[Federal Register Volume 83, Number 151 (Monday, August 6, 2018)]
[Rules and Regulations]
[Pages 38514-38573]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-16517]



[[Page 38513]]

Vol. 83

Monday,

No. 151

August 6, 2018

Part III





Department of Health and Human Services





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Centers for Medicare & Medicaid Services





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42 CFR Part 412





Medicare Program; Inpatient Rehabilitation Facility Prospective Payment 
System for Federal Fiscal Year 2019; Rules

Federal Register / Vol. 83, No. 151 / Monday, August 6, 2018 / Rules 
and Regulations

[[Page 38514]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 412

[CMS-1688-F]
RIN 0938-AT25


Medicare Program; Inpatient Rehabilitation Facility Prospective 
Payment System for Federal Fiscal Year 2019

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

ACTION: Final rule.

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SUMMARY: This final rule updates the prospective payment rates for 
inpatient rehabilitation facilities (IRFs) for federal fiscal year (FY) 
2019. As required by the Social Security Act (the Act), this final rule 
includes the classification and weighting factors for the IRF 
prospective payment system's (PPS) case-mix groups and a description of 
the methodologies and data used in computing the prospective payment 
rates for FY 2019. This final rule also alleviates administrative 
burden for IRFs by removing the Functional Independence Measure 
(FIM\TM\) instrument and associated Function Modifiers from the IRF 
Patient Assessment Instrument (IRF-PAI) beginning in FY 2020 and 
revises certain IRF coverage requirements to reduce the amount of 
required paperwork in the IRF setting beginning in FY 2019. 
Additionally, this final rule incorporates certain data items located 
in the Quality Indicators section of the IRF-PAI into the IRF case-mix 
classification system using analysis of 2 years of data beginning in FY 
2020. For the IRF Quality Reporting Program (QRP), this final rule 
adopts a new measure removal factor, removes two measures from the IRF 
QRP measure set, and codifies a number of program requirements in our 
regulations.

DATES: 
    Effective Dates: These regulations are effective on October 1, 
2018.
    Applicability Dates: The updated IRF prospective payment rates are 
applicable for IRF discharges occurring on or after October 1, 2018, 
and on or before September 30, 2019 (FY 2019). In addition, the 
revisions to certain IRF coverage requirements to reduce the amount of 
required paperwork in the IRF setting and the updated measures and 
reporting requirements under the IRF QRP are applicable for IRF 
discharges occurring on or after October 1, 2018. The removal of the 
FIM\TM\ instrument and associated Function Modifiers from the IRF-PAI 
and refinements to the case-mix classification system are applicable 
for IRF discharges occurring on or after October 1, 2019.

FOR FURTHER INFORMATION CONTACT: 
    Gwendolyn Johnson, (410) 786-6954, for general information.
    Catie Kraemer, (410) 786-0179, for information about the IRF 
payment policies and payment rates.
    Kadie Derby, (410) 786-0468, for information about the IRF coverage 
policies.
    Christine Grose, (410) 786-1362, for information about the IRF 
quality reporting program.

SUPPLEMENTARY INFORMATION: The IRF PPS Addenda along with other 
supporting documents and tables referenced in this final rule are 
available through the internet on the CMS website at http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/.
    To assist readers in referencing sections contained in this 
document, we are providing the following Table of Contents.

Table of Contents

Executive Summary
    A. Purpose
    B. Summary of Major Provisions
    C. Summary of Impacts
    D. Improving Patient Outcomes and Reducing Burden Through 
Meaningful Measures
I. Background
    A. Historical Overview of the IRF PPS
    B. Provisions of the PPACA Affecting the IRF PPS in FY 2012 and 
Beyond
    C. Operational Overview of the Current IRF PPS
    D. Advancing Health Information Exchange
II. Summary of Provisions of the Proposed Rule
III. Analysis and Responses to Public Comments
IV. Update to the Case-Mix Group (CMG) Relative Weights and Average 
Length of Stay Values for FY 2019
V. Facility-Level Adjustment Factors
VI. FY 2019 IRF PPS Payment Update
    A. Background
    B. FY 2019 Market Basket Update and Productivity Adjustment
    C. Labor-Related Share for FY 2019
    D. Wage Adjustment for FY 2019
    E. Description of the IRF Standard Payment Conversion Factor and 
Payment Rates for FY 2019
    F. Example of the Methodology for Adjusting the Prospective 
Payment Rates
VII. Update to Payments for High-Cost Outliers Under the IRF PPS for 
FY 2019
    A. Update to the Outlier Threshold Amount for FY 2019
    B. Update to the IRF Cost-to-Charge Ratio Ceiling and Urban/
Rural Averages for FY 2019
VIII. Removal of the FIM<SUP>TM</SUP> Instrument and Associated 
Function Modifiers From the IRF-PAI Beginning With FY 2020 and 
Refinements to the Case-Mix Classification System Beginning With FY 
2020
    A. Removal of the FIM<SUP>TM</SUP> Instrument and Associated 
Function Modifiers From the IRF-PAI Beginning With FY 2020
    B. Refinements to the Case-Mix Classification System Beginning 
With FY 2020
IX. Revisions to Certain IRF Coverage Requirements Beginning With FY 
2019
    A. Changes to the Physician Supervision Requirement Beginning 
With FY 2019
    B. Changes to the Interdisciplinary Team Meeting Requirement 
Beginning With FY 2019
    C. Changes to the Admission Order Documentation Requirement 
Beginning With FY 2019
    D. Summary of Comments Regarding Additional Changes to the 
Physician Supervision Requirement
    E. Summary of Comments Regarding Changes to the Use of Non-
Physician Practitioners in Meeting the Requirements Under Sec.  
412.622(a)(3), (4), and (5)
X. Updates to the IRF Quality Reporting Program (QRP)
    A. Background
    B. General Considerations Used for Selection of Measures for the 
IRF QRP
    C. New Removal Factor for Previously Adopted IRF QRP Measures
    D. Quality Measures Currently Adopted for the FY 2020 IRF QRP
    E. Removal of Two IRF QRP Measures
    F. IMPACT Act Implementation Update
    G. Form, Manner, and Timing of Data Submission Under the IRF QRP
    H. Changes to the Reconsideration Requirements Under the IRF QRP
    I. Policies Regarding Public Display of Measure Data for the IRF 
QRP
    J. Method for Applying the Reduction to the FY 2019 IRF Increase 
Factor for IRFs That Fail To Meet the Quality Reporting Requirements
XI. Miscellaneous Comments
XII. Provisions of the Final Regulations
XIII. Request for Information on Promoting Interoperability and 
Electronic Healthcare Information Exchange Through Possible 
Revisions to the CMS Patient Health and Safety Requirements for 
Hospitals and Other Medicare- and Medicaid-Participating Providers 
and Suppliers
XIV. Collection of Information Requirements
    A. Statutory Requirement for Solicitation of Comments
    B. Collection of Information Requirements for Updates Related to 
the IRF PPS
    C. Collection of Information Requirements for Updates Related to 
the IRF QRP
XV. Regulatory Impact Analysis
    A. Statement of Need
    B. Overall Impacts
    C. Anticipated Effects
    D. Alternatives Considered
    E. Regulatory Review Costs
    F. Accounting Statement and Table
    G. Conclusion

[[Page 38515]]

Regulatory Text

Executive Summary

A. Purpose

    This final rule updates the prospective payment rates for IRFs for 
FY 2019 (that is, for discharges occurring on or after October 1, 2018, 
and on or before September 30, 2019) as required under section 
1886(j)(3)(C) of the Act. As required by section 1886(j)(5) of the Act, 
this rule includes the classification and weighting factors for the IRF 
PPS's case-mix groups and a description of the methodologies and data 
used in computing the prospective payment rates for FY 2019. In 
addition, this final rule reduces the regulatory burden for IRFs by 
removing data items from the IRF-PAI and revising certain IRF coverage 
and paperwork requirements. The final rule also updates requirements 
for the IRF QRP, including adding a new quality measure removal factor, 
removing two measures from the measure set, and codifying a number of 
program requirements in our regulations.

B. Summary of Major Provisions

    In this final rule, we use the methods described in the FY 2018 IRF 
PPS final rule (82 FR 36238) to update the prospective payment rates 
for FY 2019 using updated FY 2017 IRF claims and the most recent 
available IRF cost report data, which is FY 2016 IRF cost report data. 
(Note: In the interest of brevity, the rates previously referred to as 
the ``Federal prospective payment rates'' are now referred to as the 
``prospective payment rates''. No change in meaning is intended.) We 
are also finalizing our proposals to alleviate administrative burden 
for IRFs by removing the FIM<SUP>TM</SUP> instrument and associated 
Function Modifiers from the IRF-PAI and revising certain IRF coverage 
requirements to reduce the amount of required paperwork in the IRF 
setting. We are also finalizing updates to requirements for the IRF 
QRP.

C. Summary of Impacts

------------------------------------------------------------------------
    Provision description                      Transfers
------------------------------------------------------------------------
FY 2019 IRF PPS payment rate   The overall economic impact of this final
 update.                        rule is an estimated $105 million in
                                increased payments from the Federal
                                government to IRFs during FY 2019.
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    Provision Description                        Costs
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Removal of FIM\TM\ Items from  The total reduction in costs in FY 2020
 IRF-PAI.                       for IRFs as a result of the removal of
                                the FIM\TM\ instrument and associated
                                Function Modifiers from the IRF[dash]PAI
                                is estimated to be $10.5 million.
Removal of certain IRF         The total reduction in costs in FY 2019
 coverage requirements.         for IRFs as a result of the removal of
                                certain IRF coverage requirements is
                                estimated to be $20.5 million.
New IRF QRP requirements.....  The total reduction in costs in FY 2019
                                for IRFs as a result of the new quality
                                reporting requirements is estimated to
                                be $2.5 million.
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D. Improving Patient Outcomes and Reducing Burden Through Meaningful 
Measures

    Regulatory reform and reducing regulatory burden are high 
priorities for CMS. To reduce the regulatory burden on the healthcare 
industry, lower health care costs, and enhance patient care, in October 
2017, we launched the Meaningful Measures Initiative.\1\ This 
initiative is one component of our agency-wide Patients Over Paperwork 
Initiative,\2\ which is aimed at evaluating and streamlining 
regulations with a goal to reduce unnecessary cost and burden, increase 
efficiencies, and improve beneficiary experience. The Meaningful 
Measures Initiative is aimed at identifying the highest priority areas 
for quality measurement and quality improvement in order to assess the 
core quality of care issues that are most vital to advancing our work 
to improve patient outcomes. The Meaningful Measures Initiative 
represents a new approach to quality measures that fosters operational 
efficiencies, and will reduce costs, including collection and reporting 
burden while producing quality measurement that is more focused on 
meaningful outcomes.
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    \1\ Meaningful Measures web page: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/MMF/General-info-Sub-Page.html.
    \2\ See Remarks by Administrator Seema Verma at the Health Care 
Payment Learning and Action Network (LAN) Fall Summit, as prepared 
for delivery on October 30, 2017. https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2017-Fact-Sheet-items/2017-10-30.html.
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    The Meaningful Measures Framework has the following objectives:
    <bullet> Address high-impact measure areas that safeguard public 
health;
    <bullet> Patient-centered and meaningful to patients;
    <bullet> Outcome-based where possible;
    <bullet> Fulfill each program's statutory requirements;
    <bullet> Minimize the level of burden for health care providers 
(for example, through a preference for EHR-based measures where 
possible, such as electronic clinical quality measures);
    <bullet> Significant opportunity for improvement;
    <bullet> Address measure needs for population based payment through 
alternative payment models; and
    <bullet> Align across programs and/or with other payers.
    In order to achieve these objectives, we have identified 19 
Meaningful Measures areas and mapped them to six overarching quality 
priorities as shown in the Table 1:

                        Table 1--Meaningful Measures Framework Domains and Measure Areas
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      Quality priority                                      Meaningful Measure area
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Making Care Safer by          Healthcare-Associated Infections.
 Reducing Harm Caused in the  Preventable Healthcare Harm.
 Delivery of Care.
Strengthen Person and Family  Care is Personalized and Aligned with Patient's Goals.
 Engagement as Partners in
 Their Care.
                              End of Life Care according to Preferences.
                              Patient's Experience of Care.
                              Patient Reported Functional Outcomes.

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Promote Effective             Medication Management.
 Communication and            Admissions and Readmissions to Hospitals.
 Coordination of Care.
                              Transfer of Health Information and Interoperability.
Promote Effective Prevention  Preventive Care.
 and Treatment of Chronic     Management of Chronic Conditions.
 Disease.
                              Prevention, Treatment, and Management of Mental Health.
                              Prevention and Treatment of Opioid and Substance Use Disorders.
                              Risk Adjusted Mortality.
Work with Communities to      Equity of Care.
 Promote Best Practices of    Community Engagement.
 Healthy Living.
Make Care Affordable........  Appropriate Use of Healthcare.
                              Patient-focused Episode of Care.
                              Risk Adjusted Total Cost of Care.
----------------------------------------------------------------------------------------------------------------

    By including Meaningful Measures in our programs, we believe that 
we can also address the following cross-cutting measure criteria:
    <bullet> Eliminating disparities;
    <bullet> Tracking measurable outcomes and impact;
    <bullet> Safeguarding public health;
    <bullet> Achieving cost savings;
    <bullet> Improving access for rural communities; and
    <bullet> Reducing burden.
    We believe that the Meaningful Measures Initiative will improve 
outcomes for patients, their families, and health care providers while 
reducing burden and costs for clinicians and providers, as well as 
promoting operational efficiencies.
    Comment: We received numerous comments from stakeholders regarding 
the Meaningful Measures Initiative and the impact of its implementation 
in CMS' quality programs. Many of these comments pertained to specific 
program proposals, and are discussed in the appropriate program-
specific sections of this final rule. However, commenters also provided 
insights and recommendations for the ongoing development of the 
Meaningful Measures Initiative generally, including: Ensuring 
transparency in public reporting and the usability of publicly reported 
data; evaluating the benefit of individual measures to patients via 
their use in quality programs versus the burden to providers of 
collecting and reporting that measure data; and identifying additional 
opportunities for alignment across CMS quality programs.
    Response: We will continue to work with stakeholders to refine and 
further implement the Meaningful Measures Initiative, and will take 
commenters' insights and recommendations into account moving forward.

I. Background

A. Historical Overview of the IRF PPS

    Section 1886(j) of the Act provides for the implementation of a 
per-discharge prospective payment system (PPS) for inpatient 
rehabilitation hospitals and inpatient rehabilitation units of a 
hospital (collectively, hereinafter referred to as IRFs). Payments 
under the IRF PPS encompass inpatient operating and capital costs of 
furnishing covered rehabilitation services (that is, routine, 
ancillary, and capital costs), but not direct graduate medical 
education costs, costs of approved nursing and allied health education 
activities, bad debts, and other services or items outside the scope of 
the IRF PPS. Although a complete discussion of the IRF PPS provisions 
appears in the original FY 2002 IRF PPS final rule (66 FR 41316) and 
the FY 2006 IRF PPS final rule (70 FR 47880), we are providing a 
general description of the IRF PPS for FYs 2002 through 2018.
    Under the IRF PPS from FY 2002 through FY 2005, the prospective 
payment rates were computed across 100 distinct case-mix groups (CMGs), 
as described in the FY 2002 IRF PPS final rule (66 FR 41316). We 
constructed 95 CMGs using rehabilitation impairment categories (RICs), 
functional status (both motor and cognitive), and age (in some cases, 
cognitive status and age may not be a factor in defining a CMG). In 
addition, we constructed five special CMGs to account for very short 
stays and for patients who expire in the IRF.
    For each of the CMGs, we developed relative weighting factors to 
account for a patient's clinical characteristics and expected resource 
needs. Thus, the weighting factors accounted for the relative 
difference in resource use across all CMGs. Within each CMG, we created 
tiers based on the estimated effects that certain comorbidities would 
have on resource use.
    We established the federal PPS rates using a standardized payment 
conversion factor (formerly referred to as the budget-neutral 
conversion factor). For a detailed discussion of the budget-neutral 
conversion factor, please refer to our FY 2004 IRF PPS final rule (68 
FR 45684 through 45685). In the FY 2006 IRF PPS final rule (70 FR 
47880), we discussed in detail the methodology for determining the 
standard payment conversion factor.
    We applied the relative weighting factors to the standard payment 
conversion factor to compute the unadjusted prospective payment rates 
under the IRF PPS from FYs 2002 through 2005. Within the structure of 
the payment system, we then made adjustments to account for interrupted 
stays, transfers, short stays, and deaths. Finally, we applied the 
applicable adjustments to account for geographic variations in wages 
(wage index), the percentage of low-income patients, location in a 
rural area (if applicable), and outlier payments (if applicable) to the 
IRFs' unadjusted prospective payment rates.
    For cost reporting periods that began on or after January 1, 2002, 
and before October 1, 2002, we determined the final prospective payment 
amounts using the transition methodology prescribed in section 
1886(j)(1) of the Act. Under this provision, IRFs transitioning into 
the PPS were paid a blend of the federal IRF PPS rate and the payment 
that the IRFs would have received had the IRF PPS not been implemented. 
This provision also allowed IRFs to elect to bypass this blended 
payment and immediately be paid 100 percent of the federal IRF PPS 
rate. The transition methodology expired as of cost reporting periods 
beginning on or after October 1, 2002 (FY 2003), and payments for all 
IRFs now consist of 100 percent of the federal IRF PPS rate.

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    We established a CMS website as a primary information resource for 
the IRF PPS which is available at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/index.html. The website 
may be accessed to download or view publications, software, data 
specifications, educational materials, and other information pertinent 
to the IRF PPS.
    Section 1886(j) of the Act confers broad statutory authority upon 
the Secretary to propose refinements to the IRF PPS. In the FY 2006 IRF 
PPS final rule (70 FR 47880) and in correcting amendments to the FY 
2006 IRF PPS final rule (70 FR 57166) that we published on September 
30, 2005, we finalized a number of refinements to the IRF PPS case-mix 
classification system (the CMGs and the corresponding relative weights) 
and the case-level and facility-level adjustments. These refinements 
included the adoption of the Office of Management and Budget's (OMB) 
Core-Based Statistical Area (CBSA) market definitions, modifications to 
the CMGs, tier comorbidities, and CMG relative weights, implementation 
of a new teaching status adjustment for IRFs, rebasing and revising 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 IRF payments was a 
market basket reflecting the operating and capital cost structures for 
freestanding IRFs, freestanding inpatient psychiatric facilities 
(IPFs), and long-term care hospitals (LTCHs) (hereinafter referred to 
as the rehabilitation, psychiatric, and long-term care (RPL) market 
basket). Any reference to the FY 2006 IRF PPS final rule in this final 
rule also includes the provisions effective in the correcting 
amendments. For a detailed discussion of the final key policy changes 
for FY 2006, please refer to the FY 2006 IRF PPS final rule (70 FR 
47880 and 70 FR 57166).
    In the FY 2007 IRF PPS final rule (71 FR 48354), we further refined 
the IRF PPS case-mix classification system (the CMG relative weights) 
and the case-level adjustments, to ensure that IRF PPS payments would 
continue to reflect as accurately as possible the costs of care. For a 
detailed discussion of the FY 2007 policy revisions, please refer to 
the FY 2007 IRF PPS final rule (71 FR 48354).
    In the FY 2008 IRF PPS final rule (72 FR 44284), we updated the 
prospective payment rates and the outlier threshold, revised the IRF 
wage index policy, and clarified how we determine high-cost outlier 
payments for transfer cases. For more information on the policy changes 
implemented for FY 2008, please refer to the FY 2008 IRF PPS final rule 
(72 FR 44284), in which we published the final FY 2008 IRF prospective 
payment rates.
    After publication of the FY 2008 IRF PPS final rule (72 FR 44284), 
section 115 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 
(Pub. L. 110-173, enacted on December 29, 2007) (MMSEA) amended section 
1886(j)(3)(C) of the Act to apply a zero percent increase factor for 
FYs 2008 and 2009, effective for IRF discharges occurring on or after 
April 1, 2008. Section 1886(j)(3)(C) of the Act required the Secretary 
to develop an increase factor to update the IRF prospective payment 
rates for each FY. Based on the legislative change to the increase 
factor, we revised the FY 2008 prospective payment rates for IRF 
discharges occurring on or after April 1, 2008. Thus, the final FY 2008 
IRF prospective payment rates that were published in the FY 2008 IRF 
PPS final rule (72 FR 44284) were effective for discharges occurring on 
or after October 1, 2007, and on or before March 31, 2008, and the 
revised FY 2008 IRF prospective payment rates were effective for 
discharges occurring on or after April 1, 2008, and on or before 
September 30, 2008. The revised FY 2008 prospective payment rates are 
available on the CMS website at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Data-Files.html.
    In the FY 2009 IRF PPS final rule (73 FR 46370), we updated the CMG 
relative weights, the average length of stay values, and the outlier 
threshold; clarified IRF wage index policies regarding the treatment of 
``New England deemed'' counties and multi-campus hospitals; and revised 
the regulation text in response to section 115 of the MMSEA to set the 
IRF compliance percentage at 60 percent (the ``60 percent rule'') and 
continue the practice of including comorbidities in the calculation of 
compliance percentages. We also applied a zero percent market basket 
increase factor for FY 2009 in accordance with section 115 of the 
MMSEA. For more information on the policy changes implemented for FY 
2009, please refer to the FY 2009 IRF PPS final rule (73 FR 46370), in 
which we published the final FY 2009 IRF 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 prospective payment rates, 
the CMG relative weights, the average length of stay values, the rural, 
LIP, teaching status adjustment factors, and the outlier threshold; 
implemented new IRF coverage requirements for determining whether an 
IRF claim is reasonable and necessary; and revised the regulation text 
to require IRFs to submit patient assessments on Medicare Advantage 
(MA) (formerly called Medicare Part C) patients for use in the 60 
percent rule calculations. Any reference to the FY 2010 IRF PPS final 
rule in this final rule also includes the provisions effective in the 
correcting amendments. For more information on the policy changes 
implemented for FY 2010, please refer to the FY 2010 IRF PPS final rule 
(74 FR 39762 and 74 FR 50712), in which we published the final FY 2010 
IRF prospective payment rates.
    After publication of the FY 2010 IRF PPS final rule (74 FR 39762), 
section 3401(d) of the Patient Protection and Affordable Care Act (Pub. 
L. 111-148, enacted on March 23, 2010), as amended by section 10319 of 
the same Act and by section 1105 of the Health Care and Education 
Reconciliation Act of 2010 (Pub. L. 111-152, enacted on March 30, 2010) 
(collectively, hereinafter referred to as ``PPACA''), amended section 
1886(j)(3)(C) of the Act and added section 1886(j)(3)(D) of the Act. 
Section 1886(j)(3)(C) of the Act requires the Secretary to estimate a 
multifactor productivity (MFP) adjustment to the market basket increase 
factor, and to apply other adjustments as defined by the Act. The 
productivity adjustment applies to FYs from 2012 forward. The other 
adjustments apply to FYs 2010 to 2019.
    Sections 1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(i) of the Act 
defined the adjustments that were to be applied to the market basket 
increase factors in FYs 2010 and 2011. Under these provisions, the 
Secretary was required to reduce the market basket increase factor in 
FY 2010 by a 0.25 percentage point adjustment. Notwithstanding this 
provision, in accordance with section 3401(p) of the PPACA, the 
adjusted FY 2010 rate was only to be applied to discharges occurring on 
or after 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 occurring on or after April 1, 2010, and on or before 
September 30, 2010. Thus, the final FY 2010 IRF prospective payment 
rates that were published in the FY 2010 IRF PPS final rule (74 FR 
39762) were used for

[[Page 38518]]

discharges occurring on or after October 1, 2009, and on or before 
March 31, 2010, and the adjusted FY 2010 IRF prospective payment rates 
applied to discharges occurring on or after April 1, 2010, and on or 
before September 30, 2010. The adjusted FY 2010 prospective payment 
rates are available on the CMS website at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Data-Files.html.
    In addition, sections 1886(j)(3)(C) and (D) of the Act also 
affected the FY 2010 IRF outlier threshold amount because they required 
an adjustment to the FY 2010 RPL market basket increase factor, which 
changed the standard payment conversion factor for FY 2010. 
Specifically, the original FY 2010 IRF outlier threshold amount was 
determined based on the original estimated FY 2010 RPL market basket 
increase factor of 2.5 percent and the standard payment conversion 
factor of $13,661. However, as adjusted, the IRF prospective payments 
are based on the adjusted RPL market basket increase factor of 2.25 
percent and the revised standard payment conversion factor of $13,627. 
To maintain estimated outlier payments for FY 2010 equal to the 
established standard of 3 percent of total estimated IRF PPS payments 
for FY 2010, we revised the IRF outlier threshold amount for FY 2010 
for discharges occurring on or after April 1, 2010, and on or before 
September 30, 2010. The revised IRF outlier threshold amount for FY 
2010 was $10,721.
    Sections 1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(i) of the Act also 
required the Secretary to reduce the market basket increase factor in 
FY 2011 by a 0.25 percentage point adjustment. The FY 2011 IRF PPS 
notice (75 FR 42836) and the correcting amendments to the FY 2011 IRF 
PPS notice (75 FR 70013) described the required adjustments to the FY 
2010 and FY 2011 IRF PPS prospective payment rates and outlier 
threshold amount for IRF discharges occurring on or after April 1, 
2010, and on or before September 30, 2011. It also updated the FY 2011 
prospective payment rates, the CMG relative weights, and the average 
length of stay values. Any reference to the FY 2011 IRF PPS notice in 
this final rule also includes the provisions effective in the 
correcting amendments. For more information on the FY 2010 and FY 2011 
adjustments or the updates for FY 2011, please refer to the FY 2011 IRF 
PPS notice (75 FR 42836 and 75 FR 70013).
    In the FY 2012 IRF PPS final rule (76 FR 47836), we updated the IRF 
prospective payment rates, rebased and revised the RPL market basket, 
and established a new quality reporting program (QRP) for IRFs in 
accordance with section 1886(j)(7) of the Act. We also consolidated, 
clarified, and revised existing policies regarding IRF hospitals and 
IRF units of hospitals to eliminate unnecessary confusion and enhance 
consistency. For more information on the policy changes implemented for 
FY 2012, please refer to the FY 2012 IRF PPS final rule (76 FR 47836), 
in which we published the final FY 2012 IRF prospective payment rates.
    The FY 2013 IRF PPS notice (77 FR 44618) described the required 
adjustments to the FY 2013 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 
prospective payment rates, the CMG relative weights, and the average 
length of stay values. For more information on the updates for FY 2013, 
please refer to the FY 2013 IRF PPS notice (77 FR 44618).
    In the FY 2014 IRF PPS final rule (78 FR 47860), we updated the 
prospective payment rates, the CMG relative weights, and the outlier 
threshold amount. We also updated the facility-level adjustment factors 
using an enhanced estimation methodology, revised the list of diagnosis 
codes that count toward an IRF's 60 percent rule compliance calculation 
to determine ``presumptive compliance,'' revised sections of the 
inpatient rehabilitation facility patient assessment instrument (IRF-
PAI), revised requirements for acute care hospitals that have IRF 
units, clarified the IRF regulation text regarding limitation of 
review, updated references to previously changed sections in the 
regulations text, and updated requirements for the IRF QRP. For more 
information on the policy changes implemented for FY 2014, please refer 
to the FY 2014 IRF PPS final rule (78 FR 47860), in which we published 
the final FY 2014 IRF prospective payment rates.
    In the FY 2015 IRF PPS final rule (79 FR 45872), we updated the 
prospective payment rates, the CMG relative weights, and the outlier 
threshold amount. We also revised the list of diagnosis codes that 
count toward an IRF's 60 percent rule compliance calculation to 
determine ``presumptive compliance,'' revised sections of the IRF-PAI, 
and updated requirements for the IRF QRP. For more information on the 
policy changes implemented for FY 2015, please refer to the FY 2015 IRF 
PPS final rule (79 FR 45872) and the FY 2015 IRF PPS correction notice 
(79 FR 59121).
    In the FY 2016 IRF PPS final rule (80 FR 47036), we updated the 
prospective payment rates, the CMG relative weights, and the outlier 
threshold amount. We also adopted an IRF-specific market basket that 
reflects the cost structures of only IRF providers, a blended 1-year 
transition wage index based on the adoption of new OMB area 
delineations, a 3-year phase-out of the rural adjustment for certain 
IRFs due to the new OMB area delineations, and updates for the IRF QRP. 
For more information on the policy changes implemented for FY 2016, 
please refer to the FY 2016 IRF PPS final rule (80 FR 47036).
    In the FY 2017 IRF PPS final rule (81 FR 52056), we updated the 
prospective payment rates, the CMG relative weights, and the outlier 
threshold amount. We also updated requirements for the IRF QRP. For 
more information on the policy changes implemented for FY 2017, please 
refer to the FY 2017 IRF PPS final rule (81 FR 52056) and the FY 2017 
IRF PPS correction notice (81 FR 59901).
    In the FY 2018 IRF PPS final rule (82 FR 36238), we updated the 
prospective payment rates, the CMG relative weights, and the outlier 
threshold amount. We also revised the International Classification of 
Diseases, 10th Revision, Clinical Modification (ICD-10-CM) diagnosis 
codes that are used to determine presumptive compliance under the ``60 
percent rule,'' removed the 25 percent payment penalty for IRF-PAI late 
transmissions, removed the voluntary swallowing status item (Item 27) 
from the IRF-PAI, summarized comments regarding the criteria used to 
classify facilities for payment under the IRF PPS, provided for a 
subregulatory process for certain annual updates to the presumptive 
methodology diagnosis code lists, adopted the use of height/weight 
items on the IRF-PAI to determine patient body mass index (BMI) greater 
than 50 for cases of single-joint replacement under the presumptive 
methodology, and updated requirements for the IRF QRP. For more 
information on the policy changes implemented for FY 2018, please refer 
to the FY 2018 IRF PPS final rule (82 FR 36238).

B. Provisions of the PPACA Affecting the IRF PPS in FY 2012 and Beyond

    The PPACA included several provisions that affect the IRF PPS in 
FYs 2012 and beyond. In addition to what was previously discussed, 
section 3401(d) of the PPACA also added section 1886(j)(3)(C)(ii)(I) of 
the Act (providing for a ``productivity adjustment'' for fiscal year 
2012 and

[[Page 38519]]

each subsequent fiscal year). The productivity adjustment for FY 2019 
is discussed in section VI.B. of this final rule. Section 3401(d) of 
the PPACA requires an additional 0.75 percentage point adjustment to 
the IRF increase factor for each of FYs 2017, 2018, and 2019. The 
applicable adjustment for FY 2019 is discussed in section VI.B. of this 
final rule. Section 1886(j)(3)(C)(ii)(II) of the Act provides that the 
application of these adjustments to the market basket update may result 
in an update that is less than 0.0 for a fiscal year and in payment 
rates for a fiscal year being less than such payment rates for the 
preceding fiscal year.
    Sections 3004(b) of the PPACA and section 411(b) of the Medicare 
Access and CHIP Reauthorization Act of 2015 (Pub. L. 114-10, enacted on 
April 16, 2015) (MACRA) also addressed the IRF PPS. Section 3004(b) of 
PPACA reassigned the previously designated section 1886(j)(7) of the 
Act to section 1886(j)(8) of the Act and inserted a new section 
1886(j)(7) of the Act, which contains requirements for the Secretary to 
establish a QRP for IRFs. Under that program, data must be submitted in 
a form and manner and at a time specified by the Secretary. Section 
411(b) of MACRA amended section 1886(j)(3)(C) of the Act by adding 
clause (iii), which required us to apply for FY 2018, after the 
application of section 1886(j)(3)(C)(ii) of the Act, an increase factor 
of 1.0 percent to update the IRF prospective payment rates. Beginning 
in FY 2014, section 1886(j)(7)(A)(i) of the Act requires the 
application of a 2 percentage point reduction to the market basket 
increase factor otherwise applicable to an IRF (after application of 
subparagraphs (C)(iii) and (D) of section 1886(j)(3) of the Act) for a 
fiscal year if the IRF does not comply with the requirements of the IRF 
QRP for that fiscal year. 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 are not cumulative; they only 
apply for the FY involved.

