an 

inflated compliance percentage. If the 

IRF does not have enough information 

about the patient’s condition to code the 

more specific codes on the IRF–PAI, we 

would expect the IRF to seek out 

additional information from the 

patient’s acute care hospital medical 

record to determine the appropriate, 

more specific code to use. The list of 

ICD–9–CM codes that we proposed 

removing can be found in the May 8, 

2013 proposed rule at 78 FR 26880, 

26901 through 26906. 

We received 18 comments on the 

proposed changes to the non-specific 

diagnosis codes listed in ICD–9–CM 

Codes That Meet Presumptive 

Compliance Criteria, which are 

summarized below. 

Comment: Several commenters noted 

that IRFs are post-acute settings and that 

etiological documentation is based on 

the data received from the acute care 

hospital. They argued that, in some 

cases, the specificity demanded in 

coding as described in the proposed rule 

cannot be achieved because the 

information is not in the records that 

IRFs receive from the acute care setting. 

For example, for ICD–9–CM codes 

433.91—Occlusion and stenosis of 

unspecified pre-cerebral artery with 

cerebral infarction—and 434.91— 

Cerebral artery occlusion, unspecified 

with cerebral infarction—, several 

commenters stated that a large 

proportion of ischemic strokes may not 

be able to be identified as thrombotic or 

embolic. Several commenters stated that 

the ICD–9–CM code 434.91—Cerebral 

artery occlusion, unspecified with 

cerebral infarction—should not be 

removed from the presumptive 

methodology list because in order to be 

more specific the physiatrist would 

need to note whether the stroke was 

embolic or thrombotic in nature. The 

commenters stated that this is often 

unknown, even after radiological 

results. 

Response: We recognize that the IRF 

builds its understanding of its patients 

that are admitted to the IRF from the 

acute care hospital in part from the 

acute care medical records, and that 

sometimes the information needed to 

code a more specific diagnosis is not 

available in those records. In the case of 

certain ICD–9–CM codes that we had 

proposed to remove from the 

presumptive compliance list, we agree 

with the commenters and have 

determined that the information 

necessary to appropriately code certain 

conditions may not always be available. 

To avoid diagnostic misclassification, 

we are revising our proposals in Table 

7 of the proposed rule and will retain 

codes 433.91 and 434.91 on the list of 

codes that meet the presumptive 

compliance criteria. We may revisit this 

decision in the future, if information to 

code the more specific diagnosis codes 

becomes more readily available. 

Though we agree with commenters 

that some information is either not 

available or may not always be found in 

the documentation sent by the acute 

care hospital and that this impacts the 

coding of some diagnoses, we do not 

agree that this is the case for all the 

diagnosis codes proposed for removal in 

Table 7 of the proposed rule or that the 

IRF would not be able to obtain the 

necessary information through other 

means in many instances. IRFs are 

required under the IRF coverage 

requirements to conduct thorough 

preadmission screenings on all 

prospective IRF patients prior to each 

IRF admission. During the preadmission 

screenings, a complete medical chart 

review is required, unless the patient is 

being assessed in person by the IRF 

personnel conducting the preadmission 

screening. Even if the patient is being 

assessed in person, a medical chart 

review is typically needed to gather all 

of the pertinent information to complete 

a thorough preadmission screening. 

Generally, diagnostic reports, 

radiological reports, and consultation 

notes, among other informational 

documentation are available in the acute 

care medical record to assist IRF staff in 

building a more complete clinical 

picture so that diagnostic coding, 

whenever possible, can be more 

specific. Even if such information is not 

available in the acute care medical 

record, however, we believe that the IRF 

should make every effort to obtain the 

necessary information to code more 

specifically. 

Comment: We received several 

comments on various non-specific 

diagnosis codes that the commenters 

stated should not be removed from the 

list. The commenters provided a variety 

of rationales for the continued use of 

these codes to meet the presumptive 

compliance criteria. For example, 

several commenters stated that the ICD– 

9–CM codes related to hip fracture 

should not be excluded from the list. 

The commenters stated that the specific 

information required to provide where 

the fracture occurred on the neck of the 

femur is often not available to IRF staff 

that do not have access to x-ray reports 

and that such specificity would not 

impact the type of treatment in the IRF. 

Several other commenters stated that we 

should reconsider the proposed removal 

of some non-specific traumatic brain 

injury codes. The commenters stated 

that the removal of these codes is 

‘‘administratively unrealistic.’’ The 

commenters also stated that for 

incidents of loss of consciousness of 

short duration this information, usually 

documented by on-site emergency 

technicians (when known), is no longer 

in the records by the time the patient is 

admitted to the IRF. One commenter 

argued that in cases of unobserved 

traumatic brain injury the duration of a 

patient’s loss of consciousness may 

never be specifically determined. This 

commenter further stated that despite 

the absence of this information, the 

patient may still be clinically 

appropriate for intensive inpatient 

rehabilitation services. 

Several commenters also argued that 

the identity of virus or bacteria 

associated with diagnoses such as ICD– 

9–CM codes 049.9—Unspecified nonarthropod-borne viral diseases of central 

nervous system—, 320.9—Meningitis 

due to unspecified bacterium—, 322.9— 

Meningitis, unspecified—, 323.9— 

Unspecified causes of encephalitis, 

myelitis, and encephalomyelitis cannot 

frequently be found in the medical 

records from the transferring hospital or 

in some cases may never be known. As 

such, the commenters suggest that these 

codes not be removed from the 

presumptive methodology list. 

Several commenters stated that ICD– 

9–CM codes 343.9—Infantile cerebral 

palsy, unspecified should not be 

removed from the presumptive 

methodology list because many times 


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these patients are seen in IRFs as adults, 

when the patient’s current clinical 

presentation may be different from their 

original presentation as infants. 

Moreover, the commenters argue, the 

adults may have no available medical 

records that state the appropriate 

cerebral palsy type. Similarly, these 

commenters argue that ICD–9–CM code 

344.00—Quadriplegia, unspecified 

should not be removed from the 

presumptive methodology list because 

of the potential for a change from the 

original presentation that was the basis 

of appropriate classification of the level 

of completeness of the injury. 

Response: Upon further review and 

after thoughtful consideration of the 

comments we received, we have 

determined that several codes that we 

proposed to remove from the ICD–9–CM 

Codes That Meet Presumptive 

Compliance Criteria list should be 

retained. Thus, in this final rule we will 

not remove these codes from the 

presumptive methodology list. The ICD– 

9–CM codes that we proposed for 

removal from the ICD–9–CM Codes That 

Meet Presumptive Compliance Criteria 

list, but we have determined should be 

retained, are listed in Table 8. We also 

note here that we inadvertently 

included 4 codes in Table 7 of the 

proposed rule that were never on the 

ICD–9–CM Codes That Meet 

Presumptive Compliance Criteria list. 

The codes are as follows: 804.00— 

Closed fractures involving skull or face 

with other bones, without mention of 

intracranial injury, unspecified state of 

consciousness—, 804.09—Closed 

fractures involving skull of face with 

other bones, without mention of 

intracranial injury, with concussion, 

unspecified—, 851.90—Other and 

unspecified cerebral laceration and 

contusion, with open intracranial 

wound, unspecified state of 

consciousness—, 851.99—Other and 

unspecified cerebral laceration and 

contusion, with open intracranial 

wound, with concussion, unspecified. 

Comment: Several commenters 

expressed concerns about our proposal 

to remove ICD–9–CM code 356.9— 

Unspecified hereditary and idiopathic 

peripheral neuropathy (IPN) from the 

ICD–9–CM Codes That Meet 

Presumptive Compliance Criteria list 

because ‘‘IPN is one of the most 

common chronic neurologic disorders 

in America.’’ One commenter further 

stated that the precise etiology of a 

neuropathy has little effect on a 

patient’s rehabilitation, and that there 

are a limited number of codes that can 

be used to specify the type of 

neuropathy. 

Response: We believe that the fact 

that ICD–9–CM code 356.9— 

Unspecified hereditary and idiopathic 

peripheral neuropathy (IPN)—is such a 

commonly used code for multiple types 

of chronic neurological disorders in the 

U.S. means that it is too broad a 

diagnosis to enable us to determine 

whether a patient coded with this code 

meets the criteria for the medical 

conditions that may be counted toward 

an IRF’s 60 percent rule compliance 

percentage or not. We believe that some 

patients coded with this code could 

meet the requirements in 412.29(b)(1), 

but others would not. That is, we 

believe that it is impossible to tell from 

the possible application of this code to 

such a broad and diverse population of 

patients whether patients coded with 

this diagnosis code require intensive 

rehabilitation services for treatment of 

one or more of the conditions specified 

at 42 CFR 412.29(b)(2). Our analysis 

shows that the percent of patients in 

IRFs that are coded with this diagnosis 

code has increased substantially over 

time (from 2.7 percent of all IRF patients 

in FY 2004 to 4.5 percent in FY 2012), 

with more dramatic increases occurring 

within specific IRF providers. This 

finding may be the result of an increase 

in the patient population for which this 

code applies, an increase in the percent 

of patients with these conditions being 

admitted to the IRF, or upcoding on the 

part of IRFs. Regardless, we believe that 

this code does not provide enough 

information for us to determine whether 

a patient coded with this diagnosis code 

would meet the requirements at 42 CFR 

412.29(b). Thus, we believe that the 

most appropriate course of action at this 

time is to remove this code from the 

presumptive methodology list. 

However, we note that patients that are 

coded with this diagnosis code may, 

where appropriate upon medical 

review, be found to meet the criteria for 

the medical conditions that may be 

counted toward a facility’s 60 percent 

rule compliance percentage. 

TABLE 8—ICD–9–CM CODES RETAINED IN ‘‘ICD–9–CM CODES THAT MEET PRESUMPTIVE COMPLIANCE CRITERIA’’ **

ICD–9–CM 

Code Diagnosis 

049.9 ................. Unspecified non-arthropod-borne viral diseases of central nervous system. 

320.9 ................. Meningitis due to unspecified bacterium. 

322.9 ................. Meningitis, unspecified. 

323.9 ................. Unspecified causes of encephalitis, myelitis, and encephalomyelitis. 

343.9 ................. Infantile cerebral palsy, unspecified. 

344.00 ............... Quadriplegia, unspecified. 

433.91 ............... Occlusion and stenosis of unspecified precerebral artery with cerebral infarction. 

434.91 ............... Cerebral artery occlusion, unspecified with cerebral infarction. 

800.00 ............... Closed fracture of vault of skull without mention of intracranial injury, unspecified state of consciousness. 

800.10 ............... Closed fracture of vault of skull with cerebral laceration and contusion, unspecified state of consciousness. 

800.20 ............... Closed fracture of vault of skull with subarachnoid, subdural, and extradural hemorrhage, unspecified state of consciousness. 

800.30 ............... Closed fracture of vault of skull with other and unspecified intracranial hemorrhage, unspecified state of consciousness. 

800.40 ............... Closed fracture of vault of skull with intracranial injury of other and unspecified nature, unspecified state of consciousness. 

800.50 ............... Open fracture of vault of skull without mention of intracranial injury, unspecified state of consciousness. 

800.60 ............... Open fracture of vault of skull with cerebral laceration and contusion, unspecified state of consciousness. 

800.70 ............... Open fracture of vault of skull with subarachnoid, subdural, and extradural hemorrhage, unspecified state of consciousness. 

800.80 ............... Open fracture of vault of skull with other and unspecified intracranial hemorrhage, unspecified state of consciousness. 

800.90 ............... Open fracture of vault of skull with intracranial injury of other and unspecified nature, unspecified state of consciousness. 

801.00 ............... Closed fracture of base of skull without mention of intra cranial injury, unspecified state of consciousness. 

801.10 ............... Closed fracture of base of skull with cerebral laceration and contusion, unspecified state of consciousness. 

801.20 ............... Closed fracture of base of skull with subarachnoid, subdural, and extradural hemorrhage, unspecified state of consciousness. 

801.30 ............... Closed fracture of base of skull with other and unspecified intracranial hemorrhage, unspecified state of consciousness. 

801.40 ............... Closed fracture of base of skull with intracranial injury of other and unspecified nature, unspecified state of consciousness. 

801.50 ............... Open fracture of base of skull without mention of intracranial injury, unspecified state of consciousness.

801.60 ............... Open fracture of base of skull with cerebral laceration and contusion, unspecified state of consciousness.


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TABLE 8—ICD–9–CM CODES RETAINED IN ‘‘ICD–9–CM CODES THAT MEET PRESUMPTIVE COMPLIANCE CRITERIA’’ **— 

Continued 

ICD–9–CM 

Code Diagnosis 

801.70 ............... Open fracture of base of skull with subarachnoid, subdural, and extradural hemorrhage, unspecified state of consciousness. 

801.80 ............... Open fracture of base of skull with other and unspecified intracranial hemorrhage, unspecified state of consciousness. 

801.90 ............... Open fracture of base of skull with intracranial injury of other and unspecified nature, unspecified state of consciousness. 

803.00 ............... Other closed skull fracture without mention of intracranial injury, unspecified state of consciousness. 

803.10 ............... Other closed skull fracture with cerebral laceration and contusion, unspecified state of consciousness. 

803.20 ............... Other closed skull fracture with subarachnoid, subdural, and extradural hemorrhage, unspecified state of consciousness. 

803.30 ............... Other closed skull fracture with other and unspecified intracranial hemorrhage, unspecified state of unconsciousness. 

803.40 ............... Other closed skull fracture with intracranial injury of other and unspecified nature, unspecified state of consciousness. 

803.50 ............... Other open skull fracture without mention of injury, unspecified state of consciousness. 

803.60 ............... Other open skull fracture with cerebral laceration and contusion, unspecified state of consciousness. 

803.70 ............... Other open skull fracture with subarachnoid, subdural, and extradural hemorrhage, unspecified state of consciousness. 

803.80 ............... Other open skull fracture with other and unspecified intracranial hemorrhage, unspecified state of consciousness. 

803.90 ............... Other open skull fracture with intracranial injury of other and unspecified nature, unspecified state of consciousness. 

804.10 ............... Closed fractures involving skull or face with other bones, with cerebral laceration and contusion, unspecified state of consciousness. 

804.20 ............... Closed fractures involving skull or face with other bones with subarachnoid, subdural, and extradural hemorrhage, unspecified 

state of consciousness. 

804.30 ............... Closed fractures involving skull or face with other bones, with other and unspecified intracranial hemorrhage, unspecified 

state of consciousness. 

804.40 ............... Closed fractures involving skull or face with other bones, with intracranial injury of other and unspecified nature, unspecified 

state of consciousness. 

804.60 ............... Open fractures involving skull or face with other bones, with cerebral laceration and contusion, unspecified state of consciousness. 

804.70 ............... Open fractures involving skull or face with other bones with subarachnoid, subdural, and extradural hemorrhage, unspecified 

state of consciousness. 

804.80 ............... Open fractures involving skull or face with other bones, with other and unspecified intracranial hemorrhage, unspecified state 

of consciousness. 

804.90 ............... Open fractures involving skull or face with other bones, with intracranial injury of other and unspecified nature, unspecified 

state of consciousness. 

820.00 ............... Closed fracture of intracapsular section of neck of femur, unspecified. 

820.10 ............... Open fracture of intracapsular section of neck of femur, unspecified. 

820.30 ............... Open fracture of trochanteric section of neck of femur, unspecified. 

851.00 ............... Cortex (cerebral) contusion without mention of open intracranial wound, unspecified state of consciousness. 

851.10 ............... Cortex (cerebral) contusion with open intracranial wound, unspecified state of consciousness. 

851.20 ............... Cortex (cerebral) laceration without mention of open intracranial wound, unspecified state of consciousness. 

851.30 ............... Cortex (cerebral) laceration with open intracranial wound, unspecified state of consciousness. 

851.40 ............... Cerebellar or brain stem contusion without mention of open intracranial wound, unspecified state of consciousness. 

851.50 ............... Cerebellar or brain stem contusion with open intracranial wound, unspecified state of consciousness. 

851.60 ............... Cerebellar or brain stem laceration without mention of open intracranial wound, unspecified state of consciousness. 

851.70 ............... Cerebellar or brain stem laceration with open intracranial wound, unspecified state of consciousness. 

851.80 ............... Other and unspecified cerebral laceration and contusion, without mention of open intracranial wound, unspecified state of 

consciousness. 

852.00 ............... Subarachnoid hemorrhage following injury without mention of open intracranial wound, unspecified state of consciousness. 

852.10 ............... Subarachnoid hemorrhage following injury with open intracranial wound, unspecified state of consciousness.

852.20 ............... Subdural hemorrhage following injury without mention of open intracranial wound, unspecified state of consciousness. 

852.30 ............... Subdural hemorrhage following injury with open intracranial wound, unspecified state of consciousness. 

852.40 ............... Extradural hemorrhage following injury without mention of open intracranial wound, unspecified state of consciousness. 

852.50 ............... Extradural hemorrhage following injury with open intracranial wound, unspecified state of consciousness. 

853.00 ............... Other and unspecified intracranial hemorrhage following injury without mention of open intracranial wound, unspecified state 

of consciousness. 

853.10 ............... Other and unspecified intracranial hemorrhage following injury with open intracranial wound, unspecified state of consciousness. 

854.00 ............... Intracranial injury of other and unspecified nature without mention of open intracranial wound, unspecified state of consciousness. 

854.10 ............... Intracranial injury of other and unspecified nature with open intracranial wound, unspecified state of consciousness. 

**This table includes ICD–9–CM codes that were proposed (Table 7) in the May 8, 2013 proposed rule for removal from ‘‘ICD–9–CM Codes 

That Meet Presumptive Compliance Criteria,’’ but we have determined should be retained. 

2. Arthritis Codes 

Our analysis of the list of ICD–9–CM 

codes that are currently included in the 

presumptive methodology list revealed 

utilization patterns that indicated that 

these codes were used far more 

frequently than we had anticipated. We 

also realized 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. 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 


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inpatient rehabilitation setting. As we 

realized on reflection that there is no 

way to tell base on an arthritis ICD–9– 

CM code alone whether an individual 

met the severity and prior treatment 

requirements outlined in regulation, we 

realized that factors beyond the ICD–9– 

CM code would need to be reviewed to 

establish whether these IRF patients 

should be included in the IRF’s 

compliance percentage. 

Specifically, the regulations under 

§ 412.29(b)(2)(x) through 

§ 412.29(b)(2)(xii), describe the 

following three (3) ‘‘arthritis’’ medical 

conditions that, if present, and all of the 

described circumstances are met, would 

make a patient eligible for inclusion in 

the presumptive compliance calculation 

of the IRF’s compliance percentage. The 

3 medical conditions are as follows: 

• Active, polyarticular rheumatoid 

arthritis, psoriatic arthritis, and 

seronegative arthropathies resulting in 

significant functional impairment of 

ambulation and other activities of daily 

living that have 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 that result from a systemic 

disease activation immediately before 

admission, but have 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 that 

have 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 

that result from a systemic disease 

activation immediately before 

admission, but have the potential to 

improve with more intensive 

rehabilitation. 

• Severe or advanced osteoarthritis 

(osteoarthrosis or degenerative joint 

disease) involving two or more major 

weight bearing joints (elbow, shoulders, 

hips, or knees, but not counting a joint 

with a prosthesis) with joint deformity 

and substantial loss of range of motion, 

atrophy of muscles surrounding the 

joint, significant functional impairment 

of ambulation and other activities of 

daily living that have not improved after 

the patient has participated in 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 have the potential to 

improve with more intensive 

rehabilitation. (A joint replaced by a 

prosthesis is no longer is considered to 

have osteoarthritis, or other arthritis, 

even though this condition was the 

reason for the joint replacement.) 

As stated above, 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 whether these 

additional elements of the regulatory 

criteria were met. We therefore 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. Thus, we 

proposed to remove 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 

presumptive methodology list. 

We expect that the MACs will be able, 

upon medical review, to include those 

patients in a facility’s 60 percent rule 

compliance after it has confirmed the 

severity and prior treatment portions of 

the criteria. As such, IRFs would 

continue to be able to have these 

individuals included in the medical 

review calculation of their compliance 

percentages. In Table 9, we list the ICD– 

9–CM codes associated with the medical 

conditions listed under § 412.29(b)(2)(x) 

through § 412.29(b)(2)(xii) that we will 

remove from the list, ICD–9–CM Codes 

That Meet Presumptive Compliance 

Criteria. 

We received 11 comments on the 

proposed changes to arthritis diagnosis 

codes listed in ICD–9–CM Codes That 

Meet Presumptive Compliance Criteria, 

which are summarized below. 

Comment: One commenter suggested 

that the proposed changes to the 

presumptive methodology list and the 

removal of the arthritis codes will 

increase the use of the medical review 

method, which is more burdensome for 

both CMS and for IRFs. Several 

commenters suggested that the facility 

should not have to undergo a ‘‘full 

medical review’’ if it failed 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. The commenters further 

stated that, should a sufficient number 

of cases from the ‘‘limited review’’ be 

determined to meet criteria, these 

‘‘passing’’ records would be added to 

the ‘‘numerator’’ of the presumptive 

calculation result to arrive at a 

compliance percentage equal at least 60 

percent. In this manner the facility 

would be deemed compliant without 

needing a ‘‘full medical review.’’ 

However, if the IRF failed to meet 

criteria with this ‘‘limited review,’’ the 

MAC could then perform a ‘‘full 

medical review.’’ 

Response: We acknowledge that 

because of the removal of the arthritis 

codes from the list of codes that are 

used to determine presumptive 

compliance under the ‘‘60 percent’’ rule, 

some facilities may not be able to reach 

the minimum compliance percentage 

using presumptive compliance method. 

In the May 8, 2013 proposed rule, we 

suggested that upon medical review (in 

accordance with chapter 3, section 

140.1.4 of the Medicare Claims 

Processing Manual (Pub. 100–04)), after 

which the MAC will have been able to 

determine that severity and 

pretreatment requirements have been 

met, these patients would be included 

in the calculation of a facility’s 60 

percent rule compliance percentage. 

Assuming providers make no other 

changes, we estimate that the removal of 

the arthritis and arthropathy codes will 

result in approximately 40 facilities 

failing to meet the 60 percent threshold 

using the presumptive compliance 

method, and would have to instead be 

evaluated under the medical review 

method. We assume that all of these 

facilities would obtain a satisfactory 

compliance percentage after medical 

review, as we assume that the patients 

that will be coded with the to-be 

removed arthritis and arthropathy codes 

will meet the severity and prior 

treatment requirements. Thus, we 

believe that few, if any facilities will 

ultimately lose their IRF classification 

by virtue of these changes. 

We appreciate the commenter’s 

suggestions regarding the use of a 

modified medical review limited to only 

arthritis and systemic vasculidities 

cases to determine if patients have met 

severity and pretreatment requirements, 

in lieu of full medical review carried out 

in accordance with chapter 3, section 

140.1.3(D), of the Medicare Claims 

Processing Manual (Pub. 100–04). We 

will use the time afforded by our oneyear delay (that is, the application of the 

changes to the list will not apply to 


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compliance review periods beginning 

before October 1, 2014) to consider the 

feasibility of minimizing any burdens 

created by the operational aspects of 

this policy. 

Comment: One commenter expressed 

concern that in response to our proposal 

to remove arthritis codes from the ICD– 

9–CM Codes That Meet Presumptive 

Compliance Criteria list and no longer 

count them as part of the presumptive 

methodology, IRFs will seek to avoid 

‘‘unnecessary’’ medical review by 

modifying their admission criteria so as 

to limit the admission of patients with 

arthritis conditions. The commenter 

also stated that our proposed removal of 

the arthritis codes from the list of 

presumptive ICD–9–CM codes that meet 

compliance criteria ‘‘was as if’’ we 

removed arthritis and arthropathy 

conditions from the 13 qualifying 

medical conditions outlined in 

regulation. 

Response: Although we agree that it is 

plausible that some IRFs might seek to 

avoid the possibility of medical review 

by limiting admission of patients with 

arthritis conditions, this is not our 

intent. Our intent behind this policy is 

to ensure that we have enough 

information to ensure patients with 

arthritis conditions who are counted as 

meeting the compliance criteria in 

412.29(b) are appropriately meeting the 

severity and prior treatment 

requirements, as per the regulation. We 

disagree that the proposed changes to 

the presumptive methodology list 

equates with the removal of arthritis and 

arthropathy conditions from the 13 

qualifying medical conditions outlined 

in regulation. As discussed in the 

proposed rule’s preamble and in prior 

discussion in this preamble, when we 

adopted the arthritis and arthropathy 

conditions in the May 7, 2004 final rule, 

we limited the conditions to those that 

met defined severity and prior treatment 

requirements, and that were sufficiently 

severe as to require intensive inpatient 

rehabilitation services. As discussed 

above, ICD–9–CM diagnosis codes alone 

do not provide sufficient information to 

establish whether these pretreatment 

and severity requirements have been 

met. More detailed information is 

necessary to determine if the patient 

meets the pretreatment and severity 

requirements. Verification using the 

medical review compliance method will 

allow an IRF to have these patients 

included in their compliance 

percentage. Thus, arthritis conditions 

will continue to be included in the 

calculation of compliance percentages 

in accordance with the 13 qualifying 

medical conditions in the regulations. 

3. Some Congenital Anomaly Diagnosis 

Codes 

Though congenital deformity is one of 

the 13 medical conditions that may, 

subject to the limitations spelled out in 

the regulations, qualify for inclusion in 

the calculation of an IRF’s compliance 

percentage under the 60 percent rule, 

certain congenital anomalies represent 

such serious conditions that a patient 

with one of these conditions would 

generally not be expected to be able to 

meaningfully participate in an intensive 

rehabilitation therapy program. For 

example, Craniorachischisis (ICD–9–CM 

code 740.1) is a congenital malformation 

where the neural tube from the 

midbrain down to the upper sacral 

region of the spinal cord remains open. 

The neural tube is the embryo’s 

precursor to the central nervous system, 

which comprises the brain and spinal 

cord. Similarly, Iniencephaly (ICD–9– 

CD code 740.2) is a congenital 

malformation in which parts of the 

brain do not form and the patient does 

not have a neck. Because beneficiaries 

with these diagnoses likely would 

generally not be expected to be able to 

actively participate in an intensive 

rehabilitation program, we do not 

believe that we can include such cases 

in an IRF’s presumptive compliance 

percentage. That said, as we noted in 

the proposed rule, if a patient with one 

of these conditions were able to 

participate in the intensive 

rehabilitation services provided in an 

IRF, then the MAC would be able to 

count that case toward an IRF’s 60 

percent rule compliance percentage 

upon medical review. Thus, we 

proposed the removal of these 

congenital deformity codes, and others 

that present similar concerns that were 

discussed in the proposed rule from the 

presumptive compliance list. 

We received 4 comments on the 

proposed changes to the congenital 

anomaly diagnosis codes, which are 

summarized below. 

Comment: The commenters supported 

our proposal to remove the specified 

congenital anomaly conditions from the 

presumptive methodology list. These 

commenters noted that these conditions 

are rare and agreed that patients with 

these conditions would be unlikely to 

require or to meaningfully participate in 

intensive inpatient rehabilitation 

services. 

Response: We thank the commenters 

for supporting our efforts to refine the 

presumptive methodology list so that 

the list truly represents diagnoses that 

would be expected to indicate that an 

individual meets the medical condition 

criteria, and that they should be 

included in an IRF’s compliance 

percentage under the presumptive 

compliance method of calculating a 

compliance percentage. All of the 

congenital anomaly diagnosis codes that 

we are removing from ICD–9–CM Codes 

That Meet Presumptive Compliance 

Criteria list are listed in Table 9. 

4. Unilateral Upper Extremity 

Amputations Diagnosis Codes 

Though amputation is generally one 

of the 13 medical conditions that qualify 

for inclusion in the an IRF’s compliance 

calculation for the 60 percent rule, we 

proposed the removal of certain ICD–9– 

CM codes for unilateral upper extremity 

amputations from the presumptive 

methodology list, ICD–9–CM Codes 

That Meet Presumptive Compliance 

Criteria, because we believe 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). We expect that some 

patients with these upper extremity 

amputations will not require close 

medical supervision by a physician or 

weekly interdisciplinary team 

conferences to achieve their goals, while 

others may require these services. But 

we generally believe that rehabilitation 

associated with unilateral upper 

extremity amputations would not 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 

the unilateral upper extremity 

amputation, would necessitate 

treatment in an IRF. That is to say, a 

patient’s need for intensive 

rehabilitation services provided in an 

IRF depends on other conditions which 

cannot be solely identified through the 

presence of a unilateral upper extremity 

amputation ICD–9–CM code. If the 

patient has comorbidities that would 

necessitate treatment in an IRF, then 

those comorbidities would qualify the 

patient for inclusion under the 

presumptive compliance method of 

calculating compliance with the 60 

percent rule if one or more of the 

comorbidities are on the presumptive 

methodology list. If the codes for such 

a patient’s comorbidities do not appear 

in the presumptive compliance list, the 

patient can still be considered for 

inclusion in the IRF’s compliance 

percentage following medical review 

and confirmation that they meet the 


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criteria for one or more of the medical 

conditions in the regulations. Thus, we 

proposed to remove the unilateral upper 

extremity amputation from the 

presumptive methodology list. 

We received 5 comments on the 

proposed changes to unilateral upper 

extremity amputation diagnosis codes 

listed in ICD–9–CM Codes That Meet 

Presumptive Compliance Criteria, 

which are summarized below. 

Comment: Several commenters 

supported our proposal to remove 

unilateral upper extremity amputation 

codes from ICD–9–CM Codes That Meet 

Presumptive Compliance. The 

commenters agreed with our assessment 

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 the extent that 

the patient would necessitate treatment 

in an IRF. However, one commenter 

disagreed with the proposal because an 

inpatient setting offering an intensive 

rehabilitation therapy program would be 

appropriate for the acute phase of 

wound healing, edema control, and 

desensitization and pain control that 

these patients may require. 

Response: We agree that unilateral 

upper extremity amputation patients 

have ongoing therapy needs and may 

require medical aftercare once 

discharged from an acute hospital stay. 

However, as long as the patient does not 

have any other comorbidities that have 

caused significant decline in his or her 

functional ability that, in the absence of 

the unilateral upper extremity 

amputation, would require treatment in 

an IRF, we do not believe that the 

patient could be presumed to meet the 

regulatory requirements for inclusion in 

an IRF’s compliance percentage. 

5. Miscellaneous Diagnosis Codes That 

Do Not Require Intensive Rehabilitation 

Services for Treatment 

We have identified additional ICD–9– 

CM diagnosis codes in the presumptive 

methodology list, ICD–9–CM Codes 

That Meet Presumptive Compliance 

Criteria, which do not, in the absence of 

additional confirmatory information, 

indicate a patient’s need for intensive 

rehabilitation services or that they have 

met any severity or prerequisite 

treatment requirements for the medical 

conditions that may be counted toward 

an IRF’s compliance percentage. We 

therefore proposed removal of the 

following ICD–9–CM codes from the 

list, ICD–9–CM Codes That Meet 

Presumptive Compliance Criteria. 

• Tuberculous (abscess, meningitis, 

and encephalitis or myelitis) and 

Tuberculoma (of the meninges, brain, or 

spinal cord) where a bacterial or 

histological examination is unspecified 

or was not done (see Table 7 in the 

proposed rule for a list of the specific 

codes)—Appropriate patient care 

dictates that the IRF physician must 

attempt to ascertain the means by which 

the organism, whether it be 

bacteriologic or histologic, was tested. 

We expect the IRF physician to make a 

good faith effort to determine the type 

of diagnostic test which identified the 

tuberculous organism. In the 

circumstances where this is impossible 

(that is, documentation no longer 

exists), appropriate codes remain on the 

presumptive methodology list. 

However, we expect the IRF physician 

to make a good faith effort to determine 

the type of diagnostic test which 

identified the tuberculous organism. We 

therefore proposed to remove these 

unspecified codes from the list, ICD–9– 

CM Codes That Meet Presumptive 

Compliance Criteria. 

• Postherpetic polyneuropathy 

(053.13)—This is a condition 

characterized by severe pain, which 

typically requires pain medication or 

other pain control therapies but does 

not typically require the intensive 

inpatient rehabilitation services of an 

IRF. In fact, the prescriptive hands-on 

therapeutic interventions provided in an 

IRF could exacerbate the patient’s pain. 

For these reasons, we proposed the 

removal of this code from ICD–9–CM 

Codes That Meet Presumptive 

Compliance Criteria. 

• Louping ill (063.1)—This ICD–9– 

CM code refers to an acute viral disease 

primarily of sheep that is not endemic 

to the United States. Louping ill disease 

has been recognized in Scotland for 

centuries, but only 39 cases of human 

infection have been described and none 

of these cases have been observed in the 

United States. Louping ill is a disease 

which has many manifestations, not all 

requiring inpatient rehabilitation 

hospital services. We believe that the 

ICD–9–CM code for this diagnosis does 

not provide the information necessary 

for us to determine presumptively 

whether the patient has met the criteria 

for the medical conditions that may be 

counted toward an IRF’s compliance 

percentage. However, as with all of the 

codes that we proposed removing from 

the list, ICD–9–CM Codes That Meet 

Presumptive Compliance Criteria, if 

someone with this diagnosis were to be 

admitted to an IRF, medical review 

could be used to confirm whether the 

regulatory criteria have been met. 

• Brain death (348.82)—We believe 

that it is unlikely that a patient with this 

condition would require the intensive 

inpatient rehabilitation services 

provided in an IRF. For this reason, we 

proposed the removal of this code from 

ICD–9–CM Codes That Meet 

Presumptive Compliance Criteria. 

• Myasthenia gravis without (acute) 

exacerbation (358.00)—Although we 

believe that a patient experiencing an 

acute attack of Myasthenia Gravis could 

potentially require the intensive 

inpatient rehabilitative services of an 

IRF (these individuals are coded with 

ICD–9 code 358.01 ‘‘Myasthenia gravis 

with (acute) exacerbation’’), we 

proposed the removal of non-acute 

myasthenia gravis from the list, ICD–9– 

CM Codes That Meet Presumptive 

Compliance Criteria because such 

patients would not be experiencing an 

acute exacerbation of the condition and 

most likely would not require the 

intensive inpatient rehabilitation 

services provided in an IRF. 

• Other specified myotonic disorder 

(359.29)—codes patients with Myotonia 

fluctuans, myotonia permanens, and 

paramyotonia congenital which are 

conditions that are exacerbated by 

exercise. The intensive inpatient 

rehabilitation services of an IRF would 

be expected to exacerbate these 

conditions, so such care would likely be 

contraindicated. Therefore, we proposed 

the removal of this code from the list, 

ICD–9–CM Codes That Meet 

Presumptive Compliance Criteria. 

• Periodic paralysis (359.3)—The 

treatment for periodic paralysis involves 

pharmaceutical interventions and 

lifestyle changes that control exercise 

and activity, but patients with this 

condition do not generally require the 

intensive inpatient rehabilitation 

services of an IRF. In fact, it is unclear 

how the intensive inpatient 

rehabilitation services provided in an 

IRF would effectively treat this 

condition. Thus, we proposed the 

removal of this code from the list, ICD– 

9–CM Codes That Meet Presumptive 

Compliance Criteria. 

• Brachial plexus lesions (353.0)— 

Care and treatment for this condition, 

which affects an upper extremity in a 

manner that typically does not require 

close medical supervision by a 

physician or weekly interdisciplinary 

team meetings to reach the patient’s 

goals, would not be expect to require the 

intensive inpatient rehabilitation 

services provided in an IRF. Therefore, 

we proposed the removal of this code 

from the list, ICD–9–CM Codes That 

Meet Presumptive Compliance Criteria. 

• Neuralgic amyothrophy (353.5)— 

This condition is also known as 


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Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 47891 

Parsonage-Turner syndrome or brachial 

plexus neuritis. It is a distinct 

peripheral nervous system disorder 

characterized by attacks of extreme 

neuropathic pain and rapid multifocal 

weakness and atrophy in the upper 

limbs. Patients with this condition do 

not typically require close medical 

supervision by a physician or weekly 

interdisciplinary team meetings to reach 

the patient’s therapy goals. Thus, 

patients with this condition do not 

typically require the intensive inpatient 

rehabilitation services provided in an 

IRF. Therefore, we proposed the 

removal of this code from the list, ICD– 

9–CM Codes That Meet Presumptive 

Compliance Criteria. 

• Other nerve root and plexus 

disorders (353.8)—This code does not, 

in the absence of additional 

information, reveal whether a patient is 

in need of intensive rehabilitation 

services for treatment of one or more of 

the conditions specified in the 

regulations. More descriptive codes 

should be used so as to document the 

appropriateness of a patient’s IRF 

admission, and potentially, their 

inclusion in the IRF’s compliance 

percentage. For example, Lumbosacral 

plexus lesions (353.1) could substitute 

for Other nerve root and plexus 

disorders (353.8). Patients with 

lumbosacral plexus lesions, however, do 

not typically require the intensive 

inpatient rehabilitation services 

provided in an IRF. Therefore, we 

proposed the removal of this code from 

the list, ICD–9–CM Codes That Meet 

Presumptive Compliance Criteria. 

We received 3 comments on the 

proposed changes to the miscellaneous 

diagnosis codes that we proposed 

removing from the presumptive 

methodology list in the proposed rule. 

These are summarized below. 

Comment: The commenters agreed 

with the proposed removal of the 

miscellaneous diagnosis codes that were 

discussed in the May 8, 2013 proposed 

rule. 

Response: We appreciate the 

commenters support and thank them for 

their comments. 

