DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 412 [CMS-1448-P]

RIN 0938-AR66 Medicare Program; Inpatient Rehabilitation Fa cility Prospective Payment System for

Federal Fiscal Year 2014

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

ACTION: Proposed rule.

SUMMARY: This proposed rule would update the pr ospective payment rates for inpatient rehabilitation facilities (IRFs) for federal fiscal year (FY) 2014 (for di scharges occurring on or after October 1, 2013 and on or before September 30, 2014) as required by the statute. We are also proposing to revise the list of diagnosis codes that are used to determine presumptive compliance under the “60 percent rule ,” update the IRF facility-level adjustment factors, revise sections of the Inpatient Rehabilitation Faci lity-Patient Assessment Instrument, revise requirements for acute care hospitals that ha ve IRF units, clarify th e IRF regulation text regarding limitation of review, update references to previously changed sections in the regulations text, and revise a nd update quality measures and reporting requirements under the IRF quality reporting program.

DATES : To be assured consideration, comments mu st be received at one of the addresses provided below, no later than 5 p.m. on [OFR—inser t date 60 days after the date of filing for public inspection at OFR.]

ADDRESSES: In commenting, please refer to file code CMS-1448-P. Because of staff and2

resource limitations, we ca nnot accept comments by facsimile (FAX) transmission. You may submit comments in one of four ways (please choose only one of the ways listed): 1. Electronically . You may submit electronic comments on this regulation to http://www.regulations.gov . Follow the "Submit a comment" instructions. 2. By regular mail . You may mail written comments to the following address ONLY:

Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1448-P, P.O. Box 8016, Baltimore, MD 21244-8016.

Please allow sufficient time for mailed comments to be received before the close of the comment period. 3. By express or overnight mail . You may send written comments to the following

address ONLY:

Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1448-P, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850. 4. By hand or courier . Alternatively, you may delive r (by hand or courier) your written comments ONLY to the following addresse s prior to the close of the comment period:3

a. For delivery in Washington, DC--

Centers for Medicare & Medicaid Services, Department of Health and Human Services, Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC 20201 (Because access to the interior of the Hube rt H. Humphrey Building is not readily available to persons without Federal government identification, commenters are encouraged to

leave their comments in the CMS drop slots located in the main lobby of the building. A stampin clock is available for persons wishing to reta in a proof of filing by st amping in and retaining an extra copy of the comments being filed.) b. For delivery in Baltimore, MD--

Centers for Medicare & Medicaid Services, Department of Health and Human Services, 7500 Security Boulevard, Baltimore, MD 21244-1850. If you intend to deliver your comments to the Baltimore address, please call telephone number (410) 786-7195 in advance to schedule your arrival with one of our staff members. Comments erroneously mailed to the addres ses indicated as appr opriate for hand or courier delivery may be delayed a nd received after the comment period

. For information on viewing public co mments, see the beginning of the

"SUPPLEMENTARY INFORMATION" section.

FOR FURTHER INFORMATION CONTACT:4

Gwendolyn Johnson, (410)786-6954, for general information about the proposed rule. Caroline Gallaher, (410) 786-8705, for informa tion about the quality reporting program. Susanne Seagrave, (410)786-0044 or Kadie Thom as, (410) 786-0468, for information about the proposed payment policies and the proposed payment rates.

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

. Inspection of Public Comments: All comments received before the close of the comment period are available for viewing by the public, includi ng any personally identif iable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following website as soon as possible after they have been

received: http://www.regulations.gov . Follow the search instructions on that website to view public comments. Comments received timely will also be av ailable for public inspection as they are received, generally beginning approximately 3 w eeks after publication of a document, at the headquarters of the Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view public comments, phone 1-800-743-3951. Executive Summary A. Purpose This proposed rule updates the payment rates for inpatient reha bilitation facilities (IRFs) for federal fiscal year (FY) 2014 (for discharges occurring on or after October 1, 2013 and on or5

before September 30, 2014) as required under sec tion 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 star t 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 a nd data used in computing the prospective payment rates for that fiscal year. B. Summary of Major Provisions In this proposed rule, we use the methods described in the FY 2013 IRF PPS notice (77 FR 44618) to update the Federal prospect ive payment rates for FY 2014 using updated

FY 2012 IRF claims and the most recent available IRF cost report data. We are also proposing to revise the list of diagnosis codes that are used to determin e presumptive compliance under the “60 percent rule,” update the IRF facility-level 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 IR F 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. C. Summary of Costs, Benefits and Transfers Provision Description Total Transfers FY 2014 IRF PPS payment rate update The overall economic impact of this proposed rule is an estimated $150 million in increased payments from the Federal government to IRFs during FY 2014.

To assist readers in referenc ing sections contained in this document, we are providing the following Table of Contents.6

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 III. Proposed Update to the Case-Mix Group (CMG) Relative Weights and Average Length of Stay Values for FY 2014 IV. Proposed Updates to the Facility-L evel Adjustment Factors for FY 2014

A. Background on Facility- Level Adjustments

B. Proposed Updates to the IRF Fac ility-Level Adjustment Factors

C. Budget Neutrality Methodology for the Updates to the IRF Facility-Level Adjustment Factors V. Proposed FY 2014 IRF PPS Federal Prospective Payment Rates A. Proposed Market Basket Increase Fact or, Productivity Adjustment, Other Adjustment, and Secretary’s Recommendation for FY 2014 B. Secretary’s Proposed Recommendation C. Proposed Labor-Related Share for FY 20147

D. Proposed Area Wage Adjustment E. Description of the Proposed IRF Standa rd Conversion Factor and Payment Rates for

FY 2014 F. Example of the Methodology for Adju sting the Proposed Federal Prospective Payment Rates VI. Proposed Update to Payments for High-Cost Outliers Under the IRF PPS A. Proposed Update to the Outlier Threshold Amount for FY 2014 B. Proposed Update to the IRF Cost-t o-Charge Ratio Urban and Rural Ceilings VII. Proposed Refinements to the Pres umptive Compliance Criteria Methodology

A. Background on the Compliance Percentage

B. Proposed Changes to the ICD-Q-CM-Codes th at Meet the Presumptive Compliance

Criteria VIII. Proposed Non-Quality Related Revisions to IRF-PAI Sections A. Proposed Updates B. Proposed Additions C. Proposed Deletions D. Proposed Changes IX. Proposed Technical Corrections to the Regulations at §412.130 X. Proposed Revisions to the Conditions of Payment for IRF Units Under the IRF PPS XI. Proposed Clarification of the Regulations at §412.630 XII. Proposed Revision to the Regulations at §412.29 XIII. Proposed Revisions and Updates to the Quality Reporting Program for IRFs A. Background and Statutory Authority8

B. Quality Measures Previously Finalized and Currently in Use for the IRF Quality Reporting Program C. Proposed New IRF QRP Quality Measur es Affecting the FY 2016 and FY 2017 IRF PPS Annual Increase Factor, and Subs equent Year Increase Factors D. Proposed Changes to the IRF-PAI That Are Related to the IRF Quality Reporting Program E. Proposed Change in Data Collection and Submission Periods for Future Program

Years F. Proposed Reconsideration and Appeals Process G. Proposed Policy for Granting of a Wa iver of the IRF QRP Data Submission Requirements in Case of Disaster or Extraordinary Circumstances H. Public Display of Data Qualit y Measures for the IRF QRP Program I. Method for Applying the Reduction to th e FY 2014 IRF Increase Factor for IRFs that Fail to Meet the Quality Reporting Requirements XIV. Collection of Information Requirements A.. ICRs Regarding IRF QRP B. ICRs Regarding Non-Quality Rela ted Proposed Changes to the IRF-PAI XV. Response to Public Comments XVI. Regulatory Impact Analysis

A. Statement of Need B. Overall Impacts C. Detailed Economic Analysis

D. Alternatives Considered9

E. Accounting Statement

F. Conclusion Regulation Text I. Background

A. Historical Overview of th e Inpatient Rehabilitation Facil ity 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 re habilitation units of a hospital (hereinafter referred to as IRFs). Payments under the IRF PPS encompass inpa tient operating and capital costs of furnishing covered rehabilitation services (that is , routine, ancillary, and capital costs) but not direct graduate medical educati on costs, costs of approved nursi ng 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 origin al FY 2002 IRF PPS final rule (66 FR 41316) and the FY 2006 IRF PPS fina l rule (70 FR 47880), we are providing below a general description of the IRF PPS for fiscal ye ars (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 prospe ctive payment rates were computed across 100 distinct case-mix 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 f actor in defining a CM G). In addition, we constructed five special CMGs to account for very short stays and for patients who expire in the

IRF.10

For each of the CMGs, we developed relative weighting factors to account for a patient's clinical characteristics and expected resource ne eds. 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 conversi on factor). For a detailed discussion of the budget neutral conversion factor, please re fer 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 lowincome patients, location in a rural area (if applicab le), and outlier payments (if applicable) to the IRF's unadjusted Federal prospective payment rates. For cost reporting periods that bega n on or after January 1, 2002 and before October 1, 2002, we determined the final prospective payment amounts using the transition methodology prescribed in secti on 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 or11

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 website as a primar y information resource for the IRF PPS. The website is: http://www.cms.gov/Me dicare/Medicare-Fee-for-ServicePayment/InpatientRehabFacPPS/index.html?red irect=/InpatientRehabFacPPS/ and 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 stat utory authority upon the Secretary to propose

refinements to the IRF PPS. In the FY 2006 IR F PPS final rule (70 FR 47880) and in correcting

amendments to the FY 2006 IRF PPS final rule (70 FR 57166) that we published on September 30, 2005, we finalized a number of refinements to the IRF PPS case-mix classification system (the CMGs and the corres ponding relative weights) and the case-level and facility-level adjustments. These refine ments included the adoption of the Office of Management and Budget’s (OMB) Core-Based St atistical 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, low-income 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 IR F payments is a market basket reflecting the operating and capital cost structures for frees tanding IRFs, freestanding inpatient psychiatric facilities (IPFs), and long-term car e hospitals (LTCHs) (hereafter re ferred to as the rehabilitation, psychiatric, and long-term care (RPL) market ba sket). Any reference to the FY 2006 IRF PPS final rule in this proposed rule also incl udes the provisions effec tive in the correcting12

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 FR48354), we further refined the IRF PPS casemix classification system (the CM G relative weights) and the case- level adjustments, to ensure that IRF PPS payments would conti nue to reflect as accurately as possible the costs of care. For a detailed discussion of the FY 2007 policy revi sions, 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 transf er 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 fi nal rule (72 FR 44284), section 115 of the Medicare, Medicaid, and SCHIP Extensi on 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, effec tive for IRF discharges occurring on or after April 1, 2008. Section 1886(j)(3)(C) of the Act re quired the Secretary to develop an increase factor to update the IRF federal prospective paym ent 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 fi nal 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 occurr ing 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 discharges13

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 website at http://www.cms.gov/Medicare/Medicare-Fee-for- Service-Payment/Inpati entRehabFacPPS/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 outlie r threshold; clarified IRF wage index policies regarding the treatment of “New England d eemed” counties and multi-campus hospitals; and revised the regulation text in response to sec tion 115 of the MMSEA to set the IRF compliance percentage at 60 percent (“the 60 percent ru le”) and continue the practice of including comorbidities in the calculation of compliance per centages. We also applied a zero percent

market basket increase factor for FY 2009 in acc ordance 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 re lative weights, the average length of stay values, the rural, LIP, and teaching status ad justment factors, and the outlier threshold; implemented new IRF coverage requirements for determining whether an IRF claim is reasonable and necessary; and revised the regula tion text to require IRFs to submit patient assessments on Medicare Advantage (MA) (Medicar e Part C) patients for use in the 60 percent rule calculations. Any reference to the FY 2010 IRF PPS final rule in this proposed rule also includes the provisions e ffective in the correcting amendmen ts. For more information on the14

policy changes implemented for FY 2010, pleas e 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 fina l 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 th e 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 Ac t”), amended section 1886(j)(3)(C)

of the Act and added section 1886 (j)(3)(D) of the Act. Secti on 1886(j)(3)(C) of the Act requires the Secretary to estimate a multi-factor productiv ity adjustment to the market basket increase factor, and to apply other adjustments as defi ned by the Act. The productivity adjustment applies to FYs from 2012 forward. The ot her adjustments apply to FYs 2010 to 2019. Sections 1886(j)(3)(C)(ii)(II) a nd 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 incr ease factor in FY 2010 by a 0.25 percentage point adjustment. Notwithst anding this provision, in accordance with section 3401(p) of the Affordable Care Act, the ad justed FY 2010 rate was only to be applied to discharges occurring on or af ter April 1, 2010. Based on the self-implementing 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 occurri ng 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 PP S final rule (74 FR 39762) were used for discharges occurring on or after October 1, 2009 and on or before March 31, 2010; and the15

adjusted FY 2010 IRF federal prospective payment rates applied to discha rges occurring on or after April 1, 2010 and on or before September 30, 2010. The adjusted FY 2010 federal prospective payment rates are av ailable on the CMS website at http://www.cms.gov/Medicare/Medicare-Fee-for- Service-Payment/Inpati entRehabFacPPS/DataFiles.html

. In addition, sections 1886(j) (3)(C) and (D) of the Act al so 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 standa rd 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 pros pective 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 mainta in estimated outlier payments for FY 2010 equal to the established standard of 3 percen t of total estimated IRF PPS payments for FY 2010,

we revised the IRF outlier threshold amount for FY 2010 for discharges o ccurring 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) also requ ired 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) describe d the required adjustments to the FY 2011 and FY 2010 IRF PPS Federal prosp ective payment rates and outli er threshold amount for IRF discharges occurring on or af ter April 1, 2010 and on or before September 30, 2011. It also16

updated the FY 2011 Federal prospective payment rates, the CMG relative weights, and the average length of stay values . Any reference to the FY 2011 IRF PPS notice in this proposed rule also includes the provisions effective in the correcting amendments. For more information on the FY 2010 and FY 2011 adjustments or th e 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 regulations text for the purpose of updating and providing greate r 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 publis hed the final FY 2012 IRF federal prospective payment rates. The FY 2013 IRF PPS notice (77 FR 44618) desc ribed 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 CM G relative weights, an d the average length of stay values. For more information on the upda tes for FY 2013, please refer to the 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 fo r a “productivity” adjustment” for fiscal year 2012 and each subsequent fiscal year). The proposed productivity adjustment for FY 201417

is discussed in section V.A. of this proposed rule. Section 3401(d) of the Affordable Care Act requires an additional 0.3 percentage point adjust ment to the IRF increase factor for FY 2014, as discussed in section V.A. of this proposed rule. Section 1886(j)(3)(C)(ii)(I I) 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 a nd in payment rates for a fiscal y ear being less than such payment rates for the preceding fiscal year. Section 3004(b) of the Affordable Care Ac t also addressed the IRF PPS program. It reassigned the previously-designated section 188 6(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 Secretar y. Beginning in FY 2014, s ection 1886(j)(7)(A)(i) 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) a nd (ii) of the Act, the Secret ary is generally required to select quality measures for the IRF quality report ing program from those that have been endorsed by the consensus-based entity which holds a pe rformance measurement contract under section 1890(a) of the Act. This contra ct is currently held by the Nati onal Quality Forum (NQF). So long as due consideration is gi ven to measures that have been endorsed or adopted by a consensus-based organization, section 1886(j)(7)(D)(i i) of the Act authori zes the Secretary to18

select non-endorsed measures for specified areas or medical topics when there are no feasible or practical endorsed measure(s). Under section 18 86(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-for-service patient, the IRF is required to complete the appropriate sections of a patient assessment instrument (PAI), design ated as the Inpatient Rehabilitation FacilityPatient Assessment Instrument (IRF-PAI). In ad dition, 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 ru le. All required data must be electronically encoded into the IRF-PAI software product. Ge nerally, the software product includes patient classification programming called the GROUPER software. The GROUPER software uses specific IRF-PAI data elements to classify (or gr oup) patients into distinct CMGs and account for the existence of any relevant comorbidities. The GROUPER software produces a 5-digit CM G number. The first digit is an alphacharacter that indicates the comorbidity tier. The last 4 digits represent th e distinct CMG number. Free downloads of the Inpatient Rehabilitation Validation and Entry (IRVEN) software product, including the GROUPER software, ar e available on the CMS website at19

http://www.cms.hhs.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 el ectronic claim or, if the Administrative Simplification Compliance Act of 2002 (P ub. 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 Me dicare fiscal intermed iary (FI) or Medicare Administrative Contractor (MAC). In a ddition, 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 su bmit an informational only bill (TOB 111)

which includes Condition Code 04 to their Medi care contractor. This will ensure that the Medicare Advantage days are in cluded in the hospital’s Supplem ental Security Income (SSI) ratio (used in calculating the IRF low-income 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 deni al in situations in which there is no method

available for the submission of claims in an elect ronic form or the entity submitting the claim is a small provider. In addition, the Secretary also ha s the authority to waive such denial “in such unusual cases as the Secretary finds appropriate .” For more information, see the “Medicare20

Program; Electronic Submission of Medi care Claims” final rule (70 FR 71008, November 25, 2005). CMS 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 oper ates 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 Transact ions Rule requires covered entities, including covered healthcare providers, to conduct cove red electronic transact ions according to the applicable transaction standards. (S ee the CMS program claim memoranda at http://www.cms.gov/ElectronicBillingEDITrans/ and listed in the a ddenda to the Medicare Intermediary Manual, Part 3, section 3600). The Medicare FI or MAC processes the claim through its software system. This software system includes pricing programming called th e “PRICER” software. The PRICER software uses the CMG number, along with ot her specific claim data elemen ts and provider-specific data, to adjust the IRF's prospective payment for interr upted stays, transfers, short stays, and deaths, and then applies the applicable adjustments to account for the IR F's wage index, percentage of low-income patients, rural locati on, and outlier payments. For di scharges 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 th e FY 2006 IRF PPS final rule (70 FR 47880). II. Summary of Provisions of the Proposed Rule In this proposed rule, we are proposing to update the IRF Federal prospective payment rates, to revise the list of e ligible International Classifica tion of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM) diagnosis codes that are eligible under the “60 percent rule,”21

to update the IRF facility-level ad justment factors, to revise the Inpatient Rehabilitation FacilityPatient Assessment Instrument (IRF-PAI), to revi se requirements for acute care hospitals that have IRF units, clarify the IRF regulation text re garding limitation of review, and to revise and update quality measures and reporting requireme nts under the quality reporting program for IRFs. We are also proposing to revise existing regulations text for the purpose of updating and providing greater clarity. Thes e proposals are as follows: A. Proposed Updates to the IRF Federal Prosp ective Payment Rates for Federal Fiscal Year (FY) 2014 The proposed updates to the IRF federal pros pective payment rates for FY 2014 are as

follows:

● Update the FY 2014 IRF PPS relative weights and average length of stay values using the most current and complete Medicare claims a nd cost report data in a budget neutral manner, as discussed in section III. of this proposed rule.

● Update the FY 2014 IRF PPS facility-level ad justment 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 this proposed rule.

● Update the FY 2014 IRF PPS payment rates by the proposed market basket increase factor, based upon the most current data availabl e, 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 this proposed rule.

● Discuss the Secretary’s Proposed Reco mmendation for updating IRF PPS payments for FY 2014, in accordance with the statutory require ments, as described in section V. of this22

proposed rule.

● Update the FY 2014 IRF PPS payment rates by the FY 2014 wage index and the laborrelated share in a budget neutral manner, as disc ussed in section V. of this proposed rule.

● Describe the calculation of the IRF St andard Payment Conversion Factor for FY 2014, as discussed in section V. of this proposed rule.

● Update the outlier threshol d amount for FY 2014, as discussed in section VI. of this proposed rule.

● Update the cost-to-charge ratio (CCR) ceiling and urban/rural average CCRs for FY 2014, as discussed in secti on VI. of this proposed rule.

● Describe proposed revisions to the list of eligible ICD-9- CM diagnosis codes that meet the presumptive compliance criteria in s ection VII. of this proposed rule.

● Describe proposed non-quality-related revi sions to IRF-PAI sections in section VIII. of this proposed rule.

● Describe proposed revisions and update s 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 this proposed rule. B. Proposed Revisions to Existing Regulation Text In this proposed rule, we are also propos ing 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 paym ent system (IPPS) for a hospital that has an IRF unit, as described in section X. of this proposed rule.

● Technical corrections to §412.130, to reflec t prior changes to the regulations at23

§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 this proposed rule.

● Clarifications to §412.630, to reflect the scope of secti on 1886(j)(8) of the Act, as described in section XI. of this proposed rule.

● Revision to §412.29(d), to clarify that Me dicare requires the reha bilitation physician’s review and concurrence on the preadmission sc reening for Medicare Part A fee-for-service patients only, as described in sec tion XII. of this proposed rule. III. Proposed 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 calculat e a relative weight for each CMG that is proportional to the resources needed by an averag e inpatient rehabilitatio n 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. Re lative weights account for th e variance in cost per discharge due to the variance in resource utilization among th e payment groups, and their use helps to ensure that IRF PPS payments support be neficiary access to care, as well as provider efficiency. In this proposed rule, we propose to update the CMG relative weight s and average length of stay values for FY 2014. As required by statut e, we always use the most recent available data to update the CMG relative wei ghts and average lengths of stay. For FY 2014, we are proposing

to use the FY 2012 IRF claims a nd FY 2011 IRF cost report data. These data are the most current and complete data available at this ti me. 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.24

In this proposed rule, we propose to apply th ese data using the same methodologies that we have used to update the CMG relative weight s and average length of stay values in the FY 2011 notice (75 FR 42836), the FY 2012 fina l rule (76 FR 47836), and the FY 2013 notice (77 FR 44618). In calculating the CMG relative weights, we use a hosp ital-specific relative value method to estimate operating (routine and an cillary services) and ca pital costs of IRFs. The process used to calculate the CMG relative weights for this proposed rule is as follows: Step 1 . We estimate the effects that comorbidities have on costs. Step 2 . We adjust the cost of each Medicare disc harge (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 hospital-sp ecific relative value method. Step 4 . We normalize the FY 2014 CMG relative weights to the same average CMG relative weight from the CMG relative weight s implemented in the FY 2013 IRF PPS notice (77 FR 44618). Consistent with the methodology that we ha ve used to update the IRF classification system in each instance in the past, we are proposing 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 ch anges (that is, in a budget neutral ma nner) by applying a budget neutrality factor to the standard payment amount. To calculate the appropr iate proposed budget neutrality factor for use in updating the FY 2014 CMG rela tive weights, we propose to use the following steps: Step 1 . Calculate the estimated total amount of IRF PPS payments for FY 2014 (with no proposed changes to the CMG relative weights).25

Step 2 . Calculate the estimated total amount of IRF PPS payments for FY 2014 by applying the proposed changes to the CMG re lative weights (as discussed above). Step 3 . Divide the amount calculated in step 1 by the amount calcula ted in step 2 to determine the proposed budget neutrality factor (1.0000) that would maintain the same total estimated aggregate payments in FY 2014 with and without the proposed changes to the CMG relative weights. Step 4 . Apply the proposed 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 V.E. of this proposed rule, we discuss the proposed use of the existing methodology to calculate the standard payment conversion factor for FY 2014. Table 1, “Proposed Relative Weights and Aver age Length of Stay Values for Case-Mix Groups,” presents the CMGs, the comorbidity tier s, the proposed corresponding relative weights, and the proposed average length of stay values for each CMG and tier for FY 2014. The average length of stay for each CMG is used to determin e when an IRF discharge meets the definition of a short-stay transfer, which resu lts in a per diem case level ad justment. The proposed relative weights and average length of st ay values shown in Table 1 are subject to change for the final

rule if more recent data become av ailable for use in these analyses.26

TABLE 1: Proposed Relative Weights and Average Length of Stay Values for Case-Mix Groups

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

Tier1 Tier2 Tier3 None Tier1 Tier2 Tier3 None 0101 Stroke M>51.05 0.8001 0.7122 0.6556 0.6248 9 9 9 8 0102 Stroke M>44.45 and M<51.05 and C>18.5 0.9921 0.8831 0.8129 0.7748 11 12 10 10 0103 Stroke M>44.45 and M<51.05 and C<18.5 1.1613 1.0337 0.9516 0.9069 13 13 12 11 0104 Stroke M>38.85 and

M<44.45 1.2210 1.0869 1.0006 0.9536 14 12 12 12 0105 Stroke M>34.25 and

M<38.85 1.4283 1.2715 1.1704 1.1154 15 14 14 14 0106 Stroke M>30.05 and

M<34.25 1.6327 1.4534 1.3379 1.2751 16 17 16 15 0107 Stroke M>26.15 and

M<30.05 1.8413 1.6391 1.5088 1.4380 19 20 17 17 0108 Stroke M<26.15 and A>84.5 2.3160 2.0616 1.8978 1.8087 23 24 22 21 0109 Stroke M>22.35 and M<26.15 and A<84.5 2.1034 1.8724 1.7236 1.6426 21 21 19 20 0110 Stroke M<22.35 and A<84.5 2.7387 2.4380 2.2443 2.1388 28 28 25 25 0201 Traumatic b rain injury M>53.35 and C>23.5 0.8068 0.6835 0.6059 0.5641 10 10 8 8 0202 Traumatic b rain injury M>44.25 and M<53.35 and C>23.5 1.0536 0.8926 0.7912 0.7366 12 10 10 10 0203 Traumatic b rain injury M>44.25 and C<23.5 1.2422 1.0524 0.9329 0.8685 14 13 12 1127

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

Tier1 Tier2 Tier3 None Tier1 Tier2 Tier3 None 0204 Traumatic brain injury M>40.65 and

M<44.25 1.3000 1.1013 0.9762 0.9089 12 13 12 12 0205 Traumatic b rain injury M>28.75 and

M<40.65 1.5755 1.3347 1.1831 1.1015 17 16 14 14 0206 Traumatic b rain injury M>22.05 and

M<28.75 1.9459 1.6485 1.4613 1.3605 18 19 17 16 0207 Traumatic b rain injury

M<22.05 2.5684 2.1759 1.9287 1.7957 33 26 21 200301 Nontraumatic brain injury

M>41.05 1.0992 0.9462 0.8502 0.7859 10 11 11 100302 Nontraumatic brain injury M>35.05 and

M<41.05 1.3735 1.1824 1.0625 0.9820 13 14 12 120303 Nontraumatic brain injury M>26.15 and

M<35.05 1.6221 1.3964 1.2548 1.1597 16 16 14 140304 Nontraumatic brain injury

M<26.15 2.1731 1.8708 1.6810 1.5537 24 21 19 18 0401 Traumatic spinal cord

injury M>48.45 1.1451 0.9494 0.8847 0.7923 13 13 11 10 0402 Traumatic spinal cord

injury M>30.35 and

M<48.45 1.4139 1.1724 1.0924 0.9784 17 14 14 12 0403 Traumatic spinal cord

injury M>16.05 and

M<30.35 2.3069 1.9128 1.7823 1.5963 26 23 20 2028

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

Tier1 Tier2 Tier3 None Tier1 Tier2 Tier3 None 0404 Traumatic spinal cord

injury M<16.05 and A>63.5 4.2117 3.4921 3.2539 2.9142 46 41 35 34 0405 Traumatic spinal cord

injury M<16.05 and A<63.5 3.4483 2.8592 2.6642 2.3861 37 32 31 270501 Nontraumatic spinal cord

injury M>51.35 0.8500 0.6729 0.6328 0.5761 9 9 8 80502 Nontraumatic spinal cord

injury M>40.15 and

M<51.35 1.1064 0.8759 0.8237 0.7500 12 11 10 100503 Nontraumatic spinal cord

injury M>31.25 and

M<40.15 1.4276 1.1302 1.0628 0.9677 15 13 13 120504 Nontraumatic spinal cord

injury M>29.25 and

M<31.25 1.6534 1.3089 1.2309 1.1207 14 16 14 140505 Nontraumatic spinal cord

injury M>23.75 and

M<29.25 1.9495 1.5433 1.4514 1.3214 21 18 17 160506 Nontraumatic spinal cord

injury M<23.75 2.7308 2.1619 2.0330 1.8510 30 25 23 21 0601 N eurological M>47.75 0.9661 0.7875 0.7272 0.6589 10 10 9 9 0602 N eurological M>37.35 and

M<47.75 1.2904 1.0518 0.9713 0.8801 12 12 11 1129

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

Tier1 Tier2 Tier3 None Tier1 Tier2 Tier3 None 0603 N eurological M>25.85 and

M<37.35 1.6184 1.3191 1.2182 1.1038 15 15 14 13 0604 Neurological M<25.85 2.1563 1.7575 1.6231 1.4706 22 19 18 17 0701 Fracture of lower extremity M>42.15 0.9445 0.8052 0.7712 0.6996 10 10 10 9 0702 Fracture of lower extremity M>34.15 and