C. Operational Overview of the Current IRF PPS

    As described in the FY 2002 IRF PPS final rule (66 FR 41316), upon 
the admission and discharge of a Medicare Part A Fee-for-Service (FFS) 
patient, the IRF is required to complete the appropriate sections of a 
patient assessment instrument (PAI), designated as the IRF-PAI. In 
addition, beginning with IRF discharges occurring on or after October 
1, 2009, the IRF is also required to complete the appropriate sections 
of the IRF-PAI upon the admission and discharge of each Medicare 
Advantage (MA) patient, as described in the FY 2010 IRF PPS final rule 
(74 FR 39762 and 74 FR 50712). All required data must be electronically 
encoded into the IRF-PAI software product. Generally, the software 
product includes patient classification programming called the Grouper 
software. The Grouper software uses specific IRF-PAI data elements to 
classify (or group) patients into distinct CMGs and account for the 
existence of any relevant comorbidities.
    The Grouper software produces a five-character CMG number. The 
first character is an alphabetic character that indicates the 
comorbidity tier. The last four characters are numeric characters that 
represent the distinct CMG number. Free downloads of the Inpatient 
Rehabilitation Validation and Entry (IRVEN) software product, including 
the Grouper software, are available on the CMS website at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Software.html.
    Once a Medicare Part A FFS patient is discharged, the IRF submits a 
Medicare claim as a Health Insurance Portability and Accountability Act 
of 1996 (Pub. L. 104-191, enacted on August 21, 1996) (HIPAA) compliant 
electronic claim or, if the Administrative Simplification Compliance 
Act of 2002 (Pub. L. 107-105, enacted on December 27, 2002) (ASCA) 
permits, a paper claim (a UB-04 or a CMS-1450 as appropriate) using the 
five-character CMG number and sends it to the appropriate Medicare 
Administrative Contractor (MAC). In addition, once a MA patient is 
discharged, in accordance with the Medicare Claims Processing Manual, 
chapter 3, section 20.3 (Pub. 100-04), hospitals (including IRFs) must 
submit an informational-only bill (Type of Bill (TOB) 111), which 
includes Condition Code 04 to their MAC. This will ensure that the MA 
days are included in the hospital's Supplemental Security Income (SSI) 
ratio (used in calculating the IRF LIP adjustment) for fiscal year 2007 
and beyond. Claims submitted to Medicare must comply with both ASCA and 
HIPAA.
    Section 3 of the ASCA amended section 1862(a) of the Act by adding 
paragraph (22), which requires the Medicare program, subject to section 
1862(h) of the Act, to deny payment under Part A or Part B for any 
expenses for items or services for which a claim is submitted other 
than in an electronic form specified by the Secretary. Section 1862(h) 
of the Act, in turn, provides that the Secretary shall waive such 
denial in situations in which there is no method available for the 
submission of claims in an electronic form or the entity submitting the 
claim is a small provider. In addition, the Secretary also has the 
authority to waive such denial in such unusual cases as the Secretary 
finds appropriate. For more information, see the ``Medicare Program; 
Electronic Submission of Medicare Claims'' final rule (70 FR 71008). 
Our instructions for the limited number of Medicare claims submitted on 
paper are available at http://www.cms.gov/manuals/downloads/clm104c25.pdf.
    Section 3 of the ASCA operates in the context of the administrative 
simplification provisions of HIPAA, which include, among others, the 
requirements for transaction standards and code sets codified in 45 
CFR, parts 160 and 162, subparts A and I through R (generally known as 
the Transactions Rule). The Transactions Rule requires covered 
entities, including covered health care providers, to conduct covered 
electronic transactions according to the applicable transaction 
standards. (See the CMS program claim memoranda at http://www.cms.gov/ElectronicBillingEDITrans/ and listed in the addenda to the Medicare 
Intermediary Manual, Part 3, section 3600).
    The MAC processes the claim through its software system. This 
software system includes pricing programming called the ``Pricer'' 
software. The Pricer software uses the CMG number, along with other 
specific claim data elements and provider-specific data, to adjust the 
IRF's prospective payment for interrupted stays, transfers, short 
stays, and deaths, and then applies the applicable adjustments to 
account for the IRF's wage index, percentage of low-income patients, 
rural location, and outlier payments. For discharges occurring on or 
after October 1, 2005, the IRF PPS payment also reflects the teaching 
status adjustment that became effective as of FY 2006, as discussed in 
the FY 2006 IRF PPS final rule (70 FR 47880).

D. Advancing Health Information Exchange

    The Department of Health and Human Services (HHS) has a number of 
initiatives designed to encourage and support the adoption of 
interoperable health information technology and to promote nationwide 
health information exchange to improve health care. The Office of the 
National Coordinator for

[[Page 38520]]

Health Information Technology (ONC) and CMS work collaboratively to 
advance interoperability across settings of care, including post-acute 
care.
    The Improving Medicare Post-Acute Care Transformation Act of 2014 
(Pub. L. 113-185, enacted on October 6, 2014) (IMPACT Act) requires 
assessment data to be standardized and interoperable to allow for 
exchange of the data among post-acute providers and other providers. To 
further interoperability in post-acute care, CMS is developing a Data 
Element Library to serve as a publically available centralized, 
authoritative resource for standardized data elements and their 
associated mappings to health IT standards. These interoperable data 
elements can reduce provider burden by supporting the use and reuse of 
healthcare data, support provider exchange of electronic health 
information for care coordination, person-centered care, and support 
real-time, data driven, clinical decision making. Once available, 
standards in the Data Element Library can be referenced on the CMS 
website and in the ONC Interoperability Standards Advisory (ISA).
    The 2018 Interoperability Standards Advisory (ISA) is available at 
https://www.healthit.gov/isa/.
    Most recently, the 21st Century Cures Act (Pub. L. 114-255, enacted 
on December 13, 2016) (Cures Act), requires HHS to take new steps to 
enable the electronic sharing of health information ensuring 
interoperability for providers and settings across the care continuum. 
Specifically, Congress directed ONC to ``develop or support a trusted 
exchange framework, including a common agreement among health 
information networks nationally.'' This framework (https://beta.healthit.gov/topic/interoperability/trusted-exchange-framework-and-common-agreement) outlines a common set of principles for trusted 
exchange and minimum terms and conditions for trusted exchange in order 
to enable interoperability across disparate health information 
networks. In another important provision, Congress defined 
``information blocking'' as practices likely to interfere with, 
prevent, or materially discourage access, exchange, or use of 
electronic health information, and established new authority for HHS to 
discourage these practices. We invite providers to learn more about 
these important developments and how they are likely to affect IRFs.

II. Summary of Provisions of the Proposed Rule

    In the FY 2019 IRF PPS proposed rule (83 FR 20972), we proposed to 
update the IRF prospective payment rates for FY 2019 and to alleviate 
administrative burden for IRFs by removing the FIM<SUP>TM</SUP> 
instrument and associated Function Modifiers from the IRF-PAI in 
accordance with section 1886(j)(2)(D) of the Act and revise certain IRF 
coverage requirements to reduce the amount of required paperwork in the 
IRF setting. In addition, we solicited comments on removing the face-
to-face requirement for rehabilitation physician visits and expanding 
the use of non-physician practitioners (that is, nurse practitioners 
and physician assistants) in meeting the IRF coverage requirements. For 
the IRF QRP, we proposed to add a new quality measure removal factor, 
remove two quality measures from the measure set, and codify in our 
regulations a number of requirements.
    The proposed updates to the IRF prospective payment rates for FY 
2019 are as follows:
    <bullet> Update the IRF PPS relative weights and average length of 
stay values for FY 2019 using the most current and complete Medicare 
claims and cost report data in a budget-neutral manner, as discussed in 
section III. of the FY 2019 IRF PPS proposed rule (83 FR 20972, 20978 
through 20981).
    <bullet> Describe the continued use of FY 2014 facility-level 
adjustment factors, as discussed in section IV. of the FY 2019 IRF PPS 
proposed rule (83 FR 20972 at 20981).
    <bullet> Update the IRF PPS payment rates for FY 2019 by the market 
basket increase factor, based upon the most current data available, 
with a 0.75 percentage point reduction as required by sections 
1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(v) of the Act and a 
productivity adjustment required by section 1886(j)(3)(C)(ii)(I) of the 
Act, as described in section V. of the FY 2019 IRF PPS proposed rule 
(83 FR 20972 at 20982).
    <bullet> Update the FY 2019 IRF PPS payment rates by the FY 2019 
wage index and the labor-related share in a budget-neutral manner, as 
discussed in section V. of the FY 2019 IRF PPS proposed rule (83 FR 
20972, 20982 through 20984).
    <bullet> Describe the calculation of the IRF standard payment 
conversion factor for FY 2019, as discussed in section V. of the FY 
2019 IRF PPS proposed rule (83 FR 20972, 20984 through 20985).
    <bullet> Update the outlier threshold amount for FY 2019, as 
discussed in section VI. of the FY 2019 IRF PPS proposed rule (83 FR 
20972 at 20987).
    <bullet> Update the cost-to-charge ratio (CCR) ceiling and urban/
rural average CCRs for FY 2019, as discussed in section VI. of the FY 
2019 IRF PPS proposed rule (83 FR 20972, 20987 through 20988).
    <bullet> Remove the FIM\TM\ instrument and associated Function 
Modifiers from the IRF-PAI beginning with FY 2020 to reduce 
administrative burden for IRFs, as discussed in section VII. of the FY 
2019 IRF PPS proposed rule (83 FR 20972, 20988 through 20995).
    <bullet> Revise certain IRF coverage requirements to reduce 
administrative burden for IRFs beginning with FY 2019, as discussed in 
section VIII. of the FY 2019 IRF PPS proposed rule (83 FR 20972, 20995 
through 20997).
    <bullet> Solicit comments on removing the face-to-face requirement 
for rehabilitation physician visits, as discussed in section VIII. of 
the FY 2019 IRF PPS proposed rule (83 FR 20972, 20997 through 20998).
    <bullet> Solicit comments on expanding the use of non-physician 
practitioners (that is, nurse practitioners and physician assistants) 
in meeting the IRF coverage requirements, as discussed in section VIII. 
of the FY 2019 IRF PPS proposed rule (83 FR 20972, 20998 through 
20999).
    <bullet> Update the requirements for the IRF QRP, as discussed in 
section IX. of the FY 2019 IRF PPS proposed rule (83 FR 20972, 20999 
through 21004).

III. Analysis and Response to Public Comments

    We received 109 timely responses from the public, many of which 
contained multiple comments on the FY 2019 IRF PPS proposed rule (83 FR 
20972). We received comments from various trade associations, inpatient 
rehabilitation facilities, individual physicians, therapists, 
clinicians, health care industry organizations, and health care 
consulting firms. The following sections, arranged by subject area, 
include a summary of the public comments that we received, and our 
responses.

IV. Update to the Case-Mix Group (CMG) Relative Weights and Average 
Length of Stay Values for FY 2019

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

[[Page 38521]]

beneficiary access to care, as well as provider efficiency.
    In the FY 2019 IRF PPS proposed rule (83 FR 20972, 20978 through 
20981), we proposed to update the CMG relative weights and average 
length of stay values for FY 2019. As required by statute, we always 
use the most recent available data to update the CMG relative weights 
and average lengths of stay. For FY 2019, we proposed to use the FY 
2017 IRF claims and FY 2016 IRF cost report data. These data are the 
most current and complete data available at this time. We note that, as 
we typically do, we updated our data between the FY 2019 IRF PPS 
proposed and final rules to ensure that we use the most recent 
available data in calculating IRF PPS payments. This updated data 
reflects a more complete set of claims for FY 2017 and additional cost 
report data for FY 2016.
    In the FY 2019 IRF PPS proposed rule, we proposed to apply these 
data using the same methodologies that we have used to update the CMG 
relative weights and average length of stay values each fiscal year 
since we implemented an update to the methodology to use the more 
detailed CCR data from the cost reports of IRF subprovider units of 
primary acute care hospitals, instead of CCR data from the associated 
primary care hospitals, to calculate IRFs' average costs per case, as 
discussed in the FY 2009 IRF PPS final rule (73 FR 46372). In 
calculating the CMG relative weights, we use a hospital-specific 
relative value method to estimate operating (routine and ancillary 
services) and capital costs of IRFs. The process used to calculate the 
CMG relative weights for this final rule is as follows:
    Step 1. We estimate the effects that comorbidities have on costs.
    Step 2. We adjust the cost of each Medicare discharge (case) to 
reflect the effects found in the first step.
    Step 3. We use the adjusted costs from the second step to calculate 
CMG relative weights, using the hospital-specific relative value 
method.
    Step 4. We normalize the FY 2019 CMG relative weights to the same 
average CMG relative weight from the CMG relative weights implemented 
in the FY 2018 IRF PPS final rule (82 FR 36238).
    Consistent with the methodology that we have used to update the IRF 
classification system in each instance in the past, we proposed to 
update the CMG relative weights for FY 2019 in such a way that total 
estimated aggregate payments to IRFs for FY 2019 are the same with or 
without the changes (that is, in a budget-neutral manner) by applying a 
budget neutrality factor to the standard payment amount. To calculate 
the appropriate budget neutrality factor for use in updating the FY 
2019 CMG relative weights, we use the following steps:
    Step 1. Calculate the estimated total amount of IRF PPS payments 
for FY 2019 (with no changes to the CMG relative weights).
    Step 2. Calculate the estimated total amount of IRF PPS payments 
for FY 2019 by applying the changes to the CMG relative weights (as 
discussed in this final rule).
    Step 3. Divide the amount calculated in step 1 by the amount 
calculated in step 2 to determine the budget neutrality factor (0.9981) 
that would maintain the same total estimated aggregate payments in FY 
2019 with and without the changes to the CMG relative weights.
    Step 4. Apply the budget neutrality factor (0.9981) to the FY 2018 
IRF PPS standard payment amount after the application of the budget-
neutral wage adjustment factor.
    In section VI.E. of this final rule, we discuss the use of the 
existing methodology to calculate the standard payment conversion 
factor for FY 2019.
    In Table 2, ``Relative Weights and Average Length of Stay Values 
for Case-Mix Groups,'' we present the CMGs, the comorbidity tiers, the 
corresponding relative weights, and the average length of stay values 
for each CMG and tier for FY 2019. The average length of stay for each 
CMG is used to determine when an IRF discharge meets the definition of 
a short-stay transfer, which results in a per diem case level 
adjustment.

                                     Table 2--Relative Weights and Average Length of Stay Values for Case-Mix Groups
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              Relative weight                           Average length of stay
                                                               -----------------------------------------------------------------------------------------
             CMG              CMG description  (M = motor, C =                                      No                                           No
                                     cognitive, A = age)         Tier 1    Tier 2    Tier 3   comorbidities   Tier 1    Tier 2    Tier 3   comorbidities
                                                                                                   tier                                         tier
--------------------------------------------------------------------------------------------------------------------------------------------------------
0101........................  Stroke M > 51.05................    0.8465    0.7365    0.6747         0.6451         8        11         9              8
0102........................  Stroke M > 44.45 and M < 51.05      1.0706    0.9315    0.8533         0.8159        11        12        10             10
                               and C > 18.5.
0103........................  Stroke M > 44.45 and M < 51.05      1.2391    1.0781    0.9876         0.9443        12        13        11             12
                               and C < 18.5.
0104........................  Stroke M > 38.85 and M < 44.45..    1.2938    1.1257    1.0312         0.9860        12        13        12             12
0105........................  Stroke M > 34.25 and M < 38.85..    1.4871    1.2938    1.1852         1.1333        14        14        14             13
0106........................  Stroke M > 30.05 and M < 34.25..    1.6628    1.4467    1.3253         1.2673        16        16        15             15
0107........................  Stroke M > 26.15 and M < 30.05..    1.8653    1.6229    1.4867         1.4216        18        18        16             16
0108........................  Stroke M < 26.15 and A > 84.5...    2.3056    2.0060    1.8376         1.7572        22        21        20             20
0109........................  Stroke M > 22.35 and M < 26.15      2.0857    1.8147    1.6624         1.5896        19        19        18             18
                               and A < 84.5.
0110........................  Stroke M < 22.35 and A < 84.5...    2.7655    2.4060    2.2041         2.1076        26        26        23             23
0201........................  Traumatic brain injury M > 53.35    0.8235    0.6628    0.5922         0.5527         9         9         8              7
                               and C > 23.5.
0202........................  Traumatic brain injury M > 44.25    1.1508    0.9263    0.8275         0.7724        10        11        10             10
                               and M < 53.35 and C > 23.5.
0203........................  Traumatic brain injury M > 44.25    1.2723    1.0240    0.9149         0.8539        13        13        11             10
                               and C < 23.5.
0204........................  Traumatic brain injury M > 40.65    1.3841    1.1141    0.9953         0.9290        13        13        11             11
                               and M < 44.25.
0205........................  Traumatic brain injury M > 28.75    1.6330    1.3143    1.1743         1.0960        14        15        13             13
                               and M < 40.65.
0206........................  Traumatic brain injury M > 22.05    1.9661    1.5825    1.4139         1.3196        18        18        15             15
                               and M < 28.75.
0207........................  Traumatic brain injury M < 22.05    2.4863    2.0012    1.7879         1.6687        30        22        19             18
0301........................  Non-traumatic brain injury M >      1.1727    0.9483    0.8703         0.8135        11        11        10             10
                               41.05.
0302........................  Non-traumatic brain injury M >      1.4347    1.1603    1.0648         0.9953        12        13        12             12
                               35.05 and M < 41.05.
0303........................  Non-traumatic brain injury M >      1.6572    1.3402    1.2300         1.1496        15        14        13             13
                               26.15 and M < 35.05.
0304........................  Non-traumatic brain injury M <      2.1203    1.7147    1.5737         1.4709        20        19        16             16
                               26.15.
0401........................  Traumatic spinal cord injury M >    1.0040    0.8097    0.7490         0.6855        10        10         9              9
                               48.45.
0402........................  Traumatic spinal cord injury M >    1.4873    1.1996    1.1096         1.0155        14        13        13             12
                               30.35 and M < 48.45.
0403........................  Traumatic spinal cord injury M >    2.3688    1.9105    1.7673         1.6175        25        22        19             18
                               16.05 and M < 30.35.
0404........................  Traumatic spinal cord injury M <    4.0377    3.2566    3.0125         2.7571        45        36        31             30
                               16.05 and A > 63.5.
0405........................  Traumatic spinal cord injury M <    3.6175    2.9177    2.6989         2.4701        26        35        29             26
                               16.05 and A > 63.5.
0501........................  Non-traumatic spinal cord injury    0.9171    0.7145    0.6605         0.6070         9        10         8              8
                               M > 51.35.
0502........................  Non-traumatic spinal cord injury    1.2182    0.9491    0.8774         0.8063        11        11        10             10
                               M > 40.15 and M < 51.35.

[[Page 38522]]

 
0503........................  Non-traumatic spinal cord injury    1.5156    1.1809    1.0916         1.0031        14        13        12             12
                               M > 31.25 and M < 40.15.
0504........................  Non-traumatic spinal cord injury    1.7426    1.3577    1.2551         1.1533        16        14        14             13
                               M > 29.25 and M < 31.25.
0505........................  Non-traumatic spinal cord injury    1.9957    1.5550    1.4374         1.3209        18        17        16             15
                               M > 23.75 and M < 29.25.
0506........................  Non-traumatic spinal cord injury    2.6996    2.1034    1.9443         1.7867        26        23        21             20
                               M < 23.75.
0601........................  Neurological M > 47.75..........    1.0736    0.8242    0.7624         0.6948         9         9         9              8
0602........................  Neurological M > 37.35 and M <      1.3920    1.0686    0.9884         0.9008        12        12        11             10
                               47.75.
0603........................  Neurological M > 25.85 and M <      1.7124    1.3146    1.2159         1.1082        14        14        13             13
                               37.35.
0604........................  Neurological M < 25.85..........    2.2148    1.7003    1.5727         1.4334        19        17        16             16
0701........................  Fracture of lower extremity M >     1.0280    0.8387    0.7948         0.7171        10        10         9              9
                               42.15.
0702........................  Fracture of lower extremity M >     1.3083    1.0674    1.0115         0.9127        12        12        12             11
                               34.15 and M < 42.15.
0703........................  Fracture of lower extremity M >     1.5600    1.2728    1.2062         1.0883        14        14        14             13
                               28.15 and M < 34.15.
0704........................  Fracture of lower extremity M <     1.9907    1.6242    1.5392         1.3888        18        18        17             16
                               28.15.
0801........................  Replacement of lower extremity      0.8391    0.6841    0.6185         0.5754         8         8         8              7
                               joint M > 49.55.
0802........................  Replacement of lower extremity      1.0766    0.8777    0.7936         0.7382        11         9         9              9
                               joint M > 37.05 and M < 49.55.
0803........................  Replacement of lower extremity      1.4123    1.1514    1.0410         0.9684        13        13        12             11
                               joint M > 28.65 and M < 37.05
                               and A > 83.5.
0804........................  Replacement of lower extremity      1.2727    1.0376    0.9381         0.8727        12        12        11             10
                               joint M > 28.65 and M < 37.05
                               and A > 83.5.
0805........................  Replacement of lower extremity      1.5169    1.2367    1.1181         1.0401        14        14        12             12
                               joint M > 22.05 and M < 28.65.
0806........................  Replacement of lower extremity      1.8691    1.5238    1.3777         1.2816        17        17        15             14
                               joint M < 22.05.
0901........................  Other orthopedic M > 44.75......    1.0283    0.8073    0.7481         0.6894        11        10         9              8
0902........................  Other orthopedic M > 34.35 and M    1.3030    1.0230    0.9479         0.8736        12        12        11             10
                               < 44.75.
0903........................  Other orthopedic M > 24.15 and M    1.6262    1.2768    1.1831         1.0903        14        14        13             12
                               < 34.35.
0904........................  Other orthopedic M < 24.15......    2.0372    1.5995    1.4821         1.3659        17        17        16             15
1001........................  Amputation, lower extremity M >     1.0941    0.9260    0.8226         0.7584        11        11        10              9
                               47.65.
1002........................  Amputation, lower extremity M >     1.3984    1.1835    1.0513         0.9693        13        13        12             12
                               36.25 and M < 47.65.
1003........................  Amputation, lower extremity M <     2.0247    1.7136    1.5222         1.4034        18        18        16             15
                               36.25.
1101........................  Amputation, non-lower extremity     1.3618    1.0044    1.0044         0.8832        12        11        11             11
                               M > 36.35.
1102........................  Amputation, non-lower extremity     1.9208    1.4167    1.4167         1.2458        17        15        15             13
                               M < 36.35.
1201........................  Osteoarthritis M > 37.65........    1.1125    0.9541    0.8710         0.7877        11        10        10              9
1202........................  Osteoarthritis M > 30.75 and M <    1.4092    1.2085    1.1032         0.9978        13        13        12             12
                               37.65.
1203........................  Osteoarthritis M < 30.75........    1.7067    1.4637    1.3361         1.2084        15        16        15             14
1301........................  Rheumatoid, other arthritis M >     1.0977    0.9523    0.8893         0.8342        10        10        10             10
                               36.35.
1302........................  Rheumatoid, other arthritis M >     1.4355    1.2454    1.1630         1.0909        12        13        13             12
                               26.15 and M < 36.35.
1303........................  Rheumatoid, other arthritis M <     1.7337    1.5041    1.4046         1.3175        14        17        15             15
                               26.15.
1401........................  Cardiac M > 48.85...............    0.9226    0.7511    0.6772         0.6103         9         8         8              7
1402........................  Cardiac M > 38.55 and M < 48.85.    1.2379    1.0079    0.9086         0.8189        11        11        10             10
1403........................  Cardiac M > 31.15 and M < 38.55.    1.4752    1.2011    1.0828         0.9759        13        13        12             11
1404........................  Cardiac M < 31.15...............    1.8581    1.5129    1.3639         1.2292        17        16        15             13
1501........................  Pulmonary M > 49.25.............    1.0145    0.8753    0.7927         0.7596         9        10         9              8
1502........................  Pulmonary M > 39.05 and M <         1.2970    1.1191    1.0134         0.9711        11        11        10             11
                               49.25.
1503........................  Pulmonary M > 29.15 and M <         1.5391    1.3280    1.2026         1.1524        14        13        12             12
                               39.05.
1504........................  Pulmonary M < 29.15.............    1.9395    1.6735    1.5155         1.4522        19        16        15             14
1601........................  Pain syndrome M > 37.15.........    1.2123    0.9280    0.8814         0.7954         9        11        10             10
1602........................  Pain syndrome M > 26.75 and M <     1.5361    1.1758    1.1169         1.0079        11        12        12             12
                               37.15.
1603........................  Pain syndrome M < 26.75.........    1.8637    1.4266    1.3551         1.2228        12        16        15             14
1701........................  Major multiple trauma without       1.2825    0.9724    0.9103         0.8196        14        11        10             10
                               brain or spinal cord injury M >
                               39.25.
1702........................  Major multiple trauma without       1.5510    1.1760    1.1009         0.9912        14        14        12             11
                               brain or spinal cord injury M >
                               31.05 and M < 39.25.
1703........................  Major multiple trauma without       1.8097    1.3722    1.2846         1.1565        15        15        14             13
                               brain or spinal cord injury M >
                               25.55 and M < 31.05.
1704........................  Major multiple trauma without       2.3097    1.7513    1.6395         1.4761        20        19        17             16
                               brain or spinal cord injury M <
                               25.55.
1801........................  Major multiple trauma with brain    1.1285    1.0063    0.8504         0.7943        12        11        10             10
                               or spinal cord injury M > 40.85.
1802........................  Major multiple trauma with brain    1.6639    1.4838    1.2539         1.1712        16        17        14             13
                               or spinal cord injury M > 23.05
                               and M < 40.85.
1803........................  Major multiple trauma with brain    2.6145    2.3315    1.9703         1.8403        30        25        20             19
                               or spinal cord injury M < 23.05.
1901........................  Guillain Barre M > 35.95........    1.4000    1.0049    0.9440         0.9096        15        13        11             11
1902........................  Guillain Barre M > 18.05 and M <    2.4651    1.7694    1.6622         1.6017        24        21        18             18
                               35.95.
1903........................  Guillain Barre M < 18.05........    4.2669    3.0627    2.8772         2.7725        46        31        30             30
2001........................  Miscellaneous M > 49.15.........    0.9693    0.7709    0.7160         0.6500         9         9         8              8
2002........................  Miscellaneous M > 38.75 and M <     1.2597    1.0018    0.9306         0.8448        12        11        10             10
                               49.15.
2003........................  Miscellaneous M > 27.85 and M <     1.5484    1.2314    1.1438         1.0384        14        14        12             12
                               38.75.
2004........................  Miscellaneous M < 27.85.........    1.9734    1.5695    1.4578         1.3234        18        17        15             15
2101........................  Burns M > 0.....................    1.9075    1.5493    1.4963         1.3168        22        16        16             14
5001........................  Short-stay cases, length of stay  ........  ........  ........         0.1599  ........  ........  ........              2
                               is 3 days or fewer.
5101........................  Expired, orthopedic, length of    ........  ........  ........         0.7539  ........  ........  ........              8
                               stay is 13 days or fewer.
5102........................  Expired, orthopedic, length of    ........  ........  ........         1.6493  ........  ........  ........             18
                               stay is 14 days or more.
5103........................  Expired, not orthopedic, length   ........  ........  ........         0.8091  ........  ........  ........              8
                               of stay is 15 days or fewer.

[[Page 38523]]

 
5104........................  Expired, not orthopedic, length   ........  ........  ........         2.1145  ........  ........  ........             21
                               of stay is 16 days or more.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Generally, updates to the CMG relative weights result in some 
increases and some decreases to the CMG relative weight values. Table 3 
shows how we estimate that the application of the revisions for FY 2019 
would affect particular CMG relative weight values, which would affect 
the overall distribution of payments within CMGs and tiers. Note that, 
because we proposed to implement the CMG relative weight revisions in a 
budget-neutral manner (as previously described), total estimated 
aggregate payments to IRFs for FY 2019 would not be affected as a 
result of the CMG relative weight revisions. However, the revisions 
would affect the distribution of payments within CMGs and tiers.

   Table 3--Distributional Effects of the Changes to the CMG Relative
                                 Weights
              [FY 2018 values compared with FY 2019 values]
------------------------------------------------------------------------
    Percentage change in CMG relative        Number of     Percentage of
                 weights                  cases affected  cases affected
------------------------------------------------------------------------
Increased by 15% or more................              19             0.0
Increased by between 5% and 15%.........           1,634             0.4
Changed by less than 5%.................         397,675            99.3
Decreased by between 5% and 15%.........           1,160             0.3
Decreased by 15% or more................              73             0.0
------------------------------------------------------------------------

    As Table 3 shows, 99.3 percent of all IRF cases are in CMGs and 
tiers that would experience less than a 5 percent change (either 
increase or decrease) in the CMG relative weight value as a result of 
the revisions for FY 2019. The largest estimated increase in the CMG 
relative weight values that affects the largest number of IRF 
discharges would be a 3.4 percent change in the CMG relative weight 
value for CMG 0806 Replacement of lower extremity joint, with a motor 
score less than 22.05 --with no tier adjustment. In the FY 2017 claims 
data, 1,593 IRF discharges (0.4 percent of all IRF discharges) were 
classified into this CMG and tier.
    The largest estimated decrease in a CMG relative weight value 
affecting the largest number of IRF cases would be a 2.1 percent 
decrease in the CMG relative weight for CMG 0304--Non-traumatic brain 
injury, with a motor score less than 26.5--with no tier adjustment. In 
the FY 2017 IRF claims data, this change would have affected 3,388 
cases (0.8 percent of all IRF cases).
    The proposed changes in the average length of stay values for FY 
2019, compared with the FY 2018 average length of stay values, are 
small and do not show any particular trends in IRF length of stay 
patterns.
    We received 1 comment on the proposed update to the CMG relative 
weights and average length of stay values for FY 2019, which is 
summarized below.
    Comment: The commenter was supportive of our proposal to use the 
most recent data available to update the relative weights and average 
length of stays values for FY 2019. The commenter also requested that 
CMS make available any reports and analyses that we used to update the 
relative weights and average length of stay values.
    Response: We appreciate the commenter's support of our proposal to 
use the most recent data available to update the relative weights and 
average length of stays values for FY 2019. For reports on the 
methodology that we use annually to update the relative weights and 
average length of stay values, we refer stakeholders to reports issued 
by the RAND Corporation (RAND) for the implementation of the IRF PPS, 
which can be downloaded from RAND's website at https://www.rand.org/pubs/drafts/DRU2309.html and at https://www.rand.org/pubs/monograph_reports/MR1500.html. We also refer stakeholders to a report 
that was issued by RAND in 2005 that specifically discusses the 
methodology for construction of the CMGs and the relative weights 
associated with the CMGs, which can be downloaded from RAND's website 
at https://www.rand.org/pubs/technical_reports/TR207.html. We used the 
same methodology, with one exception, that RAND used in these reports 
to calculate the CMG relative weights and average length of stay 
values. For a specific discussion of the change in our methodology that 
we implemented in FY 2009, we refer stakeholders to the FY 2009 IRF PPS 
final rule (73 FR 46372).
    Final Decision: After consideration of the public comments, we are 
finalizing our proposal to update the CMG relative weight and average 
length of stay values for FY 2019, as shown in Table 2 of this final 
rule. These updates are effective October 1, 2018.

V. Facility-Level Adjustment Factors

    Section 1886(j)(3)(A)(v) of the Act confers broad authority upon 
the Secretary to adjust the per unit payment rate by such factors as 
the Secretary determines are necessary to properly reflect variations 
in necessary costs of treatment among rehabilitation facilities. Under 
this authority, we currently adjust the 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 Sec.  412.624(e).
    Based on the substantive changes to the facility-level adjustment 
factors that were adopted in the FY IRF PPS 2014 final rule (78 FR 
47860, 47868 through 47872), in the FY 2015 IRF PPS final rule (79 FR 
45872, 45882 through 45883), we froze the facility-level adjustment 
factors at the FY 2014 levels for FY 2015 and all subsequent years

[[Page 38524]]

(unless and until we propose to update them again through future 
notice-and-comment rulemaking). For FY 2019, we will continue to hold 
the adjustment factors at the FY 2014 levels as we continue to monitor 
the most current IRF claims data available and continue to evaluate and 
monitor the effects of the FY 2014 changes.

VI. FY 2019 IRF PPS Payment Update

A. Background

    Section 1886(j)(3)(C) of the Act requires the Secretary to 
establish an increase factor that reflects changes over time in the 
prices of an appropriate mix of goods and services included in the IRF 
PPS payment, which is referred to as a market basket index. According 
to section 1886(j)(3)(A)(i) of the Act, the increase factor shall be 
used to update the IRF prospective payment rates for each FY. Section 
1886(j)(3)(C)(ii)(I) of the Act requires the application of a 
productivity adjustment. In addition, sections 1886(j)(3)(C)(ii)(II) 
and 1886(j)(3)(D)(v) of the Act require the application of a 0.75 
percentage point reduction to the market basket increase factor for FY 
2019. Thus, in the FY 2019 IRF proposed rule (83 FR 20981), we proposed 
to update the IRF PPS payments for FY 2019 by a market basket increase 
factor as required by section 1886(j)(3)(C) of the Act, with a 
productivity adjustment as required by section 1886(j)(3)(C)(ii)(I) of 
the Act, and a 0.75 percentage point reduction as required by sections 
1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(v) of the Act.
    Beginning with the FY 2016 IRF PPS, we created and adopted a stand-
alone IRF market basket, which was referred to as the 2012-based IRF 
market basket, reflecting the operating and capital cost structures for 
freestanding IRFs and hospital-based IRFs. The FY 2016 IRF PPS final 
rule (80 FR 47046 through 47068) contains a complete discussion of the 
development of the 2012-based IRF market basket.