6. Additional Diagnosis Codes 

During our review of the diagnosis 

codes on the presumptive methodology 

list we did not identify any ICD–9–CM 

codes that would be appropriate to add 

to the list. However, we welcomed 

public comment regarding ICD–9–CM 

diagnosis codes that are not currently on 

the presumptive methodology list that 

stakeholders believe should be added. 

We noted that any such suggested codes 

would have to code for one of the 

medical conditions listed at 

§ 412.29(b)(2) (including any severity or 

pretreatment requirements), and require 

intensive inpatient rehabilitation. 

We received one comment suggesting 

additional diagnosis codes not currently 

listed in ICD–9–CM Codes That Meet 

Presumptive Compliance Criteria.. 

Comment: The commenter suggested 

that we add ICD–9–CM code 348.31— 

Metabolic encephalopathy and ICD–9– 

CM code 331.83—Parkinson’s 

Dementia—to the list of qualifying 

codes. 

Response: We agree that code ICD–9– 

CM code 348.31—Metabolic 

encephalopathy— should be added to 

the list with the other toxic 

encephalopathy codes to ensure that 

IRFs can code to the highest level of 

specificity. We will add this code to the 

list of ICD–9–CM Codes That Meet 

Presumptive Compliance Criteria. 

However, we disagree with the 

commenter’s suggestion to add 

Parkinson’s Dementia to the list of codes 

because we cannot determine 

‘‘presumptively’’ whether these patients 

would be able to meaningfully 

participate in an intensive inpatient 

rehabilitation program. 

Final Decision: After carefully 

considering the comments that we 

received on the proposed changes to the 

ICD–9–CM in the presumptive 

methodology list, we are revising the list 

of ICD–9–CM codes to be removed from 

‘‘ICD–9–CM Codes That Meet 

Presumptive Compliance Criteria’’ as 

follows: We are removing the codes 

listed in Table 9 of this final rule. We 

are also adding ICD–9–CM code 

348.31—Metabolic encephalopathy to 

the presumptive methodology list. The 

revisions to the list of diagnosis codes 

that are used to determine presumptive 

compliance under the ‘‘60 percent rule’’ 

are effective for compliance review 

periods beginning on or after October 1, 

2014. 

TABLE 9—ICD–9–CM CODES REMOVED FROM ‘‘ICD–9–CM CODES THAT MEET PRESUMPTIVE COMPLIANCE CRITERIA’’ 

ICD–9–CM 

Code Diagnosis 

013.00 ............... Tuberculous meningitis, unspecified. 

013.01 ............... Tuberculous meningitis, bacteriological or histological examination not done. 

013.10 ............... Tuberculoma of meninges, unspecified. 

013.11 ............... Tuberculoma of meninges, bacteriological or histological examination not done. 

013.20 ............... Tuberculoma of brain, unspecified. 

013.21 ............... Tuberculoma of brain, bacteriological or histological examination not done. 

013.30 ............... Tuberculous abscess of brain, unspecified. 

013.31 ............... Tuberculous abscess of brain, bacteriological or histological examination not done. 

013.40 ............... Tuberculoma of spinal cord, unspecified. 

013.41 ............... Tuberculoma of spinal cord, bacteriological or histological examination not done. 

013.50 ............... Tuberculous abscess of spinal cord, unspecified. 

013.51 ............... Tuberculous abscess of spinal cord, bacteriological or histological examination not done. 

013.60 ............... Tuberculous encephalitis or myelitis, unspecified. 

013.61 ............... Tuberculous encephalitis or myelitis, bacteriological or histological examination not done. 

047.9 ................. Unspecified viral meningitis. 

053.13 ............... Postherpetic polyneuropathy. 

062.9 ................. Mosquito-borne viral encephalitis, unspecified. 

063.1 ................. Louping ill. 

063.9 ................. Tick-borne viral encephalitis, unspecified. 

324.9 ................. Intracranial and intraspinal abscess of unspecified site. 

335.10 ............... Spinal muscular atrophy, unspecified. 

335.9 ................. Anterior horn cell disease, unspecified. 

336.9 ................. Unspecified disease of spinal cord. 

341.9 ................. Demyelinating disease of central nervous system, unspecified. 

342.00 ............... Flaccid hemiplegia and hemiparesis affecting unspecified side. 

342.10 ............... Spastic hemiplegia and hemiparesis affecting unspecified side. 


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TABLE 9—ICD–9–CM CODES REMOVED FROM ‘‘ICD–9–CM CODES THAT MEET PRESUMPTIVE COMPLIANCE CRITERIA’’— 

Continued 

ICD–9–CM 

Code Diagnosis 

342.80 ............... Other specified hemiplegia and hemiparesis affecting unspecified side. 

342.90 ............... Hemiplegia, unspecified, affecting unspecified side. 

342.91 ............... Hemiplegia, unspecified, affecting dominant side. 

342.92 ............... Hemiplegia, unspecified, affecting nondominant side. 

343.3 ................. Congenital monoplegia. 

344.5 ................. Unspecified monoplegia. 

348.82 ............... Brain death. 

353.0 ................. Brachial plexus lesions. 

353.2 ................. Cervical root lesions, not elsewhere classified. 

353.3 ................. Thoracic root lesions, not elsewhere classified. 

353.4 ................. Lumbosacral root lesions, not elsewhere classified. 

353.5 ................. Neuralgic amyotrophy. 

353.8 ................. Other nerve root and plexus disorders. 

354.5 ................. Mononeuritis multiplex. 

356.9 ................. Unspecified hereditary and idiopathic peripheral neuropathy. 

358.00 ............... Myasthenia gravis without (acute) exacerbation. 

359.29 ............... Other specified myotonic disorder. 

359.3 ................. Periodic paralysis. 

432.9 ................. Unspecified intracranial hemorrhage. 

438.20 ............... Late effects of cerebrovascular disease, hemiplegia affecting unspecified side. 

438.30 ............... Late effects of cerebrovascular disease, monoplegia of upper limb affecting unspecified side. 

438.31 ............... Late effects of cerebrovascular disease, monoplegia of upper limb affecting dominant side. 

438.32 ............... Late effects of cerebrovascular disease, monoplegia of upper limb affecting nondominant side. 

438.40 ............... Late effects of cerebrovascular disease, monoplegia of lower limb affecting unspecified side. 

438.50 ............... Late effects of cerebrovascular disease, other paralytic syndrome affecting unspecified side. 

446.0 ................. Polyarteritis nodosa. 

711.20 ............... Arthropathy in Behcet’s syndrome, site unspecified. 

711.21 ............... Arthropathy in Behcet’s syndrome, shoulder region. 

711.22 ............... Arthropathy in Behcet’s syndrome, upper arm. 

711.23 ............... Arthropathy in Behcet’s syndrome, forearm. 

711.24 ............... Arthropathy in Behcet’s syndrome, hand. 

711.25 ............... Arthropathy in Behcet’s syndrome, pelvic region and thigh. 

711.26 ............... Arthropathy in Behcet’s syndrome, lower leg. 

711.27 ............... Arthropathy in Behcet’s syndrome, ankle and foot. 

711.28 ............... Arthropathy in Behcet’s syndrome, other specified sites. 

711.29 ............... Arthropathy in Behcet’s syndrome, multiple sites. 

713.0 ................. Arthropathy associated with other endocrine and metabolic disorders. 

713.1 ................. Arthropathy associated with gastrointestinal conditions other than infections. 

713.2 ................. Arthropathy associated with hematological disorders. 

713.3 ................. Arthropathy associated with dermatological disorders. 

713.4 ................. Arthropathy associated with respiratory disorders. 

713.6 ................. Arthropathy associated with hypersensitivity reaction. 

713.7 ................. Other general diseases with articular involvement. 

714.0 ................. Rheumatoid arthritis. 

714.1 ................. Felty’s syndrome. 

714.2 ................. Other rheumatoid arthritis with visceral or systemic involvement. 

714.32 ............... Pauciarticular juvenile rheumatoid arthritis. 

714.81 ............... Rheumatoid lung. 

714.89 ............... Other specified inflammatory polyarthropathies. 

714.9 ................. Unspecified inflammatory polyarthropathy. 

715.11 ............... Osteoarthrosis, localized, primary, shoulder region. 

715.12 ............... Osteoarthrosis, localized, primary, upper arm. 

715.15 ............... Osteoarthrosis, localized, primary, pelvic region and thigh. 

715.16 ............... Osteoarthrosis, localized, primary, lower leg. 

715.21 ............... Osteoarthrosis, localized, secondary, shoulder region. 

715.22 ............... Osteoarthrosis, localized, secondary, upper arm. 

715.25 ............... Osteoarthrosis, localized, secondary, pelvic region and thigh. 

715.26 ............... Osteoarthrosis, localized, secondary, lower leg. 

715.31 ............... Osteoarthrosis, localized, not specified whether primary or secondary, shoulder region. 

715.32 ............... Osteoarthrosis, localized, not specified whether primary or secondary, upper arm. 

715.35 ............... Osteoarthrosis, localized, not specified whether primary or secondary, pelvic region and thigh. 

715.36 ............... Osteoarthrosis, localized, not specified whether primary or secondary, lower leg. 

716.01 ............... Kaschin-Beck disease, shoulder region. 

716.02 ............... Kaschin-Beck disease, upper arm. 

716.05 ............... Kaschin-Beck disease, pelvic region and thigh. 

716.06 ............... Kaschin-Beck disease, lower leg. 

716.11 ............... Traumatic arthropathy, shoulder region. 

716.12 ............... Traumatic arthropathy, upper arm. 

716.15 ............... Traumatic arthropathy, pelvic region and thigh. 

716.16 ............... Traumatic arthropathy, lower leg. 


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TABLE 9—ICD–9–CM CODES REMOVED FROM ‘‘ICD–9–CM CODES THAT MEET PRESUMPTIVE COMPLIANCE CRITERIA’’— 

Continued 

ICD–9–CM 

Code Diagnosis 

716.21 ............... Allergic arthritis, shoulder region. 

716.22 ............... Allergic arthritis, upper arm. 

716.25 ............... Allergic arthritis, pelvic region and thigh. 

716.26 ............... Allergic arthritis, lower leg. 

716.51 ............... Unspecified polyarthropathy or polyarthritis, shoulder region. 

716.52 ............... Unspecified polyarthropathy or polyarthritis, upper arm. 

716.55 ............... Unspecified polyarthropathy or polyarthritis, pelvic region and thigh. 

716.56 ............... Unspecified polyarthropathy or polyarthritis, lower leg. 

719.30 ............... Palindromic rheumatism, site unspecified. 

719.31 ............... Palindromic rheumatism, shoulder region. 

719.32 ............... Palindromic rheumatism, upper arm. 

719.33 ............... Palindromic rheumatism, forearm. 

719.34 ............... Palindromic rheumatism, hand. 

719.35 ............... Palindromic rheumatism, pelvic region and thigh. 

719.36 ............... Palindromic rheumatism, lower leg. 

719.37 ............... Palindromic rheumatism, ankle and foot. 

719.38 ............... Palindromic rheumatism, other specified sites. 

719.39 ............... Palindromic rheumatism, multiple sites. 

720.0 ................. Ankylosing spondylitis. 

720.81 ............... Inflammatory spondylopathies in diseases classified elsewhere. 

720.89 ............... Other inflammatory spondylopathies. 

721.91 ............... Spondylosis of unspecified site, with myelopathy. 

722.70 ............... Intervertebral disc disorder with myelopathy, unspecified region. 

740.1 ................. Craniorachischisis. 

740.2 ................. Iniencephaly. 

741.00 ............... Spina bifida with hydrocephalus, unspecified region. 

741.90 ............... Spina bifida without mention of hydrocephalus, unspecified region. 

742.1 ................. Microcephalus. 

754.30 ............... Congenital dislocation of hip, unilateral. 

754.31 ............... Congenital dislocation of hip, bilateral. 

754.32 ............... Congenital subluxation of hip, unilateral. 

755.20 ............... Unspecified reduction deformity of upper limb. 

755.21 ............... Transverse deficiency of upper limb. 

755.22 ............... Longitudinal deficiency of upper limb, not elsewhere classified. 

755.23 ............... Longitudinal deficiency, combined, involving humerus, radius, and ulna (complete or incomplete). 

755.24 ............... Longitudinal deficiency, humeral, complete or partial (with or without distal deficiencies, incomplete). 

755.25 ............... Longitudinal deficiency, radioulnar, complete or partial (with or without distal deficiencies, incomplete). 

755.26 ............... Longitudinal deficiency, radial, complete or partial (with or without distal deficiencies, incomplete). 

755.27 ............... Longitudinal deficiency, ulnar, complete or partial (with or without distal deficiencies, incomplete). 

755.28 ............... Longitudinal deficiency, carpals or metacarpals, complete or partial (with or without incomplete phalangeal deficiency). 

755.30 ............... Unspecified reduction deformity of lower limb. 

755.4 ................. Reduction deformities, unspecified limb. 

755.51 ............... Congenital deformity of clavicle. 

755.53 ............... Radioulnar synostosis. 

755.61 ............... Coxa valga, congenital. 

755.62 ............... Coxa vara, congenital. 

755.63 ............... Other congenital deformity of hip (joint). 

756.50 ............... Congenital osteodystrophy, unspecified. 

800.09 ............... Closed fracture of vault of skull without mention of intracranial injury, with concussion, unspecified. 

800.19 ............... Closed fracture of vault of skull with cerebral laceration and contusion, with concussion, unspecified. 

800.29 ............... Closed fracture of vault of skull with subarachnoid, subdural, and extradural hemorrhage, with concussion, unspecified. 

800.39 ............... Closed fracture of vault of skull with other and unspecified intracranial hemorrhage, with concussion, unspecified. 

800.49 ............... Closed fracture of vault of skull with intracranial injury of other and unspecified nature, with concussion, unspecified. 

800.59 ............... Open fracture of vault of skull without mention of intracranial injury, with concussion, unspecified. 

800.69 ............... Open fracture of vault of skull with cerebral laceration and contusion, with concussion, unspecified. 

800.79 ............... Open fracture of vault of skull with subarachnoid, subdural, and extradural hemorrhage, with concussion, unspecified. 

800.89 ............... Open fracture of vault of skull with other and unspecified intracranial hemorrhage, with concussion, unspecified. 

800.99 ............... Open fracture of vault of skull with intracranial injury of other and unspecified nature, with concussion, unspecified. 

801.09 ............... Closed fracture of base of skull without mention of intra cranial injury, with concussion, unspecified. 

801.19 ............... Closed fracture of base of skull with cerebral laceration and contusion, with concussion, unspecified. 

801.29 ............... Closed fracture of base of skull with subarachnoid, subdural, and extradural hemorrhage, with concussion, unspecified. 

801.39 ............... Closed fracture of base of skull with other and unspecified intracranial hemorrhage, with concussion, unspecified. 

801.49 ............... Closed fracture of base of skull with intracranial injury of other and unspecified nature, with concussion, unspecified. 

801.59 ............... Open fracture of base of skull without mention of intracranial injury, with concussion, unspecified. 

801.69 ............... Open fracture of base of skull with cerebral laceration and contusion, with concussion, unspecified. 

801.79 ............... Open fracture of base of skull with subarachnoid, subdural, and extradural hemorrhage, with concussion, unspecified. 

801.89 ............... Open fracture of base of skull with other and unspecified intracranial hemorrhage, with concussion, unspecified. 

801.99 ............... Open fracture of base of skull with intracranial injury of other and unspecified nature, with concussion, unspecified. 

803.09 ............... Other closed skull fracture without mention of intracranial injury, with concussion, unspecified. 

803.19 ............... Other closed skull fracture with cerebral laceration and contusion, with concussion, unspecified. 


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TABLE 9—ICD–9–CM CODES REMOVED FROM ‘‘ICD–9–CM CODES THAT MEET PRESUMPTIVE COMPLIANCE CRITERIA’’— 

Continued 

ICD–9–CM 

Code Diagnosis 

803.29 ............... Other closed skull fracture with subarachnoid, subdural, and extradural hemorrhage, with concussion, unspecified. 

803.39 ............... Other closed skull fracture with other and unspecified intracranial hemorrhage, with concussion, unspecified. 

803.49 ............... Other closed skull fracture with intracranial injury of other and unspecified nature, with concussion, unspecified. 

803.59 ............... Other open skull fracture without mention of intracranial injury, with concussion, unspecified. 

803.69 ............... Other open skull fracture with cerebral laceration and contusion, with concussion, unspecified. 

803.79 ............... Other open skull fracture with subarachnoid, subdural, and extradural hemorrhage, with concussion, unspecified. 

803.89 ............... Other open skull fracture with other and unspecified intracranial hemorrhage, with concussion, unspecified. 

803.99 ............... Other open skull fracture with intracranial injury of other and unspecified nature, with concussion, unspecified. 

804.19 ............... Closed fractures involving skull or face with other bones, with cerebral laceration and contusion, with concussion, unspecified. 

804.29 ............... Closed fractures involving skull or face with other bones with subarachnoid, subdural, and extradural hemorrhage, with concussion, unspecified. 

804.39 ............... Closed fractures involving skull or face with other bones, with other and unspecified intracranial hemorrhage, with concussion, 

unspecified. 

804.49 ............... Closed fractures involving skull or face with other bones, with intracranial injury of other and unspecified nature, with concussion, unspecified. 

804.69 ............... Open fractures involving skull or face with other bones, with cerebral laceration and contusion, with concussion, unspecified. 

804.79 ............... Open fractures involving skull or face with other bones with subarachnoid, subdural, and extradural hemorrhage, with concussion, unspecified. 

804.89 ............... Open fractures involving skull or face with other bones, with other and unspecified intracranial hemorrhage, with concussion, 

unspecified. 

804.99 ............... Open fractures involving skull or face with other bones, with intracranial injury of other and unspecified nature, with concussion, unspecified. 

806.00 ............... Closed fracture of C1–C4 level with unspecified spinal cord injury. 

806.05 ............... Closed fracture of C5–C7 level with unspecified spinal cord injury. 

806.10 ............... Open fracture of C1–C4 level with unspecified spinal cord injury. 

806.15 ............... Open fracture of C5–C7 level with unspecified spinal cord injury. 

806.20 ............... Closed fracture of T1–T6 level with unspecified spinal cord injury. 

806.25 ............... Closed fracture of T7–T12 level with unspecified spinal cord injury. 

806.30 ............... Open fracture of T1–T6 level with unspecified spinal cord injury. 

806.35 ............... Open fracture of T7–T12 level with unspecified spinal cord injury. 

806.60 ............... Closed fracture of sacrum and coccyx with unspecified spinal cord injury. 

806.70 ............... Open fracture of sacrum and coccyx with unspecified spinal cord injury. 

820.8 ................. Closed fracture of unspecified part of neck of femur. 

820.9 ................. Open fracture of unspecified part of neck of femur. 

839.10 ............... Open dislocation, cervical vertebra, unspecified. 

850.5 ................. Concussion with loss of consciousness of unspecified duration. 

851.09 ............... Cortex (cerebral) contusion without mention of open intracranial wound, with concussion, unspecified. 

851.19 ............... Cortex (cerebral) contusion with open intracranial wound, with concussion, unspecified. 

851.29 ............... Cortex (cerebral) laceration without mention of open intracranial wound, with concussion, unspecified. 

851.39 ............... Cortex (cerebral) laceration with open intracranial wound, with concussion, unspecified. 

851.49 ............... Cerebellar or brain stem contusion without mention of open intracranial wound, with concussion, unspecified. 

851.59 ............... Cerebellar or brain stem contusion with open intracranial wound, with concussion, unspecified. 

851.69 ............... Cerebellar or brain stem laceration without mention of open intracranial wound, with concussion, unspecified. 

851.79 ............... Cerebellar or brain stem laceration with open intracranial wound, with concussion, unspecified. 

851.89 ............... Other and unspecified cerebral laceration and contusion, without mention of open intracranial wound, with concussion, unspecified. 

852.09 ............... Subarachnoid hemorrhage following injury without mention of open intracranial wound, with concussion, unspecified. 

852.19 ............... Subarachnoid hemorrhage following injury with open intracranial wound, with concussion, unspecified. 

852.29 ............... Subdural hemorrhage following injury without mention of open intracranial wound, with concussion, unspecified. 

852.39 ............... Subdural hemorrhage following injury with open intracranial wound, with concussion, unspecified. 

852.49 ............... Extradural hemorrhage following injury without mention of open intracranial wound, with concussion, unspecified. 

852.59 ............... Extradural hemorrhage following injury with open intracranial wound, with concussion, unspecified. 

853.09 ............... Other and unspecified intracranial hemorrhage following injury without mention of open intracranial wound, with concussion, 

unspecified. 

853.19 ............... Other and unspecified intracranial hemorrhage following injury with open intracranial wound, with concussion, unspecified. 

854.09 ............... Intracranial injury of other and unspecified nature without mention of open intracranial wound, with concussion, unspecified. 

854.19 ............... Intracranial injury of other and unspecified nature with open intracranial wound, with concussion, unspecified. 

887.0 ................. Traumatic amputation of arm and hand (complete) (partial), unilateral, below elbow, without mention of complication. 

887.1 ................. Traumatic amputation of arm and hand (complete) (partial), unilateral, below elbow, complicated. 

887.2 ................. Traumatic amputation of arm and hand (complete) (partial), unilateral, at or above elbow, without mention of complication. 

887.3 ................. Traumatic amputation of arm and hand (complete) (partial), unilateral, at or above elbow, complicated. 

887.4 ................. Traumatic amputation of arm and hand (complete) (partial), unilateral, level not specified, without mention of complication. 

887.5 ................. Traumatic amputation of arm and hand (complete) (partial), unilateral, level not specified, complicated. 

941.00 ............... Burn of unspecified degree of face and head, unspecified site. 

941.02 ............... Burn of unspecified degree of eye (with other parts of face, head, and neck). 

941.09 ............... Burn of unspecified degree of multiple sites [except with eye] of face, head, and neck. 

942.00 ............... Burn of unspecified degree of trunk, unspecified site. 

942.01 ............... Burn of unspecified degree of breast. 

942.02 ............... Burn of unspecified degree of chest wall, excluding breast and nipple. 

942.03 ............... Burn of unspecified degree of abdominal wall. 


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TABLE 9—ICD–9–CM CODES REMOVED FROM ‘‘ICD–9–CM CODES THAT MEET PRESUMPTIVE COMPLIANCE CRITERIA’’— 

Continued 

ICD–9–CM 

Code Diagnosis 

942.04 ............... Burn of unspecified degree of back [any part]. 

942.05 ............... Burn of unspecified degree of genitalia. 

942.09 ............... Burn of unspecified degree of other and multiple sites of trunk. 

943.00 ............... Burn of unspecified degree of upper limb, except wrist and hand, unspecified site. 

943.01 ............... Burn of unspecified degree of forearm. 

943.02 ............... Burn of unspecified degree of elbow. 

943.03 ............... Burn of unspecified degree of upper arm. 

943.04 ............... Burn of unspecified degree of axilla. 

943.05 ............... Burn of unspecified degree of shoulder. 

943.06 ............... Burn of unspecified degree of scapular region. 

943.09 ............... Burn of unspecified degree of multiple sites of upper limb, except wrist and hand. 

943.30 ............... Full-thickness skin [third degree, not otherwise specified] of upper limb, unspecified site. 

943.40 ............... Deep necrosis of underlying tissues [deep third degree] without mention of loss of a body part, of upper limb, unspecified site. 

943.50 ............... Deep necrosis of underlying tissues [deep third degree] with loss of a body part, of upper limb, unspecified site. 

944.30 ............... Full-thickness skin loss [third degree, not otherwise specified] of hand, unspecified site. 

944.40 ............... Deep necrosis of underlying tissues [deep third degree] without mention of loss of a body part, hand, unspecified site. 

944.50 ............... Deep necrosis of underlying tissues [deep third degree] with loss of a body part, of hand, unspecified site. 

945.00 ............... Burn of unspecified degree of lower limb [leg], unspecified site. 

945.01 ............... Burn of unspecified degree of toe(s) (nail). 

945.02 ............... Burn of unspecified degree of foot. 

945.03 ............... Burn of unspecified degree of ankle. 

945.04 ............... Burn of unspecified degree of lower leg. 

945.05 ............... Burn of unspecified degree of knee. 

945.06 ............... Burn of unspecified degree of thigh [any part]. 

945.09 ............... Burn of unspecified degree of multiple sites of lower limb(s). 

945.20 ............... Blisters, epidermal loss [second degree] of lower limb [leg], unspecified site. 

945.40 ............... Deep necrosis of underlying tissues [deep third degree] without mention of loss of a body part, lower limb [leg], unspecified 

site. 

945.50 ............... Deep necrosis of underlying tissues [deep third degree] with loss of a body part, of lower limb [leg], unspecified site. 

949.4 ................. Deep necrosis of underlying tissue [deep third degree] without mention of loss of a body part, unspecified. 

949.5 ................. Deep necrosis of underlying tissues [deep third degree] with loss of a body part, unspecified. 

997.60 ............... Unspecified complication of amputation stump. 

IX. Non-Quality Related Revisions to 

IRF–PAI Sections 

Under section 1886(j)(2)(D) of the Act, 

the Secretary is authorized to require 

rehabilitation facilities that provide 

inpatient hospital services to submit 

such data as the Secretary deems 

necessary to establish and administer 

the prospective payment system under 

subsection P. The collection of patient 

data is indispensable for the successful 

development and implementation of the 

IRF payment system. In the August 7, 

2001 final rule, the inpatient 

rehabilitation facility patient assessment 

instrument (IRF–PAI) was adopted as 

the standardized patient assessment 

instrument under the IRF prospective 

payment system (PPS). The IRF–PAI 

was established, and is still used to 

gather data to classify patients for 

payment under the IRF PPS. As 

discussed in section XIV of this final 

rule, it is also now used to collect 

certain data for the IRF Quality 

Reporting Program. IRFs are currently 

required to complete an IRF–PAI for 

every Medicare Part A or C patient who 

is admitted to, or discharged from an 

IRF. (We note that Medicare Part B was 

inappropriately listed in the proposed 

rule. We are clarifying that IRFs are not 

required to submit the IRF–PAI for 

Medicare Part B patients.) 

Although there have been significant 

advancements in the industry, no IRF 

PPS payment-related changes have been 

made to the IRF–PAI form since its 

implementation in FY 2002. In the FY 

2014 IRF PPS proposed rule, we 

proposed amending certain response 

code options, adding additional data 

points, removing certain outdated items 

and changing certain references to 

ensure that our policies reflect the 

current data needs of the IRF PPS 

program. 

A. Revisions 

We proposed to amend the response 

codes on the following items in the IRF– 

PAI: 

• Item 15A: Admit From (Formerly item 

15) 

• Item 16A: Pre-Hospital Living 

Situation (Formerly item 16) 

• Item 44D: Patient’s Discharge 

Destination/Living Setting (Formerly 

item 44A) 

To minimize possible confusion due 

to the use of different sets of status 

codes on the IRF–PAI and the CMS– 

1450 (also referred to as the UB–04) 

claim form, we believe that the IRF–PAI 

status codes should be updated to 

mirror those used on the UB–04 claim 

form. We also believed this update 

would help with consistency, ultimately 

decreasing the rate of coding submission 

errors on the UB–04 claim form. We 

believed that would provide response 

options that mirror other commonly 

used instruments in the Medicare 

context allowing providers to use only 

one common set of response codes. We 

proposed to amend the response options 

for the three items listed above to: 

• 01—Home (private home/apt., board/ 

care, assisted living, group home) 

• 02—Short-term General Hospital 

• 03—Skilled Nursing Facility (SNF) 

• 50—Hospice 

• 62—Another Inpatient Rehabilitation 

Facility 

• 63—Long-Term Care Hospital (LTCH) 

• 64—Medicaid Nursing Facility 

• 65—Inpatient Psychiatric Facility 

• 66—Critical Access Hospital 

• 99—Not Listed 

We also proposed to update the 

options for responding to item 20B: 

Secondary Source. While not expressly 

stated in the preamble, but evident from 


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47896 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 

the web-posted draft of the IRF–PAI that 

was cross-referenced in the proposed 

rule, we also proposed to amend the 

response codes for 20A: Primary Source 

as well. As we noted in the proposed 

rule, we find that the current response 

options for these data elements result in 

the collection of patient information 

that we do not currently need to operate 

the IRF PPS and the IRF quality 

programs. Therefore, we limit our data 

collections to those which are currently 

needed, and in an effort to decrease 

burden on IRFs through the 

implementation of simplified response 

options, we proposed to limit the 

secondary source response options to 

the following: 

• 02—Medicare—Fee for Service 

• 51—Medicare—Medicare Advantage 

• 99—Not Listed 

B. Additions 

Further, we proposed to add (or 

expand) the following items to the IRF– 

PAI: 

• Item 25A: Height 

• Item 26A: Weight 

• Item 24: Comorbid Conditions (15 

additional spaces) 

• Item 44C: Was the patient discharged 

alive? 

• Signature of Persons Completing the 

IRF–PAI 

Items 25A: Height and 26A: Weight, 

are important items to collect for using 

in the classification of facilities for 

payment under the IRF–PPS as well as 

for the risk adjustment of quality 

measures (as described in section XIV of 

this final rule). In the regulations at 

section 412.29(b)(2), we specify a list of 

comorbid conditions that, if certain 

conditions are met, may qualify a 

patient for inclusion in an IRF’s 60 

percent rule compliance percentage. For 

example, a patient with a lowerextremity joint replacement comorbidity 

could qualify as an IRF patient under 

the 60 percent rule compliance 

percentage if they have one or more of 

the following: 

• A bilateral joint replacement 

• Is over the age of 85 

• Has a BMI greater than 50. 

The patient’s BMI is calculated using 

height and weight. By adding a patient’s 

height and weight information to the 

IRF–PAI, we will for the first time have 

enough information on the number and 

types of patients being treated for a 

lower-extremity joint replacement with 

a BMI greater than 50 for purposes of 

analyzing the effects of the 60 percent 

rule. 

We also proposed to add 15 

additional spaces for providers to 

document patients’ comorbid medical 

conditions at item 24: Comorbid 

Conditions (located in the medical 

information section of the IRF–PAI). 

The IRF–PAI currently has ten spaces 

available for providers to enter ICD 

codes for comorbid conditions. 

Including the 15 additional proposed 

spaces for this item will give providers 

a total of 25 spaces on the IRF–PAI. 

Such expansion will enable IRFs to code 

with greater specificity which may 

result in accounting for additional 

comorbidities. Further identification of 

patient characteristics may assist in care 

planning, payment assignment, and 

presumptive compliance method 

compliance calculations. Furthermore, 

in order to stay aligned, we believe that 

the number of data elements allowed on 

the IRF–PAI for item 24: Comorbid 

Conditions, should mirror the number 

of spaces currently available for 

providers to document patients’ 

comorbidities on the UB–04 claim. 

Additionally, the ICD–10 coding scheme 

will become effective on October 1, 

2014, and is much more specific than 

the current ICD–9 coding. Therefore, 

when the agency moves from ICD–9 to 

ICD–10 coding, providers may need the 

additional spaces to code because of the 

greater specificity under ICD–10. 

Furthermore, we proposed to add a 

new item 44C: ‘‘Was the patient 

discharged alive?’’ to the discharge 

information section on the IRF–PAI. 

Adding this item as a standalone item 

would allow facilities that reply ‘‘no’’ to 

44C to skip items 44D, 44E, and 45, 

which describe a living patient’s 

discharge destination. This will also 

reduce the burden on the time it takes 

providers to complete the IRF–PAI. 

Facilities that respond ‘‘yes’’ to item 

44C will complete items 44D, 44E and 

45 as they apply to the patient. We 

believe that adding this question as a 

standalone item would provide greater 

clarity for providers when documenting 

patient information on the IRF–PAI. 

We also proposed to add a page to the 

IRF–PAI dedicated as the signature page 

for persons completing the IRF–PAI. As 

of the effective date of the IRF Coverage 

Requirements (see the August 7, 2009 

FY 2010 IRF PPS final rule (74 FR 

39762)) a patient’s IRF–PAI must be 

maintained in their medical record at 

the IRF (electronic or paper format), and 

the information in the IRF–PAI must 

correspond with all of the information 

provided in the patient’s IRF medical 

record. We received multiple public 

comments on the FY 2010 IRF PPS 

proposed rule regarding the requirement 

to include the IRF–PAI in the medical 

record. Commenters questioned whether 

IRFs would need to adhere to the 

conditions of participation in 

§ 482.24(c)(1) that require all patient 

medical record entries must be legible, 

complete, dated, timed, and 

authenticated in written or electronic 

form by the person responsible for 

providing or evaluating the service 

provided, consistent with hospital 

policies and procedures. When we 

responded (at http://cms.gov/Medicare/ 

Medicare-Fee-for-Service-Payment/ 

InpatientRehabFacPPS/Downloads/IRFTraining-call_version_1.pdf) that IRFs 

would need to adhere to § 482.24(c)(1), 

providers responded by asking for a 

place on the IRF–PAI where they would 

be able to document the required 

authentication. The addition of a 

signature page for persons completing 

the IRF–PAI would fulfill providers’ 

request to have an organized way to 

document who in the IRF has completed 

an IRF–PAI item and/or section when 

the information was completed. We also 

believe that the addition of a signature 

page for those completing the IRF–PAI 

will ensure that providers are satisfying 

both the IRF coverage requirements and 

the conditions of participation 

requirements. 

C. Deletions 

We proposed to delete the following 

items from the IRF–PAI: 

• Item 18: Pre-Hospital Vocational 

Category 

• Item 19: Pre-Hospital Vocational 

Effort 

• Item 25: Is patient comatose at 

admission? 

• Item 26: Is patient delirious at 

admission? 

• Item 28: Clinical signs of dehydration 

Because we no longer believe that 

these items are necessary and in the 

interest of reducing burden on 

providers, we would like to delete them. 

Items 18: Pre-Hospital Vocational 

Category and 19: Pre-Hospital 

Vocational Effort (currently located in 

the admission identification section on 

the IRF–PAI) are not used for payment 

or quality purposes. While these items 

will be removed from the IRF–PAI, we 

note that these data elements could be 

significant in a treatment context. For 

example, we believe that these data 

elements could be relevant during the 

care planning/discharge process, as well 

as during interdisciplinary team 

meetings. Therefore, we would expect 

them to appear in the patient’s medical 

record. 

We also note, that items 25: Is patient 

comatose at admission, 26: Is patient 

delirious at admission, and 28: Clinical 

signs of dehydration (currently located 

in the medical information section on 

the IRF–PAI) are voluntary items that 


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are not used for our payment or quality 

program purposes. Therefore, we do not 

believe it is necessary to collect this 

information on the IRF–PAI. 

Furthermore, to the extent such 

information would be relevant to the 

provision of patient care; this 

information should be captured in 

either the transfer documentation from 

the referring physician, or the patients’ 

initial assessment documentation. As 

such, continuing to require this 

information on the IRF–PAI would be 

duplicative since the items should be 

well documented in the patients’ 

medical record from their stay at the 

facility. 

D. Changes 

We proposed to replace all references 

to the ICD–9–CM code(s) in the IRF–PAI 

with references to ICD code(s). This 

change would allow CMS to forgo 

making additional changes to the IRF– 

PAI when the adopted ICD code(s) 

change. 

Proposed Technical Correction 

We proposed technical corrections at 

items 44D, 44E and 45 to conform to the 

additions above. We believe that adding 

language to these items indicating that 

the question can be skipped depending 

upon how item 44C is answered, will 

help reduce submission errors for 

providers when filling out the IRF–PAI. 

A draft of the IRF–PAI, with the 

revisions proposed in the proposed rule 

was made available for download on the 

IRF PPS Web site at http:// 

www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ 

InpatientRehabFacPPS/IRFPAI.html. 

We received 18 comments on the 

proposed changes to the non-quality 

related revisions to IRF–PAI sections, 

which are summarized below. 

Comment: Overall, the majority of 

commenters commended CMS for 

assessing the non-quality related 

portions of the IRF–PAI for refinements. 

Response: We appreciate the support 

from the commenters regarding the 

changes to the IRF–PAI. We believe that 

the IRF–PAI changes will promote 

efficiency and clarity for providers as 

well as ensure that our policies reflect 

the current data needs required to 

support the IRF PPS program. 

Comment: Many of the commenters 

supported our proposal to align the 

status codes on the IRF–PAI with those 

used on the UB–04 claim form. 

Commenters agreed that the proposed 

changes would help providers avoid 

coding errors. More specifically, two 

commenters commended our proposed 

removal of the status code 13 (sub-acute 

care) stating that the term is not clearly 

defined and is more commonly used as 

a marketing term. 

Response: We appreciate the support 

from commenters regarding the 

proposed changes to the IRF–PAI. We 

believe that streamlining claim 

submission codes and IRF–PAI status 

codes will ease the administrative 

burden for providers as well as reduce 

coding errors. 

Comment: One commenter suggested 

that we should delete item 44E: Was 

patient discharged with Home Health 

Services, and instead add code 06-Home 

under care of organized home health 

service organization, to item 44D: 

Patient’s discharge destination/living 

setting. Likewise, another commenter 

recommended that we remove the 

proposed new item 44C: Was the patient 

discharged alive and add the status code 

option 20-Expired. Additionally, 

another commenter supported our 

proposal to add 50-Hospice as a status 

code option, however, suggested that 

CMS should add the status code option 

51-Hospice (Institutional Facility). The 

commenters suggested that these status 

code options would more accurately 

reflect the UB–04 claim form. 