M<42.15 1.2149 1.0357 0.9920 0.8999 12 12 12 11 0703 Fracture of lower extremity M>28.15 and

M<34.15 1.4770 1.2591 1.2060 1.0940 15 15 14 13 0704 Fracture of lower extremity M<28.15 1.8753 1.5987 1.5312 1.3891 18 18 18 17 0801 Replacement of lower extremity

joint M>49.55 0.7009 0.6238 0.5675 0.5200 7 8 7 7 0802 Replacement of lower extremity

joint M>37.05 and

M<49.55 0.9206 0.8193 0.7453 0.6830 10 10 9 9 0803 Replacement of lower extremity

joint M>28.65 and M<37.05 and A>83.5 1.2478 1.1105 1.0103 0.9257 12 13 13 12 0804 Replacement of lower extremity

joint M>28.65 and M<37.05 and A<83.5 1.1083 0.9863 0.8973 0.8222 11 12 11 1030

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

Tier1 Tier2 Tier3 None Tier1 Tier2 Tier3 None 0805 Replacement of lower extremity

joint M>22.05 and

M<28.65 1.3678 1.2173 1.1075 1.0148 15 15 13 12 0806 Replacement of lower extremity

joint M<22.05 1.6590 1.4765 1.3433 1.2308 17 17 15 15 0901 Other orthopedic M>44.75 0.9026 0.7480 0.6895 0.6254 11 9 9 8 0902 Other orthopedic M>34.35 and

M<44.75 1.2051 0.9987 0.9206 0.8350 12 12 11 11 0903 Other orthopedic M>24.15 and

M<34.35 1.5094 1.2509 1.1530 1.0459 15 15 14 13 0904 Other orthopedic M<24.15 1.9660 1.6293 1.5019 1.3623 19 18 17 16 1001 Amputation, lower extremity M>47.65 1.0372 0.9443 0.8131 0.7478 12 11 10 10 1002 Amputation, lower extremity M>36.25 and

M<47.65 1.3081 1.1909 1.0255 0.9431 13 13 12 12 1003 Amputation, lower extremity M<36.25 1.9330 1.7599 1.5154 1.3936 19 20 17 16 1101 Amputation, non-lower extremity M>36.35 1.2388 1.1334 1.0487 1.0147 13 13 12 12 1102 Amputation, non-lower extremity M<36.35 1.7069 1.5618 1.4450 1.3981 16 17 16 16 1201 Osteoarthritis M>37.65 0.9482 0.9350 0.8467 0.7752 9 11 10 1031

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

Tier1 Tier2 Tier3 None Tier1 Tier2 Tier3 None 1202 Osteoarthritis M>30.75 and

M<37.65 1.1813 1.1649 1.0549 0.9659 14 14 13 12 1203 Osteoarthritis M<30.75 1.4671 1.4468 1.3101 1.1995 13 17 15 14 1301 Rheumatoid, other arthritis

M>36.35 1.1815 0.9991 0.9005 0.8171 12 10 11 10 1302 Rheumatoid, other arthritis M>26.15 and

M<36.35 1.5305 1.2942 1.1666 1.0585 16 15 14 13 1303 Rheumatoid, other arthritis

M<26.15 1.9677 1.6639 1.4998 1.3608 18 19 17 16 1401 Cardiac M>48.85 0.8864 0.7216 0.6539 0.5919 9 9 9 8 1402 Cardiac M>38.55 and

M<48.85 1.1973 0.9747 0.8832 0.7995 12 11 11 10 1403 Cardiac M>31.15 and

M<38.55 1.4604 1.1889 1.0773 0.9752 14 14 12 12 1404 Cardiac M<31.15 1.8618 1.5157 1.3734 1.2433 19 17 15 14 1501 Pulmonary M>49.25 1.0003 0.8590 0.7747 0.7436 10 9 9 9 1502 Pulmonary M>39.05 and

M<49.25 1.2590 1.0812 0.9751 0.9359 12 12 11 11 1503 Pulmonary M>29.15 and

M<39.05 1.5224 1.3074 1.1791 1.1318 15 14 13 13 1504 Pulmonary M<29.15 1.8896 1.6227 1.4634 1.4047 21 17 16 15 1601 Pain syndrome M>37.15 1.0309 0.8817 0.8282 0.7568 9 10 10 9 1602 Pain syndrome M>26.75 and

M<37.15 1.3536 1.1577 1.0874 0.9937 12 14 13 12 1603 Pain syndrome M<26.75 1.7052 1.4584 1.3699 1.2518 18 17 15 1532

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

Tier1 Tier2 Tier3 None Tier1 Tier2 Tier3 None 1701 Major multiple trauma without brain or spinal cord injury M>39.25 1.0875 0.9493 0.8541 0.7718 11 12 11 10 1702 Major multiple trauma without brain or spinal cord injury M>31.05 and

M<39.25 1.3611 1.1881 1.0689 0.9659 13 14 13 12 1703 Major multiple trauma without brain or spinal cord injury M>25.55 and

M<31.05 1.6427 1.4339 1.2901 1.1658 17 16 14 14 1704 Major multiple trauma without brain or spinal cord injury M<25.55 2.0841 1.8193 1.6368 1.4790 24 20 18 18 1801 Major multiple trauma with brain or spinal

cord injury M>40.85 1.1476 1.0623 0.9340 0.7874 14 13 12 10 1802 Major multiple trauma with brain or spinal

cord injury M>23.05 and

M<40.85 1.7108 1.5837 1.3924 1.1739 18 19 17 14 1803 Major multiple trauma with brain or spinal

cord injury M<23.05 2.7350 2.5317 2.2259 1.8766 32 28 23 2233

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

Tier1 Tier2 Tier3 None Tier1 Tier2 Tier3 None 1901 Guillain Barre M>35.95 1.0958 0.9305 0.9064 0.8886 13 10 11 11 1902 Guillain Barre M>18.05 and

M<35.95 2.1340 1.8120 1.7652 1.7305 23 21 18 20 1903 Guillain Barre M<18.05 3.5000 2.9719 2.8951 2.8382 41 32 31 30 2001 Miscellaneous M>49.15 0.8897 0.7304 0.6716 0.6138 9 9 8 8 2002 Miscellaneous M>38.75 and

M<49.15 1.1865 0.9741 0.8956 0.8186 12 11 11 10 2003 Miscellaneous M>27.85 and

M<38.75 1.4910 1.2241 1.1254 1.0286 14 14 13 12 2004 Miscellaneous M<27.85 1.9537 1.6039 1.4746 1.3478 20 18 17 15 2101 Burns M>0 2.1782 1.5737 1.4885 1.4056 24 21 17 16 5001 Short-stay cases, length of stay is 3 days or fewer 0.1541 3 5101 Expired, orthopedic, length of stay is 13 days or fewer 0.6604 8 5102 Expired, orthopedic, length of stay is 14 days or more 1.4552 17 5103 Expired, not orthopedic, length of stay is 15 days or fewer 0.7653 9 5104 Expired, not orthopedic, length of stay is 16 days or more 1.9930 22 Generally, updates to the CMG relative we ights result in some increases and some decreases to the CMG relative weight values. Table 2 shows how the application of the34

proposed revisions for FY 2014 would affect pa rticular CMG relative weight values, which

affect the overall distribution of payments within CMGs and tiers. Note that, because we propose to implement the CMG relative wei ght revisions in a budget neutral manner (as described above), total estimated aggregate paymen ts to IRFs for FY 2014 would not be affected as a result of the CMG relative weight revisions . However, the proposed revisions would affect the distribution of payments within CMGs and tiers.

TABLE 2: Distributional Eff ects of the Proposed 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% 2,325 0.7 Changed by less than 5% 340,496 98.7 Decreased by between 5% and 15% 1,939 0.6 Decreased by 15% or more 92 0.0

As Table 2 shows, almost 99 percent of all IRF cases are in CMGs and tiers that would experience less than a 5 percent change (either in crease or decrease) in the CMG relative weight value as a result of the proposed revisions for FY 2014. The largest incr ease in the proposed CMG relative weight values that affects a part icularly large number of IRF discharges is a 0.9 percent increase in the CMG relative we ight value for CMG 0704—Fracture of Lower Extremity, with a motor score less than 28.15—in the “no comorbidity” tie r. In the FY 2012 data, 18,770 IRF discharges (5.4 percent of all IR F discharges) were classified into this CMG

and tier. The largest decrease in a CMG relative we ight value affecting the most cases is a

2.0 percent decrease in the CMG relative weight for CMG 0903—Oth er Orthopedic with a motor score between 24.15 and 34.35—in the no comorbidity ti er. In the FY 2012 IRF claims data, this35

change affects 6,605 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. IV. Proposed Updates to the Facility-Level Adjustment Factors for FY 2014 A. Background on Facility- Level Adjustments Section 1886(j)(3)(A)(v) of th e Act confers broad authority upon the Secretar y to adjust the per unit payment rate “by such . . . factors as the Secretar y determines are necessary to properly reflect variations in n ecessary costs of treatment among re habilitation facilities.” For example, we adjust the federa l 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 IR F 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 co mpute the adjustment factors, especially the teaching status adjustment factor. Therefor e, we implemented a 3-year moving average approach to updating the facility-level adjust ment factors in the FY 2010 IRF PPS final rule (74 FR 39762) to provide greater stability and pr edictability of Medicare payments for IRFs. Each year, we review the major components of the IRF PPS to maintain and enhance the accuracy of the payment system. For FY 2010, we implemented a change to our methodology36

that was designed to decrease the IRF PPS volat ility by using a 3-year moving average to calculate the facility-level adju stment 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 implementa tion of the 3-year moving average did not fully address year-to-year fluctuat ions, 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-l evel 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 weighti ng factor from our analysis and update the IRF facility-level adjustment factors for FY 2012 using an un-weighted regression analysis. However, after carefully considering all of th e comments that we received on the proposed FY 2012 updates to the fac ility-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 f acility-level 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 low-income patients. B. Proposed Updates to the IRF Fa cility-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 ac curately as possible the costs of providing IRF care across the full spectrum of IRF providers. Our recent research e fforts have shown that significant differences37

exist between the cost structures of freestanding IRFs and the cost structures of IRF units of acute care hospitals (and critical access hospita ls, otherwise known as “CAHs”). We have found

that these cost structure differences substantia lly influence the estimates of the adjustment factors. Therefore, we believe that it is importa nt to control for these cost structure differences between hospital-based and frees tanding IRFs in our regressi on analysis, so that these differences do not inappropriately influence the adjustment factor estimates. In Medicare’s payment system for the treatment of end-stage re nal disease (ESRD), we already control for the cost structure differences between hospital-base d and freestanding faciliti es 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 s uggesting that the additi on of this particular

control variable to the mode l could improve the methodology fo r estimating the IRF facilitylevel adjustment factors. Thus, we propose to add an indicator vari able 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 hospita l and have an assigned value of “0” if the facility is an IRF

unit of an acute care hos pital (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 differe nces do not become inappropriately intertwined with our estimates of the differences in costs between rural and urban facilities, high LIP percentage and low LIP per centage facilities, and teaching and non-teaching facilities. Further, by including th is variable in the regression analysis, we greatly improve our ability to predict an IRF’s average co st per case (that is, the R-squared of the regression model increases from about 11 percent to 41 percent). In this way, it enhances the precision with which38

we can estimate the IRF facility-level adjustments. Therefore, in this proposed rule, we pr opose 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 e quals “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 propose to update the adjustment factors using the most recent th ree 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 propose to use the cost report data that corresponds with each IRF claim, when availabl e. In the rare instances in which the corresponding year’s cost report data are not available, we propose 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 proposed updates to the rural, LIP, and teaching status adjustment factors for FY 2014, we propose to use the following steps: [Steps 1 and 2 are performed independently fo r 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 st atus adjustments. We are also proposing to incorporate an additional indicator variable to account for whethe r a facility is a freestanding IRF hospital or a unit of an acut e care hospital (or a CAH). Step 3

. Calculate a simple mean for each of the co efficients 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 adjust ment coefficient (because the rural variable is39

either zero (if not rural) or 1 (if rural)). To compute the LIP and teaching status adjustment factors, we convert these factors b ack out of the logarithmic form. Based on this methodology, we propose to update the rural adjustment factor for FY 2014 from 18.4 percent to 14.28 percent. We propose to update the LIP adjustment factor for FY 2014 from 0.4613 to 0.3158 and the teaching status ad justment factor for FY 2014 from 0.6876 to 0.9859. The proposed adjustment factors are subject to change for the final rule if more data become available for use in these analyses. Further, although we believe th at updating the facility-level adjustment factors with the proposed methodology will enhance the accuracy and fairness of the IRF PPS payment rates, we recognize that this would resultin significant financial impacts for IRF providers. Thus, we welcome comments from the industry on whether updati ng the adjustment factor s at this time or freezing them at the current levels for an addi tional year would be a better approach. C. Budget Neutrality Methodology for the Upda tes to the IRF Facility-Level Adjustment

Factors Consistent with the way that we implem ented changes to the IRF facility-level adjustment factors (the rural, LIP, and teachi ng status adjustments factors) in the FY 2006 IRF PPS final rule (70 FR 47880 and 70 FR 57166), whic h was the only year in which we updated these adjustment factors, we propose to make ch anges 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 change s (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 proposed budget ne utrality factors used to update the rural, LIP, and teaching status adjustment factor s, we propose to use the following steps:40

Step 1

. Using the most recent available data (c urrently FY 2011), calculate the estimated total amount of IRF PPS payments that woul d be made in FY 2014 (without applying the proposed changes to the rural, LIP, or teaching status adjustment factors). Step 2

. Calculate the estimated to tal amount of IRF PPS payments that would be made in FY 2014 if the proposed update to the rura l adjustment factor were applied. Step 3

. Divide the amount calculated in step 1 by the amount calcula ted in step 2 to determine the proposed budget neutrality factor (1.0030) that would maintain the same total estimated aggregate payments in FY 2014 with and without the proposed change to the rural adjustment factor. Step 4

. Calculate the estimated to tal amount of IRF PPS payments that would be made in FY 2014 if the proposed update to the LI P adjustment factor were applied. Step 5

. Divide the amount calculated in step 1 by the amount calcula ted in step 4 to determine the proposed budget neutrality factor (1.0174) that would maintain the same total estimated aggregate payments in FY 2014 with and without the proposed change to the LIP adjustment factor. Step 6

. Calculate the estimated to tal amount of IRF PPS payments that would be made in FY 2014 if the proposed update to the teaching status adjustment factor were applied. Step 7

. Divide the amount calculated in step 1 by the amount calcula ted in step 6 to determine the proposed budget neutrality factor (0.9966) that would maintain the same total estimated aggregate payments in FY 2014 with a nd without the proposed ch ange to the teaching status adjustment factor. Step 8

. Apply the proposed budget neutrality factor s for the updates to the rural, LIP, and teaching status adjustment factors to the FY 2013 IRF PPS standard payment amount after the41

application of the proposed budget neutrality f actors for the wage adjustment and the CMG relative weights. The proposed budget neutrality factors for the proposed changes to the rural, LIP, and teaching status adjustment factor s are subject to change in the final rule if more recent data become available for use in these analyses or if the proposed payment po licies associated with the proposed budget neutrality factors change. In section V.E of this proposed rule, we discuss the proposed methodology for calculating the sta ndard payment conversion factor for FY 2014. V. Proposed FY 2014 IRF PPS Federal Prospective Payment Rates A. Proposed Market Basket Increase Fact or, Productivity Adjustment, Other Adjustment, and Secretary’s Recommendation for FY 2014 Section 1886(j)(3)(C) of the Act requires the Se cretary 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, th e increase factor shall be us ed to update the IRF federal prospective payment rates for each FY. Secti ons 1886(j)(3)(C)(ii)(II) an d 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. T hus, in this proposed rule, we are proposing to update the IRF PPS payments for FY 2014 by a ma rket 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 descri bed 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 proposed rule, we propose to use the same methodology described in the42

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 sh are. 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 first quarter 2013 forecast, the most recent estimate of the 2008-based RPL market basket increase factor for FY 2014 is 2.5 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 Ac t, and using the methodology

described in the FY 2012 IRF PPS final ru le (76 FR 47836, 47858 through 47859), we propose to 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 pr ivate nonfarm business MFP. We refer readers to

the BLS website 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 aver age of MFP for the period ending FY 2014) is 0.4 percent, which was calculated using the methodology described in the FY 2012 IRF PPS final rule (76 FR 47836, 47858 through 47859) and is based on IGI’s first quarter 2013 forecast. Thus, in accordance with section 1886(j)(3 )(C) of the Act, we propose to base the FY 2014 market basket update, which is used to determine the applicable percentage increase for43

the IRF payments, on the most recent estimate of the FY 2008-based RPL market basket (currently estimated to be 2.5 percent based on IGI’s first quarter 2013 forecast). We propose to then reduce this percen tage increase by the current estimate of the MFP adjustment for FY 2014 of 0.4 percentage point (the 10-year moving average of MFP for the period ending FY 2014 based on IGI’s first quarter 2013 forecast), whic h was calculated as described in the FY 2012 IRF PPS final rule (76 FR 47836, 47859). Following application of the productivity adjustment, we propose to further reduce the applicable per centage increase by 0.3 pe rcentage 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 proposed FY 2014 IRF update is 1.8 percent (2.5 percent market basket update less 0.4 percentage point MFP adjustment less 0.3 percentage point legislative adjustment). Furthermore, we also are proposing that if more recent data are subsequently available (for example, a more recent estimate of the market ba sket and MFP adjustment), we would use such data, if appropriate, to determine the FY 2014 ma rket basket update and MFP adjustment in the

final rule. B. Secretary’s Proposed Recommendation For FY 2014, the Medicare Payment Advisory Commission (MedPAC) recommends that a 0 percent update be applied to IRF PPS payment rates for FY 2013. 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 because se ction 1886(j)(3)(C) of the Act does not provide the Secretary with the authority to apply a different update f actor to IRF PPS payment rates for FY 2014. C. Proposed Labor-Related Share for FY 2014 The proposed labor-related share for FY 2014 is updated using the methodology44

described in the FY 2012 IRF PPS final rule (76 FR 47836, 47860 through 47863). Using this method and IGI’s first quarter 2013 forecast of the 2008-based RPL market basket, the proposed

IRF labor-related share for FY 2014 is the sum of the FY 2014 relative importance of each laborrelated cost category. This figure reflects the di fferent rates of price change for these cost categories between the base year (FY 2008) a nd FY 2014. As shown in Table 3, the proposed FY 2014 labor-related share is 69.658 percent. We propose that if a more recent estimate of the FY 2014 labor-related share is subsequently availabl e, we would use such data, if appropriate, to

determine the FY 2014 labor-related share in the final rule. TABLE 3: Proposed FY 2014 IRF RPL La bor-Related Share Relative Importance

Proposed FY 2014 Relative Importance Labor-Related Share Wages and Salaries 48.491 Employee Benefits 13.019 Professional Fees: Labor-Related 2.069 Administrative and Business Support Services 0.417 All Other: Labor-Related Services 2.086 Subtotal 66.082 Labor-Related Portion of Capital Costs (.46) 3.576 Total Labor-Related Share 69.658 Source: IHS Global Insight, Inc. 1s t quarter 2013 forecast; Historical Data through 4th quarter, 2012. D. Proposed Area Wage Adjustment Section 1886(j)(6) of the Ac t 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 (establi shed 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 f acilities. The Secretary is re quired to update the IRF PPS wage45

index on the basis of information available to th e Secretary on the wages and wage-related costs

to furnish rehabilitation servic es. Any adjustment or updates made under section 1886(j)(6) of the Act for a FY are made in a budget neutral manner. In the FY 2009 IRF PPS final rule (73 FR 46378), we maintained the methodology

described in the FY 2006 IRF PPS final rule to determine the wage index, labor market area definitions and hold harmless policy consistent with the rationale outlined in the FY 2006 IRF PPS final rule (70 FR 47880, 47917 through 47926 ). For FY 2014, we are maintaining the polic ies 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 i ndex methodology for areas with wage data. Thus, we are using

the CBSA labor market area definitions and th e 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 i ndex is based on data submitted for hospital cost reporting periods beginning on or after Octobe r 1, 2008, and before October 1, 2009 (that is, FY 2009 cost report data). The labor market designations made by th e OMB include some geographic areas where there are no hospitals and, thus, no hospital wage index data on whic h to base the calculation of the IRF PPS wage index. We propose to continue to use the same meth odology discussed in the FY 2008 IRF PPS final rule (72 FR 44299) to addr ess 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 th e OMB bulletin that corresponds with the hospital wage data46

used to determine the IRF PPS wage inde x. The OMB bulletins are available at http://www.whitehouse.gov/omb/bulletins/index.html

. In keeping with the established IRF PPS wage index policy, we propose to use the prior year’s (FY 2013) pre-floor, pre- reclassified hospital wage inde x data to derive the FY 2014 applicable IRF PPS wage index. We anticipate using the FY 2014 pre-floo r, pre-reclassified hospital wage index data to derive the applic able IRF PPS wage index for FY 2015. We note, however, that the proposed FY 2014 pre-floor, pre- reclassified hospital wa ge 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 signifi cant 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 us to incorporate these changes into the FY 2014 pre-floor, prereclassified hospital wage index, since the proposed rule was alrea dy in the advanced stages of development at that time and the changes and thei r ramifications would need to be extensively reviewed and verified prior to their inclusion in the rule. We therefore intend to propose the incorporation of these CBSA changes in our FY 2015 hospital wage index. Assuming that we

would continue to follow our established me thodology for the IRF PPS wage index, this means that the 2010 Census-based CBSA changes would not be reflected in the IRF PPS wage index

until FY 2016. To calculate the wage-adjusted facility payment for the payment rates set forth in this proposed rule, we multiply the unadjusted Federal payment rate for IRFs by the proposed

FY 2014 labor-related share based on the FY 2008-ba sed RPL market basket (69.658 percent) to determine the labor-related portion of the standard payment amount. We then multiply the labor-47

related portion by the app licable IRF wage index from the tables in the addendum to this proposed rule. These tables are available through the Internet on the CMS website at http://www.cms.hhs.gov/Medicare/Medicare-Fee -for-Service-Payment/InpatientRehabFacPPS/

. Table A is for urban areas and Table B is for rural areas. Adjustments or updates to the IRF wage i ndex made under section 1886(j)(6) of the Act must be made in a budget neutral manner. We calculate a proposed budget neutral wage adjustment factor as establis hed in the FY 2004 IRF PPS final ru le (68 FR 45689), codified at §412.624(e)(1), as described in the steps below. We use the listed steps to ensure that the proposed FY 2014 IRF standard payment conversi on factor reflects the update to the wage indexes (based on the FY 2009 hospital cost report data) and the proposed labor-related share in a budget neutral manner: Step 1. Determine the total amount of the estimated FY 2013 IRF PPS rates, using the FY 2013 standard payment conversi on factor and the labor-relate d share and the wage indexes from FY 2013 (as published in the FY 2013 IRF PPS notice (77 FR 44618)). Step 2 . Calculate the total amount of estimat ed IRF PPS payments using the FY 2013 standard payment conversion factor and the proposed FY 2014 labor-rel ated 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 proposed FY 2014 budge t neutral wage adjustment factor of 1.0011. Step 4 . Apply the proposed FY 2014 budget neutral wa ge 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 proposed FY 2014 standard payment conversion factor. We discuss the calculation of the proposed standard payment conversion factor for48

FY 2014 in section V.E. of this proposed rule. E. Description of the Proposed IRF Standard Conversion Factor and Payment Rates for FY

2014 To calculate the proposed standard payment conversion factor for FY 2014, as illustrated in Table 4, we begin by applyi ng the proposed adjusted market basket increase factor for FY 2014 that was adjusted in accordance with sec tions 1886(j)(3)(C) and (D) of the Act, to the standard payment conversion factor for FY 2013 ($14,343). Applying the proposed 1.8 percent adjusted market basket increas e factor for FY 2014 to the revised standard payment conversion factor for FY 2013 of $14,343 yields a standa rd payment amount of $14,601. Then, we apply the proposed budget neutrality factor for the FY 2014 wage index and labor-related share of 1.0011, which results in a standard payment am ount of $14,617. We next apply the proposed budget neutrality factors for the revised CMG relative weights of 1.0000, which results in a standard payment conversion factor of $14,617 for FY 2014. We then apply the proposed budget neutrality factors for the facility adjustments. Applying the budget neutrality factor for the revi sed rural adjustment of 1.0030 results in a standard payment conversion factor of $14,661. We then apply the budget neutrality factor for the revised LIP adjustment of 1.0174 resulting in a standard payment conversion factor of $14,916. Lastly, we apply the budget neutrality fact or for the revised teaching adjustment of

0.9966 which results in a final standard payment conversion factor of $14,865.49

TABLE 4: Calculations to Determine the Proposed 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 (2.5 percent), reduced by 0.3 percentage poi nt in accordance with sections 1886(j)(3)(C) a nd (D) of the Act and a 0.4 percentage point reduc tion for the productivity adjustment as required by s ection 1886(j)(3)(C)(ii)(I) of the Act x 1.018Budget Neutrality Factor for the Wage Index and LaborRelated Share x 1.0011 Budget Neutrality Factor fo r the Revisions to the CMG Relative Weights x 1.0000 Budget Neutrality Factor fo r the Update to the Rural Adjustment Factor x 1.0030 Budget Neutrality Factor fo r the Update to the LIP Adjustment Factor x 1.0174 Budget Neutrality Factor for the Update to the Teaching Status Adjustment Factor x 0.9966 Proposed FY 2014 Standard Payment Conversion Factor = $14,865

After the application of the CMG relative we ights described in Section III of this proposed rule, to the proposed FY 2014 standa rd payment conversion factor ($14,865), the resulting proposed unadjusted IRF prospective pa yment rates for FY 2014 are shown in Table 5. TABLE 5: Proposed FY 2014 Payment Rates

CMG Payment Rate Tier 1 Payment Rate Tier 2 Payment Rate Tier 3 Payment Rate No Comorbidity 0101 $ 11,893.49 $ 10,586.85 $ 9,745.49 $ 9,287.65 0102 $ 14,747.57 $ 13,127.28 $ 12,083.76 $ 11,517.40 0103 $ 17,262.72 $ 15,365.95 $ 14,145.53 $ 13,481.07 0104 $ 18,150.17 $ 16,156.77 $ 14,873.92 $ 14,175.26 0105 $ 21,231.68 $ 18,900.85 $ 17,398.00 $ 16,580.42 0106 $ 24,270.09 $ 21,604.79 $ 19,887.88 $ 18,954.36 0107 $ 27,370.92 $ 24,365.22 $ 22,428.31 $ 21,375.87 0108 $ 34,427.34 $ 30,645.68 $ 28,210.80 $ 26,886.3350

CMG Payment Rate Tier 1 Payment Rate Tier 2 Payment Rate Tier 3 Payment Rate No Comorbidity 0109 $ 31,267.04 $ 27,833.23 $ 25,621.31 $ 24,417.25 0110 $ 40,710.78 $ 36,240.87 $ 33,361.52 $ 31,793.26 0201 $ 11,993.08 $ 10,160.23 $ 9,006.70 $ 8,385.35 0202 $ 15,661.76 $ 13,268.50 $ 11,761.19 $ 10,949.56 0203 $ 18,465.30 $ 15,643.93 $ 13,867.56 $ 12,910.25 0204 $ 19,324.50 $ 16,370.82 $ 14,511.21 $ 13,510.80 0205 $ 23,419.81 $ 19,840.32 $ 17,586.78 $ 16,373.80 0206 $ 28,925.80 $ 24,504.95 $ 21,722.22 $ 20,223.83 0207 $ 38,179.27 $ 32,344.75 $ 28,670.13 $ 26,693.08 0301 $ 16,339.61 $ 14,065.26 $ 12,638.22 $ 11,682.40 0302 $ 20,417.08 $ 17,576.38 $ 15,794.06 $ 14,597.43 0303 $ 24,112.52 $ 20,757.49 $ 18,652.60 $ 17,238.94 0304 $ 32,303.13 $ 27,809.44 $ 24,988.07 $ 23,095.75 0401 $ 17,021.91 $ 14,112.83 $ 13,151.07 $ 11,777.54 0402 $ 21,017.62 $ 17,427.73 $ 16,238.53 $ 14,543.92 0403 $ 34,292.07 $ 28,433.77 $ 26,493.89 $ 23,729.00 0404 $ 62,606.92 $ 51,910.07 $ 48,369.22 $ 43,319.58 0405 $ 51,258.98 $ 42,502.01 $ 39,603.33 $ 35,469.38 0501 $ 12,635.25 $ 10,002.66 $ 9,406.57 $ 8,563.73 0502 $ 16,446.64 $ 13,020.25 $ 12,244.30 $ 11,148.75 0503 $ 21,221.27 $ 16,800.42 $ 15,798.52 $ 14,384.86 0504 $ 24,577.79 $ 19,456.80 $ 18,297.33 $ 16,659.21 0505 $ 28,979.32 $ 22,941.15 $ 21,575.06 $ 19,642.61 0506 $ 40,593.34 $ 32,136.64 $ 30,220.55 $ 27,515.12 0601 $ 14,361.08 $ 11,706.19 $ 10,809.83 $ 9,794.55 0602 $ 19,181.80 $ 15,635.01 $ 14,438.37 $ 13,082.69 0603 $ 24,057.52 $ 19,608.42 $ 18,108.54 $ 16,407.99 0604 $ 32,053.40 $ 26,125.24 $ 24,127.38 $ 21,860.47 0701 $ 14,039.99 $ 11,969.30 $ 11,463.89 $ 10,399.55 0702 $ 18,059.49 $ 15,395.68 $ 14,746.08 $ 13,377.01 0703 $ 21,955.61 $ 18,716.52 $ 17,927.19 $ 16,262.31 0704 $ 27,876.33 $ 23,764.68 $ 22,761.29 $ 20,648.97 0801 $ 10,418.88 $ 9,272.79 $ 8,435.89 $ 7,729.80 0802 $ 13,684.72 $ 12,178.89 $ 11,078.88 $ 10,152.80 0803 $ 18,548.55 $ 16,507.58 $ 15,018.11 $ 13,760.53 0804 $ 16,474.88 $ 14,661.35 $ 13,338.36 $ 12,222.00 0805 $ 20,332.35 $ 18,095.16 $ 16,462.99 $ 15,085.0051