B. FY 2019 Market Basket Update and Productivity Adjustment

    For FY 2018, we applied an increase factor of 1.0 percent to update 
the IRF prospective payment rates in accordance with section 
1886(j)(3)(C)(iii) of the Act, as added by section 411(b) of MACRA. 
However, as discussed previously, for FY 2019, we proposed to update 
the IRF PPS payments by a market basket increase factor as required by 
section 1886(j)(3)(C) of the Act, with a productivity adjustment as 
required by section 1886(j)(3)(C)(ii)(I) of the Act, and a 0.75 
percentage point reduction as required by sections 
1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(v) of the Act. For FY 2019, we 
proposed to use the same methodology described in the FY 2017 IRF PPS 
final rule (81 FR 52071) to compute the FY 2019 market basket increase 
factor to update the IRF PPS base payment rate.
    Consistent with historical practice, we proposed to estimate the 
market basket update for the IRF PPS based on the most up-to-date 
forecast of price indexes used in the market basket as forecasted by 
IHS Global Inc. (IGI). IGI is a nationally recognized economic and 
financial forecasting firm with which we contract to forecast the 
components of the market baskets and MFP. Based on IGI's first quarter 
2018 forecast with historical data through the fourth quarter of 2017, 
we proposed that the projected 2012-based IRF market basket increase 
factor for FY 2019 would be 2.9 percent. We also proposed that if more 
recent data were subsequently available (for example, a more recent 
estimate of the market basket update), we would use such data to 
determine the FY 2019 market basket update in the final rule. 
Incorporating the most recent data available, based on IGI's second 
quarter 2018 forecast with historical data through the first quarter of 
2018, the projected 2012-based IRF market basket increase factor for FY 
2019 is 2.9 percent.
    According to section 1886(j)(3)(C)(i) of the Act, the Secretary 
shall establish an increase factor based on an appropriate percentage 
increase in a market basket of goods and services. Section 
1886(j)(3)(C)(ii) of the Act then requires that, after establishing the 
increase factor for a FY, the Secretary shall reduce such increase 
factor for FY 2012 and each subsequent FY, by the productivity 
adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act. 
Section 1886(b)(3)(B)(xi)(II) of the Act sets forth the definition of 
this productivity adjustment. 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, year, cost reporting period, or other annual period) 
(the ``MFP adjustment''). The BLS publishes the official measure of 
private nonfarm business MFP. Please see http://www.bls.gov/mfp for the 
BLS historical published MFP data. A complete description of the MFP 
projection methodology is available on the CMS website at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch.html.
    Using IGI's first quarter 2018 forecast, the projected MFP 
adjustment for FY 2019 (the 10-year moving average of MFP for the 
period ending FY 2019) was 0.8 percent. We proposed that if more recent 
data were subsequently available, we would use such data to determine 
the FY 2019 MFP adjustment in the final rule. Incorporating the most 
recent data available, based on IGI's second quarter 2018 forecast, the 
projected MFP adjustment for FY 2019 is 0.8 percent.
    Thus, in accordance with section 1886(j)(3)(C) of the Act, we 
proposed to base the FY 2019 market basket update, which is used to 
determine the applicable percentage increase for the IRF payments, on 
the most recent estimate of the 2012-based IRF market basket. We 
proposed to then reduce this percentage increase by the most recent 
estimate of the MFP adjustment for FY 2019. Following application of 
the MFP adjustment, we proposed to further reduce the applicable 
percentage increase by 0.75 percentage point, as required by sections 
1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(v) of the Act. Therefore, the 
proposed FY 2019 IRF update was 1.35 percent (2.9 percent market basket 
update, less 0.8 percentage point MFP adjustment, less 0.75 percentage 
point statutorily required adjustment). Furthermore, we proposed that 
if more recent data were subsequently available (for example, a more 
recent estimate of the MFP adjustment), we would use such data to 
determine the FY 2019 MFP adjustment in the final rule. Incorporating 
the most recent data, the current estimate of the FY 2019 IRF update is 
1.35 percent (2.9 percent market basket update, less 0.8 percentage 
point MFP adjustment, less 0.75 percentage point statutorily required 
adjustment).
    For FY 2019, the Medicare Payment Advisory Commission (MedPAC) 
recommends that we reduce IRF PPS payment rates by 5 percent. As 
discussed, and in accordance with sections 1886(j)(3)(C) and 
1886(j)(3)(D) of the Act, the Secretary proposed to update the IRF PPS 
payment rates for FY 2019 by an adjusted market basket increase factor 
of 1.35 percent, as section 1886(j)(3)(C) of the Act does not provide 
the Secretary with the authority to apply a different update factor to 
IRF PPS payment rates for FY 2019. As noted above, incorporating the 
most recent data, the current estimate of the FY 2019 IRF update is 
1.35 percent.
    We received 4 comments on the proposed market basket increase 
update and productivity adjustment, which are summarized below.

[[Page 38525]]

    Comment: One commenter noted that they generally concur with the 
methodology CMS has used to arrive at the proposed net market basket 
update of 1.35 percent and encouraged CMS to use the latest available 
information to update this market basket percentage in the final rule.
    Response: We appreciate the commenter's support for the proposed 
payment update for FY 2019 and, as proposed, have used more recent data 
to determine the market basket percentage for the final rule.
    Comment: One commenter requested CMS provide access to the analyses 
done by contractors to calculate the market basket update each year.
    Response: The market basket update is derived using (1) the market 
basket base year cost weights as finalized by CMS through rulemaking 
and (2) the most up-to-date forecast of the price proxies used in the 
market basket as forecasted by IGI. As stated previously, IGI is a 
nationally recognized economic and financial forecasting firm, with 
which we contract to forecast the components of the market baskets and 
MFP. To determine the market basket update, for each cost category in 
the market basket (for example, Wages and Salaries, Pharmaceuticals), 
the level of each of these price forecasts are multiplied by the cost 
weight for that cost category. The sum of these products (that is, 
weights multiplied by proxied index levels) for all cost categories 
yields the composite index level in the market basket in a given year. 
The most recent forecast of each market basket is available on the CMS 
website at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketData.html.
    More detailed forecasts are readily available by request; please 
send an email to <a href="/cdn-cgi/l/email-protection#f8bbb5abbcb6b0abb89b958bd690908bd69f978e"><span class="__cf_email__" data-cfemail="76353b2532383e2536151b05581e1e0558111900">[email protected]</span></a> to be added to the mailing list 
for detailed market basket forecasts.
    Comment: Several commenters recommended that CMS carefully monitor 
the impact productivity adjustments have on the rehabilitation hospital 
sector, provide feedback to Congress as appropriate, and utilize any 
authority the agency has to reduce the productivity adjustment. One 
commenter stated their concern that IRFs will not have the ability to 
generate additional productivity gains at a pace matching the 
productivity of the economy at large on an ongoing, consistent basis as 
currently contemplated by the PPACA. The commenter further noted the 
difficulties in achieving productivity gains in the IRF setting due to 
the labor intensive nature of the care and unchanging labor-intensive 
standards such as the 3-hour therapy rule. One commenter specifically 
requested that CMS provide feedback to Congress, which would include a 
proposal to end the productivity adjustment effective with the end of 
the mandated PPACA Market Basket reductions.
    Response: We acknowledge the commenters' concerns regarding MFP 
growth at the economy-wide level and its application to IRFs. As stated 
above, section 1886(j)(3)(C)(ii)(I) of the Act requires the application 
of a productivity adjustment to the IRF PPS market basket increase 
factor.
    We will continue to monitor the impact of the payment updates, 
including the effects of the productivity adjustment, on IRF provider 
margins as well as beneficiary access to care. We note that each year, 
MedPAC makes an annual update recommendation to Congress based on a 
variety of measures related to payment adequacy, including analysis 
that showed freestanding IRF Medicare margins have been above 10 
percent since 2011.
    Comment: One commenter (MedPAC) noted that while they understand 
that CMS is required to implement the statutory update for IRF payment 
for FY 2019, the commenter continue to recommend that IRF payment rates 
be reduced by 5 percent for FY 2019. The commenter noted that this 
recommendation is based on a review of many factors--including 
indicators of beneficiary access to rehabilitative services, the supply 
of providers, and aggregate IRF Medicare margins, which have been above 
10 percent since 2011. The commenter also noted their appreciation that 
CMS cited their recommendation, even though the Secretary does not have 
the authority to deviate from statutorily mandated updates.
    Response: As discussed, in accordance with section 1886(j)(3)(C) of 
the Act, the increase factor for FY 2019 must be set equal to the FY 
2019 projected market basket increase factor, reduced by the 
productivity adjustment, and further reduced by a 0.75 percent 
statutorily required adjustment. Section 1886(j)(3)(C) of the Act does 
not provide the Secretary with the authority to apply a different 
update factor to IRF PPS payment rates for FY 2019.
    Final Decision: After careful consideration of comments, we are 
finalizing the FY 2019 IRF update of 1.35 percent.

C. Labor-Related Share for FY 2019

    Section 1886(j)(6) of the Act specifies that the Secretary is to 
adjust the proportion (as estimated by the Secretary from time to time) 
of rehabilitation facilities' costs which are attributable to wages and 
wage-related costs of the prospective payment rates computed under 
section 1886(j)(3) of the Act for area differences in wage levels by a 
factor (established by the Secretary) reflecting the relative hospital 
wage level in the geographic area of the rehabilitation facility 
compared to the national average wage level for such facilities. The 
labor-related share is determined by identifying the national average 
proportion of total costs that are related to, influenced by, or vary 
with the local labor market. We continue to classify a cost category as 
labor-related if the costs are labor-intensive and vary with the local 
labor market.
    Based on our definition of the labor-related share and the cost 
categories in the 2012-based IRF market basket, we proposed to 
calculate the labor-related share for FY 2019 as the sum of the FY 2019 
relative importance of Wages and Salaries, Employee Benefits, 
Professional Fees: Labor-Related, Administrative and Facilities Support 
Services, Installation, Maintenance, and Repair Services, All Other: 
Labor-related Services, and a portion of the Capital-Related cost 
weight from the 2012-based IRF market basket. For more details 
regarding the methodology for determining specific cost categories for 
inclusion in the 2012-based IRF labor-related share, see the FY 2016 
IRF final rule (80 FR 47066 through 47068).
    Using this method and IGI's first quarter 2018 forecast for the 
2012-based IRF market basket, the proposed IRF labor-related share for 
FY 2019 was 70.6 percent. We also proposed that if more recent data 
were subsequently available (for example, a more recent estimate of the 
labor-related share), we would use such data to determine the FY 2019 
IRF labor-related share in the final rule.
    Incorporating the most recent estimate of the 2012-based IRF market 
basket based on IGI's second quarter 2018 forecast with historical data 
through the first quarter of 2018, the sum of the relative importance 
for FY 2019 operating costs (Wages and Salaries, Employee Benefits, 
Professional Fees: Labor-related, Administrative and Facilities Support 
Services, Installation Maintenance & Repair Services, and All Other: 
Labor-related Services) using the 2012-based IRF market basket is 66.7 
percent. We proposed that the portion of Capital-Related Costs that are 
influenced by the local labor market was estimated to be 46 percent. 
Incorporating the most recent estimate of the FY 2019 relative 
importance of Capital-Related costs from the 2012-

[[Page 38526]]

based IRF market basket based on IGI's second quarter 2018 forecast 
with historical data through the first quarter of 2018, which is 8.2 
percent, we take 46 percent of 8.2 percent to determine the labor-
related share of Capital for FY 2019. We proposed to then add this 
amount (3.8 percent) to the sum of the relative importance for FY 2019 
operating costs (66.7 percent) to determine the total labor-related 
share for FY 2019 of 70.5 percent.

                    Table 4--IRF Labor-Related Share
------------------------------------------------------------------------
                                         FY 2019 final    FY 2018 final
                                         labor-related    labor related
                                           share \1\        share \2\
------------------------------------------------------------------------
Wages and Salaries....................             47.7             47.8
Employee Benefits.....................             11.1             11.2
Professional Fees: Labor-related......              3.4              3.4
Administrative and Facilities Support               0.8              0.8
 Services.............................
Installation, Maintenance, and Repair               1.9              1.9
 Services.............................
All Other: Labor-related Services.....              1.8              1.8
                                       ---------------------------------
    Subtotal..........................             66.7             66.9
Labor-related portion of capital (46%)              3.8              3.8
                                       ---------------------------------
    Total Labor-Related Share.........             70.5             70.7
------------------------------------------------------------------------
\1\ Based on the 2012-based IRF Market Basket, IGI's 2nd quarter 2018
  forecast with historical data through the 1st quarter of 2018.
\2\ Federal Register (82 FR 36249).

    Final Decision: As we did not receive any comments on the proposed 
labor-related share for FY 2019, we are finalizing the FY 2019 labor-
related share of 70.5 percent.

D. Wage Adjustment for FY 2019

1. Background
    Section 1886(j)(6) of the Act requires the Secretary to adjust the 
proportion of rehabilitation facilities' costs attributable to wages 
and wage-related costs (as estimated by the Secretary from time to 
time) by a factor (established by the Secretary) reflecting the 
relative hospital wage level in the geographic area of the 
rehabilitation facility compared to the national average wage level for 
those facilities. The Secretary is required to update the IRF PPS wage 
index on the basis of information available to the Secretary on the 
wages and wage-related costs to furnish rehabilitation services. Any 
adjustment or updates made under section 1886(j)(6) of the Act for a FY 
are made in a budget-neutral manner.
    For FY 2019, we proposed to maintain the policies and methodologies 
described in the FY 2018 IRF PPS final rule (82 FR 36238, 36249 through 
36250) related to the labor market area definitions and the wage index 
methodology for areas with wage data. Thus, we proposed to use the CBSA 
labor market area definitions and the FY 2018 pre-reclassification and 
pre-floor hospital wage index data. In accordance with section 
1886(d)(3)(E) of the Act, the FY 2018 pre-reclassification and pre-
floor hospital wage index is based on data submitted for hospital cost 
reporting periods beginning on or after October 1, 2013, and before 
October 1, 2014 (that is, FY 2014 cost report data).
    The labor market designations made by the OMB include some 
geographic areas where there are no hospitals and, thus, no hospital 
wage index data on which to base the calculation of the IRF PPS wage 
index. We proposed to continue to use the same methodology discussed in 
the FY 2008 IRF PPS final rule (72 FR 44299) to address those 
geographic areas where there are no hospitals and, thus, no hospital 
wage index data on which to base the calculation for the FY 2019 IRF 
PPS wage index.
    We received 9 public comments on the proposed wage index adjustment 
and related policies for FY 2019, which are summarized below.
    Comment: Commenters suggested that we should use the FY 2019 IPPS 
pre-reclassified acute care hospital wage index in the calculation of 
the FY 2019 IRF PPS wage index, as we do for the IPPS, the long-term 
care hospital PPS, the skilled nursing facility PPS, and the home 
health PPS, rather than using the FY 2018 IPPS pre-reclassified acute 
care hospital wage index, as we do in the IRF PPS, the inpatient 
psychiatric facility PPS, and the hospice PPS. Commenters indicated 
that using the same wage index data for the IRF PPS that is used in 
other post-acute and acute care settings would eliminate one difference 
between Medicare payments for IRFs and Medicare payments for other 
post-acute and acute care providers, thereby allowing IRFs to 
demonstrate their cost-effectiveness relative to other post-acute care 
service providers. By demonstrating their cost-effectiveness relative 
to other post-acute care service providers, IRFs would have more of an 
opportunity to participate successfully in alternative payment models 
currently being tested by Medicare, which generally provide financial 
incentives for cost effectiveness.
    Response: Consistent with historical practice and to ensure the 
stability and predictability of Medicare payments under the IRF PPS, we 
proposed to update the IRF wage index for FY 2019 using the FY 2018 
pre-reclassification and pre-floor acute care hospital wage index (that 
is, using a one-year lag of the hospital wage index). The FY 2018 pre-
reclassification and pre-floor hospital wage index values are based on 
data collected from the Medicare cost reports submitted by hospitals 
for cost reporting periods beginning in FY 2014. We use FY 2014 cost 
reporting period data to determine the applicable IRF PPS wage index 
values because, at the point we use these data, the values are more 
stable and do not tend to change. We do not believe that our continued 
use of the one-year lag of the hospital wage index for the IRF PPS 
hinders the ability of IRFs to demonstrate their cost effectiveness. 
However, we will continue to analyze these issues for future policy 
development.
    Comment: One commenter requested that, until a new wage index 
system is implemented, we should establish a smoothing variable to be 
applied to the current IRF wage index to reduce the fluctuations IRFs 
experience annually.
    Response: As stated above, under section 1886(j)(6) of the Act, we 
adjust IRF PPS rates to account for differences in area wage levels. 
Any perceived volatility in the wage index is predicated upon 
volatility in actual

[[Page 38527]]

wages in that area and reflects real differences in area wage levels. 
As we believe that the application of a smoothing variable would make 
the wage index values less reflective of the area wage levels, we do 
not believe it would be appropriate to implement such a change to the 
IRF wage index policy.
    As we most recently discussed in the FY 2018 IRF PPS final rule (82 
FR 36238, 36250), section 3137(b) of the PPACA required us to submit a 
report to the Congress by December 31, 2011 that included a plan to 
reform the hospital wage index system. This report describes the 
concept of a Commuting Based Wage Index as a potential replacement to 
the current Medicare wage index methodology. While this report 
addresses the goals of broad based Medicare wage index reform, no 
consensus has been achieved regarding how best to implement a 
replacement system. This concern will be taken into consideration while 
we continue to explore potential wage index reforms. The report that we 
submitted is available online at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Reform.html.
    Comment: One commenter requested that CMS implement a wage index 
floor of 1.00 for IRFs located in frontier states.
    Response: As we do not have an IRF-specific wage index, we are 
unable to determine if a rural floor policy under the IRF PPS would be 
appropriate. The rationale for our current wage index policies is fully 
described in the FY 2006 IRF PPS final rule (70 FR 47880, 47926 through 
47928).
    Additionally, as most recently noted in the FY 2017 IRF PPS Final 
rule (81 FR 52075) MedPAC's June 2007 report to the Congress, titled 
``Report to Congress: Promoting Greater Efficiency in Medicare'' 
(available at http://www.medpac.gov/-/documents/-/reports), recommends 
that Congress ``repeal the existing hospital wage index statute, 
including reclassification and exceptions, and give the Secretary 
authority to establish a new wage index systems.'' We continue to 
believe it would not be appropriate, at this time, to adopt wage index 
policies afforded to acute care hospitals into the IRF PPS, such as a 
rural floor policy. Therefore, we will continue to use the CBSA labor 
market area definitions and the pre-reclassification and pre-floor 
hospital wage index data based on 2014 cost report data.
    Final Decision: After careful consideration of the comments, we are 
finalizing our proposal to use the CBSA labor market area definitions 
and the FY 2018 pre-reclassification and pre-floor hospital wage index 
data for areas with wage data. We are also finalizing our proposal to 
continue to use the same methodology discussed in the FY 2008 IRF PPS 
final rule (72 FR 44299) to address those geographic areas where there 
are no hospitals and, thus, no hospital wage index data.
2. Core-Based Statistical Areas (CBSAs) for the Proposed FY 2019 IRF 
Wage Index
    The wage index used for the IRF PPS is calculated using the pre-
reclassification and pre-floor acute care hospital wage index data and 
is assigned to the IRF on the basis of the labor market area in which 
the IRF is geographically located. IRF labor market areas are 
delineated based on the CBSAs established by the OMB. The current CBSA 
delineations (which were implemented for the IRF PPS beginning with FY 
2016) are based on revised OMB delineations issued on February 28, 
2013, in OMB Bulletin No. 13-01. OMB Bulletin No. 13-01 established 
revised delineations for Metropolitan Statistical Areas, Micropolitan 
Statistical Areas, and Combined Statistical Areas in the United States 
and Puerto Rico based on the 2010 Census, and provided guidance on the 
use of the delineations of these statistical areas using standards 
published on June 28, 2010, in the Federal Register (75 FR 37246 
through 37252). We refer readers to the FY 2016 IRF PPS final rule (80 
FR 47068 through 47076) for a full discussion of our implementation of 
the OMB labor market area delineations beginning with the FY 2016 wage 
index.
    Generally, OMB issues major revisions to statistical areas every 10 
years, based on the results of the decennial census. However, OMB 
occasionally issues minor updates and revisions to statistical areas in 
the years between the decennial censuses. On July 15, 2015, OMB issued 
OMB Bulletin No. 15-01, which provides minor updates to and supersedes 
OMB Bulletin No. 13-01 that was issued on February 28, 2013. The 
attachment to OMB Bulletin No. 15-01 provides detailed information on 
the update to statistical areas since February 28, 2013. The updates 
provided in OMB Bulletin No. 15-01 are based on the application of the 
2010 Standards for Delineating Metropolitan and Micropolitan 
Statistical Areas to Census Bureau population estimates for July 1, 
2012 and July 1, 2013. The complete list of statistical areas 
incorporating these changes is provided in OMB Bulletin No. 15-01. In 
the FY 2018 IRF PPS final rule (82 FR 36250 through 36251), we adopted 
the updates set forth in OMB Bulletin No. 15-01 effective October 1, 
2017, beginning with the FY 2018 wage index. For a complete discussion 
of the adoption of the updates set forth in OMB Bulletin No. 15-01, we 
refer readers to the FY 2018 IRF PPS final rule.
    For FY 2019, we proposed to continue using the OMB delineations 
that we adopted beginning with FY 2016 to calculate the area wage 
indexes, with the updates set forth in OMB Bulletin No. 15-01 that we 
adopted beginning with the FY 2018 wage index.
    We invited public comment on our proposal to continue using the OMB 
delineations that we adopted beginning with FY 2016 to calculate the 
area wage indexes for FY 2019. We received one comment on the use of 
these OMB delineations, which is summarized below.
    Comment: One commenter requested that CMS extend the transition 
period that was afforded to rural IRFs that transitioned to urban 
status due to the adoption of updated OMB delineations that were 
finalized in the FY 2016 IRF PPS final rule. This commenter requested 
that CMS extend the transition period to at least 5 years or allow the 
affected facilities to apply for reclassification back to rural status 
for a 5-year period.
    Response: We believe the 3-year transition was sufficient to 
mitigate any adverse payment impacts for these IRFs while also ensuring 
that payment rates for all IRF providers are set accurately and 
appropriately. As the wage index is a relative measure of the value of 
labor in prescribed labor market areas, we do not believe it is 
appropriate to expand the transition wage index beyond than what was 
finalized. We believe extending the transition would further delay the 
use of what we believe are accurate wage index rates. As we did not 
propose any such changes, this comment is out of scope of the proposed 
rule.
    Final Decision: After careful consideration of the comment we 
received on the proposal to continue using the OMB delineations that we 
adopted beginning with FY 2016 to calculate the area wage indexes for 
FY 2019, we are finalizing this policy for FY 2019.
3. Codes for Constituent Counties in CBSAs
    CBSAs are made up of one or more constituent counties. Each CBSA 
and constituent county has its own unique identifying codes. There are 
two different lists of codes associated with

[[Page 38528]]

counties: Social Security Administration (SSA) codes and Federal 
Information Processing Standard (FIPS) codes. Historically, we have 
used SSA and FIPS county codes to identify and crosswalk counties to 
CBSA codes for purposes of the IRF wage index. We have learned that SSA 
county codes are no longer being maintained and updated. However, the 
FIPS codes continue to be maintained by the U.S. Census Bureau. The 
Census Bureau's most current statistical area information is derived 
from ongoing census data received since 2010; the most recent data are 
from 2015. For purposes of cross-walking counties to CBSA codes, we 
proposed to discontinue the use of SSA county codes and continue using 
only the FIPS county codes. We proposed to use the FIPS county codes to 
calculate area wage indexes in a manner that is generally consistent 
with the CBSA-based methodologies finalized in the FY 2006 IRF final 
rule (70 FR 47880) and the FY 2016 IRF final rule (80 FR 47036). The 
use of the FIPS codes for cross-walking counties to CBSAs does not 
result in any changes to the constituent counties of any CBSA. Thus, 
there is no impact or change for any IRF due to the use of the FIPS 
county codes. We believe that using the latest FIPS codes will allow us 
to maintain a more accurate and up-to-date payment system that reflects 
the reality of population shifts and labor market conditions.
    As discussed in the FY 2018 Inpatient prospective payment system 
(IPPS) and Long-Term Care Hospital (LTCH) PPS final rule (82 FR 38130), 
this change was implemented under the IPPS beginning on October 1, 
2017. Therefore, we proposed to implement this revision for the IRF PPS 
beginning October 1, 2018, consistent with our historical practice of 
modeling IRF PPS adoption of updates to labor market areas after IPPS 
adoption of these changes.
    We invited public comments on this proposal. However, we did not 
receive any comments on the proposed revisions to the CBSA codes.
    Final Decision: As we did not receive any comments on our proposal 
to discontinue the use of SSA county codes and continue using only the 
FIPS County codes for purposes of cross-walking counties to CBSA codes, 
we are finalizing these changes for FY 2019.
4. Wage Adjustment
    The wage index applicable to FY 2019 is available on the CMS 
website at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Data-Files.html. Table A is for urban 
areas, and Table B is for rural areas.
    To calculate the wage-adjusted facility payment for the payment 
rates set forth in this final rule, we multiply the unadjusted federal 
payment rate for IRFs by the FY 2019 labor-related share based on the 
2012-based IRF market basket (70.5 percent) to determine the labor-
related portion of the standard payment amount. A full discussion of 
the calculation of the labor-related share is located in section VI.C 
of this final rule. We then multiply the labor-related portion by the 
applicable IRF wage index from the tables in the addendum to this final 
rule. These tables are available on the CMS website at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Data-Files.html.
    Adjustments or updates to the IRF wage index made under section 
1886(j)(6) of the Act must be made in a budget-neutral manner. We 
proposed to calculate a budget-neutral wage adjustment factor as 
established in the FY 2004 IRF PPS final rule (68 FR 45689), codified 
at Sec.  412.624(e)(1), as described in the steps below. We proposed to 
use the listed steps to ensure that the FY 2019 IRF standard payment 
conversion factor reflects the update to the wage indexes (based on the 
FY 2014 hospital cost report data) and the labor-related share in a 
budget-neutral manner:
    Step 1. Determine the total amount of the estimated FY 2018 IRF PPS 
payments, using the FY 2018 standard payment conversion factor and the 
labor-related share and the wage indexes from FY 2018 (as published in 
the FY 2018 IRF PPS final rule (82 FR 36238)).
    Step 2. Calculate the total amount of estimated IRF PPS payments 
using the FY 2019 standard payment conversion factor and the FY 2019 
labor-related share and CBSA urban and rural wage indexes.
    Step 3. Divide the amount calculated in step 1 by the amount 
calculated in step 2. The resulting quotient is the FY 2019 budget-
neutral wage adjustment factor of 1.0000.
    Step 4. Apply the FY 2019 budget-neutral wage adjustment factor 
from step 3 to the FY 2018 IRF PPS standard payment conversion factor 
after the application of the increase factor to determine the FY 2019 
standard payment conversion factor.
    We discuss the calculation of the standard payment conversion 
factor for FY 2019 in section VI.E. of this final rule.
    We invited public comments on this proposal. However, we did not 
receive any comments on the proposed methodology for calculating the 
budget-neutral wage index.
    Final Decision: As we did not receive any comments on the proposed 
methodology for calculating the budget-neutral wage index, we are 
finalizing this policy for FY 2019.

E. Description of the IRF Standard Payment Conversion Factor and 
Payment Rates for FY 2019

    To calculate the standard payment conversion factor for FY 2019, as 
illustrated in Table 5, we begin by applying the increase factor for FY 
2019, as adjusted in accordance with sections 1886(j)(3)(C) and (D) of 
the Act, to the standard payment conversion factor for FY 2018 
($15,838). Applying the 1.35 percent increase factor for FY 2019 to the 
standard payment conversion factor for FY 2018 of $15,838 yields a 
standard payment amount of $16,052. Then, we apply the budget 
neutrality factor for the FY 2019 wage index and labor-related share of 
1.0000, which results in a standard payment amount of $16,052. We next 
apply the budget neutrality factor for the revised CMG relative weights 
of 0.9981, which results in the standard payment conversion factor of 
$16,021 for FY 2019.

     Table 5--Calculations To Determine the FY 2019 Standard Payment
                            Conversion Factor
------------------------------------------------------------------------
               Explanation for adjustment                  Calculations
------------------------------------------------------------------------
Standard Payment Conversion Factor for FY 2018..........         $15,838
Market Basket Increase Factor for FY 2019 (2.9 percent),        x 1.0135
 reduced by 0.8 percentage point for the productivity
 adjustment as required by section 1886(j)(3)(C)(ii)(I)
 of the Act, and reduced by 0.75 percentage point in
 accordance with sections 1886(j)(3)(C)(ii)(II) and
 1886(j)(3)(D)(v) of the Act............................
Budget Neutrality Factor for the Wage Index and Labor-          x 1.0000
 Related Share..........................................
Budget Neutrality Factor for the Revisions to the CMG           x 0.9981
 Relative Weights.......................................
                                                         ---------------

[[Page 38529]]

 
    FY 2019 Standard Payment Conversion Factor..........       = $16,021
------------------------------------------------------------------------

    We received 1 comment on the proposed FY 2019 standard payment 
conversion factor.
    Comment: The commenter noted that the FY 2019 standard payment 
conversion factor does not include any additional payment to IRFs for 
the time and resources needed to complete assessments for quality 
reporting.
    Response: Section 1886(j)(3) of the Act does not provide the 
Secretary with the authority to adjust payments to reflect increases in 
costs due to time and resources needed to complete assessments for 
quality reporting. We will continue to monitor the impact of the FY 
2019 payment updates and quality reporting requirements on IRF 
providers.
    Final Decision: After careful consideration of the comment we 
received, we are finalizing the IRF standard payment conversion factor 
of $16,021 for FY 2019.
    After the application of the CMG relative weights described in 
section IV of this final rule to the FY 2019 standard payment 
conversion factor ($16,021), the resulting unadjusted IRF prospective 
payment rates for FY 2019 are shown in Table 6.

                                         Table 6--FY 2019 Payment Rates
----------------------------------------------------------------------------------------------------------------
                                                   Payment rate    Payment rate    Payment rate    Payment rate
                       CMG                            tier 1          tier 2          tier 3      no comorbidity
----------------------------------------------------------------------------------------------------------------
0101............................................     $ 13,561.78     $ 11,799.47     $ 10,809.37     $ 10,335.15
0102............................................       17,152.08       14,923.56       13,670.72       13,071.53
0103............................................       19,851.62       17,272.24       15,822.34       15,128.63
0104............................................       20,727.97       18,034.84       16,520.86       15,796.71
0105............................................       23,824.83       20,727.97       18,988.09       18,156.60
0106............................................       26,639.72       23,177.58       21,232.63       20,303.41
0107............................................       29,883.97       26,000.48       23,818.42       22,775.45
0108............................................       36,938.02       32,138.13       29,440.19       28,152.10
0109............................................       33,415.00       29,073.31       26,633.31       25,466.98
0110............................................       44,306.08       38,546.53       35,311.89       33,765.86
0201............................................       13,193.29       10,618.72        9,487.64        8,854.81
0202............................................       18,436.97       14,840.25       13,257.38       12,374.62
0203............................................       20,383.52       16,405.50       14,657.61       13,680.33
0204............................................       22,174.67       17,849.00       15,945.70       14,883.51
0205............................................       26,162.29       21,056.40       18,813.46       17,559.02
0206............................................       31,498.89       25,353.23       22,652.09       21,141.31
0207............................................       39,833.01       32,061.23       28,643.95       26,734.24
0301............................................       18,787.83       15,192.71       13,943.08       13,033.08
0302............................................       22,985.33       18,589.17       17,059.16       15,945.70
0303............................................       26,550.00       21,471.34       19,705.83       18,417.74
0304............................................       33,969.33       27,471.21       25,212.25       23,565.29
0401............................................       16,085.08       12,972.20       11,999.73       10,982.40
0402............................................       23,828.03       19,218.79       17,776.90       16,269.33
0403............................................       37,950.54       30,608.12       28,313.91       25,913.97
0404............................................       64,687.99       52,173.99       48,263.26       44,171.50
0405............................................       57,955.97       46,744.47       43,239.08       39,573.47
0501............................................       14,692.86       11,447.00       10,581.87        9,724.75
0502............................................       19,516.78       15,205.53       14,056.83       12,917.73
0503............................................       24,281.43       18,919.20       17,488.52       16,070.67
0504............................................       27,918.19       21,751.71       20,107.96       18,477.02
0505............................................       31,973.11       24,912.66       23,028.59       21,162.14
0506............................................       43,250.29       33,698.57       31,149.63       28,624.72
0601............................................       17,200.15       13,204.51       12,214.41       11,131.39
0602............................................       22,301.23       17,120.04       15,835.16       14,431.72
0603............................................       27,434.36       21,061.21       19,479.93       17,754.47
0604............................................       35,483.31       27,240.51       25,196.23       22,964.50
0701............................................       16,469.59       13,436.81       12,733.49       11,488.66
0702............................................       20,960.27       17,100.82       16,205.24       14,622.37
0703............................................       24,992.76       20,391.53       19,324.53       17,435.65
0704............................................       31,893.00       26,021.31       24,659.52       22,249.96
0801............................................       13,443.22       10,959.97        9,908.99        9,218.48
0802............................................       17,248.21       14,061.63       12,714.27       11,826.70
0803............................................       22,626.46       18,446.58       16,677.86       15,514.74
0804............................................       20,389.93       16,623.39       15,029.30       13,981.53
0805............................................       24,302.25       19,813.17       17,913.08       16,663.44
0806............................................       29,944.85       24,412.80       22,072.13       20,532.51
0901............................................       16,474.39       12,933.75       11,985.31       11,044.88
0902............................................       20,875.36       16,389.48       15,186.31       13,995.95
0903............................................       26,053.35       20,455.61       18,954.45       17,467.70
0904............................................       32,637.98       25,625.59       23,744.72       21,883.08
1001............................................       17,528.58       14,835.45       13,178.87       12,150.33

[[Page 38530]]

 
1002............................................       22,403.77       18,960.85       16,842.88       15,529.16
1003............................................       32,437.72       27,453.59       24,387.17       22,483.87
1101............................................       21,817.40       16,091.49       16,091.49       14,149.75
1102............................................       30,773.14       22,696.95       22,696.95       19,958.96
1201............................................       17,823.36       15,285.64       13,954.29       12,619.74
1202............................................       22,576.79       19,361.38       17,674.37       15,985.75
1203............................................       27,343.04       23,449.94       21,405.66       19,359.78
1301............................................       17,586.25       15,256.80       14,247.48       13,364.72
1302............................................       22,998.15       19,952.55       18,632.42       17,477.31
1303............................................       27,775.61       24,097.19       22,503.10       21,107.67
1401............................................       14,780.97       12,033.37       10,849.42        9,777.62
1402............................................       19,832.40       16,147.57       14,556.68       13,119.60
1403............................................       23,634.18       19,242.82       17,347.54       15,634.89
1404............................................       29,768.62       24,238.17       21,851.04       19,693.01
1501............................................       16,253.30       14,023.18       12,699.85       12,169.55
1502............................................       20,779.24       17,929.10       16,235.68       15,557.99
1503............................................       24,657.92       21,275.89       19,266.85       18,462.60
1504............................................       31,072.73       26,811.14       24,279.83       23,265.70
1601............................................       19,422.26       14,867.49       14,120.91       12,743.10
1602............................................       24,609.86       18,837.49       17,893.85       16,147.57
1603............................................       29,858.34       22,855.56       21,710.06       19,590.48
1701............................................       20,546.93       15,578.82       14,583.92       13,130.81
1702............................................       24,848.57       18,840.70       17,637.52       15,880.02
1703............................................       28,993.20       21,984.02       20,580.58       18,528.29
1704............................................       37,003.70       28,057.58       26,266.43       23,648.60
1801............................................       18,079.70       16,121.93       13,624.26       12,725.48
1802............................................       26,657.34       23,771.96       20,088.73       18,763.80
1803............................................       41,886.90       37,352.96       31,566.18       29,483.45
1901............................................       22,429.40       16,099.50       15,123.82       14,572.70
1902............................................       39,493.37       28,347.56       26,630.11       25,660.84
1903............................................       68,360.00       49,067.52       46,095.62       44,418.22
2001............................................       15,529.16       12,350.59       11,471.04       10,413.65
2002............................................       20,181.65       16,049.84       14,909.14       13,534.54
2003............................................       24,806.92       19,728.26       18,324.82       16,636.21
2004............................................       31,615.84       25,144.96       23,355.41       21,202.19
2101............................................       30,560.06       24,821.34       23,972.22       21,096.45
5001............................................  ..............  ..............  ..............        2,561.76
5101............................................  ..............  ..............  ..............       12,078.23
5102............................................  ..............  ..............  ..............       26,423.44
5103............................................  ..............  ..............  ..............       12,962.59
5104............................................  ..............  ..............  ..............       33,876.40
----------------------------------------------------------------------------------------------------------------

F. Example of the Methodology for Adjusting the Prospective Payment 
Rates

    Table 7 illustrates the methodology for adjusting the federal 
prospective payments (as described in section VI. of this final rule). 
The following examples are based on two hypothetical Medicare 
beneficiaries, both classified into CMG 0110 (without comorbidities). 
The unadjusted prospective payment rate for CMG 0110 (without 
comorbidities) appears in Table 6.
    Example: One beneficiary is in Facility A, an IRF located in rural 
Spencer County, Indiana, and another beneficiary is in Facility B, an 
IRF located in urban Harrison County, Indiana. Facility A, a rural non-
teaching hospital has a Disproportionate Share Hospital (DSH) 
percentage of 5 percent (which would result in a LIP adjustment of 
1.0156), a wage index of 0.8088, and a rural adjustment of 14.9 
percent. Facility B, an urban teaching hospital, has a DSH percentage 
of 15 percent (which would result in a LIP adjustment of 1.0454 
percent), a wage index of 0.8689, and a teaching status adjustment of 
0.0784.
    To calculate each IRF's labor and non-labor portion of the 
prospective payment, we begin by taking the unadjusted prospective 
payment rate for CMG 0110 (without comorbidities) from Table 6. Then, 
we multiply the labor-related share for FY 2019 (70.5 percent) 
described in section VI.C. of this final rule by the unadjusted 
prospective payment rate. To determine the non-labor portion of the 
prospective payment rate, we subtract the labor portion of the federal 
payment from the unadjusted prospective payment.
    To compute the wage-adjusted prospective payment, we multiply the 
labor portion of the federal payment by the appropriate wage index 
located in Tables A and B. These tables are available on the CMS 
website at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Data-Files.html. The resulting figure is 
the wage-adjusted labor amount. Next, we compute the wage-adjusted 
federal payment by adding the wage-adjusted labor amount to the non-
labor portion of the federal payment.
    Adjusting the wage-adjusted federal payment by the facility-level 
adjustments involves several steps. First, we take the wage-adjusted 
prospective payment and multiply it by the appropriate rural and LIP 
adjustments (if applicable). Second, to determine the appropriate 
amount of additional payment for the teaching status adjustment (if 
applicable), we multiply the teaching status adjustment (0.0784, in 
this example) by the wage-adjusted and rural-adjusted amount (if 
applicable). Finally, we add the

[[Page 38531]]

additional teaching status payments (if applicable) to the wage, rural, 
and LIP-adjusted prospective payment rates. Table 7 illustrates the 
components of the adjusted payment calculation.