Response: As we mentioned in the 

proposed rule, many of the changes we 

made on the non-quality related IRF– 

PAI items were to initiate 

standardization between IRF claims and 

the IRF–PAI when coding patients. Our 

intent in mirroring the IRF–PAI status 

codes with the UB–04 claim form codes 

was to help providers avoid future 

coding errors. After reviewing the 

comments submitted, we agree with 

most of the commenters suggestions to 

add several status code options to 

further mirror the UB–04 claim form. In 

addition to finalizing the proposed 

status code changes, we will also add 

the following status code options, which 

are identical to the options on the UB– 

04 claim form to items 15A: Admit 

From; 16A: Pre-hospital Living Setting; 

and 44D: Patient’s discharge 

destination/living setting: 

04—Intermediate Care Facility 

06—Home under care of organized 

home health service organization 

51—Hospice (Institutional Facility) 

61—Within institution to swing bed 

We do not agree with the commenters 

suggestion to remove item 44C: Was the 

patient discharged alive, and add 20- 

Expired as a status code option. 

Although the status code would mirror 

the UB–04 claim form, we do not 

believe ‘‘expired’’ is an adequate 

response when providers are answering 

a question regarding the patient’s 

discharge destination. If a patient 

expires while in the IRF, they are not 

discharged from the facility therefore, 

we would still need item 44C: Was the 

patient discharged alive. Additionally, 

adding this item as a standalone item 

allows clear delineation of a section of 

the IRF–PAI that providers would not 

have to report if the reply to 44C is 

‘‘no’’. Items 44D and 45, which describe 

a living patient’s discharge destination, 

can then be skipped. Finally, in light of 

the addition of status code option 06— 

Home under care of organized home 

health service organization; we will 

remove item 44E: Was patient 

discharged with Home Health Services 

live, as this item would be redundant 

for providers to answer. 

Comment: One commenter suggested 

that we should consider creating a new 

status code option 08-subacute (SNF 

with continued therapy plan of care/ 

skilled needs). 

Response: We appreciate the 

commenter’s suggestion and will 

consider creating a new status code 

option 08-Subacute (SNF with 

continued therapy plan of care/skilled 

needs) during future rulemaking. 

However, our intentions of changing the 

status code options on the IRF–PAI were 

to mirror those on the UB–04 claim 

form, and this suggestion does not 

conform to those changes as it is not 

currently necessary for IRF payment or 

quality reporting. 

Comment: Several commenters 

expressed concern that the coding 

changes to the IRF–PAI for items 15A: 

Admitted From; 16A: Pre-Hospital 

Living Situation; and 44D: Patient’s 

Discharge Destination, are not optimal 

and suggested that we retain the current 

IRF–PAI coding options for these items. 

The commenters stated that the data 

collected by IRFs in response to these 

items provide valuable information for 

quality review and operational 

management. Limiting the response 

options too severely, the commenters 

indicated, would impair an IRF’s ability 

to collect and retain valuable 

information for payers other than 

Medicare. 

Response: We appreciate the 

commenters suggestion as we continue 

to believe that the status code changes 

are necessary to provide better clarity 

and alignment with the UB–04 claim 

form, ultimately reducing coding 

submission errors. Although we have 

removed some status code options, we 

do not believe that we are preventing or 

deterring IRFs from continuing to 

collect patient information and 

document it within the medical record. 

Comment: One commenter disagreed 

with our proposal to group the existing 

status codes for private home, board/ 

care, assisted living and group home 


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together under the proposed status code 

01—Home (private home/apt., board/ 

care, assisted living, group home) and to 

completely remove the code options for 

transitional living and intermediate care 

from items 15A: Admitted From; 16A: 

Pre-Hospital Living Situation; and 44D: 

Patient’s Discharge Destination. The 

commenter recommended that if the 

proposed status code changes are 

finalized, we should consider adding 

transitional living and intermediate care 

under the status code 01—Home. 

Response: As we have previously 

mentioned, our goal in proposing to 

change some of the status code options 

on the IRF–PAI is to be as consistent as 

possible with the UB–04 claim form. 

Therefore, we disagree with the 

commenters’ suggestion to ungroup the 

existing status codes for private home, 

board/care, assisted living, and group 

home under the proposed status code 

01—Home. But we do agree with the 

commenter that intermediate care and 

transitional living are status code 

options that should be included in the 

IRF–PAI. Therefore, we will add status 

code 04—Intermediate care. 

Furthermore, we will include 

transitional living as one of the 

locations listed in status code 01— 

Home to the response options. 

Comment: Several commenters 

expressed concerns with our proposed 

change to limit the status code options 

in item 22B: Secondary Source, to only 

02—Medicare-Fee For Service; 51 

Medicare-Medicare Advantage; and 99 

Not Listed, stating that IRFs would lose 

the ability to track other payer sources 

beyond Medicare. One commenter 

suggested that if we remove the majority 

of the code options in item 20B: 

Secondary Source, then we should 

display the current comprehensive list 

of payment sources under item 20A: 

Primary Source. Additionally, the 

commenter recommended that we add 

Medicaid Expansion and the Health 

Insurance Marketplace as status code 

options. Another commenter stated that 

decreasing the number of code options 

will not really save time and burden for 

providers. 

Response: We respectfully disagree 

with the commenters and continue to 

believe that decreasing the number of 

code options will allow providers to 

code more accurately and reduce 

burden. However, even if this is not the 

case, we do not have authority to collect 

the various information requests the 

commenters suggested since the 

information is not currently relevant for 

administration of the IRF PPS or for the 

IRF Quality Reporting Program. 

According to the Privacy Act at 5 U.S.C. 

552a(e)(1), an ‘‘agency that maintains a 

system of records shall—(1) maintain in 

its records only such information about 

an individual as is relevant and 

necessary to accomplish a purpose of 

the agency required to be accomplished 

by statute or executive order of the 

President.’’ When an IRF uploads the 

IRF–PAI data, it is entered into CMS’s 

Privacy Act System of Records. As the 

status code options removed from the 

secondary source item are currently 

irrelevant to both the IRF payment 

system and the IRF Quality Reporting 

Program, we do not have statutory 

authority to continue to collect this 

information. Furthermore, we do not 

believe that we are limiting IRFs from 

continuing to collect and document 

payer source information by way of 

their own internal mechanisms. 

Furthermore, as we previously 

mentioned, it was our intent to include 

item 20A: Primary Source regarding this 

update, as the list of status code options 

identified in the Payer Information 

section relates to both items 20A and 

20B. Additionally, the draft version of 

the IRF–PAI that went on display with 

the proposed rule very clearly depicts 

the changes; therefore, we will finalize 

our proposals as they were described in 

the proposed rule and the draft IRF–PAI 

Comment: The majority of 

commenters supported the additional 15 

extra spaces in item 24: Comorbid 

Conditions, and the new items 25A: 

Height and 26A Weight. One commenter 

suggested that items 25A and 26A 

would be more beneficial if time 

parameters such as ‘‘admission’’ or 

‘‘discharge’’ were placed on the 

measure. One commenter suggested that 

adding items 25A: Height; 26A Weight; 

and 27: Swallowing Status, to the IRF– 

PAI would be redundant, as this 

information is already in the patient’s 

medical record. This commenter also 

requested clarification as to whether 

these items would be mandatory or 

optional requirements on the IRF–PAI. 

Response: We appreciate the support 

from the commenters regarding the 

proposed addition of the 15 extra spaces 

in item 24: Comorbid Conditions, and 

the new items 25A: Height and 26A 

Weight. We believe these items are 

pertinent information to add to the IRF– 

PAI and allow additional information to 

be collected after the transition to the 

more specific ICD–10–CM codes. We 

note that the proposed items 25A: 

Height and 26A: Weight already 

indicate ‘‘on admission’’ as a time 

parameter. Additionally, items 25A: 

Height and 26A: Weight will be 

mandatory items on the IRF–PAI, as 

these items are needed for payment and 

quality measurement purposes. CMS 

did not propose any changes to item 27: 

Swallowing Status, therefore, it will 

remain a voluntary item. 

We disagree with the commenter’s 

statement that items 25A and 26A are 

redundant, as all of the information on 

the IRF–PAI must also be included in 

some form in the medical record. We 

require this information on the IRF–PAI 

so that it may be submitted to us to 

enable the implementation of the IRF 

PPS and the IRF quality reporting 

program. Therefore, we are finalizing 

both of these items as they were 

proposed. 

Comment: The majority of 

commenters supported the addition of a 

signature page to the IRF–PAI. A few 

commenters suggested that we allow an 

electronic signature to satisfy this new 

requirement. One commenter suggested 

that we add a prompt on the signature 

page for ‘‘time’’ in order to comply with 

the requirements at 482.24(c)(1). 

Response: We appreciate the 

commenters’ suggestions regarding the 

proposed signature page in the IRF–PAI. 

In order to stay consistent with our 

current procedures, providers should 

reference the clarification to our 

coverage requirements regarding the use 

of electronic signatures located at 

(http://cms.gov/Medicare/Medicare-Feefor-Service-Payment/InpatientRehabFac

PPS/Downloads/ElecSysClar.pdf). 

Should a formal policy be established 

for the development of Medicare’s 

formal electronic signature policies, we 

may need to revise or further clarify 

these criteria to ensure that it is in 

accordance with those policies. 

Additionally, we agree with the 

commenters’ suggestion that a ‘‘time’’ 

prompt should be added to the signature 

page. Therefore, we will add an 

additional column for providers to 

indicate the time that they completed an 

item and/or section of the IRF–PAI. 

Comment: A few commenters 

requested that we clarify and/or provide 

more specific instructions for 

completing the proposed signature page 

in the IRF–PAI. One commenter was 

unclear as to why multiple signatures 

are required, as the information on the 

IRF–PAI is documented and 

authenticated within the medical record 

documentation. Another commenter 

requested clarification regarding the use 

of the word ‘‘submit’’ when referring to 

the sentence, ‘‘I also certify that I am 

authorized to submit this information by 

this facility on its behalf.’’ The 

commenter acknowledged that anyone 

who contributes to the IRF–PAI is, in 

effect, involved in the submitting of data 

to us. However, in common parlance, 

‘‘submit’’ often refers to the actual act of 

electronically submitting the final 

product to us. 


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Response: We plan to provide more 

specific instructions for completing the 

signature page in the IRF–PAI training 

manual that will accompany the revised 

IRF–PAI form. We understand the 

commenter’s concerns regarding the 

attestation statement on the signature 

page, and we are deleting the statement, 

‘‘I also certify that I am authorized to 

submit this information by this facility 

on its behalf.’’ Removal of this statement 

from the attestation should clarify what 

providers are attesting to, and alleviate 

any concerns. 

Comment: Several commenters 

expressed concern that the proposed 

addition of the signature page is 

burdensome and unnecessary because 

staff entries in the electronic health 

record are already stamped with date 

and time, in addition to the name and 

credentials of the person entering the 

information. These commenters stated 

that it would be burdensome to track 

down individuals to sign an additional 

sheet of paper. 

Response: When the coverage 

requirements became effective January 

1, 2010, providers requested a place on 

the IRF–PAI where they could sign, 

date, and record the time in order to 

comply with the hospital conditions of 

participation (CoPs). We are taking this 

opportunity to acknowledge those 

requests made by the industry. 

Additionally, the signature item clarifies 

for the provider and CMS that the 

requirement has been met. 

Comment: One commenter requested 

that we provide a definition for the new 

discharge status code 64—Medicaid 

Nursing Facility. 

Response: Medicaid coverage of 

nursing facility services is available 

only for services provided in a nursing 

home licensed and certified by the state 

survey agency as a Medicaid Nursing 

Facility (NF). Medicaid nursing facility 

services are available only when other 

payment options are unavailable and 

the individual is eligible for the 

Medicaid program. For more 

information please reference the link 

provided: http://www.medicaid.gov/ 

Medicaid-CHIP-Program-Information/ 

By-Topics/Delivery-Systems/ 

Institutional-Care/Nursing-FacilitiesNF.html. 

Comment: One commenter 

recommended that the IRF–PAI changes 

be delayed one year to coincide with the 

implementation of ICD–10, so that 

providers can incorporate all of the 

changes at one time. This commenter 

suggested that a delayed effective date 

for the IRF–PAI changes would decrease 

burden by only having to make updates 

to information systems once. 

Response: We proposed an effective 

date of October 1, 2014, for all of the 

finalized IRF–PAI changes. In concert 

with stakeholder recommendations, we 

are finalizing this proposal which will 

help alleviate burden on providers. We 

believe that the October 1, 2014 

effective date will provide IRF’s with an 

adequate amount of time to make 

necessary changes to information 

systems as well as provide extensive 

education for clinicians. 

Final Decision: Based on careful 

consideration of the comments that we 

received on the proposed non-quality 

related updates to the IRF–PAI for FY 

2014, we are finalizing the following 

items: 

• The status code options for Items 

15A: Admit From, 16A: Pre-hospital 

Living Situation and 44D: Patient’s 

Discharge Destination/Living Setting 

will be 01—Home (private home/apt., 

board/care, assisted living, group home, 

transitional living); 02—Short-term 

General Hospital; 03—Skilled Nursing 

Facility (SNF); 04—Intermediate Care; 

06—Home under care of organized 

home health service organization; 50— 

Hospice (Home); 51—Hospice 

(Institutional Facility); 61—Within 

institution to swing bed; 62—Another 

Inpatient Rehabilitation Facility; 63— 

Long-Term Care Hospital (LTCH); 64— 

Medicaid Nursing Facility; 65— 

Inpatient Psychiatric Facility; 66— 

Critical Access Hospital; 99—Not Listed 

• The status code options for Items 

20A: Primary Source and 20B: 

Secondary Source will be 02— 

Medicare-Fee for Service; 51— 

Medicare-Medicare Advantage; 99—Not 

Listed 

• The additions will include Item 24: 

Comorbid Conditions (15 additional 

spaces); item 25A: Height; item 26A: 

Weight; Signature of Persons 

Completing the IRF–PAI (with the 

addition of a ‘‘time’’ prompt); 44C: Was 

the patient discharged alive? 

• The deletions will include items 18: 

Pre-Hospital Vocational Category; 19: 

Pre-Hospital Vocational Effort; 25: Is the 

patient comatose at admission; 26: Is the 

patient delirious at admission; 28: 

Clinical signs of dehydration; 44E: Was 

patient discharged with Home Health 

Services 

• Using the language ICD code(s) on 

the IRF–PAI 

• The technical corrections at items 

44D: Patient’s discharge destination/ 

living setting and 45: Discharge to 

Living With 

• The revised IRF–PAI will become 

effective for IRF discharges occurring on 

or after October 1, 2014. All final 

changes to the IRF–PAI will be 

represented when it is posted with the 

final rule. 

X. Technical Corrections to the 

Regulations at § 412.130 

In the FY 2012 IRF PPS final rule (76 

FR 47869 through 47873), we revised 

the regulations for inpatient 

rehabilitation facilities at § 412.23(b), 

§ 412.25(b), § 412.29, and § 412.30 to 

update and simplify the policies, to 

eliminate unnecessary repetition and 

confusion, and to enhance consistency 

with the IRF coverage requirements. 

Among other revisions, we removed the 

regulations that were formerly in 

§ 412.30, and revised and consolidated 

the requirements regarding ‘‘new’’ IRFs 

and ‘‘new’’ IRF beds that previously 

existed in § 412.30 into the revised 

regulations at § 412.29(c). However, we 

have recently discovered that § 412.130, 

which outlines the policies regarding 

retroactive adjustments for incorrectly 

excluded hospitals and units, was not 

updated to reflect the changes to 

§ 412.30 and § 412.29. Specifically, 

§ 412.130 still references regulations in 

§ 412.30 that were revised and 

consolidated into § 412.29(c). Further, it 

still references regulations that were 

formerly in § 412.23(b)(2), but were 

moved into § 412.29(b) in the FY 2012 

IRF PPS final rule (76 FR 47869 through 

47873). 

We proposed to make the following 

technical corrections to the regulations 

in § 412.130 to conform with the 

revisions to the regulations in 

§ 412.23(b), § 412.29, and § 412.30 that 

were implemented in the FY 2012 IRF 

PPS final rule (76 FR 47869 through 

47873): 

• Replace the current reference to 

‘‘§ 412.23(b)(8)’’ in § 412.130(a)(1) with 

the new reference to § 412.29(c), 

• Replace all of the current references 

to ‘‘§ 412.23(b)(2)’’ in § 412.130(a)(1), 

(2), and (3) with the new reference to 

§ 412.29(b), 

• Replace the current reference to 

‘‘§ 412.30(a)’’ in § 412.130(a)(2) with the 

new reference to § 412.29(c), and 

• Replace the current reference to 

‘‘§ 412.30(c)’’ in § 412.130(a)(3) with the 

new reference to § 412.29(c). 

We did not receive any comments on 

the proposed technical corrections to 

the regulations at § 412.130. Thus, we 

are finalizing the technical corrections 

as proposed, effective for IRF discharges 

occurring on or after October 1, 2013. 

XI. Revisions to the Conditions of 

Payment for IRF Units Under the IRF 

PPS 

The regulations at § 412.25 specify the 

requirements for an IRF unit to be 

excluded from the inpatient prospective 


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payment system (IPPS) specified in 

§ 412.1(a)(1) and to instead be paid 

under the IRF PPS specified in 

§ 412.1(a)(3). The requirements at 

§ 412.25 are unique to IRF units of 

hospitals, whereas the requirements at 

§ 412.29 apply to both freestanding IRF 

hospitals and IRF units of hospitals. 

Among the requirements at § 412.25 is 

the requirement (at § 412.25(a)(1)(iii)) 

that the institution of which the IRF 

unit is a part must have ‘‘enough beds 

that are not excluded from the 

prospective payment systems to permit 

the provision of adequate cost 

information, as required by § 413.24(c) 

of this chapter.’’ We have not previously 

specified how many such beds the 

hospital, of which the IRF unit is a part, 

must have to meet this requirement. 

However, we have recently received 

questions from providers about whether 

one or two hospital beds that are 

certified for payment under the IPPS, in 

some cases beds that are rarely used for 

patient care, would meet the 

requirement at § 412.25(a)(1)(iii). We 

believe this does not meet the 

requirement at § 412.25(a)(1)(iii), which 

provides for the hospital of which the 

IRF unit is a part to be an IPPS hospital, 

which we believe is not demonstrated 

by the presence of just one or two 

hospital beds. 

In addition, from a fairness and 

quality of care perspective, we are 

particularly concerned about the 

application of the regulations in 

§ 412.29(g), which require freestanding 

IRF hospitals to have a full-time director 

of rehabilitation, but only require IRF 

units of acute care hospitals (and CAHs) 

to have a director of rehabilitation for 20 

hours per week. We believe that it is 

unfair to other freestanding IRF 

hospitals and potentially problematic 

from a quality of care standpoint for an 

IRF that is effectively operating as a 

freestanding IRF hospital, even though 

it is technically classified as an IRF unit, 

to be allowed to have a director of 

rehabilitation only 20 hours per week. 

Further, we are unclear how the IRF 

unit that is part of a hospital with only 

one or two beds would be able to meet 

another requirement, at § 412.25(a)(7), 

that specifies that an IRF unit must have 

beds that are ‘‘physically separate from 

(that is, not commingled with) the 

hospital’s other beds.’’ The requirement 

at § 412.25(a)(7) means that there is 

some sort of physical separation that 

distinguishes the IRF unit from the rest 

of the hospital beds. We believe that it 

is unlikely that this requirement would 

be met in the situation in which the 

hospital of which the IRF unit is a part 

only has one or two beds, in some cases 

beds that are rarely used for patient 

care. 

Thus, we proposed to specify at 

§ 412.25(a)(1)(iii) a minimum number of 

hospital beds that the IPPS hospital 

must have to meet the requirements at 

§ 412.25(a)(1)(iii) for having an IRF unit. 

We note that, though§ 412.25(a)(1)(iii) 

also applies to inpatient psychiatric 

facilities (IPFs), these facilities have 

their own requirements at § 412.27 for 

payment under the IPF PPS that we are 

not changing in this proposed rule. IPFs 

should continue following the 

regulations at § 412.27. 

We proposed to specify in 

§ 412.25(a)(1)(iii) that the institution of 

which the IRF unit is a part must have 

at least 10 staffed and maintained 

hospital beds that are not excluded from 

the IPPS, or at least 1 staffed and 

maintained hospital bed for every 10 

certified IRF beds, whichever number is 

greater. If the institution is not able to 

meet this requirement, then the IRF unit 

should instead be classified as an IRF 

hospital. We also proposed to exclude 

CAHs that have IRF units from these 

requirements, as CAHs already have 

very specific bed size restrictions. 

We received 3 comments on the 

proposed revisions to the conditions of 

payment for IRF units under the IRF 

PPS, which are summarized below. 

Comment: Several commenters noted 

that the conversion from an IRF unit to 

a freestanding IRF hospital to meet the 

new proposed requirements could pose 

problems for a facility in meeting 

certain state licensing and/or state 

certificate of need requirements. These 

commenters suggested that these statelevel requirements could be 

‘‘burdensome, difficult and expensive’’ 

for the IRF. 

Response: Although the conversion 

from an IRF unit to a freestanding IRF 

hospital is a simple administrative task 

within Medicare, which does not 

necessitate any new surveys, any 

changes to the IRF’s Medicare provider 

agreement, or any changes to the IRF’s 

payment status under Medicare, we 

recognize that the conversion may take 

longer to complete under state laws. 

Thus, we are implementing this change 

on a one-year delay, so that it will be 

effective for IRF discharges occurring on 

or after October 1, 2014, to give IRFs 

who are affected by this change ample 

time to conform to state certificate of 

need or other state licensure laws. 

Final Decision: After considering the 

comments that we received on the 

proposed revision to the conditions of 

payment for IRF units under the IRF 

PPS, we are finalizing the change to 

§ 412.25(a)(1)(iii) to specify that the 

institution of which the IRF unit is a 

part must have at least 10 staffed and 

maintained hospital beds that are not 

excluded from the IPPS, or at least 1 

staffed and maintained hospital bed for 

every 10 certified IRF beds, whichever 

number is greater. We exclude CAHs 

that have IRF units from these 

requirements, as CAHs already have 

very specific bed size restrictions. We 

are implementing this change effective 

for IRF discharges occurring on or after 

October 1, 2014 (a one-year delay in the 

effective date) to give IRFs affected by 

this change adequate time to comply 

with state certificate of need or other 

state licensure laws. 

XII. Clarification of the Regulations at 

§ 412.630 

In the original rule establishing a 

prospective payment system for 

Medicare payment of inpatient hospital 

services provided by a rehabilitation 

hospital or by a rehabilitation unit of a 

hospital, we stated that that there would 

be no administrative or judicial review, 

under sections 1869 and 1878 of the Act 

or otherwise, of the establishment of 

case-mix groups, the methodology for 

the classification of patients within 

these groups, the weighting factors, the 

prospective payment rates, outlier and 

special payments and area wage 

adjustments. See FY 2002 IRF PPS final 

rule (66 FR 41316, 41319). Our intent 

was to honor the full breadth of the 

preclusion of administrative or judicial 

review provided by section 1886(j)(8) of 

the Act. However, the regulatory text 

reflecting the preclusion of review has 

been at times improperly interpreted to 

allow review of adjustments authorized 

under section 1886(j)(3)(v) of the Act. 

Because we interpret the preclusion of 

review at § 1886(j)(8) of the Act to apply 

to all payments authorized under 

section 1886(j)(3) of the Act, we do not 

believe that there should be 

administrative or judicial review of any 

part of the prospective rate. 

Accordingly, we are clarifying our 

regulation at § 412.630 by deleting the 

word ‘‘unadjusted’’ so that the 

regulation will clearly preclude review 

of ‘‘the Federal per discharge payment 

rates.’’ This clarification will provide for 

better conformity between the 

regulation and the statutory language. 

As such, in accordance with sections 

1886(j)(7)(A), (B), and (C) of the Act, we 

are revising the regulations at § 412.630 

to clarify that administrative or judicial 

review under sections 1869 or 1878 of 

the Act, or otherwise, is prohibited with 

regard to the establishment of the 

methodology to classify a patient into 

the case-mix groups and the associated 

weighting factors, the federal per 

discharge payment rates, additional 


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payments for outliers and special 

payments, and the area wage index. 

We received 2 comments on the 

proposed clarification of the regulations 

at § 412.630, which are summarized 

below. 

Comment: The commenters expressed 

concerns with our proposal to revise the 

regulations at 42 CFR 412.630 to clarify 

that the Medicare statute precludes 

administrative and judicial review of 

the Federal per discharge payment rates, 

including the LIP adjustment. One 

commenter stated that the proposal is 

not a ‘‘clarification’’ that can be applied 

to pending cases, is inconsistent with 

the statute, runs afoul of the 

presumption of judicial review, fails to 

give proper notice of the regulatory 

change, and is unconstitutional. 

Response: We disagree with the 

commenter’s statements. Our proposed 

change serves to clarify the regulation so 

that it clearly reflects the preclusion of 

review found in the statute. It also 

removes any doubt as to the conformity 

of the regulation to the preclusion of 

review found in the statute, which by its 

own terms is applicable to all pending 

cases regardless of whether it is 

reflected in regulations or not. 

We also strongly disagree with the 

commenter’s reading of the statute. 

Section 1886(j)(8) of the statute broadly 

precludes review of ‘‘the prospective 

payment rates under paragraph (3),’’ 

that is, section 1886(j)(3). Within this 

section, subsection 1886(j)(3)(A) 

authorizes certain adjustments to the 

IRF payment rates and, within that, 

subsection 1886(j)(3)(A)(v) authorizes 

adjustments to the rates by such other 

factors as the Secretary determines are 

necessary to properly reflect variations 

in necessary costs of treatment among 

rehabilitation facilities.’’ The LIP 

adjustment is made under authority of 

section 1886(j)(3)(A)(v). As that 

provision is contained within section 

1886(j)(3), and the IRF payment rates 

under section 1886(j)(3) are precluded 

from review by section 1886(j)(8), the 

LIP adjustment falls squarely within the 

statutory preclusion of review. Such 

preclusion overcomes any presumption 

of reviewability that might generally 

apply, and it is not unconstitutional for 

Congress (which has the power to define 

the jurisdiction of the federal courts) to 

preclude review of certain issues as it 

has done here. Several virtually 

identical preclusions of review in other 

sections of the Medicare statute have 

been repeatedly upheld and applied by 

federal courts. Finally, as to notice, the 

proposed rule itself served as notice of 

our intention to revise the regulation. In 

addition, as discussed below, the 

longstanding language of the statute 

itself provides sufficient notice to apply 

the preclusion. 

Comment: One commenter stated that 

our proposal cannot be a clarification 

because we have allowed review of 

matters concerning the LIP adjustment 

for many years. This commenter further 

stated that any preclusion of review 

should apply only to the ‘‘formulas’’ 

used in the IRF payment rates, and that 

to preclude review would prevent 

providers from correcting errors in their 

payments and would result in two 

separate methods being used to pay IRFs 

and hospitals paid under the inpatient 

prospective payment system (IPPS). 

Response: We disagree with these 

comments. The preclusion of review has 

been effective since its enactment as 

part of the IRF prospective payment 

system in 2002. No regulation or 

revision of any regulation was necessary 

for the statutory preclusion to become 

effective, regardless of whether we or 

our contractors may have participated in 

review of IRF LIP matters in the past 

without making a jurisdictional 

objection. To the extent that such 

erroneous participation may have 

occurred, it does not override the 

mandate of the statute or prevent us 

from immediately applying the statutory 

preclusion of review. 

In addition, the preclusion applies to 

all aspects of the IRF PPS payment rates, 

not just the formulas. Courts have 

applied nearly identical preclusion 

provisions in other parts of the 

Medicare statute to prevent review of all 

subsidiary aspects of the matter or 

determination protected from review. 

Finally, while precluding review of the 

IRF LIP adjustment may prevent 

correction of certain errors, we can only 

conclude that Congress has made the 

judgment that such a result is an 

appropriate trade-off for the gains in 

efficiency and finality that are achieved 

by precluding review. Similarly, 

although applying the preclusion here 

may result in certain questions being 

reviewable for an IPPS hospital but not 

an IRF, this is a judgment that Congress 

has made. We note that there is a 

preclusion of review provision in the 

IPPS statute also, at section 1886(d)(7). 

The precise contours of these preclusive 

provisions were for Congress to draw. 

Final Decision: After careful review of 

the comments we received on the 

clarification of the regulations at 

§ 412.630, we are adopting our proposal 

to revise the regulations at 42 CFR 

412.630 to clarify that the Medicare 

statute precludes administrative and 

judicial review of the Federal per 

discharge payment rates under section 

1886(j)(3), including the LIP adjustment. 

This revision to the regulation is 

effective October 1, 2013. 

XIII. Revision to the Regulations at 

§ 412.29 

According to the regulations at 

§ 412.29(d), to be excluded from the 

inpatient prospective payment system 

(IPPS) and instead be paid under the 

IRF PPS, a facility must ‘‘have in effect 

a preadmission screening procedure 

under which each prospective patient’s 

condition and medical history are 

reviewed to determine whether the 

patient is likely to benefit significantly 

from an intensive inpatient hospital 

program. This procedure must ensure 

that the preadmission screening is 

reviewed and approved by a 

rehabilitation physician prior to the 

patient’s admission to the IRF.’’ The 

latter sentence of this regulation is 

based on the preadmission screening 

requirement for Medicare coverage of 

IRF services in § 412.622(a)(4)(i)(D). The 

requirement was repeated in both places 

for consistency. 

However, in § 412.622(a)(4)(i)(D), we 

specify that this requirement applies to 

patients ‘‘for whom the IRF seeks 

payment’’ from Medicare. We believe 

that the analogous requirement in 

§ 412.29(d) should also clearly state that 

it applies only to patients for whom the 

IRF is seeking payment directly from 

Medicare. Other payer sources, such as 

private insurance, have their own IRF 

admission requirements, and we do not 

believe that it would be appropriate to 

interfere with or duplicate the 

requirements that other payer sources 

may already have in place. Thus, we 

proposed to amend § 412.29(d) to clarify 

that the IRF’s preadmission screening 

procedure must ensure that the 

preadmission screening for a Medicare 

Part A Fee-for-Service patient is 

reviewed and approved by a 

rehabilitation physician prior to the 

patient’s admission to the IRF. We 

continue to believe that the basic 

preadmission screening procedure itself 

is an important element of providing 

quality IRF care to all patients and, thus, 

we will require that the basic 

preadmission screening procedure 

requirement remain in place for all 

patients regardless. 

We received 5 comments on the 

revision to the regulations at 

§ 412.29(d), which are summarized 

below. 

Comment: Several commenters 

expressed support for the proposed 

revisions to the regulations at § 412.29, 

which clarify that we require 

rehabilitation physician review and 

concurrence of a patient’s preadmission 

screening prior to the IRF admission 


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1The version of the CAUTI measure that was 

adopted in the FY 2012 IRF PPS final rule (76 FR 

47874 through 47876) was titled ‘‘CatheterAssociated Urinary Tract Infection [CAUTI] Rate 

Per 1,000 Urinary Catheter Days for ICU patients. 

However, shortly after the FY 2012 IRF PPS final 

rule was published, this measure was submitted by 

the CDC (measure steward) to the NQF for a 

measure maintenance review, The CDC asked for 

changes to the measure, including expansion of the 

scope of the measure to non-ICU patient care 

locations and additional healthcare facility settings, 

including IRFs. The name of the measure was 

changed to reflect the character of the revised 

CAUTI measure. This measure is now titled 

‘‘National Health Safety Network (NHSN) Catheter 

Associated Urinary Tract Infection (CAUTI) 

Outcome Measure.’’ 

only for Medicare Fee-for-Service 

beneficiaries. The commenters indicated 

that this proposed regulation change 

would greatly relieve the burden on 

IRFs that treat a large proportion of nonMedicare patients, for whom other 

admission requirements typically apply. 

These commenters also requested that 

we amend the Rehabilitation Unit and 

Rehabilitation Hospital Criteria 

Worksheets and the Attestation 

Statement (State Operations Manual 

Exhibit 127, Attestation Statement) to 

appropriately reflect this change to the 

regulations. 

Response: We appreciate the 

stakeholder community bringing this 

issue to our attention, thereby giving us 

the opportunity to alleviate unintended 

provider burden. We encourage 

stakeholders to bring these types of 

issues to our attention, as we are always 

willing to consider suggestions that can 

improve the Medicare program while at 

the same time reducing the regulatory 

burden on providers. We will ensure 

that the appropriate adjustments are 

made to the Worksheets and the 

Attestation Statement in accordance 

with the change to the regulations. 

Comment: One commenter 

recommended that we further clarify the 

distinction between Medicare 

Conditions of Payment and the IRF 

coverage requirements. The commenter 

suggested that a table distinguishing the 

two requirements would be useful to 

providers. 

Response: We thank the commenter 

for the suggestion, and will take this 

into consideration for future stakeholder 

outreach in this area. 

Final Decision: Based on 

consideration of the comments received 

on the proposed change to § 412.29(d), 

we are finalizing this change, effective 

for IRF discharges occurring on or after 

October 1, 2013. 

XIV. 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 

IRFs that fail 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 this 

subsection for a fiscal year being less 

than the 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 

section (j) for a subsequent fiscal year. 

Section 1886(j)(7)(C) of the Act 

requires that each IRF submit data to the 

Secretary on 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 

consensus development process. 

We have generally adopted NQFendorsed measures in our reporting 

programs. However, section 

1886(j)(7)(D)(ii) of the Act provides that 

‘‘in 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, so long as due consideration 

is given to measures that have been 

endorsed or adopted by a consensusbased organization identified by the 

Secretary.’’ Under section 

1886(j)(7)(D)(iii) of the Act, the 

Secretary was required to publish the 

selected measures that will be 

applicable to the FY 2014 IRF PPS no 

later than October 1, 2012. 

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’’ 1 (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 Risk 

Standardized Post IRF Discharge 

Hospital Readmission Measure at a later 

date. 

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 

measure to the IRF setting, replacing our 

previous adoption of an application of 

the measure for the IRF QRP; 

• A policy that would allow any 

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 sub-regulatory process to 

incorporate NQF updates to IRF quality 


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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 re-titled it to cover both 

residents and patients within LTCH and 

IRF settings, in addition to the Nursing 

Home/Skilled Nursing Facility setting. 

Although the 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. 

Public comments revealed that the 

‘‘Quality Indicator’’ section of the IRF– 

PAI did not contain the data elements 

that would be needed to calculate a riskadjusted measure. As a result, we 

decided to: (1) adopt an application of 

the NQF #0678 pressure ulcer measure 

that was a non-risk-adjusted 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 NQF #0678, 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 NQF 

#0138 NHSN Catheter Associated 

Urinary Tract Infection (CAUTI) 

Outcome Measure (replacing an 

application of this measure which we 

initially adopted in the FY 2012 IRF 

PPS (76 FR 47874 through 47886). The 

NQF endorsed measure applies to the 

FY 2015 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 

measure has not changed. Furthermore, 

we have not removed, suspended, or 

replaced this measure 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 NHSN can be found at 

the NHSN Web site at http:// 

www.cdc.gov/nhsn/inpatient-rehab/ 

index.html. 

We received several comments related 

to this previously finalized measure, 

NQF #0138, and some other previously 

finalized measures, raising some 

questions about our current policies. 

While we greatly appreciate the 

commenters’ views on such previously 

finalized measures and policies, we did 

not make any proposals relating to them 

in the FY 2014 IRF PPS proposed rule 

(78 FR 26880). As such, we will not, in 

general, be addressing them here. 

However, we will consider all of these 

views for future rulemaking and 

program development. We have 

responded, however, to a few comments 

in which commenters asked only for a 

clarification related to an existing policy 

and/or measure. 

Comment: Several commenters, 

including MedPAC, expressed that CMS 

should focus on measures that reflect 

the success of rehabilitation care, 

mentioning specifically functional 

improvement and/or discharge to 

community. One commenter suggested 

these measures be used instead of the 

‘‘process of care measures related to 

urinary tract infections and pressure 

ulcers’’. 

Response: We appreciate the 

commenter’s suggestion. We would like 

to thank MedPAC and the other 

commenters for their comments. We 

also agree that a discharge to 

community measure would likely be 

very important to beneficiaries and 

serve as a useful corollary to the 30-day 

readmissions measure we proposed in 

the FY 2014 IRF PPS proposed rule, 

because it reflects whether a patient 

returns home, rather than returning 

directly to the acute hospital or another 

inpatient facility. We have developed a 

strategic plan related to the types of 

quality measures that we will propose 

over the next several rulemaking cycles. 

Patient experience of care and care 

coordination measures, such as a 

discharge to community measure, are 

included in this plan. We have 

previously discussed a measure of 

discharge to community in one of the 

IRF–QRP Technical Expert Panels. We 

also agree with MedPAC’s suggestion 

that adding quality measures that assess 

functional improvement should be a 

priority for the IRFQRP. At this time, 

our quality measure development 

contractor is completing the 

development of quality measures that 

specifically focus on outcomes related 

to improvement of a patient’s functional 

status, and these measures have been 

presented to the Measures Application 

Partnership (MAP) to determine 

whether the MAP at least supports the 

direction of the concept behind these 

measures (since the measures are not yet 

complete). The MAP) and its functions 

are described in detail at http:// 

www.qualityforum.org/map/. The 

development of these measures has 

necessitated several years of work, 

involving testing, revisions, and expert 

review. However, we are now close to 

being in our final stages of the 

development of these measures, and 

will present them to the MAP this year. 