CMG Payment Rate Tier 1 Payment Rate Tier 2 Payment Rate Tier 3 Payment Rate No Comorbidity 0806 $ 24,661.04 $ 21,948.17 $ 19,968.15 $ 18,295.84 0901 $ 13,417.15 $ 11,119.02 $ 10,249.42 $ 9,296.57 0902 $ 17,913.81 $ 14,845.68 $ 13,684.72 $ 12,412.28 0903 $ 22,437.23 $ 18,594.63 $ 17,139.35 $ 15,547.30 0904 $ 29,224.59 $ 24,219.54 $ 22,325.74 $ 20,250.59 1001 $ 15,417.98 $ 14,037.02 $ 12,086.73 $ 11,116.05 1002 $ 19,444.91 $ 17,702.73 $ 15,244.06 $ 14,019.18 1003 $ 28,734.05 $ 26,160.91 $ 22,526.42 $ 20,715.86 1101 $ 18,414.76 $ 16,847.99 $ 15,588.93 $ 15,083.52 1102 $ 25,373.07 $ 23,216.16 $ 21,479.93 $ 20,782.76 1201 $ 14,094.99 $ 13,898.78 $ 12,586.20 $ 11,523.35 1202 $ 17,560.02 $ 17,316.24 $ 15,681.09 $ 14,358.10 1203 $ 21,808.44 $ 21,506.68 $ 19,474.64 $ 17,830.57 1301 $ 17,563.00 $ 14,851.62 $ 13,385.93 $ 12,146.19 1302 $ 22,750.88 $ 19,238.28 $ 17,341.51 $ 15,734.60 1303 $ 29,249.86 $ 24,733.87 $ 22,294.53 $ 20,228.29 1401 $ 13,176.34 $ 10,726.58 $ 9,720.22 $ 8,798.59 1402 $ 17,797.86 $ 14,488.92 $ 13,128.77 $ 11,884.57 1403 $ 21,708.85 $ 17,673.00 $ 16,014.06 $ 14,496.35 1404 $ 27,675.66 $ 22,530.88 $ 20,415.59 $ 18,481.65 1501 $ 14,869.46 $ 12,769.04 $ 11,515.92 $ 11,053.61 1502 $ 18,715.04 $ 16,072.04 $ 14,494.86 $ 13,912.15 1503 $ 22,630.48 $ 19,434.50 $ 17,527.32 $ 16,824.21 1504 $ 28,088.90 $ 24,121.44 $ 21,753.44 $ 20,880.87 1601 $ 15,324.33 $ 13,106.47 $ 12,311.19 $ 11,249.83 1602 $ 20,121.26 $ 17,209.21 $ 16,164.20 $ 14,771.35 1603 $ 25,347.80 $ 21,679.12 $ 20,363.56 $ 18,608.01 1701 $ 16,165.69 $ 14,111.34 $ 12,696.20 $ 11,472.81 1702 $ 20,232.75 $ 17,661.11 $ 15,889.20 $ 14,358.10 1703 $ 24,418.74 $ 21,314.92 $ 19,177.34 $ 17,329.62 1704 $ 30,980.15 $ 27,043.89 $ 24,331.03 $ 21,985.34 1801 $ 17,059.07 $ 15,791.09 $ 13,883.91 $ 11,704.70 1802 $ 25,431.04 $ 23,541.70 $ 20,698.03 $ 17,450.02 1803 $ 40,655.78 $ 37,633.72 $ 33,088.00 $ 27,895.66 1901 $ 16,289.07 $ 13,831.88 $ 13,473.64 $ 13,209.04 1902 $ 31,721.91 $ 26,935.38 $ 26,239.70 $ 25,723.88 1903 $ 52,027.50 $ 44,177.29 $ 43,035.66 $ 42,189.8452

CMG Payment Rate Tier 1 Payment Rate Tier 2 Payment Rate Tier 3 Payment Rate No Comorbidity 2001 $ 13,225.39 $ 10,857.40 $ 9,983.33 $ 9,124.14 2002 $ 17,637.32 $ 14,480.00 $ 13,313.09 $ 12,168.49 2003 $ 22,163.72 $ 18,196.25 $ 16,729.07 $ 15,290.14 2004 $ 29,041.75 $ 23,841.97 $ 21,919.93 $ 20,035.05 2101 $ 32,378.94 $ 23,393.05 $ 22,126.55 $ 20,894.24 5001 $ - $ - $ - $ 2,290.70 5101 $ - $ - $ - $ 9,816.85 5102 $ - $ - $ - $ 21,631.55 5103 $ - $ - $ - $ 11,376.18 5104 $ - $ - $ - $ 29,625.95

F. Example of the Methodology for Adjus ting the Proposed Federal Prospective Payment

Rates Table 6 illustrates the methodology for ad justing the proposed federal prospective payments (as described in sections V.A. through V.C. of this proposed rule). The following examples are based on two hypothe tical Medicare bene ficiaries, both classified into CMG 0110 (without comorbidities). The proposed unadjus ted federal prospective payment rate for CMG 0110 (without comorbidities) appears in Table 5. Example : One beneficiary is in Facility A, an IRF located in rural Spencer County, Indiana, and another beneficiary is in Facil ity B, an IRF located in urban Harrison County, Indiana. Facility A, a rural non-teaching hospi tal has a Disproportionate Share Hospital (DSH) percentage of 5 percent (which would result in a LIP adjustment of 1.0155), a wage index of 0.8472, and a rural adjustment of 14. 28 percent. Facility B, an urban teaching hospital, has a DSH percentage of 15 percent (which would re sult in a LIP adjustment of 1.0451 percent), a wage index of 0.8862, and a teachin g status adjustment of 0.0610.

To calculate each IRF’s labor and non-labor portion of the proposed Federal prospective53

payment, we begin by taking the proposed unadj usted Federal prospective payment rate for CMG 0110 (without comorbidities) from Table 5. Then, we multiply the proposed labor-related share for FY 2014 (69.658 percent) described in section V.C. of this proposed rule by the proposed unadjusted federal prospective payment ra te. To determine the non-labor portion of the proposed federal prospective payment rate, we subt ract the labor portion of the proposed federal payment from the proposed unadjuste d Federal prospective payment. To compute the proposed wage-adjusted fede ral prospective payment, we multiply the labor portion of the proposed federal payment by the appropriate wage index found in tables A

and B. These tables are available th rough the Internet on the CMS website at http://www.cms.hhs.gov/Medicare/Medicare-Fee -for-Service-Payment/InpatientRehabFacPPS/

. The resulting figure is the wage-adjusted laboramount. Next, we compute the proposed wageadjusted federal payment by adding the wage-a djusted labor amount to the non-labor portion. Adjusting the proposed wage-adjusted federa l 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 adjust ments (if applicable). Second, to determine the appropriate amount of additional payment for the t eaching status adjustment (if applicable), we multiply the teaching status adjustment (0.0610, in this example) by the wage-adjusted and ruraladjusted amount (if applicable). Finally, we add the additional teaching status payments (if applicable) to the wage, rural, and LIP-adjusted federal prospective pa yment rates. Table 6 illustrates the components of th e adjusted payment calculation. TABLE 6: 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 $ 31,793.26 $ 31,793.2654

Steps Rural Facility A (Spencer Co., IN) Urban Facility B (Harrison Co., IN) 2 Labor Share X 0.69658 X 0.69658

3 Labor Portion of Federal Payment = $22,146.55 = $22,146.55

4 CBSA Based Wage Index (shown in the Addendum , Tables 1 and 2) X

0.8472 X 0.8862 5 Wage-Adjusted Amount = $18,762.56 = $19,626.27 6 Nonlabor Amount + $9,646.71 + $9,646.71

7 Wage-Adjusted Federal Payment = $28,409.27 = $29,272.98 8 Rural Adjustment X 1.1428 X 1.000

9 Wage- and Rural- Adjusted Federal Payment = $32,466.11 = $29,272.98 10 LIP Adjustment X 1.0155 X 1.0451

11 FY 2014 Wage-, Rural- and LIP- Adjusted Federal Prospective Payment Rate = $32,969.33 = $30,593.19

12 FY 2014 Wage- and RuralAdjusted Federal Prospective Payment $32,466.11 $29,272.98 13 Teaching Status Adjustment X 0 X 0.0610

14 Teaching Status Adjustment Amount = $0.00 = $1,785.65

15 FY 2014 Wage-, Rural-, and LIP-Adjusted Federal Prospective Payment Rate +

$32,969.33 + $30,593.19

16 Total FY 2014 Adjusted Federal Prospective Payment = $32,969.33 = $32,378.84 Thus, the proposed adjusted payment for Facility A would be $32,969.33 and the proposed adjusted payment for Facility B would be $32,378.84. VI. Proposed Update to Payments fo r High-Cost Outliers Under the IRF PPS A. Proposed Update to the Ou tlier Threshold Amount for FY 2014 Section 1886(j)(4) of the Act provides the Secr etary 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 es timated cost of the case exceeds the adjusted55

outlier threshold. We calculate the adjusted ou tlier 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 (als o 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 fo r 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 estimat ed payments. For the 2002 IRF PPS final rule, we analyzed various outlier po licies 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 paymen ts 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 ou tlier payments at 3 percent of total estimated payments. We also stated in the FY 2009 fi nal rule (73 FR 46370 at 46385) that we would continue to analyze the estimated outlier paymen ts for subsequent years and adjust the outlier threshold amount as appropriate to maintain the 3 percent target. To update the IRF outlier threshold am ount for FY 2014, we propose to use FY 2012 claims data and the same methodology that we used to set the ini tial outlier threshold amount in56

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 outlie r threshold amounts for FYs 2006 through 2013. Based on an analysis of this updated data, we esti mate that IRF outlier payments as a percentage of total estimated payments ar e approximately 2.8 percent in FY 2014. Therefore, we propose to update the outlier threshold amount to $10,111 to maintain estimated outlier payments at approximately 3 percent of total estimated aggregate IRF payments for FY 2014. B. Proposed Update to the IRF Cost-t o-Charge Ratio Urban and Rural Ceilings

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 prop ose to update the national urban and 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 nationa l urban and rural CCRs in the following situations:

● New IRFs that have not yet subm itted 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 ca lculate an overall CCR are not available. Specifically, for FY 2014, we estimate a proposed national average CCR of 0.638 for rural IRFs, which we calculate by taking an aver age of the CCRs for all rural IRFs using their most recently submitted cost report data. Si milarly, we estimate a national average CCR of 0.511 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 th e CCRs of IRFs with higher costs factor more heavily into the averages than the CCRs of IRFs with lower costs. For this proposed rule, we57

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 befo re 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 fo r 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 re flect the current cost of care. In accordance with past pract ice, we propose to set the national CCR ceiling at 3 standard deviations above the mean CCR. Using this method, the national CCR ceiling is set at 1.43 for FY 2014. This means that, if an individual IRF’s CCR exceeds this ceiling of 1.43 for FY 2014, we would replace the IRF’s CCR with the approp riate 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 (wei ghted by each IRF’s total costs, as discussed above) of all IRFs for which we have sufficient cost re port data (both rural and urban IRFs combined). Step 2 . Estimating the standard deviation of th e national average CCR computed in step

1. Step 3 . Multiplying the standard deviation of th e national average CCR computed in step 2 by a factor of 3 to compute a stat istically significan t reliable ceiling. Step 4 . Adding the result from step 3 to the na tional average CCR of all IRFs for which

we have sufficient cost report data, from step 1. We note that the proposed national average rural and urban CCRs and our estimate of the58

national CCR ceiling in this section are subject to change in the fi nal rule if more recent data become available for use in these analyses. VII. Proposed Refinements to the P resumptive Compliance Criteria 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 Sept ember 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. Th e 1983 interim rule stipulat ed that in accordance with sections 1886(d)(1)(B) and 1886(d)(1)(B)(ii) of the Act, a rehab ilitation hospital and a

rehabilitation unit were excluded from the I PPS. Sections 1886(d)(1 )(B) and 1886(d)(1)(B)(ii) of the Act also give the Secret ary the discretion to define a re habilitation 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 m eet 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 rehabilita tion hospital or unit. Hospitals and units meeting these criteria are eligible to be paid on a prospective paym ent 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 complete d 12-month cost reporting period, the hospital must be primarily engaged in furn ishing intensive rehabilitation services, as demonstrated by patient medical records, indicati ng 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 reha bilitation treatment provide d in an IRF. These59

criteria, along with othe r related criteria, disti nguished an inpatient reha bilitation 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 proporti on of patients treated for conditions that typically require intensive inpa tient rehabilitation, we would be able to distinguish those hospitals in which the provision of rehabilitation services was pr imary 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 specif ied under the compliance percentage, or “75 percent rule,” were stroke , spinal cord injury, congeni tal deformity, amputation, major multiple trauma, fracture of femur (hip fractur e), brain injury, and polyarthritis (including rheumatoid arthritis). In the January 3, 1984 fi nal rule (49 FR 234), we expanded the list of eligible medical conditions to include neurologic al disorders (including multiple sclerosis, motor neuron diseases, polyneuropathy, mu scular dystrophy, and Parkinson’ s disease) and burns. In the May 7, 2004 final rule (69 FR 25752), we modifi ed and expanded the list of eligible medical conditions by removing polyarthritis and substituti ng three more clearly defined arthritis-related conditions. The three conditions that repl aced polyarthritis included the following:

● Active, polyarticular rheumatoid arthritis, psoriatic arthritis, and seronegative arthropathies resulting in signi ficant functional impairment of am bulation and other activities of daily living, which has not improved after an appr opriate, aggressive, and sustained course of outpatient therapy services or services in other less intensiv e rehabilitation settings immediately preceding the inpatient rehabilitation admission or which results from a systemic disease60

activation immediately before admi ssion, but has the potential to improve with more intensive

rehabilitation.

● Systemic vasculidities with joint infl ammation, resulting in significant functional impairment of ambulation and ot her activities of daily living, wh ich has not improved after an appropriate, aggressive, and sustai ned course of outpatient therapy services or services in other

less intensive rehab ilitation settings immediat ely preceding the inpatien t rehabilitation admission or which results from a systemic disease activ ation immediately before admission, but has the potential to improve with more intensive rehabilitation.

● Severe or advanced osteoarthritis (ost eoarthrosis or degenera tive joint disease) involving three or more major joints (elbow, shou lders, hips, or knees) with joint deformity and substantial loss of range of mo tion, 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 re habilitation 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 arth ritis, 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 re placement 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 join t replacement surgery during the acute hospitalization immediately preceding the IRF admission.61

● 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 st ates only that the patients be age 85 or older at the time of admission to the IRF.) In 2002, we surveyed Medicare fiscal inte rmediaries to determine how they were enforcing the 75 percent rule. Although the 75 percen t rule was one of the criteria that was used to distinguish an IRF from an acute care hospital from 1983 to 2004, we found evidence that

different fiscal intermediaries we re enforcing the rule differently. We found fiscal intermediaries were using inconsistent methods to determin e whether IRFs were in compliance with the regulation, and that some IRFs were not being re viewed 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 establis h 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 pe rcent 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 Be ing Classified as an Inpatient Rehabilitation Facility” (68 FR 53266). In that rule, we propos ed 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 to62

comments on the September 9, 2003 proposed rule and as stated above, the May 7, 2004 final rule (69 FR 25752) expanded the nu mber of medical conditions th at would meet the compliance percentage from 10 to 13 and provided that pa tient comorbidities may also be included in determining an IRF’s compliance with th e requirements during the transition period. In the September 9, 2003 proposed rule, we de fined a “comorbidity” as a specific patient condition that is secondary to the patient’s princi pal diagnosis or impairme nt 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 toward s the compliance threshold during the transition period. In the determination of the compliance percentage, a patient co morbidity counts toward the percentage if the comorbid ity falls in one of the conditio ns 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 w ould 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 repo rting 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 phas e-in period was intended to begi n with cost reporting periods on or after July 1, 2004 with the threshold at 50 percent of the IRF’s pop ulation 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 co mpliance percentage would once again be at 75 percent.

Section 5005 of the Deficit Reduction Act of 2005 (DRA, Pub. L. 109-171, enacted63

February 8, 2006) and section 1886(d )(1)(B) of the Act modified th e provisions of the 75 percent rule originally specified in the May 7, 2004 final rule. To refl ect these statutory changes, in the August 7, 2007 final rule (72 FR 44284), we revi sed the regulations to prolong the overall duration of the phased transition to the full 75 per cent threshold by stipula ting 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 extende d 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 re porting period that starts on or after July 1, 2008. Subsequently, section 115 of the MMSEA am ended 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 revi sed the compliance rate that IRFs must meet to be excluded from the IPPS and be paid unde r the IRF PPS to 60 percent for cost reporting periods beginning in or after July 1, 2006. Also, in accordance with the stat ute, 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 in cluded 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,” instea d of the “75 percent rule.” The re gulations finalized in the FY 2009 IRF PPS Final Rule (73 FR 46370) cont inue to be in effect. Though an IRF must serve an i npatient population of whom at least 60 percent meet the compliance percentage criteria specified at §412.29(b), the existing regulation allows for 40 percent of reasonable and necessary admissions to an IRF to fall outside of the 13 qualifying64

medical conditions. Still, the “60 percent rule” is one of the primary ways we distinguish an IRF from an acute care hospital. As Medicare paymen ts for IRF services are generally significantly higher than Medicare payments fo r similar services provided in acute care hospital settings, we believe that it is important to maintain and enforce the 60 percent rule compliance criteria to ensure that the higher Medicare payments are appr opriately allocated to t hose providers that are providing IRF-level services. B. Proposed Changes to the ICD-9-CM C odes That Meet the Presumptive Compliance

Criteria The presumptive methodology is one of two ways that contractors may evaluate an IRF’s compliance with the 60 percent ru le compliance criteria (the other methodology is called the medical review methodology). IRFs may be ev aluated using the presumptive methodology only

if their Medicare fee-for-service and Medicare Advantage popul ations combined make-up over half of their total patient populat ions, so that the Medicare popul ations can be presumed to be representative of the IRF’s tota l patient population. Thus, if an IRF is eligible to use the presumptive methodology to evaluate its complian ce with the IRF 60 percen t rule, all of its IRFPAI assessments from the most recently comp leted 12 month compliance review period are examined (with the use of a computer program) to determine whether th ey contain any of the codes listed on the presumptive methodology list. Under the rule, each IRF is given the option

of whether the Medicare contra ctor reviews all IRF discharg es from that period, or all admissions from that period. Each selected assess ment is presumptively categorized as either meeting or not meeting the IRF 60 percent rule requirements based upon the primary reason for the patient to be treated in the IRF (the impa irment group) and the ICD-9-CM codes listed as either the etiologic diagnosis (the etiologic problem that led to the condition for which the patient65

is receiving rehabilitation) or one of 10 comorb idities on the assessment. An impairment group code is not an ICD-9-CM code, but part of a se parate unique set of code s specifically developed for the IRF PPS for assigning the primary reason for admission to an IRF. The ICD-9-CM diagnosis codes that may be used to categorize a pa tient as meeting the 60 pe rcent rule criteria if those codes appear on the patient’ s IRF-PAI assessment as either the etiologic diagnosis or as a comorbid condition are listed in “Appendix C: ICD-9-CM Codes That Meet Presumptive Compliance Criteria.” This list can be downl oaded from the October 1, 2007 IRF Compliance Rule Specification Files on the Medicare IRF PPS website athttp://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/InpatientRehabFacPPS/Criteria.html

. The underlying premise of the presumptive methodology ICD-9-CM code list is that it represents those codes that w ould be expected to “presumptiv ely” meet the 60 percent rule compliance criteria. That is, it reflects those par ticular diagnosis codes that , if a patient is coded using one of those codes, would more than likely be expected to meet the requirement either that the patient required intensive rehabilitation serv ices for treatment of one or more of the conditions specified at § 412.29(b)(2) or had a comorbidity th at caused significant decline in functional ability such that, ev en in the absence of the adm itting condition, the patient would require the intensive rehabilitation treatment that is unique to inpatient rehabilitation facilities and cannot be appropriately perfor med 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 60 percent rule under the presumptive 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, change s in clinical practice, changes66

in the frequency of various types of illness a nd disability, and changes to the application of 60 percent rule itself) supporte d our updating the ICD-9-CM code s that are deemed to count toward a facility’s 60 percent ru le compliance. Such updates woul d ensure that the codes better reflect the regulations at § 412.29(b). Our review included taking a fresh look at th e regulations in §412.29(b), which revealed that the following parts of the regulation were not being adequately a ddressed in the current application of the presumptive method of calcu lating compliance with th e IRF 60 percent rule:

● The details of the requirements in para graph §412.29(b)(1), which specify that the IRF must serve “an inpatient population of whom at le ast 60 percent required intensive rehabilitation

services for treatment of one or more of the conditions specified...”, and

● The details of the requirements rega rding 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 si gnificant decline in functional ability in the individual that, even in the absence of the ad mitting condition, the individual would require the

intensive rehabilitation treatment that is unique to inpatient rehabilitation facilities...and that cannot be appropriately performe d in another care setting...” These requirements must be met in conj unction with a patient having one of the 13 conditions listed in §412.29(b)(2) for the case to meet the 60 per cent 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 c onditions 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 th emselves whether or not the required severity67

and prior treatment criteria are met for those pati ents 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 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 certai n ICD-9-CM codes currently on the presumptive methodology list do not necessarily demonstrate a patient’s meeting th e requirements for inclusion in a facility’s 60 percent compliance threshold, and, as such, should be removed from the 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 IR Fs. Based on these analyses, we are proposing specific revisions to the ICD-9-CM code list that are described below in sections VII.B.1 through VII.B.6 of this proposed rule. We encourage stakeholders comment on th e following proposals. All such public comment(s) will be addressed in the final rule. 1. Non-Specific Diagnosis Codes We believe that highly descri ptive codes provide the best a nd clearest way to ensure the appropriateness of a given patie nt’s inclusion in the presum ptive method of calculating a facility’s compliance percentage. Therefore, whenever possible, we believe that the most specific code that describes a medical disease, condition, or injury should be documented on the IRF-PAI. Generally, “unspecifi ed” codes are used when there is lack of information about location or severity of medical c onditions in the medical record. Ho wever, site and/or severity of68

condition is an important determinant in assess ing whether a patient’s principal or secondary diagnosis falls into the 13 qualif ying conditions and, as such, shoul d count toward the facility’s compliance with the 60 percent rule. For this reason, and in accordance with ICD-9-CM coding guidelines, we believe that specif ic diagnosis codes that narrowly identify anatomical sites where disease, injury, or condition exist should be required when coding patients’ conditions on the

IRF-PAI whenever such codes are available. Furt hermore, on the same note, we believe that one

should also include on the IRF-PAI the more de scriptive ICD-9-CM code that indicates the degree of injury in instances of burns. In accordance with these principles, we propose to remove non-specific codes from Appendix C whenev er more specific codes are available as we believe imprecise codes would inappropriately ca tegorize an overly broad segment of the patient population as having the conditions required for inclusion in a fac ility’s compliance percentage. If the IRF does not have enough information about the patient’s conditio n to code the more specific codes on the IRF-PAI, we would expect th e IRF to seek out additional information from the patient’s acute care hospital medical record to determine the appropriate, more specific code

to use. For example, the current ICD-9-CM codes 820.8 “Unspecified part of neck of femur, closed” and 820.9 “Unspecified part of neck of femur, open”, which indicate hip fractures, could be replaced with more specific codes( 820.01-820.09, 820.11-820.19,820.21-820.22, or 820.31- 820.32). We believe that the proposed removal of the unspecified codes listed in Table 7, “Proposed ICD-9-CM Codes To Be Removed Fr om the Appendix C: ICD-9-CM Codes That Meet Presumptive Compliance Criteria,” would not negatively impact a provider’s ability to meet the compliance percentage threshold becau se these diagnoses could be coded under the aforementioned more specific codes. More specif ic codes will aid us in determining (by the69

nature of the site, severity, degree of injury, etc.) whether a patient’s principal or secondary diagnosis falls into the 13 qua lifying conditions and should count toward the 60 percent rule.

2. Arthritis Codes Our analysis of the list of ICD-9-CM code s that are currently deemed to meet the 60 percent rule required us to reexamine the overall application of the compliance criteria in regards to the arthritis codes. Utilization patter ns for the arthritis codes indicated that some of the codes in this category are coded far more frequently than we had anticipated, given the severity and prior treatment requ irements outlined in regulation. When we adopted the arthritis conditions in the FY 2004 final rule (69 FR 25752) , we did so because we believed that these conditions were appropriate for treatment in an IRF. However, we limited the arthritis

conditions to those that were su fficiently severe and in which in tensive inpatient rehabilitation would be an appropriate modality of treatment. We anticipated that less severe arthritic

conditions could be satisfactoril y managed outside of IRFs sin ce these cases would not require the intensive therapy provided in the inpatient rehabilitation setti ng. Likewise, we expected that even in cases where patients with arthritis cond itions severe enough to requ ire intensive inpatient rehabilitation, some patients would improve afte r an appropriate, aggr essive, and sustained course of treatment in an outpatient setting. “A n appropriated, aggressive , and sustained course of treatment in an outpatient setting” is define d in Chapter 3, section 140.1.1.C of the Medicare Claims Processing Manual (Pub. 100-04). We be lieve that there may be arthritis ICD-9-CM

codes entered on the IRF-PAI for cases that do not meet the severity and prior treatment requirements outlined in regulation. Thus, after reexamining our application of the compliance criteria in regards to the arthritis codes, we determined that factors beyond the ICD-9-CM code

should be reviewed to establish whether thes e IRF patients should be included in the IRF’s70

compliance percentage. In the regulations at §412.29( b)(2)(x) through §412.29( b)(2)(xii), we describe 3 medical conditions that, if present, make a patient elig ible for inclusion in the calculation of the compliance percentage if additional circumstance s are met. The 3 medical conditions are as

follows:

● Active, polyarticular rheumatoid arthritis, psoriatic arthritis, and seronegative arthropathies resulting in signi ficant functional impairment of am bulation and other activities of daily living that have not improve d after an appropriate, aggre ssive, and sustained course of outpatient therapy services or services in other less intensiv e 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 infl ammation, resulting in significant functional impairment of ambulation and ot her activities of daily living th at have not improved after an appropriate, aggressive, and sustai ned course of outpatient therapy services or services in other

less intensive rehab ilitation settings immediat ely preceding the inpatien t rehabilitation admission or that result from a systemic disease activ ation immediately before admission, but have the potential to improve with mo re intensive rehabilitation.