    Table 7--Example of Computing the FY 2019 IRF Prospective Payment
------------------------------------------------------------------------
                                                        Urban facility B
               Steps                 Rural facility A    (Harrison Co.,
                                    (Spencer Co., IN)         IN)
------------------------------------------------------------------------
1. Unadjusted Payment.............         $33,765.86         $33,765.86
2. Labor Share....................            x 0.705            x 0.705
3. Labor Portion of Payment.......        = 23,804.93        = 23,804.93
4. CBSA-Based Wage Index (shown in           x 0.8088           x 0.8689
 the Addendum, Tables A and B)....
5. Wage-Adjusted Amount...........        = 19,253.43        = 20,684.10
6. Non-Labor Amount...............         + 9,960.93         + 9,960.93
7. Wage-Adjusted Payment..........        = 29,214.36        = 30,645.03
8. Rural Adjustment...............            x 1.149             x1.000
9. Wage- and Rural-Adjusted               = 33,567.30        = 30,645.03
 Payment..........................
10. LIP Adjustment................           x 1.0156           x 1.0454
11. Wage-, Rural- and LIP-Adjusted        = 34,090.95        = 32,036.32
 Payment..........................
12. Wage- and Rural-Adjusted                33,567.30          30,645.03
 Payment..........................
13. Teaching Status Adjustment....                x 0           x 0.0784
14. Teaching Status Adjustment                 = 0.00         = 2,402.57
 Amount...........................
15. Wage-, Rural-, and LIP-               + 34,090.95        + 32,036.32
 Adjusted Payment.................
16. Total Adjusted Payment........        = 34,090.95        = 34,438.89
------------------------------------------------------------------------

    Thus, the adjusted payment for Facility A would be $34,090.95, and 
the adjusted payment for Facility B would be $34,438.89.

VII. Update to Payments for High-Cost Outliers Under the IRF PPS for FY 
2019

A. Update to the Outlier Threshold Amount for FY 2019

    Section 1886(j)(4) of the Act provides the Secretary with the 
authority to make payments in addition to the basic IRF prospective 
payments for cases incurring extraordinarily high costs. A case 
qualifies for an outlier payment if the estimated cost of the case 
exceeds the adjusted outlier threshold. We calculate the adjusted 
outlier threshold by adding the IRF PPS payment for the case (that is, 
the CMG payment adjusted by all of the relevant facility-level 
adjustments) and the adjusted threshold amount (also adjusted by all of 
the relevant facility-level adjustments). Then, we calculate the 
estimated cost of a case by multiplying the IRF's overall CCR by the 
Medicare allowable covered charge. If the estimated cost of the case is 
higher than the adjusted outlier threshold, we make an outlier payment 
for the case equal to 80 percent of the difference between the 
estimated cost of the case and the outlier threshold.
    In the FY 2002 IRF PPS final rule (66 FR 41362 through 41363), we 
discussed our rationale for setting the outlier threshold amount for 
the IRF PPS so that estimated outlier payments would equal 3 percent of 
total estimated payments. For the 2002 IRF PPS final rule, we analyzed 
various outlier policies using 3, 4, and 5 percent of the total 
estimated payments, and we concluded that an outlier policy set at 3 
percent of total estimated payments would optimize the extent to which 
we could reduce the financial risk to IRFs of caring for high-cost 
patients, while still providing for adequate payments for all other 
(non-high cost outlier) cases.
    Subsequently, we updated the IRF outlier threshold amount in the 
FYs 2006 through 2018 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, 77 FR 44618, 78 FR 47860, 
79 FR 45872, 80 FR 47036, 81 FR 52056, and 82 FR 36238, respectively) 
to maintain estimated outlier payments at 3 percent of total estimated 
payments. We also stated in the FY 2009 final rule (73 FR 46370 at 
46385) that we would continue to analyze the estimated outlier payments 
for subsequent years and adjust the outlier threshold amount as 
appropriate to maintain the 3 percent target.
    To update the IRF outlier threshold amount for FY 2019, we proposed 
to use FY 2017 claims data and the same methodology that we used to set 
the initial outlier threshold amount in the FY 2002 IRF PPS final rule 
(66 FR 41316 and 41362 through 41363), which is also the same 
methodology that we used to update the outlier threshold amounts for 
FYs 2006 through 2018. The outlier threshold is calculated by 
simulating aggregate payments and using an iterative process to 
determine a threshold that results in outlier payments being equal to 3 
percent of total payments under the simulation. To determine the 
outlier threshold for FY 2019, we estimate the amount of FY 2019 IRF 
PPS aggregate and outlier payments using the most recent claims 
available (FY 2017) and the FY 2019 standard payment conversion factor, 
labor-related share, and wage indexes, incorporating any applicable 
budget-neutrality adjustment factors. The outlier threshold is adjusted 
either up or down in this simulation until the estimated outlier 
payments equal 3 percent of the estimated aggregate payments. Based on 
an analysis of the preliminary data used for the proposed rule, we 
estimated that IRF outlier payments as a percentage of total estimated 
payments would be approximately 3.4 percent in FY 2018. Therefore, we 
proposed to update the outlier threshold amount from $8,679 for FY 2018 
to $10,509 for FY 2019 to maintain estimated outlier payments at 
approximately 3 percent of total estimated aggregate IRF payments for 
FY 2019.
    We note that, as we typically do, we updated our data between the 
FY 2019 IRF PPS proposed and final rules to ensure that we use the most 
recent available data in calculating IRF PPS payments. This updated 
data includes a more complete set of claims for FY 2017. Based on our 
analysis using this updated data, we now estimate that IRF outlier 
payments as a percentage of total estimated payments are approximately 
3.1 percent in FY 2018. Therefore, we will update the outlier threshold 
amount from $8,679 for FY 2018 to $9,402 for FY 2019 to account for the 
increases in IRF PPS payments and estimated costs and to maintain 
estimated outlier payments at

[[Page 38532]]

approximately 3 percent of total estimated aggregate IRF payments for 
FY 2019.
    We received 5 comments on the proposed update to the FY 2019 
outlier threshold amount to maintain estimated outlier payments at 
approximately 3 percent of total estimated IRF payments, which are 
summarized below.
    Comment: Some commenters were supportive of maintaining estimated 
payments for outlier payments at approximately 3 percent and requested 
that CMS update the outlier threshold amount in the final rule using 
the latest available data. One commenter reiterated their 
recommendation to expand the outlier pool from 3 to 5 percent to 
redistribute payments within the IRF PPS and to reduce the impact of 
misalignments between IRF payments and costs. Specifically, the 
commenter suggested that expanding the outlier pool would help to 
ameliorate the financial burden on IRFs that have a relatively high 
share of costly cases. However, this same commenter noted that such an 
expansion in the outlier pool could inappropriately reward some 
facilities for inefficiencies. Another commenter suggested that CMS 
should lower the outlier pool below 3 percent.
    Response: We agree that we should use the most recent data 
available to calculate the outlier threshold. Therefore, as previously 
stated, we updated the data used to calculate the outlier threshold 
between the FY 2019 IRF PPS proposed and final rule.
    We refer readers to the 2002 IRF PPS final rule (66 FR 41316, 41362 
through 41363), for a discussion of the rationale for setting the 
outlier threshold amount for the IRF PPS so that estimated outlier 
payments would equal 3 percent of total estimated payments. For the 
2002 IRF PPS final rule, we analyzed various outlier policies using 3, 
4, and 5 percent of the total estimated payments, and we concluded that 
an outlier policy set at 3 percent of total estimated payments would 
optimize the extent to which we could reduce the financial risk to IRFs 
of caring for high-cost patients, while still providing for adequate 
payments for all other (non-high cost outlier) cases. We continue to 
believe that the outlier policy of 3 percent of total estimated 
aggregate payments accomplishes this objective. Increasing the outlier 
pool would leave less money available to cover the costs of non-outlier 
cases, due to the fact that we would implement such a change in a 
budget-neutral manner. We believe that our current outlier policy, to 
set outlier payments at 3 percent of total estimated aggregate 
payments, is consistent with the statute and the goals of the IRF PPS.
    Comment: Several commenters stated that CMS should ensure that the 
full 3 percent outlier pool is paid out to providers, as the commenters 
indicated that CMS has paid out less than the estimated 3 percent in 
the past. Some commenters suggested implementing a forecast error 
correction if the full amount of the outlier pool is not paid out.
    Response: We appreciate the commenters' analyses and suggestions 
regarding the outlier threshold calculations. Our analysis of recent 
data shows that IRF outlier payments as a percentage of total estimated 
aggregate payments are approximately 3.1 percent in FYs 2017 and 2018, 
thus indicating that we paid out more than 3 percent, not less, in the 
2 most recent fiscal years. Thus, we have not found that our outlier 
threshold calculations show any tendency to underpay on outlier 
payments.
    However, we will continue to monitor our IRF outlier policies to 
ensure that they continue to compensate IRFs appropriately for treating 
unusually high-cost patients and do not limit access to care for 
patients who are likely to require unusually high-cost care. As we most 
recently noted in the FY 2018 IRF PPS final rule (82 FR 36255), we do 
not make adjustments to IRF PPS payment rates for the sole purpose of 
accounting for differences between projected and actual outlier 
payments. We use the best available data at the time to establish an 
outlier threshold for IRF PPS payments prior to the beginning of each 
fiscal year to help ensure that estimated outlier payments for that 
fiscal year will equal 3 percent of total estimated IRF PPS payments. 
We analyze expenditures annually, and if there is a difference from our 
projection, that information is used to make a prospective adjustment 
to lower or raise the outlier threshold for the upcoming fiscal year. 
We believe a retrospective adjustment would not be appropriate to 
recoup or make excess payments to hospitals.
    If outlier payments for a given year turn out to be greater than 
projected, we do not recoup money from hospitals; if outlier payments 
for a given year are lower than projected, we do not make an adjustment 
to account for the difference. Payments for a given discharge in a 
given fiscal year are generally intended to reflect or address the 
prospective average costs of that discharge in that year; that goal 
would be undermined if we adjusted IRF PPS payments to account for 
``underpayments'' or ``overpayments'' in IRF outliers in previous 
years.
    Comment: Several commenters suggested that we consider implementing 
a cap on the amount of outlier payments an individual IRF can receive 
under the IRF PPS to ensure that outliers are fairly distributed.
    Response: As we did not propose to implement a cap on the amount of 
outlier payments an individual IRF can receive under the IRF PPS, these 
comments are outside the scope of this rule. However, we note that any 
future consideration given to imposing a limit on outlier payments 
would have to carefully analyze and take into consideration the effect 
on access to IRF care for certain high-cost populations.
    Comment: One commenter expressed concern that the proposal to 
increase the outlier threshold amount from $8,679 to $10,509 was too 
large an increase and suggested that we increase the threshold by no 
more than 5 or 10 percent.
    Response: We note that, as is our standard practice, we have used 
updated data to calculate the FY 2019 IRF outlier threshold for this 
final rule, which results in us finalizing a lower outlier threshold 
amount ($9,402) than we proposed ($10,509) for FY 2019. We believe that 
this decrease between the proposed and final outlier threshold amount 
for FY 2019 should at least partially address the commenter's stated 
concerns. We note, however, that our methodology is designed to 
maintain estimated outlier payments at 3 percent of total estimated 
payments, and we do not adjust the outlier threshold amount beyond what 
is required to meet the target percentage.
    Final Decision: Having carefully considered the public comments 
received and also taking into account the most recent available data, 
we are finalizing the outlier threshold amount of $9,402 to maintain 
estimated outlier payments at approximately 3 percent of total 
estimated aggregate IRF payments for FY 2019.

B. Update to the IRF Cost-to-Charge Ratio Ceiling and Urban/Rural 
Averages for FY 2019

    Cost-to-charge ratios are used to adjust charges from Medicare 
claims to costs and are computed annually from facility-specific data 
obtained from Medicare cost reports. IRF specific cost-to-charge ratios 
are used in the development of the CMG relative weights and the 
calculation of outlier payments under the IRF prospective payment 
system. In accordance with the methodology stated in the FY 2004 IRF 
PPS final rule (68 FR 45674, 45692 through 45694), we proposed to apply 
a ceiling to IRFs' CCRs. Using the methodology described in that final

[[Page 38533]]

rule, we proposed to update the national urban and rural CCRs for IRFs, 
as well as the national CCR ceiling for FY 2019, based on analysis of 
the most recent data that is available. We apply the national urban and 
rural CCRs in the following situations:
    <bullet> New IRFs that have not yet submitted their first Medicare 
cost report.
    <bullet> IRFs whose overall CCR is in excess of the national CCR 
ceiling for FY 2019, as discussed below in this section.
    <bullet> Other IRFs for which accurate data to calculate an overall 
CCR are not available.
    Specifically, for FY 2019, we proposed to estimate a national 
average CCR of 0.518 for rural IRFs, which we calculated by taking an 
average of the CCRs for all rural IRFs using their most recently 
submitted cost report data. Similarly, we proposed to estimate a 
national average CCR of 0.414 for urban IRFs, which we calculated by 
taking an average of the CCRs for all urban IRFs using their most 
recently submitted cost report data. We apply weights to both of these 
averages using the IRFs' estimated costs, meaning that the CCRs of IRFs 
with higher total costs factor more heavily into the averages than the 
CCRs of IRFs with lower total costs. For this final rule, we have used 
the most recent available cost report data (FY 2016). This includes all 
IRFs whose cost reporting periods begin on or after October 1, 2015, 
and before October 1, 2016. If, for any IRF, the FY 2016 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 2015) settled cost 
report for that IRF. We do not use cost report data from before FY 2004 
for any IRF because changes in IRF utilization since FY 2004 resulting 
from the 60 percent rule and IRF medical review activities suggest that 
these older data do not adequately reflect the current cost of care. 
Using updated FY 2016 cost report data for this final rule, we estimate 
a national average CCR of 0.515 for rural IRFs, and a national average 
CCR of 0.412 for urban IRFs.
    In accordance with past practice, we proposed to set the national 
CCR ceiling at 3 standard deviations above the mean CCR. Using this 
method, we proposed a national CCR ceiling of 1.31 for FY 2019. This 
means that, if an individual IRF's CCR were to exceed this ceiling of 
1.31 for FY 2019, we would replace the IRF's CCR with the appropriate 
proposed national average CCR (either rural or urban, depending on the 
geographic location of the IRF). We calculated the proposed national 
CCR ceiling by:
    Step 1. Taking the national average CCR (weighted by each IRF's 
total costs, as previously discussed) of all IRFs for which we have 
sufficient cost report data (both rural and urban IRFs combined).
    Step 2. Estimating the standard deviation of the national average 
CCR computed in step 1.
    Step 3. Multiplying the standard deviation of the national average 
CCR computed in step 2 by a factor of 3 to compute a statistically 
significant reliable ceiling.
    Step 4. Adding the result from step 3 to the national average CCR 
of all IRFs for which we have sufficient cost report data, from step 1.
    Using the updated FY 2016 cost report data for this final rule, we 
estimate a national average CCR ceiling of 1.32, using the same 
methodology. We did not receive any comments on the proposed update to 
the IRF CCR ceiling and the urban/rural averages for FY 2019.
    Final Decision: As we did not receive any comments on the proposed 
update to the IRF CCR ceiling and the urban/rural averages for FY 2019, 
we are finalizing the national average urban CCR at 0.412, the national 
average rural CCR at 0.515, and the national average CCR ceiling at 
1.32 for FY 2019.

VIII. Removal of the FIMTM Instrument and Associated Function Modifiers 
From the IRF-PAI Beginning With FY 2020 and Refinements to the Case-Mix 
Classification System Beginning With FY 2020

A. Removal of the FIMTM Instrument and Associated Function Modifiers 
From the IRF-PAI Beginning With FY 2020

    Under section 1886(j)(2)(D) of the Act, the Secretary is authorized 
to require rehabilitation facilities that provide inpatient hospital 
services to submit such data as the Secretary deems necessary to 
establish and administer the IRF PPS. In the FY 2002 IRF PPS final rule 
(66 FR 41324 through 41328), we finalized the use of the IRF-PAI, 
through which IRFs are now required to collect and electronically 
submit patient data for all Medicare Part A FFS and Medicare Part C 
(Medicare Advantage) patients. Data collected in the IRF-PAI is used to 
classify patients into distinct payment groups based on clinical 
characteristics and expected resource needs as well as to monitor the 
quality of care furnished in IRFs.
    The IRF-PAI currently in use under the IRF PPS (IRF-PAI version 
2.0) was originally developed based on a modified version of the 
Uniform Data System for medical rehabilitation (UDSmr) patient 
assessment instrument, commonly referred to as the FIM<SUP>TM</SUP>. 
Item 39 of the IRF-PAI version 2.0 contains 18 of the FIM<SUP>TM</SUP> 
data elements and the FIM<SUP>TM</SUP> measurement scale that are used 
to score both motor and cognitive functioning at admission and 
discharge. The FIM<SUP>TM</SUP> data elements and measurement scale are 
collectively referred to as the FIM<SUP>TM</SUP> instrument. 
Additionally, items 29 through 38 of the IRF-PAI version 2.0 contain 
Function Modifiers associated with the FIM<SUP>TM</SUP> instrument. The 
FIM<SUP>TM</SUP> instrument and associated Function Modifiers are 
currently used to assign a patient into a CMG for payment purposes 
under the IRF PPS based on the patient's ability to perform specific 
activities of daily living and, in some cases, the patient's cognitive 
ability.
    In the FY 2012 IRF PPS final rule (76 FR 47873 through 47883), we 
established the IRF QRP in accordance with section 1886(j)(7) of the 
Act and finalized revisions to the IRF-PAI to begin collecting data 
items under the IRF QRP. Under the IRF QRP, the following data items 
are collected in the Quality Indicators section of the IRF-PAI:
    <bullet> GG0130A1 Eating.
    <bullet> GG0130B1 Oral hygiene.
    <bullet> GG0130C1 Toileting hygiene.
    <bullet> GG0130E1 Shower/bathe self.
    <bullet> GG0130F1 Upper-body dressing.
    <bullet> GG0130G1 Lower-body dressing.
    <bullet> GG0130H1 Putting on/taking off footwear.
    <bullet> GG0170A1 Roll left and right.
    <bullet> GG0170B1 Sit to lying.
    <bullet> GG0170C1 Lying to sitting on side of bed.
    <bullet> GG0170D1 Sit to stand.
    <bullet> GG0170E1 Chair/bed-to-chair transfer.
    <bullet> GG0170F1 Toilet transfer.
    <bullet> GG0170I1 Walk 10 feet.
    <bullet> GG0170J1 Walk 50 feet with two turns.
    <bullet> GG0170K1 Walk 150 feet.
    <bullet> GG0170M1 One step curb.
    <bullet> H0350 Bladder continence.
    <bullet> H0400 Bowel continence.
    <bullet> BB0700 Expression of ideas and wants.
    <bullet> BB0800 Understanding verbal content.
    <bullet> C0500 Brief Interview for Mental Status (BIMS) summary 
score.
    Because these data items collect data that are similar in nature 
to, and overlap with, data collected through the FIM<SUP>TM</SUP> 
instrument and associated Function Modifiers, we proposed to remove the 
FIM<SUP>TM</SUP> instrument and associated Function Modifiers from the 
IRF-PAI beginning with FY 2020 to reduce administrative burden on IRFs.

[[Page 38534]]

    Currently, data elements in the FIM<SUP>TM</SUP> instrument and 
associated Function Modifiers capture data on eating, grooming, 
bathing, dressing upper body, dressing lower body, toileting, bladder 
management, bowel management, transfer to bed/chair/wheelchair, 
transfer to toilet, transfer to tub/shower, walking or wheelchair use, 
stair climbing, comprehension, expression, social interaction, problem 
solving, and memory. The Function Modifiers are used to assist in the 
scoring of the related FIM<SUP>TM</SUP> instrument data elements and 
provide additional information as to how the FIM<SUP>TM</SUP> 
instrument data element score has been determined. For example, item 29 
(Bladder Level of Assistance) and item 30 (Bladder Frequency of 
Accidents) are used to determine the score for the item 39G, the 
Bladder data element contained in the FIM<SUP>TM</SUP> instrument.
    Data items in the Quality Indicators section of the IRF-PAI capture 
data on functional status, cognitive function, and changes in function 
and cognitive function among other elements used for quality reporting. 
For example, the data items in the Quality Indicators section of the 
IRF-PAI capture data on eating, oral hygiene, toileting hygiene, 
shower/bathing, dressing upper body, dressing lower body, bowel 
continence, bladder continence, chair/bed-to-chair transfer, toilet 
transfer, walking, stair climbing, expression of ideas and wants, 
understanding verbal and non-verbal content, temporal orientation, and 
memory/recall ability. As the data elements in the FIM<SUP>TM</SUP> 
instrument (item 39 of the IRF-PAI) and associated Function Modifiers 
(items 29 through 38 of the IRF-PAI) overlap, directly or indirectly, 
with data items in the Quality Indicators section of the IRF-PAI, and 
as we can now use data items in the Quality Indicators section of the 
IRF-PAI to assign patients to CMGs for payment under the IRF PPS, we 
believe that the collection of the FIM<SUP>TM</SUP> instrument and 
associated Function Modifiers is no longer necessary. Accordingly, we 
believe that continuing to collect the FIM<SUP>TM</SUP> instrument and 
associated Function Modifiers places undue burden on IRFs. 
Additionally, the removal of the FIM<SUP>TM</SUP> instrument and 
associated Function Modifiers from the IRF-PAI would support the 
broader goal to standardize data collection across PAC settings as 
several of the data items we proposed to incorporate into the IRF case-
mix system in place of the FIM<SUP>TM</SUP> instrument and associated 
Function Modifiers are similar to data elements that are also collected 
on Skilled Nursing Facility (SNF) and LTCH assessment instruments. In 
support of our goal to reduce administrative burden on providers, we 
proposed to remove the FIM<SUP>TM</SUP> instrument (item 39) and 
associated Function Modifiers (items 29 through 38) from the IRF-PAI 
beginning with FY 2020, that is, for all IRF discharges beginning on or 
after October 1, 2019. This decrease in burden will be accounted for in 
the information collection under OMB control number (0938-0842).
    We invited public comment on our proposal to remove the 
FIM<SUP>TM</SUP> instrument and associated Function Modifiers from the 
IRF-PAI beginning with FY 2020, that is, for all IRF discharges 
beginning on or after October 1, 2019. We summarize and respond to the 
comments received on this proposal and discuss our final decision on 
this proposal in section VIII.B.4 of this final rule.
    In section VIII.B of this final rule, we discuss the proposed CMG 
case-mix classification revisions that are necessary to replace our use 
of the FIM<SUP>TM</SUP> items in assigning CMGs with use of data items 
located in the Quality Indicators section of the IRF-PAI.

B. Refinements to the Case-Mix Classification System Beginning With FY 
2020

1. IRF Classification System Overview
    Section 1886(j)(2) of the Act requires the Secretary to establish 
case-mix groups for payment under the IRF PPS. Under section 
1886(j)(2)(B) of the Act, the Secretary must assign each case-mix group 
a weighting factor that reflects the relative facility resources used 
for patients classified within the group as compared to patients 
classified within other groups. Additionally, section 1886(j)(2)(C)(i) 
of the Act requires the Secretary from time to time to adjust the 
classifications and weighting factors as appropriate to reflect changes 
in treatment patterns, technology, case-mix, number of payment units 
for which payment is made under title XVIII of the Act, and other 
factors which may affect the relative use of resources. Such 
adjustments must be made in a manner so that changes in aggregate 
payments under the classification system are a result of real changes 
and are not a result of changes in coding that are unrelated to real 
changes in case mix.
    In the FY 2002 IRF PPS final rule (66 FR 41316), we established a 
case-mix classification system for IRFs under the IRF PPS. Under the 
case-mix classification system, a patient's principal diagnosis or 
impairment is used to classify the patient into a RIC. The patient is 
then placed into a CMG within the RIC, based on the patient's 
functional status (motor and cognitive scores) and sometimes age. Other 
special circumstances, such as the occurrence of very short stays, or 
cases where the patient expired, are also considered in determining the 
appropriate CMG. CMGs are further divided into tiers based on the 
presence of certain comorbidities. These tiers reflect the differential 
cost of care compared with the average beneficiary in a CMG. We refer 
readers to the FY 2002 final rule (66 FR 41316) and the FY 2006 IRF 
final rule (70 FR 47886) for a detailed discussion of the development 
of, and refinements to, the IRF case-mix classification system.
    As discussed in section VIII.A of this final rule, we proposed to 
remove the FIM<SUP>TM</SUP> instrument and associated Function 
Modifiers from the IRF-PAI beginning with FY 2020, that is, for all IRF 
discharges beginning on or after October 1, 2019. This would 
necessitate the incorporation of the data items collected on admission 
and located in the Quality Indicators section of the IRF-PAI version 
2.0 into the CMG classification system, as the FIM<SUP>TM</SUP> data 
would no longer be available to assign patients to CMGs for purposes of 
payment under the IRF PPS. In accordance with section 1886(j)(2)(C)(i) 
of the Act and as specified in Sec.  412.620(c) we proposed to replace 
our use of the FIM<SUP>TM</SUP> items in assigning CMGs with use of 
data items located in the Quality Indicators section of the IRF-PAI. In 
addition, to ensure that IRF payments are accurately calculated using 
the data items located in the Quality Indicators section of the IRF-
PAI, we also proposed to update the functional status scores used in 
the case-mix system and to revise the CMGs and update the relative 
weights and average length of stay values associated with the revised 
CMGs. We proposed to implement these revisions to the case-mix 
classification system in a budget neutral manner.
    We proposed to make these changes effective beginning with FY 2020, 
that is, for discharges occurring on or after October 1, 2019, as they 
require extensive systems changes. That is, we proposed to implement 
these changes with a one-year delayed effective date to allow adequate 
time for providers and vendors to make the necessary systems changes. 
These proposed changes are discussed in detail below. We did not 
propose any changes to the methodology used to update the CMGs, 
relative weights and average length of stay values for FY 2019, that 
is, for discharges occurring on or after October

[[Page 38535]]

1, 2018, and on or before September 30, 2019. For information on the 
updates to the CMG relative weights and average length of stay values 
for FY 2019, please refer to section IV of this final rule.
2. Changes to the Functional Status Scores Beginning With FY 2020
    As discussed in the FY 2006 IRF final rule (70 FR 47886), under the 
CMG case-mix classification system, a patient's principal diagnosis or 
impairment is used to classify the patient into a RIC. After using the 
RIC to define the first division among the inpatient rehabilitation 
groups, a patient's motor and cognitive scores and age are used to 
partition the cases further. To classify a patient into a CMG, IRFs use 
the admission assessment data from the IRF-PAI to score a patient's 
functional status. Currently, the functional status scores consist of 
what are termed ``motor'' items and ``cognitive'' items. In addition to 
the functional status scores, the patient's age may also influence the 
patient's CMG classification. The motor items are generally indications 
of the patient's physical functioning level. The cognitive items are 
generally indications of the patient's mental functioning level, and 
are related to the patient's ability to process and respond to 
empirical factual information, use judgment, and accurately perceive 
what is happening. Under the current case-mix system, the motor and 
cognitive scores are derived from a combination of data elements in the 
FIM<SUP>TM</SUP> instrument (item 39 of the IRF-PAI). Eating, grooming, 
bathing, dressing upper body, dressing lower body, toileting, bladder 
management, bowel management, transfer to bed/chair/wheelchair, 
transfer to toilet, walking or wheelchair use, and stair climbing are 
the data elements collected through the FIM<SUP>TM</SUP> instrument 
that are currently used to compute a patient's weighted motor score. 
Comprehension, expression, social interaction, problem solving, and 
memory are the data elements collected through the FIM<SUP>TM</SUP> 
instrument that are used to compute a patient's cognitive score. Each 
data element is recorded on the IRF-PAI and scored on a scale of 1 to 
7, with a 7 indicating complete independence in this area of 
functioning, and a one indicating that a patient is very impaired in 
this area of functioning. Additionally, a value of zero is used to 
indicate that an activity did not occur. The scores for each data 
element above are then used to determine the patient's weighted motor 
score and cognitive score, which may be used to group a patient into a 
CMG for payment purposes under the IRF PPS.
    As discussed in section VIII.A of this final rule, we proposed to 
remove the FIM<SUP>TM</SUP> instrument and associated Function 
Modifiers from the IRF-PAI beginning with FY 2020. As the data in the 
FIM<SUP>TM</SUP> instrument section will no longer be available to 
determine the motor and cognitive scores used to assign patients to 
CMGs, we proposed to use data items collected on admission and located 
in the Quality Indicators section of the IRF-PAI to derive the 
functional status scores used to assign patients to a CMG for payment 
purposes under the IRF PPS. The Quality Indicators section of the IRF-
PAI includes data items that are similar to the data elements located 
in the FIM<SUP>TM</SUP> instrument, in addition to new data elements 
that capture additional functional status information.
    In the summer of 2013, we contracted with Research Triangle 
Institute, International (RTI) to explore use of the data items 
collected in the Quality Indicators section of the IRF-PAI in setting 
IRF PPS payments. Some of the data items collected in the Quality 
Indicators section of the IRF-PAI were originally developed and tested 
as part of the Post-Acute Care Payment Reform Demonstration (PAC-PRD) 
version of the Continuity Assessment Record and Evaluation (CARE) Item 
Set. The CARE item set was developed in response to a mandate in 
section 5008 of the Deficit Reduction Act of 2005 (Pub. L. 109-171, 
enacted on February 8, 2006) (DRA) to develop a uniform patient 
assessment instrument to assess patients across all types of acute and 
PAC providers.
    In the first stage of this analysis, RTI hosted a Technical Expert 
Panel (TEP) on September 18, 2014, which brought together researchers, 
clinicians, and representatives from provider associations to discuss 
exploratory research on the potential to incorporate the CARE data 
items in the current case-mix system utilized in the IRF PPS. We 
received helpful feedback on the exploratory research including 
clinicians' views of the importance and significance of various 
findings, input on the methodology used to incorporate the CARE items, 
and potential limitations of the analysis. RTI's analysis of the 
original CARE data set, along with guidance from the TEP, suggested the 
need to derive different functional status measures from the data 
collected in the Quality Indicators section of the IRF-PAI. The data 
items from the Quality Indicators section of the IRF-PAI contain 
slightly different information and utilize a different rating system 
than the items collected on the FIM<SUP>TM</SUP> instrument. Thus, we 
proposed to modify the IRF case-mix classification system to calculate 
IRF PPS payments correctly using the admission data items from the 
Quality Indicators section of the IRF-PAI. RTI considered a broad range 
of the data items in the Quality Indicators section of the IRF-PAI to 
identify the best predictors of IRF costs. These analyses examined all 
motor, cognitive, and additional items collected at admission to 
predict costs. The regression analysis indicated that the components of 
functional status that were found to best predict costs were the 
patient's motor function, a memory function, a communication function 
based on comprehension and expression, and age.
    The motor items used to derive the additive motor score are eating, 
oral hygiene, toileting hygiene, shower bathe/self, upper body 
dressing, lower body dressing, putting on/taking off footwear, bladder 
continence, bowel continence, roll left and right, sit to lying, lying 
to sitting on side of bed, sit to stand, chair/bed-to-chair transfer, 
toilet transfer, walk 10 feet, walk 50 feet with two turns, walk 150 
feet, and 1 step (curb). The item used to derive the memory score is 
the BIMS summary score, which is based on the repetition of three 
words, temporal orientation, and recall. The communication score is 
derived from the hearing, speech, and vision items including expression 
of ideas and wants and understanding verbal and non-verbal content. We 
proposed to incorporate a motor score, a memory score, a communication 
score, and age into the IRF case-mix classification system. Currently, 
the IRF case-mix system uses a weighted motor score and an unweighted 
cognitive score. We did not propose to apply a weighting methodology to 
the motor score at this time. We proposed to derive the scores for each 
respective group of the functional status items described above by 
calculating the sum of the items that constitute each functional status 
component. For a more detailed discussion of these analyses, please 
refer to the technical report, ``Analyses to Inform the Potential Use 
of Standardized Patient Assessment Data Elements in the Inpatient 
Rehabilitation Facility Prospective Payment System,'' available at 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Research.html.
    As noted in the proposed rule, we believe that it is appropriate to 
utilize the admission data items located in the Quality Indicators 
section of the IRF-PAI, as described above, in place of the FIM\TM\ 
items to determine functional status, as the data items located in the 
Quality Indicators section are now