Before proposing to adopt these 

measures, we want to take all steps 

necessary to ensure that the 

introduction of functional measurement 

into the IRF–QRP is comprehensive in 

design so as to be meaningful to our 

beneficiaries, Medicare and our 

stakeholders. 

Comment: One commenter expressed 

concern about changes made by the CDC 

to the CAUTI infection definitions in 

2013, and the pending review with 

further changes to the definition likely 

in early 2014. This commenter believed 

that instability of data between baseline 

years and into CY 2014 can be expected 

due to the changes in the CAUTI 

definitions. One commenter expressed 

support for the continued use of the 

CAUTI measure, but suggested that 

training could help to support a smooth 

transition when the new reporting 

definitions are introduced. The 

commenter further encouraged CMS to 

provide any training necessary that will 

support a smooth transition when new 

reporting definitions are introduced. 

Response: According to the measure 

steward, Centers for Disease Control and 

Prevention (CDC), NHSN’s definition of 

CAUTI did not change in 2013, and the 

revised criteria in 2013 for what 

constitutes an healthcare-associated 

infection (HAI) amounts to providing 

operational guidance—already widely 

in use before the guidance was 

published—that makes identifying HAIs 

more consistent across reporting 

healthcare facilities. There was no 

change in the NQF measure 

specification; the CAUTI measure 

remains the same. As a result, CAUTI 

data reported for infections occurring in 

2013 can be compared to the CAUTI 

baseline established using CAUTI date 

reported for infections occurring in 

2009. In short, there was no significant 

change in the measure and the changes 

in HAI criteria have no bearing on 

reporting obligations. We will continue 

to work with the NHSN to provide 

provider training on any changes 

affecting the IRF QRP. 


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Comment: One commenter expressed 

concern about the adequacy of the risk 

adjustment of the CAUTI measure, 

especially with regard to its impact on 

IRFs caring for patients with a spinal 

cord injury. 

Response: With regard to risk 

adjustment, the CAUTI measure relies 

on robust statistical analysis to inform 

its risk adjustment methodologies to 

ensure that the measure is accurately 

reported. We will work with the CDC to 

continue to collect data and to explore 

the possibility of refining the CAUTI 

measure through NQF measure 

maintenance and future rulemaking, if 

the change is substantive, as more data 

is collected. 

b. Application of Percent of Residents or 

Patients With Pressure Ulcers That Are 

New or Worsened (Short-Stay) (NQF 

#0678) 

In the CY 2103 OPPS/ASC final rule 

(77 FR 68500 through 68507) we 

finalized adoption of a non-riskadjusted application of this measure 

using the current version of the IRF– 

PAI. To adopt the NQF-endorsed 

version of this measure, we must update 

the existing IRF–PAI to include the 

additional data elements necessary to 

risk adjust this measure. We also 

delayed public reporting of pressure 

ulcer measure results until we amend 

the IRF–PAI to add the data elements 

necessary for risk adjusting NQF #0678 

(77 FR 68507). We are not making any 

changes to the application of measure 

#0678 finalized in the CY 2013 OPPS/ 

ASC final rule for the FY 2015 and FY 

2016 IRF PPS annual increase factors. 

Furthermore, we have not removed, 

suspended, or replaced this measure for 

those specific annual increase factors 

and the application of NQF #0678 

remains an active part of the IRF QRP 

for that purpose. Additional information 

about this measure can be found at 

http://www.qualityforum.org/QPS/0678. 

Our procedures for data submission for 

this measure also have remained the 

same. IRFs should continue to collect 

and submit pressure ulcer measure data 

during CY 2013 using the IRF–PAI 

released on October 1, 2012 for the FY 

2015 IRF PPS annual increase factor. 

Further, IRFs should continue to collect 

and submit pressure ulcer measure data 

during the first three quarters of CY 

2014 using the IRF–PAI released on 

October 1, 2012 for the FY 2016 IRF PPS 

annual increase factor. 

In the May 8, 2013 proposed rule (78 

FR 26909 through 26924), we did 

propose to adopt a revised version of the 

IRF–PAI starting October 1, 2014 for the 

FY 2017 PPS annual increase factor and 

subsequent fiscal years annual increase 

factors. We noted that the proposed 

revisions to the IRF–PAI would allow 

collection of data elements necessary for 

risk adjustment of NQF #0678, which is 

required by the NQF endorsed version 

of the measure. We also proposed to 

replace the current application of NQF 

#0678 and adopt instead the NQF 

endorsed version of this measure. We 

have discussed these proposed changes 

in more detail in section C. below. 

TABLE 10—QUALITY MEASURES FINALIZED IN THE CY 2013 OPPS/ASC FINAL RULE AFFECTING THE FY 2015 IRF 

ANNUAL INCREASE FACTOR AND SUBSEQUENT YEAR INCREASE FACTORS

NQF measure ID Measure title 

NQF #0138 ........................... National Health Safety Network (NHSN) Catheter-associated Urinary Tract Infection (CAUTI) Outcome Measure.+

Application of NQF #0678 .... Percent of Residents or Patients with Pressure Ulcers That are New or Worsened (Short-Stay).* 

+ Using CDC/NHSN. 

* Using October 1, 2012 release of IRF–PAI. 

C. New IRF QRP Quality Measures 

Affecting the FY 2016 and FY 2017 IRF 

PPS Annual Increase Factor, and 

Subsequent Year Increase Factors 

1. General Considerations Used for 

Selection of Quality Measures for the 

IRF QRP 

In the May 8, 2013 proposed rule (78 

FR 26909 through 26924), we noted that 

the successful development of an IRF 

quality reporting program that promotes 

the delivery of high-quality healthcare 

services in IRFs is our paramount 

concern. We discussed many of the 

factors we had taken into account in 

selecting measures to propose in the 

May 8, 2013 proposed rule (78 FR 26909 

through 26924), and we refer readers 

there for details about our selection 

process. 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 prerulemaking 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 1st 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 http://www.qualityforum.org/Setting_

Priorities/Partnership/Measure_

Applications_Partnership.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, and the 

National Strategy for Quality 

Improvement in Healthcare at http://

www.ahrq.gov/workingforquality/nqs/

nqs2012annlrpt.pdf. To the extent 

practicable, we have sought to adopt 

measures that have been endorsed by a 

national consensus organization, 

recommended by multi-stakeholder 

organizations, and developed with the 

input of providers, purchasers/payers, 

and other stakeholders. 

2. New Measures for the FY 2016 and 

FY 2017 Annual Increase Factors 

For the FY 2016 IRF PPS annual 

increase factor, in addition to retaining 

the previously discussed CAUTI and 

Pressure Ulcer measures, we proposed 

in the May 8, 2013 proposed rule (78 FR 

26909 through 26924), to adopt one new 

measure: Influenza Vaccination 

Coverage among Healthcare Personnel 

Measure (NQF #0431). In addition, for 

the FY 2017 IRF PPS annual increase 

factor, we proposed to adopt three 

quality measures: (1) All-Cause 

Unplanned Readmission Measure for 30 

Days Post Discharge 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 


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2Wilde JA, McMillan JA, Serwint J, et al. 

Effectiveness of influenza vaccine in healthcare 

professionals: A randomized trial. JAMA. 1999; 

281:908–913. 

3Harriman K, Rosenberg J, Robinson S, et al. 

Novel influenza A (H1N1) virus infections among 

health-care personnel—United States, April–May 

2009. MMWR Morb Mortal Wkly Rep. 2009; 58(23): 

641–645. 

4Fiore AE, Uyeki TM, Broder K, et al. Prevention 

and control of influenza with vaccines: 

Recommendations of the Advisory Committee on 

Immunization Practices (ACIP), 2010. MMWR 

Recomm Rep. 2010. 59(08): 1–62. 

#0678). We discuss these measures in 

more detail below in this final rule. 

2. New Quality Measures for Quality 

Data Reporting Affecting the FY 2016 

IRF PPS Annual Increase Factor 

a. IRF QRP Measure #1: Influenza 

Vaccination Coverage Among 

Healthcare Personnel (NQF #0431) 

In the FY 2014 IRF PPS proposed rule 

(78 FR 26880), we proposed to adopt the 

CDC developed Influenza Vaccination 

Coverage among Healthcare Personnel 

(NQF #0431) 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. We 

noted that this measure was included on 

the CMS’ List of Measures under 

Consideration for December 1, 2012 and 

that this measure was reviewed by the 

MAP and was included in the MAP 

input that was transmitted to CMS on 

February 1, 2013, as required by section 

1890A(a)(3) of the Act. The MAP fully 

supported the use of this measure in the 

IRF setting, indicating it promotes 

alignment across quality reporting 

programs (for example, with Long-Term 

Care Hospital Quality Reporting 

Program (LTCHQR Program) and 

Hospital Inpatient Quality Reporting 

Program (Hospital IQR)) and addresses a 

core measure concept. 

Health care personnel are at risk for 

both acquiring influenza from patients 

and transmitting it to patients, and 

health care personnel often come to 

work when ill.2 One early report of 

health care personnel influenza 

infections during the 2009 H1N1 

influenza pandemic estimated 50 

percent of infected health care 

personnel had contracted the influenza 

virus from patients or coworkers in the 

healthcare setting.3

The CDC Advisory Committee on 

Immunization Practices (ACIP) 

guidelines recommends that all health 

care personnel get an influenza 

vaccination every year to protect 

themselves and patients.4 Even though 

levels of influenza vaccination among 

health care personnel have slowly 

increased over the past 10 years, less 

than 50 percent of health care personnel 

each year received the influenza 

vaccination until the 2009 and 2010 

season, when an estimated 62 percent of 

health care personnel got a seasonal 

influenza vaccination. In the 2010 and 

2011 season, 63.5 percent of health care 

personnel reported an influenza 

vaccination. Increased influenza 

vaccination coverage among health care 

personnel is expected to result in 

reduced morbidity and mortality related 

to influenza virus infection among 

patients, aligning with the NQS’s aims 

of better care and healthy people/ 

communities. This measure has been 

finalized for reporting in the Hospital 

IQR Program, LTCHQR Program, and 

the Ambulatory Surgical Center Quality 

Reporting Program (ASCQR Program). 

We refer readers to the NHSN Manual, 

Healthcare Personnel Safety Component 

Protocol Module, Influenza Vaccination 

and Exposure Management Modules, 

which is available at the CDC Web site 

at http://www.cdc.gov/nhsn/inpatientrehab/hcp-vacc/index.html for measure 

specifications and additional details. 

In the FY 2014 IRF PPS proposed rule 

(78 FR 26909 through 26924), we 

proposed that the Influenza Vaccination 

Coverage Among Healthcare Personnel 

measure (NQF #0431) have its own 

reporting period to align with the 

influenza vaccination season, which is 

defined by the CDC as October 1st (or 

when the vaccine becomes available) 

through March 31st. We further 

proposed 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 

healthcare-associated infection tracking 

system maintained by the CDC and can 

be utilized by all types of health care 

facilities in the United States, including 

IRFs. 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 the 

provided web link: http://www.cdc.gov/ 

nhsn/. NHSN will submit data to CMS 

on behalf of the facility. We also 

proposed that for the FY 2016 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 (78 

FR 26909 through 26924). 

Details related to the use of 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 

data, the 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 

season for the healthcare personnel 

(HCP) influenza vaccination measure 

NQF #0431, data submission is only 

required once per influenza season, 

unlike the other measure finalized for 

the IRF QRP that utilizes NHSN (CAUTI 

measure NQF #0138). For example, IRFs 

can choose to submit HCP influenza 

vaccination data on a monthly basis. 

However, each time an IRF submits 

these data, it will be asked to provide a 

cumulative total of vaccinations for the 

‘‘current’’ influenza season. Thus, 

entering this information at the end of 

the influenza season would yield the 

same total number of vaccinations. The 

NHSN system will not track the 

individual number of vaccinations on a 

monthly basis, but, rather, will track the 

cumulative total of vaccinations for the 

‘‘current’’ influenza season. We 

proposed that the final deadline 

associated with this measure should 

align with the other CMS deadline for 

IRF HAI (CAUTI) reporting into NHSN, 

which is May 15th. IRF QRP data 

collection timelines and submission 

deadlines are discussed below. 

Also, as noted in the proposed rule, 

data collection for this measure is not 12 

months, as with other measures, but is 

approximately 6 months (that is, 

October 1st (or when the vaccine 

becomes available) through March 31st 

of the following year). This data 

collection period is applicable only to 

NQF #0431 Influenza Vaccination 

Coverage Among Healthcare Personnel, 

and 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. 

We sought public comments on the 

Influenza Vaccination Coverage among 

Healthcare Personnel (NQF #0431) 

measure for the FY 2016 IRF PPS annual 

increase factor and subsequent years. 

The responses to public comments on 

our adopting NQF #0431 are discussed 

below in this section of the final rule. 

Comment: Several commenters 

expressed unconditional agreement 

with our proposal to adopt the Influenza 

Vaccination Coverage among Healthcare 

Personnel measure in the IRF QRP. 

However, a majority of commenters 


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5Federal Register/Vol. 76, No. 160/Thursday, 

August 18, 2011/Rules and Regulations, C1a. 

6MedPAC, Report to Congress, Medicare Payment 

Policy, March, 2012. http://www.medpac.gov/ 

chapters/Mar12_Ch09.pdf. 

expressed a conditional support for this 

measure in which they support the use 

of the measure by IRFs that are 

freestanding hospitals, but do not 

support the use of this measure by IRF 

units that are affiliated with an acute 

care facility. These commenters believe 

that IRF units should be excluded from 

this measure because most IPPS 

hospitals include IRF unit employees in 

reporting health care personnel 

influenza vaccination rates to NHSN 

under the IPPS Quality Reporting 

program. 

Response: The intent of NQF measure 

#0431 is to incentivize full influenza 

vaccination coverage of all healthcare 

workers (HCWs) within a specific kind 

of facility and to measure the extent to 

which that goal is accomplished within 

that facility. We regard an IRF unit that 

is affiliated with an acute care facility to 

be its own separate type of facility, with 

its own responsibility for HCW 

vaccination and data submission. The 

submission of data by an IRF unit that 

is affiliated with an acute care facility 

will constitute location-specific 

reporting to NHSN for the HCWs who 

have worked within that specific unit. 

These IRF units will need to account for 

any staff that work within the unit for 

one day or more between Oct 1st and 

March 31st of a flu season and fall 

within the 3 required categories of staff 

as defined by the NHSN protocol, 

including payroll employees, licensed 

independent practitioners, and 

students/trainees/volunteers. The acute 

care facility will have the same 

requirements for submission of data, but 

will need to cover all of its inpatient 

care units, which will include any 

existing IRF units that are affiliated with 

an acute care facility, and will 

essentially be reporting facility-wide 

counts. The data submitted for these 

two separate requirements will never be 

summed together. 

Comment: Many of the commenters 

requested that CMS clarify that the data 

collection period for the influenza 

vaccine begins on October 1st and not 

at an earlier date, should the influenza 

vaccination become available at any 

time before October 1st. 

Response: NHSN specifies the 

reporting period for influenza vaccine 

coverage in its protocol. Vaccine 

coverage reporting, that is, measure 

numerator data, is required based on 

data collected from Oct 1 or whenever 

the vaccine becomes available. This 

statement ensures that if the vaccine is 

available early, any vaccines given 

before Oct 1 can be credited toward 

vaccination coverage, and if the vaccine 

is late, then the vaccination counts are 

to begin as soon as possible after Oct 1. 

For the denominator count, IRFs will 

need to account for any staff that work 

within the unit for 1 day or more 

between Oct 1st and March 31st of a flu 

season and fall within the 3 required 

categories of staff as defined by the 

NHSN protocol, including payroll 

employees, licensed independent 

practitioners, and students/trainees/ 

volunteers. 

Final Decision: Having carefully 

considered the comments we received 

on the Influenza Vaccination Coverage 

among Healthcare Personnel (NQF 

#0431), we are finalizing the adoption of 

this measure for use in the IRF QRP. 

TABLE 11—SUMMARY OF QUALITY MEASURES AFFECTING THE FY 2016 IRF PPS ANNUAL INCREASE FACTOR

Continued Measure Affecting the FY 2015 Annual Increase Factor and Subsequent Year Annual Increase Factors: 

• NQF #0138: National Health Safety Network (NHSN) Catheter-associated Urinary Tract Infection (CAUTI) Outcome Measure. +

Continued Measure Affecting the FY 2015 and FY 2016 Annual Increase Factors: 

• Application of NQF #0678: Percent of Residents with Pressure Ulcers That are New or Worsened (Short-Stay). * 

New IRF QRP Measure Affecting the FY 2016 IRF PPS Annual Increase Factor and Subsequent Year Increase Factors: 

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

+ Using CDC NHSN. 

* Using October 1, 2012 release of IRF–PAI. 

3. Quality Measures for Quality Data 

Reporting Affecting the FY 2017 IRF 

PPS Annual Increase Factor and 

Subsequent Years 

In the FY 2014 IRF PPS proposed rule 

(78 FR 26909 through 26924), we 

proposed to adopt 2 additional quality 

measures and replace an existing quality 

measure for the IRF QRP for the FY 

2017 annual increase factor and 

subsequent year increase factors. The 

new measures we proposed are: (1) AllCause Unplanned Readmission Measure 

for 30 Days Post Discharge from 

Inpatient Rehabilitation Facilities, and 

(2) Percent of Residents or Patients Who 

Were Assessed and Appropriately Given 

the Seasonal Influenza Vaccine (ShortStay) (NQF #0680). In addition, we 

proposed to replace the non-risk 

adjusted application of Percent of 

Residents or Patients with Pressure 

Ulcers That Are New or Worsened 

(short-stay) (NQF #0678) with adoption 

of the NQF-endorsed version of this 

measure. A summary of the public 

comments received and our responses to 

comments are discussed below. 

a. IRF QRP Measure #1: All-Cause 

Unplanned Readmission Measure for 30 

Days Post Discharge From Inpatient 

Rehabilitation Facilities 

In the May 8, 2013 proposed rule (78 

FR 26909 through 26924), we proposed 

to adopt an All-Cause Unplanned 

Readmission Measure for 30 Days Post 

Discharge from Inpatient Rehabilitation 

Facilities. This measure estimates the 

risk-standardized 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 which will not 

require reporting of new data by IRFs, 

and hence, will not be used to 

determine IRF reporting compliance for 

the IRF QRP. 

Addressing unplanned hospital 

readmissions is a high priority for HHS 

and CMS as our focus continues on 

promoting patient safety, eliminating 

healthcare associated infections, 

improving care transitions, and 

reducing the cost of healthcare. 

Readmissions are costly to the Medicare 

program and have been cited as 

sensitive to improvements in 

coordination of care and discharge 

planning for patients.5 Although the 

literature on readmissions is mainly 

concerned with discharges from shortterm acute hospitals, the same issues of 

discharge planning, communications 

and coordination arise at discharge from 

other inpatient facilities. 

IRFs provide intensive rehabilitation 

services to patients after an injury, 

illness, or surgery. According to 

MedPAC, the average length of stay for 

most patients in an IRF is 13.1 days.6 In 

2010, almost 360,000 Medicare Fee-forService (FFS) beneficiaries received care 


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Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 47907 

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. 

8 Jack BW, Chetty VK, Anthony D, Greenwald JL, 

Sanchez GM, Johnson AE, et al. A reengineered 

hospital discharge program to decrease 

rehospitalization: a randomized trial. Ann Intern 

Med 2009;150(3):178–87. 

9Coleman EA, Smith JD, Frank JC, Min SJ, Parry 

C, Kramer AM. Preparing patients and caregivers to 

participate in care delivered across settings: the 

Care Transitions Intervention. J Am Geriatr Soc 

2004;52(11):1817–25. 

10Courtney M, Edwards H, Chang A, Parker A, 

Finlayson K, Hamilton K. Fewer emergency 

readmissions and better quality of life for older 

adults at risk of hospital readmission: a randomized 

controlled trial to determine the effectiveness of a 

24-week exercise and telephone follow-up program. 

J Am Geriatr Soc 2009;57(3):395–402. 

11 Garasen H, Windspoll R, Johnsen R. 

Intermediate care at a community hospital as an 

alternative to prolonged general hospital care for 

elderly patients: a randomized controlled trial. BMC 

Public Health 2007;7:68. 

12 Koehler BE, Richter KM, Youngblood L, Cohen 

BA, Prengler ID, Cheng D, et al. Reduction of 30- 

day post discharge hospital readmission or 

emergency department (ED) visit rates in high-risk 

elderly medical patients through delivery of a 

targeted care bundle. J Hosp Med 2009;4(4):211– 

218. 

13Naylor M, Brooten D, Jones R, Lavizzo-Mourey 

R, Mezey M, Pauly M. Comprehensive discharge 

planning for the hospitalized elderly. A randomized 

clinical trial. Ann Intern Med 1994;120(12):999– 

1006. 

14Naylor MD, Brooten D, Campbell R, Jacobsen 

BS, Mezey MD, Pauly MV, et al. Comprehensive 

discharge planning and home follow-up of 

hospitalized elders: a randomized clinical trial. 

JAMA 1999;281(7):613–20. 

15Naylor MD, Aiken LH, Kurtzman ET, Olds DM, 

Hirschman KB.The Importance of Transitional Care 

in Achieving Health Reform. Health Affairs 2011; 

30(4):746–754. 

in IRFs and cost the Medicare FFS 

program over $6 billion dollars. The 

unadjusted readmission rate to an IPPS 

hospital in the 30 days following an IRF 

discharge was about 15 percent.7 With 

such a large proportion of patients being 

readmitted to a hospital level of care, we 

proposed a risk-adjusted measure of 

readmission rate, the All-Cause 

Unplanned Readmission Measure for 30 

Days Post Discharge from Inpatient 

Rehabilitation Facilities. An IRF’s 

readmission rate is affected by complex 

and critical aspects of care, such as 

communication between providers or 

between providers and patients; 

prevention of, and response to, 

complications; patient safety; and 

coordinated transitions to the 

community or a less intense level of 

care. While disease-specific measures of 

readmission are useful in identifying 

deficiencies in care for specific groups 

of patients, they account for only a 

small minority of total readmissions. By 

contrast, a facility-wide, all-cause 

readmission reflects a broader 

assessment of the quality of care in IRFs, 

and may consequently better promote 

quality improvement and inform 

consumers about quality. 

While some readmissions are 

unavoidable, such as those resulting 

from the inevitable progression of 

disease or worsening of chronic 

conditions, readmissions may also 

result from poor quality of care or 

inadequate transitions between care 

settings. Randomized controlled trials in 

short-stay acute care hospitals have 

shown that improvement in the 

following areas can directly reduce 

hospital readmission rates: Quality of 

care during the initial admission; 

improvement in communication with 

patients, their caregivers and their 

clinicians; patient education; predischarge assessment; and coordination 

of care after discharge. Successful 

randomized trials have reduced 30-day 

readmission rates by 20 to 40 

percent.8 9 10 11 12 13 14 and a 2011 metaanalysis of randomized clinical trials 

found evidence that interventions 

associated with discharge planning 

helped to reduce readmission rates,15

illustrating how hospitals may influence 

readmission rates through best 

practices. 

Because many studies have shown 

readmissions to be related to quality of 

care, and that interventions have been 

able to reduce 30-day readmission rates, 

we believe it is appropriate to include 

an all-condition readmission rate as a 

quality measure in the IRF QRP. 

Promoting quality improvements 

leading to successful transitions of care 

for patients moving from the IRF setting 

to the community or another post-acute 

care setting, and reducing preventable 

facility-wide readmission rates, is 

consistent with the National Quality 

Strategy priorities of safer, better 

coordinated care and lower costs. 

Our approach to developing this 

measure is not the same as, but is in 

many ways very similar to NQFendorsed Hospital-Wide (HWR) RiskAdjusted All-Cause Unplanned 

Readmission Measure (NQF #1789) 

(http://www.qualityforum.org/

Publications/2012/07/Patient_

Outcomes_All-Cause_Readmissions_

Expedited_Review_2011.aspx) finalized 

for the Hospital IQR Program in the FY 

2013 IPPS/LTCH PPS Final Rule (FR 77 

53521 through 53528). To the extent 

appropriate, we have harmonized the 

IRF measure with the HWR measure and 

other measures of readmission rates 

developed for post-acute care (PAC) 

settings, including LTCHs. We have 

provided more details about these 

measures and our attempts to harmonize 

with them below. 

The All-Cause Unplanned 

Readmission Measure for 30 Days Post 

Discharge from Inpatient Rehabilitation 

Facilities measure assesses returns to 

short-stay acute care hospitals or LTCHs 

within 30 days of discharge from an IRF 

to the community or another care setting 

of lesser intensity. Patient readmissions 

are tracked using Medicare claims data 

for 30 days after discharge, to the date 

of patient death, if the patient dies 

within 30 days of discharge. Because 

patients differ in complexity and 

morbidity, the measure is risk-adjusted 

for patient case-mix. The measure also 

excludes planned readmissions, because 

these are not considered to be indicative 

of poor quality of care on the part of the 

IRF. 

A model developed by a CMS 

measure development contractor 

predicts admission rates while 

accounting for patient demographics, 

primary condition in the prior short 

stay, comorbidities, and a few other 

patient factors. While estimating the 

predictive power of patient 

characteristics, the model also estimates 

a facility specific effect common to 

patients treated at that facility. Similar 

to the Hospital IQR Program hospitalwide readmission measure, the IRF QRP 

measure is the ratio of the number of 

risk-adjusted predicted unplanned 

readmissions for each individual IRF, 

including the estimated facility effect, to 

the average number of risk-adjusted 

predicted unplanned readmissions for 

the same patients treated at the average 

IRF. A ratio above one indicates a higher 

than expected readmission rate, or 

lower level of quality, while a ratio 

below one indicates a lower than 

expected readmission rate, or higher 

level of quality. (The methodology 

report detailing the development of the 

IPPS hospital-wide measure and the 

NQF report may be downloaded from: 

http://www.qualityforum.org/

Publications/2012/07/Patient_

Outcomes_AllCause_Readmissions_

Expedited_Review_2011.aspx.) 

The patient population includes IRF 

patients who: 

• Were discharged alive from the IRF. 

• Had 12 months of Medicare Part A, 

Fee-for-Service coverage prior to the IRF 

stay. 

• Had 30 days of Medicare Part A, 

Fee-for-Service coverage post discharge. 

• Had an acute care facility (IPPS, 

CAH or psychiatric hospital) stay within 

the 30 days prior to the IRF stay. 

• Were aged 18 years or above when 

admitted to the IRF. 


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16National Quality Forum. ‘‘Patient Outcomes: 

All-Cause Readmissions Expedited Review 2011’’. 

July 2012. pp12. 

17National Quality Forum. Measure Applications 

Partnership Pre-Rulemaking Report: 2013 

Recommendations of Measures Under 

Consideration by HHS: February 2013. Available at 

http://www.qualityforum.org/WorkArea/ 

linkit.aspx?LinkIdentifier=id&ItemID=72738. 

As with the Hospital IQR Program 

hospital-wide readmission measure, 

patients with medical treatment for 

cancer are excluded. Studies of this 

population that were reviewed for the 

Hospital IQR Program readmission 

measure showed them to have a 

different trajectory of illness and 

mortality than other patient 

populations.16 The measure also 

excludes patients who died during the 

IRF stay, IRF patients under the age of 

18, or IRF patients discharged against 

medical advice (AMA). 

Readmissions that are not included in 

the measure are: 

• Transfers from an IRF to another 

IRF or acute care facility. 

• Readmissions within the 30-day 

window that are usually considered 

planned due to the nature of the 

procedures and principal diagnoses of 

the readmission. 

• IRF stays with data that are 

problematic. (The Medicare data files 

occasionally have anomalous records 

that indicate a person is in two facilities 

or stays that overlap in dates, or are 

otherwise potentially erroneous or 

contradictory.) 

The planned readmission list includes 

the planned procedures specified in the 

Hospital-Wide All-Cause Unplanned 

Readmission (HWR) Measure (NQF 

#1789) used in the Hospital IQR 

Program, plus other procedures that we 

determined in consultation with 

technical expert panels. In addition to 

the list of planned procedures is a list 

of diagnoses (provided at the link below 

in the planned readmission criteria), 

which, if found as the principal 

diagnosis on the readmission claim, 

would indicate that the procedure 

occurred during an unplanned 

readmission. The planned readmissions 

criteria may be found at http://www.

cms.gov/Medicare/Quality-InitiativesPatient-Assessment-Instruments/IRFQuality-Reporting/Downloads/DRAFTSpecifications-for-the-Proposed-AllCause-Unplanned-30-day-Post-IRFDischarge-Readmission-Measure.pdf 

with a link to the latest planned 

readmissions criteria used in the HWR 

at the end of Table 1. 

A discharged patient is tracked until 

one of the following occurs: (1) The 30- 

day period ends; (2) the patient dies; or 

(3) the patient is readmitted to an acute 

level of care (short or long term). If 

multiple readmissions occur, only the 

first is considered for this measure. If 

the readmission is unplanned, it is 

counted as a readmission in the measure 

rate. If the readmission is planned, the 

readmission is not counted in the 

measure rate. The occurrence of a 

planned readmission ends further 

tracking for readmissions in the 30-day 

window following discharge from the 

IRF. 

Readmission rates are risk-adjusted 

for patient case-mix characteristics, 

independent of quality. The risk 

adjustment modeling estimates the 

effects of patient characteristics on the 

probability of readmission so they can 

be adjusted out when reporting the 

readmission rates. The risk-adjustment 

model for IRFs accounts for 

demographic characteristics, principal 

diagnosis, comorbidities, case-mix 

group in the IRF, length of stay in the 

prior acute care facility, critical care 

days in the prior acute care facility, 

number of acute care facility stays in the 

prior year, and the occurrence of various 

surgery types in the prior acute care 

facility stay. In modeling IRF 

readmissions, all patients are included 

in a single model. We did not divide 

patients into groups clinically, modeling 

separate patient types separately as was 

done in the IPPS HWR measure. In the 

HWR there are five patient cohorts, each 

modeled separately, and a combined 

score for the facility. All IRF patients are 

modeled as one group, both because 

IRFs have a substantially smaller patient 

population, restricting the ability to 

create reasonably large subgroups, and 

the technical expert panel did not 

recommend any such stratification. 

While the HWR measure used 1 year 

of data, the smaller IRF patient 

population led us to merge 2 years of 

data for the IRF QRP. This approach is 

similar to that used by the Hospital IQR 

Program condition-specific readmission 

measures, such as that for heart attack 

and heart failure patients, which use 3 

years of claims data. Increasing sample 

size by merging multiple years produces 

more precise estimates of the effects of 

all the risk adjusters and increases the 

sample size associated with each 

facility. Larger patient samples are 

generally better for meaningfully 

distinguishing facility performance. We 

proposed this measure under the 

exception authority in section 

1886(m)(5)(D)(ii) of the Act for the IRF 

QRP. This section provides that in 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. 

We noted in the proposed rule we had 

not been able to identify an NQFendorsed readmission measure that was 

appropriate for the IRF setting. In 2012, 

NQF endorsed hospital-wide 

readmission measures, the National 

Committee for Quality Assurance 

(NCQA) measure intended for health 

plans, Plan All-Cause Readmissions 

(NQF #1768), and CMS’ Hospital-Wide 

All-Cause Unplanned Readmission 

Measure (HWR) (NQF #1789), of which 

the latter is the model for the All-Cause 

Unplanned Readmission Measure for 30 

Days Post Discharge from Inpatient 

Rehabilitation Facilities measure, 

proposed in the FY 2014 IRF PPS 

proposed rule. This measure was 

present on CMS’s List of Measures 

Under Consideration, and the most 

recent MAP Pre-Rulemaking Report 

noted that ‘‘readmission measures are 

also examples of measures that MAP 

recommends be standardized across 

settings, yet customized to address the 

unique needs of the heterogeneous PAC/ 

LTC population’’ (http:// 

www.qualityforum.org/Publications/ 

2013/02/MAP_Pre-Rulemaking_Report_- 

_February_2013.aspx (pp. 177–180)). 

Although the MAP supported the 

direction of this measure, they 

cautioned that the readmission measure 

required further development. The MAP 

has also continually noted the need for 

‘‘care transition measures in PAC/LTC 

performance measurement programs’’ 

and stated that ‘‘setting-specific 

admission and readmission measures 

under consideration would address this 

need.’’ 17

In the May 8, 2013 proposed rule, we 

stated our intention to seek NQF 

endorsement of the All-Cause 

Unplanned Readmission Measure for 30 

Days Post Discharge from Inpatient 

Rehabilitation Facilities measure. We 

noted that because this is a claims-based 

measure not requiring reporting of new 

data by IRFs, this measure will not be 

used to determine IRF reporting 

compliance for the IRF QRP. We also 

stated that we expected to begin 

reporting feedback to IRFs on 

performance of this measure in CY 2016 

and that initial provider feedback will 

be based on CY 2013 and CY 2014 

Medicare FFS claims data related to IRF 

readmissions and that the readmission 

measure will be part of the IRF public 

reporting program once public reporting 


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is implemented. We noted that details 

pertaining to this measure can be found 

on the IRF Quality Reporting Program 

Web site at http://www.cms.gov/ 

Medicare/Quality-Initiatives-PatientAssessment-Instruments/IRF-QualityReporting/index.html. We invited 

stakeholders to submit public comments 

in response to our proposal to adopt the 

All-Cause Unplanned Readmission 

Measure for 30 Days Post Discharge 

from Inpatient Rehabilitation Facilities. 

A summary of the public comments 

received and our responses to comments 

are discussed below. 

Comment: Many commenters have 

expressed concern that CMS has not yet 

sought and obtained NQF endorsement 

for the IRF readmission measure. 

Response: We are aware this measure 

is not yet NQF-endorsed for the IRF 

setting and are working to submit the 

measure for NQF review and 

endorsement. Currently, we are working 

with contractors to submit the measure 

for NQF endorsement in October 2013. 

For the time being, we have chosen to 

adopt this measure by exercising our 

authority to finalize a non-NQF 

endorsed measure when NQF endorsed 

measures are not available or 

appropriate for a setting and the 

Secretary has given due consideration to 

measures that have been endorsed or 

adopted by a consensus organization 

identified by the Secretary. We were not 

able to find a measure that was 

appropriate for the IRF setting. 

Comment: Several commenters 

requested that additional risk adjustors 

be added to the risk adjustment model 

for the IRF readmission measure, 

including patient data such as function 

and social support, on the IRF–PAI. 

Response: The proposed readmission 

measure is a risk-standardized 

readmission measure that adjusts for 

case-mix differences based on the 

clinical status of the patient at the time 

of admission to the IRF. That is, the 

measure is risk-adjusted for certain key 

variables that are clinically relevant or 

have been found to have strong 

relationships with the outcome, 

including age group, sex, comorbid 

diseases, history of repeat admissions. 

We also include as adjusters the IRF 

case-mix groups (CMGs). The 92 CMGs 

are patient classes based on information 

on the IRF–PAI and are reported on 

claims. The CMG assigned to a patient 

contain information on the reason for 

IRF treatment (impairment group), 

functional status, and sometimes 

cognitive status and age group. These 

data elements from claims further 

enhance risk adjustment which, along 

with information from the IRF–PAI, are 

sufficient without requiring linking the 

IRF–PAI assessments themselves. We 

will investigate in the future if 

including data elements, such as 

function and social support, directly 

from the IRF–PAI would produce 

substantive improvement of the model. 

Comment: Several commenters 

suggested that socioeconomic status and 

social factors be added to the risk 

adjustment model for the IRF 

readmission measure. 

Response: The inclusion of factors 

related to socioeconomic status (SES) 

has been raised in the context of the 

IPPS Hospital IQR measures and our 

policy in that program omits them as 

explicit risk adjusters. Medicaid dual 

eligibility, which is related to income, is 

a socioeconomic factor, and is also not 

accounted for explicitly in IQR 

measures. The IRF measure harmonizes 

with the other readmission measures in 

that respect (the IQR and the final longterm care hospital readmission 

measure). The effect of SES is similar in 

the case of IRFs to the effects in the IPPS 

setting and the reasoning for not 

explicitly accounting for SES is similar. 

The effect of levels of SES is captured 

to a great extent by other variables 

included in the model. The readmission 

measure is a risk-standardized 

readmission measure that adjusts for 

case-mix differences based on the 

clinical status of the patient at the time 

of admission to the hospital. That is, 

they are risk-adjusted for certain key 

variables (for example, age, sex, 

comorbid diseases, and a history of 

repeat admissions) that are clinically 

relevant and/or have been found to have 

strong relationships with the outcome. 

To the extent that race or SES results in 

certain patient groups having a worse 

medical condition profile, those factors 

are accounted for in the measure. 

These measures are not otherwise 

adjusted for other factors such as race or 

English language proficiency. We 

believe such additional adjustments are 

not appropriate because the association 

between such patient factors and health 

outcomes can be due, in part, to 

differences in the quality of health care 

received by groups of patients with 

varying race/language/SES. Differences 

in the quality of health care received by 

certain racial and ethnic groups may be 

obscured if the measures risk-adjust for 

race and ethnicity. In addition, riskadjusting for patient race, for instance, 

may suggest that hospitals with a high 

proportion of minority patients are held 

to different standards of quality than 

hospitals treating fewer minority 

patients. We appreciate the concerns of 

hospitals that care for 

disproportionately large numbers of 

disadvantaged populations. Our 

analysis indicates that better quality of 

care is achievable regardless of the 

demographics of the hospital’s patients. 