● Severe or advanced osteoarthritis (ost eoarthrosis or degenera tive joint disease) involving two or more major weig ht bearing joints (elbow, shoul ders, hips, or knees, but not counting a joint with a prosthesis ) with joint deformity and substa ntial loss of range of motion, atrophy of muscles surrounding the joint, signifi cant functional impairment of ambulation and other activities of daily living that have not im proved after the patient has participated in an71

appropriate, aggressive, and sustai ned course of outpatient therapy services or services in other

less intensive rehab ilitation settings immediat ely preceding the inpatien t rehabilitation admission but have the potential to impr ove with more intensive rehabi litation. (A joint replaced by a prosthesis no longer is considered to have osteoarthritis, or ot her arthritis, ev en though this condition was the reason for the joint replacement.) As stated above, the inclusion of patients w ith these medical conditions in the compliance percentage is conditioned on those patients m eeting certain severity and prior treatment requirements. However, the ICD-9-CM diagnos is codes that reflect these arthritis and arthropathy conditions do not pr ovide any information about wh ether or not these additional eligibility requirements were met. We believe that a qualitative assessm ent (such as a medical review) is necessary to determin e if the medical record would support inclusion of individuals with the arthritis and arthropathy conditions outlined in our regulations at §412.29(b)(2)(x) through §412.29(b)(2)(xii) in a facility’s complian ce percentage. Thus, we propose to remove the ICD-9-CM diagnosis codes associated with th e medical conditions outlined in our regulations at §412.29(b)(2)(x) through §412.29(b)(2)(xii) fro m the presumptive method ICD-9-CM code list in Appendix C. We expect that the FI/MAC will be able, upon medical review, to include those patients in a facility’s 60 percent rule compliance pe rcentage in accordance with chapter 3, §140.1.4 of the Medicare Claims Processing Manual (Pub. 100- 04) after it has confir med the severity and prior treatment requirements. So IRFs will conti nue to be able to include these individuals in their compliance percentages. In Table 7, we list the ICD-9-CM codes associated with the medical conditions listed at §412.29(b)(2)(x) through §412.29(b)(2)(xii) that we propose to remove from Appendix C.72

3. Some Congenital Anomaly Diagnosis Codes Though congenital deformity is one of the 13 medical conditions that may generally qualify for inclusion in the presumptive method for calculating compliance with the 60 percent rule, we find that some of the specific ICD-9- CM diagnosis codes in Appendix C for congenital anomalies represent such serious conditions that a patient with one of these conditions would be unlikely to be able to meaningfully participate in an intensive rehabilitation therapy program. For example, Craniorachischisis (ICD-9-CM code 740.1) is a c ongenital malformation where the neural tube from the midbrain down to the upper s acral region of the spinal cord remains open. The neural tube is the embryo’ s precursor to the central nerv ous system, which comprises the brain and spinal cord. Similarly, Inience phaly (ICD-9-CD code 740.2) is a congenital malformation in which parts of the brain do not fo rm and the patient does not have a neck. If a patient with one of these conditi ons were able to participate in the intensive rehabilitation services provided in an IRF, then the FI/MAC w ould be able to count that case toward an IRF’s 60 percent rule compliance calculation upon medical review. However, because beneficiaries with these diagnoses likely would not be able to actively participat e in an intensive rehabilitation program, we do not believe that we can presumptiv ely include such cases in an IRF’s compliance percentage. Thus, we propose to remove these congenital deformity codes, and others like them, from Appendix C. All of the congenital anom aly diagnosis codes that we propose to remove from appendix C are listed in table 7. 4. Unilateral Upper Extremity Amputations Diagnosis Codes Though amputation is generally one of the 13 medical conditions that qualify for inclusion in the presumptive method for calcula ting compliance with th e 60 percent rule, we propose the removal of certain ICD-9-CM codes for unilateral upper extremity amputations from73

Appendix C because we believe that it is impossibl e 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 qualify for tr eatment in an IRF. Some patients with upper extremity amputations will not require close me dical supervision by a physician or weekly interdisciplinary team conferences to achieve their goals, while others may require these

services. We believe that rehabilitation associ ated with unilateral upper extremity amputations does not necessarily need to be accompanied by the close medical management provided in IRFs, as long as the patient does not have a ny additional comorbidities that have caused significant decline in hi s 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 servic es provided in an IRF may depend on other conditions which cannot be solely identified through the presen ce of a unilateral upper extremity amputation ICD-9-CM code. If the patient has comorbiditie s that would necessitate treatment in an IRF, then those comorbidities could qualify the pati ent for inclusion in the presumptive method of calculating compliance with the 60 percent rule requi rements. If the codes for such a patient’s comorbidities do not appear in Appendix C, they could be found on medical review to meet the

criteria for inclusion in the IR F’s 60 percent rule compliance rate . Thus, we propose to remove the unilateral upper extremity amputation IC D-9-CM codes listed in Table 7. 5. Miscellaneous Diagnosis Codes That Do Not Require Intensive Rehabilitation Services

For Treatment

We have identified additional ICD-9-CM dia gnosis codes in Appendi x C that should not be included in the listing because as single condi tions, they do not serve as an indication of a patient qualifying for inclusion in an IRF’s compliance per centage under the presumptive74

method for calculating compliance with the 60 pe rcent rule. These patients generally do not require intensive rehabilitation services or cannot be shown to have undergone appropriate diagnostic testing based on the IC D-9-CM code alone. For the reasons discussed below, we propose to remove the following ICD-9-CM codes from Appendix C. (T hese ICD-9-CM codes are also listed in Table 7):

● Tuberculous (abscess, meni ngitis, and encephalitis or myelitis) and Tuberculoma (of the meninges, brain, or spinal cord) where a ba cterial or histological examination was not done (see Table 7 for specific codes) - Appropriate patient care dictat es that the IRF physician must document the means by which the organism, whether it be bacteriologic or histologic, was tested

. We are proposing to remove these codes from the list in Appendix C because the subclassification indicates that a bacteriologic or histologic examination has not been performed.

● Postherpetic polyneuropathy (053.13)- This is a conditi on characterized by severe pain, which typically requires pain medication or other pain control therapies but does not typically require the intensive inpatient rehabilitati on 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 are proposing to remove this code from Appendix C.

● 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 i npatient rehabilitation hospital se rvices. We believe that the ICD-9-CM code for this diagnosis does not provide the information necessary for us to determine presumptively if the patient should count toward the IRF’s compliance threshold.75

However, as with all of the codes that we are proposing to remove from appendix C, if someone with this diagnosis were to be admitted to an IRF, where appropriate, it could be found by an FI/MAC to meet the 60 percent ru le requirements on medical review.

● Brain death (348.82)- We believe that it is unlikel y that a patient with this condition would require the intensive inpatient rehabilitation services provide d in an IRF. For this reason, we propose to remove this code from Appendix C.

● Myasthenia gravis without (acute) exacerbation (358.00)- Although we believe that a patient experiencing an acute atta ck of Myasthenia Gravis could potentially requir e the services of an IRF (see ICD-9 code 358.01 “Myasthenia gravis with ( acute) exacerbation”), the ICD-9-CM code that we propose to remove from appendix C is used for patients who are not experiencing an acute exacerbation of the conditi on and most likely do not require the intensive inpatient rehabilitation services provided in an IRF.

● Other specified myotonic disorder (359.29)- Myotonia fluctuans, myotonia permanens, and paramyotonia congenital reflect conditions th at are exacerbated by exercise. Therefore, these conditions would not likely re quire the intensive inpatient rehabi litation services of an IRF. Therefore, we are proposing to rem ove it from the list in appendix C.

● Periodic paralysis (359.3)- The treatment for pe riodic paralysis involves pharmaceutical interventions and lifestyle changes th at control exercise and activity, but patients with this condition do not generally require the in tensive inpatient rehabilitation services of an IRF. In fact, it is unclear how the intensive inpatient rehabilita tion services provided in an IRF would effectively treat this condi tion. Thus, we propose to remove this code from the list in Appendix C.76

● Brachial pl exus lesions (353.0)- Care and treatment for this condition affecting an upper extremity do not typically require close medical supervision by a physician or weekly interdisciplinary team meetings to reach the patient’s goals. Thus, patients with this condition do not typically require the intens ive inpatient rehabilitation serv ices provided in an IRF. Therefore, we propose to remove this code from the list in appendix C.

● Neuralgic amyothrophy (353.5)- This condition is also known as Parsonage-Turner syndrome or brachial plexus neuritis. It is a distinct peripheral ne rvous system disorder characterized by attacks of extreme neuropathic pain and rapid multifocal weakness and atrophy in the upper limbs. Patients w ith this condition do not typically require close medical supervision by a physician or weekly interdiscip linary 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. Ther efore, we propose to remove this code from the list Appendix C.

● Other nerve root and plexus disorders (353.8)- More descrip tive codes provide the clearest way to ensure the appropriateness of a pa tient’s inclusion in the compliance percentage. For example, Lumbosacral plexus lesions (353.1) could substitute for Other nerve root and plexus disorders (353.8). Thus, patients with this condition do not typically requir e the intensive inpatient rehabilitation services pr ovided in an IRF. Therefore, we propose to remove this code from the list in Appendix C. 6. Additional Diagnosis Codes During our review of the diagnos is codes that meet the 60 pe rcent compliance criteria, we did not identify any ICD-9-CM code s that would be appropriate to add to the list. However, we welcome public comment regarding ICD-9-CM di agnosis codes that are not currently on the77

presumptive methodology list of codes that stake holders believe should be added to the list and that specifically identify one of the conditions listed at §412.29(b)(2), that require intensive inpatient rehabilitation, and can be presump tively identified by a ICD-9-CM code.78

TABLE 7: Proposed ICD-9-CM Codes To Be Removed From Appendix C: 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, bacteriol ogical or histological examination not done 013.60 Tuberculous encephalitis or myelitis, unspecified 013.61 Tuberculous encephalitis or myelitis, bacterio logical or histological examination not done 047.9 Unspecified viral meningitis 049.9 Unspecified non-arthropod-borne viral diseases of central nervous system 053.13 Postherpetic polyneuropathy 062.9 Mosquito-borne viral encephalitis, unspecified 063.1 Louping ill 063.9 Tick-borne viral encephalitis, unspecified 320.9 Meningitis due to unspecified bacterium 322.9 Meningitis, unspecified 323.9 Unspecified causes of encephalitis, myelitis, and encephalomyelitis 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 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 monoplegia79

ICD-9-CM Code Diagnosis 343.9 Infantile cerebral palsy, unspecified 344.00 Quadriplegia, unspecified 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 idi opathic 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, m onoplegia of upper limb affecting nondominant side 438.40 Late effects of cerebrovascular disease, monopl egia of lower limb affecting unspecified side 438.50 Late effects of cerebrovascular disease, othe r paralytic syndrome affecting unspecified side 433.91 Occlusion and stenosis of unspecified pr ecerebral artery with cerebral infarction 434.91 Cerebral artery occlusion, unspecified with cerebral infarction 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 disorders80

ICD-9-CM Code Diagnosis 713.1 Arthropathy associated with gastrointes tinal 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, prim ary, 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, sec ondary, pelvic region and thigh 715.26 Osteoarthrosis, localized, secondary, lower leg 715.31 Osteoarthrosis, localized, not specified wh ether primary or secondary, shoulder region 715.32 Osteoarthrosis, localized, not specified whether primary or secondary, upper arm 715.35 Osteoarthrosis, localized, not specified whet her 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 716.21 Allergic arthritis, shoulder region 716.22 Allergic arthritis, upper arm 716.25 Allergic arthritis, pe lvic region and thigh 716.26 Allergic arthritis, lower leg 716.51 Unspecified polyarthropathy or polyarthritis, shoulder region 716.52 Unspecified polyarthropathy or polyarthritis, upper arm81

ICD-9-CM Code Diagnosis 716.55 Unspecified polyarthropathy or poly arthritis, 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 pa rtial (with or without distal deficiencies, incomplete) 755.28 Longitudinal deficiency, carpals or metacarpa ls, complete or partial (with or without incomplete phalangeal deficiency) 755.30 Unspecified reduction deformity of lower limb, 755.4 Reduction deformities, unspecified limb82

ICD-9-CM Code Diagnosis 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 800.00 Closed fracture of vault of skull without mention of intracranial injury, unspecified state of consciousness 800.09 Closed fracture of vault of skull without mention of intracranial injury, with concussion, unspecified 800.10 Closed fracture of vault of skull with cerebra l laceration and contusion, unspecified state of consciousness 800.19 Closed fracture of vault of skull with cerebra l laceration and contusion, with concussion, unspecified 800.20 Closed fracture of vault of skull with subarachnoid, subdural, and extradural hemorrhage, unspecified state of consciousness 800.29 Closed fracture of vault of skull with subarachnoid, subdural, and extradural hemorrhage, with concussion, unspecified 800.30 Closed fracture of vault of skull with ot her and unspecified intracranial hemorrhage, unspecified state of consciousness 800.39 Closed fracture of vault of skull with other and unspecified intracranial hemorrhage, with concussion, unspecified 800.40 Closed fracture of vault of skull with intracr anial injury of other and unspecified nature, unspecified state of consciousness 800.49 Closed fracture of vault of skull with intracr anial injury of other and unspecified nature, with concussion, unspecified 800.50 Open fracture of vault of skull without mention of intracranial injury, unspecified state of consciousness 800.59 Open fracture of vault of skull without men tion of intracranial injury, with concussion, unspecified 800.60 Open fracture of vault of skull with cerebra l laceration and contusion, unspecified state of consciousness 800.69 Open fracture of vault of skull with cerebra l laceration and contusion, with concussion, unspecified 800.70 Open fracture of vault of skull with subar achnoid, subdural, and extradural hemorrhage, unspecified state of consciousness 800.79 Open fracture of vault of skull with subar achnoid, subdural, and extradural hemorrhage, with concussion, unspecified 800.80 Open fracture of vault of skull with othe r and unspecified intracranial hemorrhage, unspecified state of consciousness 800.89 Open fracture of vault of skull with other and unspecified intracranial hemorrhage, with concussion, unspecified 800.90 Open fracture of vault of skull with intracra nial injury of other and unspecified nature, unspecified state of consciousness 800.99 Open fracture of vault of skull with intracra nial injury of other and unspecified nature, with concussion, unspecified83

ICD-9-CM Code Diagnosis

801.00 Closed fracture of base of skull without menti on of intra cranial injury, unspecified state of consciousness 801.09 Closed fracture of base of skull without menti on of intra cranial injury, with concussion, unspecified 801.10 Closed fracture of base of skull with cerebra l laceration and contusion, unspecified state of consciousness 801.19 Closed fracture of base of skull with cerebra l laceration and contusion, with concussion, unspecified 801.20 Closed fracture of base of skull with subar achnoid, subdural, and extradural hemorrhage, unspecified state of consciousness 801.29 Closed fracture of base of skull with subar achnoid, subdural, and extradural hemorrhage, with concussion, unspecified 801.30 Closed fracture of base of skull with othe r and unspecified intracranial hemorrhage, unspecified state of consciousness 801.39 Closed fracture of base of skull with other and unspecified intracranial hemorrhage, with concussion, unspecified 801.40 Closed fracture of base of skull with intracran ial injury of other and unspecified nature, unspecified state of consciousness 801.49 Closed fracture of base of skull with intracran ial injury of other and unspecified nature, with concussion, unspecified 801.50 Open fracture of base of skull without mention of intracranial injury, unspecified state of consciousness 801.59 Open fracture of base of skull without menti on of intracranial injury, with concussion, unspecified 801.60 Open fracture of base of skull with cerebral l aceration and contusion, unspecified state of consciousness 801.69 Open fracture of base of skull with cerebral laceration and contusion, with concussion, unspecified 801.70 Open fracture of base of skull with subarac hnoid, subdural, and extradural hemorrhage, unspecified state of consciousness 801.79 Open fracture of base of skull with subarac hnoid, subdural, and extradural hemorrhage, with concussion, unspecified 801.80 Open fracture of base of skull with othe r and unspecified intracranial hemorrhage, unspecified state of consciousness 801.89 Open fracture of base of skull with other a nd unspecified intracranial hemorrhage, with concussion, unspecified 801.90 Open fracture of base of skull with intracrani al injury of other and unspecified nature, unspecified state of consciousness 801.99 Open fracture of base of skull with intracrani al injury of other and unspecified nature, with concussion, unspecified 803.00 Other closed skull fracture without mention of intracranial injury, unspecified state of consciousness 803.09 Other closed skull fracture without mention of intracranial injury, with concussion, unspecified 803.10 Other closed skull fracture with cerebral lacer ation and contusion, unspecified state of consciousness 803.19 Other closed skull fracture with cerebral l aceration and contusion, with concussion, unspecified84

ICD-9-CM Code Diagnosis

803.20 Other closed skull fracture with subarachnoid, subdural, and extradural hemorrhage, unspecified state of consciousness 803.29 Other closed skull fracture with subarachnoid, subdural, and extradural hemorrhage, with concussion, unspecified 803.30 Other closed skull fracture with other and unspecified intracranial hemorrhage, unspecified state of unconsciousness 803.39 Other closed skull fracture with other and unspecified intracranial hemorrhage, with concussion, unspecified 803.40 Other closed skull fracture with intracrania l injury of other and unspecified nature, unspecified state of consciousness 803.49 Other closed skull fracture with intracranial in jury of other and unspecified nature, with concussion, unspecified 803.50 Other open skull fracture without mention of injury, unspecified state of consciousness 803.59 Other open skull fracture without mention of intracranial injury, with concussion, unspecified 803.60 Other open skull fracture with cerebral laceration and contusion, unspecified state of consciousness 803.69 Other open skull fracture with cerebral lacer ation and contusion, with concussion, unspecified 803.70 Other open skull fracture with subarachnoi d, subdural, and extradural hemorrhage, unspecified state of consciousness 803.79 Other open skull fracture with subarachnoid, subdural, and extradural hemorrhage, with concussion, unspecified 803.80 Other open skull fracture with other and unspecified intracranial hemorrhage, unspecified state of consciousness 803.89 Other open skull fracture with other and uns pecified intracranial hemorrhage, with concussion, unspecified 803.90 Other open skull fracture with intracranial injury of other and unspecified nature, unspecified state of consciousness 803.99 Other open skull fracture with intracranial inju ry of other and unspecified nature, with concussion, unspecified 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 804.10 Closed fractures involving skull or face with other bones, with cerebral laceration and contusion, unspecified state of consciousness 804.19 Closed fractures involving skull or face with other bones, with cerebral laceration and contusion, with concussion, unspecified 804.20 Closed fractures involving skull or face with other bones with subarachnoid, subdural, and extradural hemorrhage, unspecified state of consciousness 804.29 Closed fractures involving skull or face with other bones with subarachnoid, subdural, and extradural hemorrhage, with concussion, unspecified 804.30 Closed fractures involving skull or face with other bones, with other and unspecified intracranial hemorrhage, unspecified state of consciousness 804.39 Closed fractures involving skull or face with other bones, with other and unspecified intracranial hemorrhage, with concussion, unspecified85

ICD-9-CM Code Diagnosis

804.40 Closed fractures involving skull or face with ot her bones, with intracranial injury of other and unspecified nature, unspecified state of consciousness 804.49 Closed fractures involving skull or face with ot her bones, with intracranial injury of other and unspecified nature, with concussion, unspecified 804.60 Open fractures involving skull or face with other bones, with cerebral laceration and contusion, unspecified state of consciousness 804.69 Open fractures involving skull or face with other bones, with cerebral laceration and contusion, with concussion, unspecified 804.70 Open fractures involving skull or face with ot her bones with subar achnoid, subdural, and extradural hemorrhage, unspecified state of consciousness 804.79 Open fractures involving skull or face with ot her bones with subar achnoid, subdural, and extradural hemorrhage, with concussion, unspecified 804.80 Open fractures involving skull or face with other bones, with other and unspecified intracranial hemorrhage, unspecified state of consciousness 804.89 Open fractures involving skull or face with other bones, with other and unspecified intracranial hemorrhage, with concussion, unspecified 804.90 Open fractures involving skull or face with othe r bones, with intracranial injury of other and unspecified nature, unspecified state of consciousness 804.99 Open fractures involving skull or face with othe r 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 w ith unspecified spinal cord injury 806.70 Open fracture of sacrum and coccyx with unspecified spinal cord injury 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 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 851.00 Cortex (cerebral) contusion without mention of open intracranial wound, unspecified state of consciousness 851.09 Cortex (cerebral) contusion without mention of open intracranial wound, with concussion, unspecified 851.10 Cortex (cerebral) contusion with open in tracranial wound, unspecified state of consciousness 851.19 Cortex (cerebral) contusion with open intracranial wound, with concussion, unspecified86

ICD-9-CM Code Diagnosis

851.20 Cortex (cerebral) laceration without mention of open intracranial wound, unspecified state of consciousness 851.29 Cortex (cerebral) laceration without mention of open intracranial wound, with concussion, unspecified 851.30 Cortex (cerebral) laceration with open in tracranial wound, unspecified state of consciousness 851.39 Cortex (cerebral) laceration with open intracr anial wound, with concussion, unspecified 851.40 Cerebellar or brain stem contusion wit hout mention of open intracranial wound, unspecified state of consciousness 851.49 Cerebellar or brain stem contusion withou t mention of open intracranial wound, with concussion, unspecified 851.50 Cerebellar or brain stem contusion with ope n intracranial wound, unspecified state of consciousness 851.59 Cerebellar or brain stem contusion with open intracranial wound, with concussion, unspecified 851.60 Cerebellar or brain stem laceration wit hout mention of open intracranial wound, unspecified state of consciousness 851.69 Cerebellar or brain stem laceration without mention of open intracranial wound, with concussion, unspecified 851.70 Cerebellar or brain stem laceration with ope n intracranial wound, unspecified state of consciousness 851.79 Cerebellar or brain stem laceration with open intracranial wound, with concussion, unspecified 851.80 Other and unspecified cerebral laceration a nd contusion, without mention of open intracranial wound, unspecifi ed state of consciousness 851.89 Other and unspecified cerebral laceration a nd contusion, without mention of open intracranial wound, with concussion, unspecified 851.90 Other and unspecified cerebral laceration a nd contusion, with open intracranial wound, unspecified state of consciousness 851.99 Other and unspecified cerebral laceration a nd contusion, with open intracranial wound, with concussion, unspecified 852.00 Subarachnoid hemorrhage following injury without mention of open intracranial wound, unspecified state of consciousness 852.09 Subarachnoid hemorrhage following injury without mention of open intracranial wound, with concussion, unspecified 852.10 Subarachnoid hemorrhage following injury with open intracranial wound, unspecified state of consciousness 852.19 Subarachnoid hemorrhage following injury with open intracranial wound, with concussion, unspecified 852.20 Subdural hemorrhage following injury without mention of open intracranial wound, unspecified state of consciousness 852.29 Subdural hemorrhage following injury without mention of open intracranial wound, with concussion, unspecified 852.30 Subdural hemorrhage following injury with open intracranial wound, unspecified state of consciousness 852.39 Subdural hemorrhage following injury with open intracranial wound, with concussion, unspecified87

ICD-9-CM Code Diagnosis

852.40 Extradural hemorrhage following injury w ithout mention of open intracranial wound, unspecified state of consciousness 852.49 Extradural hemorrhage following injury w ithout mention of open intracranial wound, with concussion, unspecified 852.50 Extradural hemorrhage following injury with open intracranial wound, unspecified state of consciousness 852.59 Extradural hemorrhage following injury with open intracranial wound, with concussion, unspecified 853.00 Other and unspecified intracranial hemorrhag e following injury without mention of open intracranial wound, unspecifi ed state of consciousness 853.09 Other and unspecified intracranial hemorrhag e following injury without mention of open intracranial wound, with concussion, unspecified 853.10 Other and unspecified intracranial hemorrhag e following injury with open intracranial wound, unspecified state of consciousness 853.19 Other and unspecified intracranial hemorrhag e following injury with open intracranial wound, with concussion, unspecified 854.00 Intracranial injury of other and unspecified nature without mention of open intracranial wound, unspecified state of consciousness 854.09 Intracranial injury of other and unspecified nature without mention of open intracranial wound, with concussion, unspecified 854.10 Intracranial injury of other and unspecifi ed nature with open intracranial wound, unspecified state of consciousness 854.19 Intracranial injury of other and unspecified nature with open intracranial wound, with concussion, unspecified 887.0 Traumatic amputation of arm and hand (compl ete) (partial), unilateral, below elbow, without mention of complication 887.1 Traumatic amputation of arm and hand (compl ete) (partial), unilateral, below elbow, complicated 887.2 Traumatic amputation of arm and hand (compl ete) (partial), unilateral, at or above elbow, without mention of complication 887.3 Traumatic amputation of arm and hand (compl ete) (partial), unilateral, at or above elbow, complicated 887.4 Traumatic amputation of arm and hand (com plete) (partial), unilateral, level not specified, without mention of complication 887.5 Traumatic amputation of arm and hand (com plete) (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 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 trunk88

ICD-9-CM Code Diagnosis 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 otherw ise 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 ot herwise 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 thir d 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

VIII. Proposed Non-Quality Relate d Revisions to IRF-PAI Sections Under section 1886(j)(2)(D) of the Act, th e Secretary is authorized to require rehabilitation facilities that provide inpatient hospital services to submit such data as the89

Secretary deems necessary to es tablish and administer the prospective payment system under subsection P. The collection of patient data is indispensable for the su ccessful development and implementation of the IRF payment system. In the August 7, 2001 final rule, the inpatient rehabilitation facility patient assessment instru ment (IRF-PAI) was adopted as the standardized patient assessment instrument under the IRF pros pective payment system (PPS). The IRF-PAI was established for, and is still used to gather data to classify patients for payment under the IRF PPS. As discussed in section XII. of this proposed rule, it is also now used to collect certain data for the IRF Quality Reporting Program. IRFs ar e currently required to complete an IRF-PAI for every Medicare Part A, B or C patient who is admitted to, or discharged from an IRF. Although there have been significant advan cements in the industry, no IRF PPS paymentrelated changes have been made to the IRF-PAI form since its implementation - in FY 2002. We are proposing to amend certain re sponse options, add additional data points, remove certain outdated items and change certain references to ensure that our policies reflect the current data needs of the IRF PPS program. A. Proposed Updates We propose 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 Destin ation/Living Setting (Formerly item 44A) To minimize possible confusion due to the us e of different sets of status codes on the IRF-PAI and the CMS-1450 (also refe rred to as the UB-04) claim fo rm, we believe that the IRFPAI status codes should be changed to mirro r those used on the CMS-1450 claim form. We believe this proposed update w ould help decrease the rate of coding errors on CMS-1450 claim90

forms. We believe this propos al would provide response options that mirror another commonly

used instrument in the Medicare context a llowing providers to use only one common set of response codes. We propose to amend the respon se 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 Re habilitation Facility

● 63- Long-Term Care Hospital (LTCH)

● 64- Medicaid Nursing Facility

● 65- Inpatient Psychiatric Facility

● 66- Critical Access Hospital

● 99- Not Listed

We also propose to update the options for responding to item 20B: Secondary Source. We find that the current response options for this data element exceed what we need to operate IRF PPS. Therefore, to decrease burden on IRFs through the implem entation of simplified response options, we propose to limit secondary source response options to the following:

● 02- Medicare- Fee for Service

● 51- Medicare- Medicare Advantage

● 99- Not Listed B. Proposed Additions Further, we propose to add (or expand ) the following items to the IRF-PAI:

● Item 25A: Height91

● Item 26A: Weight

● Item 24: Comorbid Cond itions (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 use 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 XII. of this proposed rule). In the regulations at §412.29(b)(2), we specify a list of comorbid conditi ons that, if certain conditions are met, may qualify a patient for inclusion in an IRF’s 60 per cent rule compliance percentage. For example, a patient with a lower-extremity joint replacement comorbidity would qualify if the patient had a bilateral joint replacement, is over the age of 85, and/or has a BMI greater than 50. BMI is calculated using height and we ight. As such, by adding a pa tients’ height and weight information to the IRF-PAI we expect that th e FI/MAC will be able, upon medical review, to include these patients in a fac ilities’ 60 percent rule compliance percentage in accordance with chapter 3, §140.14 of the Medicare Claims Processing Manual (Pub. 100.4), after it has confirmed any other severity and prior treatment requirements that may apply. We also propose adding 15 additional spaces for providers to document patients’

comorbid medical conditions at item 24: Co morbid Conditions (located in the medical information section of the IRF-PAI). The IR F-PAI currently has ten spaces available for providers to enter ICD codes for comorbid cond itions. If finalized, th e IRF-PAI would have a total of 25 spaces. Such expansion would support IRFs as they seek to code with greater specificity to support presumptive compliance per centage findings, and woul d be in keeping with recent industry-driven changes.92