[[Page 38536]]

available and collected by all IRF providers for purposes of the IRF 
QRP. We believed the proposed motor score, a memory score, a 
communication score, and age should compose the functional status 
scores in the IRF case-mix classification system, as our analysis 
determined these to be the best predictors of cost. The removal of the 
FIM\TM\ instrument and the incorporation of certain items from the 
Quality Indicators section of the IRF-PAI to assign patients to CMGs 
support our efforts to reduce burden on providers. Additionally, the 
removal of the FIM\TM\ instrument and the incorporation of certain 
items from the Quality Indicators section of the IRF-PAI into the CMG 
case-mix system support our broader goal of standardizing assessment 
data collection across PAC settings.
    We proposed to utilize certain data items located in the Quality 
Indicators section of the IRF-PAI, as described above, to generate the 
functional status scores that will be used to group patients into CMGs 
for payment purposes under the IRF PPS beginning in FY 2020.
    We invited public comments on the proposed use of certain data 
items located in the Quality Indicators section of the IRF-PAI, as 
described above, for payment purposes under the IRF PPS beginning with 
FY 2020, that is, for all IRF discharges beginning on or after October 
1, 2019. We summarize and respond to the comments received on this 
proposal and discuss our final decision on this proposal in section 
VIII.B.4 of this final rule.
3. Updates to the Score Reassignment Methodology Beginning With FY 2020
    As previously noted, the data items located in the Quality 
Indicators section of the IRF-PAI utilize a different rating system 
than the FIM\TM\ instrument. There are several important differences to 
note regarding the rating systems for the data items from the Quality 
Indicators section of the IRF-PAI and the data contained in the FIM\TM\ 
instrument. First, the data items from the Quality Indicators section 
of the IRF-PAI are assessed based on a patient's usual performance 
during the assessment period in contrast to the FIM\TM\ items, which 
are assessed based on the patient's lowest functional score during the 
assessment period. The data items from the Quality Indicators section 
of the IRF-PAI are generally assessed using a 6 level rating scale for 
the self-care and mobility elements and a 4 level scale for the 
cognitive elements. The FIM\TM\ data items use a 7 level scale. 
Additionally, the FIM\TM\ scale includes a value of zero to indicate an 
activity did not occur or was not observed. The data items from the 
Quality Indicators section of the IRF-PAI utilize the following four 
codes to indicate why an activity did not occur: the patient refused to 
complete an activity (code 07), the patient did not perform this 
activity (code 09), the activity was not attempted due to environmental 
limitations (code 10), or the activity was not attempted due to a 
medical condition or safety concern (code 88).
    As the rating scale for the data items in the Quality Indicators 
section of the IRF-PAI captures multiple reasons an activity did not 
occur, we proposed to modify the methodology currently used to reassign 
values indicating an activity did not occur or was not observed, when 
they are recorded on an item used for payment, beginning with FY 2020. 
Currently, when a code of 0 appears for one of the FIM<SUP>TM</SUP> 
items on the IRF-PAI used to determine payment, the item is reassigned 
another value to determine the appropriate payment for the patient. In 
the FY 2002 IRF PPS final rule (66 FR 41316), we finalized a 
methodology to assign a code of 1 (indicating the patient needed total 
assistance) whenever the recorded code indicated that the activity did 
not occur. Subsequently, in the FY 2006 IRF PPS final rule, we revised 
this methodology to assign a value of 2 when the transfer to toilet 
item was coded with a zero value. For more information on the rationale 
behind this decision we refer readers to the 2006 IRF PPS final rule 
(70 FR 47896 through 47902). As the data items from the Quality 
Indicators section of the IRF-PAI now utilize 4 values to indicate an 
activity did not occur and a dash to indicate ``no information'', we 
proposed to modify the reassignment methodology to incorporate the new 
codes. For the self-care and mobility items identified above, we 
proposed to recode values of 07, 09, 10, 88, and the presence of a dash 
(``-'') to 1, the most dependent level, except the toilet transfer 
item, which is recoded to 2. These recodes are consistent with the 
current reassignment methodology rules. We also proposed to change the 
way we treat specific values for the bowel continence and bladder 
continence items, as our analysis of these items and current coding 
guidelines indicate these changes are necessary. The bladder continence 
and bowel continence items utilize a different scale than the other 
function items and may capture clinical information that is not 
necessarily reflective of a patient's functional ability. For instance, 
the bladder continence scale includes the options ``no urine output'' 
or ``not applicable'' for cases where a patient may have renal failure 
or an indwelling catheter. A clinical review of these cases determined 
that patients for whom these values are coded are similar in terms of 
resource needs and costliness to patients for whom functional ability 
is captured. Based on this review, we proposed to recode these values 
to be able to score the functional status of a patient when these 
values are coded on the IRF-PAI. For the bladder continence item, we 
proposed to reassign a value of 1 (stress incontinence only) to 0 
(always continent), a value of 5 (no urine output) to 0 (always 
continent), and a value of 9 (not applicable) to 4 (always 
incontinent). For the bowel continence item, we proposed to reassign a 
value of 9 (not rated) to 2 (frequently incontinent). For both items, 
we proposed to reassign a missing score to 0 (always continent). As 
noted in the proposed rule, we believe these changes are necessary to 
update the score reassignment methodology used to derive the functional 
status scores to reflect use of the new data items from the Quality 
Indicators section of the IRF-PAI and to accurately assign payments 
based on a patients' expected costliness.
    We invited public comments on the proposed updates to the score 
reassignment methodology beginning with FY 2020, that is, for all IRF 
discharges beginning on or after October 1, 2019. We summarize and 
respond to the comments received on this proposal and discuss our final 
decision on this proposal in section VIII.B.4 of this final rule.
4. Refinements to the CMGs Beginning With FY 2020
    As previously noted, we proposed to modify the methodology used to 
update the CMGs used to classify IRF patients for purposes of 
establishing payment amounts, beginning with FY 2020. We proposed to 
implement revisions to the CMGs in a budget-neutral manner. As 
discussed in the FY 2006 IRF PPS final rule (70 FR 47886 through 
47887), the current CMGs were derived through Classification and 
Regression Trees (CART) analysis that incorporated a patient's 
functional status (motor score and cognitive score) and age into the 
construction of the CMGs. Under the IRF case-mix classification system, 
a patient's principal diagnosis or impairment is used to classify the 
patient into a RIC. Currently, there are 21 diagnosis-based RICs. The 
RICs are then further subdivided into 92 CMGs.

[[Page 38537]]

Of the 92 CMGs, patients are assigned to 87 of the CMGs based on the 
patient's primary reason for rehabilitation care, age and functional 
status. There are also five special CMGs to account for very short 
stays and for patients who expire in the IRF.
    The CART method is useful in identifying statistical relationships 
among data and, using these relationships, constructing a predictive 
model for organizing and separating a large set of data into smaller, 
similar groups. CART ensures that the proposed CMGs recognize that 
patients with clinically distinct resource needs are appropriately 
grouped in the case-mix classification system. CART is an iterative 
process that creates initial groups of patients then searches for ways 
to split the initial groups to further decrease the clinical and cost 
variances within a group and increase the explanatory power of the 
CMGs.
    As noted previously, the data items from the Quality Indicators 
section of the IRF-PAI contain slightly different information and 
utilize a different rating system than the items collected on the 
FIM\TM\ instrument. Thus, we proposed to update the IRF case-mix 
classification system to ensure that IRF PPS payments reflect as 
closely as possible the costs of care when we convert to using the 
admission data items from the Quality Indicators section of the IRF-
PAI. To convert from using the FIM\TM\ items to using the data items 
from the Quality Indicators section of the IRF-PAI, RTI first had to 
identify which quality indicator data items would be the best 
predictors of cost, as previously discussed. Then, RTI used CART 
analysis to modify the CMG definitions to reflect the use of the 
different assessment items.
    To develop CMGs based on the data items from the Quality Indicators 
section of the IRF-PAI, RTI used CART analysis to divide patients into 
payment groups based on similarities in their clinical characteristics 
and relative costs. As part of this analysis, RTI imposed certain 
restraints on these groupings to decrease the resulting number of CMGs 
(to ensure that the payment system did not become unduly complicated). 
For a more detailed discussion of these analyses or for more 
information on the development of the CMGs, we refer readers to the 
technical report, ``Analyses to Inform the Potential Use of 
Standardized Patient Assessment Data Elements in the Inpatient 
Rehabilitation Facility Prospective Payment System'', available at 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Research.html.
    In developing the revised CMGs, RTI's analysis indicated that RIC 
16 and RIC 17 should incorporate the CMGs shown in Table 8, based on 
motor score and cognitive function, derived from the memory and 
communication scores.

  Table 8--CART-Based CMGs for RIC 16 (Pain Syndrome) and RIC 17 (Major Multiple Trauma Without Brain or Spinal
                                                  Cord Injury)
----------------------------------------------------------------------------------------------------------------
    RIC            CMG            Cases         Avg. cost         Rule 1            Rule 2            Rule 3
----------------------------------------------------------------------------------------------------------------
16.........               1             255      $11,088.65  Motor >= 70.....
16.........               2             270       13,402.22  Motor < 70......  Motor >= 61.....
16.........               3             188       14,775.04  Motor < 61......  Cognition >= 7..
16.........               4             260       16,806.16  Motor < 61......  Cognition >= 7..
17.........               1            1149       12,911.91  Motor >= 62.....
17.........               2            1557       15,504.35  Motor < 62......  Motor >= 51.....
17.........               3             624       17,273.01  Motor < 51......  Motor >= 47.....
17.........               4             927       19,209.23  Motor < 47......  Motor >= 39.....
17.........               5             289       20,245.80  Motor < 51......  Motor < 39......  Cognition < 8.
17.........               6             205       23,465.77  Motor < 51......  Motor < 39......  Cognition >= 8.
----------------------------------------------------------------------------------------------------------------

    We considered proposing to revise the CMGs for RIC 16 and RIC 17 as 
shown above. However, these CMGs indicate higher costs for patients 
with no cognitive impairment as compared to those with any level of 
impairment. As this unexpected result may be driven by small sample 
size, we proposed to combine CMG 03 and 04 for RIC 16 and to combine 
CMG 05 and 06 for RIC 17 as shown in Table 9.
    Table 9 contains the proposed CMGs and their respective 
descriptions, including the functional status scores and age that we 
proposed to use to classify discharges into CMGs. Table 9 also contains 
the CMG relative weights and average length of stay values for the 
CMGs. We did not propose any changes to methodology used to determine 
the CMG relative weights that was finalized in the FY 2002 IRF final 
rule (66 FR 41351 through 41357) and revised in the FY 2009 IRF final 
rule (73 FR 46372 through 46374). For more information on the 
methodology used to calculate the CMG relative weights please refer to 
section IV. of this final rule.

                           Table 9--Revised Relative Weights and Average Length of Stay Values for the Revised Case-Mix Groups
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Relative weight                         Average length of stay
                                                                 ---------------------------------------------------------------------------------------
             CMG                CMG description (M = motor, A =                                      No                                          No
                                              age)                 Tier 1    Tier 2    Tier 3    comorbidity   Tier 1    Tier 2    Tier 3    comorbidity
                                                                                                    tier                                        tier
--------------------------------------------------------------------------------------------------------------------------------------------------------
0101.........................  Stroke M >= 77...................    1.0570    0.9232    0.8492        0.8050        11        11        10            10
0102.........................  Stroke M < 77 and M >= 68........    1.3370    1.1678    1.0741        1.0182        13        13        12            12
0103.........................  Stroke M < 68 and M >= 55........    1.6848    1.4715    1.3535        1.2831        15        16        15            15
0104.........................  Stroke M < 55 and M >= 47........    2.1484    1.8764    1.7260        1.6361        19        20        19            19
0105.........................  Stroke M < 47 and A >= 85........    2.4137    2.1081    1.9391        1.8382        22        22        21            20
0106.........................  Stroke M < 47 and A < 85.........    2.7956    2.4417    2.2460        2.1291        26        27        24            23
0201.........................  Traumatic Brain Injury M >= 73...    1.2418    1.0426    0.9376        0.8708        12        12        11            11
0202.........................  Traumatic Brain Injury M < 73 and    1.4929    1.2534    1.1272        1.0468        14        14        13            12
                                M >= 64.
0203.........................  Traumatic Brain Injury M < 64 and    1.7699    1.4859    1.3363        1.2411        16        17        15            14
                                M >= 51.
0204.........................  Traumatic Brain Injury M < 51 and    2.1753    1.8263    1.6424        1.5254        21        20        18            17
                                M >= 36.
0205.........................  Traumatic Brain Injury M < 36....    2.6959    2.2634    2.0355        1.8904        36        24        22            19

[[Page 38538]]

 
0301.........................  Non-Traumatic Brain Injury M >=      1.2192    1.0096    0.9348        0.8735        11        11        11            10
                                70.
0302.........................  Non-Traumatic Brain Injury M < 70    1.5403    1.2755    1.1810        1.1034        14        14        13            13
                                and M >= 57.
0303.........................  Non-Traumatic Brain Injury M < 57    1.8496    1.5316    1.4182        1.3251        17        16        15            15
                                and M >= 45.
0304.........................  Non-Traumatic Brain Injury M < 45    2.0666    1.7113    1.5846        1.4806        20        18        17            16
                                and A >= 79.
0305.........................  Non-Traumatic Brain Injury M < 45    2.2755    1.8843    1.7447        1.6302        21        21        18            17
                                and A < 79.
0401.........................  Traumatic Spinal Cord Injury M >=    1.2999    1.0952    1.0122        0.9370        13        12        12            11
                                64.
0402.........................  Traumatic Spinal Cord Injury M <     1.6630    1.4011    1.2949        1.1987        15        15        15            14
                                64 and M >= 57.
0403.........................  Traumatic Spinal Cord Injury M <     1.9672    1.6574    1.5318        1.4180        15        18        17            16
                                57 and M >= 46.
0404.........................  Traumatic Spinal Cord Injury M <     2.6209    2.2082    2.0408        1.8892        25        24        23            21
                                46 and M >= 36.
0405.........................  Traumatic Spinal Cord Injury M <     3.1923    2.6895    2.4857        2.3010        34        29        27            24
                                36 and A < 63.
0406.........................  Traumatic Spinal Cord Injury M <     3.6963    3.1142    2.8782        2.6643        46        34        28            29
                                36 and A >= 63.
0501.........................  Non-Traumatic Spinal Cord Injury     1.1291    0.9068    0.8382        0.7642        10        11        10             9
                                M >= 75.
0502.........................  Non-Traumatic Spinal Cord Injury     1.4096    1.1322    1.0464        0.9541        14        13        12            11
                                M < 75 and M >= 63.
0503.........................  Non-Traumatic Spinal Cord Injury     1.7905    1.4381    1.3292        1.2119        16        15        15            14
                                M < 63 and M >= 52.
0504.........................  Non-Traumatic Spinal Cord Injury     2.2191    1.7823    1.6473        1.5020        21        19        18            17
                                M < 52 and M >= 44.
0505.........................  Non-Traumatic Spinal Cord Injury     2.8377    2.2792    2.1065        1.9206        27        24        22            21
                                M < 44.
0601.........................  Neurological M >= 69.............    1.3205    1.0500    0.9795        0.8873        12        12        11            10
0602.........................  Neurological M < 69 and M >= 57..    1.6324    1.2981    1.2109        1.0969        14        14        13            13
0603.........................  Neurological M < 57 and M >= 47..    1.9170    1.5244    1.4220        1.2882        16        16        15            14
0604.........................  Neurological M < 47..............    2.2218    1.7667    1.6481        1.4929        20        18        17            16
0701.........................  Fracture of Lower Extremity M >=     1.1960    0.9851    0.9487        0.8595        11        11        11            10
                                67.
0702.........................  Fracture of Lower Extremity M <      1.5308    1.2608    1.2142        1.1001        14        14        14            13
                                67 and M >= 55.
0703.........................  Fracture of Lower Extremity M <      1.8510    1.5245    1.4682        1.3302        17        17        16            15
                                55 and M >= 45.
0704.........................  Fracture of Lower Extremity M <      2.0790    1.7124    1.6491        1.4941        18        18        18            17
                                45.
0801.........................  Replacement of Lower Extremity       1.0475    0.8892    0.8044        0.7437        10        10         9             9
                                Joint M >= 67.
0802.........................  Replacement of Lower Extremity       1.2925    1.0972    0.9926        0.9176        12        12        11            11
                                Joint M < 67 and M >= 56.
0803.........................  Replacement of Lower Extremity       1.5469    1.3132    1.1880        1.0982        15        15        13            12
                                Joint M < 56 and M >= 47.
0804.........................  Replacement of Lower Extremity       1.8517    1.5719    1.4220        1.3146        16        17        15            15
                                Joint M < 47.
0901.........................  Other Orthopedic M >= 69.........    1.1749    0.9376    0.8792        0.8083        11        11        10            10
0902.........................  Other Orthopedic M < 69 and M >=     1.5103    1.2052    1.1302        1.0390        13        14        13            12
                                55.
0903.........................  Other Orthopedic M < 55 and M >=     1.8117    1.4457    1.3557        1.2463        15        16        15            14
                                47.
0904.........................  Other Orthopedic M < 47..........    2.0393    1.6273    1.5261        1.4029        17        17        16            16
1001.........................  Amputation Lower Extremity M >=      1.3231    1.1340    1.0276        0.9487        12        13        12            11
                                67.
1002.........................  Amputation Lower Extremity M < 67    1.6372    1.4032    1.2715        1.1739        15        15        14            14
                                and M >= 59.
1003.........................  Amputation Lower Extremity M < 59    1.8961    1.6251    1.4726        1.3596        17        16        16            15
                                and M >= 49.
1004.........................  Amputation Lower Extremity M < 49    2.1617    1.8527    1.6788        1.5500        19        20        18            17
1101.........................  Amputation Non-Lower Extremity...    1.8322    1.3022    1.3022        1.0585        15        14        13            12
1201.........................  Osteoarthritis M >= 65...........    1.3071    1.0757    0.9575        0.8777        11        12        11            11
1202.........................  Osteoarthritis M < 65 and M >= 49    1.6787    1.3816    1.2297        1.1273        14        15        14            13
1203.........................  Osteoarthritis M < 49............    1.9145    1.5756    1.4024        1.2857        16        16        16            15
1301.........................  Rheumatoid Other Arthritis M >=      1.1111    0.9753    0.9076        0.8570        10        11        10            11
                                69.
1302.........................  Rheumatoid Other Arthritis M < 69    1.3176    1.1567    1.0764        1.0164        12        13        12            12
                                and M >= 58.
1303.........................  Rheumatoid Other Arthritis M < 58    1.6691    1.4652    1.3635        1.2875        13        17        14            14
                                and A >= 72.
1304.........................  Rheumatoid Other Arthritis M < 58    1.7642    1.5487    1.4412        1.3609        14        17        15            15
                                and A < 72.
1401.........................  Cardiac M >= 70..................    1.1839    0.9920    0.8991        0.8023        11        11        10             9
1402.........................  Cardiac M < 70 and M >= 59.......    1.4635    1.2263    1.1115        0.9918        13        13        12            11
1403.........................  Cardiac M < 59 and M >= 51.......    1.7034    1.4272    1.2936        1.1544        15        15        14            13
1404.........................  Cardiac M < 51...................    1.9704    1.6510    1.4964        1.3353        18        17        16            14
1501.........................  Pulmonary M >= 84................    1.0149    0.9214    0.8346        0.7907         7        10         9             9
1502.........................  Pulmonary M < 84 and M >= 74.....    1.2323    1.1187    1.0133        0.9601        11        12        11            10
1503.........................  Pulmonary M < 74 and M >= 59.....    1.4557    1.3215    1.1970        1.1341        13        13        12            12
1504.........................  Pulmonary M < 59 and M >= 46.....    1.7464    1.5853    1.4360        1.3606        15        15        14            14
1505.........................  Pulmonary M < 46.................    2.0273    1.8404    1.6670        1.5794        20        17        15            16
1601.........................  Pain Syndrome M >= 70............    1.2293    0.9242    0.8776        0.7774        10        11        10            10
1602.........................  Pain Syndrome M < 70 and M >= 61.    1.5216    1.1439    1.0863        0.9622        12        12        12            11
1603.........................  Pain Syndrome M < 61.............    1.8391    1.3826    1.3129        1.1630        13        15        14            13
1701.........................  Major Multiple Trauma Without        1.4355    1.1154    1.0668        0.9504        14        13        12            11
                                Brain or Spinal Cord Injury M >=
                                62.
1702.........................  Major Multiple Trauma Without        1.7939    1.3938    1.3330        1.1876        16        15        15            14
                                Brain or Spinal Cord Injury M <
                                62 and M >= 51.
1703.........................  Major Multiple Trauma Without        2.0059    1.5585    1.4906        1.3280        17        16        16            15
                                Brain or Spinal Cord Injury M <
                                51 and M >= 47.
1704.........................  Major Multiple Trauma Without        2.1848    1.6975    1.6236        1.4465        19        18        17            16
                                Brain or Spinal Cord Injury M <
                                47 and M >= 39.
1705.........................  Major Multiple Trauma Without        2.4250    1.8841    1.8020        1.6055        21        21        19            17
                                Brain or Spinal Cord Injury M <
                                39.
1801.........................  Major Multiple Trauma With Brain     1.1980    1.0351    0.8752        0.8233        13        11        10            10
                                or Spinal Cord Injury M >= 72.
1802.........................  Major Multiple Trauma With Brain     1.5335    1.3250    1.1204        1.0539        14        16        12            12
                                or Spinal Cord Injury M < 72 and
                                M >= 58.
1803.........................  Major Multiple Trauma With Brain     2.0608    1.7806    1.5056        1.4162        23        19        16            16
                                or Spinal Cord Injury M < 58 and
                                M >= 42.

[[Page 38539]]

 
1804.........................  Major Multiple Trauma With Brain     2.9220    2.5248    2.1348        2.0081        34        25        23            22
                                or Spinal Cord Injury M < 42.
1901.........................  Guillain-Barr[eacute] M >= 54....    1.5211    1.2331    1.1228        1.0834        16        15        12            13
1902.........................  Guillain-Barr[eacute] M < 54.....    3.4558    2.8014    2.5507        2.4613        39        28        27            27
2001.........................  Miscellaneous M >= 70............    1.2339    1.0047    0.9349        0.8447        11        11        10            10
2002.........................  Miscellaneous M < 70 and M >= 58.    1.5240    1.2410    1.1547        1.0433        14        13        12            12
2003.........................  Miscellaneous M < 58 and M >= 49.    1.7837    1.4525    1.3515        1.2211        16        15        14            14
2004.........................  Miscellaneous M < 49.............    2.0373    1.6589    1.5436        1.3947        19        17        16            15
2101.........................  Burns............................    1.9058    1.5390    1.5118        1.3015        22        16        16            14
5001.........................  Short-stay cases, length of stay   ........  ........  ........        0.1801  ........  ........  ........             3
                                is 3 days or fewer.
5101.........................  Expired, orthopedic, length of     ........  ........  ........        0.6240  ........  ........  ........             7
                                stay is 13 days or fewer.
5102.........................  Expired, orthopedic, length of     ........  ........  ........        1.7071  ........  ........  ........            18
                                stay is 14 days or more.
5103.........................  Expired, not orthopedic, length    ........  ........  ........        0.6795  ........  ........  ........             7
                                of stay is 15 days or fewer.
5104.........................  Expired, not orthopedic, length    ........  ........  ........        2.1069  ........  ........  ........            21
                                of stay is 16 days or more.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The following would be the most significant differences between the 
current CMGs and the revised CMGs:
    <bullet> There would be fewer CMGs than before (88 instead of 92 
currently).
    <bullet> There would be fewer CMGs in RICs 1, 2, 5, 8, 11, and 19, 
while there would be more CMGs in RICs 3, 4, 10, 13, 15, 17, and 18.
    <bullet> A patient's age would affect assignment for CMGs in RICs 
1, 3, 4, and 13 whereas it currently affects assignment for CMGs in 
RICs 1, 4, and 8.
    We proposed to utilize the CMGs based on the data items from the 
Quality Indicators section of the IRF-PAI to classify IRF patients for 
purposes of establishing payment under the IRF PPS beginning with FY 
2020. We proposed to implement these revisions in a budget neutral 
manner. For more information on the specific impacts of this change, we 
refer readers to Table 10. We also proposed to update the CMG relative 
weights and average length of stay values associated with the CMGs 
based on the data items from the Quality Indicators section of the IRF-
PAI. We believe it is appropriate to update the CMGs and relative 
weights for FY 2020 to better align IRF payments with the costs of 
caring for IRF patients, given the new information that is captured by 
the data items from the Quality Indicators section of the IRF-PAI. 
Additionally, changes in treatment patterns, technology, case-mix, and 
other factors affecting the relative use of resources in IRFs since the 
current CMGs were last revised, likely require an update to the 
classification system.

                           Table 10--Distributional Effects of the Changes to the CMGs
----------------------------------------------------------------------------------------------------------------
                     Facility classification                      Number of IRFs     Number of      % Change in
---------------------------------------------------------------------------------      cases       mean payment
                                                                                 -------------------------------
                               (1)                                      (2)             (3)             (4)
----------------------------------------------------------------------------------------------------------------
Total...........................................................           1,111         369,684               0
Urban unit......................................................             702         155,121               3
Rural unit......................................................             133          20,074               3
Urban hospital..................................................             265         190,431              -2
Rural hospital..................................................              11           4,058              -1
Urban For-Profit................................................             339         185,702              -2
Rural For-Profit................................................              37           7,388               2
Urban Non-Profit................................................             529         137,321               2
Rural Non-Profit................................................              84          13,338               2
Urban Government................................................              99          22,529               3
Rural Government................................................              23           3,406               4
Urban...........................................................             967         345,552               0
Rural...........................................................             144          24,132               2
                         Urban by region
Urban New England...............................................              29          15,514              -2
Urban Middle Atlantic...........................................             134          48,194              -2
Urban South Atlantic............................................             144          69,040               0
Urban East North Central........................................             173          46,132               3
Urban East South Central........................................              56          24,250              -1
Urban West North Central........................................              73          18,333               0
Urban West South Central........................................             180          75,717              -1
Urban Mountain..................................................              81          26,683              -1
Urban Pacific...................................................              97          21,689               4
                         Rural by region
Rural New England...............................................               4           1,048              -6
Rural Middle Atlantic...........................................              11           1,244               3
Rural South Atlantic............................................              16           3,491              -1
Rural East North Central........................................              21           3,599               2

[[Page 38540]]

 
Rural East South Central........................................              21           4,174               4
Rural West North Central........................................              21           2,829               2
Rural West South Central........................................              40           6,765               4
Rural Mountain..................................................               7             722               4
Rural Pacific...................................................               3             260               2
                         Teaching status
Non-teaching....................................................             842         303,102              -1
Teaching........................................................             269          66,582               2
                            Bed size
<25.............................................................             563          85,835               3
25-49...........................................................             314         107,858               1
50-74...........................................................             134          85,923              -1
75-99...........................................................              58          48,564              -2
100-124.........................................................              19          14,527              -2
125+............................................................              23          26,977              -1
----------------------------------------------------------------------------------------------------------------

    Table 10 shows how we estimate that the application of the 
revisions to the case-mix system for FY 2020 would affect particular 
groups. Table 10 categorizes IRFs by geographic location, including 
urban or rural location, and location for CMS's 9 Census divisions of 
the country. In addition, the table divides IRFs into those that are 
separate rehabilitation hospitals (otherwise called freestanding 
hospitals in this section), those that are rehabilitation units of a 
hospital (otherwise called hospital units in this section), rural or 
urban facilities, ownership (otherwise called for-profit, non-profit, 
and government), by teaching status, and bed size. The changes to the 
case-mix classification system are expected to affect the overall 
distribution of payments across CMGs. Note that, because we proposed to 
implement the revisions to the case-mix classification system in a 
budget-neutral manner, total estimated aggregate payments to IRFs would 
not be affected as a result of the revisions to the CMGs. However, 
these revisions may affect the distribution of payments across CMGs.
    We received 94 comments on our proposals to remove the FIM\TM\ 
instrument and associated Function Modifiers from the IRF-PAI beginning 
with FY 2020 and to incorporate certain data items located in the 
Quality Indicators section of the IRF-PAI in the IRF case-mix 
classification system, which are summarized below.
    Comment: Several commenters expressed support for the removal of 
the FIM\TM\ and associated Function Modifier items from the IRF-PAI. 
One commenter stated that collection of both sets of data items is 
inefficient and takes time away from patient care and also noted that 
they prefer the data items located in the Quality Indicators section of 
the IRF-PAI as they are easier to score and are better understood. 
Another commenter was fully supportive of this proposal, noting that it 
would remove the requirement of having to report on similar data twice, 
which providers have indicated is a substantial burden. This commenter 
stated that they believe this proposal would result in only minor 
changes to the payment system because of the similarities between the 
FIM\TM\ and Quality Indicators data items and noted that there would 
not be any changes to the RICs used in the IRF PPS. Additionally, this 
commenter stated that the removal of the FIM\TM\ instrument is 
responsive to the IMPACT Act requirement to remove duplicative or 
overlapping data as soon as practicable.
    Response: We appreciate the commenters' support for our proposal to 
remove the FIM<SUP>TM</SUP> instrument and associated Function 
Modifiers from the IRF-PAI and agree with the one commenter's 
assessment that this proposal will not result in major changes to the 
IRF case-mix classification system. We also agree with the commenter 
that the proposal to remove the FIM<SUP>TM</SUP> instrument and 
associated Function Modifiers from the IRF-PAI aligns with the overall 
goals of the IMPACT Act.
    Comment: While many commenters were appreciative of efforts to 
reduce burden and generally supportive of future post-acute care 
payment reform efforts, most commenters did not support the removal of 
the FIM<SUP>TM</SUP> instrument and associated Function Modifiers from 
the IRF-PAI, citing concerns over the incorporation of the data items 
located in the Quality Indicators section of the IRF-PAI into the IRF 
PPS. Several commenters stated that too little is known about the 
accuracy, consistency and clinical efficacy of these data items. Many 
commenters expressed concern that these items have not been 
meaningfully evaluated and have not been found to be valid and reliable 
measures of patients' functional status. Additionally, many commenters 
stated that the data items in the Quality Indictors section of the IRF-
PAI have not been sufficiently studied, understood, or validated to be 
used as the basis for a new budget neutral case-mix system. Many 
commenters noted they were supportive of the objective to eliminate 
duplicative data elements, and some were supportive of potentially 
removing the FIM<SUP>TM</SUP> in the future, but many commenters stated 
that finalizing the removal of the FIM<SUP>TM</SUP> data would be 
premature at this time. Commenters expressed concerns that the data 
items that we had proposed to replace the FIM<SUP>TM</SUP> data items 
have not been proven reliable or valid for payment purposes and 
requested to continue reporting data through the FIM<SUP>TM</SUP> 
instrument.
    Response: We disagree with the commenters that the data items in 
the Quality Indicators section of the IRF-PAI have not been 
meaningfully evaluated and have not been proven reliable and valid. The 
data items and response codes located in the Quality Indicators section 
of the IRF-PAI that were proposed to be incorporated into the IRF case-
mix classification system were derived from a subset of items within 
the CARE Tool that were extensively tested for validity and reliability 
in the IRF setting as part of the Post-Acute Care Payment Reform 
Demonstration (PAC PRD). These items were developed to accurately 
measure the functional and cognitive status of