Comment: Many commenters, 

including MedPAC, suggested the IRF 

readmission measure should focus on 

avoidable or related hospitalizations. 

Response: The issue of all-cause 

readmissions as opposed to a more 

focused set of readmission types has 

been raised in other contexts such as the 

HWR IQR measure. Discussions with 

technical experts have led us to prefer 

using an all-cause measure rather than 

a condition-specific readmissions 

measure. A measure of avoidable or 

related readmissions is possible when 

the population being measured is 

narrowly defined and certain 

complications are being targeted. For 

broader measures, a narrow set of 

readmission types is not practical. In 

addition, readmissions may be clinically 

related even if they are not 

diagnostically related. A patient may 

have comorbid conditions that are 

unrelated to the reason for 

rehabilitation. If not properly dealt with 

in discharge planning a readmission for 

such a condition may become more 

likely. One of the primary purposes of 

a readmission measure is to encourage 

improved transitions at discharge, a 

choice among discharge destinations 

and care coordination. A readmission 

can occur that is less related to the 

primary condition being treated in the 

IRF than to the coordination of care 

post-discharge. That said, we have 

chosen to reduce the all-cause 

readmission set by excluding 

readmissions that are normally for 

planned or expected diagnosis and 

procedures. We augmented the research 

for the Hospital IQR set of planned 

readmissions for the IRF setting with 

recommendations and input from a TEP 

in the field of post-acute care (including 

IRFs). Nearly 9 percent of readmissions 

are considered planned. In the case 

where the readmission is due to a 

random event, such as a car accident, 

we expect these events to be randomly 

distributed across hospitals. 

Comment: Several commenters 

indicated that the readmission measure 

may have the unintended consequence 

of reducing access to IRF care. 

Response: We recognize that in some 

cases, hospital readmission will occur. 

Hospital readmission is not considered 

as a ‘‘never event’’ that hospitals are 

expected to reduce to zero. The measure 

of hospital readmission is risk-adjusted 

to account for the factors that increase 

this readmission risk, so that hospitals 

with a disproportionately larger share of 

patients who are at high risk for 

readmission do not perform worse on 


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47910 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 

18Centers for Medicare & Medicaid Services 

(2011, May). Adult Immunization: Overview. 

Retrieved from https://www.cms.gov/ 

Immunizations/. 

19 Gorina Y, Kelly T, Lubitz J, et al. (2008, 

February). Trends in influenza and pneumonia 

among older persons in the United States. Aging 

Trends no. 8. Retrieved from http://www.cdc.gov/ 

nchs/data/ahcd/agingtrends/08influenza.pdf. 

20Centers for Disease Control and Prevention. 

(2008, September). Influenza e-brief: 2008–2009 flu 

facts for policymakers. Retrieved from http:// 

www.cdc.gov/washington/pdf/flu_newsletter.pdf. 

21Zorowitz, RD. Stroke Rehabilitation Quality 

Indicators: Raising the Bar in the Inpatient 

Rehabilitation Facility. Topics in Stroke 

Rehabilitation 2010; 17 (4):294–304. 

22Centers for Medicare & Medicaid Services. 

MDS 3.0 Item Subsets V1.10.4 for the April 1, 2012 

Release. Retrieved from https://www.cms.gov/ 

NursingHomeQualityInits/ 

30_NHQIMDS30TechnicalInformation.asp. 

23The LTCH CARE Data Set Version 2.00, the 

data collection instrument for the submission of the 

Percent of Residents or Patients with Pressure 

Ulcers That are New or Worsened (Short-Stay) 

measure and the Percent of Residents or Patients 

Who Were Assessed and Appropriately Given the 

Seasonal Influenza Vaccine (Short-Stay) measure, is 

currently under review by the Office of 

Management and Budget (OMB) in accordance with 

the Paperwork Reduction Act (PRA) http:// 

www.gpo.gov/fdsys/pkg/FR-2013-02-01/pdf/2013- 

02155.pdf. The LTCH CARE Data Set Version 1.01 

was approved on April 24, 2012 by OMB in 

accordance with the PRA. The OMB Control 

Number is 0938–1163. Expiration Date April 30, 

2013. 

the quality measure due to factors out of 

their control. We appreciate the 

commenters’ concerns but the risk 

adjustment is intended to adjust for 

more complex patients so that access to 

care will not be reduced. Nonetheless, 

as with all quality measures that we 

have implemented, we will examine IRF 

data to monitor for potential unintended 

consequences. 

Comment: Some commenters 

suggested that more than 2 years of data 

be included in the readmissions 

measure to increase sample size. 

Response: The 2 years of data for each 

reporting period is a compromise 

between sample size and timeliness. In 

this case the total number of IRF stays 

in 1 year of national data is much 

smaller than the number of IPPS stays. 

However, 2 years of data generally yield 

good sample sizes at the facility level. 

Ninety-five percent of facilities have 

more than 100 patients averaged in their 

measure. We do not think that 3 years 

of data is needed at this time. However, 

we will continue to monitor this data 

over time and if there is a significant 

change in number of IRF discharges in 

total or in individual facilities we will 

reconsider the data requirement. 

Final Decision: Having carefully 

considered the comments we received 

on the All-Cause Unplanned 

Readmission Measure for 30 Days Post 

Discharge from Inpatient Rehabilitation 

Facilities, we are finalizing the adoption 

of this measure for use in the IRF QRP. 

We will also continue to seek NQF 

endorsement of the All-Cause 

Unplanned Readmission Measure for 30 

Days Post Discharge from Inpatient 

Rehabilitation Facilities measure. 

b. IRF QRP Quality Measure #2: Percent 

of Residents or Patients Who Were 

Assessed and Appropriately Given the 

Seasonal Influenza Vaccine (Short-Stay) 

(NQF #0680) 

In the May 8, 2013 proposed rule (78 

FR 26909 through 26924), we proposed 

to add the NQF #0680 Percent of 

Residents or Patients who were assessed 

and Appropriately Given the Seasonal 

Influenza Vaccination (Short-Stay) 

measure to the IRF QRP, and we 

proposed to collect the data for this 

measure through the addition of data 

items to the Quality Indicator section of 

the IRF–PAI. We noted that this 

measure was on CMS’s list of measures 

under consideration that were reviewed 

by the MAP and was included in the 

MAP input that was transmitted to 

CMS, as required by the pre-rulemaking 

process in section 1890A(a)(3) of the 

Act. The MAP panel supported the use 

of this measure in the IRF setting, noting 

that it promotes alignment across 

settings and addresses a core measure 

concept. 

Although influenza is prevalent 

among all population groups, the rates 

of death and serious complications 

related to influenza are highest among 

those ages 65 and older and those with 

medical complications that put them at 

higher risk. The CDC reports that an 

average of 36,000 Americans die 

annually from influenza and its 

complications, and most of these deaths 

are among people 65 years of age and 

over.18 In 2004, approximately 70,000 

deaths were caused by influenza and 

pneumonia, and more than 85 percent 

of these deaths were among the 

elderly.19 Given that many individuals 

receiving health care services in IRFs 

are elderly and/or have several medical 

conditions, many IRF patients are 

within the target population for 

influenza immunization.20 21

We have also proposed to add the 

data elements needed for this measure, 

as an influenza data item set, to the 

Quality Indicator section of the IRF–PAI 

and that data for this measure will be 

collected using a revised version of the 

IRF–PAI. Our proposed revision of the 

IRF–PAI includes a new data item set 

designed to assess patients’ influenza 

vaccination status. The revised IRF–PAI 

would become effective on October 1, 

2014. We noted that these proposed data 

set items are harmonized with data 

elements (O0250: Influenza Vaccination 

Status) from the Minimum Data Set 

(MDS) 3.0 and LTCH CARE Data Set 

item sets 22 23 and that the specifications 

and data elements for this proposed 

measure are available in the MDS 3.0 

QM User’s Manual available on our Web 

site at https://www.cms.gov/ 

NursingHomeQualityInits/Downloads/ 

MDS30QM-Manual.pdf. 

For purposes of this measure, the 

influenza vaccination season consists of 

October 1st (or when the vaccine 

becomes available) through March 31st 

each year. We proposed that while an 

IRF’s compliance with reporting quality 

data for this measure will be based on 

the calendar year, the measure 

calculation and public reporting of this 

measure (once public reporting is 

implemented) will be based on the 

influenza vaccination season starting on 

October 1 (or when vaccine becomes 

available) and ending on March 31 of 

the subsequent year. 

The IRF–PAI Training Manual will 

indicate how providers should complete 

these items during the time period 

outside of the vaccination season (that 

is, prior to October 1st or when 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 (Short-Stay) 

(NQF #0680), can be found on the CMS 

Web site: http://www.cms.gov/ 

Medicare/Quality-Initiatives-PatientAssessment-Instruments/ 

NursingHomeQualityInits/ 

NHQIQualityMeasures.html. Measure 

specifications are located in the 

download titled: MDS 3.0 QM User’s 

Manual V6.0. Additional information on 

this measure can also be found at http:// 

www.qualityforum.org/QPS/0680. 

In the May 8, 2013 proposed rule, we 

invited public comment on our proposal 

to use the Percent of Residents or 

Patients Who Were Assessed and 

Appropriately Given the Seasonal 

Influenza Vaccine (Short-Stay) (NQF 

#0680) measure for the FY 2017 IRF PPS 

annual increase factor and subsequent 

years. A summary of the public 

comments received and our responses to 

comments are discussed below. 

Comment: Several commenters 

indicated that they did not support the 

patient immunization measure because 

it is not a core focus of care in IRFs. 

Response: While we appreciate the 

commenters’ point of view, influenza is 

a serious illness, especially for patients 

who are elderly, immuno-compromised, 

or who have recently undergone 

surgery—characteristics that describe 


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many of the patients in IRFs. CDC 

reports that pneumonia and influenza 

were the 5th leading cause of death 

amongst individuals 65 and older and 

that between 1997 and 2007, deaths 

among people aged 65 and older 

accounted for 87.9 percent of deaths 

related to pneumonia and influenza. 

Providing appropriate influenza 

vaccination is an important preventative 

measure that is the responsibility of 

healthcare providers in all settings. 

Although many patients may have 

already been offered and/or received the 

influenza vaccine in the acute care 

setting, the ultimate goal is that 100 

percent of patients are assessed for 

appropriate receipt of the influenza 

vaccine, and achieving this goal requires 

the participation of all healthcare 

providers. 

Comment: Several commenters 

expressed concern that the NQF #0680 

Percent of Residents or Patients Who 

Were Assessed and Appropriately Given 

the Seasonal Influenza Vaccine is 

redundant because patients are offered 

many opportunities to receive the 

influenza vaccination prior to admission 

into the IRF and are highly likely to 

have already received the influenza 

vaccine in the acute care hospital. 

Several commenters also noted that the 

patient influenza measure may lead to 

over-vaccination of patients. 

Response: We appreciate the 

comments and acknowledge the 

commenters’ concern for redundancy 

and over-vaccination. The specifications 

for the Percent of Patients or Residents 

Who Were Assessed and Appropriately 

Given the Seasonal Influenza Vaccine 

(short stay) measure are written so that 

clinicians can document if patients have 

already received the influenza vaccine 

for the current influenza season. The 

numerator statement of the measure 

includes patients who received the 

influenza vaccine, either inside or 

outside the IRF, for the current 

influenza season. An IRF can report that 

a patient received the vaccine prior to 

admission to the IRF and that it should 

not re-vaccinate the patient for purposes 

of being able to report the patient 

receiving a vaccination in the IRF. We 

acknowledge that facilities will need to 

adhere to the principles of proper care 

coordination and documentation to 

avoid over-immunization and underimmunization. However, the 

specifications for the measure are 

designed to encourage facilities to only 

vaccinate when the patient has not 

already received the vaccination. 

Comment: Several commenters 

requested guidance on how to track 

down the influenza vaccination history 

of patients. 

Response: We refer commenters to the 

measure description and specifications 

of the NQF-endorsed measure at the 

NQF Web site http:// 

www.qualityforum.org/QPS/0680. 

Further, to the extent that the 

commenters are asking us to issue 

guidance on proper vaccine 

documentation for purposes of ensuring 

that the receiving facility has an 

accurate immunization history, we agree 

that care coordination is essential to 

avoid over- as well as underimmunization. The influenza 

vaccination measure, however, was not 

designed to offer guidance to providers 

on how to vaccinate. The measure is 

specified to assess if the patient was 

vaccinated, where the patient was 

vaccinated (if they were vaccinated), or 

why the vaccination was not given (if 

the patient was not vaccinated). Patients 

who were not vaccinated due to a 

contraindication and patients who 

refused the vaccination are both 

counted in the numerator and 

accounted separately in the numerator 

of the measure. In a situation where 

vaccination status is unknown, we 

would expect that the IRF provider 

would make a clinical judgment on 

whether or not to vaccinate a patient, 

taking into account the patient’s 

medical history and current health 

status, as well as the existing policy of 

their IRF on vaccination. The IRF must 

only report the decision it made; that is, 

whether the vaccination was or was not 

given. The measure does not require an 

IRF to provide a vaccination that was 

not appropriate due to a 

contraindication or a patient refusal, or 

to provide a vaccination to a patient 

who was already given a vaccination 

outside of the IRF. We encourage all 

IRFs to vaccinate according to their 

facilities’ policies and the best clinical 

judgment of the medical providers 

treating each individual patient and to 

document the reason for the vaccination 

decision in the patient’s medical record. 

Comment: Many commenters 

requested clarification about the data 

collection period for the patient 

influenza vaccine. 

Response: Starting with 2014–2015 

Influenza season data collection will be 

required for all patients in the IRF for 

1 or more days between October 1 and 

March 31. Clinicians can report that the 

reason a given patient did not receive 

the vaccine was that the patient was not 

in the facility during the current 

influenza vaccination season. Consistent 

with NQF #0431, the vaccination 

measure for healthcare personnel, it is 

the vaccinations received for patients in 

the IRF during the influenza season 

(October 1st to March 31st) that will be 

included in measure calculations and 

for the purpose of public reporting. 

Final Decision: After careful 

consideration of the public comments 

received, we are finalizing our proposal 

to adopt the Percent of Residents or 

Patients Who Were Assessed and 

Appropriately Given the Seasonal 

Influenza Vaccine (Short-Stay) (NQF 

#0680) measure for the FY 2017 IRF PPS 

annual increase factor and subsequent 

years. We are additionally clarifying 

that data collection will begin starting 

with the 2014–2015 Influenza season. 

Data collection for this and all 

subsequent influenza seasons will be 

from October 1 through March 31 of the 

following year. All data collection and 

submission guidelines will be addressed 

in the IRF Quality Reporting Manual. 

c. IRF QRP Quality Measure #3: 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 May 8, 2013 proposed rule (78 

FR 26909 through 26924), we have 

proposed to adopt the NQF-endorsed 

version of the NQF #0678 pressure ulcer 

measure, with data collection beginning 

October 1, 2014 using the revised 

version of IRF–PAI, for quality reporting 

affecting the FY 2017 and subsequent 

years IRF PPS annual increase factors. 

We also proposed to remove the current 

non-risk adjusted application of this 

measure when the revised IRF–PAI is 

implemented on October 1, 2014. We 

noted in the proposed rule that, until 

September 30, 2014, IRFs should 

continue to submit pressure ulcer data 

using the IRF–PAI released on October 

1, 2012 for the purposes of data 

submission requirements for the FY 

2015 and FY 2016 IRF PPS increase 

factors. Details about our proposed 

changes to the IRF–PAI and additional 

information regarding data submission 

are discussed in the proposed rule (78 

FR 26909 through 26924). 

We invited public comment in 

response to our proposed removal of the 

currently adopted non-risk adjusted 

application of the Percent of Residents 

or Patients with Pressure Ulcers That 

Are New or Worsened (short-stay) (NQF 

#0678) and the adoption of the NQFendorsed version of the Percent of 

Residents or Patients with Pressure 

Ulcers That Are New or Worsened (NQF 

#0678). A summary of the public 

comments received and our responses to 

comments are discussed below in this 

final rule. 

Comment: Several commenters 

expressed support for our proposal to 

remove the currently adopted non-risk 


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adjusted application of the Percent of 

Residents or Patients with Pressure 

Ulcers That Are New or Worsened 

(short-stay) (NQF #0678) and adopt the 

NQF endorsed version of the Percent of 

Residents or Patients with Pressure 

Ulcers That Are New or Worsened 

(Short Stay) (NQF #0678) for the FY 

2017 annual increase factor. These 

commenters also expressed general 

support for the addition of the risk 

adjustment factors associated with this 

measure to the IRF–PAI. 

Response: We appreciate the 

commenters for their supportive 

comments and their feedback for the 

measure to the IRF–PAI. 

Final Decision: After careful 

consideration of the comments received, 

we are finalizing our proposal to adopt 

the NQF-endorsed version of the 

Percent of Residents or Patients with 

Pressure Ulcers That Are New or 

Worsened (short-stay) (NQF #0678) 

measure beginning on October 1, 2014, 

using the revised version of the IRF– 

PAI. We are also finalizing our proposal 

to remove the existing non-risk adjusted 

application of NQF #0678 from the IRF 

QRP effective October 1, 2014. 

TABLE 12—SUMMARY OF MEASURES AFFECTING THE FY 2017 IRF PPS ANNUAL INCREASE FACTOR AND SUBSEQUENT

YEAR INCREASE FACTORS

Continued Measure Affecting the FY 2015 Annual Increase Factor: 

• NQF #0138: National Health Safety Network (NHSN) Catheter-associated Urinary Tract Infection (CAUTI) Outcome Measure.+

New IRF QRP Measure Affecting the FY 2016 IRF PPS Annual Increase Factor: 

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

New IRF QRP Measures Affecting the FY 2017 IRF PPS Annual Increase Factor: 

• 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).* 

∂ Using CDC/NHSN. 

* Using the IRF–PAI released October 1, 2014. 

∧ Medicare Fee-For-Service claims data. 

D. Changes to the IRF–PAI That Are 

Related to the IRF Quality Reporting 

Program 

1. General Background 

A version of the IRF–PAI has been in 

use in the IRF setting since January 1, 

2002, when IRFs first began receiving 

payment under the IRF PPS. IRFs must 

submit a completed IRF–PAI for each 

Medicare Part A, B, and C patient that 

is admitted and discharged from the 

IRF. 

The IRF PPS utilizes information from 

the IRF–PAI to classify patients into 

distinct groups based on clinical 

characteristics and expected resource 

needs. Separate payments are calculated 

for each group, including the 

application of case and facility level 

adjustments available at http:// 

www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ 

InpatientRehabFacPPS/index.html. 

In the FY 2014 proposed rule, we 

proposed to release an updated version 

of the IRF–PAI on October 1, 2014 (78 

FR 26909–26924) . Proposed revisions 

included data elements that will (1) 

allow for risk adjustment of the NQF 

#0678 Percent of Residents or Patients 

with Pressure Ulcers That Are New or 

Worsened (Short-Stay), (2) allow for 

voluntary submission of more detailed 

data collection related to NQF #0678 

Percent of Residents or Patients with 

Pressure Ulcers That Are New or 

Worsened (Short-Stay), and (3) allow for 

data collection for NQF #0680 Percent 

of Residents or Patients Who Were 

Assessed and Appropriately Given the 

Seasonal Influenza Vaccine (Short-Stay). 

We also proposed to adopt a new 

numbering schema for the IRF–PAI. 

What we have proposed includes both 

mandatory and voluntary additions to 

the IRF–PAI. Collection of voluntary 

data elements by IRFs will have no 

impact on measure calculations or on 

our determination of whether the IRF 

has met the reporting requirements 

under the IRF QRP. In contrast, failure 

to complete mandatory data elements 

may result in non-compliance with the 

IRF QRP requirements and subject the 

facility to a 2 percentage point reduction 

in its annual increase factor. We have 

provided more details about these items 

below at http://www.cms.gov/Medicare/ 

Quality-Initiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/

Spotlights-Announcements.html under 

‘‘CMS–10036’’. 

The October 1, 2014 release of the 

IRF–PAI that we proposed, inclusive of 

all the changes that we intend to finalize 

here, and information about the IRF– 

PAI submission process can be found at 

https://www.cms.gov/Medicare/

Medicare-Fee-for-Service-Payment/

InpatientRehabFacPPS/Downloads/

508c-IRF-PAI-2014.pdf. A PRA package 

for the revised IRF–PAI discussed here 

has been submitted for the Office of 

Management and Budget’s (OMB) 

review and approval. The PRA package 

documents are available for viewing on 

the CMS PRA Listings Web page at: 

https://www.cms.gov/Regulations-andGuidance/Legislation/Paperwork

ReductionActof1995/PRA-Listing-Items/

CMS1216518.html?DLPage=1&DLFilter=

IRF-PAI&DLSort=1&DLSortDir=

descending. The PRA package form 

number is cms-10036, and the OMB 

control number for this PRA package is 

0938–0842. 

a. Background Related to Collection of 

Pressure Ulcer Data Elements Using the 

IRF–PAI 

In the FY 2012 IRF PPS final rule, we 

finalized a proposal to adopt an 

application of the NQF #0678 ‘‘Percent 

of Residents with Pressure Ulcers That 

Are New or Worsened (Short-Stay)’’ 

measure for use in the IRF QRP, 

beginning with the IRF PPS annual 

increase factor for FY 2014. We also 

finalized our proposal to collect the data 

for this pressure ulcer measure using the 

IRF–PAI. In order to comply with 

section 3004 of the Affordable Care Act 

requirements, we deleted the set of 

outdated pressure ulcer assessment 

items that were voluntary quality 

questions and had been located in the 

‘‘Quality Indicator’’ section of the IRF– 

PAI and replaced them with a new set 

of pressure ulcer quality measure data 

items that were designed to capture the 

data necessary for the finalized 

application of NQF #0687. These items 

were modeled after the MDS 3.0 items, 

numbered 48A to 50D, and changed the 

status of the pressure ulcer data items 

from ‘‘voluntary’’ to ‘‘mandatory.’’ 

These revisions to the IRF–PAI went 

into effect on October 1, 2012. 

Since the publication of the FY 2012 

final rule (76 FR 47836) we have 

received numerous comments about the 

current version of the IRF–PAI from IRF 

providers, provider organizations, and 


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advocacy groups. In the CY 2013 OPPS/ 

ASC final rule, we discussed a number 

of specific public comments related to 

pressure ulcer data that we received in 

response to the CY 2013 OPPS/ASC IRF 

proposed rule (77 FR 68506). In that CY 

2013 proposed rule, we proposed to 

update the application of NQF #0678 

that we had previously incorporated 

into the IRF QRP by instead 

incorporating the actual NQF-endorsed 

version of this measure (77 FR 45196). 

NQF #0678 is a risk adjusted measure. 

Commenters expressed specific 

concerns regarding the ability of the 

data elements in the IRF–PAI to 

sufficiently risk-adjust the measure. We 

agreed that there were limitations 

related to the risk adjustment data items 

that are on the IRF–PAI that went into 

effect on October 1, 2012, impacting the 

ability to calculate the measure using all 

of the risk adjustment related covariates. 

As a result, the CY 2013 OPPS/ASC 

final rule adopted an application of 

#0680 without risk-adjustment for FY 

2015 and subsequent years (77 FR 

68507). 

In the proposed rule, we noted that in 

response to the comments and feedback 

received in previous rules discussed 

above, we intended to propose 

modifications to the data items in both 

the admission and discharge IRF–PAI 

assessments as discussed below. 

2. Revisions to the IRF–PAI To Add 

Mandatory Risk Adjustment Data Items 

for NQF #0678 Percent of Residents or 

Patients With Pressure Ulcers That Are 

New or Worsened (Short-Stay) 

In the FY 2014 IRF PPS proposed rule 

(78 FR 26909–26924), we proposed to 

update the current IRF–PAI to include 

data elements that are necessary to risk 

adjust the Percent of Residents or 

Patients with Pressure Ulcers That Are 

New or Worsened (Short-Stay) (NQF 

#0678). These updates to the IRF–PAI 

include the addition of the following 

indicator boxes to the IRF–PAI 

admission assessment: (1) Peripheral 

Vascular Disease, (2) Peripheral Arterial 

Disease, and (3) Diabetes. The additions 

would be placed in the Quality 

Indicators section of the revised IRF– 

PAI. 

We further determined that risk 

adjustment factors related to height and 

weight had inadvertently been left off of 

the revised version of the IRF–PAI that 

became effective on October 1, 2012. We 

proposed to add height and weight to 

the IRF–PAI to correct this oversight 

into the ‘‘Medical Information’’ section 

of the IRF–PAI. As a general rule, we 

would place all data items related to 

quality reporting and quality measures 

within the Quality Indicator section of 

the IRF–PAI. However, the height and 

weight items have a dual purpose 

because they can be used for the 

calculation of Body Mass Index (BMI), 

which is used as one part of the analysis 

for compliance with the 60 percent rule. 

Even though the height and weight 

items are placed in the ‘‘Medical 

Information’’ section of the IRF–PAI, 

they are also being added to the IRF– 

PAI for calculating risk adjustment for 

the pressure ulcer measure. Failure to 

provide height and weight information 

could result in a finding of noncompliance with the reporting 

requirements. 

We invited public comment on our 

proposal to include data elements 

required for risk-adjustment of NQF 

#0678 Percent of Patients with Pressure 

Ulcers That Are New or Worsened 

measure as mandatory data collection 

elements in the revised IRF–PAI. Below 

is a summary of public comments 

received for the additional elements 

required for risk-adjustment of the 

pressure ulcer measure, and our 

responses to these comments. 

Comment: One commenter questioned 

the use of peripheral artery disease 

(PAD), peripheral vascular disease 

(PVD), and diabetes mellitus (DM) as 

risk adjusters for the pressure ulcer 

quality measure. 

Response: Peripheral Arterial Disease, 

Peripheral Vascular Disease, and 

Diabetes are all conditions affecting 

perfusion and oxygenation, which are 

considered to impact risk of pressure 

ulcer development. Conditions causing 

issues of sensory perception (for 

example, peripheral neuropathy) or an 

alteration to intact skin (dry skin, 

erythema and other skin alterations) 

also are considered to impact risk of 

pressure ulcer development (Pressure 

Ulcer Prevention Clinical Practice 

Guideline, NPUAP). Additionally, 

statistical analyses showed that these 

factors were found to be significantly 

associated with the development of 

pressure ulcers when risk adjustment 

models were tested in a large sample of 

IRF patients. 

Comment: Several commenters 

requested that CMS consider adding 

impairment group as a risk adjuster for 

the pressure ulcer measure. 

Response: When developing the 

pressure ulcer quality measure, we 

reviewed the literature and obtained 

input from clinicians on which factors 

should be tested as potential risk 

adjustors. Various measurements of 

functional status/functional impairment 

were tested on a large sample of IRF 

patients, and were not found to be 

statistically significant in the population 

as a whole. We will continue to analyze 

this measure as more data is collected 

and will consider testing additional risk 

adjustors for future iterations of the 

measure. 

Comment: A commenter expressed 

concern that the adoption of the NQFendorsed version of the pressure ulcer 

measure ‘‘may be too premature.’’ This 

commenter noted that CMS recently 

held a technical expert panel to discuss 

the potential development of a 

standardized set of pressure ulcer 

measurement items to be used across 

multiple healthcare settings (referred to 

as ‘‘cross-setting’’), and therefore, this 

commenter suggested that CMS delay 

implementing the revised pressure ulcer 

items. 

Response: It was necessary for us to 

finalize development of the proposed 

updates to the pressure ulcer data items 

for the October 1, 2014 IRF–PAI release 

prior to work on the cross-setting 

pressure ulcer measures because of the 

significant amount of time required to 

implement such a data item set. 

However, we will continue to work on 

improving the data collection efforts to 

ensure that the most relevant patient 

information is obtained. 

Final Decision: After careful 

consideration of the public comments 

we received, we are finalizing our 

proposal to include the additional risk 

adjustment elements discussed above to 

the IRF–PAI for the purpose of riskadjustment for NQF #0678 Percent of 

Residents or Patients with Pressure 

Ulcers That Are New or Worsened 

(Short-Stay). 

3. Revisions to the IRF–PAI To Add 

Voluntary Data Items Related to NQF 

#0678 Percent of Residents or Patients 

With Pressure Ulcers That Are New or 

Worsened (Short-Stay) 

The pressure ulcer measure 

numerator for the NQF #0678 endorsed 

version of the ‘‘Percent of Residents or 

Patients with Pressure Ulcers That Are 

New or Worsened (Short-Stay)’’ measure 

looks at the number of patients with a 

target assessment during the selected 

time window who have one or more 

Stage 2 through 4 pressure ulcer(s) that 

are new or that have worsened 

compared with the previous assessment. 

According to the NQF Web site, in its 

description of NQF #0678, ‘‘Stage 1 

pressure ulcers are excluded from this 

measure because recent studies have 

identified difficulties in objectively 

measuring them across different 

populations.’’ The measure numerator 

also does not include what is referred to 

as ‘‘unstageable’’ pressure ulcers, which 

we describe below. The data that that 

has been mandatory for IRFs to report 

under the IRF QRP are those that met 


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the requirements of the application of 

NQF #0678 that we finalized in the CY 

2013 OPPS/ASC final rule (as 

incorporated into the 2012 version of 

the IRF PAI), which reflected the same 

staging for pressure ulcers as the NQFendorsed version of the measure. We 

have proposed to include in the 2014 

version of the IRF–PAI additional 

mandatory data items to accommodate 

the risk adjustment requirements of the 

NQF-endorsed version of this measure. 

We have received feedback from 

providers through a variety of sources 

(including a May 2, 2012 in-person 

training and special open door forums 

that occurred on November 29, 2011; 

April 19, 2012; July 26, 2012; August 16, 

2012; September 20, 2012; and October 

18, 2012) in regard to the pressure ulcer 

items on the IRF–PAI. Additionally, we 

have received feedback in the form of 

questions from IRF providers submitted 

to the IRF Quality Reporting Program 

Helpdesk. 

We learned from provider feedback 

that a majority of IRF providers want the 

ability and flexibility to document 

information about all stages of pressure 

ulcers (numerical stages 1 through 4 and 

pressure ulcers that are not numerically 

stageable due to suspected deep tissue 

injury, slough and/or eschar, or nonremovable devices, known as 

unstageable pressure ulcers), in addition 

to data on the stages of pressure ulcers 

required for the quality measure, and 

that they felt this extended 

documentation would allow them to 

track the evolution of pressure ulcers. 

We further learned that many providers 

felt that it is important to have a way to 

document information about healed 

pressure ulcers because they wanted us 

to know about these positive outcomes. 

In response to the feedback we 

received from providers, we proposed to 

add voluntary data items to the IRF–PAI 

Quality Indicators section, designed to 

address providers’ concerns about the 

adequacy of current pressure ulcer data 

items. As modified, our proposed 

admission assessment consists of 2 main 

topics: (1) Unhealed Pressure Ulcers; 

and (2) Pressure Ulcer Risk Conditions. 

Also, the discharge assessment consists 

of 2 main topics: (1) Unhealed Pressure 

Ulcers; and (2) Healed Pressure Ulcers. 

Within each main topic there are subtopics that contain a set of questions. 

The provider is asked to document how 

many pressure ulcers, if any, the patient 

has at each stage upon admission. We 

have added new questions that extend 

beyond stages 2 through 4 pressure 

ulcers, covering the presence of stage 1 

pressure ulcers, as well as unstageable 

pressure ulcers that are due to a nonremovable device or dressing, to slough 

or eschar, or deep tissue injury. We note 

that the discharge assessment differs 

somewhat from the admission 

assessment with regard to the pressure 

ulcer questions. A copy of the 2014 IRF– 

PAI can be found at https:// 

www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ 

InpatientRehabFacPPS/IRFPAI.html. 

We have added this greater specificity 

to the pressure ulcer items to allow 

providers to document pressure ulcers 

in more detail. In describing the 

inadequacy they perceived in the 

present pressure ulcer items, providers 

described such situations as those in 

which a patient is admitted into an IRF 

with an unstageable pressure ulcer that 

is a suspected deep tissue injury (DTI). 

During the course of the IRF stay the 

DTI evolves into a stage 3 and, after 

several days, worsens to a stage 4. On 

the current version of the IRF–PAI, 

providers have no ability to document 

the presence of an unstageable pressure 

ulcer that existed when the patient was 

admitted. Whether or not the IRF 

believes there is an unstageable pressure 

ulcer, the IRF must document that the 

patient had no pressure ulcers on the 

admission assessment. However later, 

after the DTI worsens to a stage 3, if the 

IRF judges from the nature of the 

pressure ulcer that it was extremely 

likely to have been present at 

admission, the IRF would have to go 

back and change their documentation 

on the admission assessment to reflect 

that the patient actually had a stage 3 

pressure ulcer upon admission. Upon 

discharge, the IRF would document that 

the patient has a stage 4 pressure ulcer. 

With the new pressure ulcer data items 

for 2014, the IRF will be able to 

document the presence of the 

unstageable pressure ulcer or suspected 

DTI on the admission assessment. The 

revisions to the IRF–PAI for 2014 will 

allow the IRF to give a more complete 

and accurate picture of the progression 

of this pressure ulcer when the patient 

is discharged. 

While Stage 1 and unstageable 

pressure ulcers are not part of the NQF 

#0678 endorsed version of the ‘‘Percent 

of Residents or Patients with Pressure 

Ulcers That Are New or Worsened 

(Short-Stay),’’ and are not mandatory, 

we nonetheless believe that it is 

appropriate and important for us to 

collect this information. As the measure 

steward for this measure, CMS would 

like to gather and analyze data regarding 

Stage 1 and unstageable pressure ulcers 

to help determine if any modification to 

the existing measure should be made. 

This data could also help us determine 

if any additional pressure ulcer 

measures should be developed. For 

example, collecting data about Stage 1 

pressure ulcers could provide us with 

information that would allow us to 

assess whether these pressure ulcers can 

now be objectively measured across 

different populations. 

Additionally, as we have noted above, 

some pressure ulcers that are present on 

admission can become stageable and 

then worsen to a higher stage during the 

IRF stay. Access to data on these kinds 

of situations would assist us in 

determining whether including 

unstageable and Stage 1 measures in the 

measure results may be appropriate in 

the future. We might accomplish this by 

expanding the current measure or 

developing an entirely new pressure 

ulcer measure. 

We invited public comment on our 

proposed revisions to the IRF–PAI of 

voluntary items related to the staging of 

pressure ulcers. We received the 

following public comments in response 

to our proposals for the addition of 

these voluntary pressure ulcer items to 

the IRF–PAI. 

Comment: Several commenters 

suggested that stage 1 pressure ulcers 

should not be collected on the IRF–PAI. 

Response: We obtained feedback from 

providers on the pressure ulcer items on 

the IRF–PAI released in October 2012 

during Provider Trainings, Open Door 

Forums, and via the Quality Reporting 

Program Helpdesk. Based on the 

feedback we received, we learned that 

many IRF providers want the ability to 

document as much information as 

possible about all types of pressure 

ulcers and feel that this will help them 

to better track the evolution of pressure 

ulcers. Because it would be useful to us, 

as well as providers, to obtain complete, 

accurate information about the quality 

of care being provided in IRFs, we 

included fields for the documentation of 

all stages of pressure ulcers, including 

Stage 1 and Unstageable pressure ulcers. 

However, NQF #0678 covers only Stages 

2–4 pressure ulcers. Stage 1 pressure 

ulcers are not included in the quality 

measure. If a facility does not wish to 

report data on these pressure ulcers, 

they are under no obligation to do so. 

Comment: Several commenters 

requested that each IRF–PAI quality 

indicator pressure ulcer item be labeled 

as to whether it is mandatory or 

voluntary. Another commenter 

recommended that the voluntary IRF– 

PAI quality indicator pressure ulcer 

items be segregated from the mandatory 

items, or that CMS in some way on the 

IRF–PAI indicate which of the items are 

voluntary. 

Response: We have posted on our 

Web site a detailed matrix that identifies 

which data elements will be required, 


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24Centers for Medicare & Medicaid Services. 

MDS 3.0 Item Subsets V1.10.4 for the April 1, 2012 

Release. Retrieved from https://www.cms.gov/ 

NursingHomeQualityInits/ 

30_NHQIMDS30TechnicalInformation.asp. 

25The LTCH CARE Data Set Version 2.00, the 

data collection instrument for the submission of the 

Percent of Residents or Patients with Pressure 

Ulcers That are New or Worsened (Short-Stay) 

measure and the Percent of Residents or Patients 

Who Were Assessed and Appropriately Given the 

Seasonal Influenza Vaccine (Short-Stay) measure, is 

currently under review by the Office of 

Management and Budget (OMB) in accordance with 

the Paperwork Reduction Act (PRA) http:// 

www.gpo.gov/fdsys/pkg/FR-2013-02-01/pdf/2013- 

02155.pdf. The LTCH CARE Data Set Version 1.01 

was approved on April 24, 2012 by OMB in 

accordance with the PRA. The OMB Control 

Number is 0938–1163. Expiration Date April 30, 

2013. 

and which will be voluntary (available 

at http://www.cms.gov/Medicare/ 

Quality-Initiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/ 

Spotlights-Announcements.html) and 

this matrix will also be incorporated 

into the final IRF PAI Training Manual 

which will be posted on CMS IRF PPS 

Web site. We do not directly indicate on 

the IRF–PAI which items are mandatory 

versus which items are voluntary. These 

designations are subject to change, and 

although we can address such changes 

in rulemaking, the IRF–PAI is only 

released biannually. Thus, our ability to 

change these designations on the IRF– 

PAI itself is limited and could lead to 

provider confusion should these 

designations not align with current 

policy because they have changed 

during the interim year when we do not 

have a new release of the IRF–PAI. 