In response to the industry’s request to update the claim form to allow for better accounting for patients comorbidities, added 15 a dditional spaces were added to the claim form for providers to document ICD codes. We believe that the number of data elements allowed on

the IRF-PAI should mirror the number allowed on the claim. Additiona lly, the ICD-10 coding scheme, which will be used beginning on October 1, 2014 is much more specific than the current ICD-9 coding. Therefore, when the agency mo ves from ICD-9 to ICD-10 coding, providers may need the additional spaces to code because of the greater spec ificity under ICD-10. Furthermore, we propose 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 sk ip items 44D, 44E, and 45, which describe a living patient’s discharge destination. This will reduce the burden on the time it takes 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 documenti ng patient information on the IRF-PAI. We propose adding a page to the IRF-PAI dedi cated as the signature page for persons completing the IRF-PAI. As of the effective da te of the IRF Coverage Requirements, see the August 7, 2009 FY 2010 IRF PPS final rule ( 74 FR 39762), the IRF-PAI forms must be maintained in the patient’s medical record at th e IRF (either in electroni c or paper format), and

information in the IRF-PAI must correspond with all of the inform ation 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 th at IRF-PAI in the medical record questioning

whether IRFs would need to adhere to the c onditions of participati on in §482.24(c)(1) that require all patient medical record entries mu st be legible, complete, dated, timed, and93

authenticated in written or elec tronic form by the person respons ible for providing or evaluating the service provided, consistent with hospital po licies and procedures. When CMS responded (athttp://cms.gov/Medicare/Medicare-Fee-for-ServicePayment/InpatientRehabFacPPS/Downlo ads/IRF-Training-call_version_1.pdf ) that IRFs would need to adhere to §482.24(c)(1 ), providers responded by aski ng for a place on the IRF-PAI where they would be able to document the requi red authentication. The proposed addition of a page for signatures of persons completing the IRF-PAI would fulfill providers’ request to have an organized way to document who in the IRF ha s completed the assessment of the patient and when that assessment took place. We also belie ve that having 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. Proposed Deletions We propose to delete the follo wing 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 We no longer believe that these items are nece ssary 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 (which are currently located in the admission identification sec tion on the IRF-PAI) are not used for payment or quality purposes. While these items will, if finalized, be dropped from the IRF-94

PAI form, however, we would note that these data elements could be significant in a treatment context, in which case we would expect them to appear in the patient’ s medical record. For example, we believe that these data el ements could be relevant during the care planning/discharge process as well as during interdisciplinary team meetings. We also note, that items 25: Is patient coma tose at admission, 26: Is patient delirious at admission, and 28: Clinical signs of dehydration (which are currently lo cated in the medical

information section on the IRF-PA I) are voluntary items that are not used for our payment or quality program purposes. Therefore, we do not belie ve 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 pati ents’ initial assessment documenta tion. 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. Proposed Changes We are proposing to replace all references to the ICD-9-CM code(s) in the IRF-PAI with references to ICD code(s). This change woul d allow CMS to forgo making additional changes to the IRF-PAI when the adopted ICD code(s) change. Proposed Technical Correction We are proposing a technical correction at items 44D, 44E and 45 to conform to the additions proposed above. We believe that a dding language to these it ems 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.95

A draft of the IRF-PAI, with the proposed revisions discussed throughout this proposed

rule is available for downl oad on the IRF PPS website athttp://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/InpatientRehabFacPPS/IRFPAI.html

. IX. Proposed 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 rehabilitati on facilities at §412.23(b), §412.25(b), §412.29, and §412.30 to update and simplify the policie s, to eliminate unnecessary repetition and confusion, and to enhance consistency with the IRF coverage re quirements. Among other revisions, we removed the regulations that were formerly in §412.30, a nd 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). Howeve r, we have recently discovered that §412.130, which outlines the policies regarding retroactive adjustments fo r incorrectly excluded ho spitals and units, was not updated to reflect the changes to §412.30 and §412.29. Specifically, §412.130 still references regulations in §412.30 th at were revised and consolidat ed into §412.29(c). Further, it still references regulations th at were formerly in §412.23(b)(2), but were moved into §412.29(b)

in the FY 2012 IRF PPS final ru le (76 FR 47869 through 47873). Thus, in this proposed rule, we propose to ma ke the following techni cal corrections to the regulations in §412.130 to conform with the re visions 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),96

• 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). X. Proposed Revisions to the Conditions of Payment for IRF Un its Under the IRF PPS The regulations at §412.25 specify the requirements for an IRF unit to be excluded from the inpatient prospective payment system (IPPS) sp ecified in §412.1(a)(1) a nd 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 requi rements at §412.25 is the requirement (at §412.25(a)(1)(iii)) that the in stitution of which the IRF unit is a part must have “enough beds that are not excluded from the prospective payment sy stems to permit the provision of adequate cost information, as required by §413.24(c) of this chapte r.” 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 fro m providers about whether one or two hospital beds that are certified for paymen t 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 th is does not meet the requirement at §412.25(a)(1)(iii), wh ich 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. Further, we are unclear how th e IRF unit that is part of a hospital with on ly one or two97

beds would be able to meet an other requirement, at §412.25(a)(7), th at specifies th at an IRF unit must have beds that are “physic ally separate from (that is, no t commingled with) the hospital’s other beds.” The requirement at §412.25(a)(7) m eans that there is some sort of physical separation (such as a different fl oor, a different wing, and different building, etc.) that separates 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 propose to specify at §412.25(a)(1)(iii) a minimum nu mber of hospital beds that the IPPS hospital must have to meet the requir ements at §412.25(a)(1)(ii i) for having an IRF unit. We note that, though §412.25( a)(1)(iii) also applies to i npatient psychiatric facilities (IPFs), these facilities have their own requirements at§412.27 for payment under the IPF PPS that we are not proposing to cha nge in this proposed rule. IP Fs should continue following the regulations at §412.27. We propose 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 maintain ed hospital beds that ar e not excluded from the IPPS, or at least 1 staffed and maintained hospi tal bed for every 10 certified IRF beds, whichever number is greater. If the instit ution is not able to meet this proposed requirement, then we propose that the IRF unit should instead be classifi ed as an IRF hospital. We also propose to exclude CAHs that have IRF units from these requ irements, as CAHs already have very specific

bed size restrictions. We welcome stakeholder comments on the specific minimum hospital bed requirements for IRFs that we are proposing in this rule. XI. Proposed Clarificatio n of the Regulations at §412.630 In the original rule establis hing a prospective payment system for Medicare payment of98

inpatient hospital services provi ded by a rehabilitation hospital or by a rehabilita tion 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 with in these groups, the weighting factors, the prospective payment rates, outlier and special payments and area wage adjustments. See 66 FR 41316, 41319 (August 7, 2001). Our intent was to honor the full bread th of the preclusion of administrative or judicial re view provided by section 1886(j)(8) of the Act. However, the regulatory text reflecting the prec lusion of review has been at tim es 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 section 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 proposing to clarify our regulat ion at §412.630 by deleting the word “unadjusted” so that the regulation would clearly preclude review of “the Federal per di scharge payment rates.” This

clarification will better conform the regulation to the statutory language. As such, in accordance with se ctions 1886(j)(7)(A), (B), a nd (C) of the Act, we are proposing to revise the regulations at § 412.630 to clarify that administrative or judicial review under sections 1869 or 1878 of the Act, or othe rwise, 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. XII. Proposed Revision to the Regulations at §412.29 According to the regulations at §412.29(d), to be excluded from the inpatient prospective99

payment system (IPPS) and instead be paid under th e 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 pati ent is likely to benefit significantly from an intensive inpatient hospital program. This procedure must ensure that the preadmission screening is reviewed and appr oved by a rehabilitation physician pr ior to the patient’s admission to the IRF.” The latter sentence of this regu lation is based on the preadmission screening requirement for Medicare coverage of IRF serv ices 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 th at 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 stat e that it applies only to patients for whom the IRF is seeking payment directly from Medicare. Other payer sour ces, such as private insurance, have their own IRF admission requirements, and we do not believe th at it would be appropriate to interfere with or duplicate the requirements that other payer sources may already have in place. Thus, we propose to amend §412.29(d) to clarify that th e IRF’s preadmission screening procedure must ensure that the preadmission screening for a Medi care Part A fee-for-service patient is reviewed and approved by a rehabilitation phy sician prior to the patient’s admission to the IRF. We

continue to believe that the ba sic preadmission screening procedur e itself is an important element of providing quality IRF care to all patients and, thus, we propos e to require that the basic preadmission screening procedure requirement remain in place for all patients regardless. XIII. Proposed Revisions and Updates to the Quality Reporting Program for IRFs A. Background and Statutory Authority Section 3004(b) of the Affordable Care Ac t added section 1886(j)(7) to the Act, which100

requires the Secretary to implem ent a quality reporting program (QRP) for IRFs. This program applies to freestanding IRF hospitals , IRF units that are affiliated w ith an acute care facility, and

IRF units affiliated with a cr itical access hospital (CAH). Beginning in FY 2014, section 1886(j)(7)(A)(i) of the Act requires the reduction of the applicable IRF PPS annual increas e factor, as previously modifi ed 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 u nder this subsection for a fiscal year being less than the payment rates for the preceding fiscal year. Any reduction base d 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 unde r subsection (j) for a subsequent fiscal year. Section 1886(j)(7)(C) of the Act requires th at 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 sec tion 1890(a) of the Act. This c ontract is currently held by the National Quality Forum (NQF), which is a volun tary 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 NQF-endorsed measures in our reporting programs. However, section 1886(j)(7)(D)(ii) of the Act prov ides that “in the case of a specified area or101

medical topic determined appropriate by the Secret ary 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 en dorsed, so long as due consideration is given to measures that have been endorsed or adopted by a consensus-based 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 app licable 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 th e 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 th e public reporting of data collected under those programs. The initial framework of the IRF QRP was es tablished in the FY 2012 IRF PPS final rule (76 FR 47873). B. Quality Measures Previously Finalized and Currently in Use for the IRF Quality Reporting Program 1. Background In the FY 2012 IRF PPS final rule, we adopted ap plications of 2 quality measures for use in the first data reporting cycle of the IRF QR P: (1) an application of “Catheter-Associated Urinary Tract Infection [CAUTI] for Intensive Care Unit Patients” 1 (NQF#0138); and (2) an

1 The version of the CAUTI measure that was adopted in the FY 2012 IRF PPS final rule (76 FR 47874 through 47876) was102

application of “Percent of Resi dents with Pressure Ulcers th at Are New or Worsened (shortstay)” (NQF #0678). We adopted applications of these two measures becaus e neither of them, at the time, was endorsed by the NQF for the IRF se tting. We also discussed our plans to propose a 30-Day All Cause Risk Standardized Post IR F Discharge Hospital Readmission Measure at a later date (76 FR 47874 through 47878). In the CY 2013 OPPS/ASC proposed rule (77 FR 45193 through 45196), we proposed: (1) to adopt updates to the CAUTI measure that had been ad opted by NQF after we had adopted an application of the prior version of the meas ure for the IRF QRP; (2) to adopt 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 (we also proposed to apply this proposal to the CAUTI and pressure ulcer measures that had already been adopted for use in the IRF QRP); and (3) to utilize a subregulatory process to in corporate NQF updates to IRF quality measure specifications that do not substantively change th e nature of the measure. We also informed

stakeholders that CMS had submitted an ad hoc request for NQF review of the pressure ulcer measure with a request to endorse the measure’s use in two additional care settings -- Long-Term Care Hospitals (LTCHs) and IRFs. Assuming that the review resulted in no substantive changes to the pressure ulcer measure, we noted that, if adopted, we would use the proposed subregulatory process to incor porate any NQF updates and revi sions to the pressure ulcer measure specifications for the IRF QRP Program (77 FR 45196 ). In the CY 2013 OPPS/ASC final rule ( 77 FR 68500 through 68507), we adopted the

titled ‘‘Catheter-Associated 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 change s 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 measur e. This measure is now titled ‘‘N ational Health Safety Network (NHSN) Catheter Associated Urinary Tract Infection (CAUTI) Outcome Measure.’’103

policies and measures as proposed, with one ex ception. At the time of the CY 2013 OPPS/ASC final rule, the NQF had endorsed the pressure ulce r measure for the IRF setting, and re-titled it to cover both residents and patient s within LTCH and IRF settings, in addition to the Nursing Home/Skilled Nursing Facility setting. Alt hough 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 Th at Are New or Worsened (short-stay)” (NQF #0678). Public comments revealed that the “Qua lity Indicator” section of the IRF-PAI did not

contain the data elements that w ould be needed to calculate a risk -adjusted measure. As a result, we decided to: (1) adopt an application of NQF #0678 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 curren t version of the IRF–PAI; (3) delay public reporting of pressure ulcer measure results unti l 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 IR F setting through rulemaking (77 FR 68507).

2. Previously Finalized IRF QRP Quality Measures i. National Healthcare Safety Network ( NHSN) Catheter Associ ated Urinary Tract Infection (CAUTI) Outcome Measure (NQF #0138) In the FY 2013 OPPS/ASC final rule we adopted the current version of NQF #0138

NHSN Catheter Associated Ur inary Tract Infection (CAUTI) Outcome Measure (replacing an application of this measure which we initia lly adopted in the FY 2012 IRF PPS (76 FR 47874 through 47886)). The NQF endorsed measure a pplies to the FY 2015 IRF PPS annual increase factor and all subsequent payment de terminations (77 FR 68504 through 68505). Since the publication of the FY 2013 OPPS/ ASC final rule, the NHSN CAUTI measure104

has not changed. Furthermore, we have not re moved, suspended, or repl aced this measure and it remains an active part of the IRF QRP. Additio nal 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 contin ue 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 website at http://www.cdc.gov/nhsn/inpatientrehab/index.html

. ii. Application of Percent of Residents or Patients with Pr essure 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-risk-adjusted appl ication of this measure using the current version of the IRFPAI. We also stated that we would not be gin public reporting of th is measure until we had adopted the NQF-endorsed version of this measure. To adopt the NQF-endorsed version of this measure, we had to update th e existing IRF-PAI to include the additional data elements necessary to risk adjust this measure. We also delayed publ ic reporting of pressure ulcer

measure results until we could use notice and co mment rulemaking to amend the IRF-PAI to add the data elements necessary for risk adjust ing NQF #0678 (77 FR 68507). We are not proposing any changes to the application of measure #0678 finalized in the FY 2013 OPPS/ASC final rule

for the FY 2015 and FY 2016 IRF PPS annual increas e factor. Furthermore, we have not removed, suspended, or replaced this measure and it remains an active part of the IRF QRP.

Additional information about th is 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 contin ue to collect and submit pressure ulcer measure105

data during CY 2013 using the IRF-PAI releas ed on October 1, 2012 for the FY 2015 IRF PPS

annual increase factor. Furthe r, IRFs should continue to co llect and submit pressure ulcer measure data during the first th ree quarters of CY 2014 using th e IRF-PAI released on October 1, 2012 for the FY 2016 IRF PPS annual increase factor. However, we propose to adopt a revised vers ion of the IRF-PAI st arting October 1, 2014.

This revised version of the IRF-PAI would allow collection of data elements necessary for risk adjustment of NQF #0678; therefore, we are pr oposing to adopt the NQF #0678 as specified (for example, including risk-adjustment) for the FY 2017 payment determination and subsequent fiscal year payment determinations. TABLE 8: Quality Measu res Finalized in the CY 2013 OPPS/ASC Final Rule Affecting the FY 2015 IRF Annual Increase Fa ctor and Subsequent Year Increase Factors NQF Measure ID Measure Title NQF #0138 National Health Safety Networ k (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. Proposed New IRF QRP Quality Measures Affecting the FY 2016 and FY 2017 IRF PPS Annual Increase Factor, and Subs equent Year Increase Factors

1. General Considerations Used For Sel ection of Quality Measures for the IRF QRP

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 seek to adopt measures for the IRF QRP that promote better, safer, and more efficient care. Our measure selection activities for the IRF QRP must take into consideration input we receive from a multistakeholder group, the Measure Applications Part nership (MAP), which is convened by the NQF as part of a pre-rulemaking process that we ha ve established and are required to follow under106

section 1890A of the Act. The MAP is a publ ic-private partnershi p comprised of multistakeholder groups convened by the NQF for th e primary purpose of providing input to CMS on the selection of certain categories of quality and efficiency measures , as required by section 1890A(a)(3) of the Act. By February 1 st of each year, the NQF must provide MAP input to CMS. We have taken the MAP’s input into consid eration in selecting measures for this proposed rule. Input from the MAP is located at http://www.qualityforum.org/Sett ing_Priorities/Partnership/Meas ure_Applications_Partnership.a

spx

. For more details about the pre-rulemaki ng process, see the FY 2013 IPPS/LTCH PPS final rule (77 FR 53376). We also take into account national prioriti es, such as those established by the National Priorities Partnership (NPP) at http://www.qualityforum.org/npp/ , the HHS Strategic Plan http://www.hhs.gov/secretary/abou t/priorities/priorities.html and the National Strategy for Quality Improvement in Healthcare located at ( http://www.healthcare.gov/news/r eports/national qualitystrategy032011.pdf ). To the extent practicable, we have sought to adopt measures that have been endorsed by a national consensus organization, recommende d by multi-stakeholder organizations, and developed with the input of providers, purchasers/payers, and other stakeholders.

For the FY 2016 IRF PPS annual in crease factor, in addition to retaining the previously discussed CAUTI and Pressure Ulcer measures, we are proposing to adopt one new measure: Influenza Vaccination Coverage among Healthcare Personnel Measure (NQF #0431). For the

FY 2017 IRF PPS annual increase fact or we are proposing 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 Pa tients Who Were Assessed and107

Appropriately Given the Seasonal Influenza Vaccine (Short-Stay) (NQF #0680), and (3) the NQF endorsed version of Percent of Residents or Patients with Pressure Ulcers that are New or Worsened (Short-Stay) (NQF #0678). We discuss each in turn below. 2. New Quality Measures Proposed for Qual ity Data Reporting Affecting the FY 2016 IRF

PPS Annual Increase Factor i. Proposed IRF QRP Measure #1: Influen za Vaccination Coverage among Healthcare Personnel (NQF #0431) We propose to adopt the CDC develope d Influenza Vaccination Coverage among Healthcare Personnel (NQF #0431) measure that is currently co llected by the CDC via the NHSN. This measure reports on the percentage of health care personnel who receive the

influenza vaccination. This measure was incl uded on the CMS’ List of Measures under Consideration for December 1, 2012 that CMS ma de publicly available. The measure was reviewed by the MAP and was included in th e 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, indica ting it promotes alignment across quality reporting programs (for example, with Long-Term Care Hospital Quality Reporting Program (LTCHQR Program) and Hospital Inpatient Quality Reporti ng 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 personne l influenza infections during the 2009 H1N1 influenza pandemic estimated 50 percent of infected health care pe rsonnel had contracted the influenza virus from

2 Wilde JA, McMillan JA, Serwint J, et al. Effectiveness of influenza vaccine in healthcare professionals: A randomized trial. JAMA. 1999; 281: 908–913.108

patients or coworkers in the healthcare setting. 3 The CDC Advisory Committee on Immuni zation Practices (ACIP) guidelines

recommend that all health care personnel get an influenza va ccine every year to protect themselves and patients. 4 Even though levels of influe nza 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 v accination until the 2009 and 2010 seasons, when an estimated 62 percent of health care personnel got a s easonal influenza vaccination. In the 2010 and 2011 season, 63.5 percent of health care personne l reported influenza vaccination. Increased influenza vaccination coverage am ong health care personnel is e xpected to result in reduced morbidity and mortality related to influenza vi rus infection among patient s, aligning with the NQS’s aims of better care and healthy people/comm unities. 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, Health care Personnel Safety Component Protocol Module, Influenza Vaccination and Exposure Mana gement Modules, which is available at the

CDC website at http://www.cdc.gov/nhsn/inpatie nt-rehab/hcp-vacc/index.html for measure specifications and additional details. We propose that, for the IRF QRP, th e 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 1 st (or when the vaccine becomes available) through March 31 st . IRFs will submit their data for this measure to the

3 Harriman K, Rosenberg J, Robinson S, et al. Novel influenza A (H1N1) virus infections am ong health-care personnel—United States, April– May 2009. MMWR Morb Mortal Wkly Rep. 2009; 58(23): 641–645. 4 Fiore AE, Uyeki TM, Broder K, et al. Prevention and control of influenza with vaccine s: Recommendations of the Advisory Committee on Immunization Practices (ACIP), 2010. MMWR Recomm Rep. 2010. 59(08): 1–62.109

NHSN ( http://www.cdc.gov/nhsn/ ). It is a secure Internet ba sed surveillance 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 web based tool hosted by the CDC. Information on the NHSN system, including protocols, report fo rms, 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. For the FY 2016 IRF PPS annual increase factor, we propose that the data collection will cover the period from October 1, 2014 (or when the vaccine becomes available) through March 31, 2015. Details related to the use of NHSN for data submission and information on definitions, numerator data, denominator data, data analyses , and measure specifications for the Influenza Vaccination Coverage among Healthcare Perso nnel (NQF #0431) measure can be found at http://www.cdc.gov/nhsn/inpatie nt-rehab/hcp-vacc/index.html . Because IRFs are already using the NHSN for the submission of CAUTI data, the ad ministrative burden rela ted 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 NQF #0431, data submission is only required once per influenza season, unlike the other measure finalized for the IRF QRP that ut ilizes NHSN (CAUTI measure NQF #0138). For example, IRFs can choose to submit 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. T hus, entering this information at the end of the influenza season would yield the same total num ber 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 “curren t” influenza season. We propose that the final110

deadline associated with this measure align with another CMS deadline for IRF HAI reporting into NHSN, which is May 15 th . IRF QRP data collection timelin es and submission deadlines are

discussed below. Also, we note that data collection for this measure is not 12 months, as with other measures, but is approximately 6 months (Octob er 1 (or when the vaccine becomes available) through March 31 of the following year). We note th at this data collectio n period is applicable only to NQF #0431 Influenza Vaccination Covera ge Among Healthcare Personnel, and not applicable to any other IRF QRP measures, prop osed or adopted, unless explicitly stated. The measure specifications for this measure can be found at http://www.cdc.gov/nhsn/inpatientrehab/hcp-vacc/index.html and at http://www.qualityforum.org/QPS/0431. We are seeking comments on the proposed use of the Influenza Vaccination Coverage among Healthcare Personnel (NQF #0431) measur e for the FY 2016 IRF PPS annual increase factor and subsequent years. TABLE 9: Summary of FY 2016 IRF PPS Annual Increase Factor

Continued Data Collection:

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

• Application of NQF #0678: Per cent of Residents with Pressu re Ulcers That are New or Worsened (Short-Stay) * Proposed New IRF QRP Measures Affecting the FY 2016 IRF PPS An nual 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-PAI111

3. Quality Measures Proposed for Quality Da ta Reporting Affecting the FY 2017 IRF PPS Annual Increase Factor and Subsequent Years We are proposing to adopt two additional quality measures, and replace an existing quality measure for the IRF QRP for the FY 2017 payment determination and subsequent payment determinations. The new measures being proposed are (1) All-Cause Unplanned Readmission Measure for 30 Days Post Discharge from Inpatient Rehabilitation Facilities, and (2) Percent of Residents or Pa tients Who Were Assessed and A ppropriately Given the Seasonal Influenza Vaccine (Short-Stay) (NQF #0680). In addition, we propose to re place the application

of Percent of Residents or Pati ents with Pressure Ulcers That Are New or Worsened (short-stay) (NQF #0678), with adoption of the NQF endorsed vers ion of this measure. We discuss each in

turn below.

i. Proposed IRF QRP Measure #1: All-Cause Unplanned Readmission Measure for 30 Days Post Discharge from Inpa tient Rehabilitation Facilities We propose to adopt the All-Cause Unpla nned Readmission Measure for 30 Days Post Discharge from Inpatient Rehabilita tion Facilities. This measure estimates the risk-standardized rate of unplanned, all-cause hospital readmission s 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. This is a claims-based measure not requiring reporting of new data by IRFs, and hence, will not be used to determine IRF reporti ng compliance for the IRF QRP. Addressing unplanned hospital re admissions is a high priority for HHS and CMS as our focus continues on promoting patient safety, el iminating healthcare associated infections, improving care transitions, and reducing the cost of healthcare. Readmissions are costly to the112

Medicare program and have been cited as sensi tive to improvements in coordination of care and discharge planning for patients. 5 Although the literature on readmissions is mainly concerned with discharges from short-term acute hospita ls, the same issues of discharge planning,

communications and coordination arise at disc harge 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-for-ser vice (FFS) beneficiaries received care in IRFs and cost the Medicare FFS program over $6 billion dollars. The unadjusted readmission rate to an IPPS hospital in the 30 days fo llowing an IRF discharge was about 15 percent 7 . With such a large proportion of patients being readmitted to a hospital level of care, we are proposing a risk-adjusted measure of readmission rate, th e All-Cause Unplanned Readmission Measure for 30 Days Post Discharge from Inpa tient Rehabilitation Facilities. An IRF’s readmission rate is affected by complex and critical aspects of car e such as communication between providers or between providers and patients; prevention of, an d response to, complications; patient safety; and

coordinated transitions to the co mmunity or a less intense level of care. While disease-specific measures of readmission are useful in identifyi ng deficiencies in care for specific groups of patients, they account for only a small minority oftotal readmissions. By contrast, a facilitywide, all-cause readmission reflects a broader assessment of the qual ity of care in IRFs, and may consequently better promote quality improveme nt and inform consumers about quality. While some readmissions are unavoidable, such as those resulting from the inevitable progression of disease or worsen ing of chronic conditions, readmissions may also result from

5 Federal Register / Vol. 76, No. 160 / Thursd ay, August 18, 2011 / Rules and Regulations, C1a 6 MedPAC, Report to Congress, Medicare Payment Policy, March, 2012 /. http://www.medpac.gov/chapters/Mar12_Ch09.pdf 7 Bernard SL, Dalton K, Lenfestey N F, Jarrett NM, Nguyen KH, Sore nsen 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). 2011.113

poor quality of care or inadequate transitions be tween care settings. Randomized controlled trials in short-stay acute care hospitals have show n that improvement in the following areas can directly reduce hospital readmi ssion rates: quality of care during the initial admission; improvement in communication with patients, their caregivers and their clinicians; patient education; pre-discharge assessment; and coor dination of care after discharge. Successful randomized trials have reduced 30-day readmission rates by 20–40 percent. 8,9,10,11,12,13,14 and a 2011 meta-analysis of randomized cl inical trials found evidence th at 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 Nationa l Quality Strategy priorities of safer, better

coordinated care and lower costs. CMS’s approach to developing this measure is consistent with NQF-endorsed Hospital-

8 Jack BW, Chetty VK, Anthony D, Greenwald JL, Sanchez GM, Johns on AE, et al. A reengineered hospital discharge program to decr ease rehospitalization: a randomized trial. Ann Intern Med 2009;150(3):178–87. 9 Coleman EA, Smith JD, Frank JC, Min SJ, Parry C, Kramer AM. Preparing patients and caregivers to participate in care delivere d across settings: the Care Transitions Interven tion. J Am Geriatr Soc 2004;52(11):1817–25 10 Courtney M, Edwards H, Chang A, Parker A, Finlayson K, Hamilton K. Fewer emerge ncy readmissions and better quality of life f or older adults at risk of hospital readmission: a randomized controlled tr ial 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 co mmunity hospital as an alternative to prolonged general hospital care for elderly patients: a randomized controlled tria l. BMC Public Health 2007;7:68. 12 Koehler BE, Richter KM, Youngblood L, Cohe n BA, Prengler ID, Cheng D, et al. Reduc tion of 30- day post discharge hospital re admission or emergency department (ED) visit rates in high-risk elderly medical patients through de livery of a targeted care bundle. J Hosp Med 2009;4(4):211– 218. 13 Naylor M, Brooten D, Jones R, Lavizzo-Mourey R, Mezey M, Pa uly M. Comprehensive discharge planning for the hospitalized elde rly. A randomized clinical trial. Ann Intern Med 1994;120(12):999– 1006. 14 Naylor MD, Brooten D, Campbell R, Jacobsen BS, Mezey MD, Pa uly MV, et al. Comprehensive di scharge planning and home follow-u p of hospitalized elders: a randomized clin ical trial. Jama 1999;281(7):613–20. 15 Naylor MD, Aiken LH, Kurtzman ET, Olds DM, Hirschman KB.The Importance of Transitional Care in Achieving Health Reform. Heal th Affairs 2011; 30(4):746-754.114

Wide (HWR) Risk-Adjusted All-Cause U nplanned Readmission Measure (NQF #1789) ( http://www.qualityforum.org/Publica tions/2012/07/Patient_Outcomes_AllCause_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, the proposed IRF measure is bei ng harmonized with the HWR measure and other measures of readmission rates developed for post-acute care (PAC) settings, including LTCHs. The All-Cause Unplanned Readmission Meas ure for 30 Days Post Discharge from Inpatient Rehabilitation F acilities measure assesses returns to short-stay acute care hospitals or LTCHs within 30 days of discharge from an IR F 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 pa tient 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 readmission s, because these are not considered to be indicative of poor quality of car e on the part of the IRF. A model developed by a CMS m easure 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 the patient characteristics, the model also estimates a facility specific effect common to patients treated at that facility. Similar to the Hospita l IQR Program hospital-wide readmission measure, the proposed IRF QRP measure is the ratio of the number of risk-adjusted predicted unplanned readmissions for each individual IRF, including th e estimated facility effect, to the average number of risk-adjusted predic ted unplanned readmissions for the same patients treated across IRFs. A ratio above one indicates a higher than expected readmission rate, or lower level of115

quality, while a ratio below one i ndicates a lower than expected readmission rate, or higher level of quality (The methodology report detailing the de velopment of the IPPS hospital-wide measure and the NQF report may be downloaded from: http://www.qualityforum.org/Publica tions/2012/07/Patient_Outcomes_AllCause_Readmissions_Expedited_Review_2011.aspx .) The patient population incl udes IRF patients who:

• Were discharged alive from the IRF

• Had 12 months of Medicare Part A, fee-for-s ervice coverage prior to the IRF stay

• Had 30 days of Medicare Part A, fee-fo r-service coverage post discharge.