[[Page 38541]]

patients across PAC settings and were found to be reliable and valid. A 
description of the reliability and validity testing methodology and 
results are available in several reports, including The Development and 
Testing of the Continuity Assessment Record and Evaluation (CARE) Item 
Set, the Final Report On Reliability Testing, and the Final Report on 
CARE Item Set and Current Assessment Comparisons. These reports are 
available at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/CARE-Item-Set-and-B-CARE.html.
    Additionally, these data items were extensively tested for payment 
purposes under the IRF PPS as part of the PAC PRD. These data items 
were developed in response to a mandate in Section 5008 of the Deficit 
Reduction Act of 2005 and were collected for analysis under the PAC PRD 
from 2008 to 2010. Analyses conducted through the PAC PRD found that 
the elements of the CARE tool include proven predictors of health care 
costs and utilization across PAC prospective payment systems. More 
information on the PAC PRD is available on the CMS website at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Reports/Research-Reports-Items/PAC_Payment_Reform_Demo_Final.html.
    In addition to this, we conducted reliability and validity testing 
of the data items associated with the four IRF QRP functional outcome 
measures when these measures were submitted for NQF endorsement as 
discussed in the FY 2016 IRF PPS final rule (80 FR 47096 through 
47120). The testing of the data elements, the scale and facility-level 
data showed very good reliability and validity. We will update the 
reliability and validity testing of the data items associated with the 
four IRF QRP functional outcome measures, as these outcome measures are 
due for maintenance of NQF endorsement in 2019.
    In addition to the work conducted under the PAC PRD, RTI conducted 
analysis to identify the best predictors of cost and then used CART 
analysis to modify the CMG definitions to reflect the use of the 
different assessment items. RTI found that the model predicting costs 
using CMGs derived from the items located in the Quality Indicators 
section of the IRF-PAI, based on data from FY 2017, had a slightly 
higher R-squared value than models using the current CMGs which are 
derived from items in the FIM<SUP>TM</SUP> instrument, thus indicating 
that the revised CMGs more accurately predict costs than the CMGs that 
are currently utilized.
    Additionally, we disagree with the commenters' characterization of 
this proposal as the construction of a new budget neutral case-mix 
system. Instead, we proposed revisions to the case-mix system solely to 
incorporate the data items from the Quality Indicators section instead 
of the FIM<SUP>TM</SUP> instrument. We note that that we did not 
propose any changes to the RICs, comorbidity tiers, or the relative 
weight methodology that are currently in place, and we believe the 
proposed revisions to the case-mix groups would result in minor changes 
to the structure of the CMGs.
    Comment: A number of commenters expressed concerns that the removal 
of the FIM<SUP>TM</SUP> instrument could, paradoxically, increase 
burden on providers and potentially worsen patient outcomes. Many 
commenters noted that providers would need to invest in system changes 
due to these proposals. Several commenters stated that facilities need 
adequate lead time, measured in years, to change electronic medical 
record systems, financial tracking and reporting systems, quality 
measurement recording, and program improvement purposes and that any 
regulatory burden reduction derived from eliminating duplicative 
reporting would be offset by having to adapt to major changes in the 
payment system. Additionally, several commenters suggested that 
eliminating the FIM<SUP>TM</SUP> instrument to reduce burden may have 
the opposite effect in light of ongoing confusion and uncertainty in 
proper coding of section GG items, which are the data items in the 
Quality Indicators section, and suggested that burden would increase 
from education and training activities.
    Response: We disagree with the suggestion that the proposed removal 
of the FIM<SUP>TM</SUP> instrument and associated Function Modifiers 
would increase administrative burden associated with Medicare data 
reporting requirements or have an adverse effect on patient outcomes. 
This proposal would simply remove data items from the IRF-PAI and was 
proposed with a one year delayed effective date of October 1, 2019 to 
allow providers time to make necessary system changes. We note that 
with each assessment release, we provide free software to providers 
that allows for the completion and submission of any required 
assessment data. Free downloads of the Inpatient Rehabilitation 
Validation and Entry (IRVEN) software product are available on the CMS 
website at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Software.html. Additionally, we disagree 
with the commenters' suggestions that the proposal would create 
additional burden on providers from training activities, as these data 
items have been collected nationally for almost 2 years. We do not 
believe providers will experience additional burden from the continued 
reporting and collection of this subset of Quality Indicator data 
items.
    Comment: Several commenters supported the continued collection of 
FIM<SUP>TM</SUP> data because the commenters said that they did not 
believe that the Quality Indicator items accurately capture burden of 
care. Multiple commenters noted that the Quality Indicators data items 
use a different scale, and that this compressed scale may limit the 
ability to capture the complexity of the sickest IRF patients. 
Commenters stated that they believe the scale used for the data items 
located in the Quality Indicators section of the IRF-PAI is less 
sensitive than the scale used for the FIM<SUP>TM</SUP> items and 
expressed concern that the scale does not capture a patient's true 
severity of impairment. Several commenters stated the scale for the 
Quality Indicator items does not have the specificity or predictability 
of the FIM<SUP>TM</SUP> scale and expressed concern that the scale for 
these items does not reflect progress between admission and discharge 
in a similar manner as the FIM<SUP>TM</SUP> scale.
    Response: We disagree with the commenters and believe that the data 
items located in the Quality Indicators section of the IRF-PAI 
accurately capture the functional and cognitive status of patients and 
can also be used to accurately assess changes in patients' functional 
status. We believe that the six level scale utilized for the data items 
located in the Quality Indicators section of the IRF-PAI better 
distinguishes change at the highest and lowest levels of patient 
function by documenting minimal change from no change at the low end of 
the scale. This is important for measuring progress in some of the most 
complex cases treated in PAC settings. Additionally, we note that these 
data items were developed with input from the clinical therapy 
communities to better measure the change in function, regardless of the 
severity of the individual's impairment. The self-care and mobility 
data elements included on the IRF-PAI were selected to represent a wide 
range of activity difficulty, and cover a wide range of patient 
functioning, from low to high functioning. At admission, activities in 
the areas of toileting hygiene, dressing,

[[Page 38542]]

bed mobility, bed and toilet transfers, and walking distinguish patient 
ability. Several data elements are activities that are very challenging 
for patients to complete and are frequently coded using the ``activity 
not attempted codes'' at admission. Thus, these more challenging data 
elements may not contribute as much to identify differences in patient 
ability at admission beyond the included data elements. These more 
challenging activities (for example, car transfers and 12 steps) are 
important to assess at discharge as they represent daily activities 
that are important for a person living in the community and are 
important in differentiating patient abilities at discharge when most 
patients have gained function. Overall, the inclusion of these items 
allows the patient the opportunity to demonstrate gains in a variety of 
functional activities and tasks. Rehabilitation care typically focuses 
on several aspects of functioning, and patients may be expected to make 
varying amounts of improvement, from minimal to substantial 
improvement, across different functional activities.
    Comment: A number of commenters noted they use the FIM<SUP>TM</SUP> 
data for various purposes and that removing the FIM<SUP>TM</SUP> 
instrument from the IRF-PAI would not reduce burden as providers would 
still need to collect this data for internal purposes. Other commenters 
indicated that FIM<SUP>TM</SUP> scores are sent to insurance companies 
for approval of continued treatment, are used in other acute settings, 
and are used by private payers to make determinations about IRF 
coverage.
    Response: We appreciate the commenters' concerns regarding the 
various uses of the FIM<SUP>TM</SUP> data items outside of their use 
for Medicare payment, but we note that these concerns are specific to 
business decisions of individual IRF providers. For Medicare payment 
purposes, we believe that the Quality Indicator items represent an 
improved and more standardized way of collecting functional assessment 
data on patients in the IRF setting and across PAC settings, and we 
therefore also believe that collecting both the FIM<SUP>TM</SUP> 
instrument and the Quality Indicator items on the same IRF-PAI form is 
unnecessarily burdensome for providers. We certainly have no issues 
with IRF providers choosing to continue to continue to collect the 
FIM<SUP>TM</SUP> instrument data on their own, but this choice has no 
bearing on our decision to remove the FIM<SUP>TM</SUP> items from the 
IRF-PAI to minimize regulatory burden on providers.
    Comment: One commenter noted that FIM<SUP>TM</SUP> items are 
universally understood across PAC settings and suggested that we should 
continue to collect the FIM<SUP>TM</SUP> items. This commenter also 
suggested that we make the FIM<SUP>TM</SUP> instrument the standard 
throughout all PAC areas to describe motor and cognitive function.
    Response: As certain Quality Indicator data items collect data that 
are similar in nature to data collected through the FIM<SUP>TM</SUP> 
instrument and these items are currently collected in multiple PAC 
settings, we believe that these items are understood by providers in 
the settings in which they are currently collected and that they will 
be well understood in settings in which they may be collected in the 
future. We disagree with the commenter and do not believe that the 
FIM<SUP>TM</SUP> instrument is the best instrument to use to collect 
standardized patient assessment data across all PAC settings. As noted 
above, the data items collected in the Quality Indicators section of 
the IRF-PAI are a subset of items derived from the original CARE tool 
item set that was specifically developed to measure the clinical 
complexity of patients in acute care hospitals and across all four 
types of PAC providers. We continue to believe that the data items 
located in the Quality Indicators section of the IRF-PAI are the most 
appropriate data for assessing functional status in the IRF setting and 
across all PAC settings.
    Comment: Several commenters suggested that we utilize a 
demonstration or establish a model through CMS' Center for Medicare and 
Medicaid Innovation to test the revisions to the IRF-PAI, inform future 
policy recommendations, and gather additional data before making IRFs 
invest in system changes for revisions to the IRF-PAI.
    Response: We do not believe there is any need to test the 
collection of IRF-PAI data as it would not have any impact on, or 
fundamentally change, the current IRF-PAI submission process. The 
Quality Indicator data items that we proposed to use to determine 
Medicare payment to IRFs are already being collected on the IRF-PAI and 
were originally developed and tested as part of the PAC PRD version of 
the CARE item set. These items have undergone extensive testing and 
validation and have been found to be accurate and valid to use for 
payment purposes under the IRF PPS.
    Comment: One commenter stated they were concerned that the 
discontinued use of the FIM<SUP>TM</SUP> instrument could stymy 
research and advancements in treatment and care management, as most 
rehabilitation research and other Physical Medicine and Rehabilitation 
(PM&R) academic papers use FIM<SUP>TM</SUP> data to assess function and 
intervention outcomes.
    Response: As noted previously, the FIM<SUP>TM</SUP> data items and 
the Quality Indicator data items are very similar, and we therefore do 
not believe that the proposed removal of the FIM<SUP>TM</SUP> 
instrument and replacement with the Quality Indicator data will have a 
substantial impact on the research being conducted in this area. 
Researchers may choose to continue to use the FIM<SUP>TM</SUP> data 
items, subject to obtaining any necessary permissions, or 
alternatively, utilize the Quality Indicator data items.
    Comment: One commenter inquired if preadmission screening 
requirements would be updated to utilize Quality Indicator item 
scoring.
    Response: We do not currently require FIM<SUP>TM</SUP> scoring on 
the preadmission screening documentation, and we will not require the 
Quality Indicator item scoring on the preadmission screening 
documentation either.
    Comment: Several commenters expressed concerns that there are no 
certification requirements and no clinician-level certification 
materials for section GG items and inquired if there would be a 
certification process developed for this in the future.
    Response: There is currently no plan to require any certification 
process for completion of the IRF-PAI. Patient assessments must be 
completed in accordance with applicable federal requirements.
    Comment: Commenters stated that transitioning from the 
FIM<SUP>TM</SUP> instrument to the Quality Indicators items will take 
time and sufficient training to ensure the industry understands and 
consistently applies the new definitions and standards. Commenters 
stated that we have not provided enough guidance to ensure the accuracy 
of this data and noted that guidance received during training on the 
CARE tool was inconsistent and that additional training with the CARE 
tool is needed. Commenters requested that we clarify the new rules for 
section GG patient assessment items, revise the IRF-PAI training manual 
to reflect these clarifications, and provide more opportunities for 
education and outreach to IRF providers. One commenter did not object 
to the proposed removal of the FIM<SUP>TM</SUP>, but requested that we 
develop decision trees to assist clinical teams in accurately coding 
the Quality Indicators data items.
    Response: We disagree with the commenters' assertions that we have 
provided insufficient guidance on the

[[Page 38543]]

proper coding of this data. We are committed to providing information 
and support that will allow providers to accurately interpret and 
complete quality reporting items. We believe we have provided adequate 
training opportunities for IRFs on coding the Quality Indicator data 
items, including in-person training, webinars, on-line training and 
help desk emails. We will continue to provide these types of 
opportunities to the IRF community and plan to provide training and 
updated educational resources regarding the Quality Indicators items 
before the data items are used for payment purposes beginning on 
October 1, 2019.
    We finalized the collection of the Quality Indicators data items in 
the FY 2016 IRF PPS final rule (80 FR 47036, 47100 through 47120). 
Prior to October 1, 2016, the data collection start date, we hosted two 
in-person training programs for IRFs that included coding guidance for 
the Quality Indicators items followed by practice examples and a case 
study so IRF clinicians could practice applying the guidance. 
Additionally, we offered an IRF QRP Refresher Webinar in August 2017, 
which covered coding guidance and examples for this data, and then 
hosted an additional in-person training in May 2018, which also covered 
coding guidance and new examples for coding this data.
    The 2016, 2017, and 2018 training materials (for example, slides 
and case study) are available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/IRF-Quality-Reporting-Training.html. Video recordings of previous trainings 
can be accessed at CMS YouTube channel at https://www.youtube.com/user/CMSHHSgov. Search for ``IRF QRP'' on the CMS You Tube channel.
    A web-based training program focused on the coding of the Quality 
Indicators items was published on the CMS website in December 2017. 
This training module can be accessed at https://www.cms.gov/medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/gg-training/.
    We also note that we receive questions about coding the items via 
the IRF QRP help desk email (<a href="/cdn-cgi/l/email-protection#672e35214916120214130e08091427040a14490f0f1449000811"><span class="__cf_email__" data-cfemail="7e372c38500f0b1b0d0a1711100d3e1d130d5016160d50191108">[email protected]</span></a>), and we 
encourage providers to reach out to us with any questions.
    We have updated the Quality Indicators section of the IRF-PAI 
Training Manual in 2016, 2017, and 2018 and incorporated coding tips 
based on the questions we have received via the help desk and during 
training programs. We also post on the CMS website ``Post-training 
Question and Answer'' documents and ``Frequently-Asked Questions'' so 
that all providers can learn from questions requested by their 
colleagues. These resources are available on the IRF QRP website at 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/.
    We thank the commenters for their suggestion to improve training 
materials by incorporating more decision trees. We will work to 
incorporate this approach into our training materials.
    Comment: Several commenters stated that there is considerable 
confusion and uncertainty among many rehabilitation hospital clinicians 
as to how to accurately and consistently score a patient's ``usual 
performance'' under the Quality Indicator items and expressed concern 
that the data may not be accurate due to duplication and discrepancies 
in the definitions of the term ``usual performance''. One commenter 
indicated that CMS has not adequately defined what it means to assess a 
patient's ``usual performance'' on a Section GG item or activity and 
requested that CMS clarify the definition for ``usual performance'' 
with specific examples.
    Response: We disagree with the commenters on this point. Usual 
performance has been the approach used since the development and 
testing of the data elements, starting in 2006, and we believe that IRF 
clinicians are able to accurately assess patients' ``usual 
performance'' on the Quality Indicator items, as we have undertaken 
numerous training efforts and developed comprehensive training 
materials to assist providers in accurately coding these data items. We 
have been pleased with the participation of IRF clinicians at the in-
person training programs and via the IRF QRP help desk since the 
introduction of the Quality Indicator data elements. Our responses to 
questions from the IRF QRP help desk have reflected more specific 
guidance and examples related to coding usual performance. In an effort 
to share this information widely with the IRF industry, we have updated 
Section GG of the IRF-PAI Training Manual in 2016, 2017 and 2018 and 
incorporated coding tips based on the questions we have received via 
the help desk and during training programs. The IRF-PAI manual and 
change tables can be found in the Download section on the IRF QRP 
website at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/IRF-PAI-and-IRF-QRP-Manual.html.
    We also post on the CMS website ``Post-training Question and 
Answer'' documents and ``Frequently-Asked Questions'' so that all 
providers can learn from questions requested by their colleagues. These 
resources are available on the IRF QRP website at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/.
    In addition, we refer readers to the most recent IRF QRP Providers 
Training, held May 9-10, 2018 in Baltimore, MD. Training materials and 
video recordings are available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/IRF-Quality-Reporting-Training.html.
    We thank the commenters for the suggestions to improve training 
materials by including specific examples and appreciate the feedback on 
the types of training materials that are most helpful to providers. We 
will continue to offer training sessions and will work to incorporate 
these approaches into our training materials. We also plan to offer 
these training sessions and update training materials and educational 
resources before the refinements to the case-mix classification take 
effect on October 1, 2019.
    Comment: One commenter sought additional information on the 
expectations for capturing patient level of care and what role nursing 
staff has in capturing the patient's usual performance.
    Response: As noted above, the data items located in the Quality 
Indicators section of the IRF-PAI and the revised CMGs have been found 
to accurately reflect the relative resources needs and costliness of 
patients. With regard to the expectations and role of nursing staff in 
capturing patient level of care, we believe it is the responsibility of 
each IRF to ensure that any staff, including nurses, that complete the 
IRF-PAI assessments adhere to the coding instructions and 
specifications identified in the IRF-PAI training manual for coding the 
data items located in the Quality Indicators section of the IRF-PAI.
    Comment: One commenter requested that we clarify how cognitive 
abilities for stroke patients should be reported under the Quality 
Indicator items.
    Response: The reporting of cognitive ability for stroke patients 
should follow the coding guidelines outlined in the IRF-PAI Training 
Manual. The IRF-PAI Training Manual can be accessed on the CMS IRF QRP 
website at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-
Assessment-

[[Page 38544]]

Instruments/IRF-Quality-Reporting/IRF-PAI-and-IRF-QRP-Manual.html.
    Comment: Several commenters requested that we better clarify the 
instructions for completing the Quality Indicator items on the IRF-PAI. 
Specifically, these commenters requested that we clarify any 
differences between the reporting of the FIM<SUP>TM</SUP> instrument 
and the Section GG items, including the timing of the data collection 
(that is, the first 3 days of admission), and that we explain how 
Section GG items align with other IRF requirements.
    Response: We refer these commenters to Section GG in the IRF-PAI 
Training Manual on the CMS IRF QRP website at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/IRF-PAI-and-IRF-QRP-Manual.html for additional 
information about completing the Section GG items. As we do not 
understand from the comments exactly what questions these commenters 
have about the Section GG items, we also encourage them to send 
specific questions that they may have regarding how to report the 
Section GG items or how these items align with other IRF regulations to 
us at <a href="/cdn-cgi/l/email-protection" class="__cf_email__" data-cfemail="531a01157d02263620273a3c3d2013303e207d3b3b207d343c25">[email protected]</a>. We will be happy to try to answer the 
commenters' questions directly. We also plan to provide training and 
updated educational resources regarding the Quality Indicators items 
before the data items are used for payment purposes beginning on 
October 1, 2019.
    Comment: Several commenters specifically expressed concern with the 
new cognitive function items in Section GG, stating that they believe 
these items lack the appropriate sensitivity and do not capture a 
complete picture of cognition, especially when compared to the legacy 
cognition items from the FIM<SUP>TM</SUP> instrument. These commenters 
said that using the new items and excluding the legacy cognitive 
FIM<SUP>TM</SUP> items may produce an inadequate picture of patient 
severity, level of impairment, and the resources needed to care for 
patients. Several commenters expressed concerns with the BIMS item, 
stating that the item cannot measure progress, social interaction, or 
problem solving, which can lead to unsafe discharges, repeat re-
admissions, and higher SNF placement and that the item cannot define 
critical deficits within cognitive domains that are useful for care 
planning such as social interaction, levels of supervision, safety 
considerations, and the need and use of medications. Commenters noted 
that CMS is still testing these data items and recommended that these 
items not be utilized until they are found to be sufficiently reliable 
and valid. Another commenter indicated that work is underway to develop 
better function and cognition measures and encouraged us to incorporate 
the improved cognition measures into the IRF-PAI as they become 
available to ensure that the breadth of cognition is captured in 
patient assessment.
    Response: We believe that the cognitive items including the 
expression of ideas and wants, understanding verbal and non-verbal 
content, and the BIMS items have been tested and have been shown to be 
sensitive and valid. The reliability of these communication items was 
tested in the IRF setting and results are reported in the report 
entitled The Development and Testing of the Continuity Assessment 
Record and Evaluation (CARE) Item Set: Final Report on Reliability 
Testing Volume 2 of 3 (available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/Downloads/The-Development-and-Testing-of-the-Continuity-Assessment-Record-and-Evaluation-CARE-Item-Set-Final-Report-on-Reliability-Testing-Volume-2-of-3.pdf).
    This analysis indicated that the data element focused on 
understanding verbal and non-verbal content and had very good 
reliability with unweighted and weighted kappa values that ranged from 
0.677 to 0.777. The data element focused on expression of needs also 
showed very good reliability with unweighted and weighted kappa values 
between 0.656-0.789.
    We examined the reliability of the BIMS items in post-acute care 
providers and found very good agreement with weighted kappas ranging 
from 0.71 to 0.91 and unweighted kappas ranging from 0.62 to 0.86. The 
kappas were highest for the ``Temporal orientation'' items at 0.86 and 
above and ``Recall of three words'' at 0.89 or above for the second 
recall item. The first memory item, ``Repetition of 3 words,'' was 
slightly lower with kappas of 0.71.
    We would also like to note that the cognitive items that were used 
in RTI's CART analysis only emerged as potential splits in two RICs. As 
we proposed to merge the CMGs within these RICs, these cognitive items 
were not included in the proposed revised CMG definitions. We 
appreciate the commenter's suggestion to incorporate improved cognition 
measures into the IRF-PAI if and when they become available and will 
take this into consideration in future analyses.
    Comment: Several commenters expressed concerns that we have not 
adequately evaluated how clinicians across the nation have been scoring 
and assessing the Quality Indicators data items and suggested that we 
conduct new inter-rater reliability studies to validate practice 
consistency in the field before finalizing these proposals.
    Response: We agree with the commenters about the importance of 
reliability testing on these items to ensure that they are being scored 
consistently across all IRF providers. For this reason, we examined 
reliability using two distinct methods. Our initial testing focused on 
within-facility testing. We requested two clinicians to assess the same 
patient at the same time and independently report the patient's 
ability. Our subsequent testing focused on using ``standardized 
patients'' by using videotapes of persons completing daily activities 
and being interviewed by a clinician. By showing the same videos to 
multiple clinicians, we were able to examine the agreement of data 
element coding across all the providers and across disciplines and with 
coding experts. We report on the ``standardized patient'' reliability 
testing in a report entitled ``Continuity Assessment Record and 
Evaluation (CARE) Item Set: Video Reliability Testing'' which is 
available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/Downloads/Continuity-Assessment-Record-and-Evaluation-CARE-Item-Set-Video-Reliability-Testing.pdf.
    When we submitted the four functional outcome measures for NQF 
endorsement consideration, our NQF applications included reliability 
and validity testing of the data elements, the scale and facility-level 
data. The testing of the data elements, the scale and facility-level 
data showed very good reliability and validity. The NQF applications 
can be found at http://www.qualityforum.org/QPS/2633 and http://www.qualityforum.org/QPS/2634 and http://www.qualityforum.org/QPS/2635 
and http://www.qualityforum/QPS/2636. We note that these four 
functional outcome measures are due for maintenance of NQF endorsement 
in 2019 and that we will submit NQF applications with updated 
reliability and validity testing for the data elements, scale and 
provider-level data, which will be reviewed by the NQF methods panel, 
person- and family-centered care committee and the public.
    Comment: Several commenters suggested that because the data items 
in the FIM<SUP>TM</SUP> instrument and the data items collected in the 
Quality Indicators section of the IRF-PAI use different scales, there 
is a need to crosswalk

[[Page 38545]]

future performance to historical performance to ensure continuity in 
ongoing care improvement activities. Several commenters noted there are 
no available tools to crosswalk the FIM<SUP>TM</SUP> data items to the 
CARE data items set and requested that CMS make such a tool available 
so that providers can study and compare patient functional outcomes if 
the FIM<SUP>TM</SUP> instrument is removed. A number of commenters 
indicated they use national and regional benchmark data to measure 
clinical outcomes and improvement efforts and recommend that CMS delay 
the removal of the FIM<SUP>TM</SUP> instrument until benchmark data is 
available for the data items located in the Quality Indicators section 
of the IRF-PAI.
    Response: Although the data items collected in the Quality 
Indicators section of the IRF-PAI utilize different reporting 
guidelines and a different scale than the FIM<SUP>TM</SUP> items, we 
believe that the FIM<SUP>TM</SUP> and the Quality Indicator items are 
similar enough to facilitate ongoing care improvement activities. The 
items do not lend themselves to a specific cross-walk, but we do 
provide national IRF Medicare data for the Functional Outcome Measures 
derived from the data items located in the Quality Indicators section 
of the IRF PAI in Confidential QM Reports and Provider Preview Reports 
to IRFs in CASPER, so that the providers have the ability to compare 
their patients' functional outcomes with those of other IRFs. The data 
items located in the Quality Indicators section of the IRF-PAI have 
been collected since October 1, 2016, so IRFs may use this data to 
compare functional outcomes over time. By October 1, 2019, 2 years (24 
months) of this data will be available. The methods used to calculate 
the functional outcome measures using this data are provided in the IRF 
Quality Measures User's Manual, which is available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/IRF-Quality-Reporting-Program-Measures-Information-.html.
    Comment: Several commenters stated that 1 year of data is too 
little to be used as the basis for a new case-mix system. Many 
commenters noted that providers have limited experience using the 
assessment items in the Quality Indicators section of the IRF-PAI and 
suggested that the data may not be accurate and valid and therefore the 
revised case-mix groups may not accurately reflect patients' nursing, 
therapy, cognitive and other needs. Commenters suggested that CMS 
should study and evaluate the accuracy of the data before basing any 
changes on it and noted CMS has not audited this data to determine if 
providers are reporting the Quality Indicator items appropriately and 
accurately. Many of these commenters noted that there was a 4-year 
baseline of data used when the FIM<SUP>TM</SUP> instrument was 
incorporated into the IRF PPS and that the same baseline is not present 
for the analysis used to incorporate the Quality Indicators items into 
the IRF PPS. Commenters suggested that we should consider delaying this 
proposal until multiple years of data are available for analysis. Other 
commenters suggested excluding 1 or more years of the initial data 
collected from the analysis to provide a more stable foundation to 
support this proposed policy change. Commenters encouraged CMS to 
monitor any shifts in this data and update the model to reflect these 
changes.
    Response: We note that the data items in the Quality Indicators 
section of the IRF-PAI have been collected for close to 2 years, and we 
believe the data to be accurate and valid at this time. Additionally, 
we note that we do not generally audit the FIM<SUP>TM</SUP> data that 
is used for payment and believe it is the responsibility of the IRF to 
submit accurate and valid data that adheres to the coding guidelines 
detailed in the IRF-PAI training manual.
    As published in the aforementioned technical report, ``Analyses to 
Inform the Potential Use of Standardized Patient Assessment Data 
Elements in the Inpatient Rehabilitation Facility Prospective Payment 
System,'' RTI found that the model predicting costs using CMGs derived 
from the items located in the Quality Indicators section of the IRF-
PAI, based on data from FY 2017, had a slightly higher R-squared value 
than models using the current CMGs which are derived from items in the 
FIM<SUP>TM</SUP> instrument, thus indicating that the revised CMGs more 
accurately predict costs than the CMGs that are currently utilized.
    We also note that the data items and response codes located in the 
Quality Indicators section of the IRF-PAI have been collected 
nationally for all IRFs since October 1, 2016. As such, the proposed 
revised CMGs reflect data collected from the entire universe of 
Medicare-covered inpatient rehabilitation patients, allowing for 
greater precision in the analysis compared to the analysis used in the 
construction of the original CMGs. The original CMGs that were 
implemented at the inception of the IRF PPS were based on data from 
just a sample of hospitals, which was the best available data at the 
time and which contributed to the use of multiple years of data in 
those analyses. As the most recently available year of national data 
portrays the most recent and complete picture of patients under the IRF 
PPS, we believe it was sufficient and appropriate to utilize in this 
analysis.
    However, we appreciate the commenters' concerns and suggestions to 
incorporate multiple years of data into this analysis and conduct 
monitoring activities and we will therefore ensure that we use multiple 
years of data in our analysis when we incorporate the Quality Indicator 
data items into the IRF case-mix classification system on October 1, 
2019. We will incorporate an additional year of data into the analysis 
used to update the revised CMG definitions to reflect the use of the 
different assessment items. Any changes to the revised CMG definitions 
will be addressed in future rulemaking prior to their implementation 
beginning in FY 2020.
    Comment: Several commenters requested clarifications and further 
detail on how cognitive function would play a role in defining the 
CMGs. Other commenters noted that current CMGs incorporate cognition 
and expressed concern that cognition does not factor into the revised 
CMGs. Commenters suggested that cognition is an important factor in 
determining how costly a patient will be in the IRF and indicated that 
not reflecting a patient's cognitive score in the CMG definitions 
misses an important factor in predicting patient costs. Another 
commenter recommended that we investigate whether there are floor or 
ceiling effects with the proposed cognitive function items. Commenters 
also requested that we allow and recognize additional cognitive 
research to consider impacts on costs of care before finalizing this 
policy and suggested that we conduct further study into the 
relationship between cognitive function and resource use in the 
inpatient rehabilitation setting. One commenter requested that the 
FIM<SUP>TM</SUP> cognitive items be included in the CMGs to account for 
the cost and impact of cognitive deficits.
    Response: To clarify, a cognitive score was identified in the early 
stages of the analysis for inclusion in the proposed revised CMG 
definitions as a potential split for CMGs in both RIC 16 and RIC 17, 
presented separately in Table 8 of the FY 2019 IRF PPS proposed rule 
(83 FR 20992). Ultimately, however, we decided to propose to combine 
the CMGs within these RICs because, in both cases, higher patient 
cognitive deficits would have led to lower IRF payments, which we 
believed would be

[[Page 38546]]

inappropriate. Also, we were concerned about this result because it was 
based on a relatively small number of patients that could be 
inappropriately skewing our results. As the CMGs we proposed to combine 
within these RICs were only differentiated by a cognitive score, our 
decision to consolidate the CMGs in these 2 RICs, resulted in the 
exclusion of a cognitive score from the definitions of the revised CMGs 
presented in Table 9 of the FY 2019 IRF PPS proposed rule.
    We believe that the fact that patients' cognitive scores do not 
show up as significant in the CART analysis in any other RICs may be 
due in large part to the limitations with the cognitive items that were 
proposed to be incorporated into the revised case-mix system. The 
cognitive items that we used for this analysis are the best ones that 
we have for use at the present time, but we will certainly consider the 
incorporation of revised cognitive data items into the CMG definitions 
if and when they become available in the future. We also note that, 
while a cognitive score is not included in the revised CMG definitions, 
the motor score may capture aspects of cognitive status as the scale 
measures the need for assistance, including supervision. We will take 
the commenters' concerns into consideration in future analysis.
    Comment: Several commenters noted particular concerns that they had 
with the proposed motor score, including concerns with the exclusion of 
certain items from the score's calculation, general concerns with the 
structure of the data items that were proposed for inclusion in the 
motor score, and concerns with the definition of the score response 
codes utilized by the data items that were proposed for inclusion in 
the motor score. Commenters also requested additional information on 
the predictive ability of the items that were included in the proposed 
motor score. One commenter specifically requested additional 
information on why item ``GG017O1--12 Steps'' was not included in the 
motor score.
    Response: We appreciate the commenters' concerns with the proposed 
motor score. We note that RTI analyzed a range of available data to 
identify the variables that were most predictive of costs in the IRF 
setting. RTI's analysis shows that the correlation between the 
standardized item motor score and the FIM<SUP>TM</SUP> motor score was 
between 0.76 and 0.90 across all RICs. In addition, each of the 
proposed Quality Indicators data items that were included in the motor 
score were found to have statistically significant correlation with IRF 
costs.
    RTI's analysis of the variables that were most predictive of costs 
found a higher use of ``activity not attempted codes'' for more 
challenging items such as GG017O1 and found that there was less 
variability overall in the score for these items across all patients on 
admission, which may be due to discretion in the assessment of these 
activities. Based on this finding, the more challenging items including 
stairs and car transfers were not included in the motor score.
    Comment: A number of commenters disagreed with the omission of 
wheelchair locomotion from the motor score items that were found to 
best predict costs and sought additional information on how patients 
that are wheelchair dependent would be accounted for in the proposed 
CMGs and what impact this would have on wheelchair-dependent patients. 
One commenter noted that omitting wheelchair locomotion items from the 
motor score would underestimate a patient's functional ability at 
admission if the patient is more functional in a wheelchair than 
walking and recommended including ``wheels 50 feet with 2 turns'' and 
``wheels 150 feet'' into the motor score. One commenter noted that 
omitting wheelchair items from the motor score would inappropriately 
produce a higher facility payment for some patients that may be more 
functional in a wheelchair than walking, as these patients' functional 
ability would be underestimated based on walking items alone.
    Response: We appreciate the commenters' concerns about wheelchair-
dependent patients. Patients that are considered wheelchair dependent 
or are otherwise unable to walk would be accounted for in the proposed 
motor score through the ``not attempted'' response codes captured 
through some of the other items, especially some of the walking items 
that are incorporated in the proposed motor score. We proposed to 
recode any ``not attempted'' response codes to 1, the most dependent 
status, because RTI's analysis of the items ``wheel 50 with two turns'' 
and ``wheel 150 feet with two turns'' indicated that the majority of 
these items are currently coded as 1, ``dependent'' or utilized an 
``activity was not attempted code''. We do not believe that the 
omission of these items from the motor score would have any impact on 
wheelchair dependent patients. We thank the commenters for their 
suggestions and will consider the incorporation of the data items 
identified above into the motor score in the future.
    Comment: Commenters requested that we explain why we proposed to 
use an unweighted motor score when RAND previously found that a 
weighted motor score using the FIM<SUP>TM</SUP> items improved the 
explanation of variance within each RIC.
    Response: We proposed to use an unweighted motor score as our 
analysis at this time does not identify any benefit from weighting the 
items in the motor score. Additionally, the unweighted motor score 
facilitates greater understanding among the provider community, as it 
is less complex. We will take these comments into consideration in 
future analysis.
    Comment: Several commenters expressed concerns with the number of 
claims used in the analysis and questioned if we were using 
statistically sound data. Some of these commenters also suggested that 
it would be more appropriate to utilize multiple years of data for this 
analysis.
    Response: We believe that the data utilized in this analysis was 
sufficient and statistically sound. The exclusion criteria utilized in 
the analysis and outlined in the technical report aligned with the 
approach used by RAND when revisions to the current CMGs were finalized 
in the FY 2006 IRF PPS final rule (70 FR 47892 through 47896). We 
appreciate the commenter's suggestion to incorporate multiple years of 
data into the analysis and will use 2 years of data (FYs 2017 and 2018) 
to revise the CMG definitions prior to implementing the proposed 
changes in FY 2020.
    Comment: We received several comments on the proposed score 
recoding methodology that was discussed in the proposed rule and in the 
technical report. One commenter supported the proposed score recoding 
methodology. Another commenter recommended that a value of 10 be 
recoded to a 6 for the bladder continence item, and suggested that a 
non-response items for the bladder item should be recoded to ``0'' 
instead of ``1'', noting that recoding it to ``1'' would overestimate a 
patient's bladder function at admission. Another commenter stated that 
they did not support the proposed score recoding methodology, and 
requested that we provide additional rationale and explanation for the 
methodology. Some commenters also requested that we conduct further 
regression analysis to test the proposed score recoding methodology. 
Additionally, one commenter expressed concern that the proposed score 
recoding methodology could have significant operational impacts on 
providers.