Comment: One commenter suggested 

that if a pressure ulcer is discovered 

after the removal of a ‘‘non-removable 

device or other dressing’’ during the IRF 

stay, and there was no documentation of 

this wound from the discharging 

hospital, this should not be counted on 

the IRF–PAI due to issues of attribution. 

Response: Assessment items 

collecting data on unstageable pressure 

ulcers are voluntary. However, if a 

numerically staged pressure ulcer is 

observed when a non-removable device/ 

dressing is removed, and the pressure 

ulcer is still present at the time of 

discharge, that pressure ulcer will be 

reported on the IRF–PAI at discharge. If 

there were documentation that the 

pressure ulcer was present at admission 

at the same stage, and it did not worsen 

to a higher stage during the stay, then 

the pressure ulcer would not be 

considered new or worsened. The item 

in the proposed October 1, 2014 IRF– 

PAI ‘‘Unstageable due to NonRemovable Device or Dressing’’ should 

be used on admission when there is 

documentation of a known pressure 

ulcer that cannot be fully visualized and 

staged due to a non-removable device. 

Comment: Several commenters 

indicated that the IRF–PAI is now too 

long and causes undue burden. 

Response: We obtained feedback from 

providers in October of 2012 on the IRF 

PAI during Provider Trainings, Open 

Door Forums, and via the Quality 

Reporting Program Helpdesk. Based on 

the feedback we received, providers 

wanted the ability to provide as much 

information as possible to truly track the 

evolution of pressure ulcers, so in order 

to accommodate these providers, we are 

adding voluntary items. However, only 

those pressure ulcer items required to 

calculate the quality measure NQF 

#0678, Percent of Patients or Residents 

with Pressure Ulcers That Are New or 

Worsened (Short Stay), are required in 

order for providers to avoid a 2 

percentage point reduction of the 

applicable IRF PPS annual increase 

factor. Therefore, if a facility finds 

completing the additional data items 

burdensome, it is under no obligation to 

do so. Please refer to the 2014 IRF–PAI 

training manual for the voluntary/ 

mandatory status of each item. 

Comment: One commenter requested 

that CMS consider capturing the degree 

to which a pressure ulcer has healed by 

discharge. 

Response: Pressure ulcer healing and 

treatment is a complex clinical issue 

that is difficult to capture in 

standardized assessment items. The 

IRF–PAI does not record incremental 

improvement, but instead captures only 

condition on admission and discharge, 

based on staging pressure ulcers, to 

avoid undue burden of data collection 

on facilities. Possible indicators of 

healing are numerous and not always 

accurate. These include surface area 

reduction, a common indicator for 

tracking the healing of pressure ulcers; 

however, we do not believe it is an 

appropriate data element to include in 

the IRF–PAI because it is not the sole 

determinant of healing. Development of 

granulation tissue, decrease in 

erythema, decrease in exudate, reepithelialization, etc., are also other 

ways to document pressure ulcer 

healing. We cannot add data elements 

for all possible indicators. Also, many 

IRF stays are short, averaging 13 days, 

and we have no expectation that severe 

pressure ulcers will heal completely 

during this timeframe. If the patient is 

admitted with a full thickness pressure 

ulcer which will likely not be healed in 

approximately 13 days, it would simply 

be noted in the patient’s record as full 

thickness on discharge. The IRF would 

not experience any negative impact 

from a quality reporting standpoint in a 

situation such as this, because this 

information is not required for purposes 

of NQF #0678. Also, from a more 

general perspective, quality measures 

are not designed to track a full set of 

details about the progress of any 

individual patient, but rather to include 

just enough information to register a 

patient’s decline or improvement while 

in the care of a facility. This kind of 

assessment can assist us in monitoring 

the overall quality of facilities to ensure 

patients are receiving high-quality care 

and to identify facilities whose practices 

can be improved. 

Final Decision: After giving careful 

consideration to the public comments 

received in response to our proposal to 

add new voluntary pressure ulcer items 

to the IRF–PAI, we are finalizing the 

proposal to add the new pressure ulcer 

items that were posted on the IRF PPS 

Web page and as part of the IRF–PAI 

PRA package. 

4. Revisions to the IRF–PAI To Add 

Mandatory Data Items Related to NQF 

#0680 Percent of Residents or Patients 

Who Were Assessed and Appropriately 

Given the Seasonal Influenza Vaccine 

(Short-Stay) 

We have proposed to make changes to 

the IRF–PAI discharge assessment to 

include the addition of elements 

necessary to report data for the 

proposed measure, Percent of Residents 

or Patients Who Were Assessed and 

Appropriately Given the Seasonal 

Influenza Vaccine (Short-Stay) (NQF 

#0680). These items will be based on the 

items from the MDS 3.0 and LTCH 

CARE Data Set items.24 25 There are 3 

data elements that will be collected in 

relation to this measure: Two are used 

to calculate the measure, and a third is 

used to ensure internal consistency and 

data accuracy. The items are as follows: 

• Did the patient receive the 

influenza vaccine in this facility for this 

year’s influenza vaccination season? 

• Date influenza vaccine was 

received, and 

• If influenza vaccine not received, 

state reason. 

These items and questions allow the 

IRF to report if and when an influenza 

vaccine was given at the facility. They 

also allow the IRF to indicate why a 

vaccine was not given if that is the case. 

Further details on the specifications and 

data elements for this measure are 

available in the MDS 3.0 QM User’s 

Manual available on our Web site at 

http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/NursingHomeQualityInits/ 

NHQIQualityMeasures.html. Measure 

specifications are located in the 

download titled: MDS 3.0 QM User’s 

Manual V6.0. Measure information is 


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also available at http:// 

www.qualityforum.org/QPS/0680. 

In the proposed rule, we invited 

public comment on our proposed 

revisions to the IRF–PAI related to NQF 

#0680 Percent of Residents or Patients 

Who Were Assessed and Appropriately 

Given the Seasonal Influenza Vaccine 

(Short-Stay). The comments we received 

were related to our proposal to adopt 

the measure itself, and not on how we 

were proposing to modify the IRF–PAI. 

For a summary of comments and 

responses on this issue, please see 

section XIV.3.b. of this final rule. 

Final Decision: After careful 

consideration of the public comments 

we received, we are finalizing our 

proposal to modify the IRF–PAI 

discharge item set to add the 3 data 

elements for collecting data for NQF 

#0680. 

5. Revisions to the IRF–PAI Related to 

Numbering of Quality Indicator Items 

In the revised IRF–PAI, we include 

changes in the numbering scheme used 

in the Quality Indicator section of the 

IRF–PAI from a ‘‘consecutive numbering 

scheme’’ for numbering assessment 

items to a numbering scheme that 

allows greater flexibility for item 

removal and insertion. Problems arise 

with a consecutive numbering scheme 

when items are removed or new ones 

are inserted because this changes the 

numbers of some or all of the items 

around them. Other CMS post-acute 

care data collection vehicles, such as the 

MDS 3.0 and the LTCH CARE Data Set, 

have adopted a more flexible numbering 

schema that allows insertion or removal 

of items without requiring renumbering 

of the remaining items. We proposed to 

adopt a similar numbering schema in 

the revised IRF–PAI. A less flexible 

numbering system that necessitates 

renumbering items on the IRF–PAI in 

the event of such changes will result in 

a given item number having very 

different meanings on different versions 

of the IRF–PAI item set. 

For more details about our plans for 

changes to the IRF–PAI, see https:// 

www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ 

InpatientRehabFacPPS/IRFPAI.html. 

In the May 8, 2013 proposed rule, we 

invited public comments about our 

proposal to change the numbering 

scheme used in the quality indicator 

section of the IRF–PAI. A summary of 

the public comments received and our 

responses to comments are discussed 

below. 

Comment: We did not receive any 

comments in response to our proposal 

to change the type of numbering used 

on the quality indicator section of the 

IRF–PAI from a consecutive scheme to 

a numbering scheme similar to that used 

in the MDS 3.0. We did, however, 

receive comments requesting that page 

numbers be added to the IRF–PAI. The 

commenters suggested that because this 

document was being increased from 3 to 

9 pages in length as a result of the 

proposed changes to the Quality 

Indicator section of the IRF–PAI then 

the page numbering should be added. 

Another commenter requested that page 

numbers be added to the IRF–PAI 

because ‘‘numbering the IRF–PAI pages 

will help keep it in correct order, since 

it is filed in the medical record.’’ 

Response: We agree with the 

commenters that adding page 

numbering to the IRF–PAI can assist 

IRFs in keeping the document in correct 

order. We also acknowledge that the 

proposed changes to the Quality 

Indicator section of the IRF–PAI will 

significantly increase the length of this 

document. 

Final Decision: After careful 

consideration of the public comments 

we received, we are finalizing our 

proposal to adopt a flexible numbering 

scheme (similar to that used in MDS 

3.0) into the Quality Indicator section of 

the IRF–PAI. In addition, we will add 

general page numbering to the IRF–PAI 

document. 

E. Change in Data Collection and 

Submission Periods for Future Program 

Years 

The FY 2012 final rule (76 FR 47836) 

included an initial framework for the 

IRF QRP. In that rule we also finalized 

the initial quality measures to be used 

in the IRF QRP, stated how data for 

these measures would to be collected, 

and selected the time periods for the 

data collection and reporting of the 

quality data. 

The FY 2012 final rule (76 FR 47836) 

also finalized the initial IRF QRP data 

reporting cycle, affecting the FY 2014 

annual increase factor, as beginning on 

October 1, 2012 and ending on 

December 31, 2012. Beginning in 2013 

for the FY 2015 annual increase factor, 

and for subsequent year annual increase 

factors, we finalized that quality 

reporting cycles would be based on a 

full calendar year (CY) cycle (76 FR 

47879). 

When there are new measures added 

to the quality reporting program that 

will be collected on the IRF–PAI, that 

data collection instrument must be 

updated accordingly. The next update to 

the IRF- PAI will take place on October 

1, 2014. Under current policy, the IRF 

QRP data collection cycle for the FY 

2016 annual increase factor will not 

begin until January 1, 2014. 

In the FY 2014 proposed rule, we 

proposed to change the IRF–PAI data 

collection periods for the FY 2016 and 

FY 2017 annual increase factors in order 

to align with the release of the new 

version of the IRF–PAI on October 1, 

2014. We have also proposed to shorten 

the data collection period impacting the 

FY 2016 IRF PPS annual increase factor 

to 9 months, so that the FY 2017 

reporting periods can begin on October 

1, 2014 using the new version of the 

IRF–PAI. Under this proposal, the next 

data collection period would run from 

January 1, 2014 to September 30, 2014 

and affect the IRF PPS annual increase 

factor for FY 2016. 

We further proposed to start fiscal 

year data collection periods beginning 

on October 1, 2014, and data collected 

for discharges during October 1, 2014 to 

September 30, 2015 will affect the FY 

2017 IRF PPS annual increase factor. In 

addition, we proposed that data 

collection will continue on FY cycles 

unless there is an event that requires 

that this cycle be amended. We noted 

that, in the event the established cycles 

must be changed, we will make this 

apparent to the public and follow all 

necessary processes to make the change. 

Finalizing these proposals will result in 

having 2 separate data collection and 

submission schedules for IRF–PAI and 

NHSN based measures. We provide 

more details on this distinction below. 

We invited public comment on our 

proposal to alter the IRF–PAI data 

collection periods impacting the FY 

2016 and FY 2017 increase factors in a 

way that aligns with the release of the 

next version of the IRF–PAI instrument. 

A summary of the public comments 

received and our responses to comments 

are discussed below. 

Comment: Several commenters 

expressed support for this proposal. We 

did not receive any comments that 

included objections to our proposal to 

change the data collection and 

submission timeframe for data collected 

using the IRF–PAI from a calendar year 

basis to a fiscal year basis, beginning on 

October 1, 2014. Likewise, no 

commenters objected to our continuing 

collection of NHSN data on a calendar 

year basis. 

Response: We thank those 

commenters for their support of the 

proposed changes to the data collection 

and submission cycle for data collected 

using the IRF–PAI from a calendar to a 

fiscal year basis. 

Comment: Several commenters 

expressed their support for our proposal 

to continue data collection and 

submission of NHSN measures data on 

a calendar year basis beginning on 

October 1, 2014 with the exception of 


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the Influenza Vaccination Among 

Healthcare Personnel Measure (NQF 

#0431). These commenters expressed an 

opinion that IRF units within acute care 

hospitals should be permitted to attest 

that their health care personnel flu 

vaccination measure data is reported 

through the acute care hospital’s 

reporting, thereby automatically 

receiving credit for reporting in the IRF 

QRP. 

Response: We thank those 

commenters for their support of our 

proposal to continue to report data to 

NHSN on a calendar year. We do not 

agree, however, that IRF units located 

within IPPS hospitals should be 

permitted to attest to the submission of 

(NQF #0431) Influenza Vaccination 

among Healthcare Personnel measure 

data as part of the IPPS data. We will 

require all IRFs to report data for this 

measure. For a full discussion of this 

specific issue, as well as details about 

this measure, see section XIV.3.C.2 

above ‘‘IRF QRP Measure #1: Influenza 

Vaccination Coverage among 

Healthcare Personnel (NQF #0431)’’. 

Final Decision: After careful 

consideration of the public comments 

received, we are finalizing our proposal 

to change the data collection timeframe 

for data submitted via the IRF–PAI to a 

fiscal year basis beginning on October 1, 

2014, and to continue data collection of 

data that is reported via NHSN on a 

calendar year basis. 

1. Implementation of Data Submission 

Deadlines for the IRF QRP 

In the FY 2012 IRF PPS final rule we 

stated that details regarding data 

submission and reporting requirements 

would be posted on the CMS Web site 

at https://www.cms.gov/Medicare/ 

Quality-Initiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/ 

index.html no later than January 31, 

2012 (76 FR 47879). Further data 

submission details for the IRF QRP were 

posted on the CMS IRF QRP Web site on 

January 31, 2012, as promised. In 

addition, data submission details were 

disseminated to IRFs at various times 

from January 31, 2012 to December 31, 

2012, through an in-person training held 

on May 2, 2012, Open Door Forums, 

list-serve announcements, IRF QRP Web 

page postings and responses to IRF QRP 

Helpdesk inquiries. In these 

communications, we announced that 

the final data submission deadline for 

the IRF QRP would be May 15th for all 

measures finalized for the FY 2014 

annual increase factor and each 

subsequent years annual increase factor. 

We realize the value in providing 

clear submission deadlines for the IRF 

QRP and we believe that we should 

provide deadlines that clearly 

distinguish between data submitted 

using the NHSN and data submitted 

using the IRF–PAI. Further, it is 

important to have distinct deadlines at 

which point data submitted afterward, 

including data modifications and 

corrections, could not be used for 

reporting or IRF PPS annual increase 

factor determinations. For purposes of 

the FY 2016 and subsequent year IRF 

PPS annual increase factors, and for the 

purposes of applying quarterly 

deadlines for public reporting purposes, 

we proposed the inclusion of quarterly 

data submission deadlines in addition 

to the previously finalized deadlines. 

We believe that clear submission 

deadlines this will ensure timely 

submission of data. 

2. Quarterly Timelines for Submitting 

Data Using the IRF–PAI 

For the purposes of submitting quality 

data using the IRF–PAI for the IRF QRP, 

we have proposed new quarterly 

timeframes described below that we 

believe will provide sufficient time for 

IRFs to meet quality reporting 

requirements and allow us to harmonize 

IRF QRP data submission deadlines 

with the LTCHQR Program and Hospital 

IQR. Beginning with data collection and 

reporting impacting the FY 2016 annual 

increase factor, we proposed that IRFs 

follow the deadlines presented in the 

tables below to complete submission of 

data for each quarter. For each quarter 

outlined in the tables below during 

which IRFs are required to collect data, 

we proposed a final deadline occurring 

approximately 135 days (or 

approximately 4 and 1⁄2 months) after 

the end of each quarter by which all 

data collected during that quarter must 

be submitted. We believe that this is a 

reasonable amount of time to allow IRFs 

to submit data and make any necessary 

corrections. We have summarized these 

deadlines in the tables below. 

TABLE 13—TIMELINES FOR SUBMISSION OF IRF QRP PROGRAM QUALITY DATA USING IRF–PAI * FOR FY 2016 IRF PPS 

ANNUAL INCREASE FACTOR +: APPLICATION OF NQF #0678 PERCENT OF RESIDENTS OR PATIENTS WITH PRESSURE

ULCERS THAT ARE NEW OR WORSENED (SHORT-STAY) 

Quarter IRF–PAI Data collection period 

IRF–PAI Data submission 

deadline for corrections of the 

IRF QRP 

FY 2016 Annual Increase Factor 

Quarter 1 .................................... January 1, 2014–March 31, 2014 ..................................................................... August 15, 2014. 

Quarter 2 .................................... April 1, 2014–June 30, 2014 ............................................................................. November 15, 2014. 

Quarter 3 .................................... July 1, 2014–September 30, 2014 .................................................................... February 15, 2015. 

* Using October 1, 2012 release of IRF–PAI. 

+FY 2016 APU determination is based on 3 quarters of data submission for the pressure ulcer measure. 

TABLE 14—TIMELINES FOR SUBMISSION OF IRF QRP PROGRAM QUALITY DATA USING IRF–PAI * FOR FY 2017 IRF PPS 

ANNUAL INCREASE FACTOR: NQF #0678 PERCENT OF RESIDENTS OR PATIENTS WITH PRESSURE ULCERS THAT ARE

NEW OR WORSENED (SHORT-STAY), AND NQF #0680 PERCENT OF RESIDENTS OR PATIENTS WHO WERE ASSESSED

AND APPROPRIATELY GIVEN THE SEASONAL INFLUENZA VACCINE (SHORT-STAY) 

Quarter IRF–PAI Data collection period 

IRF–PAI Data submission 

deadline for corrections of the 

IRF QRP 

FY 2017 Annual Increase Factor 

Quarter 1 .................................... October 1, 2014–December 31, 2014 .............................................................. May 15, 2015. 


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TABLE 14—TIMELINES FOR SUBMISSION OF IRF QRP PROGRAM QUALITY DATA USING IRF–PAI * FOR FY 2017 IRF PPS 

ANNUAL INCREASE FACTOR: NQF #0678 PERCENT OF RESIDENTS OR PATIENTS WITH PRESSURE ULCERS THAT ARE

NEW OR WORSENED (SHORT-STAY), AND NQF #0680 PERCENT OF RESIDENTS OR PATIENTS WHO WERE ASSESSED

AND APPROPRIATELY GIVEN THE SEASONAL INFLUENZA VACCINE (SHORT-STAY)—Continued 

Quarter IRF–PAI Data collection period 

IRF–PAI Data submission 

deadline for corrections of the 

IRF QRP 

Quarter 2 .................................... January 1, 2015–March 31, 2015 ..................................................................... August 15, 2015. 

Quarter 3 .................................... April 1, 2015–June 30, 2015 ............................................................................. November 15, 2015. 

Quarter 4 .................................... July 1, 2015–September 30, 2015 .................................................................... February 15, 2016. 

* Using October 1, 2014 release of IRF–PAI. 

3. Quarterly Submission Timelines of 

Data Reported Using NHSN 

In the FY 2014 proposed rule (78 FR 

26909 through 26924), we proposed that 

the IRF QRP align its deadlines for 

submitting of quality data via the NHSN 

with the established deadlines set forth 

in the Hospital IQR and LTCHQR 

Programs. We noted that the CDC 

recommends that a facility report 

Healthcare Acquired Infection (HAI) 

events such as CAUTI as close to the 

time of the event as possible, and 

certainly within 30 days after the event. 

We agree with the CDC’s 

recommendations and therefore are 

requiring that IRFs report CAUTI events, 

even null events (months without 

CAUTIs) within 30 days (on a monthly 

level) after each event using the NHSN. 

We are finalizing our proposal to 

continue the calendar year basis of 

reporting CAUTI, using quarterly 

deadlines as established by the Hospital 

IQR program for all events that occur 

during each quarter. Final submission 

deadlines for data collected through the 

NHSN are shown in the tables below. 

TABLE 15—TIMELINES FOR SUBMISSION OF IRF QRP PROGRAM QUALITY DATA USING CDC/NSHN FOR FY 2016 AND

FY 2017 IRF PPS ANNUAL INCREASE FACTOR: NATIONAL HEALTH SAFETY NETWORK (NHSN) CATHETER-ASSOCIATED URINARY TRACT INFECTION (CAUTI) OUTCOME MEASURE

Quarter CDC/NHSN Data collection period CDC/NHSN Data submission 

deadline 

FY 2016 Annual Increase Factor 

Quarter 1 .................................... January 1, 2014–March 31, 2014 ..................................................................... August 15, 2014. 

Quarter 2 .................................... April 1, 2014–June 30, 2014 ............................................................................. November 15, 2014. 

Quarter 3 .................................... July 1, 2014–September 30, 2014 .................................................................... February 15, 2015. 

Quarter 4 .................................... October 1, 2014–December 31, 2014 .............................................................. May 15, 2015. 

FY 2017 Annual 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. 

Further, we proposed to apply to IRF 

QRP the same deadlines established for 

the reporting of the Influenza 

Vaccination Coverage Among Health 

Personnel (NQF #0431) measure in the 

Hospital IQR Program and proposed in 

the LTCH QRP. 

TABLE 16—TIMELINES FOR SUBMISSION OF IRF QRP PROGRAM QUALITY DATA USING CDC/NSHN FOR FY 2016 AND

FY 2017 IRF PPS ANNUAL INCREASE FACTOR: NQF #0431 INFLUENZA VACCINATION COVERAGE AMONG

HEALTHCARE PERSONNEL

Data collection timeframe CDC/NHSN Data 

submission deadline 

FY 2016 Annual Increase Factor 

October 1, 2014 (or when the influenza vaccine becomes available)–March 31, 2015 ............................................................ May 15, 2015. 

FY 2017 Annual Increase Factor 

October 1, 2015 (or when the influenza vaccine becomes available)–March 31, 2016 ............................................................ May 15, 2016. 

We invited public comment on the 

proposals made in the proposed rule 

regarding data submission quarterly and 

final deadlines for the purposes of 

reporting data using the IRF–PAI and for 

the purposes of reporting data using the 

NHSN. The following are comments 

received in response to these proposals 

and our response to these comments. 


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Comment: A few comments expressed 

support for our proposal to apply 

quarterly reporting deadlines to both the 

measures reported using the IRF–PAI on 

a fiscal year basis and to the measures 

reported to the CDC via NHSN on a 

calendar year basis. 

Response: We thank the commenters 

for their supportive comments on the 

IRF–PAI measure on a fiscal year basis. 

Final Decision: After careful 

consideration of the public comments 

we received, we are finalizing our 

proposal to apply quarterly deadlines to 

both the measures reported using the 

IRF–PAI on a fiscal year basis and to the 

measures reported to the CDC via NHSN 

on a calendar year basis. 

F. Reconsideration and Appeals Process 

In the proposed rule (78 FR 26909 

through 26921) we provided details 

pertaining to a reconsideration process, 

and the mechanisms related to provider 

requests for reconsideration of their 

annual increase factor, such as filing 

requests, required content, supporting 

documentation, and mechanisms of 

notification and final determinations on 

the IRF QRP Web site this spring at 

http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/ 

index.html. We also invited public 

comment on the proposed procedures 

for reconsideration and appeals. We 

received the following public comments 

related to our discussion of the 

reconsideration process in the proposed 

rule: 

Comment: Many commenters 

expressed support of CMS’ proposed 

IRF QRP reconsideration and appeals 

process. Further, one commenter 

encouraged CMS to mirror the processes 

used in the Hospital IQR Program and 

the Hospital Outpatient Quality 

Reporting (OQR) Program when 

developing reconsideration and appeals 

and for the IRF QRP. 

Response: We thank the commenters 

for their support for the inclusion of 

reconsideration and appeals processes 

in the IRF QRP. It is our goal to align 

our reconsideration and appeals process 

and policies with those of existing 

quality reporting programs, such as 

Hospital IQR Program and the Hospital 

Outpatient Quality Reporting Program, 

to the extent appropriate for the IRF 

QRP. We greatly appreciate the 

commenters’ views on the 

reconsideration process, and will 

consider all of these comments for 

future rulemaking and program 

development. 

Comment: One commenter expressed 

concern that CMS did not provide 

procedural details of the reconsideration 

process through rulemaking and 

encouraged CMS to ensure that 

sufficient outreach and education is 

conducted in a timely manner regarding 

these processes. 

Response: We thank the commenter 

for the comments. We established a Web 

site that provides procedural details for 

the FY 2014 IRF QRP reconsideration 

process. This information is available at 

http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/ 

Reconsideration-and-Disaster-WaiverRequests.html. We noted in the FY 2014 

proposed rule (78 FR 26909 through 

26921) that we developed this Web site 

as a resource to inform providers on 

how to seek reconsideration of any 

decision of non-compliance for the FY 

2014 annual increase factor, and the 

necessary steps to do so. We provided 

a process for reconsideration should 

IRFs choose to avail themselves of it. In 

the FY 2014 proposed rule (78 FR 26909 

through 26921), we stated that IRFs 

must first apply for reconsideration 

through CMS prior to appealing our 

initial finding of non-compliance to the 

PRRB. In light of a commenter’s concern 

that CMS did not provide procedural 

details of the reconsideration process 

through rulemaking and concern that 

CMS ensure that sufficient outreach and 

education are available, we have 

decided to continue with an IRF QRP 

reconsideration process that is 

voluntary for the time being in order to 

fully address these concerns. We are 

therefore only recommending that IRFs 

use the reconsideration process prior to 

appealing to the PRRB. We note that the 

agency has had good success under the 

Hospital IQR program with a process 

that is very similar to the one we 

proposed for the IRF QR. From the 

provider perspective, it allows for the 

opportunity to resolve issues early in 

the process when we have dedicated 

resources to considering all 

reconsideration requests before payment 

changes are applied to an IRF’s annual 

payment update. From CMS’ 

perspective, it decreases the number of 

appeals presented to the PRRB, which 

reviews cases for all quality reporting 

programs, allowing for more efficient 

operations at the appeals level. 

Because we have been aware that 

providers should be able to request a 

reconsideration of their annual increase 

factor if their circumstances warrant it 

as soon as possible, we provided details 

pertaining to the voluntary 

reconsideration process, and the 

mechanisms related to provider requests 

for reconsiderations of their annual 

increase factor, such as filing requests, 

required content, supporting 

documentation, and mechanisms of 

notification and final determinations on 

the IRF QRP Web site in spring 2013 

prior to any IRF’s need for information 

on the CMS reconsideration process for 

the FY 2014 annual increase factor and 

subsequent years annual increase factors 

at: http://www.cms.gov/Medicare/ 

Quality-Initiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting. 

CMS’ subregulatory approach to the FY 

2014 reconsideration process was 

necessary, as any other form of the 

reconsideration process that we might 

propose and finalize in this rule would 

not be final and in effect until October 

1, 2013. This would have the effect of 

proposing and finalizing a FY 2014 

process for reconsiderations that should 

already be completed. We note that we 

are finalizing the policy that this 

subregulatory approach to the 

reconsideration process will remain in 

effect until we can propose and finalize 

a regulatory version of the 

reconsideration process in future 

rulemaking. 

As part of the voluntary process, IRFs 

that are non-compliant with the 

reporting requirements during a given 

reporting cycle will be notified of that 

finding. The purpose of this notification 

is to put the IRF on notice of the 

following: (1) That the IRF has been 

identified as being non-compliant with 

the IRF QRP’s reporting requirements 

for the reporting cycle in question; (2) 

that the IRF will be scheduled to receive 

a reduction in the amount of two 

percentage points to the annual 

payment update for the upcoming fiscal 

year; (3) that the IRF may file a request 

for reconsideration if they believe that 

the finding of non-compliance is 

erroneous, or that if they were noncompliant, they have a valid and 

justifiable excuse for this noncompliance; and (4) that the IRF must 

follow a defined process on how to file 

a request for reconsideration, which will 

be described in the notification. 

Upon the conclusion of our review of 

each request for reconsideration, we 

will render a decision. We may reverse 

our initial finding of noncompliance if: 

(1) The IRF provides proof of full 

compliance with all requirements 

during the reporting period; or (2) the 

IRF provides adequate proof of a valid 

or justifiable excuse for non-compliance 

if the IRF was not able to comply with 

requirements during the reporting 

period. We will uphold our initial 

finding of noncompliance if the IRF 

cannot show any justification for 

noncompliance. 


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26http://www.gpo.gov/fdsys/pkg/CFR-2011- 

title42-vol2/pdf/CFR-2011-title42-vol2-sec412- 

614.pdf. 

G. Policy for Granting a Waiver of the 

IRF QRP Data Submission Requirements 

in Case of Disaster or Extraordinary 

Circumstances 

Our experience with other quality 

reporting programs has shown that there 

are times when providers are unable to 

submit quality data due to the 

occurrence of extraordinary 

circumstances beyond their control (for 

example, natural or man-made 

disasters). We define a ‘‘disaster’’ as any 

natural or man-made catastrophe which 

causes damages of sufficient severity 

and magnitude to partially or 

completely destroy or delay access to 

medical records and associated 

documentation. Natural disasters could 

include events such as hurricanes, 

tornadoes, earthquakes, volcanic 

eruptions, fires, mudslides, snowstorms, 

and tsunamis. Man-made disasters 

could include such events as terrorist 

attacks, bombings, floods caused by 

man-made actions, civil disorders, and 

explosions. A disaster may be 

widespread or impact multiple 

structures or be isolated and impact a 

single site only. 

In certain instances of either natural 

or man-made disasters, an IRF may have 

the ability to conduct a full patient 

assessment, and record and save the 

associated data either during or before 

the occurrence of an extraordinary 

event. In this case, the extraordinary 

event has not caused the facility’s data 

files to be destroyed, but it could hinder 

the IRF’s ability to meet the quality 

reporting program’s data submission 

deadlines. In this scenario, the IRF 

would potentially have the ability to 

report the data at a later date, after the 

emergency circumstances have 

subsided. In such cases, a temporary 

waiver of the IRF duty to report quality 

measure data may be appropriate. 

In other circumstances of natural or 

man-made disaster, an IRF may not have 

had the ability to conduct a full patient 

assessment, and record and save the 

associated data before the occurrence of 

an extraordinary event. In such a 

scenario, the facility does not have data 

to submit to CMS as a result of the 

extraordinary event. We believe that it 

is appropriate, in these situations, to 

grant a full waiver of the reporting 

requirements. 

It is our goal not to penalize IRF 

providers in these circumstances or to 

unduly increase their burden during 

these times. Therefore, we proposed a 

process, for payment year 2015 and 

subsequent years, for IRF providers to 

request and for us to grant waivers with 

respect to the reporting of quality data 

when there are extraordinary 

circumstances beyond the control of the 

provider. When a waiver is granted, an 

IRF will not incur payment reduction 

penalties for failure to comply with the 

requirements of the IRF QRP. 

In the FY 2014 proposed rule (78 FR 

26909 through 26921), we proposed to 

establish a disaster waiver process, in 

which IRFs that have experienced a 

disaster can request a waiver of their 

quality reporting responsibilities for 

purposes of payment year 2015 and 

subsequent payment years. We 

proposed that the IRF may request a 

waiver for one or more quarters by 

submitting a written request to CMS. We 

also proposed that should IRFs compose 

a letter to CMS that documents the 

waiver request, with the information 

described below, and submit the letter 

to CMS via email to the IRF Help Desk 

at IRFQRPReconsiderations@

cms.hhs.gov. IRFs that have filed a 

request for an IRF QRP disaster waiver 

with an IRF–PAI waiver request using 

the procedure that is described under 

our regulations at 42 CFR § 412.614 can 

indicate this in their letter to CMS for 

their request for a waiver for quality 

reporting purposes.26

Note that the subject of the email 

must read ‘‘Disaster Waiver Request’’ 

and the letter must contain the 

following information: 

• IRF CCN; 

• IRF name; 

• CEO or CEO-designated personnel 

contact information including name, 

telephone number, email address, and 

mailing address (the address must be a 

physical address, not a post office box); 

• IRF’s reason for requesting a waiver; 

• Evidence of the impact of 

extraordinary circumstances, including 

but not limited to photographs, 

newspaper and other media articles; and 

• A date when the IRF believes that 

it will again be able to submit IRF QRP 

data and a justification for the proposed 

date. 

We proposed that the letter 

documenting the disaster waiver request 

be signed by the IRF’s CEO, and must 

be submitted within 30 days of the date 

that the extraordinary circumstances 

occurred. Following receipt of the letter, 

we would: (1) Provide a written 

acknowledgement, using the contact 

information provided in the letter, to the 

CEO or designated contact person, 

notifying them that the request has been 

received, and (2) after CMS has made a 

decision as to whether to grant the 

waiver request, provide a formal 

response to the CEO, or designated 

contact person notifying them of our 

decision. 

This policy does not preclude us from 

granting waivers to IRFs that have not 

requested them when we determine that 

an extraordinary circumstance, such as 

an act of nature, affects an entire region 

or locale. If we make the determination 

to grant a waiver to IRFs in a region or 

locale, we propose to communicate this 

decision through routine 

communication channels to IRFs and 

vendors, including but not limited to 

issuing memos, emails, and notices on 

https://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/

index.html. 

In the proposed rule, we invited 

public comment on our proposed 

disaster waiver process. A summary of 

the public comments received and our 

responses to comments are discussed 

below. 

Comment: Several commenters stated 

that they support the IRF QRP disaster 

waiver policy and ‘‘applaud the agency 

for recognizing the impact of natural 

disasters and other extenuating 

circumstances on the ability of IRFs to 

collect and report quality data.’’ 

Response: We appreciate the 

commenters’ support and recognition of 

our efforts to plan for various types of 

emergency situations that can impact an 

IRF’s ability to report quality data. 

Final Decision: After careful 

consideration of the public comments 

received, we are finalizing the IRF QRP 

disaster/extraordinary circumstances 

waiver and appeals processes as 

proposed. 

H. Public Display of Data Quality 

Measures for the IRF QRP Program 

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 procedures to ensure that 

each IRF provider has the opportunity 

to review the data that is to be made 

public with respect to its facility, prior 

to such data being made public. Section 

1886(j)(7)(E) of the Act requires CMS to 

report quality measures that relate to 

services furnished in IRFs on CMS’ Web 

site. 

Currently, the Agency is developing 

plans regarding the implementation of 

these provisions. We appreciate the 

need for transparency in 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 


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established procedures or timelines for 

public reporting of data, but we intend 

to include related proposals in future 

rule making. 

Comment: Several commenters urged 

CMS to convene stakeholders to inform 

this process prior to rulemaking. One 

commenter strongly encouraged CMS to 

display the most current performance 

data for public reporting of IRF QRP 

data. 

Response: We appreciate the 

commenters for their feedback. We 

appreciate the need to ensure that the 

data made publicly available is easily 

understood by all stakeholders, 

including providers and consumers. At 

this time, we are working to establish 

procedures for public reporting, 

including procedures that provide the 

opportunity for IRFs to review their data 

before it is made public, and will 

propose such procedures through future 

rulemaking after allowing stakeholders 

the opportunity to submit input. 

We thank the commenters for the 

input and suggestions, and we will 

consider them as we develop proposals 

for public reporting of quality measures 

in future rulemaking. 

I. Method for Applying the Reduction to 

the FY 2014 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 

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. FY 2014 is to 

be the first year that the mandated 

reduction will be applied for IRFs that 

failed to comply with the data 

submission requirements during the 

data collection period October 1, 2012 

through December 31, 2012. Thus, in 

compliance with 1886(j)(7)(A)(i) of the 

Act, we will apply a 2 percentage point 

reduction to the applicable FY 2014 

market basket increase factor (1.8 

percent) in calculating an adjusted FY 

2014 standard payment conversion 

factor to apply to payments for only 

those IRFs that failed to comply with 

the data submission requirements. As 

noted previously, 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, 

reporting-based reductions to the market 

basket increase factor will not be 

cumulative; they will only apply for the 

FY involved. Table 17 shows the 

calculation of the adjusted FY 2014 

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 October 1, 2012 

through December 31, 2012. 

TABLE 17—CALCULATIONS TO DETERMINE THE ADJUSTED FY 2014 STANDARD PAYMENT CONVERSION FACTOR FOR

IRFS THAT FAILED TO MEET THE QUALITY REPORTING REQUIREMENT

Explanation for Adjustment Calculations 

Standard Payment Conversion Factor for FY 2013 ........................................................................................................................ $14,343 

Adjusted Market Basket Increase Factor for FY 2014 (2.6 percent), reduced by 0.3 percentage point in accordance with sections 1886(j)(3)(C) and (D) of the Act and a 0.5 percentage point reduction for the productivity adjustment as required by 

section 1886(j)(3)(C)(ii)(I) of the Act, further reduced by 2 percentage points for IRFs that failed to meet the quality reporting requirement ............................................................................................................................................................................ × 0.99800 

Budget Neutrality Factor for the Wage Index and Labor-Related Share ........................................................................................ × 1.0010 

Budget Neutrality Factor for the Revisions to the CMG Relative Weights ..................................................................................... × 1.0000 

Budget Neutrality Factor for the Update to the Rural Adjustment Factor ....................................................................................... × 1.0025 

Budget Neutrality Factor for the Update to the LIP Adjustment Factor .......................................................................................... × 1.0171 

Budget Neutrality Factor for the Update to the Teaching Status Adjustment Factor ..................................................................... × 0.9962 

Adjusted FY 2014 Standard Payment Conversion Factor .............................................................................................................. = $14,555 

XV. Miscellaneous Comments 

Comment: Several commenters 

requested that CMS use the most recent 

three years of data and the first year of 

data collected under ICD–10 to review 

and update the list of comorbidities 

used to determine the tier payments to 

ensure that the tier list reflects all 

conditions that contribute significantly 

to IRF costs of care. One commenter also 

suggested that CMS re-examine the 

omission from this list of certain 

comorbidities that are considered 

preventable and might lead to perverse 

incentives for the IRF to undertreat 

these conditions. 