• Had an IPPS hospital stay within the 30 days prior to the IRF stay.

• Were aged 18 years or above when admitted to the IRF. As with the Hospital IQR Program hospital- wide readmission measure, patients whose principal diagnosis was cancer and whose treatm ent was non-surgical are excluded. Studies of this population that were reviewed for the Ho spital IQR Program readmission measure showed them to have a different trajectory of illness and mortality than other patient populations16. The measure also excludes patients who died during th e 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 IPPS hospital

• 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 that are problematic (e.g., with stays that overlap wholly or in part)

16 National Quality Forum. “Patient Outcomes: All-Cause Readmissions Expedited Review 2011”. July 2012. pp12116

The planned readmission list includes the plan ned procedures specified in the HospitalWide All-Cause Unplanned Readmission Measur e (HWR) (NQF #1789) used in the Hospital IQR Program, plus other procedures that were de termined in consultation with technical expert panels. In addition to th e list of planned procedures is a list of diagnoses which, if found as the principal diagnosis on the readmission claim, wo uld indicate that the pr ocedure occurred during an unplanned readmission. 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 r eadmitted 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 read mission in the measure ra te. If the readmission is planned, the readmission is not counted in the measure rate. The occurrence of a planned readmission ends the 30-day window of th e index discharge from the IRF. Readmission rates are risk-adjusted for patient case-mix characteristics, independent of quality. The risk-adjustment model accounts for dem ographic characteristics, principal diagnosis, co-morbidities, length of stay in the prior IPPS hospital, critic al care days in the prior IPPS hospital, number of IPPS hospita l stays in the prior year, and the occurrence of various surgery types in the prior IPPS hospital st ay. In modeling IRF readmissions , all patients are included in a single model modeling separate patient types sepa rately as was done in the IPPS measure, an approach different from the five-cohort approach of the HWR measure, adapted to account for a substantially smaller patient population. While the HWR measure used one year of da ta, the smaller IRF pa tient population leads us to propose merging two years of data for the IRF QRP. This approach is similar to that used by the Hospital IQR Program condition-specific re admission measures, which use three years of117

claims data. Merging multiple years produces more pr ecise estimates of the effects of all the risk adjusters, and increases the sample size associated with each facility. Larger patient samples are better to be able to meaningfully to disti nguish facility performa nce. Under the exception authority in section 1886(m)(5)(D)(ii) of the Act, we are proposing to use this measure in 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), the Secretary may specify a measure that is not so endorsed as long as due consideration is gi ven to measures that have been endorsed or adopted by a consensus organizati on identified by the Secretary. We were not able to identify an approp riate readmission measure for IRFs. In 2012, NQF endorsed two hospital-wide readmission me asures, the National Committee for Quality Assurance (NCQA) measure intended for health plans, Plan All-Cause Readmissions (NQF #1768), and CMS’ Hospital-Wide All-Cause U nplanned Readmission Measure (HWR) (NQF #1789), of which the latter is th e basis of the All-Cause Unplanned Readmission Measure for 30 Days Post Discharge from Inpatie nt Rehabilitation Facilities meas ure being proposed here. This measure was present on CMS’s List of Measures Under Considera tion, and the most recent MAP Pre-Rulemaking Report noted that “readmission meas ures are also examples of measures that MAP recommends be standardized across settings, yet customized to address the unique needs of the heterogeneous Post-Acute Care/L ong-Term Care (PAC/LTC) population. ( http://www.qualityforum.or g/Publications/2013/02/MAP_Pre-Rulemaking_Report_- _February_2013.aspx pp. 177-180 ). Although supported the direc tion of this measure, they cautioned that required further development. MA P has also continually noted the need for care transition measures in PAC/LTC performan ce measurement programs. Setting-specific118

admission and readmission measures under c onsideration would address this need” 17

. We intend to seek NQF endorsement of the All-Cause Unplanned Readmission Measure for 30 Days Post Discharge from Inpatient Rehabili tation Facilities measure. As this is a claimsbased 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 are proposing to begin reporting feedback to IRFs on performance of this measur e in CY 2016. The initial provider feedback will

be based on CY 2013 and CY 2014 Medicare FFS clai ms data related to IRF readmissions. The readmission measure will be part of the IRF public reporting program once public reporting is instated. Additional Details pertaining to this measure can be found on the IRF Quality Reporting Program website at http://www.cms.gov/Medicare/Qu ality-Initiatives-PatientAssessment-Instruments/IRF-Quality-Reporting/index.html . We intend to provide details pertaining to the public reporting, such as provi der preview of performance results, of this measure in our upcoming rules. We seek public comment on our proposal to adopt the All-Cause Unplanned Readmission Measure for 30 Days Post Discharge from Inpatient Rehabili tation Facilities. ii. Proposed IRF QRP Quality Measure #2 : Percent of Residents or Patients Who Were Assessed and Appropriately Given the Seasona l Influenza Vaccine (Short-Stay) (NQF #0680) We are proposing to add the NQF# 0680 Percen t of Residents or Patients who were assessed and Appropriately Given the Seasonal In fluenza Vaccination (Short-Stay) measure to the IRF QRP, and we propose to collect the data for this measure through the addition of data items to the Quality Indicator section of the IRF-PAI. This measure was on CMS’s list of

17 National 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=72738119

measures under consideration that were revi ewed 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. A MAP finding of “supported” indicates the measure is appropriate for immediate inclusion in the program measure set. (MAP Pre-Rulema king Report: 2013 Recommendations on Measures Under Consideration by HHS, Pages 20 and 178, February 2013). 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 hi gher 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 pe rcent of these deaths were among the elderly. 19 Given that many individuals recei ving health care services in IRFs are elderly and/or have several medical conditions, many IRF patients are within the target population for the influenza

immunization. 20,21 We propose to add the data elements needed for this measure, as an influenza data item set, to the Quality Indicator section of the IRF- PAI. This item set is described below entitled, “Proposed Changes to the IRF-PAI That Are Related to the IRF Quality Reporting Program .” We are proposing that data for this measure will be collected using a revised version of the IRF-

18 Centers for Medicare & Medicaid Services (2011, Ma y). 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/ahc d/agingtrends/08influenza.pdf

. 20 Centers for Disease Control and Prevention. (2008, September) . Influenza e-brief: 2008–2009 flu facts for policymakers. Retr ieved from http://www.cdc.gov/washington/pdf/flu

_ newsletter.pdf

. 21 Zorowitz, RD. Stroke Rehabilitation Quality Indicators: Raising the Bar in the Inpatient Rehabilitation Facility

. Topics in Stroke Rehabilitation 2010; 17 (4):294–304.120

PAI that includes a new data item set designed to assess patients’ influenza vaccination status.

The revised IRF-PAI would be effective on Octo ber 1, 2014. These proposed data set items are harmonized with data elements (O0250: Influe nza Vaccination Status) from the Minimum Data Set (MDS) 3.0 and LTCH CARE Data Set item sets. 22,23 The specifications and data elements for this proposed measure are available in the MDS 3.0 QM User’s Manual available on our

website at https://www.cms.gov/NursingHomeQuality Inits/Downloads/MDS30QM-Manual.pdf

. For purposes of this measure, the influenza vaccination season consists of October 1 st (or

when the vaccine becomes available) through March 31 st each year. We are proposing that while an IRF’s compliance with reporti ng quality data for this measur e will be based on the calendar year, the measure calculation and public repor ting of this measure (o nce public reporting is instated) will be based on the influenza v accination 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 ho w providers should complete these items during the time period outside of the vaccinati on season (October 1 (or when vaccine becomes available) through March 31). The measure specificat ions for this measure, Percent of Residents

or Patients Who Were Assessed and Appropriately Given the S easonal Influenza Vaccine (ShortStay) (NQF #0680), can be found on the CMS website: http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/NursingHomeQualityInits/NHQIQualityMeasures.html . Measure specifications are located in the download titled: MDS 3.0 QM Us er’s Manual V6.0. Additional information on

22 Centers for Medicare & Medicaid Services. MDS 3.0 Item Subs ets V1.10.4 for the April 1, 2012 Release. Retrieved from https://www.cms.gov/NursingHomeQualityInits/30

_ NHQIMDS30TechnicalInformation.asp

. 23 The LTCH CARE Data Set Version 2.00, th e data collection instrument for the submi ssion of the Percent of Residents or Patien ts with Pressure Ulcers That are New or Worsened (Short-Stay) measure a nd the Percent of Residents or Patients Who Were Assessed and Ap propriately Given the Seasonal Influenza Vaccine (Short-Stay) measure, is cu rrently under review by the Offi ce of Management and Budget (OM B) in accordance with the Paperwork Reduction Act (PRA) http://www.gpo.gov/fdsys/pkg/FR-2 013-02-01/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, 2013.121

this measure can also be found at http://www.qualityforum.org/QPS/0680 . Additional discussion related to the timing and submission of this measure is provided in this proposed rule. We invite public comment on our proposal to use the Percent of Re sidents 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 s ubsequent years.

iii. Proposed IRF QRP Quality Measure #3: Percent of Residents or Patients with Pressure

Ulcers That Are New or Wors ened (Short-Stay) (NQF #0678) – Proposal to adopt the NQF

endorsed version of this measure. In the CY 2013 OPPS/ASC final rule (77 FR 68507) we finalized adoption of a non-riskadjusted application of this measure, using the IRF-PAI released on October 1, 2012 for data collection. Although the measure was expanded to the IRF setting in 2012, th e existing IRF-PAI needed to be updated to include the additional data elements required to risk adjust the measure prior to adopting the NQF measure. We also st ated that we would not begin public reporting of this measure until we had adopted the NQF-endorsed version of this measure, and we would use the rulemaking process to solicit public comments on changes made to the IRF-PAI to collect elements necessary for risk adju stment of NQF #0678 (77 FR 68507). If these proposed data elements related to ri sk adjustment data element are finalized, we also propose to remove the use of the currently adopted non-risk adjust ed application of the measure and adopt the NQF-endorsed version of NQF #0678 for the FY 2017 IRF PPS increase factor. NQF #0678 underwent review for expansion to the IRF setting by the NQF Consensus Standards Approval Committee (CSAC) on July 11, 2012 and was subsequently ratified by the122

NQF Board of Directors for expans ion to IRF settings on August 1, 2012 24, 25 .The title of the measure was changed to Percent of Residents or Patients with Pressure Ulcers that are New or Worsened (short-stay) to reflect this expansion. Updated specifi cations, reflecting the expansion, are available on the NQF Web site at http://www.qualityforum.org/QPS/0678 . We further propose to collect data for this measure using a revised version of the IRF-PAI beginning on October 1, 2014 for the FY 2017 IRF PPS annual increase factor. Our proposals related to a

revised IRF-PAI are discussed in this proposed rule. The measur e specifications for this NQF endorsed measure, Percent of Residents or Pati ents with Pressure Ulcers That Are New or Worsened (short-stay) (NQF #0678) can be found on the CMS website: http://www.cms.gov/Medicare/Quality -Initiatives-Patient-AssessmentInstruments/NursingHomeQualityInits/NHQIQualityMeasures.html . Measure specifications are located in the download titled: MDS 3.0 QM Us er Manual V6.0. Additional information about

the measure can also be found at http://www.qualityforum.org/QPS/0678

. In summary, we propose to adopt the NQF-endorsed versi on of NQF #0678, with data collection beginning October 1, 2014 using the revi sed version of IRF-PAI, for quality reporting affecting the FY 2017 IRF PPS annual increase fact or. Further, we propose to remove the current non-risk adjusted applica tion of this measure when the revised IRF-PAI is implemented on October 1, 2014. Note that until Septembe r 30, 2014, IRFs should continue to submit pressure ulcer data using the IRF-PAI releas ed on October 1, 2012 for the purposes of data submission requirements for the FY 2015 and FY 2016 IRF PPS increase factor. Changes to the

24National Quality Forum, Consensus Standards Approv al Committee Wednesday, July 11, 2012. Transcript. Available: http://www.qualityforum.org/Wo rkArea/linkit.aspx?LinkIde ntifier=id&ItemID=71612

. 25Press Release: NQF Removes Time-Limited Endorsement Status for 13 Measures, Measures Now Have Endorsed Status. August 1, 2012. Available: http://www.qualityforum.org/News_And_Resources /Press_Releases/2012/NQF_Removes_TimeLimited_Endorsement_for_13_Measures;_M easures_Now_Have_Endorsed_Status.aspx123

IRF-PAI and additional information regarding data submission are discussed in this proposed

rule. We invite public comment regarding our pr oposed removal of the currently adopted nonrisk adjusted application of the Percent of Residents or Patien ts with Pressure Ulcers That Are New or Worsened (short-stay) (NQF #0678) and the adoption of the NQF endorsed version of

the Percent of Residents or Patients with Pr essure Ulcers That Are New or Worsened (NQF #0678). TABLE 10: Summary of FY 2017 IRF PPS Annual Increase Factor

Continued Data Collection:

• NQF #0138: National Health Safety Network ( NHSN) Catheter-associated Urinary Tract Infection (CAUTI) Outcome Measure + Continued Data Collection of Proposed New IRF QRP Measures Affecting the FY 2016 IRF PPS Annual Increase Factor:

• NQF #0431: Influenza Vaccination Coverage among Healthcare Personnel + Proposed 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 (Short-Stay) *

• 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. Proposed 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 paym ent 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.124

The IRF PPS utilizes information from the IR F-PAI to classify patients into distinct groups based on clinical characteri stics and expected resource needs. Separate payments are calculated for each group, including the applicat ion of case and facili ty level adjustments

available at http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/InpatientRehabFacPPS/index.html

. We are proposing to release an update d version of the IRF-PAI on October 1, 2014. Proposed revisions include data el ements that will (1) allow fo r risk adjustment of the NQF

#0678 Percent of Residents or Patients with Pres sure Ulcers That Are New or Worsened (ShortStay), (2) allow for more detailed data collect ion 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 Reside nts or Patients Who Were Assessed and Appropriately Given the Seasonal Influenza Vaccin e (Short-Stay). We also propose to adopt a new numbering schema for the IRF-PAI. Note that we are proposing both mandatory and voluntary additions to the IRF-PAI. Collection of voluntary data elements by IRFs w ill have no impact on measure calculations or on

our determination of whether the IRF has met th e reporting requirements under the IRF QRP. In contrast, failure to complete any adopted mandato ry data elements may result in non-compliance with the IRF QRP requirements and subject the faci lity to a 2 percentage point reduction in its

annual increase factor. In a ddition to clearly indicating whic h items are mandatory and which are voluntary in this proposal , we will post on our website at http://www.cms.gov/Medicare/Quality-Initiatives- Patient-Assessment-Instruments/IRF-QualityReporting/index.html a detailed matrix that identifies wh ich data elements will be required, and which will be voluntary.125

The October 1, 2012 release of the IRF-PAI, the proposed October 1, 2014 release of the IRF-PAI, inclusive of all th e changes proposed here, and in formation about the IRF-PAI submission process can be found at https://www.cms.gov/Medicare/M edicare-Fee-for-ServicePayment/InpatientRehabFacPPS/IRFPAI.html . A PRA package for the revised IRF-PAI

discussed here has been submitted for the Offi ce of Management and Budget’s (OMB) review and approval.

2. 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 (ShortStay)” measure for use in the IRF QRP, beginni ng with the IRF PPS annual increase factor for FY 2014. We also finalized our pro posal to collect the data for th is pressure ulcer measure using the IRF-PAI. To do this, we deleted the set of voluntary quality questions that had been located in the “Quality Indicator” section of the IRF- PAI and replaced them with a new required set of pressure ulcer quality measure da ta items, numbered 48A to 50D. These revisions to the IRFPAI went into effect on October 1, 2012. Since the publication of the FY 2012 IRF PPS final rule we have received numerous

comments about the current versi on of the IRF-PAI from IRF pr oviders, provider organizations, and advocacy groups. In the CY 2013 OPPS/ASC fi nal 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). Commenters expressed specific concerns regarding the ability of the data elements in the IRF-PAI to sufficiently ri sk-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 ab ility to calculate the measure using all of the risk adjustment related cova riates. As a result, the CY 2013 OPPS/ASC final126

rule adopted an application of #0680 without risk-adjustment for FY 2015 and subsequent years (77 FR 68507). In response to the comments and feedback rece ived in previous rules discussed above, we propose modifications to the data items in both the admission and discharge IRF-PAI

assessments.

3. Proposed 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) We are proposing to update the current IRF-PAI to include data elements that are necessary to risk adjust the Percent of Resident s or Patients with Pre ssure Ulcers That Are New or Worsened (Short-Stay) (NQF# 0678). These in clude the addition of th e following indicator

boxes to the IRF-PAI admission a ssessment: (1) Peripheral Vascular Disease, (2) Peripheral Arterial Disease, and (3) Diabetes. The additi ons 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 ve rsion of the IRF-PAI th at became effective on October 1, 2012. We are now proposing to add height and weight to the IRF-PAI to correct this oversight. We further propose adding the height and weight items into the “Medical Information” section if 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 b ecause they can be used for the calculation of Body Mass Index (BMI), which is used as one pa rt of the analysis for compliance with the 60127

percent rule. Even though the he ight and weight items are placed in the “Medical Information” section of the IRF-PAI, they are also being adde d to the IRF-PAI for calcu lating risk adjustment for the pressure ulcer measure. Failure to provid e height and weight coul d result in a finding of non-compliance with the reporting requirements. We invite public comment on our proposal to include data elements required for riskadjustment of #0678 Percent of Patients with Pr essure Ulcers That Are New or Worsened Measure as mandatory data collection elements in the revised IRF-PAI.

4. Proposed 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 Patients with Pressure Ulcers That Are New or Worsened” measure looks at the number of patients with a targ et assessment during the selected time window who have one or more Stage 2 through 4 pressure ul cer(s) that are new or that have worsened compared with the previous assessment. According to the NQF we bsite, in its descripti on of NQF #0678, “Stage 1 pressure ulcers are excluded from this measure because recent studies have identified difficulties in objectively measuring them across different po pulations.” The measure numerator also does not include unstageable pressure ulcers. The data that is manda tory for IRFs to report under the IRF QRP are those that meet the requirements of the application of NQF #0678 that we finalized in the CY 2013 OPPS/ASC Final Rule. As noted above, we are proposing to add additional mandatory data items to accommodate this. If our proposal to adopt the NQF-endorsed version of this measure is finalized, the ma ndatory data would remain the same. We are also proposing to add voluntary data items to the IRF-PAI Quality Indicators section, designed to address commenters’ concerns about the adequacy of current pressure ulcer128

data items. Some commenters e xpressed concern that the current data items would not allow for documentation of all relevant categor ies of pressure ulcers, such as unstageable pressure ulcers. As modified, our proposed admission assessment c onsists 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 sub-topics that contai n 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 ulcer s 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 th e proposed new IRF-PAI can be found at https://www.cms.gov/Medicare/M edicare-Fee-for-ServicePayment/InpatientRehabFacPPS/IRFPAI.html

. We have added greater specificity to the pr essure ulcer items to allow providers to document pressure ulcers in more detail. In describing the inadequacy they perceived in the present pressure ulcer items, provi ders 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 DT I evolves into a stage 3 and, after several days, worsens to a stage 4. On the current version of the IRF-PAI, provide rs have no ability to document the presence of an unstageable pressu re 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 ulcer s on the admission assessment. However later,129

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 assessmen t to reflect that the patient actually had a stage 3 pressure ulcer upon admission. Upon discha rge, the IRF would document that the patient has a stage 4 pressure ulcer. With the new propos ed pressure ulcer data items, the IRF would be able to document the presence of the unstageable pressure ulcer or suspected DTI on the admission assessment. The proposed revisions to the IRF-API would allow the IRF to give a more complete and accurate pictur e of the progression of this pre ssure ulcer when the patient is discharged. While Stage 1 and unstageable pressure ul cers are not part of the NQF #0678 endorsed

version of the “Percent of Patient s with Pressure Ulcers That Are New or Worsened,” and are not mandatory, we nonetheless believe that it is appr opriate 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 informa tion that would allow us to assess whether these pressure ulcers can now be objectively measured across different populations. Additionally, some pressure ul cers that are present on admission can become stageable and then worsen to a higher stage during the IRF stay. Access to data on this scenario would assist us in determining whether including unsta geable 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.130

We invite public comment on our proposed re visions to the IRF-PAI related to voluntary items for NQF #0678 Percent of Residents or Patie nts with Pressure Ulcers That Are New or Worsened (Short-Stay).

5. Proposed 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 are also proposing changes to the IRF- PAI discharge assessment to include the addition of the data elements necessary to repo rt the data necessary for the proposed measure,

Percent of Residents or Patients Who Were Assessed and Appropriately Given the Seasonal Influenza Vaccine (Short-Stay) (NQF #0680). Thes e items will be based on the items from the

MDS 3.0 and LTCH CARE Data Set items. 26 , 27 There are three data elements collected in

relation to this measure: two ar e 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 infl uenza vaccine not received, state reason. These questions allow the IRF to report if and when an influenza vaccine was given at the facility. It also allows 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 m easure are available in the MDS 3.0 QM User’s

Manual available on our website at http://www.cms.gov/Medicare/Qu ality-Initiatives-PatientAssessment-Instruments/NursingHomeQualityInits/NHQIQualityMeasures.html . Measure

26 Centers for Medicare & Medicaid Services. MDS 3.0 Item Subs ets V1.10.4 for the April 1, 2012 Release. Retrieved from https://www.cms.gov/NursingHomeQualityInits/30

_ NHQIMDS30TechnicalInformation.asp

. 27 The LTCH CARE Data Set Version 2.00, the data collection instrume nt for the submission of the Percent of Residents or Patients with Pressure Ulcers That are New or Worsened (Short-Stay) measure a nd the Percent of Residents or Patients Who Were Assessed and Ap propriately Given the Seasonal Influenza Vaccine (Short-Stay) measure, is cu rrently under review by the Offi ce of Management and Budget (OM B) in accordance with the Paperwork Reduction Act (PRA) http://www.gpo.gov/fdsys/pkg/FR-2 013-02-01/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, 2013.131

specifications are located in the download t itled: MDS 3.0 QM User’s Manual V6.0. Measure

information is also available at http://www.qualityforum.org/QPS/0680

. We invite 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).

6. Proposed Revisions to the IRF-PAI Related to Numbering of Quality Indicator Items. Finally, in the revised IRF-PAI, we include changes in the nu mbering 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 allo ws greater flexibility for item removal and

insertion. Problems arise with a consecutive nu mbering scheme when items are removed or new ones are inserted because this changes the numbe rs of some or all of the items around them. Other CMS post- acute care data collection vehi cles, such as the MDS 3.0, and the LTCH CARE Data Set, have adopted a more flexible numberi ng schema that allows insertion or removal of items without requiring renumbering of the rema ining items. We propose adopting a similar numbering schema in the revised IRF-PAI. A le ss 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 diffe rent 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/M edicare-Fee-for-ServicePayment/InpatientRehabFacPPS/IRFPAI.html

. We invite public comments about our proposed changes to the numbering schema of the

IRF-PAI. E. Proposed Change in Data Collection and Submission Periods for Future Program Years132

The FY 2012 IRF PPS final rule 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 select ed the time periods for the data collection and reporting of the quality data.

The FY 2012 IRF PPS final rule finalized th e initial IRF QRP data reporting cycle, affecting the FY 2014 payment determination, as beginning on October 1, 2012 and ending on December 31, 2012. Beginning in 2013 for the FY 2015 payment determination, and for subsequent years, we finalized th at quality reporting cycles 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 da ta collection instrument must be updated accordingly. The next update to the IRF- PAI will take place on Oc tober 1, 2014. Under current policy, the IRF QRP data collection cycle for the FY 2016 pa yment determination will not begin until January 1, 2014.

To accommodate the revised data collection in strument, we are proposing to change the IRF-PAI data collection periods for the FY 2016 and FY 2017 payment determinations in order to align with the rel ease of the new version of the IRF- PAI on October 1, 2014. We propose to shorten the data collection peri od impacting the FY 2016 IRF PPS a nnual increase factor to nine months, so that the next reporting period may begin on October 1, 2014 using the new version of

the IRF-PAI. Under this proposal, the next data colle ction period would run from January 1, 2014 to September 30, 2014 and affect the IRF PPS annual increase factor for

FY 2016.133

Starting October 1, 2014, we propose to start fisc al year data collecti on periods, such that data collected for discharges during Octobe r 1, 2014 to September 30, 2015 will affect the

FY 2017 IRF PPS annual increase factor. We furthe r propose that data collection continue on FY cycles unless there is an event that requires th at this cycle be amended. We intend to provide public announcements in the event the established cycles must be changed. Note that, as a result of this proposal, da ta submitted on the IRF-PAI and data submitted using the NHSN will have two separate data co llection and submission schedules. We provide

more details on this distinction below. We i nvite 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 ne xt version of the IRF-PAI instrument. 1. Proposed Implementation of Quarterly Da ta Submission Deadlines for the IRF QRP

In the FY 2012 IRF PPS rule we stated that “details regarding data submission and reporting requirements for this measure wi ll be posted on the CMS website at https://www.cms.gov/Medicare/Quality-Initiatives -Patient-Assessment-Instruments/IRF-QualityReporting/index.html no later than January 31, 2012” (F R 76 47879). Further data submission details for the IRF QRP were posted on the CMS IRF QRP website 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 webpage postings and responses to IRF QRP Helpdesk inquiries. In th ese communications, we announced th at the final data submission deadline for the IRF QRP would be May 15 th for all measures finalized for the FY 2014 payment determination and each subsequent payment determination.134

We realize the value in providing clear s ubmission deadlines for the IRF QRP and we believe that we should provide de adlines that clearly distinguis h between data submitted using the NHSN and data submitted using the IRF-PAI. Fu rther, it is important to have distinct deadlines at which point data s ubmitted afterward, including data modifications and corrections, could not be used for reporting or IRF PPS annua l increase factor determinations For purposes of the FY 2016 and subsequent year IRF PPS an nual increase factors, and for the purposes of applying quarterly deadlines for public reporting purposes, we propos e the inclusion of quarterly data submission deadlines in addition to the previously finalized deadlines. We believe that this will ensure timely submission of data. 2. Quarterly Submission Timelines of Data Reported Using the IRF-PAI For the purposes of quality data reported us ing the IRF-PAI for the IRF QRP, we have proposed timeframes described below that we belie ve will provide sufficient time for IRFs and CMS to meet quality reporting requirement s and allow CMS to harmonize IRF QRP data submission deadlines with the LTCHQR Program and Hospital IQR. Beginning with data collection and reporting impac ting the FY 2016 annual increase factor, we propose 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 propose a final deadline occurring approx imately 135 days 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 subm it data and make any necessary corrections.

We have summarized these deadlines in the tables below.

TABLE 11: Proposed 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)135

Quarter IRF-PAI Data Collection Peri od 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 12: Proposed 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 Percen t of Residents or Patients Who Were Assessed and Appropriately Given the Se asonal 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

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 For the purposes of reporting quality data using the NHSN, specifically CAUTI reporting and reporting of the staff influenza immunization measure, we are specifically proposing to align with CMS’s established subm ission deadlines in the Hospital IQR and the LTCHQR Programs. The CDC recommends that a facility report Health care Acquired Infection (HAI) events such as CAUTI, as close to the time of the event as is possibl e, and certainly within136

30 days. CMS recommends adherence to this a pproach. In addition, we propose that IRFs report CAUTI events, includi ng null events, on a monthl y level using the NHSN. For the purposes of continuity, we propose to continue the calendar year basis of reporting CAUTI, using quarterly deadlines as es tablished by the Hospital IQR program. Final

submission deadlines for measures collected th rough the NHSN are shown in the tables below.

TABLE 13: Proposed 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 (NHS N) Catheter-associated Urinary Tract Infection (CAUTI) Outcome Measure Quarter CDC/NHSN Data Co llection 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 propose to apply to IRF QRP the same deadlines established for the reporting

of the Influenza Vaccination Coverage Among Health Personne l (NQF #0431) measure in the Hospital IQR Program and proposed in the LTCH QRP.