[[Page 38547]]

    Response: We thank the commenters for these suggestions and will 
take them into consideration in the future. We note that the proposed 
methodology for recoding the ``non-response'' values aligns with the 
current recoding methodology, and reflects both findings from 
regression analysis and clinical input. We also note that we do not 
believe that the proposed score recoding methodology could have a 
significant operational impact on providers as it does not impact the 
data collection or submission process of IRF-PAI data.
    Comment: One commenter noted that the bladder continence and bowel 
continence items use a scoring methodology where higher scores indicate 
more impairment which does not align with the scoring methodology used 
for the other motor items where lower scores indicate higher 
impairment.
    Response: As outlined in the aforementioned technical report, 
available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Research.html, we proposed to reverse the 
bladder continence and bowel continence responses for purposes of 
determining the motor score so that the higher response codes would 
reflect less impairment to be consistent with the scale used for the 
other proposed motor items.
    Comment: One commenter disagreed with the use of the response code 
``10- the activity was not attempted due to environmental limitations'' 
and suggested that allowing a facility to not assess a patient due to 
environmental limitations would reduce the quality of care for 
patients.
    Response: We appreciate the commenter's concerns but have no reason 
to believe that ability to indicate why an activity was not attempted 
would reduce the quality of care for patients. We note that responses 
indicating an activity did not occur or was not attempted are currently 
used on the IRF-PAI for items in both the FIM\TM\ Instrument and items 
located in the Quality Indicators section of the IRF PAI. The addition 
of this code allows for the collection of additional data indicating 
why an activity was not attempted.
    Comment: One commenter was generally supportive of the proposed 
refinements to the CMGs but expressed concern about the proposal to 
combine CMGs within RIC 16 and RIC 17, stating that fewer CMGs within 
RICs may degrade the ability to quantify burden of care in sufficient 
detail. Another commenter did not support the proposal to combine 
certain CMGs and requested that we increase the sample size of the data 
on which the analysis was conducted.
    Response: As noted in the aforementioned technical report, RTI's 
analysis indicated that the CMGs generated by the CART analysis for RIC 
16 and RIC 17 attributed considerably higher costs for what could 
amount to a small level of impairment. Given the high threshold for the 
splits, the inconsistency with clinical expectations, and the low 
number of observations in these RICs, we proposed to remove these 
splits from the final CMG definitions. Specifically, these splits went 
against clinical expectations by attributing higher payments to 
beneficiaries with less impairment than to those with greater 
impairment, which we believed would be inappropriate. As noted above, 
we will incorporate an additional year of data into our analysis and 
will revisit any changes in this proposal due to the incorporation of 
additional data into the analysis in future notice and comment 
rulemaking prior to implementing the revised CMG definitions beginning 
in FY 2020. We appreciate the commenter's concerns and will take them 
into consideration for future analysis.
    Comment: Several commenters expressed concern that the new CMGs may 
not accurately reflect the severity of illness of some of the most 
clinically complex IRF patients, noting that there were fewer CMGs in 
some RICs, thereby creating less specificity in payment determinations 
for some patients. Commenters also suggested that these changes will 
impact access to and quality of care for medically complex patients and 
suggested that we assess the impact of these proposed changes on 
patient outcomes.
    Response: While the commenters are correct that, in certain RICs, 
there are fewer proposed CMGs than under the current IRF case-mix 
classification system, there are more proposed CMGs in other RICs. We 
disagree with the commenters' concerns that the revised CMGs may not 
accurately reflect resource needs for clinically complex patients. As 
noted in the FY 2019 IRF PPS proposed rule (83 FR 20991 through 20992) 
and the accompanying technical report, RTI utilized CART analysis on FY 
2017 Medicare claims to determine the revised CMG definitions. As such, 
we believe the revised CMGs reflect the severity or distinct resource 
needs of the current Medicare IRF population. We believe that, if 
anything, the revised CMGs will have a neutral or positive impact on 
access to and quality of care for IRF patients by increasing the 
accuracy of IRF payments to providers. We appreciate the commenters' 
concerns and will continue to monitor the IRF data closely to ensure 
that IRF payments are appropriately aligned with costs of care and that 
Medicare patients continue to have appropriate access to IRF services.
    Comment: Several commenters expressed concern that utilizing a 
patient's usual performance instead of lowest function will make IRF 
patients appear ``less severe'' and that the revised CMG definitions 
will result in decreased lengths of stay and decreased payments.
    Response: We agree with commenters that the scales and coding 
instructions are slightly different between the data sets and that 
coding a patient's usual performance instead of the patient's lowest 
function may result in higher functional scores for some patients. As 
noted above, we believe that the scale for the data items located in 
the Quality Indicators section of the IRF-PAI is sensitive and may more 
accurately reflect the costs of caring for patients.
    Regarding the commenters' assertion that this proposal will lead to 
shorter lengths of stay, we disagree with the commenters that the 
proposal will have any substantial or long-term impact on the average 
lengths of stay in the IRFs. First, we believe that these commenters 
have misunderstood the purpose of the published average lengths of stay 
values in the IRF PPS proposed and final rules. We note that the 
average length of stay values are not prescribed lengths of stay for 
patients admitted to IRFs and should not considered to be target 
lengths of stay. IRFs generally have the flexibility to treat patients 
for as few or as many days as they deem medically appropriate. We 
encourage IRFs to admit patients for the length of time that results in 
the best quality of care for the patient. The average length of stay 
values are used to determine when an IRF discharge meets the definition 
of a short-stay transfer.
    Additionally, we believe that commenters may have been 
inappropriately comparing the average lengths of stay published for the 
proposed revised CMGs to the average lengths of stay for the current 
CMGs. As the definitions for the proposed revised CMGs are different 
than those for the current CMGs, the average length of stay values 
cannot be directly compared between the two. The proposed revised CMGs 
group patients differently, and therefore result in different average 
length of stays for the new patient groupings. We do not believe that 
the proposed revised CMGs would result in any systematic changes in 
average length of stay in the IRF setting since,

[[Page 38548]]

as noted above, the average length of stay values should not considered 
to be target lengths of stay.
    Comment: Several commenters expressed concern that the proposed 
CMGs may not, in fact, be budget neutral as proposed and requested that 
we reevaluate our budget neutrality adjustment. One commenter noted 
that they anticipated lower payments due to this proposal and 
therefore, the proposal was not budget neutral.
    Response: We disagree with the commenters' suggestions that the 
proposed budget neutrality adjustment was incorrect. As stated in the 
FY 2019 IRF PPS proposed rule, the proposed revisions to the IRF case-
mix classification were to be implemented in a budget neutral manner. 
Thus, we proposed to apply a budget-neutrality adjustment to payments 
to ensure that aggregate payments to IRFs due to the implementation of 
these proposals would neither increase nor decrease overall. However, 
the proposed changes would result in some redistribution of payments 
among providers.
    Comment: One commenter stated that we have not adequately 
determined the impact of these proposed changes on patient outcomes, 
including medically complex, low functioning patients and that these 
types of analyses should be an essential component of the IMPACT Act's 
eventual research framework before moving forward.
    Response: As noted previously, the Quality Indicator data items 
have been extensively tested for reliability, accuracy, and sensitivity 
and were found to be reliable, accurate, and sensitive for use in the 
IRF PPS. As these items are more sensitive and more accurately reflect 
patients' functional status in the IRF, we believe that IRF payments 
based on these items will do a better job of reflecting patients' costs 
than payments based on the FIM\TM\ items. Therefore, we disagree with 
the commenter and believe that, if anything, the proposed changes will 
have a neutral or positive impact on access to care and outcomes for 
more medically complex, low-functioning patients by paying more 
accurately for these patients' care in the IRF.
    Comment: One commenter requested that we adjust the classifications 
and weighting factors to reflect the special care and complex medical 
needs of oncology patients in the rehabilitation setting. This 
commenter suggested adding additional codes to the list of impairment 
group codes to better define patients with impairments due to cancer 
under the RIC classification system and noted that without these 
specific classifications, cancer patients may not be admitted to IRFs 
due to the high costs of care for these patients.
    Response: As we did not propose any changes to the RICs or 
comorbidity tiers, this comment is outside the scope of the proposed 
rule.
    Comment: Several commenters requested more information about how 
comorbid conditions will be reported for the revised case-mix 
classification system and requested that we review and update the 
comorbid condition code listings.
    Response: As we did not propose any changes to how comorbid 
conditions are to be reported or any changes to the list of comorbid 
condition codes, these comments are out of scope of the proposed rule.
    Comment: Many commenters noted that they were supportive of 
policies in the IMPACT Act and of future Medicare payment reforms that 
would move Medicare in the direction of unified post-acute care 
payment. However, several of these commenters suggested that the 
proposed revisions to the CMGs are inconsistent with the intent of the 
IMPACT ACT. Multiple commenters noted that the IMPACT Act's core 
premise is to develop a complete evidentiary basis, inform broad post-
acute care payment and delivery reform, and provide recommendations for 
replacing existing payment policies based on the incorporation of 
standardized patient assessment data. These commenters suggested that 
finalizing the proposed policies now would be premature and recommended 
that we refrain from finalizing the proposed changes at this time. 
Commenters stated that because the proposal would be implemented in a 
budget neutral manner, there is no financial rationale or budgetary 
impact that supports moving faster than the IMPACT Act mandates. Many 
commenters also stated that the functional assessment data items 
located in the Quality Indicators section of the IRF-PAI were designed 
for quality purposes and should not be used to develop a new payment 
system.
    Response: We disagree with the commenters' suggestion that these 
proposals are inconsistent with the intent of the IMPACT Act and would 
like to note that these policies were proposed under the authority of 
section 1886(j)(2)(D), 1886(j)(2)(B), and 1886(j)(2)(C) of the Act. We 
believe that the proposed policies align with the overall goals of the 
IMPACT Act and are a necessary step toward a potential unified PAC PPS 
in the future. We would like to note that the data items that we 
proposed to incorporate into the IRF case-mix system were tested for 
use in all PAC settings under the PAC PRD, and were found to be 
appropriate to use for payment purposes.
    We also disagree with the commenters' suggestions that the data 
items located in the Quality Indicators section of the IRF-PAI were 
developed for quality purposes and are therefore not suitable for use 
in payment because they were developed for quality reporting purposes. 
Many of these data items were derived from the original CARE Tool data 
item set. The CARE Tool's development was based on certain guiding 
principles, including the ability to measure the needs and clinical 
characteristics of patients that were predictive of resource intensity 
and that could be used to inform payment policy. While we agree with 
commenters that the IMPACT Act imposed new data reporting requirements 
for the purposes of the quality reporting program, it does not preclude 
the use of these items for payment purposes. As noted above, these 
items were developed and tested for payment purposes and were found to 
be appropriate for incorporation in the IRF case-mix system. We would 
also like to reiterate that we disagree with the commenter's assessment 
of the proposed revisions to the CMGs as the development of a new 
payment system. We believe these proposals would generate minor changes 
to the current IRF case-mix classification system.
    Comment: Several commenters stated that they believe that the 
proposed incorporation of data items located in the Quality Indicators 
section of the IRF-PAI into the IRF case-mix system conflicts with the 
timelines specified in the IMPACT Act. Commenters noted that CMS and 
MEDPAC are directed to submit a report to Congress by 2021 on the 
findings of the IMPACT Act and to provide recommendations for replacing 
existing PAC payment systems. Several commenters stated that, if we 
were to move forward with finalizing the proposed changes, it would be 
in direct conflict with the timelines in the IMPACT Act.
    Response: We believe commenters may have misinterpreted the 
reporting requirements and associated deadlines stipulated in the 
IMPACT Act, as these requirements are not applicable to the proposed 
removal of the FIM\TM\ instrument and associated Function Modifiers 
from the IRF-PAI or the proposed incorporation of data items located in 
the Quality Indicators section of the IRF-PAI into the IRF case-mix 
system at this time. While these proposals are generally consistent 
with the broad goal of standardizing patient assessment data collection 
across PAC settings and aligning the IRF PPS with

[[Page 38549]]

other PAC payment systems, they do not implement or conflict with any 
specific provision of the IMPACT Act.
    Comment: Several commenters noted that they did not believe that we 
have performed the thorough data analyses, testing, and engagement with 
the provider community that are necessary prior to making significant 
changes to the IRF-PAI and the IRF PPS. Many commenters did not support 
the proposed revisions to the IRF PPS and noted they would be willing 
to work with us to develop appropriate changes to payment policies in 
the future. One commenter specifically expressed concern that CMS did 
not seek stakeholder input through an advanced notice of public 
rulemaking, similar to the process used in proposing the new SNF case-
mix classification system. Several commenters requested that we solicit 
additional feedback from the stakeholder community, including convening 
a technical advisory panel, to assist us in developing the proposed 
changes to the IRF case-mix classification system.
    Response: We are committed to engaging with the provider community 
and providing information that will support a clear understanding of 
our proposals and the potential impacts on providers. We would like to 
note that RTI hosted a TEP in 2014 to discuss their initial research 
and findings on the potential incorporation of the CARE data items into 
the IRF case-mix system. Through the TEP, we received helpful feedback 
on the initial research that was taken into consideration in the 
development of these proposals. We appreciate the offers from 
stakeholders to assist in the development of future revisions to 
payment policies and we recognize the value from these partnerships. We 
appreciate the request for increased engagement and will continue to 
engage stakeholders in future development of payment policies. However, 
we do not believe an advanced notice of proposed rulemaking would have 
been necessary or that a technical advisory panel is needed at this 
time as the proposed changes to the case-mix system are minor.
    Comment: Several commenters expressed concern that providers needed 
more time or information to model the impact of a new case-mix 
classification system. Multiple commenters requested that we provide 
additional information, including the algorithms and CART trees used in 
the analysis to better understand how we arrived at the proposed 
revisions to the CMG definitions. One commenter requested that we make 
available all standardized data being collected from providers across 
all settings of care. Another commenter requested that we make all data 
utilized in the analysis, including the Medicare Inpatient National 
Claims History, IRF-PAI data, and IRF cost reports available in full to 
enable IRFs to replicate our analyses. Some commenters indicated that, 
without additional data, they would not be able to provide meaningful 
input on the proposed significant changes to the IRF case-mix 
classification system.
    Response: We believe that we released sufficient information in the 
proposed rule and the accompanying technical report to enable 
stakeholders to model impacts and submit meaningful comments. The 
technical report, entitled ``Analyses to Inform the Potential Use of 
Standardized Patient Assessment Data Elements in the Inpatient 
Rehabilitation Facility Prospective Payment System,'' was released 
contemporaneously with the proposed rule and describes, in detail, the 
data and analysis used to construct the revised CMGs. This technical 
report included the methodology used to calculate the revised 
functional scores and the CMG relative weights for the revised CMG 
definitions, which would allow providers to model impacts. 
Additionally, the FY 2019 IRF PPS proposed rule included an impact 
analysis for IRFs at a group level based on IRF provider 
characteristics.
    Regarding the request for additional data, we note that the release 
of all standardized data being collected from providers in other 
settings of care is outside the scope of the proposed rule. 
Additionally, the FY 2017 IRF claims and IRF-PAI data utilized in this 
analysis contain information that can be used to identify individual 
Medicare beneficiaries and therefore cannot be made publicly available.
    Final Decision: After careful consideration of the comments 
received, we are finalizing our proposal, as discussed in section 
VIII.A of this final rule, to remove the FIM\TM\ instrument and 
associated Function Modifiers from the IRF-PAI beginning in FY 2020 
that is, for all discharges occurring on or after October 1, 2019.
    We are also finalizing our proposal to incorporate certain data 
items from the Quality Indicators section of the IRF-PAI into the IRF 
case-mix classification system for payment purposes beginning in FY 
2020. Specifically, we are finalizing our proposal to use the Quality 
Indicator data items identified in section VIII.B.2 of this final rule, 
to construct the functional status scores for use in the IRF case-mix 
classification system and to derive the scores for each respective 
group of the functional status items by calculating the sum of the 
items that constitute each functional status component.
    Additionally, we are finalizing our proposal to update the score 
reassignment methodology, as discussed in section VIII.B.3 of this 
final rule, beginning with FY 2020, that is, for all IRF discharges 
beginning on or after October 1, 2019.
    We are also finalizing our proposal, as discussed in section 
VIII.B.4 of this final rule, to utilize CMGs based on the data items 
from the Quality Indicators section of the IRF-PAI to classify IRF 
patients for purposes of establishing payment under the IRF PPS 
beginning with FY 2020. However, based on public comments, we are not 
finalizing the revised CMG definitions as proposed and as identified in 
table 9 of this final rule. Instead, we have noted the commenters' 
concerns regarding the use of one year of data and will incorporate two 
full years of data (FY 2017 and FY 2018) into our analyses used to 
revise the CMG definitions that will be implemented beginning in FY 
2020. Any changes to the proposed CMG definitions resulting from the 
incorporation of an additional year of data (FY 2018) into the analysis 
will be addressed in future rulemaking prior to their implementation 
beginning in FY 2020. Additionally, we will also update the relative 
weights and average length of stay values associated with the revised 
CMG definitions in future rulemaking. We also plan to provide training 
and educational resources on the data items in the Quality Indicators 
section of the IRF-PAI before this finalized policy takes effect on 
October 1, 2019.

IX. Revisions to Certain IRF Coverage Requirements Beginning With FY 
2019

    We are committed to transforming the health care delivery system, 
and the Medicare program, by putting an additional focus on patient-
centered care and working with providers and physicians to improve 
patient outcomes. As an agency, we recognize it is imperative that we 
develop and implement policies that allow providers and physicians to 
focus the majority of their time treating patients rather than 
completing paperwork. Moreover, we believe it is essential for us to 
reexamine current regulations and administrative requirements, to 
assure that we are not placing unnecessary burden on providers.
    We believe the agency initiative of treating patients over 
paperwork will improve patient outcomes, decrease provider costs, and 
ensure that patients

[[Page 38550]]

and providers are making the best health care choices possible. In the 
FY 2018 IRF PPS proposed rule (82 FR 20743), we included a request for 
information (RFI) to solicit comments from stakeholders requesting 
information on CMS flexibilities and efficiencies. The purpose of the 
RFI was to receive feedback regarding ways in which we could reduce 
burden for hospitals and physicians, improve quality of care, decrease 
costs and ensure that patients receive the best care. We received 
comments from IRF industry associations, state and national hospital 
associations, industry groups representing hospitals, and individual 
IRF providers in response to the solicitation. We are appreciative of 
the feedback. As discussed in more detail below, we in some cases used 
the commenters' specific suggestions to propose changes to regulatory 
requirements to alleviate provider burden. In other cases, however, we 
proposed additional changes to the regulatory requirements that we 
believed would be responsive to stakeholder feedback and helpful to 
providers in reducing administrative burden.
    In the FY 2010 IRF PPS final rule (74 FR 39788 through 39798), we 
updated the IRF coverage criteria requirements to reflect changes that 
had occurred in medical practice since the IRF PPS was first 
implemented in 2002. IRF care is only considered by Medicare to be 
reasonable and necessary under section 1862(a)(1) of the Act if the 
patient meets all of the IRF coverage requirements outlined in Sec.  
412.622(a)(3), (4), and (5). Failure to meet the IRF coverage criteria 
in a particular case will result in denial of the IRF claim. The IRF 
coverage requirements have not been updated since they became effective 
on January 1, 2010. To reduce unnecessary burden on IRF providers and 
physicians, we proposed to revise the current IRF coverage criteria as 
suggested by some of the comments received in response to the RFI. 
Specifically, we focused on reducing medical record documentation 
requirements that we believe have become overly burdensome to IRF 
providers over time.

A. Changes to the Physician Supervision Requirement Beginning With FY 
2019

    In response to the RFI, several commenters suggested that we 
consider decreasing the number of required weekly face-to-face visits 
that the rehabilitation physician must complete and document in the IRF 
medical record. Commenters suggested that the decrease in visits would 
not only assist with reducing the medical record documentation burden 
on rehabilitation physicians, but it would also afford the 
rehabilitation physician more time to focus on higher-acuity, more 
complex patients resulting in improved outcomes and lower readmission 
rates. Additionally, we received comments suggesting that we consider 
either eliminating the requirement to document post-admission physician 
evaluation in the IRF medical record altogether in an effort to reduce 
paperwork and duplicative requirements or that we allow the post-
admission physician evaluation to count as one of the required face-to-
face visits completed and documented by the rehabilitation physician in 
the IRF medical record. We agreed with the commenters and proposed a 
combination of these two suggested ideas in order to reduce unnecessary 
burden on rehabilitation physicians.
    Under Sec.  412.622(a)(3)(iv), for an IRF claim to be considered 
reasonable and necessary under section 1862(a)(1) of the Act, there 
must be a reasonable expectation at the time of the patient's admission 
to the IRF that the patient requires physician supervision by a 
rehabilitation physician, defined as a licensed physician with 
specialized training and experience in inpatient rehabilitation. The 
requirement for medical supervision means that the rehabilitation 
physician must conduct face-to-face visits with the patient at least 3 
days per week throughout the patient's stay in the IRF to assess the 
patient both medically and functionally, as well as modify the course 
of treatment as needed to maximize the patient's capacity to benefit 
from the rehabilitation process. Under Sec.  412.622(a)(4)(ii), to 
document that each patient for whom the IRF seeks payment is reasonably 
expected to meet all of the requirements in Sec.  412.622(a)(3) at the 
time of admission, the patient's medical record at the IRF must contain 
a post-admission physician evaluation that meets all of the 
requirements specified in the regulation. For more information, we 
refer readers to the Medicare Benefit Policy Manual, chapter 1, 
sections 110.1.2 and 110.2.4 (Pub. 100-02), which can be downloaded 
from the CMS website at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Internet-Only-Manuals-IOMs.html.
    While the purpose of the physician supervision requirement is to 
ensure that the patient's medical and functional statuses are being 
continuously monitored as the patient's overall plan of care is being 
carried out, the purpose of the post-admission physician evaluation is 
to document (in the IRF medical record) the patient's status on 
admission, identify any relevant changes that may have occurred since 
the preadmission screening, and provide the rehabilitation physician 
with the necessary information to begin development of the patient's 
overall plan of care. When the coverage criteria were initially 
implemented, we believed that the post-admission physician evaluation 
should not be used as a way to fulfill one of the face-to-face visits 
required under Sec.  412.622(a)(3)(iv) because we considered them to be 
different types of assessments. We also believed it was in the 
patient's best interest to be seen by a rehabilitation physician at 
least four times in the first week of the IRF admission when the 
patient is in the most critical phase of their recovery process.
    While we continue to believe that the post-admission physician 
evaluation and the face-to-face physician visits are two different 
types of assessments, after reevaluating these coverage criteria, we 
believe that the rehabilitation physician should have the flexibility 
to assess the patient and conduct the post-admission physician 
evaluation during one of the three face-to-face physician visits 
required in the first week of the IRF admission. Additionally, based on 
the comments that we received in response to the RFI, we believe that 
it should be the responsibility of the rehabilitation physician to use 
his or her best clinical judgment to determine whether the patient 
needs to be seen more than three times in the first week of the IRF 
admission. Therefore, allowing these two requirements to be met (and 
documented in the IRF medical record) concurrently would reduce 
redundancy and regulatory burden while still ensuring adequate care to 
the patient.
    Therefore, we proposed to modify Sec.  412.622(a)(3)(iv) to provide 
that the post-admission physician evaluation required under Sec.  
412.622(a)(4)(ii) may count as one of the face-to-face physician visits 
required under Sec.  412.622(a)(3)(iv) beginning with FY 2019, that is, 
for all IRF discharges beginning on or after October 1, 2018. To 
clarify, we did not propose to modify Sec.  412.622(a)(4)(ii), 
including the 24-hour timeframe within which the post-admission 
physician evaluation requirement must be completed.
    We received 33 comments on the proposal to modify Sec.  
412.622(a)(3)(iv) to provide that the post-admission physician 
evaluation required under Sec.  412.622(a)(4)(ii) (and documented in 
the IRF medical record) may count as one of the face-to-face physician 
visits required under Sec.  412.622(a)(3)(iv) beginning with FY 2019, 
that is, for all

[[Page 38551]]

IRF discharges beginning on or after October 1, 2018, which are 
summarized below.
    Comment: The majority of commenters supported our proposal. 
Commenters agreed that the proposed change would provide additional 
flexibility to rehabilitation physicians and reduce redundancy of 
documentation requirements and regulatory burden, while still ensuring 
adequate care to patients. Additionally, some commenters suggested that 
they believed this proposed change would allow rehabilitation 
physicians the flexibility to use their clinical judgment to determine 
the need and frequency of physician visits based on each patient's 
needs during the first week of admission.
    Response: We appreciate the commenters' support for the proposal. 
We agree that finalizing this proposal will ease administrative and 
documentation burden for rehabilitation physicians.
    Comment: One commenter supported the proposal, but stated that they 
did not expect the proposal to produce the cost savings in Medicare 
expenditures as estimated by CMS since many IRF physicians visit 
patients far more frequently than the minimum three times per week.
    Response: We appreciate the commenter's support for the proposal. 
Based on this comment, we decided to take a more conservative approach 
when estimating the burden reduction for IRFs. Therefore, we are 
estimating that the rehabilitation physicians in only about half of the 
IRFs would adopt this new policy change. While some IRFs may choose not 
to reduce the number of physician visits, removing the need to 
specifically document a visit as meeting the requirements at Sec.  
412.622(a)(3) increases the flexibility that IRFs have to make these 
types of decisions in the best interest of their patients and will free 
up valuable physician time that can be spent on patient care.
    Comment: One commenter suggested that CMS should provide greater 
flexibility for IRFs to complete the post-admission physician 
evaluation by allowing more lenient timeframes in which the evaluation 
could be completed or should consider removing the requirement 
completely. The commenter stated that the post-admission physician 
evaluation is redundant with other documentation requirements such as 
the pre-admission screening or the overall plan of care.
    Response: We appreciate the commenters' suggestions, but we 
respectfully disagree with both suggestions, as we continue to believe 
that the post-admission physician evaluation, as well as the timeframe 
in which it is currently required to be completed, are integral parts 
of the patient's care. The purpose of the post-admission physician 
evaluation is to document in the IRF medical record the patient's 
status on admission, identify any relevant changes that may have 
occurred since the preadmission screening, and provide the 
rehabilitation physician with the necessary information to begin 
development of the patients overall plan of care. We believe that 
removing this requirement completely or changing the 24-hour timeframe 
within which the post-admission physician evaluation must be completed, 
could jeopardize initial contact with the patient and result in a 
decrease in quality of care. We believe that evaluating the patient 
after admission to the IRF in order to confirm that their medical and 
functional status has not decreased since the pre-admission screening 
is necessary to ensure the patient is still an appropriate candidate 
for IRF care.
    Comment: Several commenters stated that CMS should more clearly 
articulate that, although we are proposing to combine the two 
requirements, three face-to-face rehabilitation physician visits during 
the first week of a patient's admission serves as a minimum, and 
patients are entitled to additional physician visits as medically 
necessary based on their rehabilitation physician's clinical judgment. 
Another commenter expressed concern that loosening IRF coverage 
requirements suggests that such high levels of care may not be required 
by all patients who are cared for in an IRF or that the level of 
resources needed to provide IRF care has decreased.
    Response: To clarify, we are not limiting rehabilitation physicians 
from seeing patients more than three times in the first week of a 
patient's admission, nor are we limiting rehabilitation physicians from 
using their best clinical judgment regarding the frequency in which 
they believe patients should to be seen. Though we are finalizing our 
proposal to combine these two requirements, we continue to expect that 
each rehabilitation physician will exercise his or her best clinical 
judgment to determine the need and frequency of rehabilitation 
physician visits for a given patient.
    Additionally, we respectfully disagree with the commenter that 
allowing the post-admission physician evaluation to count as one of the 
required face-to-face physician visits in any way implies a reduction 
in the intensity of care required by IRF patients. By allowing the two 
requirements to be met concurrently, we are decreasing documentation 
burden on rehabilitation physicians, which will free up valuable 
physician time that can be spent on patient care and oversight.
    Comment: One commenter stated that after both of the requirements 
were initially implemented, it was clarified through sub-regulatory 
guidance that the post-admission physician evaluation and the required 
face-to-face rehabilitation physician visits could not be combined. The 
commenter suggested that while they support the proposal to allow the 
post-admission physician evaluation to count as one of the required 
face-to-face physician visits, it could also be clarified through sub-
regulatory guidance and proposing it through rulemaking was not 
necessary.
    Response: We appreciate the commenter's suggestion. However, since 
both the post-admission physician evaluation requirement and the 
required face-to-face physician visits were implemented through the 
rulemaking process, we believe it is appropriate to revise our IRF 
coverage policies through notice and comment rulemaking. We also want 
to avoid creating any confusion for stakeholders.
    Final Decision: After careful consideration of the comments we 
received, we are finalizing our proposal to modify Sec.  
412.622(a)(3)(iv) to provide that the post-admission physician 
evaluation required under Sec.  412.622(a)(4)(ii) may count as one of 
the face-to-face physician visits required under Sec.  
412.622(a)(3)(iv) beginning with FY 2019, that is, for all IRF 
discharges beginning on or after October 1, 2018.