Response: We appreciate the 

commenters’ suggestions, and will 

consider these suggestions for future 

analyses. 

Comment: One commenter suggested 

that CMS revise the IRF coverage 

requirements that are described in 

chapter 1, section 110 of the Medicare 

Benefit Policy Manual (Pub. L. 100–02) 

to allow recreational therapy services to 

count, on a limited basis, towards the 

intensive rehabilitation therapy 

requirement in IRFs when the medical 

necessity is well-documented by the 

rehabilitation physician in the medical 

record and is ordered by the 

rehabilitation physician as part of the 

overall plan of care for the patient. 

Response: As we did not propose any 

changes to the IRF coverage 

requirements in § 412.622(a)(3), (4), and 

(5) that would affect any of the 

requirements described in chapter 1, 

section 110 of the Medicare Benefit 

Policy Manual (Pub. L. 100–02), this 

comment is outside the scope of the 

proposed rule. However, as we have 

indicated previously in the FY 2012 IRF 

PPS final rule (76 FR 47836 at 47883), 

we do not believe that recreational 

therapy services should replace the 

provision of the 4 core skilled therapy 

services (physical therapy, occupational 

therapy, speech-language therapy, and 

prosthetics/orthotics). Thus, we believe 

it should be left to each individual IRF 

to determine whether offering 

recreational therapy is the best way to 

achieve the desired patient care 

outcomes. As we have stated previously, 

recreational therapy is a covered service 

in IRFs when the medical necessity is 

well-documented by the rehabilitation 

physician in the medical record and is 

ordered by the rehabilitation physician 

as part of the overall plan of care for the 

patient. Recreational therapy may be 

offered as an additional service above 

and beyond the core skilled therapy 

services used to demonstrate the 

provision of an intensive rehabilitation 

therapy program, but may not replace 

one of these therapies. 

Comment: One commenter requested 

that we consider a new model of 

payment for post-acute care services, 

such as the Continuing Care Hospital 

(CCH) model, that would pay based on 

the needs of the patient rather than the 

setting in which the care is provided. 


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This commenter urged us to pilot test 

the CCH idea. 

Response: As we did not propose any 

new payment models for post-acute care 

services in the FY 2014 IRF PPS 

proposed rule (78 FR 26880), this 

comment is outside the scope of this 

rule. However, we appreciate the 

commenter’s suggestions, and we note 

that on May 15, 2013, CMS announced 

a second round of Health Care 

Innovation Awards. Under this 

announcement, we will spend up to $1 

billion for awards and evaluation of 

projects from across the country that test 

new payment and service delivery 

models that will deliver better care and 

lower costs for Medicare, Medicaid, and 

Children’s Health Insurance Program 

(CHIP) enrollees. In addition, we 

commenced the Bundled Payments for 

Care Improvement Initiative, whereby 

organizations will enter into payment 

arrangements that include financial and 

performance accountability for episodes 

of care. These models may lead to 

higher quality, more coordinated care at 

a lower cost to Medicare. In one of the 

model designs being tested (referred to 

as ‘‘Model 3’’ at http:// 

innovation.cms.gov/initiatives/BPCIModel-3), the episode of care will be 

triggered by an acute care hospital stay 

and will begin at initiation of post-acute 

care services with a participating skilled 

nursing facility, inpatient rehabilitation 

facility, long-term care hospital or home 

health agency. 

Comment: Several commenters 

requested that we use the electronic 

signature guidelines provided in the 

Medicare Program Integrity Manual to 

allow the use of electronic signatures for 

all required documentation, including 

for the rehabilitation physician’s review 

and concurrence with the preadmission 

screening requirements under the IRF 

coverage requirements in 

412.622(a)(3)(i). 

Response: As we did not propose any 

changes to the regulations in 

§ 412.622(a)(3)(i) in the May 8, 2013 

proposed rule (78 FR 26880), this 

comment in outside the scope of this 

final rule. However, we have provided 

specific guidance on the use of 

electronic signatures for documentation 

of the rehabilitation physician’s review 

and concurrence with the IRF 

preadmission screening requirements, 

which can be downloaded from the IRF 

PPS Web site at http://www.cms.gov/ 

Medicare/Medicare-Fee-for-ServicePayment/InpatientRehabFacPPS/ 

Downloads/ElecSysClar.pdf. 

XVI. Provisions of the Final Regulations 

In this final rule, we are adopting the 

provisions set forth in the FY 2014 IRF 

PPS proposed rule (78 FR 26880), 

except as noted elsewhere in the 

preamble. Specifically: 

A. Payment Provision Changes 

• We will update the FY 2014 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 IV of this final 

rule. 

• We will update the FY 2014 IRF 

PPS facility-level adjustment factors, 

using the most current and complete 

Medicare claims and cost report data 

with an enhanced estimation 

methodology, in a budget-neutral 

manner, as discussed in section V of 

this final rule. 

• We will update the FY 2014 IRF 

PPS payment rates by the market basket 

increase factor, based upon the most 

current data available, with a 0.3 

percentage point reduction as required 

by sections 1886(j)(3)(C)(ii)(II) and 

1886(j)(3)(D)(iii) of the Act and a 

productivity adjustment required by 

section 1886(j)(3)(C)(ii)(I) of the Act, as 

described in section VI of this final rule. 

• We will indicate the Secretary’s 

Final Recommendation for updating IRF 

PPS payments for FY 2014, in 

accordance with the statutory 

requirements, as described in section VI 

of this final rule. 

• We will update the FY 2014 IRF 

PPS payment rates by the FY 2014 wage 

index and the labor-related share in a 

budget-neutral manner, as discussed in 

section VI of this final rule. 

• We will calculate the final IRF 

Standard Payment Conversion Factor for 

FY 2014, as discussed in section VI of 

this final rule. 

• We will update the outlier 

threshold amount for FY 2014, as 

discussed in section VII of this final 

rule. 

• We will update the cost-to-charge 

ratio (CCR) ceiling and urban/rural 

average CCRs for FY 2014, as discussed 

in section VII of this final rule. 

• We will adopt revisions to the list 

of eligible ICD–9–CM diagnosis codes 

that meet the presumptive compliance 

criteria, with a one-year delayed 

implementation date, as discussed in 

section VIII of this final rule. 

• We will adopt non-quality-related 

revisions to IRF–PAI sections effective 

October 1, 2014, as discussed in section 

IX of this final rule. 

• We will adopt 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, effective October 1, 2014, as 

discussed in section XIV of this final 

rule. 

B. Revisions to Existing Regulation Text 

In this final rule, we will make the 

following revisions to the existing 

regulations: 

• We will revise § 412.25(a)(1)(iii) to 

specify a minimum required number of 

beds that are not excluded from the 

inpatient prospective payment system 

(IPPS) for a hospital that has an IRF 

unit, with a one-year delayed 

implementation date to give providers 

an opportunity to comply with the 

requirements, as described in section XI 

of this final rule. 

• We will make technical corrections 

to § 412.130, to reflect prior changes to 

the regulations at § 412.29 and § 412.30 

that we made in the FY 2012 IRF PPS 

final rule (76 FR 47836), as described in 

section X of this final rule. 

• We will make clarifications to 

§ 412.630, to reflect the scope of section 

1886(j)(8) of the Act, as described in 

section XII of this final rule. 

• We will revise § 412.29(d), to clarify 

that Medicare requires the rehabilitation 

physician’s review and concurrence on 

the preadmission screening for 

Medicare Part A Fee-for-Service patients 

only, as described in section XIII of this 

final rule. 

XVII. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

of 1995, we are required to provide 30- 

day 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 

affected public, including automated 

collection techniques. 

This final rule does not impose any 

new information collection 

requirements as outlined in the 

regulation text. However, this final rule 

does make reference to associated 

information collections that are not 

discussed in the regulation text 

contained in this document. The 


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27According to the U.S. Bureau of Labor 

Statistics, the mean hourly wage for a Medical 

Records & Health Information Technician is $15.55. 

See: http://www.bls.gov/ooh/healthcare/medicalrecords-and-health-information-technicians.htm. 

28 15 minutes Administrative staff time to collect 

and report staff influenza measure @ $15.55 per 

hour = $3.9889 per IRF per year. 

29At the time of the writing of this rule, there 

were 1161 IRFs reporting quality data to CMS. 

($3.9889 per IRF per year × 1161 IRFs in U.S. = 

$4,621516). 

30MedPAC, A Data Book: Health Care Spending 

and the Medicare Program (June 2012), http:// 

www.medpac.gov/chapters/ 

Jun12DataBookSec8.pdf. 

31 359,000 IRF–PAIs per all IRFs per year/1161 

IRFs in U.S. = 309 IRF–PAIs per each IRF per year. 

309 IRF–PAI reports per IRF per year/12 months 

per year = 26 IRF–PAI reports per each IRF per year. 

32According to the U.S. Bureau of Labor 

Statistics, the mean hourly wage for a Registered 

Nurse is $33.23. (See http://www.bls.gov/oes/2011/ 

may/oes291111.htm). 

33 25 minutes × 309 IRF–PAI assessments per 

each IRF per year = 7,725 minutes per each IRF per 

year. 

7,725 minutes per each IRF per year/60 minutes 

per hour = 128.75 hours per each IRF per year. 

128.75 hours per year × $33.23 per hour = 

$4,278.36 nursing wages per each IRF per year. 

34 $4,278.36 × 1161 IRF providers = $4,967,176 

per all IRFs per year. 

following is a discussion of these 

information collections, some of which 

have already received OMB approval. 

A. ICRs Regarding IRF QRP 

As stated in section XIV. of this final 

rule, we are adopting one new measure 

for use in the IRF QRP which will affect 

the increase factor for FY 2016. This 

quality measure is: Influenza 

Vaccination Coverage among Healthcare 

Personnel (NQF #0431). We are also 

adopting 2 new measures that will affect 

the increase factor for FY 2017. The first 

is an All-Cause Unplanned Readmission 

Measure for 30 Days Post Discharge 

from Inpatient Rehabilitation Facilities. 

This measure is a claims-based measure 

that does not require submission of data 

by IRF providers. In addition, we are 

adopting the Percent of Residents or 

Patients Who Were Assessed and 

Appropriately Given the Seasonal 

Influenza Vaccine (Short-Stay) (NQF 

#0680) measure. Finally, we are 

replacing a non-risk adjusted 

application of an NQF-endorsed 

pressure ulcer measure, in which only 

numerator and denominator data is 

collected, to use the NQF-endorsed 

version of this measure ‘‘Percent of 

Residents or Patients with Pressure 

Ulcers That Are New or Worsened 

(Short-Stay)’’ (NQF #0678), which is a 

risk-adjusted measure. Each of these 

measures will be collected in the 

manner described below: 

1. Influenza Vaccination Coverage 

Among Healthcare Personnel (NQF 

#0431) 

In section XIV. of this final rule, we 

are adopting the new measure, Influenza 

Vaccination Coverage among Healthcare 

Personnel (NQF #0431) to the IRF QRP. 

IRFs will be required to collect data 

related to the number of healthcare 

personnel working at a facility who 

have been vaccinated against the 

influenza virus during a given influenza 

vaccination season. The CDC has 

determined that the influenza 

vaccination season begins on October 

1st (or when the vaccine becomes 

available) and ends on the following 

March 31st each year. This measure 

requires that the provider submit only 

one report to NHSN by the data 

submission deadline of May 15 

following the close of the data collection 

period each year. 

It has become a common practice for 

healthcare facilities, including IRFs, to 

promote vaccination of employees for 

the influenza virus and to keep records 

of which of their staff members received 

this vaccination each year. Therefore, 

we do not believe that IRFs will incur 

any additional burden related to the 

collection of the data for this measure. 

We anticipate that it will take 

approximately 15 minutes to prepare 

and transmit the required data for this 

measure to the CDC each year. The 

reporting of the data for this measure 

can be done while the provider is logged 

onto NHSN for the purpose of entering 

their CAUTI measure data. We believe 

that this task can be completed by an 

administrative person such as a Medical 

Secretary/Medical Data Entry Clerk. The 

average hourly wage for Medical 

Records or Health Information 

Technicians is $15.55.27 We estimate 

that the annual cost to each IRF for the 

reporting of the staff influenza measure 

will be $3.89.28 The annual cost across 

the 1161 IRFs in the U.S. that are 

reporting data to CMS is estimated to be 

$4,516.29

2. All-Cause Unplanned Readmission 

Measure for 30 Days Post Discharge 

from Inpatient Rehabilitation Facilities 

As stated in section XIV. of this final 

rule, data for this measure will be 

collected from Medicare claims and 

therefore will not add any additional 

reporting burden for IRFs. 

3. Percent of Residents or Patients with 

Pressure Ulcers that are New or Have 

Worsened (Short-Stay) (NQF #0678) 

In section XIV of this final rule, we 

are adopting the NQF-endorsed version 

of the measure titled ‘‘Percent of 

Residents or Patients with Pressure 

Ulcers That Are New or Worsened 

(Short-Stay)’’ (NQF #0678), affecting the 

FY 2017 annual increase factor. To 

support the standardized collection and 

calculation of this quality measure, we 

are modifying the current Inpatient 

Rehabilitation Facility-Patient 

Assessment Instrument (IRF–PAI) by 

replacing the current pressure ulcer 

items with data elements similar or 

identical to those collected through the 

Minimum Data Set 3.0 (MDS 3.0) used 

in nursing homes. By building upon 

preexisting resources, we intend to 

reduce administrative burden related to 

data collection and submission. We 

anticipate that the initial setup and 

acclimation to pressure ulcer data 

collection will have already occurred 

with the adoption of the pressure ulcer 

measure for the IRF QRP for the FY 

2014 annual increase factor. Therefore, 

we believe the transition to reporting 

similar as well as additional data 

elements for this measure will be less 

burdensome. 

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 expect that during 

these time periods, the RN would be 

engaged in the collection of data for the 

purpose of the IRF QRP and would not 

be engaged in the performance of 

routine patient care. 

We estimate that there are 359,000 

IRF–PAI submissions per year 30 and 

that there are 1161 IRFs in the U.S. 

reporting quality data to CMS. Based on 

these figures, we estimate that each IRF 

will submit approximately 309 IRF– 

PAIs per year or 26 IRF–PAIs per 

month.31 Assuming that each IRF–PAI 

submission requires 25 minutes of time 

by an RN at an average hourly wage of 

$33.23,32 the yearly cost to each IRF 

would be $4,278.36 33 and the 

annualized cost across all IRFs would be 

$4,967,176.34

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 

into their electronic health record (EHR) 

system and/or the CMS JIRVEN 

program. We estimate that this data 

entry task will take no more than 3 

minutes for each IRF–PAI record or 

15.45 hours for each IRF annually or 


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35 359,000 IRF–PAI reports per all IRFs per year/ 

1161 IRFs in U.S. = 309 IRF–PAI reports per each 

IRF per year. 

17,937 hours across all IRFs. As noted 

above, the average hourly wage for a 

Medical Records & Health Information 

Technician is $15.55. As we noted 

above, there are approximately 359,000 

IRF–PAI submissions per year and 1161 

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 record is $278,930. We further 

estimate the average yearly cost to each 

individual IRF to be $240.25. 

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 144.20 hours 

for each individual IRF and 167,416 

hours across all IRFs. The total 

estimated annualized cost for collection 

and submission of pressure ulcer data is 

$4,518.61 for each IRF and $5,246,106 

across all IRFs. We estimate the cost for 

each pressure ulcer submission to be 

$14.61. 

4. Percent of Residents or Patients Who 

Were Assessed and Appropriately Given 

the Seasonal Influenza Vaccine (ShortStay) (NQF #0680) 

In section XIV. of this final rule, we 

are adding the measure, Percent of 

Residents or Patients Who Were 

Assessed and Appropriately Given the 

Seasonal Influenza Vaccine (Short-Stay) 

(NQF #0680) to the IRF QRP. We further 

are adding a new set of standardized 

data elements now used in the MDS 3.0 

to the IRF–PAI to collect the data 

required for this measure. 

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. By building upon preexisting 

resources, we intend to reduce 

administrative burden related to data 

collection and submission. We 

anticipate that the initial setup and 

acclimation to data collection through 

the IRF–PAI for purposes of reporting 

IRF quality measure data will have 

already occurred with the adoption of 

the Pressure Ulcer measure for the IRF 

QRP for the FY 2014 increase factor. 

Therefore, we believe the transition to 

reporting an additional measure via the 

IRF–PAI may be less burdensome. 

We estimate that completion of the 

patient influenza measure item set will 

take approximately 5 minutes to 

complete. The patient influenza item set 

consists of three items (questions). Each 

item is straightforward and does not 

require physical assessment for 

completion. We estimate that it will take 

approximately 0.7 minutes to complete 

each item, or 2.1 minutes to complete 

the entire item set. 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 1.6 minutes 

per item or a total of 5 minutes to 

complete the item set. 

The IRF staff will be required to 

perform a full influenza assessment only 

during the influenza vaccination season. 

The CDC defines that influenza 

vaccination season as the time period 

from October 1st (or when the vaccine 

becomes available) through March 31 

each year. From April 1st through 

September 30th, IRFs are not required to 

perform full influenza screening and 

may skip to the next item set after 

checking the selection which indicates 

that the patient’s IRF stay occurred 

outside of the influenza vaccination 

season. Our time estimate reflects the 

averaged amount of time necessary to 

complete the influenza item set both 

during and outside the influenza 

vaccination season. 

We anticipate that the patient 

influenza item set will be completed by 

a clinician such an RN, while 

completing the Quality Indicator section 

of the IRF–PAI. It is most appropriate 

for an RN to complete the influenza 

item set because it involves performing 

a skilled assessment to determine, from 

a patient’s records, whether the patient 

has received a vaccination and, if not, 

to discuss with the patient any 

medications or other related topics such 

as medication allergies, other 

vaccinations that the patient may have 

had, and any contraindications that 

might exist for receiving the influenza 

vaccination. The nurse has knowledge 

and experience to determine the 

relevance of this information to the 

patient influenza items and also to 

determine if the patient should be given 

the influenza vaccination. 

As noted above, we estimate that it 

will take approximately 5 minutes to 

complete the patient influenza measure 

item set. We have also noted above that 

there are approximately 359,000 IRF– 

PAIs completed annually across all 1161 

IRFs that report IRF quality data to 

CMS. This breaks down to 

approximately 309 IRF–PAIs completed 

by each IRF yearly.35 We estimate that 

the annual time burden for reporting the 

patient influenza vaccination measure 

data is 29,896 hours across all IRFs in 

the U.S. and 26 hours for each 

individual IRF. According to the U.S. 

Bureau of Labor, the hourly wage for a 

Registered Nurse is $33.23. 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 $993,433. We further estimate the 

cost for each individual IRF to be 

$855.67. A summary of the public 

comments received on our burden 

estimate for this measure and our 

responses to those comments are 

discussed below. 

Comment: The additional burden of 

data collection (that is, seeking 

information directly from the patient or 

by searching through the paper medical 

record) must not take away from limited 

resources in these facilities which are 

needed to provide direct care. 

Response: We agree that there will be 

some additional burden added because 

IRFs will be required to check to see if 

the patient received the influenza 

vaccination prior to admission to the 

IRF. However, we believe that the 

burden will be minimal. 

Most patients are transferred to IRFs 

from an acute care facility. If the patient 

received the influenza vaccination 

while in the acute care facility, there 

should be several places where the 

information about the administration of 

this vaccination can be quickly and 

easily located. The influenza 

vaccination is a medication, so the 

Medication Administration Record 

would be one place that this 

information could be located. Also, if 

this vaccination was ordered by a 

physician or the acute care facility had 

standing orders for the administration of 

the vaccination, then the Physicians 

Order section of the chart is another 

place that is likely to contain the 

influenza vaccination information. 

Comment: One commenter suggested 

that CMS’ estimates on the burden 

caused by the implementation of the 

two vaccination measures (Influenza 

Vaccination Coverage among Healthcare 

Personnel (NQF #0431) and Percent of 

Residents or Patients Who Were 

Assessed and Appropriately Given the 

Seasonal Influenza Vaccine (Short-Stay) 

(NQF#0680) are inaccurate because they 

do not encompass changes that must be 

made to its billing software, electronic 

medical records, or administrative 

processes. 

Response: When making a burden 

estimate, we estimate only those 

activities and costs that are common to 

a majority of providers and which can 

be fairly and accurately estimated across 

all IRFs. Unfortunately, costs related to 

changes to billing and electronic 

medical record software, or 


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administrative processes are costs that 

are so variable among different IRFs we 

are not able to make an accurate 

estimate of these costs that can be 

applied across all providers. 

Costs for updates to electronic 

medical records are extremely variable 

and will depend on many factors such 

as the manufacturer of the electronic 

medical records software; whether there 

is a warranty that covers updates; 

whether the IRF has a service contract 

which covers updates; who the IRF 

hires to perform upgrades to its system; 

where the IRF is geographically located; 

or whether the cost is incurred by a 

large corporation that owns many IRFs 

or the IRF is a solely owned and 

operated facility. In regard to costs for 

changes to administrative processes, 

these costs are also difficult to define or 

quantify as they are equally variable, if 

not more so than costs related to 

changes to electronic record systems. 

Even though it was not reflected in 

the burden estimate, CMS does 

recognize that many IRFs will incur 

costs for changes that will be required 

to billing software, electronic medical 

records, or administrative processes. 

Some of these changes are required as 

a result of the IRF QRP proposals that 

we are finalizing in this final rule. 

However, we believe that some of these 

costs are also attributable to non-quality 

related proposals that are being 

finalized in this rule. 

B. ICRs Regarding Non-Quality Related 

Changes to the IRF–PAI 

We will revise several items on the 

IRF–PAI to provide greater clarity for 

providers. The changes include 

updating several items regarding the 

response options available to providers. 

Additionally, we are removing several 

items that we believe are unnecessary 

for providers to continue documenting 

on the IRF–PAI since those items are 

already being documented in the 

patients’ medical record. We are also 

adding several items, such as a signature 

page, to fulfill providers’ request to have 

an organized way to document who has 

assessed the patient and when that 

assessment took place. We do not 

estimate any additional burden for IRFs 

to complete the IRF–PAI as a result of 

these changes. We estimate the time that 

will be needed to complete the new 

non-quality related proposed items, 

equals the time that was needed to 

complete the previous non-quality 

related items. When the original burden 

estimates were completed for the IRF– 

PAI, we estimated that the proposed 

deletion of the non-quality related items 

would take approximately 3 minutes to 

complete. Thus, removing these items 

the IRF–PAI would decrease the total 

estimated burden of completing the 

non-quality related portions of the IRF– 

PAI by 3 minutes. However, we estimate 

that it will take about 3 minutes to 

complete the new non-quality related 

items that we are proposing to add. 

Therefore, we estimate no net change in 

the amount of time associated with 

completing the non-quality related 

portions of the IRF–PAI and that the 

burden for completing these portions of 

the IRF–PAI will not change. 

We did not receive any comments 

specifically on the information 

collection requirements regarding the 

non-quality related changes to the IRF– 

PAI. 

We will be submitting a revision to 

the current IRF–PAI collection of 

information approval under (OMB 

control number 0938–0842) for OMB 

review and approval. 

If you comment on these information 

collection and recordkeeping 

requirements, please do either of the 

following: 

1. Submit your comments 

electronically as specified in the 

ADDRESSES section of the proposed rule; 

or 

2. Submit your comments to the 

Office of Information and Regulatory 

Affairs, Office of Management and 

Budget, Attention: CMS Desk Officer, 

CMS–1448–P, Fax: (202) 395–6974; or, 

Email: OIRA_submission@omb.eop.gov. 

XVIII. Regulatory Impact Analysis 

A. Statement of Need 

This final rule updates the IRF 

prospective payment rates for FY 2014 

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 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 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 through 

2019. 

This rule also adopts some policy 

changes within the statutory discretion 

afforded to the Secretary under section 

1886(j) of the Act. We will revise the list 

of diagnosis codes that are eligible 

under the presumptive compliance 

method of calculating an IRF’s 

compliance percentage under the ‘‘60 

percent rule’’ effective for compliance 

review periods beginning on or after 

October 1, 2014 (a one-year delay), 

update the IRF facility-level adjustment 

factors, revise sections of the Inpatient 

Rehabilitation Facility-Patient 

Assessment Instrument, revise 

requirements for acute care hospitals 

that have IRF units beginning on or after 

October 1, 2014 (a one-year delay), 

clarify the IRF regulation text regarding 

limitation of review, and revise and 

update quality measures under the IRF 

quality reporting program. We believe 

that the policy changes will enhance the 

clarity, accuracy, and fairness of the IRF 

PPS. 

B. Overall Impacts 

We have examined the impacts of this 

final 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 final rule with 

economically significant effects ($100 

million or more in any one year). We 

estimate the total impact of the policy 

updates described in this final rule by 

comparing the estimated payments in 

FY 2014 with those in FY 2013. This 

analysis results in an estimated $170 

million increase for FY 2014 IRF PPS 

payments. As a result, this final 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. 


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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 $34.5 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 

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 18, we estimate that the net 

revenue impact of this final rule on all 

IRFs is to increase estimated payments 

by approximately 2.3 percent. However, 

we find that certain categories of IRF 

providers would be expected to 

experience revenue impacts in the 3 to 

5 percent range. We estimate a 5.0 

percent overall impact for teaching IRFs 

with resident to average daily census 

ratios of 10 to 19 percent, a 10.1 percent 

overall impact for teaching IRFs with a 

resident to average daily census ratio 

greater than 19 percent, and a 4.1 

percent overall impact for IRFs with a 

DSH patient percentage of 0 percent. As 

a result, we anticipate this final rule 

adoptes a net positive impact on a 

substantial number of small entities. 

Medicare fiscal intermediaries, 

Medicare Administrative Contractors, 

and carriers 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 final rule will not have a 

significant impact (not greater than 3 

percent) on rural hospitals based on the 

data of the 167 rural units and 18 rural 

hospitals in our database of 1,134 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 one year of 

$100 million in 1995 dollars, updated 

annually for inflation. In 2013, that 

threshold level is approximately $141 

million. This final 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 final 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 final rule sets forth policy 

changes and updates to the IRF PPS 

rates contained in the FY 2013 notice 

(77 FR 44618). Specifically, this final 

rule updates the CMG relative weights 

and average length of stay values, the 

facility-level adjustment factors, the 

wage index, and the outlier threshold 

for high-cost cases. This final rule also 

applies a MFP adjustment to the FY 

2014 RPL market basket increase factor 

in accordance with section 

1886(j)(3)(C)(ii)(I) of the Act, and a 0.3 

percentage point reduction to the FY 

2014 RPL market basket increase factor 

in accordance with sections 

1886(j)(3)(C)(ii)(II) and (D)(iii) of the 

Act. Further, this final rule contains 

changes to the list of ICD–9–CM codes 

that are used in the 60 percent rule 

presumptive methodology. Since these 

changes are being made with a one-year 

delayed implementation date, for 

compliance review periods beginning 

on or after October 1, 2014, no financial 

impacts will accrue until FY 2015 from 

these changes. In addition, section XIV 

of this rule discusses the first 

implementation (in FY 2014) 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 

changes and updates described in this 

final rule will be a net estimated 

increase of $170 million in payments to 

IRF providers. This estimate does not 

include the estimated impacts of the 

changes to the list of ICD–9–CM codes 

that are used in the 60 percent rule 

presumptive compliance (as discussed 

below), which are effective for 

compliance review periods on or after 

October 1, 2014, or the estimated 

impacts of the implementation (in FY 

2014) 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 below). The impact analysis 

in Table 18 of this final rule represents 

the projected effects of the updates to 

IRF PPS payments for FY 2014 

compared with the estimated IRF PPS 

payments in FY 2013. 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 2014, we 

are adopting standard annual revisions 

described in this final 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 2014 RPL market basket 

increase factor in accordance with 

section 1886(j)(3)(C)(ii)(I) of the Act, and 


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a 0.3 percentage point reduction to the 

FY 2014 RPL market basket increase 

factor in accordance with sections 

1886(j)(3)(C)(ii)(II) and (D)(iii) of the 

Act. We estimate the total increase in 

payments to IRFs in FY 2014, relative to 

FY 2013, will be approximately $170 

million. 

This estimate is derived from the 

application of the FY 2014 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 0.3 percentage point 

reduction in accordance with sections 

1886(j)(3)(C)(ii)(II) and (D)(iii) of the 

Act, which yields an estimated increase 

in aggregate payments to IRFs of $135 

million. Furthermore, there is an 

additional estimated $35 million 

increase in aggregate payments to IRFs 

due to the update to the outlier 

threshold amount. Outlier payments are 

estimated to increase from 

approximately 2.5 percent in FY 2013 to 

3.0 percent in FY 2014. Therefore, 

summed together, we estimate that these 

updates will result in a net increase in 

estimated payments of $170 million 

from FY 2013 to FY 2014. 

The effects of the updates that impact 

IRF PPS payment rates are shown in 

Table 18. The following updates that 

affect the IRF PPS payment rates are 

discussed separately below: 

• The effects of the update to the 

outlier threshold amount, from 

approximately 2.5 percent to 3.0 percent 

of total estimated payments for FY 2014, 

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

Act. 

• The effects of the 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 0.3 

percentage point reduction in 

accordance with sections 1886(j)(3)(C) 

and (D) of the Act. 

• The effects of applying the budgetneutral labor-related share and wage 

index adjustment, as required under 

section 1886(j)(6) of the Act. 

• The effects of the budget-neutral 

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 effects of the updates to the 

Rural, LIP, and Teaching Status 

adjustment factors, using an updated 

methodology. 

• The total change in estimated 

payments based on the FY 2014 

payment changes relative to the 

estimated FY 2013 payments. 

2. Description of Table 18 

Table 18 categorizes IRFs by 

geographic location, including urban or 

rural location, and location with respect 

to 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 18 shows the overall 

impact on the 1,134 IRFs included in 

the analysis. 

The next 12 rows of Table 18 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 949 

IRFs located in urban areas included in 

our analysis. Among these, there are 733 

IRF units of hospitals located in urban 

areas and 216 freestanding IRF hospitals 

located in urban areas. There are 185 

IRFs located in rural areas included in 

our analysis. Among these, there are 167 

IRF units of hospitals located in rural 

areas and 18 freestanding IRF hospitals 

located in rural areas. There are 302 forprofit IRFs. Among these, there are 263 

IRFs in urban areas and 39 IRFs in rural 

areas. There are 688 non-profit IRFs. 

Among these, there are 571 urban IRFs 

and 117 rural IRFs. There are 144 

government-owned IRFs. Among these, 

there are 115 urban IRFs and 29 rural 

IRFs. 

The remaining four parts of Table 18 

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 

with respect to their location within a 

particular one of the nine Census 

geographic regions. Second, IRFs 

located in rural areas are categorized 

with respect to 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 final rule to the facility 

categories listed above are shown in the 

columns of Table 18. 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 2012 

analysis file. 

• Column (3) shows the number of 

cases in each category in our FY 2012 

analysis file. 

• Column (4) shows the estimated 

effect of the adjustment to the outlier 

threshold amount. 

• Column (5) shows the estimated 

effect of the 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 0.3 percentage point 

reduction in accordance with sections 

1886(j)(3)(C)(ii)(II) and (D)(iii) of the 

Act. 

• Column (6) shows the estimated 

effect of the update to the IRF laborrelated share and wage index, in a 

budget-neutral manner. 

• Column (7) shows the estimated 

effect of the update to the CMG relative 

weights and average length of stay 

values, in a budget-neutral manner. 

• Column (8) shows the estimated 

effect of the update to the facility 

adjustment factors using an updated 

methodology, in a budget-neutral 

manner. 

• Column (9) compares our estimates 

of the payments per discharge, 

incorporating all of the proposed 

policies reflected in this final rule for 

FY 2014 to our estimates of payments 

per discharge in FY 2013. 

The average estimated increase for all 

IRFs is approximately 2.3 percent. This 

estimated net increase includes the 

effects of the RPL market basket increase 

factor for FY 2014 of 2.6 percent, 

reduced by a productivity adjustment of 

0.5 percentage point in accordance with 

section 1886(j)(3)(C)(ii)(I) of the Act, and 

further reduced by 0.3 percentage point 

in accordance with sections 


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1886(j)(3)(C)(ii)(II) and (D)(iii) of the 

Act. It also includes the approximate 0.5 

percent overall estimated increase in 

estimated IRF outlier payments from the 

update to the outlier threshold amount. 

Since we are making the updates to the 

IRF wage index, the facility-level 

adjustments, 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. 

TABLE 18—IRF IMPACT TABLE FOR FY 2014 

[Columns 4–9 in %] 

Facility classification 

Number 

of 

IRFs 

Number 

of 

cases 

Outlier 

Adjusted 

market 

basket 

increase 

factor for 

FY 2014 1

FY 2014 

CBSA 

wage 

index 

and 

laborshare 

CMG Facility 

adjust. 

Total 

percent 

change 

(1) (2) (3) (4) (5) (6) (7) (8) (9) 

Total ................................................................. 1,134 382,756 0.5 1.8 0.0 0.0 0.0 2.3 

Urban unit ........................................................ 733 181,133 0.7 1.8 0.0 0.0 0.2 2.8 

Rural unit .......................................................... 167 27,098 0.6 1.8 0.1 0.0 ¥2.4 0.0 

Urban hospital .................................................. 216 168,609 0.2 1.8 ¥0.1 0.0 0.3 2.1 

Rural hospital ................................................... 18 5,916 0.1 1.8 ¥0.1 ¥0.1 ¥3.0 ¥1.3 

Urban For-Profit ............................................... 263 143,162 0.2 1.8 ¥0.2 0.0 0.2 2.0 

Rural For-Profit ................................................ 39 7,728 0.3 1.8 0.1 0.0 ¥2.9 ¥0.7 

Urban Non-Profit .............................................. 571 178,424 0.6 1.8 0.2 0.0 0.2 2.8 

Rural Non-Profit ............................................... 117 20,578 0.5 1.8 0.0 0.0 ¥2.4 ¥0.1 

Urban Government .......................................... 115 28,156 0.7 1.8 ¥0.2 0.0 0.3 2.7 

Rural Government ............................................ 29 4,708 0.7 1.8 0.2 0.0 ¥2.6 0.1 

Urban ............................................................... 949 349,742 0.5 1.8 0.0 0.0 0.2 2.5 

Rural ................................................................. 185 33,014 0.5 1.8 0.0 0.0 ¥2.5 ¥0.2 

Urban by Region 

Urban New England ......................................... 32 16,779 0.3 1.8 0.7 0.0 0.0 2.8 

Urban Middle Atlantic ....................................... 140 59,466 0.4 1.8 0.0 0.0 0.7 2.9 

Urban South Atlantic ........................................ 130 62,557 0.3 1.8 ¥0.3 0.0 0.0 1.9 

Urban East North Central ................................ 182 52,632 0.6 1.8 0.2 0.0 0.6 3.2 

Urban East South Central ................................ 49 24,489 0.2 1.8 ¥0.8 0.0 0.4 1.7 

Urban West North Central ............................... 73 18,097 0.6 1.8 0.5 0.0 ¥0.1 2.8 

Urban West South Central ............................... 171 67,575 0.4 1.8 ¥0.1 0.0 0.3 2.4 

Urban Mountain ............................................... 73 23,459 0.6 1.8 ¥0.5 0.0 0.1 2.0 

Urban Pacific .................................................... 99 24,688 0.9 1.8 0.7 0.0 ¥0.9 2.5 

Rural by Region 

Rural New England .......................................... 6 1,400 0.8 1.8 ¥0.5 ¥0.1 ¥1.8 0.1 

Rural Middle Atlantic ........................................ 15 2,711 0.3 1.8 ¥0.2 0.0 ¥2.2 ¥0.3 

Rural South Atlantic ......................................... 24 5,624 0.3 1.8 0.1 0.0 ¥2.5 ¥0.3 

Rural East North Central ................................. 32 5,595 0.5 1.8 0.3 0.0 ¥2.4 0.1 

Rural East South Central ................................. 22 3,852 0.4 1.8 0.0 0.1 ¥2.7 ¥0.4 

Rural West North Central ................................ 27 3,660 0.7 1.8 ¥0.7 0.0 ¥2.2 ¥0.4 

Rural West South Central ................................ 48 9,130 0.4 1.8 0.4 0.0 ¥3.1 ¥0.6 

Rural Mountain ................................................. 7 664 1.2 1.8 0.2 0.1 ¥1.5 1.9 

Rural Pacific ..................................................... 4 378 1.9 1.8 0.1 ¥0.1 ¥1.1 2.6 

Teaching Status 

Non-teaching .................................................... 1,018 334,415 0.4 1.8 0.0 0.0 ¥0.2 2.0 

Resident to ADC less than 10% ...................... 65 32,238 0.5 1.8 0.1 0.0 0.6 3.0 

Resident to ADC 10%–19% ............................ 39 14,504 0.8 1.8 0.1 0.0 2.3 5.0 

Resident to ADC greater than 19% ................. 12 1,599 0.6 1.8 0.3 0.0 7.1 10.1 

Disproportionate Share Patient Percentage (DSH PP) 

DSH PP = 0% .................................................. 38 7,859 1.1 1.8 0.2 0.0 1.0 4.1 

DSH PP less than 5% ..................................... 195 64,484 0.4 1.8 ¥0.1 0.0 0.8 2.9 

DSH PP 5%–10% ............................................ 323 123,384 0.3 1.8 ¥0.1 0.0 0.3 2.4 

DSH PP 10%–20% .......................................... 347 124,564 0.4 1.8 0.1 0.0 ¥0.1 2.2 

DSH PP greater than 20% .............................. 231 62,465 0.7 1.8 0.0 0.0 ¥1.1 1.3 

1This column reflects the impact of the RPL market basket increase factor for FY 2014 of 1.8 percent, which includes a market basket update 

of 2.6 percent, a 0.3 percentage point reduction in accordance with sections 1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(iii) of the Act and a 0.5 percentage point reduction for the productivity adjustment as required by section 1886(j)(3)(C)(ii)(I) of the Act. 