TABLE 14: Proposed Timelines For Submission of IRF QRP Program Quality Data using CDC/NSHN for FY 2016 and FY 2017 IR F PPS Annual Increase Factor: NQF #0431 Influenza Vaccination Cov erage 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, 2015137

Data collection timeframe CDC/NHSN Data Submission Deadline FY 2017 Annual Increase Factor October 1, 2015 (or when the influenza vaccine becomes available) – March 31, 2016 May 15, 2016

We invite public comment on the proposed da ta submission quarterly and final deadlines for the purposes of reporting data using the IR FPAI and for the purposes of reporting data using

the NHSN. F. Proposed Reconsiderat ion and Appeals Process At the conclusion of any given data reporti ng period, we will review the data received from each IRF during that reporting period to de termine if the IRF has reported the required amount and type of data. IRFs that are found to be non-compliant with the reporting requirements set forth for that reporting cycl e could receive a reduction in the amount of 2 percentage points to their IRF PPS increase factor for the upcoming payment year. We are aware that there may be situations in which an IRF provider has evidence to dispute a finding of non-compliance. We furthe r understand that there may be times when a provider may be prevented from submitting quality data due to the occurrence of extraordinary circumstances beyond their control (for example, natu ral disasters). It is our goal not to penalize IRF providers in these circumstances or to undul y increase their burden during these times. We are also aware, for the purposes of th e IRF Quality Reporting Program, that we will be making compliance determinations for the FY 2014 payment determination in the coming months and believe that providers should have the opportunity to re quest a reconsideration if the circumstances warrant. In addition, adding a reconsideration process to the IRF Quality Reporting program will make it consistent with other established quality reporting programs, a number of which already offer this opportunity. We are therefore providing a mechanism that138

will allow IRFs to request reconsiderations pe rtaining to their FY 2014 payment determinations and that of subsequent fiscal years. Specifically, as part of the mechanism to a llow for IRFs to request a reconsideration, IRFs found to be non-compliant w ith the reporting requirements during a given reporting cycle will be notified of that finding. IRFs will be informed: (1) that they have been identified as being non-compliant with the IRF Quality Repor ting Program’s reporting requirements for the reporting cycle in question; (2) that they will be scheduled to receive a reduction in the amount of 2 percentage points to their PPS increase factor for the upcomi ng payment year; (3) that they may file a request for reconsid eration if they believe that the finding of non-compliance is erroneous, or that if they were non-compliant, they have a valid and justif iable excuse for this non-compliance; and (4) that they 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 re quest for reconsideration, we will render a decision. We may reverse our initial finding of non-compliance if: (1) th e IRF provides proof of full compliance with all requirements during th e 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 ou r initial finding of noncompliance if the IRF cannot show any justification for non-compliance. We intend to provide details pertaining to the reconsideration process, and the mechanisms related to provider requests for reco nsideration of their payment determinations, such as filing requests, required content, supporting documentation, and mechanisms of

notification and final determinations on the IRF QRP website this spring at http://www.cms.gov/Medicare/Quality-Initiatives- Patient-Assessment-Instruments/IRF-Quality-139

Reporting/index.html . We invite public comment on the proposed procedures for reconsideration and appeals. G. Proposed Policy for Granting of a Wa iver 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 da ta due to the occurrence of extraordinary circumstances beyond their control (for example, na tural or man-made disasters). We define a “disaster” as any natural or man-made catastroph e which causes damages of sufficient severity and magnitude to partially or completely de stroy or delay access to medical records and

associated documentation. Natural disasters could include events such as hurricanes, tornadoes, earthquakes, volcanic eruptions, fires, mudslid es, snowstorms, and tsunamis. Man-made

disasters could include such events as terror ist 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 a nd 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 hinde r the IRF’s ability to meet the quality reporting program’s data submission d eadlines. 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 waiv er of the IRF duty to report quality measure data may be appropriate.

In other circumstances of natural or man-ma de disaster, an IRF may not have had the140

ability to conduct a full patient assessment, and r ecord 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 even t. 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 IR F providers in these circumstan ces or to unduly increase their burden during these times. Therefore, we are proposing a process, for payment year 2015 and subsequent years, for IRF provide rs to request and for CMS to gr ant waivers with respect to the reporting of quality data when there are extrao rdinary circumstances be yond the control of the provider. When a waiver is granted, an IR F will not incur payment reduction penalties for failure to comply with the requirements of the IRF QRP. We are proposing a process that, in the event that an IRF seeks to request a waiver for quality reporting purposes for payment year 2015 and subs equent payment years, the IRF may request a waiver for one or more quarters by submitting a written request to CMS. We are proposing that 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 IRFQualityQuestions@cms.hhs.gov . IRFs that have filed a re quest for an IRF QRP disaster waiver with an IRF-PAI waiver request usi ng the procedure that is described under our regulations at 42 CFR §412.614 can indi cate this in their letter to CMS for their request for a waiver for quality reporting purposes. 28 Note that the subject of the email must read “Disaster Waiver Request” and the letter must contain the following information:

• IRF CCN;

28 http://www.gpo.gov/fdsys/pkg/CFR-2011-title42-vo l2/pdf/CFR-2011-title42-vol2-sec412-614.pdf141

• IRF name;

• CEO or CEO-designated personnel cont act information including name, telephone number, email address, and mailing addre ss (the address must be a physical address, not a post office box);

• IRF’s reason for requesting a waiver;

• Evidence of the impact of extraordinar y 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 fo r the proposed date. We propose that the letter documenting the disa ster 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 writ ten acknowledgement, using the contact information pr ovided in the letter, to the CE O 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 to waiver reques t, provide a formal response to the CEO, or designated contact person notifying them of our decision. This proposal does not preclude CMS from gr anting waivers to IRFs that have not requested them when we determine that an extrao rdinary 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 communicat e 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/Quality-Initiatives -Patient-Assessment-Instruments/IRF-QualityReporting/index.html.142

We invite public comment on this proposal.

H. Public Display of Data Quality Measures for the IRF QRP Program Under section 1886(j)(7)(E)of the Act, the Secr etary is required to establish procedures for making data submitted under the IRF QRP ava ilable to the public. S ection 1886(j)(7)(E) also requires procedures to ensure that each IRF provider has the opportuni ty to review that data that is to be made public with respect to its facili ty, prior to such data being made public. Section 1886(j)(7)(E) of the Act requires CMS to report qualit y measures that relate to services furnished

in IRFs on CMS’ website. Currently, the Agency is developing plan s regarding the implementation of these provisions. We appreciate the need for transparen cy into the processes an d 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 be fore it is made public. At this time, we have not established procedures or timelines for public reporting of da ta, but we intend to incl ude related proposals in future rule making. We welcome public co mments on what we should consider when developing future proposals related to public reporting.

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 requiremen ts. 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 peri od October 1, 2012 through December 31, 2012. Thus, in compliance with 1886(j)(7)(A)(i) of th e Act, we will apply a 2 percentage point143

reduction to the applicable FY 2014 market basket increase factor (1.7 percen t) in calculating an adjusted FY 2014 standard payment conversion fact or to apply to payments for only those IRFs that failed to comply with the data subm ission requirements. As noted previously, application of the 2 percentage point reduction may result in an upda te 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 15 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 reporti ng requirements for the period from October 1, 2012 through December 31, 2012.

TABLE 15: Calculations to Determine the Proposed Adjusted FY 2014 Standard Payment Conversion Factor for IRFs that Failed to Meet the Quality Reporting Requirement Explanation for Adjustment Calculations Standard Payment Conversi on Factor for FY 2013 $14,343 Adjusted Market Basket Increase F actor for FY 2014 (2.5 percent), reduced by 0.3 percentage point in accordance with sections 1886(j)(3)(C) and (D) of the Act and a 0.4 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 x 0.99800 Budget Neutrality Factor for the Wage Index and Labor-Related Share x 1.0011 Budget Neutrality Factor for the Revisions to the CMG Relative Weights x 1.0000 Budget Neutrality Factor for the Update to the Rural Adjustment Factor x 1.0030 Budget Neutrality Factor for the Update to the LIP Adjustment Factor x 1.0174 Budget Neutrality Factor for the Update to the Teaching Status Adjustment Factor x 0.9966 Proposed Adjusted FY 2014 Standard Payment Conversion Factor = $14,573

XIV. Collection of Information Requirements144

Under the Paperwork Reduction Act of 1995 we are required to provide 60-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 in formation collection should be approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995 re quires 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 inform ation collection burden on the affected public, including automate d collection techniques. This proposed rule does not impose any ne w information collection requirements as outlined in the regulation text. However, this proposed rule does make reference to associated

information collections that are not discussed in the regulation text contained in this document. The following is a discussion of these informa tion collections, some of which have already received OMB approval. We are soliciting public comment on each of th ese issues for the following sections of this document that contain information collection requirements (ICRs).

A. ICRs Regarding IRF QRP

As stated in section XIII. of the preamble of this proposed rule, we have proposed to introduce one new measure for use in the IRF QRP that will require IRF providers to submit new data beginning on October 1, 2014 and which will a ffect the increase factor for FY 2016. This145

quality measure is: Influenza Vaccination C overage among Healthcare Personnel (NQF #0431). We have also proposed to introduce for FY 2017 an All-Cause Unplanned Readmission Measure for 30 Days Post Discharge from Inpatient Rehab ilitation Facilities. This measure is a claimsbased measure that does not require submission of data by IRF providers. For FY 2017, we have proposed to adopt the Percent of Resident or Patients Who Were Asse ssed and Appropriately Given the Seasonal Influenza Vaccine (Short- Stay) (NQF#0680) measure. We have also proposed for FY 2017 to change from the use of a non-risk adjusted pressure ulcer measure, in which only numerator and denominat or data is collected, to use of the NQF endorsed measure

“Percent of Residents or Patients with Pressure Ulcers That Are New or Worsened (Short-Stay)” (NQF #0678), which is a risk-adjus ted measure. Each of these m easures will be collected in the

manner described below: 1. Influenza Vaccination Coverage among Healthcare Personnel (NQF #0431) In section XIII. of this proposed rule, we are proposing to add 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 work ing at a facility who have been vaccinated against the influenza viru s during a given influenza vaccination season.

The CDC has determined that the influen za vaccination season begins on October 1 st (or when the vaccine becomes available) and ends on the following March 31 st each year. This measure requires that the provider subm it only one report to NHSN after th e close of the data collection period each year. We believe that it has become a common pr actice 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 e ach year. Therefore, we do not believe that146

IRFs will incur any additional burden related to the collection of the data for this measure. We anticipate that it will take approximate ly 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 ont o 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. 29 We estimate that the annual cost to each IRF for the reporting of the staff influenza measure will be $3.98 . 30 The annual cost across the 1161 IRFs in the U.S. that are reporting data to CMS is estimated to be $4,621 31

. 2. All-Cause Unplanned Readmission Measure fo r 30 Days Post Discharge from Inpatient

Rehabilitation Facilities As stated in section XIII. of this proposed rule, data for this measure will be collected

from Medicare claims and therefore will not a dd any additional reporting burden for IRFs.

1. Percent of Residents or Patients with Pressu re Ulcers that are New or Have Worsened (Short-Stay) (NQF #0678) In section XIII of this proposed rule, we pr oposed to adopt the NQF endorsed version of

the measure titled “Percent of Residents or Pati ents with Pressure Ulcers That Are New or Worsened (Short-Stay)” (NQF #0678). To support the standardized collection and calculation of this quality measure, we have proposed to modi fy the current Inpatient Rehabilitation Facility-

29 According 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/medical-records-and-health-informationtechnicians.htm . 30 15 minutes administrative staff time to collect and report staff influenza measure @ $15.55 per hour = $3.98 per IRF per year 31 At the time of the writing of this rule, there were 1161 IRFs reporting quality data to CMS. ($3.98 per IRF per year x 1161 IRFs in U.S.= $4,621).147

Patient Assessment Instrument (IRF-PAI) by replacing the current pressure ul cer items with data

elements similar or identical to those coll ected through the Minimum Data Set 3.0 (MDS 3.0) used in nursing homes. By building upon pr eexisting resources for data collection and submission, we intend to reduce administrative burd en related to data collection and submission. We anticipate that the initial se tup and acclimation to pressure ulcer data collection will have already occurred with the adop tion of the Pressure Ulcer m easure for the IRF QRP for the FY 2014 payment determination. Therefore, we believe the transition to reporting additional

data elements for this measure will be less burdensome. We expect that the admission and discharge pr essure 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 admiss ion pressure ulcer asse ssment. We further

estimate that it will take an additional 15 minutes of time to complete the discharge pressure ulcer assessment. We expect th at during these time periods, the RN would be engaged in the collection of data for the purpose of the IRF QR P and would not be engaged in the performance of routine patient care. We estimate that there are 359,000 IRF-PAI submissions per year 32 and that there are 1161 IRFs in the U.S. reporting quality data to CM S. Based on these figures, we estimate that each IRF will submit approximately 309 IRF-PA Is per year or 26 IRF-PAIs per month.

33 Assuming that each IRF-PAI submission requires 25 minutes of time by an RN at an average

32 MedPAC, A Data Book: Health Care Sp ending and the Medicare Program (June 2012 ), http://www.medpac.gov/chapters/Jun12DataBookSec8.pdf 33 359,000 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 mont hs per year = 26 IRF-PAI reports per each IRF per year148

hourly wage of $33.23 34 , the yearly cost to each IRF would be $4,278.36 35 and the annualized cost across all IRFs would be $4,967,176. 36 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 en tering 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 taskwill take no more than 3 minutes per each IRFPAI record or 15.45 hours per each IRF annually or 17,937 hours across all IRFs. As noted above, the average hourly wage for a Medical Re cords & Health Information Technician is $15.55. As we noted above, there are approximate ly 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 th e 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 IR Fs. 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 fo r each pressure ulcer submission to be $14.61. We are proposing to revise the IRF-PAI instrume nt to include the data set associated with

this measure.

34 According 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 ) 35 25 minutes x 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 x $33.23 per hour = $4 ,278.36 nursing wages per each IRF per year 36 $4,278.36 x 1161 IRF providers = $4,967,176 per all IRFs per year149

2. Percent of Residents or Patients Who We re Assessed and Appropriately Given the Seasonal Influenza Vaccine (Short-Stay) (NQF #0680) In section XIII. of the of this proposed ru le, we have proposed to add 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 have further proposed to add

a new set of standardized data elements now us ed in the MDS 3.0 to the IRF-PAI to collect the data required for this measure. As noted above, IRFs are alr eady required to complete and transmit certain IRF-PAI data

on all Medicare Part A fee-for-service and Medi care Part C (Medicare Advantage) patients to receive payment from Medicare. By building upon preexisting resources for data collection and submission, we intend to reduce administrative burd en related to data collection and submission. We anticipate that the initial setup and acclimation to data co llection through the IRF-PAI for purposes of reporting of IRF quality measure data will have already occurred with the adoption

of the Pressure Ulcer meas ure for the IRF QRP for the FY 2014 payment determination. Therefore, we believe the transi tion 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 straightforwar d and does not require physical assessment for completion. We estimate that it will take approxi mately 0.7 minutes to complete each item, or 2.1 minutes to complete the entire item set. Ho wever, 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 allott ed 1.6 minutes per items or a total of 5 minutes150

to complete the item set. IRF staff will be required to perform a full influenza assessment only during the influenza

vaccination season. The CDC define s that influenza vaccination season as the time period from

October 1 st (or when the vaccine becomes available) through March 31 each year. From April 1 st through September 30 th , IRFs are not required to perform fu ll influenza screening and may skip to the next item set after checking the selecti on which indicates that the patient’s IRF stay

occurred outside of the influenza vaccination se ason. Our time estimate reflects the averaged amount of time necessary to complete the in fluenza 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 becau se it involves performing a skilled assessment to determine, from a patient’ records, whet her the patient has received a vaccination and, if not, to discuss with the patient any medications or othe r related topics such as medication allergies, other vaccinations that the patien t may have had, and any contrai ndications 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 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 noted above that there are approximately 359,000IRF-PAIs completed annually acr oss all 1161 IRFs that report IRF quality data to CMS. This breaks down to approximately 309 IRF-PAIs completed by each IRF yearly 37 . We estimate

37 359,000 IRF-PAI reports per all IRFs per year / 1161 IR Fs in U.S. = 309 IRF-PAI reports per each IRF per year151

that the annual time burden for reporting the pa tient 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 Regist ered Nurse is $33.23. Taking all of the above information into consideration, we estimate the a nnual 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.

B. ICRs Regarding Non-Quality Relate d Proposed Changes to the IRF-PAI We propose to revise several items on the IRF-PAI to provide greater clarity for providers. The proposed changes include updating several items regarding the response options available to providers. Additiona lly, we are proposing to remove several items that we believe are unnecessary for providers to continue doc umenting on the IRF-PAI since those items are already being documented in the patients’ medical record. We are also proposing to add several items, such as a signature page, to fulfill providers’ request to have an organized way to document who has assessed the patient and wh en that assessment took place. We do not estimate any additional burden for IRFs to comple te the IRF-PAI as a re sult of these proposals.

We estimate the time that will be needed to complete the new non-quality related proposed items, equals the time that was needed to comple te the previous non-quality related items. When the original burden estimates were completed fo r 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 am ount of time associated with completing the non-152

quality related portions of the IRF-PAI and that the burden for completing these portions of the IRF-PAI will not change. We will be submitting a revision to the cu rrent IRF-PAI collection of information approval under (OMB control number 0938–084 2) for OMB review and approval. If you comment on these information collecti on and recordkeeping requirements, please do either of the following:

1. Submit your comments electronically as sp ecified in the ADDRESSES section of this proposed rule; or

2. Submit your comments to the Office of Information and Regulatory Affairs, Office of Management and Budget,

Attention: CMS De sk Officer, CMS-1448-P Fax: (202) 395-6974; or

Email: OIRA_submission@omb.eop.gov XV. Response to Public Comments Because of the large number of public comments we normally receive on Federal Register documents, we are not able to acknowledge or respond to them individually. We will consider all comments we receive by the date and time specified in the “DATES” section of this preamble, and, when we proceed with a subse quent document, we will respond to the comments in the preamble to that document. XV. Response to Comments Because of the large number of public comments we normally receive on Federal Register documents, we are not able to acknowledge or respond to them individually. We will consider all comments we receive by the date and time specified in the "DATES" section of this preamble, and, when we proceed with a subse quent document, we will respond to the comments153

in the preamble to that document. XVI. Regulatory Impact Analysis

A. Statement of Need This proposed rule updates the IRF prosp ective payment rates for FY 2014 as required under section 1886(j)(3)(C) of the Act. It res ponds to section 1886(j)(5) of the Act, which requires the Secretar y 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 a nd 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 th e Secretary to apply a multi-factor productivity adjustment to the market basket increase factor , and to apply other adju stments 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 proposes some policy changes within the statutory discretion afforded to the Secretary under section 1886(j) of the Act. We propose to revise the list of diagnosis codes that are eligible under the “60 pe rcent rule,” update th e IRF facility-level adjustment factors, revise sections of the Inpatient Rehabilitati on Facility-Patient Assessment Instrument, revise requirements for acute care hospitals that ha ve IRF units, clarify th e IRF regulation text regarding limitation of review, and revise and update quality measures under the IRF quality reporting program. We believe that the proposed policy changes would enha nce the clarity, accuracy, and fairness of the IRF PPS.154

B. Overall Impacts We have examined the impacts of this pr oposed rule as required by Executive Order 12866 (September 30, 1993, Regulatory Planning and Review), Executive Order 13563 on Improving Regulation and Regulator y Review (January 18, 2011), the Regulatory Flexibility Act (September 19, 1980, Pub. L. 96-354)(RFA), secti on 1102(b) of the Act, section 202 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), Executive Order 13132 on Federalism (August 4, 1999), and the Congressional Review Act (5 U.S.C. 804(2)). Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. A regulatory impact analysis (RIA ) must be prepared for a major proposed rule with economically significant effect s ($100 million or more in any one year). We estimate the total impact of the proposed polic y updates described in this proposed rule by comparing the estimated payments in FY 2014 with those in FY 2013. This analysis results in an estimated $150 million increase for FY 2014 IRF PPS pa yments. As a result, this proposed rule is designated as economically “significant” under section 3(f)(1) of Executive Order 12866, and hence a major rule under the Congressional Review Act. The Regulatory Flexibility Act (RFA) requires agencies to analyze options for regulatory relief of small entities, if a rule has a significan t impact on a substantial number of small entities. For purposes of the RFA, small entities incl ude small businesses, nonprofit organizations, and small governmental jurisdictions. Most IRFs a nd most other providers and suppliers are small155

entities, either by having revenues of $7 milli on to $34.5 million in any 1 year, or by being nonprofit organizations that are not dominant in their markets. (For details, see the Small

Business Administration's final rule that set fort h size standards for hea lth care industries, at

65 FR 69432 at http://www.sba.gov/sites/default/f iles/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 propor tion of IRFs' revenue that is derived from Medicare payments. Therefore, we assume that all IRFs (an approximate total of 1,200 IRFs, of which approximately 60 percent are nonprofit facil ities) are considered small entities and that Medicare payment constitutes the majority of th eir revenues. The Depa rtment 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 16, we estimate that the net revenue im pact of this proposed rule on all IRFs is to increase estimated paymen ts by approximately 2.0 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 4.3 percent overall impact fo r teaching IRFs with resident to average daily censu s ratios of 10 to 19 percent, a9 .3 percent overall impact for teaching IRFs with a resident to average daily census ratio greater than 19 percent, and a 3.5 percent overall impact for IRFs with a DSH patient percentage of 0 percent. As a result, we anticipate this proposed rule would have a posi tive impact on a substantial number of small

entities. Medicare fiscal intermediaries, Medicare Administra tive Contractors, and carriers are

not considered to be small entitie s. 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 operati ons of a substantial number of156

small rural hospitals. This analysis must confor m to the provisions of section 603 of the RFA. For purposes of section 1102(b) of the Act, we defi ne a small rural hospital as a hospital that is located outside of a Metropolitan Statistical Area and has fewer th an 100 beds. As discussed in detail below, the rates and policies set forth in this proposed rule would not have a significant impact (not greater than 3 percen t) on rural hospitals based on the data of the 167 rural units and 18 rural hospitals in our da tabase of 1,132 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 spen ding in any one year of $100 million in 1995 dollars, updated annually for in flation. In 2013, that thres hold level is approximately $141 million. This proposed rule will not impose spending costs on State, local, or tribal governments, in the aggregate, or by the pr ivate sector, of greater than $141 million. Executive Order 13132 establishes certain requir ements that an agency must meet when it promulgates a final rule that imposes substant ial direct requirement costs on state and local governments, preempts state law, or otherwise has fe deralism implications. As stated above, this proposed rule will not have a substantial effect on State and local governments, preempt state law, or otherwise have a federalism implication. C. Detailed Economic Analysis 1. Basis and Methodology of Estimates This proposed rule sets forth proposed polic y changes and updates to the IRF PPS rates contained in the FY 2013 notice (77 FR 44618). Specifically, this proposed rule proposes updates to the CMG relative weights and averag e length of stay values, the facility-level adjustment factors, the wage index, and the outlie r threshold for high-cost cases. This proposed157

rule also applies a productivity ad justment to the FY 2014 RPL market basket increase factor in accordance with section 1886(j)(3)(C)(i i)(I) of the Act, and a 0.3 percentage point reduction to

the FY 2014 RPL market basket increase factor in accordance with sec tions 1886(j)(3)(C)(ii)(II) and (D)(ii) of the Act. Further, this proposed rule contains proposed ch anges to the list of

ICD-9-CM codes that are used in the 60 percent rule presumptive methodology and, in

section XII of this rule. di scusses the first implementati on (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 propos ed changes and updates described in this proposed rule would be a net estimated increase of $150 million in payments to IRF providers.

This estimate does not include the estimated im pacts of the proposed ch anges to the list of ICD-9-CM codes that are used in the 60 per cent rule presumptive compliance (as discussed below) or the estimated impacts of the implemen tation (in FY 2014) of th e required 2 percentage point reduction of the market basket increase factor for any IRF that fails to meet the IRF quality reporting requirements (as discussed in below). The impact analysis in Table 16 of this proposed rule represents the projected effects of th e proposed 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 paymen t variables constant. We use the best data available, but we do not attempt to predict behavi oral responses to these changes, and we do not make adjustments for future changes in such va riables 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-ori ented and, thus, susceptible to forecasting errors because of other changes in the forecasted im pact time period. Some examples could be158

legislative changes made by the Congress to the Medicare program that would impact program funding, or changes specifically related to IRFs. Although so me of these changes may not necessarily be specific to the IRF PPS, the natu re of the Medicare program is such that the changes may interact, and the co mplexity of the interaction of these changes could make it difficult to predict accurately the fu ll scope of the impact upon IRFs. In updating the rates for FY 2014, we are pr oposing standard annual revisions described in this proposed rule (for exam ple, 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)(i i)(I) of the Act, and a 0.3 percentage point reduction to the FY 2014 RPL market basket in crease factor in accordance with sections 1886(j)(3)(C)(ii)(II) and (D)(ii) of the Act. We estimate the total increase in payments to IRFs in FY 2014, relative to FY 2013, would be approximately $150 million. This estimate is derived from the applica tion of the FY 2014 RPL market basket increase factor, as reduced by a productivity adjustment in accordance with secti on 1886(j)(3)(C)(ii)(I) of the Act, and a 0.3 percentage point reduction in accordance with sectio ns 1886(j)(3)(C)(ii)(II) and (D)(ii) of the Act, which yields an estimat ed increase in aggregate payments to IRFs of $135 million. Furthermore, there is an additiona l estimated $15 million increase in aggregate payments to IRFs due to the proposed update to the outlier threshold am ount. Outlier payments are estimated to increase under this proposal fr om approximately 2.8 percent in FY 2013 to 3.0 percent in FY 2014. Therefore, summed togeth er, we estimate that these updates will result in a net increase in estimated payments of $150 million from FY 2013 to FY 2014.159

The effects of the proposed updates that impact IRF PPS payment rates are shown in Table 16. The following proposed updates that affect the IRF PPS payment rates are discussed separately below:

• The effects of the proposed update to the outlier threshold amount, from approximately 2.8 percent to 3.0 percent of tota l estimated payments for FY 2014, consistent with section 1886(j)(4) of the Act.

• The effects of the proposed annual market basket update (using the RPL market basket) to IRF PPS payment rates, as require d by section 1886(j)(3)(A)(i) and sections 1886(j)(3)(C) and (D) of the Act, including a productivity adjustment in acco rdance 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 proposed budget- neutral labor-related share and wage index adjustment, as required under section 1886(j)(6) of the Act.

• The effects of the proposed budget-neutral ch anges 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 proposed updates to the Ru ral, LIP, and Teaching Status adjustment factors, using an updated methodology.

• The total change in esti mated payments based on the proposed FY 2014 payment changes relative to the estimated FY 2013 payments. 2. Description of Table 16 Table 16 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 reha bilitation hospitals (otherwise160

called freestanding hospitals in this section), t hose that are rehabilita tion 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 16 shows the overall impact on the 1,132 IRFs included in the analysis.

The next 12 rows of Table 16 contain IRFs categorized according to their geographic location, designation as either a freestanding hosp ital or a unit of a hosp ital, and by type of ownership; all urban, which is fu rther divided into urban units of a hospital, urban freestanding hospitals, and by type of ownership; and all rural, which is furthe r divided into rural units of a hospital, rural freestanding hospita ls, and by type of ownership. There are 947 IRFs located in urban areas included in our analysis. Among thes e, there are 731 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, ther e are 167 IRF units of hospitals located in rural areas and 18 freestanding IRF hosp itals located in rural areas. There are 299 forprofit IRFs. Among these, there ar e 260 IRFs in urban areas and 39 IRFs in rural areas. There are 685 non-profit IRFs. Among these, there are 570 urban IRFs and 115 rural IRFs. There are 148 government-owned IRFs. Among these, th ere are 117 urban IRFs and 31 rural IRFs. The remaining four parts of Table 16 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 thei r location within a particular on e of the nine Census geographic regions. Second, IRFs located in rural areas are cat egorized with respect to their location within a particular one of the nine Cens us geographic regions. In some ca ses, especially for rural IRFs located in the New England, Mountain, and Pacifi c regions, the number of IRFs represented is161

small. IRFs are then grouped by teaching stat us, including non-teaching IRFs, IRFs with an intern and resident to average da ily census (ADC) ratio less than 10 percent, IRFs with an intern and resident to ADC ratio greater than or equal to 10 pe rcent and less than or equal to 19 percent,

and IRFs with an intern and resident to ADC ratio greater than 19 per cent. 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 proposed policy described in this proposed rule to the facility categories listed above are shown in the columns of Table 16. The description of each

column is as follows:

● Column (1) shows the facility clas sification 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 proposed adjustment to the outlier

threshold amount.

● Column (5) shows the estimated effect of the proposed update to the IRF PPS payment rates, which includes a productivity adjustment in accordance with secti on 1886(j)(3)(C)(ii)(I) of the Act, and a 0.3 percentage point reduction in accordance with sectio ns 1886(j)(3)(C)(ii)(II) and (D)(ii) of the Act.

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

● Column (7) shows the estimated effect of the proposed update to the CMG relative weights and average length of stay values, in a budget neutral manner.162

● Column (8) shows the estimated effect of the proposed updat e 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 proposed rule for FY 2014 to our estimates of payments per discharge in FY 2013. The average estimated increase for all IRFs is approximately 2.0 percent. This estimated

net increase includes the effects of the proposed RPL market bask et increase factor for FY 2014 of 2.5 percent, reduced by a productivity adjustme nt of 0.4 percentage point in accordance with section 1886(j)(3)(C)(ii)(I) of the Act, and furthe r reduced by 0.3 percentage point in accordance with sections 1886(j)(3)(C)(i i)(II) and (D)(ii) of the Act. It also includes the approximate 0.2 percent overall estimated increase in estimated IRF outlier payments from the proposed update to

the outlier threshold amount. Since we are maki ng the proposed updates to the IRF wage index, the facility-level adjustments, and the CMG relative wei ghts in a budget-neutral manner, they would not be expected to affect total estimated IRF payments in the aggregate. However, as described in more detail in each section, they would be expected to affect the estimated distribution of payments among providers.163

TABLE 16: 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 indexand laborshare CMG Facility Adjust. Total Percent Change (1) (2) (3) (4) (5) (6) (7) (8) (9)

Total 1,132 380,988 0.2 1.8 0.0 0.0 0.0 2.0

Urban unit 731 180,061 0.3 1.8 0.0 0.0 0.2 2.5

Rural unit 167 26,894 0.2 1.8 0.1 0.1 -2.8 -0.7 Urban hospital 216 168,159 0.1 1.8 -0.1 0.0 0.3 2.1 Rural hospital 18 5,874 0.1 1.8 -0.2 -0.1 -3.4 -1.9Urban ForProfit 260 142,026 0.1 1.8 -0.2 0.0 0.3 2.0Rural ForProfit 39 8,184 0.1 1.8 0.0 0.0 -3.3 -1.4Urban NonProfit 570 177,533 0.3 1.8 0.2 0.0 0.3 2.5Rural NonProfit 115 19,523 0.2 1.8 0.0 0.0 -2.8 -0.8 Urban Government 117 28,661 0.3 1.8 -0.2 0.0 0.3 2.3 Rural Government 31 5,061 0.3 1.8 0.1 0.1 -3.0 -0.7

Urban 947 348,220 0.2 1.8 0.0 0.0 0.3 2.3

Rural 185 32,768 0.2 1.8 0.0 0.0 -2.9 -0.9 Urban by region 2 Urban New England 31 16,756 0.1 1.8 0.8 0.0 0.1 2.7 Urban Middle Atlantic 140 59,219 0.2 1.8 0.0 0.0 0.7 2.7 Urban South Atlantic 130 62,331 0.1 1.8 -0.3 0.0 0.1 1.8 Urban East North Central 182 52,383 0.3 1.8 0.2 0.0 0.6 2.9 Urban East South Central 49 24,405 0.1 1.8 -0.8 0.0 0.5 1.6 Urban West North Central 73 17,946 0.2 1.8 0.5 0.0 0.0 2.5 Urban West South Central 171 67,357 0.2 1.8 -0.1 0.0 0.4 2.3 Urban Mountain 72 23,318 0.3 1.8 -0.5 0.0 0.2 1.7164

Facility Classification Number of IRFs Number of cases Outlier Adjusted Market Basket Increase Factor for FY 2014 1 FY 2014 CBSA wage indexand laborshare CMG Facility Adjust. Total Percent Change

Urban Pacific 99 24,505 0.4 1.8 0.7 0.0 -0.8 2.1 Rural by region 2 Rural New England 6 1,395 0.4 1.8 -0.4 -0.1 -2.1 -0.4 Rural Middle Atlantic 15 2,702 0.2 1.8 -0.3 0.0 -2.6 -0.9

Rural South Atlantic 24 5,546 0.1 1.8 0.0 0.1 -2.9 -0.9 Rural East North Central 32 5,576 0.2 1.8 0.3 0.0 -2.8 -0.5 Rural East South Central 22 3,834 0.2 1.8 0.0 0.1 -3.2 -1.2 Rural West North Central 27 3,624 0.3 1.8 -0.7 0.0 -2.7 -1.4 Rural West South Central 48 9,056 0.2 1.8 0.3 0.0 -3.5 -1.3 Rural Mountain 7 660 0.4 1.8 0.3 0.2 -2.0 0.6

Rural Pacific 4 375 0.8 1.8 0.1 -0.1 -1.3 1.3 Teaching Status Non-teaching 1,015 332,827 0.2 1.8 0.0 0.0 -0.2 1.8 Resident to ADC less than 10% 68 32,835 0.2 1.8 0.1 0.0 0.6 2.7 Resident to ADC 10%- 19% 37 13,743 0.3 1.8 0.1 0.0 2.1 4.3 Resident to ADC greater than 19% 12 1,583 0.2 1.8 0.4 0.0 6.7 9.3 Disproportio nate Share Patient Percentage (DSH PP)

DSH PP = 0% 39 7,929 0.8 1.8 0.2 0.0 0.7 3.5 DSH PP less than 5% 193 64,712 0.2 1.8 0.0 0.0 0.9 2.8 DSH PP 5% - 10% 323 122,318 0.1 1.8 -0.1 0.0 0.4 2.3 DSH PP 10% 0.2 1.8 0.1 0.0 0.0 2.0165

Facility Classification Number of IRFs Number of cases Outlier Adjusted Market Basket Increase Factor for FY 2014 1 FY 2014 CBSA wage indexand laborshare CMG Facility Adjust. Total Percent Change - 20% 349 125,863 DSH PP greater than 20% 228 60,166 0.3 1.8 0.0 0.0 -1.3 0.7 1 This column reflects the impact of the RP L market basket increase factor for FY 2014 of 1.8 percent, which includes a market ba sket update of 2.5 percent, a 0.3 percentage point redu ction in accordance with sections 1886(j)(3 )(C)(ii)(II) and 1886(j )(3)(D)(ii) of the Ac t and a 0.4 percentage point reduction for the productivity adjustment as required by section 1886(j)(3)(C)(ii)(I) of the Act. 2 A map of states that comprise the 9 geographic regions can be found at

( http://www.census.gov/geo/www/us_regdiv.pdf .)166

3. Impact of the Proposed Update to the Outlier Threshold Amount The proposed outlier threshold adjustment is presented in column 4 of Table 16. In the 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 per cent of total estimated payments for FY 2013. For this proposed rule, we are proposi ng to update 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 2.8 percent in FY 2013. Thus, we are proposing to adjust the outlier threshold amount in this prop osed 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 0.2 percent increase in payments

because the estimated outlier portion of total payments is estimated to increase from approximately 2.8 percent to 3 percent. The impact of this proposed outlier adju stment update (as shown in column 4 of Table 16) is to increase estimated overall payments to IRFs by about 0.2 percent. We estimate the largest increase in payments from the update to the outlier threshold amount to be 0.8 percent for rural IRFs in the Pacific region. We do not estimate that any group of IRFs would experience a decrease in payments from this proposed update. 4. Impact of the Proposed Market Basket Update to the IRF PPS Payment Rates The proposed market basket update to the IR F PPS payment rates is presented in column 5 of Table 16. In the aggregate the proposed update would result in a net 1.8 percent increase in overall estimated payments to IR Fs. This net increase reflects the estimated RPL market basket increase factor for FY 2014 of 2.5 percent, re duced by the 0.3 percentage point in accordance167

with sections 1886(j)(3)(C)(ii)(I I) and 1886(j)(3)(D)(ii) of the Act, and further reduced by a 0.4 percentage point productivity adjustment as required by sec tion 1886(j)(3)(C)(ii )(I) of the

Act. 5. Impact of the Proposed CBSA Wage Index and Labor-Related Share In column 6 of Table 16, we present the e ffects of the proposed budget neutral update of the wage index and labor-related share. The pr oposed changes to the wage index and the laborrelated share are discussed together because the wage index is applied to the labor-related share portion of payments, so the proposed changes in the two have a combined effect on payments to providers. As discussed in sec tion V.C. of this proposed rule, we propose to decrease the laborrelated share from 69.881 percent in FY 2013 to 69.658 percent in FY 2014. In the aggregate, since these proposed upda tes to the wage index and the labor-related share are applied in a budget-ne utral manner as required under sect ion 1886(j)(6) of the Act, we do not estimate that these propos ed updates would affect overall estimated payments to IRFs. However, we estimate that these proposed update s would have small distributional effects. For example, we estimate the largest increase in payments from the proposed update to the CBSA wage index and labor-related share of 0.8 percen t for urban IRFs in the New England region. We estimate the largest decrease in payments from the update to the CBSA wage index and labor-related hare to be a 0.8 per cent decrease for urban IRFs in the East South Central region. 6. Impact of the Proposed Update to the CMG Relative Weights and Average Length of Stay

Values. In column 7 of Table 16, we present the e ffects of the proposed budget neutral update of the CMG relative weights and average length of stay values. In the aggregate, we do not estimate that these proposed updates would affect ove rall estimated payments to IRFs. However,168

we would expect these proposed update to have sm all distributional effect s. 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 estimate d increase in payments as a result of these updates is a 0.2 increase in the Mountain region. 7. Impact of the Proposed Updates to the Facility-Level Adjustments In column 8 of Table 16, we present the e ffects of the proposed budget neutral updates to the IRF facility-level adjustment factors (the rura l, LIP, and teaching status adjustment factors) for FY 2014. In the aggregate, we do not esti mate that these proposed updates would affect overall estimated payments to IRFs. However, we estimate that these proposed updates would have distributional effects, as shown in Table 16. The largest es timated decrease in payments as a result of these proposed updates is a 3.5 percen t decrease to rural IRFs in the West South Central region. The largest estimat ed increase in payments as a result of these proposed updates is a 6.7 percent increase for teachi ng IRFs with a resident to av erage daily census ratio greater than 19 percent. 8. Impact of the Proposed Refinements to the Presumptive Compliance Criteria Methodology

As discussed in section VII. of this proposed rule, we are pr oposing changes to the list of ICD-9-CM codes available to meet the presumptiv e compliance criteria. We believe that these proposed changes would affect all 1,132 IRFs, as these facilities would need to change their coding practices to continue to meet the 60 perc ent compliance percentage using the presumptive methodology. We estimate that the financial impact, in the absence of any behavior al responses to these proposed changes on the part of providers, woul d be a decrease of 6.9 percent (or $520 million) in overall estimated payments to IRFs. However, we believe that IRFs will be able to improve169

the specificity of their coding practices, alte r 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 per cent compliance threshold. For example, we estimate that about 92 percen t of the IRF cases that would potentially be affected by the proposed revisions to the pr esumptive methodology codes are affected by the removal of the non-specific codes. However, we have been careful to propose removal only of those non-specific codes for which more specific codes for the same conditions will remain on the list of codes that meet the presumptive me thodology. Thus, in all of these cases, we believe

that the IRF will be able to sw itch to a more specific code for the same condition, leaving the IRF’s admission practices and clas sification status unaffected. However, we welcome comments on whether there are any particular non-specific code s or situations in which switching to a more specific code would be unusually difficult for an IRF. Fewer than 1 percent of the cases that we estimate would be affected by the proposed revisions are affected by the Unilateral Uppe r Extremity Amputation codes, the Congenital Anomaly codes, and the Miscellaneous codes co mbined. Thus, we do not estimate that the proposed removal of these code groups would ha ve a significant effect on IRF admission or coding practices, or cl assification status. However, we welcome comments on whether individual IRFs may specia lize in any of these conditi ons and might therefore be disproportionately affected by these proposed revisions. Finally, approximately 7 percent of the cases that we estimate would be affected by the proposed revisions involve arthritis diagnoses. We estimate that the proposed revisions in this category would have the largest potential effects on providers because, by the very nature of these revisions, IRFs would not have another arth ritis code on the list to code instead. We170

estimate that about 14 percent of all IRF cases ar e coded with the arthritis codes that we propose to remove from the list, and in 11 percent of thes e 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 thes e cases will still be foun d to meet the 60 percent rule requirements under medical review, so we estim ate that these proposed revisions will lead to few if any IRF declassifications. However, we welcome comments on whether there are any

reasons to believe that the arthritis cases ma y not generally be found to count towards the 60 percent rule requirements under medical review. 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 th at they will adapt quickly to the proposed changes to the presumptive methodology list. In addition, th e proposed changes would 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 per cent 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 expe rienced by IRFs, their patients and other relevant entities, we note that the $520 million estimate app earing earlier in this s ection represents an upper bound (probably an extreme upper bound) on th e costs that would be borne by IRFs. Should these proposed changes to the 60 percen t rule be finalized, we intend to closely monitor provider coding practices to identify wh ether those patients that we envisioned would be171

served under the IRF PPS are counting toward the presumptive compliance percentage. We will also monitor whether these proposed changes ar e having any unintended consequences in terms of limiting access to care. 9. Effects of Proposed Updates to the IRF QRP In this rule, we are proposing to continue use of the pressure ulcer measure that was adopted in the FY 2012 IRF PPS final rule but have proposed to change this measure for the IRF PPS increase factor for FY 2017, at which time we are proposing to adopt the NQF-endorsed version of this measure. We are further proposin g to make 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 measure item set that will be incorporated into th e IRF-PAI. We expect that th e admission and discharge pressure ulcer data will be collected by a clinician such as a registered nurse (RN) because the assessment and staging of pressure ulcers re quires a high degree of clinical judgment and experience. We estimate that it will take approximately 10 minut es 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 IR F quality reporting program and would not be performing patient care. An RN or clinician of 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 th e amount of $4,518.61 and across all IRFs, $5,246,106. This burden is comprised of the clinical and admi nistrative wages. The clinical wages are based172

on an average hourly wage rate of $33.23. 38 We estimate that there are 359,000 IRF-PAI submissions per year 39 and that there are 1161 IRFs in the U.S. that have reported quality data to CMS. Based on these figures, we estimate thateach IRF will submit approximately 309 IRFPAIs per year or 25.75 IRF-PAIs per month. 40 Assuming that each IRF-PAI submission requires 25 minutes of time by an RN at an average hourl y wage of $33.23, the yearly cost to each IRF would be $4,278.36 41 and the annualized cost ac ross all IRFs would be $4,967,176. 42 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 As sistants is $15.55. As noted a bove, 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 require d for entry of pressure ulcer da ta into the IRF-PAI record is $278,930. We further estimate the average yearly cost to each IRF to be $240.25

. We are also proposing to add 3 new quality measures to the IRF QRP. These proposed measures include: (1) Percent of Residents or Patients Who Were Asse ssed and Appropriately

38 According to the U.S. Bureau of Labor Statistics, the m ean hourly wage for a Regist ered Nurse is $33.23. (See http://www.bls.gov/oes/2011/may/oes291111.htm ). 39 MedPAC, A Data Book: Health Care Spending and the Medicare Program (June 2012 ), http://www.medpac.gov/chapter s/Jun12DataBookSec8.pdf 40 359,000 IRF-PAI reports per all IRFs per year / 1161 IR Fs 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 41 25 minutes x 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 x $33.23 per hour = $4, 278.36 nursing wages per each IRF per year 42 $4,278.36 x 1161 IRF providers = $4,967,176 per all IRFs per year173

Given the Seasonal Influenza Vaccine (Short-St ay) (NQF #0680), which will affect the FY 2017 increase factor; (2) Influenza Vaccination C overage among Healthcare Personnel (NQF #0431),

which will affect the FY 2016 increase factor ; and (3) an All-Cause Unplanned Readmission Measure for 30 Days Post Discharge from Inpatie nt Rehabilitation Facili ties, which will affect the FY 2017 increase factor. We discuss the impact of each measure upon IRFs below. We have proposed that IRFs will submit their data for the patient influenza measure (NQF #0680) on the IRF-PAI. We have further proposed to add 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 th e influenza vaccination season, which has been defined by the CDC as the time period from October 1 st (or when the vaccine becomes available) through March 31 each year. From April 1 st through September 30 th , IRFs are not required to perform a full influenza screen ing. Our time estimate reflects the averaged amount of time necessary to complete the influenza item set both during and outside th e 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 requ ires clinical judgme nt and knowledge of

vaccinations. An administrative em ployee, 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. We estimate that it will take approximately 5 minutes to complete the patient influenza measure item set. According to MedPAC, there are approximately 359,000 43 IRF-PAIs

43 MedPAC, A Data Book: Health Care Spending and the Medicare Program (June 2012), Page 129174

completed annually across 1161 IRFs that reported quality data to CMS. This breaks down to approximately 309 IRF-PAIs completed by each IR F yearly. We estimate that the annual time burden for reporting the patient influenza vacc ination measure data is 29,896 hours across all

IRFs in the U.S. and 25.75 hours for each individua l IRF. According to the U.S. Bureau of Labor, the hourly wage for a Registered Nurs e 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 sta ff immunization measure (NQF #0431) to the CDC’s healthcare acquired (HAI) surveillance webs ite known as NHSN. Data collection for this measure is only required from October 1 st (or when the vaccine becomes available) through March 31st each year, during which IRFs will be required to keep records of which staff

members receive the influenza va ccination. However, IRFs are required to make one report to

NHSN after the close of the reporting period on March 31 st , by May 15 th of each year. We do not believe that IRFs will incur any new burden a ssociated with the collec tion of data during the

influenza vaccination season. We believe that mo st IRFs already keep records related to the

influenza vaccination of their staff because th is impacts on 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 approxi mately 15 minutes of time once per year to gather the data that was collect ed during the influenza vaccinati ons 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 ta sk can be completed by an administrative person

().( http://www.medpac.gov/chapters/Jun12DataBookSec8.pdf )175

such as a Medical Secretary Medical Data En try Clerk. As noted a bove, the average hourly wage for Medical Records or Health Informati on Technicians is $15.55.44 We estimate that the average yearly cost to each IR F for the reporting of this measur e will be $3.98 45 and the cost across all IRFs will be $4,62146. The proposed readmission measure is a claims based 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. The IRF QRP was established under section 3004 of the Affordable Care Act (which added Section 1886(j)(7)(A)(i) to the Act). Section 1886(j)(7)(A)( i) requires the reduction of the applicable IRF PPS increase factor, as previous ly 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. 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 ACA 3004 IRF QRP into the IRF setting. The IRF provi der community has shared many suggestions and ideas related to the IRF QRP. Outreach ac tivities, such as a one day in-person training, and six open door forums were well attended. Given the amount of positive feedback and willingness to participate in the IRF QRP that ha s been demonstrated by IRFs, we anticipate that there will be a relatively small numb er of IRFs that fail to report the required type and amount of quality data. If finalized, our proposed reconsider ation process would allow IRFs that receive an

44 According 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/medical-records-and-health-informationtechnicians.htm . 45 15 minutes Admin staff time to collect and report staff influen za measure @ $15.55 per hour = $3.98 per IRF per year 46 $3.98 per IRF per year x 1161 IRFs in U.S.= $4,621.176

initial finding of non-compliance an opportunity to file a reques t for reconsideration of this finding. 10. Impact of the Implementation of the 2 Percen tage Point Reduction in the Increase Factor for Failure to Meet the IRF Quality Reporting Requirements

As discussed in section XIII. of this proposed rule and in accordance with section 1886(j)(7) of the Act, we will implement a 2 pe rcentage point payment reduction in FY 2014 for IRFs that fail to report the required quality re porting data to us during the first IRF quality reporting period (from October 1, 2012 through December 31, 2012). In section XIII., we discuss how the 2 percentage point payment reduction will be applied. Currently, we cannot estimate the overall financial impacts of the app lication of this reducti on 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 qual ity reporting data on the IRF-PAI form is very low. Additionally, the Catheter Associated Ur inary Tract Infections (CAUTI) quality reporting requirement would require IRFs to register with the National Healthcare Safety Network (NHSN) to submit the required data. At this time, we cannot predict how many IRFs would fail to register. The official reporting period end date for the first IRF quality reporting period is May 15, 2013. We expect a preliminary report of th e IRFs that have failed to report the required data during the first quality re porting period to be developed by mid-June 2013. However, that list could change substantially dur ing the proposed reconsideration process (described in section177

XIII. of this proposed rule) that would occur between June 2013 and September 2013. Therefore, we intend to closely monitor the e ffects of this new quality reporting program on IRF providers as we cannot predict the number of, or types of IRFs that w ould fail to report the required quality reporting data for th e first quality reporting period.

D. Alternatives Considered As stated in section XV.B. of this proposed rule, we estimate that the proposed changes

discussed in the rule would resu lt in a significant economic impact on IRFs. The overall impact

on all IRFs is an estimated increase in FY 2014 payments of $150 million (2.0 percent), relative to FY 2013. The following is a discussion of the alternatives considered for the proposed IRF PPS updates contained in this proposed rule. Section 1886(j)(3)(C) of the Act requires the Secretary to update the IRF PPS payment rates by an increase factor that reflects changes ov er time in the prices of an appropriate mix of goods and services included in the covered IRF serv ices. 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 proposed rule, section 1886(j)(3 )(C)(ii)(I) requires the Secretary to apply a productivity adjustment to the market ba sket increase factor for FY 2014 and sections 1886(j)(3)(C)(i i)(II) and 1886(j)(3)( D)(ii) of the Ac t 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 proposed to update IRF federal prospective payments in this proposed rule by 1.8 percen t (which equals the 2.5 percent estimated RPL

market basket increase factor for FY 2014 reduced by 0.3 percentage points, and further reduced by a 0.4 percentage point productivity adjustment as required by section 1886(j)(3)(C)(ii)(I) of the Act).178

We considered maintaining the existing CMG relative weights and average length of stay values for FY 2014. However, in light of recently av ailable 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 appr opriate to propose to update the CMG relative weights and averag e length of stay values at th is 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 adju stment factor at 0.6876) for an additional year. However, as discussed in more detail in section IV.B. of this proposed rule, our recent research effort s have shown significant differences in cost structures between freestanding IRFs and IRF units of acute care ho spitals (and CAHs). We have found that these

cost structure differences substan tially influence the estimates of th e adjustment factors. For this reason, our regression analysis f ound that the proposed inclusion of the control variable for a facility’s status as either a fr eestanding IRF hospital or an IRF un it of an acute care hospital (or a CAH) would greatly enhance th e accuracy of the adjustment factors for FY 2014, as we incorporate updated data. Furthe r, as noted previously, we received comments from an IRF industry association on the FY 2012 IRF PPS proposed rule suggesting this enhancement to the methodology. Thus, we believe that the best appr oach at this time is to propose to update the facility-level adjustment factors for FY 2014 using this proposed enhancement to the methodology. However, we welcome comments on this approach and on whether or not the facility-level adjustment factor s need updating at this time or s hould be frozen at their current levels for an additional year.179

We considered maintaining the existing ou tlier threshold amount for FY 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 0.2 percent, unless we updated the outlier thres hold amount. Consequently, we pro pose adjusting the outlier threshold amount in this proposed rule to reflect a 0.2 pe rcent increase thereby se tting the total outlier payments equal to 3 percent, instead of 2.8 pe rcent, of aggregate estimated payments in

FY 2014. Finally, we considered maintaining the curren t 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 are proposing to remove from the list in this proposed rule. However, we believe that the specific ICD-9-CM code removals that we are proposing in section VII. of this proposed rule would result in a list that better reflects the 60 percent rule regulations. For example, th e proposed removal of th e non-specific diagnosis codes (as discussed in section VII. of this propo sed rule) is in accordan ce with the trend toward requiring more specific coding in other Medicar e 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 specificit y of patients’ care plans. In addition, the proposed removal of the arthritis diagnosis codes (as discussed in section VII. of this proposed rule) would 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 IC D-9-CM codes themselves. With respect to the other code categories that we are proposing to remove from the presumptive methodology list,180

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 se ction VII. of this proposed rule. However, we welcome comments on whether there are any specific reasons that we may not have previously considered that would argue for keeping certa in of these codes on the presumptive methodology

list. E. Accounting Statement. As required by OMB Circ ular A-4 (available at http://www.whitehouse.gov/sites/default/f iles/omb/assets/omb/circulars/a004/a-4.pdf ), in Table 17, we have prepared an accounting statement sh owing the classification of the expenditures associated with the provisions of this proposed rule. Table 17 provides ou r best estimate of the increase in Medicare payments under the IRF PPS as a result of the proposed updates presented in this proposed rule based on the data for 1,132 IRFs in our database.

TABLE 17: Accounting Statement: Classifi cation of Estimated Expenditures, from the 2013 IRF PPS Fiscal Year to the 2014 IRF PPS Fiscal Year Category Transfers Annualized Monetized Transfers $150 million From Whom to Whom? Federal Government to IRF Medicare Providers Estimated annualized cost to the federal government for the administration of the IRF quality reporting program $2 million (This cost is attributed to various sources, including but not limited to the CCSQ IRF measure developer contractor and the Division of National Systems)

F. Conclusion Overall, the estimated payments per disc harge for IRFs in FY 2014 are projected to increase by 2.0 percent, compared with the es timated payments in FY 2013, as reflected in column 9 of Table 16. IRF payments per discharg e are estimated to increase 2.3 percent in urban181

areas and decrease 0.9 percent in rural areas, compared with estimated FY 2013 payments. Payments per discharge to rehabi litation units are estimated to in crease 2.5 percent in urban areas and decrease 0.7 percent in rural areas. Paym ents per discharge to freestanding rehabilitation hospitals are estimated to increa se 2.1 percent in urban areas a nd decrease 1.9 percent in rural

areas. Overall, IRFs are estimated to experience a net increase in payments as a result of the proposed policies in this proposed rule. The largest payment in crease is estimated to be a 2.9 percent increase for urban IRFs located in the East North Central region. This is due to the large positive effect of the f acility adjustment updates for urban IRFs in this region. In accordance with the provisions of Executive Order 12866, this proposed rule was reviewed by the Office of Management and Budget.182

List of Subjects in 42 CFR Part 412

Administrative practice and procedure, Health facilitie s, Medicare, Puerto Rico, Reporting and recordkeeping requirements.183

For the reasons set forth in the preamble, the Centers for Medicar e & Medicaid Services proposes to amend 42 CFR chapter IV as follows:

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 So cial Security Act (42 U.S.C. 1302, 1395y, and 1395hh). 2. Section 412.25 is amended by revising para graph (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 hos pital, the hospital of which an IRF is a unit

must have at least 10 staffed and maintained hospital beds th at are not excluded from the inpatient prospective payment system, or at leas t 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 hos pital, rather than an IRF unit. In the case of an IPF unit, the hospital must have enough beds that are not ex cluded from the inpatient prospective payment system to permit the provision of adequate co st 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 und er the inpatient rehabilitation facility prospective payment system.184

* * * * * (d) Have in effect a preadmission screen ing procedure under which each prospective patient’s condition and medical hist ory 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 fo r each Medicare Part A fee-for-s ervice 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 paragra phs (a)(1), (a)(2) a nd (a)(3) to read as

follows: §412.130 Retroactive adjustments for inco rrectly 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 pros pective payment system specifi ed in §412.1(a)(3), as a new rehabilitation hospital for a cost reporting pe riod beginning on or after October 1, 1991 based on

a certification under §412.29(c) of this part 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 th e prospective payment systems specified in §412.1(a)(1) or paid under the pros pective payment system specifi ed in §412.1(a)(3), as a new rehabilitation unit for a cost reporting peri od beginning on or after October 1, 1991, based on a certification under §412.29(c) regard ing the inpatient population the hospital planned to treat in that unit during the perio d, if the inpatient population actually tr eated in the unit du ring that cost reporting period did not meet the requirements of §412.29(b).185

(3) A hospital that added new beds to its exis ting rehabilitation unit for a cost reporting period beginning on or after October 1, 1991 ba sed on a certification und er §412.29(c) regarding the inpatient population the hospital planned to treat in these new beds during that cost reporting period, if the inpatient populati on 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 revise d to read as follows: §412.630 Limitation on review. Administrative or judicial review unde r sections 1869 or 1878 of the Act, or otherwise, is prohibited with re gard to the establishment of th e methodology to classify a patient into the case-mix groups and the associated weigh ting factors, the Federal per discharge payment rates, additional payments for outliers and sp ecial payments, and the area wage index.CMS-1448-P

Authority: (Catalog of Federal Domestic Assi stance Program No. 93.773, Medicare-- Hospital Insurance; and Program No. 93.774, Medicare--Supplementary Medical Insurance Program)

Dated: April 16, 2013.

_______________________________ Marilyn Tavenner, Acting Administrator,

Centers for Medicare & Medicaid Services.

Approved: April 25, 2013.

__________________________________ Kathleen Sebelius, Secretary.

BILLING CODE 4120-01-P

[FR Doc. 2013-10755 Filed 05/02/2013 at 4:15 pm; Publication Date: 05/08/2013]