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3. Impact of the Update to the Outlier 

Threshold Amount 

The estimated effects of the update to 

the outlier threshold adjustment are 

presented in column 4 of Table 18. In 

the July 30, 2012 FY 2013 IRF PPS 

notice (77 FR 44618), we used FY 2011 

IRF claims data (the best, most complete 

data available at that time) to set the 

outlier threshold amount for FY 2013 so 

that estimated outlier payments would 

equal 3 percent of total estimated 

payments for FY 2013. 

For this final rule, we are updating 

our analysis using FY 2012 IRF claims 

data and, based on this updated 

analysis, we estimate that IRF outlier 

payments as a percentage of total 

estimated IRF payments are 2.5 percent 

in FY 2013. We attribute this 

underpayment in IRF outliers for FY 

2013 to the effects of the recentlyimplemented IRF outlier reconciliation 

policy (as outlined in Chapter 3, Section 

140.2.8 of the Medicare Claims 

Processing Manual (Pub. 100–04) that 

we believe is causing a downward trend 

in IRF cost-to-charge ratios (CCR). We 

are seeing this downward trend in CCRs 

in all of the settings for which we 

implemented the outlier reconciliation 

policy. Thus, we are adjusting the 

outlier threshold amount in this final 

rule to set total estimated outlier 

payments equal to 3 percent of total 

estimated payments in FY 2014. The 

estimated change in total IRF payments 

for FY 2014, therefore, includes an 

approximate 0.5 percent increase in 

payments because the estimated outlier 

portion of total payments is estimated to 

increase from approximately 2.5 percent 

to 3 percent. 

The impact of this outlier adjustment 

update (as shown in column 4 of Table 

18) is to increase estimated overall 

payments to IRFs by about 0.5 percent. 

We estimate the largest increase in 

payments from the update to the outlier 

threshold amount to be 1.9 percent for 

rural IRFs in the Pacific region. We do 

not estimate that any group of IRFs will 

experience a decrease in payments from 

this update. 

4. Impact of the Market Basket Update 

to the IRF PPS Payment Rates 

The estimated effects of the market 

basket update to the IRF PPS payment 

rates are presented in column 5 of Table 

18. In the aggregate the update will 

result in a net 1.8 percent increase in 

overall estimated payments to IRFs. 

This net increase reflects the estimated 

RPL market basket increase factor for FY 

2014 of 2.6 percent, reduced by the 0.3 

percentage point in accordance with 

sections 1886(j)(3)(C)(ii)(II) and 

1886(j)(3)(D)(iii) of the Act, and further 

reduced by a 0.5 percentage point 

productivity adjustment as required by 

section 1886(j)(3)(C)(ii)(I) of the Act. 

5. Impact of the CBSA Wage Index and 

Labor-Related Share 

In column 6 of Table 18, we present 

the effects of the budget-neutral 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 

changes in the two have a combined 

effect on payments to providers. As 

discussed in section VI (C) of this final 

rule, we will decrease the labor-related 

share from 69.981 percent in FY 2013 to 

69.494 percent in FY 2014. 

In the aggregate, since these updates 

to the wage index and the labor-related 

share are applied in a budget-neutral 

manner as required under section 

1886(j)(6) of the Act, we do not estimate 

that these proposed updates will affect 

overall estimated payments to IRFs. 

However, we estimate that these 

updates will have small distributional 

effects. For example, we estimate the 

largest increase in payments from the 

update to the CBSA wage index and 

labor-related share of 0.7 percent for 

urban IRFs in the New England and 

Pacific regions. We estimate the largest 

decrease in payments from the update to 

the CBSA wage index and labor-related 

share to be a 0.8 percent decrease for 

urban IRFs in the East South Central 

region. 

6. Impact of the Update to the CMG 

Relative Weights and Average Length of 

Stay Values 

In column 7 of Table 18, we present 

the effects of the budget-neutral 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 to 

IRFs. However, we do expect these 

updates to have small distributional 

effects. Freestanding rural hospitals will 

see a 0.1 decrease in payments as a 

result of these updates. The rural areas 

affected are New England and Pacific. 

The largest estimated increase in 

payments as a result of these updates is 

a 0.1 increase in the rural Mountain and 

East South Central regions. 

7. Impact of the Updates to the FacilityLevel Adjustments 

In column 8 of Table 18, we present 

the effects of the budget-neutral updates 

to the IRF facility-level adjustment 

factors (the rural, LIP, and teaching 

status adjustment factors) for FY 2014. 

In the aggregate, we do not estimate that 

these updates will affect overall 

estimated payments to IRFs. However, 

we estimate that these updates will have 

distributional effects, as shown in Table 

18. The largest estimated decrease in 

payments as a result of these updates is 

a 3.1 percent decrease to rural IRFs in 

the West South Central region. The 

largest estimated increase in payments 

as a result of these updates is a 10.1 

percent increase for teaching IRFs with 

a resident to average daily census ratio 

greater than 19 percent. 

8. Impact of the Refinements to the 

Presumptive Compliance Criteria 

Methodology 

As discussed in section VIII of this 

final rule, we are changing the list of 

ICD–9–CM codes available to meet the 

presumptive compliance criteria. We 

believe that these changes will improve 

the accuracy and integrity of the IRF 

PPS by ensuring that the cases that 

qualify as meeting the 60 percent rule 

truly meet the requirements in 42 CFR 

412.29(b). These changes will affect all 

1,134 IRFs, as these facilities will need 

to change their coding practices to 

continue to meet the 60 percent 

compliance percentage using the 

presumptive methodology. However, we 

are implementing these changes with a 

one-year delayed effective date, so that 

these changes will be effective for 

compliance review periods beginning 

on or after October 1, 2014. Thus, any 

potential financial impacts of these 

policy changes will not accrue until FY 

2015. 

We estimate that the financial impact, 

in the absence of any behavioral 

responses to these changes on the part 

of providers, would be a decrease of 6.9 

percent (or $520 million) in overall 

estimated payments to IRFs for FY 2015. 

We note that these estimates are 

unchanged from the ones we had noted 

in the proposed rule, even though we 

have decided to add some ICD–9–CM 

codes that we had proposed for deletion 

back onto the list of ICD–9–CM codes 

that would qualify a patient as meeting 

the 60 percent rule criteria. This is 

because we inadvertently used the 

wrong list of ICD–9–CM codes in our 

analysis for the proposed rule. Had we 

used the correct list of ICD–9–CM codes 

for the proposed rule analysis, our 

estimates of the financial impact of the 

proposals would have been $20 million 

(or 0.2%) higher than those presented in 

the proposed rule, and our estimates 

would therefore have reduced to $520 

million (6.9 percent) for this final rule. 

However, as we noted in the proposed 

rule, we believe that IRFs will be able 

to improve the specificity of their 


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coding practices, alter their admitting 

practices, meet the 60 percent 

compliance threshold under medical 

review, and make other modifications to 

their operations to continue to meet the 

60 percent compliance threshold. 

For example, we estimate that about 

90 percent of the IRF cases that will 

potentially be affected by the final 

revisions to the presumptive 

methodology codes are affected by the 

removal of the non-specific codes. 

However, we have been careful to 

remove only those non-specific codes 

for which more specific codes for the 

same conditions will remain on the list 

of codes that meet the presumptive 

methodology. Thus, in all of these cases, 

we believe that the IRF will be able to 

switch to a more specific code for the 

same condition, leaving the IRF’s 

admission practices and classification 

status unaffected. 

About 1 percent of the cases that we 

estimate would be affected by the final 

revisions are affected by the Unilateral 

Upper Extremity Amputation codes, the 

Congenital Anomaly codes, and the 

Miscellaneous codes combined. Thus, 

we do not estimate that the removal of 

these code groups will have a significant 

effect on IRF admission or coding 

practices, or classification status. 

Finally, approximately 9 percent of 

the cases that we estimate will be 

affected by the final revisions involve 

arthritis diagnoses. We estimate that the 

revisions in this category will have the 

largest potential effects on providers 

because, by the very nature of these 

revisions, IRFs would not have another 

arthritis code on the list to code instead. 

We estimate that about 14 percent of all 

IRF cases are coded with the arthritis 

codes that we are removing from the 

list, and in 11 percent of these cases, the 

arthritis code is the only code that 

would qualify the patient as meeting the 

60 percent rule requirements. However, 

for the arthritis category of codes, we 

estimate that most of these cases will 

still be found to meet the 60 percent 

rule requirements under medical 

review, so we estimate that these 

revisions will lead to few if any IRF 

declassifications. 

Historically, we have seen that IRFs 

adapt quickly to changes in the 60 

percent rule, as evidenced by the rapid 

response to changes over time in the 

compliance threshold. Thus, we have 

every reason to believe that they will 

adapt quickly to the changes to the 

presumptive methodology list. In 

addition, the changes will not affect 

how many patients would ultimately be 

shown to meet the 60 percent rule 

criteria on medical review. For these 

reasons, we believe that our best 

estimate of the impact on IRFs of these 

changes is no net change in Medicare 

reimbursement payments. Instead, IRFs 

will quickly change their coding 

practices, admission practices, meet the 

60 percent compliance threshold under 

medical review, and make other changes 

to their business practice to ensure that 

they continue to meet the 60 percent 

rule requirements; although we lack 

data to more precisely characterize the 

rule-induced costs, benefits and 

transfers that would be experienced by 

IRFs, their patients and other relevant 

entities, we note that the $520 million 

estimate appearing earlier in this section 

represents an upper bound (probably an 

extreme upper bound) on the costs that 

would be borne by IRFs. 

We intend to closely monitor provider 

coding practices to these changes to the 

60 percent rule in order to identify 

whether those patients that we 

envisioned would be served under the 

IRF PPS are counting toward the 

presumptive compliance percentage. We 

will also monitor whether these changes 

are having any unintended 

consequences in terms of limiting access 

to care. 

Comment: One commenter requested 

that CMS make its impact analysis of 

the changes to the presumptive 

methodology public. 

Response: We used the same 

methodology in the FY 2014 proposed 

and final rules to estimate the impacts 

of changes to the ICD–9–CM codes used 

in the presumptive methodology that we 

used in the May 7, 2004 to estimate the 

impacts of the modifications to the 60 

percent rule, with one exception. A 

description of that methodology is 

included in the May 7, 2004 final rule 

(69 FR 25752 at 25770 through 25774). 

We deviated from this methodology in 

one respect. In this final rule, we report 

the estimated financial impact on IRF 

providers of the changes to the 

presumptive compliance method. In the 

May 7, 2004 final rule, however, we 

reported the estimated financial impact 

on Medicare’s baseline (that is, the 

amount of savings that would be 

projected to accrue to the Medicare 

program from the policies that were 

finalized in the May 7, 2004 final rule). 

Thus, in the May 7, 2004 final rule, we 

estimated a net decrease in IRF 

admission, and then estimated that 

patients that were no longer treated in 

IRFs would be treated instead in another 

Medicare setting (such as a skilled 

nursing facility or home health care 

setting). We estimated the decrease in 

Medicare payments to IRFs, but added 

to that estimate the total estimated 

Medicare payments to the alternative 

Medicare settings in which the patients 

would have received care. Those 

estimates, therefore, represent the net 

savings to the Medicare program. In this 

final rule, we are only estimating the 

financial impacts on IRFs, so we do not 

add back in the payments for the 

patients treated in alternative settings. 

9. Effects of Updates to the IRF QRP 

This final rule sets forth a number of 

updates and several policy changes to 

the IRF Quality Reporting Program. 

Specifically, we are taking the following 

actions: (A) finalizing the use of the 

following measures for the IRF QRP: (1) 

Percent of Patients/Residents with 

Pressure Ulcers that are New or 

Worsened (NQF #0678); (2) Percent of 

Residents or Patients Who Were 

Assessed and Appropriately Given the 

Seasonal Influenza Vaccine (Short-Stay) 

(NQF #0680); (3) Influenza Vaccination 

Coverage among Healthcare Personnel 

(NQF #0431); (4) All-Cause Unplanned 

Readmission Measure for 30 Days Post 

Discharge from Inpatient Rehabilitation 

Facilities Measure; (B) Adding new data 

items to the IRF–PAI to collect data for 

the patient influenza vaccination and 

pressure ulcer measures; (C) Renumbering of Quality Indicator section 

of the IRF–PAI items, using a flexible 

numbering system; (D) finalizing our 

proposal to change data collection for 

all IRF–PAI based measures to a fiscal 

year basis; (E) Finalizing our proposal to 

impose quarterly data submission 

deadlines for all but one measure; (F) 

providing a discussion of the voluntary 

reconsideration process for IRFs that 

CMS finds to be out of compliance with 

the reporting requirements; (G) and a 

disaster waiver process. 

We have based our assessment of the 

effects of this final rule on all of the 

actions described in the previous 

paragraph. One of the changes we have 

finalized is the adoption of a new 

pressure ulcer measure. Currently, the 

IRF QRP contains a pressure ulcer 

measure that is an application of an 

NQF-endorsed measure (Percent of 

Residents or Patients with Pressure 

Ulcers That Are New or Worsened 

(Short-Stay)’’ (NQF #0678)) that we 

adopted in the FY 2012 IRF PPS final 

rule (76 FR 47836). That measure affects 

an IRF’s annual increase factors up 

through the FY 2016 annual increase 

factor. We have now adopted the actual 

NQF-endorsed version of this measure, 

which will affect the IRF PPS increase 

factor for FY 2017 and subsequent years 

increase factors. We also made revisions 

to the pressure ulcer items on the IRF– 

PAI that providers will use to collect 

data for this measure. 

IRFs will incur some financial impact 

from the use of the pressure ulcer 


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36According to the U.S. Bureau of Labor 

Statistics, the mean hourly wage for a Registered 

Nurse is $33.23. (See http://www.bls.gov/oes/2011/ 

may/oes291111.htm). 

37MedPAC, A Data Book: Health Care Spending 

and the Medicare Program (June 2012), http:// 

www.medpac.gov/chapters/ 

Jun12DataBookSec8.pdf. 

38 359,000 IRF–PAI reports per all IRFs per year/ 

1161 IRFs in U.S. = 309 IRF–PAI reports per each 

IRF per year 309 IRF–PAI reports per IRF per year/ 

12 months per year = 26 IRF–PAI reports per each 

IRF per year. 

39 25 minutes × 309 IRF–PAI assessments per 

each IRF per year = 7,725 minutes per each IRF per 

year 7,725 minutes per each IRF per year/60 

minutes per hour = 128.75 hours per each IRF per 

year 128.75 hours per year × $33.23 per hour = 

$4,278.36 nursing wages per each IRF per year. 

40 $4,278.36 × 1161 IRF providers = $4,967,176 

per all IRFs per year. 

41According to the U.S. Bureau of Labor 

Statistics, the mean hourly wage for a Medical 

Records & Health Information Technician is $15.55. 

Continued 

measure item set that will be 

incorporated into the IRF–PAI. We 

expect that the admission and discharge 

pressure ulcer data will be collected by 

a clinician such as a 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 15 minutes of time to complete 

the discharge pressure ulcer assessment. 

During these time periods, the RN 

would be engaged in the collection of 

data for the purpose of the IRF QRP and 

would not be performing patient care. 

An RN or clinician with a similar level 

of training and expertise should perform 

the pressure ulcer assessment and 

record this data on the IRF–PAI. 

We believe use of the NQF-endorsed 

pressure ulcer measure will cause IRFs 

to incur additional annual financial 

burden in the amount of $4,518.61 and 

across all IRFs, $5,246,106. This burden 

is comprised of the clinical and 

administrative wages. The clinical 

wages are based on an average hourly 

wage rate of $33.23 for a RN.36 We 

estimate that there are 359,000 IRF–PAI 

submissions per year 37 and that there 

are 1161 IRFs in the U.S. that will report 

quality data to CMS. Based on these 

figures, we estimate that each IRF will 

submit approximately 309 IRF–PAIs per 

year or 25.75 IRF–PAIs per month.38

Assuming that each IRF–PAI 

submission requires 25 minutes of time 

by an RN at an average hourly wage of 

$33.23, the yearly cost to each IRF 

would be $4,278.36 39 and the 

annualized cost across all IRFs would be 

$4,967,176.40 To calculate the total 

amount of administrative staff wages 

incurred, we estimate that this data 

entry task will take no more than 3 

minutes per each IRF–PAI record or 

15.45 hours per each IRF annually or 

17,937 hours across all IRFs. According 

to the U.S. Bureau of Labor, the average 

hourly wage for Administrative 

Assistants is $15.55. We have estimated 

that there are approximately 359,000 

IRF–PAI submissions per year and 1161 

IRFs in the U.S. that are reporting 

quality data to CMS. Given this wage 

information, the estimated total annual 

cost across all IRFs for the time required 

for entry of pressure ulcer data into the 

IRF–PAI record is $278,930. We further 

estimate the average yearly cost to each 

IRF to be $240.25. 

In addition to updating the pressure 

ulcer measure, we have added 3 new 

quality measures to the IRF QRP. These 

measures include: (1) Percent of 

Residents or Patients Who Were 

Assessed and Appropriately Given the 

Seasonal Influenza Vaccine (Short-Stay) 

(NQF #0680), which will affect the FY 

2017 increase factor and subsequent 

years increase factors; (2) Influenza 

Vaccination Coverage among Healthcare 

Personnel (NQF #0431), which will 

affect the FY 2016 increase factor and 

subsequent years increase factors; and 

(3) an All-Cause Unplanned 

Readmission Measure for 30 Days Post 

Discharge from Inpatient Rehabilitation 

Facilities, which will affect the FY 2017 

increase factor and subsequent years 

increase factors. We discuss the impact 

of each measure upon IRFs below. 

IRFs will now submit their data for 

the patient influenza measure (NQF 

#0680) on the IRF–PAI. We have added 

a new data item set consisting of 3 items 

to the IRF–PAI to collect the data for 

this measure. IRF staff will be required 

to perform a full influenza assessment 

only during the influenza vaccination 

season, which has been defined by the 

CDC as the time period from October 1st 

(or when the vaccine becomes available) 

through March 31 each year. From April 

1st through September 30th, IRFs are 

not required to perform a full influenza 

screening. Our time estimate reflects the 

averaged amount of time necessary to 

complete the influenza item set both 

during and outside the influenza 

vaccination season. 

We believe that it will be most 

appropriate for a clinician, such as an 

RN, to complete the influenza items 

because this assessment requires 

clinical judgment and knowledge of 

vaccinations. An administrative 

employee, such as a medical data entry 

clerk or administrative assistant would 

not have this level of knowledge. We do 

not believe that IRFs will require 

additional time by administrative staff 

to encode and transmit this data to 

CMS, because submission of an IRF–PAI 

for each patient is already required as a 

condition for payment. 

As noted above, we estimate that it 

will take approximately 5 minutes to 

complete the patient influenza measure 

item set. We have also noted above that 

there are approximately 359,000 IRF– 

PAIs completed annually across all 1161 

IRFs that report IRF quality data to 

CMS. This breaks down to 

approximately 309 IRF–PAIs completed 

by each IRF yearly. We estimate that the 

annual time burden for reporting the 

patient influenza vaccination measure 

data is 29,896 hours across all IRFs in 

the U.S. and 25.75 hours for each 

individual IRF. According to the U.S. 

Bureau of Labor, the hourly wage for a 

Registered Nurse is $33.23. The 

estimated annual cost across all IRFs in 

the U.S. for the submission of the 

patient influenza measure data is 

$993,433 and $855.67 for each 

individual IRF. 

IRFs will submit their data for the 

staff immunization measure (NQF 

#0431) to the CDC’s healthcare acquired 

(HAI) surveillance Web site known as 

NHSN. Data collection for this measure 

is only required from October 1st (or 

when the vaccine becomes available) 

through March 31st each year, during 

which time IRFs will be required to 

keep records of which staff members 

receive the influenza vaccination. IRFs 

are only required to make one report to 

NHSN after the close of the reporting 

period on March 31st. All data must be 

submitted by May 15th of each year. We 

do not believe that IRFs will incur any 

new burden associated with the 

collection of data during the influenza 

vaccination season. We believe that 

most IRFs already keep records related 

to the influenza vaccination of their staff 

because this impacts many aspects of 

their business, including but not limited 

to, staff absences and transmission of 

illness to other staff and patients. 

We estimate that it will take each IRF 

approximately 15 minutes of time once 

per year to gather the data that was 

collected during the influenza 

vaccinations season, and prepare to 

make their report to NHSN. We do not 

estimate that it will take IRFs additional 

time to input their data into NHSN, 

once they have logged onto the system 

for the purpose of submitting their 

monthly CAUTI report. We believe that 

this task can be completed by an 

administrative person such as a Medical 

Secretary Medical Data Entry Clerk. As 

noted above, the average hourly wage 

for Medical Records or Health 

Information Technicians is $15.55.41 We 


tkelley on DSK3SPTVN1PROD with RULES2
47932 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 

See: http://www.bls.gov/ooh/healthcare/medicalrecords-and-health-information-technicians.htm. 

42 15 minutes Administrative staff time to collect 

and report staff influenza measure @ $15.55 per 

hour = $3.9889 per IRF per year. 

43 $3.89 per IRF per year × 1161 IRFs in U.S. = 

$4,621,516. 

estimate that the average yearly cost to 

each IRF for the reporting of this 

measure will be $3.89 42 and the cost 

across all IRFs will be $4,516.43

The readmission measure (All-Cause 

Unplanned Readmission Measure for 30 

Days Post Discharge from Inpatient 

Rehabilitation Facilities) is a claimsbased measure and, therefore, IRFs are 

not required to submit any data for this 

measure. We do not anticipate that IRFs 

will be impacted by any financial or 

time burdens as a result of the use of 

this measure for the IRF QRP. 

Taking all of the above-stated 

information into consideration, we 

estimate that the total cost to IRFs in FY 

2015, including staff wages and 48 

percent for fringe benefits and overhead, 

is $9.2 million as related to (1) Influenza 

Vaccination Coverage among Healthcare 

Personnel (NQF #0431); (2) Percent of 

Patients with Pressure Ulcers That Are 

New or Worsened (NQF #0678); and (3) 

Percent of Patients that Were 

Appropriately Assessed and Given the 

Influenza Vaccination (NQF #0680). 

Over the past 18 months, we have 

received a great deal of positive 

feedback from IRFs about the IRF QRP, 

and overall, IRFs have been very 

receptive to the introduction of the IRF 

QRP into the IRF setting. The IRF 

provider community has shared many 

suggestions and ideas related to the IRF 

QRP. Outreach activities, such as a oneday in-person training, and 6 open door 

forums were well attended. Given the 

amount of positive feedback and 

willingness to participate in the IRF 

QRP that has been demonstrated by 

IRFs, we anticipate that there will be a 

relatively small number of IRFs that fail 

to report the type and amount of quality 

data that IRFs are required to collect and 

submit. Our proposed reconsideration 

process allows IRFs that receive an 

initial finding of non-compliance an 

opportunity to file a request for 

reconsideration of this finding. Access 

to this process may have the effect of 

lowering even further the number of 

IRFs who have not ultimately succeeded 

in meeting the IRF QRP reporting 

requirements. 

10. Impact of the Implementation of the 

2 Percentage Point Reduction in the 

Increase Factor for Failure To Meet the 

IRF Quality Reporting Requirements 

As discussed in section XIV. of this 

final rule and in accordance with 

section 1886(j)(7) of the Act, we will 

implement a 2 percentage point 

reduction in the FY 2014 increase factor 

for IRFs that have failed to report the 

required quality reporting data to us 

during the first IRF quality reporting 

period (from October 1, 2012 through 

December 31, 2012). In section XIV of 

this final rule, we discuss how the 2 

percentage point reduction will be 

applied. Currently, we cannot estimate 

the overall financial impacts of the 

application of this reduction on 

aggregate IRF PPS payments or on the 

distribution of IRF PPS payments among 

providers because we cannot predict the 

number of or types of IRFs that will fail 

to report the required quality reporting 

data. IRFs are currently required to 

complete the non-quality portions of the 

IRF–PAI to receive payment for all 

Medicare fee-for-service admissions. 

Therefore, we estimate that the number 

of IRFs that would fail to submit the 

additional quality reporting data on the 

IRF–PAI form is very low. 

The official reporting period end date 

for the first IRF quality reporting period 

was May 15, 2013. While we made a 

preliminary determination of 

compliance related to IRFs in June 2013, 

we feel that it would not be prudent to 

release those numbers at this time. We 

believe that these numbers could change 

substantially during the reconsideration 

process (described in section XIII. of the 

May 8, 2013 (78 FR 26880) proposed 

rule that will occur between July and 

September 2013, and that we will not 

have a true picture of IRF performance 

until after this final rule is displayed. 

We intend to closely monitor the effects 

of this new quality reporting program on 

IRF providers as we cannot predict the 

number of, or types of IRFs that would 

fail to report the required quality 

reporting data for the first quality 

reporting period. 

D. Alternatives Considered 

As stated in section XVIII (B) of this 

final rule, we estimate that the 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 2014 payments 

of $170 million (2.3 percent), relative to 

FY 2013. The following is a discussion 

of the alternatives considered for the 

IRF PPS updates contained in this final 

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 2014. However, as 

noted previously in this final 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 2014 and 

sections 1886(j)(3)(C)(ii)(II) and 

1886(j)(3)(D)(iii) of the Act require the 

Secretary to apply a 0.3 percentage 

point reduction to the market basket 

increase factor for FY 2014. Thus, in 

accordance with section 1886(j)(3)(C) of 

the Act, we are updating IRF federal 

prospective payments in this final rule 

by 1.8 percent (which equals the 2.6 

percent estimated RPL market basket 

increase factor for FY 2014 reduced by 

0.3 percentage points, and further 

reduced by a 0.5 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 

2014. 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 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 maintaining the 

current facility-level adjustment factors 

(that is, the rural factor at 18.4 percent, 

the LIP factor at 0.4613, and teaching 

status adjustment factor at 0.6876). 

However, as discussed in more detail in 

section V (B) of this final rule, our 

recent research efforts have shown 

significant differences in cost structures 

between freestanding IRFs and IRF units 

of acute care hospitals (and CAHs). We 

have found that these cost structure 

differences substantially influence the 

estimates of the adjustment factors. For 

this reason, our regression analysis 

found that the proposed inclusion of the 

control variable for a facility’s status as 

either a freestanding IRF hospital or an 

IRF unit of an acute care hospital (or a 

CAH) would greatly enhance the 

accuracy of the adjustment factors for 

FY 2014, as we incorporate updated 

data. Further, as noted previously, we 

received comments on the FY 2012 IRF 

PPS proposed rule suggesting this 

enhancement to the methodology. Thus, 

we believe that the best approach at this 

time is to update the facility-level 

adjustment factors for FY 2014 using 

this enhancement to the methodology. 

We considered maintaining the 

existing outlier threshold amount for FY 


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2014. However, analysis of updated FY 

2012 data indicates that estimated 

outlier payments would be lower than 3 

percent of total estimated payments for 

FY 2013, by approximately 0.5 percent, 

unless we updated the outlier threshold 

amount. Consequently, we are adjusting 

the outlier threshold amount in this 

final rule to reflect a 0.5 percent 

increase thereby setting the total outlier 

payments equal to 3 percent, instead of 

2.5 percent, of aggregate estimated 

payments in FY 2014. 

Finally, we considered maintaining 

the current list of ICD–9–CM codes used 

to determine an IRF’s compliance with 

the 60 percent rule under the 

presumptive methodology, or 

maintaining some of the categories of 

codes that we proposed removing from 

the list in the proposed rule. However, 

we believe that the specific ICD–9–CM 

codes removed in section VIII of this 

final rule results in a list that better 

reflects the 60 percent rule regulations. 

For example, the removal of the nonspecific diagnosis codes (as discussed in 

section VIII of this final rule) is in 

accordance with the trend toward 

requiring more specific coding in other 

Medicare payment settings, such as the 

IPPS. We believe that the incentives to 

use more specific codes, whenever 

possible, will also lead to improvements 

in the quality of care for patients by 

providing more detailed information 

that medical personnel can use to 

enhance the specificity of patients’ care 

plans. In addition, the removal of the 

arthritis diagnosis codes (as discussed 

in section VIII of this final rule) will 

enable CMS to ensure that we only 

count patients as meeting the 60 percent 

rule requirements if they have met the 

necessary severity and prior treatment 

requirements, information which is not 

discernible from the ICD–9–CM codes 

themselves. With respect to the other 

code categories that we are removing 

from the presumptive methodology list, 

we do not believe that patients who are 

coded with these codes would typically 

require treatment in an IRF, as described 

in more detail in section VIII of this 

final rule. However, to give providers 

more time to adjust to the changes, we 

are delaying the effective date of these 

changes by one year, so that the changes 

will be effective for compliance review 

periods beginning on or after October 1, 

2014. 

E. Accounting Statement 

As required by OMB Circular A–4 

(available at http://www.whitehouse.

gov/sites/default/files/omb/assets/omb/

circulars/a004/a-4.pdf), in Table 19, we 

have prepared an accounting statement 

showing the classification of the 

expenditures associated with the 

provisions of this final rule. Table 19 

provides our best estimate of the 

increase in Medicare payments under 

the IRF PPS as a result of the updates 

presented in this final rule based on the 

data for 1,134 IRFs in our database. In 

addition, the table below presents the 

costs associated with the new IRF 

quality reporting program requirements 

for FY 2015. 

TABLE 19—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED EXPENDITURES

Category Transfers 

Change in Estimated Transfers from FY 2013 IRF PPS to FY 2014 IRF PPS: 

Annualized Monetized Transfers .............................................................. $170 million. 

From Whom to Whom? ............................................................................ Federal Government to IRF Medicare Providers. 

Estimated Impacts in FY 2015 

Refinements to the presumptive compliance criteria methodology under the ‘60 percent rule’: 

Annualized Monetized Transfers .............................................................. The estimated FY 2015 impact of the refinements to the presumptive 

compliance criteria methodology reflects a decrease of payments between $0 to $520 million, depending on the IRFs behavioral responses to the changes, with $520 million representing the upper 

bound. 

From Whom to Whom? ............................................................................ Federal Government to IRF Medicare Providers. 

Cost to updating the Quality Reporting Program for IRFs: 

Annualized Monetized Costs for IRFs to Submit Data (Quality Reporting Program).$9.2 million. 

F. Conclusion 

Overall, the estimated payments per 

discharge for IRFs in FY 2014 are 

projected to increase by 2.3 percent, 

compared with the estimated payments 

in FY 2013, as reflected in column 9 of 

Table 18. IRF payments per discharge 

are estimated to increase 2.5 percent in 

urban areas and decrease 0.2 percent in 

rural areas, compared with estimated FY 

2013 payments. Payments per discharge 

to rehabilitation units are estimated to 

increase 2.8 percent in urban areas, 

whereas we estimate no change in 

payments per discharge to rehabilitation 

units in rural areas. Payments per 

discharge to freestanding rehabilitation 

hospitals are estimated to increase 2.1 

percent in urban areas and decrease 1.3 

percent in rural areas. 

Overall, IRFs are estimated to 

experience a net increase in payments 

as a result of the policies in this final 

rule. The largest payment increase is 

estimated to be a 3.2 percent increase 

for urban IRFs located in the East North 

Central region. This is due to the large 

positive effect of the facility adjustment 

updates for urban IRFs in this region. 

Finally, the total cost to IRFs in FY 2015 

is $9.2 million as related to (1) Influenza 

Vaccination Coverage among Healthcare 

Personnel (NQF #0431); (2) Percent of 

Patients with Pressure Ulcers That Are 

New or Worsened (NQF #0678); and (3) 

Percent of Patients that Were 

Appropriately Assessed and Given the 

Influenza Vaccination (NQF #0680). 

List of Subjects in 42 CFR Part 412 

Administrative practice and 

procedure, Health facilities, Medicare, 

Puerto Rico, Reporting and 

recordkeeping requirements. 

For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services amends 42 CFR 

chapter IV as follows: 


tkelley on DSK3SPTVN1PROD with RULES2
47934 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 

PART 412—PROSPECTIVE PAYMENT 

SYSTEMS FOR INPATIENT HOSPITAL 

SERVICES 

■ 1. The authority citation for part 412 

continues to read as follows: 

Authority: Sections 1102, 1862, and 1871 

of the Social Security Act (42 U.S.C. 1302, 

1395y, and 1395hh). 

■ 2. Section 412.25 is amended by 

revising paragraph (a)(1)(iii) to read as 

follows: 

§ 412.25 Excluded hospital units: Common 

requirements. 

(a) * * * 

(1) * * * 

(iii) Unless it is a unit in a critical 

access hospital, the hospital of which an 

IRF is a unit must have at least 10 

staffed and maintained hospital beds 

that are not excluded from the inpatient 

prospective payment system, or at least 

1 staffed and maintained hospital bed 

for every 10 certified inpatient 

rehabilitation facility beds, whichever 

number is greater. Otherwise, the IRF 

will be classified as an IRF hospital, 

rather than an IRF unit. In the case of 

an inpatient psychiatric facility unit, the 

hospital must have enough beds that are 

not excluded from the inpatient 

prospective payment system to permit 

the provision of adequate cost 

information, as required by § 413.24(c) 

of this chapter. 

* * * * * 

■ 3. Section 412.29 is amended by 

revising paragraph (d) to read as 

follows: 

§ 412.29 Classification criteria for payment 

under the inpatient rehabilitation facility 

prospective payment system. 

* * * * * 

(d) Have in effect a preadmission 

screening procedure under which each 

prospective patient’s condition and 

medical history are reviewed to 

determine whether the patient is likely 

to benefit significantly from an intensive 

inpatient hospital program. This 

procedure must ensure that the 

preadmission screening for each 

Medicare Part A Fee-for-Service patient 

is reviewed and approved by a 

rehabilitation physician prior to the 

patient’s admission to the IRF. 

* * * * * 

■ 4. Section 412.130 is amended by 

revising paragraphs (a)(1), (a)(2) and 

(a)(3) to read as follows: 

§ 412.130 Retroactive adjustments for 

incorrectly excluded hospitals and units. 

(a) * * * 

(1) A hospital that was excluded from 

the prospective payment systems 

specified in § 412.1(a)(1) or paid under 

the prospective payment system 

specified in § 412.1(a)(3), as a new 

rehabilitation hospital for a cost 

reporting period beginning on or after 

October 1, 1991 based on a certification 

under § 412.29(c) regarding the 

inpatient population the hospital 

planned to treat during that cost 

reporting period, if the inpatient 

population actually treated in the 

hospital during that cost reporting 

period did not meet the requirements of 

§ 412.29(b). 

(2) A hospital that has a unit excluded 

from the prospective payment systems 

specified in § 412.1(a)(1) or paid under 

the prospective payment system 

specified in § 412.1(a)(3), as a new 

rehabilitation unit for a cost reporting 

period beginning on or after October 1, 

1991, based on a certification under 

§ 412.29(c) regarding the inpatient 

population the hospital planned to treat 

in that unit during the period, if the 

inpatient population actually treated in 

the unit during that cost reporting 

period did not meet the requirements of 

§ 412.29(b). 

(3) A hospital that added new beds to 

its existing rehabilitation unit for a cost 

reporting period beginning on or after 

October 1, 1991 based on a certification 

under § 412.29(c) regarding the 

inpatient population the hospital 

planned to treat in these new beds 

during that cost reporting period, if the 

inpatient population actually treated in 

the new beds during that cost reporting 

period did not meet the requirements of 

§ 412.29(b). 

* * * * * 

■ 5. Section 412.630 is revised to read 

as follows: 

§ 412.630 Limitation on review. 

Administrative or judicial review 

under sections 1869 or 1878 of the Act, 

or otherwise, is prohibited with regard 

to the establishment of the methodology 

to classify a patient into the case-mix 

groups and the associated weighting 

factors, the Federal per discharge 

payment rates, additional payments for 

outliers and special payments, and the 

area wage index. 

Authority: (Catalog of Federal Domestic 

Assistance Program No. 93.773, Medicare— 

Hospital Insurance; and Program No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program). 

Dated: July 23, 2013. 

Marilyn Tavenner, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Approved: July 29, 2013. 

Kathleen Sebelius, 

Secretary. 

[FR Doc. 2013–18770 Filed 7–31–13; 4:15 pm] 

BILLING CODE 4120–01–P 


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