B. Changes to the Interdisciplinary Team Meeting Requirement Beginning 
With FY 2019

    Under Sec.  412.622(a)(5), for an IRF claim to be considered 
reasonable and necessary under section 1862(a)(1) of the Act, the 
patient must require an interdisciplinary team approach to care, as 
evidenced by documentation in the patient's medical record of weekly 
interdisciplinary team meetings that meet all of the requirements 
specified in the regulation. Among those requirements are that the team 
meetings must be led by a rehabilitation physician and that the results 
and findings of the team meetings, and the concurrence by the 
rehabilitation physician with those results and findings, are retained 
in the patient's medical record. For more information, we refer readers 
to the Medicare Benefit Policy Manual, chapter 1, section 110.2.5 (Pub. 
100-02), which can be

[[Page 38552]]

downloaded from the CMS website at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Internet-Only-Manuals-IOMs.html.
    We understand that it may occasionally be difficult for the 
rehabilitation physician to be physically present in the team meetings 
and for that reason we have always instructed providers that the 
rehabilitation physician may participate in the interdisciplinary team 
meetings by telephone as long as it is clearly demonstrated in the 
documentation of the IRF medical record that the meeting was led by the 
rehabilitation physician. However, with the advancements in technology 
since the inception of the IRF coverage criteria in 2010, we believe it 
is appropriate to allow rehabilitation physicians to lead the meeting 
remotely via another mode of communication, such as video or telephone 
conferencing. Therefore, we proposed to amend Sec.  412.622(a)(5)(A) to 
expressly provide that the rehabilitation physician may lead the 
interdisciplinary meeting remotely without any additional documentation 
requirements. We believe that other communication modes such as video 
and telephone conferencing are acceptable ways of leading the 
interdisciplinary team meeting. We believe this change will allow time 
management flexibility and convenience for all rehabilitation 
physicians, especially those located in rural areas who may need to 
travel greater distances between facilities. We proposed for this 
change to apply only to the rehabilitation physician and not the other 
required interdisciplinary team meeting attendees to give IRFs time to 
adapt to this change. However, we stated that we may consider expanding 
this policy to include other interdisciplinary team meeting attendees 
in future rulemaking. Please note that the requirement that the 
rehabilitation physician must lead the interdisciplinary team meeting 
will remain the same.
    We received 37 comments on the proposal to amend Sec.  
412.622(a)(5)(A) to expressly provide that the rehabilitation physician 
may lead the interdisciplinary team meeting remotely without any 
additional documentation requirements, which are summarized below.
    Comment: The majority of commenters agreed with our proposal, 
stating that it would decrease burdensome documentation requirements 
and increase time management flexibility for rehabilitation physicians.
    Response: We appreciate the support that we received from 
commenters regarding this proposed change. We agree that this proposed 
policy will allow rehabilitation physicians the flexibility to use 
their clinical judgment regarding when it is necessary to conduct the 
team meeting in-person versus when it can be conducted remotely without 
hindering patient coordination and care. Additionally, we believe that 
allowing the rehabilitation physician the flexibility to conduct the 
interdisciplinary team meeting remotely without additional 
documentation requirements will free up valuable time for the 
rehabilitation physician to focus on patient care.
    Comment: Some commenters stated that while they agree with allowing 
the rehabilitation physician to lead the interdisciplinary team meeting 
remotely without any additional documentation requirements, it should 
only be allowed on a limited basis as in-person meetings enhance the 
flow of communication and result in a more clearly articulated plan of 
care. The commenters expressed that they believe in-person team 
meetings are more effective and create a positive team involvement.
    Response: We believe that each IRF should maintain the flexibility 
to determine how to appropriately organize their medical staff, as well 
as how to best implement a protocol for where the rehabilitation 
physician leads the interdisciplinary team meeting. We are finalizing 
this policy as proposed. However, we would like to clarify that this 
policy in no way precludes IRFs from exercising their own discretion in 
determining how best to organize their medical staff or implementing a 
protocol for determining when the rehabilitation physician should lead 
the interdisciplinary team meeting in person or remotely. If IRFs would 
like to maintain a protocol that their rehabilitation physician must 
continue to lead the interdisciplinary team meeting in-person, then we 
believe they should have the flexibility to do so. Likewise, if IRFs 
believe that they would like to implement a more flexible protocol for 
their rehabilitation physician, we believe they should have the ability 
to do so. Our purpose in revising this policy is to give rehabilitation 
physicians increased flexibility for time management, as well as to 
reduce documentation requirements that we believe are burdensome and 
provide limited benefit to patient care and coordination.
    Comment: A few commenters were not supportive of this proposal, 
suggesting that in-person communication is the most effective way for 
the rehabilitation physician to lead discussions regarding patient care 
and coordination and that using other forms of communication such as 
videoconferencing or telephone conferencing could possibly hinder the 
flow of communication where critical discussions are needed. Commenters 
also suggested that team members could become more easily distracted 
during meetings if the rehabilitation physician was conducting the 
meeting remotely. In addition, commenters suggested that although 
meetings conducted with the assistance of technology have increased 
throughout the medical arena, technology is not always cooperative or 
reliable and could result in ineffective meetings with valuable time 
lost.
    Response: We appreciate the commenters' feedback and understand the 
concerns that commenters have expressed. To clarify, we have always, 
and continue to believe, that the role of the rehabilitation physician 
during the interdisciplinary team meeting is vital to patient 
coordination and care. We believe that it is of utmost importance for 
the rehabilitation physician to lead the interdisciplinary team meeting 
in order to make critical decisions regarding patient care. However, we 
do not feel that documentation of the rehabilitation physician's 
physical location during the team meeting in the IRF medical record is 
needed to ensure that the rehabilitation physician is making the 
decisions. We also do not believe that removal of this documentation 
requirement in any way hinders patient coordination and care. For these 
reasons, we have decided to finalize this policy as proposed. As noted 
above, however, this policy in no way precludes IRFs from exercising 
their own discretion in determining how best to organize their medical 
staff or implementing a protocol for determining when the 
rehabilitation physician should lead the interdisciplinary team meeting 
in person or remotely. We support IRFs that want to continue requiring 
the interdisciplinary team meetings to be led by the rehabilitation 
physician in-person. Likewise, if IRFs would like to allow the 
rehabilitation physicians more flexibility to lead the team meetings 
remotely (for example, during extenuating situations only), we support 
that decision as well.
    Comment: A few commenters suggested that this policy should only 
apply to IRFs in rural areas or underserved areas, or to small IRFs 
with few staff. These commenters indicated that physician access is 
frequently limited in rural and underserved areas and that this 
proposal would increase access to care for patients in these areas. The 
commenters suggested that for all other IRFs it should be mandatory 
that

[[Page 38553]]

the rehabilitation physician leads the interdisciplinary team meeting 
in-person.
    Response: We appreciate the commenters' suggestion, but we believe 
that implementing this policy change for some IRFs and not others would 
be unduly complicated and confusing to administer, and would likely 
increase administrative burden for providers rather than lessen it.
    Comment: Some commenters that agreed with our proposal also 
suggested that we extend the policy to allow all members of the 
interdisciplinary team meeting to participate in the meeting remotely 
if necessary.
    Response: We appreciate the commenters' suggestion to allow 
additional interdisciplinary team meeting members to participate in the 
meetings remotely, if necessary. After careful consideration of the 
comments, at this time, we are only applying this policy to 
rehabilitation physicians. We will monitor the implementation of this 
new policy and possibly consider applying this policy to other 
interdisciplinary team meeting members in the future, through notice 
and comment rulemaking, as appropriate.
    Final Decision: After careful consideration of the comments we 
received, we are finalizing our proposal to amend Sec.  
412.622(a)(5)(A) to expressly provide that the rehabilitation physician 
may lead the interdisciplinary meeting remotely without any additional 
documentation requirements beginning with FY 2019, that is, for all IRF 
discharges beginning on or after October 1, 2018. We also note that 
this policy in no way precludes IRFs from exercising their own 
discretion in determining how best to organize their medical staff or 
implementing a protocol for determining when the rehabilitation 
physician should lead the interdisciplinary team meeting in person or 
remotely.

C. Changes to the Admission Order Documentation Requirement Beginning 
With FY 2019

    In response to the RFI, several commenters suggest that in general, 
we should consider eliminating duplicative requirements. Commenters 
stated that duplicative requirements placed unnecessary administrative 
burden on facilities trying to make sure they comply with each nuance 
of each requirement. We agreed with the commenters, and for that reason 
we proposed to remove Sec.  412.606(a) as we believe that IRFs are 
already required to fulfill this requirement under Sec. Sec.  
482.12(c), 482.24(c), and 412.3.
    Under Sec.  412.606(a), at the time that each Medicare Part A FFS 
patient is admitted, the IRF must have physician orders for the 
patient's care during the time the patient is hospitalized. For more 
information, we refer readers to the Medicare Benefit Policy Manual, 
chapter 1, section 110.1.4 (Pub. 100-02), which can be downloaded from 
the CMS website at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Internet-Only-Manuals-IOMs.html.
    Additionally, under Sec.  412.3(a) of the hospital payment 
requirements, for the purposes of payment under Medicare Part A, an 
individual is considered an inpatient of a hospital, including a 
critical access hospital, if formally admitted as an inpatient under an 
order for inpatient admission by a physician or other qualified 
practitioner in accordance with Sec. Sec.  412.3, 482.24(c), 482.12(c), 
and 485.638(a)(4)(iii) for a critical access hospital.
    In an effort to reduce duplicative requirements, we believe that if 
we remove the admission order documentation requirement at Sec.  
412.606(a), this requirement would continue to be appropriately 
addressed through the enforcement of Sec.  482.12(c) and Sec.  
482.24(c) of the hospital conditions of participation (CoPs), as well 
as the hospital admission order payment requirements at Sec.  412.3. 
IRFs are responsible for meeting all of the inpatient hospital CoPs and 
the hospital admission order payment requirements at Sec.  412.3, and, 
therefore, we believe that by removing the admission order 
documentation requirement at Sec.  412.606(a), we would be reducing 
both regulatory redundancy as well as administrative burden.
    Therefore, we proposed to amend Sec.  412.606(a) to remove the 
admission order documentation requirement beginning with FY 2019, that 
is, for all IRF discharges beginning on or after October 1, 2018. IRFs 
would continue to meet the requirements at Sec. Sec.  482.12(c), 
482.24(c), and 412.3.
    We received 21 comments on the proposal to amend Sec.  412.606(a) 
to remove the admission order documentation requirement, which are 
summarized below.
    Comment: All of the comments that we received regarding the 
proposal to amend Sec.  412.606(a) to remove the admission order 
documentation requirement were supportive. The commenters agreed with 
our assessment that the regulations currently have duplicative 
admission order requirements for IRFs. Commenters agreed that, if we 
remove the admission order documentation requirement at Sec.  
412.606(a), the admission order requirement would continue to be 
addressed through the enforcement of the hospital conditions of 
participation.
    Response: We appreciate the support from the commenters regarding 
the removal of the admission order documentation requirement at Sec.  
412.606(a). We believe that removal of this duplicative requirement 
will reduce unnecessary administrative burden on IRFs.
    Comment: One commenter suggested that CMS remove the reference to 
Sec.  412.3 as a requirement that IRFs will continue to be required to 
meet for the purposes of admission orders, as we proposed to revise 
that requirement in the FY 2019 IPPS/LTCH proposed rule to no longer 
require a written inpatient admission order to be present in the 
medical record as a specific condition of Medicare Part A payment.
    Response: We respectfully disagree with the commenters' suggestion 
to remove the reference at Sec.  412.3 as a requirement that IRFs will 
need to meet. While we proposed revisions to the language at Sec.  
412.3 in the FY 2019 IPPS/LTCH proposed rule (83 FR 20447 through 
20448), we did not propose to remove the admission order requirement 
completely. Therefore, IRFs must still meet the requirements at Sec.  
412.3 as well as Sec. Sec.  482.12(c) and 482.24(c). We are finalizing 
our proposal to remove the admission order requirement at Sec.  
412.606(a) because it is duplicative.
    Final Decision: After careful consideration of the comments we 
received, we are finalizing our proposal to amend Sec.  412.606(a) to 
remove the admission order documentation requirement beginning with FY 
2019, that is, for all IRF discharges beginning on or after October 1, 
2018. IRFs will continue to meet the requirements at Sec. Sec.  
482.12(c), 482.24(c), and 412.3.

D. Summary of Comments Regarding Additional Changes to the Physician 
Supervision Requirement

    As discussed in section VIII.A of the proposed rule, under Sec.  
412.622(a)(3)(iv), for an IRF claim to be considered reasonable and 
necessary under section 1862(a)(1) of the Act, there must be a 
reasonable expectation at the time of the patient's admission to the 
IRF that the patient requires physician supervision by a rehabilitation 
physician, defined as a licensed physician with specialized training 
and experience in inpatient rehabilitation. The requirement for medical 
supervision means that the rehabilitation physician must conduct face-
to-face visits with the patient at least 3 days per week throughout the

[[Page 38554]]

patient's stay in the IRF to assess the patient both medically and 
functionally, as well as to modify the course of treatment as needed to 
maximize the patient's capacity to benefit from the rehabilitation 
process. For more information, we refer readers to the Medicare Benefit 
Policy Manual, chapter 1, section 110.2.4 (Pub. 100-02), which can be 
downloaded from the CMS website at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Internet-Only-Manuals-IOMs.html.
    When the IRF coverage criteria were initially implemented in 2010, 
we believed that the rehabilitation physician visits should be 
completed face-to-face to ensure that the patient receives the most 
comprehensive in-person care by a rehabilitation physician throughout 
the IRF stay.
    As part of our efforts to assist in reducing unnecessary regulatory 
burden on IRFs, this is an issue we would like to further explore. We 
solicited public comments in the FY 2019 IRF PPS proposed rule (83 FR 
20997 through 20998) on whether the rehabilitation physician should 
have the flexibility to determine that some of the IRF visits can be 
appropriately conducted remotely via another mode of communication, 
such as video or telephone conferencing. Given the level of complexity 
of IRF patients, we had some concerns about whether this approach would 
have an impact on the quality of care provided to IRF patients. To 
maintain the hospital level of care that IRF patients require, we would 
continue to expect that the majority of IRF physician visits would 
continue to be performed face-to-face. However, we were interested in 
feedback from stakeholders on whether we should allow a limited number 
of visits to be conducted remotely. In order to better assist us in 
balancing the needs of the patient, as well as retaining the hospital 
level quality of care provided in an IRF with the goal of reducing the 
regulatory burden on rehabilitation physicians, we sought feedback from 
stakeholders about potentially amending the face-to-face visit 
requirement for rehabilitation physicians. Specifically, we sought 
feedback regarding the following:
    <bullet> Do stakeholders believe that the rehabilitation physician 
would be able to fully assess both the medical and functional needs and 
progress of the patient remotely?
    <bullet> Would this assist facilities in rural areas where it may 
be difficult to employ an abundance of physicians?
    <bullet> Do stakeholders believe that assessing the patient 
remotely would affect the quality or intensity of the physician visit 
in any way?
    <bullet> How many and what types of visits do stakeholders believe 
should be able to be performed remotely?
    <bullet> From an operational standpoint, how would the remote visit 
work?
    <bullet> What type of clinician would need to be present in the 
room with the patient while the rehabilitation physician was in a 
remote location?
    Thus, to assist us in generating ideas and information for 
analyzing potential refinements in this area, we specifically solicited 
public comments from stakeholders on whether the rehabilitation 
physician should have the flexibility to determine that some of the IRF 
visits can be appropriately conducted remotely via another mode of 
communication, such as video or telephone conferencing, while 
maintaining a hospital level high quality of care for IRF patients.
    We received 22 comments in response to our solicitation. We 
appreciate the commenters' responses to this solicitation and will take 
them into consideration for possible future policy development.

E. Summary of Comments Regarding Changes to the Use of Non-Physician 
Practitioners in Meeting the Requirements Under Sec.  412.622(a)(3), 
(4), and (5)

    Several of the requirements under Sec.  412.622(a)(3), (4), and (5) 
require documentation that a rehabilitation physician, defined as a 
licensed physician with specialized training and experience in 
inpatient rehabilitation, visited each patient admitted to an IRF and 
performed an assessment of the patient. For example, under Sec.  
412.622(a)(3)(iv), for an IRF claim to be considered reasonable and 
necessary under section 1862(a)(1) of the Act, there must be a 
reasonable expectation at the time of the patient's admission to the 
IRF that the patient requires physician supervision by a rehabilitation 
physician. The requirement for medical supervision means that the 
rehabilitation physician must conduct face-to-face visits with the 
patient at least 3 days per week throughout the patient's stay in the 
IRF to assess the patient both medically and functionally, as well as 
to modify the course of treatment as needed to maximize the patient's 
capacity to benefit from the rehabilitation process. For more 
information, please refer to the Medicare Benefit Policy Manual, 
chapter 1, section 110.2.4 (Pub. 100-02), which can be downloaded from 
the CMS website at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Internet-Only-Manuals-IOMs.html.
    In addition, under Sec.  412.622(a)(4)(ii), to document that each 
patient for whom the IRF seeks payment is reasonably expected to meet 
all of the requirements in Sec.  412.622(a)(3) at the time of 
admission, the patient's medical record at the IRF must contain a post-
admission physician evaluation that must, among other requirements, be 
completed by a rehabilitation physician within 24 hours of the 
patient's admission to the IRF. For more information, we refer readers 
to the Medicare Benefit Policy Manual, chapter 1, section 110.1.2 (Pub. 
100-02), which can be downloaded from the CMS website at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Internet-Only-Manuals-IOMs.html.
    In the feedback that we received in response to the RFI, it was 
suggested that we consider amending the requirements in Sec.  
412.622(a)(3)(iv) and Sec.  412.622(a)(4)(ii) to enable IRFs to expand 
their use of non-physician practitioners (physician assistants and 
nurse practitioners) to fulfill some of the requirements that 
rehabilitation physicians are currently required to complete. The 
commenters suggested that expanding the use of non-physician 
practitioners in meeting some of the IRF requirements would ease the 
documentation burden on rehabilitation physicians.
    In exploring this issue, we had questions about whether non-
physician practitioners have the specialized training in inpatient 
rehabilitation that would enable them to adequately assess the 
interaction between patients' medical and functional care needs in an 
IRF. Another concern that had been raised regarding this issue, was 
whether IRF patients will continue to receive the hospital level and 
quality of care that is necessary to treat such complex conditions.
    To better assist us in balancing the needs of the patient with the 
desire to reduce the regulatory burden on rehabilitation physicians, in 
the FY 2019 IRF PPS proposed rule (83 FR 20998 through 20999), we 
specifically solicited public comments from stakeholders about 
potentially allowing IRFs to expand their use of non-physician 
practitioners to fulfill some of the requirements that rehabilitation 
physicians are currently required to complete. Specifically, we sought 
feedback regarding the following:
    <bullet> Do non-physician practitioners have the specialized 
training in rehabilitation that they need to have to

[[Page 38555]]

assess IRF patients both medically and functionally?
    <bullet> How would the non-physician practitioner's credentials be 
documented and monitored to ensure that IRF patients are receiving high 
quality care?
    <bullet> Are non-physician practitioners required to do rotations 
in inpatient rehabilitation facilities as part of their training, or 
could this be added to their training programs in the future?
    <bullet> Do stakeholders believe that utilizing non-physician 
practitioners to fulfill some of the requirements that are currently 
required to be completed by a rehabilitation physician would have an 
impact of the quality of care for IRF patients?
    Thus, to assist us in generating ideas and information for 
analyzing potential refinements in this area, we specifically solicited 
public comments from stakeholders on the ways in which the role of non-
physician practitioners could be expanded in the IRF setting while 
maintaining a hospital level high quality of care for IRF patients.
    We received 39 comments in response to our solicitation. We 
appreciate the commenters' responses to this solicitation and will take 
them into consideration for future possible policy development.

X. Updates to the IRF Quality Reporting Program (QRP)

A. Background

    The Inpatient Rehabilitation Facility Quality Reporting Program 
(IRF QRP) is authorized by section 1886(j)(7) of the Act, and it 
applies to freestanding IRFs, as well as inpatient rehabilitation units 
of hospitals or critical access hospitals (CAHs) paid by Medicare under 
the IRF PPS. Under the IRF QRP, the Secretary reduces the annual 
increase factor for discharges occurring during such fiscal year by 2 
percentage points for any IRF that does not submit data in accordance 
with the requirements established by the Secretary. For more 
information on the background and statutory authority for the IRF QRP, 
we refer readers to the FY 2012 IRF PPS final rule (76 FR 47873 through 
47874), the CY 2013 Hospital Outpatient Prospective Payment System/
Ambulatory Surgical Center (OPPS/ASC) Payment Systems and Quality 
Reporting Programs final rule (77 FR 68500 through 68503), the FY 2014 
IRF PPS final rule (78 FR 47902), the FY 2015 IRF PPS final rule (79 FR 
45908), the FY 2016 IRF PPS final rule (80 FR 47080 through 47083), the 
FY 2017 IRF PPS final rule (81 FR 52080 through 52081), and the FY 2018 
IRF PPS final rule (82 FR 36269 through 36270).
    Although we have historically used the preamble to the IRF PPS 
proposed and final rules each year to remind stakeholders of all 
previously finalized program requirements, we have concluded that 
repeating the same discussion each year is not necessary for every 
requirement, especially if we have codified it in our regulations. 
Accordingly, the following discussion is limited as much as possible to 
a discussion of our proposals, responses to comments on those 
proposals, and policies we are finalizing for future years of the IRF 
QRP after consideration of the comments, and represents the approach we 
intend to use in our rulemakings for this program going forward.

B. General Considerations Used for the Selection of Measures for the 
IRF QRP

1. Background
    For a detailed discussion of the considerations we historically 
used for the selection of IRF QRP quality, resource use, and other 
measures, we refer readers to the FY 2016 IRF PPS final rule (80 FR 
47083 through 47084).
    Comment: Several commenters offered support, suggestions for 
improvement, and concerns about the implementation of the IMPACT Act. 
Some commenters requested greater stakeholder engagement, including IRF 
involvement in the testing of Standardized Patient Assessment Data 
Elements (SPADE), and that CMS provide publicly available cross-setting 
data on SPADEs. One commenter recommended that quality measurement (QM) 
and SPADE development be suspended until QMs are standardized and 
interoperable for all post-acute care (PAC) sites, measures are NQF 
endorsed for their setting, SPADE provides evidence that it predicts 
costs and/or improves quality, and additional training materials and 
specifications are provided.
    Response: We appreciate the comments, and we will take them into 
account as we engage in future quality measure and SPADE development 
for the IRF QRP. For a discussion of the IMPACT Act, the selection of 
IRF QRP measures, and SPADEs, we refer readers to the FY 2016 IRF PPS 
final rule (80 FR 47083 through 47084) and the FY 2018 IRF PPS final 
rule (82 FR 36270 through 36276) respectively.
2. Accounting for Social Risk Factors in the IRF QRP
    In the FY 2018 IRF PPS final rule (82 FR 36273 through 36274), we 
discussed the importance of improving beneficiary outcomes including 
reducing health disparities. We also discussed our commitment to 
ensuring that medically complex patients, as well as those with social 
risk factors, receive excellent care. We discussed how studies show 
that social risk factors, such as being near or below the poverty level 
as determined by HHS, belonging to a racial or ethnic minority group, 
or living with a disability, can be associated with poor health 
outcomes and how some of this disparity is related to the quality of 
health care.\3\ Among our core objectives, we aim to improve health 
outcomes, attain health equity for all beneficiaries, and ensure that 
complex patients as well as those with social risk factors receive 
excellent care. Within this context, reports by the Office of the 
Assistant Secretary for Planning and Evaluation (ASPE) and the National 
Academy of Medicine have examined the influence of social risk factors 
in our value-based purchasing programs.\4\ As we noted in the FY 2018 
IRF PPS final rule (82 FR 36273 through 36274), ASPE's report to 
Congress, which was required by the IMPACT Act, found that, in the 
context of value-based purchasing programs, dual eligibility was the 
most powerful predictor of poor health care outcomes among those social 
risk factors that they examined and tested. ASPE is continuing to 
examine this issue in its second report required by the IMPACT Act, 
which is due to Congress in the fall of 2019. In addition, as we noted 
in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38428), the National 
Quality Forum (NQF) undertook a 2-year trial period in which certain 
new measures and measures undergoing maintenance review have been 
assessed to determine if risk adjustment for social risk factors is 
appropriate for these measures.\5\ The trial period ended in April 2017 
and a final report is available at http://www.qualityforum.org/SES_Trial_Period.aspx. The trial concluded that

[[Page 38556]]

``measures with a conceptual basis for adjustment generally did not 
demonstrate an empirical relationship'' between social risk factors and 
the outcomes measured. This discrepancy may be explained in part by the 
methods used for adjustment and the limited availability of robust data 
on social risk factors. NQF has extended the socioeconomic status (SES) 
trial,\6\ allowing further examination of social risk factors in 
outcome measures.
---------------------------------------------------------------------------

    \3\ See, for example, United States Department of Health and 
Human Services. ``Healthy People 2020: Disparities. 2014,'' http://www.healthypeople.gov/2020/about/foundation-health-measures/Disparities or National Academies of Sciences, Engineering, and 
Medicine. Accounting for Social Risk Factors in Medicare Payment: 
Identifying Social Risk Factors. Washington, DC: National Academies 
of Sciences, Engineering, and Medicine 2016.
    \4\ Department of Health and Human Services Office of the 
Assistant Secretary for Planning and Evaluation (ASPE), ``Report to 
Congress: Social Risk Factors and Performance Under Medicare's 
Value-Based Purchasing Programs.'' December 2016, https://aspe.hhs.gov/pdf-report/report-congress-social-risk-factors-and-performance-under-medicares-value-based-purchasing-programs.
    \5\ Available at http://www.qualityforum.org/SES_Trial_Period.aspx.
    \6\ Available at: http://www.qualityforum.org/SES_Trial_Period.aspx.
---------------------------------------------------------------------------

    In the FY/CY 2018 proposed rules for our quality reporting and 
value-based purchasing programs, we solicited feedback on which social 
risk factors provide the most valuable information to stakeholders and 
the methodology for illuminating differences in outcomes rates among 
patient groups within a provider that would also allow for a comparison 
of those differences, or disparities, across providers. Feedback we 
received across our quality reporting programs included encouraging CMS 
to explore whether factors that could be used to stratify or risk 
adjust the measures (beyond dual eligibility); to consider the full 
range of differences in patient backgrounds that might affect outcomes; 
to explore risk adjustment approaches; and to offer careful 
consideration of what type of information display would be most useful 
to the public.
    We also sought public comment on confidential reporting and future 
public reporting of some of our measures stratified by patient dual 
eligibility. In general, commenters noted that stratified measures 
could serve as tools for hospitals to identify gaps in outcomes for 
different groups of patients, improve the quality of health care for 
all patients, and empower consumers to make informed decisions about 
health care. Commenters encouraged CMS to stratify measures by other 
social risk factors such as age, income, and educational attainment. 
With regard to value-based purchasing programs, commenters also 
cautioned to balance fair and equitable payment while avoiding payment 
penalties that mask health disparities or discouraging the provision of 
care to more medically complex patients. Commenters also noted that 
value-based payment program measure selection, domain weighting, 
performance scoring, and payment methodology must account for social 
risk.
    As a next step, we are considering options to improve health 
disparities among patient groups within and across hospitals by 
increasing the transparency of disparities, as shown by quality 
measures. We also are considering how this work applies to other CMS 
quality programs in the future. We refer readers to the FY 2018 IPPS/
LTCH PPS final rule (82 FR 38403 through 38409) for more details where 
we discuss the potential stratification of certain Hospital Inpatient 
Quality Reporting Program outcome measures. Furthermore, we continue to 
consider options to address equity and disparities in our value-based 
purchasing programs.
    We plan to continue working with ASPE, the public, and other key 
stakeholders on this important issue to identify policy solutions that 
achieve the goals of attaining health equity for all beneficiaries and 
minimizing unintended consequences.
    Comment: Many commenters supported the future implementation of a 
strategy to account for social risk factors in the IRF QRP that 
includes risk stratification by race, ethnicity, geographic area, sex, 
and disability. The commenters also suggested that CMS consider the 
role of primary language and family, caregiver and community support in 
developing this strategy.
    Response: We thank the commenters for their comments and will take 
these comments into account as we further consider how to appropriately 
account for social risk factors in the IRF QRP. We also refer the 
reader to the FY 2018 IRF PPS final rule (82 FR 36273 through 36274), 
where we discussed in depth many of the issues raised by these 
commenters.

C. New Removal Factor for Previously Adopted IRF QRP Measures

    As part of our Meaningful Measures Initiative, discussed in section 
D.1. of the Executive Summary of this final rule, we strive to put 
patients first, ensuring that they, along with their clinicians, are 
empowered to make decisions about their own healthcare using data-
driven information that is increasingly aligned with a parsimonious set 
of meaningful quality measures. We began reviewing the IRF QRP's 
measures in accordance with the Meaningful Measures Initiative, and we 
are working to identify how to move the IRF QRP forward in the least 
burdensome manner possible, while continuing to incentivize improvement 
in the quality of care provided to patients.
    Specifically, we believe the goals of the IRF QRP and the measures 
used in the program cover most of the Meaningful Measures Initiative 
priorities, including making care safer, strengthening person and 
family engagement, promoting coordination of care, promoting effective 
prevention and treatment, and making care affordable.
    We also evaluated the appropriateness and completeness of the IRF 
QRP's current measure removal factors. We have previously finalized 
that we would use notice and comment rulemaking to remove measures from 
the IRF QRP based on the following factors: \7\
---------------------------------------------------------------------------

    \7\ We refer readers to the FY 2013 CY 2013 Hospital Outpatient 
Prospective Payment System/Ambulatory Surgical Center (OPPS/ASC) 
Payment Systems and Quality Reporting Programs final rule (77 FR 
45194 through 45195) and FY 2018 IRF PPS final rule (82 FR 36276) 
for more information on the factors we consider for removing 
measures and standardized patient assessment data.
---------------------------------------------------------------------------

    <bullet> Factor 1. Measure performance among IRFs is so high and 
unvarying that meaningful distinctions in improvements in performance 
can no longer be made.
    <bullet> Factor 2. Performance or improvement on a measure does not 
result in better patient outcomes.
    <bullet> Factor 3. A measure does not align with current clinical 
guidelines or practice.
    <bullet> Factor 4. A more broadly applicable measure (across 
settings, populations, or conditions) for the particular topic is 
available.
    <bullet> Factor 5. A measure that is more proximal in time to 
desired patient outcomes for the particular topic is available.
    <bullet> Factor 6. A measure that is more strongly associated with 
desired patient outcomes for the particular topic is available.
    <bullet> Factor 7. Collection or public reporting of a measure 
leads to negative unintended consequences other than patient harm.
    We continue to believe these measure removal factors are 
appropriate for use in the IRF QRP. However, even if one or more of the 
measure removal factors applies, we might nonetheless choose to retain 
the measure for certain specified reasons. Examples of such instances 
could include when a particular measure addresses a gap in quality that 
is so significant that removing the measure could in turn result in 
poor quality, or in the event that a given measure is statutorily 
required. We note further that, consistent with other quality reporting 
programs, we apply these factors on a case-by-case basis.
    In the FY 2019 IRF PPS proposed rule, we proposed to adopt an 
additional factor to consider when evaluating measures for removal from 
the IRF QRP measure set:
    Factor 8. The costs associated with a measure outweigh the benefit 
of its continued use in the program.

[[Page 38557]]

    As we discussed in section D.1. of the Executive Summary of this 
final rule, in furtherance of our new Meaningful Measures Initiative, 
we are engaging in efforts to ensure that the IRF QRP measure set 
continues to promote improved health outcomes for beneficiaries while 
minimizing the overall costs associated with the program. We believe 
these costs are multifaceted and include not only the burden associated 
with reporting, but also the costs associated with implementing and 
maintaining the program. We have identified several different types of 
costs, including, but not limited to: (1) Provider and clinician 
information collection burden and burden associated with the 
submitting/reporting of quality measures to CMS; (2) the provider and 
clinician cost associated with complying with other programmatic 
requirements; (3) the provider and clinician cost associated with 
participating in multiple quality programs, and tracking multiple 
similar or duplicative measures within or across those programs; (4) 
the cost to CMS associated with the program oversight of the measure 
including measure maintenance and public display; and (5) the provider 
and clinician cost associated with compliance to other federal and/or 
state regulations (if applicable).
    For example, it may be needlessly costly and/or of limited benefit 
to retain or maintain a measure which our analyses show no longer 
meaningfully supports program objectives (for example, informing 
beneficiary choice). It may also be costly for health care providers to 
track confidential feedback, preview reports, and publicly reported 
information on a measure where we use the measure in more than one 
program. We may also have to expend unnecessary resources to maintain 
the specifications for the measure, including the tools needed to 
collect, validate, analyze, and publicly report the measure data. 
Furthermore, beneficiaries may find it confusing to see public 
reporting on the same measure in different programs.
    When these costs outweigh the evidence supporting the continued use 
of a measure in the IRF QRP, we believe it may be appropriate to remove 
the measure from the program. Although we recognize that one of the 
main goals of the IRF QRP is to improve beneficiary outcomes by 
incentivizing health care providers to focus on specific care issues 
and making public data related to those issues, we also recognize that 
those goals can have limited utility where, for example, the publicly 
reported data is of limited use because it cannot be easily interpreted 
by beneficiaries and used to influence their choice of providers. In 
these cases, removing the measure from the IRF QRP may better 
accommodate the costs of program administration and compliance without 
sacrificing improved health outcomes and beneficiary choice.
    We proposed that we would remove measures based on this factor on a 
case-by-case basis. We might, for example, decide to retain a measure 
that is burdensome for health care providers to report if we conclude 
that the benefit to beneficiaries is so high that it justifies the 
reporting burden. Our goal is to move the program forward in the least 
burdensome manner possible, while maintaining a parsimonious set of 
meaningful quality measures and continuing to incentivize improvement 
in the quality of care provided to patients.
    We invited public comment on our proposal to adopt an additional 
measure removal Factor 8. The costs associated with a measure outweigh 
the benefit of its continued use in the program.
    Comment: Several commenters supported the proposal to add measure 
removal Factor 8. The costs associated with a measure outweigh the 
benefit of its continued use in the program. Commenters appreciated the 
consideration of costs beyond those associated with data collection and 
submission.
    Response: We appreciate the support of the addition of this measure 
removal factor for the IRF QRP.
    Comment: A few commenters had concerns about the new measure 
removal Factor 8. Some commenters suggested that CMS should involve 
stakeholders when determining if Factor 8 applies to a measure, to get 
input about whether clinicians or patients believe a measure is 
important. One commenter requested clarification about the methods or 
criteria used to assess when the measure cost or burden outweighs the 
benefits of retaining it.
    Response: We appreciate commenters' concerns about the new measure 
removal factor. We value transparency in our processes, and continually 
seek stakeholder input through education and outreach sessions, other 
webinars, rulemaking, and other collaborative engagements with 
stakeholders. We agree with commenters that benefits can be difficult 
to define and that various stakeholders may have different perspectives 
on these benefits. Because of these challenges, we intend to evaluate 
each measure on a case-by-case basis, while considering input from a 
variety of stakeholders, including, but not limited to: Patients, 
caregivers, patient and family advocates, providers, provider 
associations, healthcare researchers, data vendors, and other 
stakeholders with insight into the benefits and costs (financial and 
otherwise) of maintaining the specific measure in the IRF QRP.
    With regard to the request for clarification about criteria used to 
assess costs and burden, in the FY 2019 IRF PPS proposed rule (83 FR 
21000 through 21001), we provided examples of five different costs that 
could be considered in this proposed measure removal factor. We intend 
to assess the costs and benefits to all program stakeholders, including 
but not limited to, those listed above. We intend to balance the costs 
with the benefits to a variety of stakeholders. These stakeholders 
include, but are not limited to, patients and their families or 
caregivers, providers, the healthcare research community, healthcare 
payers, and patient and family advocates. Because for each measure the 
relative benefit to each stakeholder may vary, we believe that the 
benefits to be evaluated for each measure are specific to the measure 
and the original rationale for including the measure in the program.
    Final Decision: After consideration of the public comments, we are 
finalizing our proposal to add the IRF QRP measure removal Factor 8. 
The costs associated with a measure outweigh the benefit of its 
continued use in the program.
    We proposed to revise Sec.  412.634(b)(2) of our regulations to 
codify both the removal factors we have previously finalized for the 
IRF QRP, as well as the new measure removal factor that we are 
finalizing in this final rule. We also proposed to remove the reference 
to the payment impact from the heading of Sec.  412.634(b) and, as 
discussed more fully in section X.J. of this final rule, remove the 
language in current Sec.  412.634(b)(2) related to the 2 percentage 
point payment reduction because that payment reduction is also 
addressed at Sec.  412.624(c)(4).
    We did not receive any public comments on our proposals to update 
to the IRF QRP regulatory text.
    Final Decision: We are finalizing the codification of the IRF QRP 
measure removal factors at Sec.  412.634(b)(2) and the updates to the 
regulatory text at Sec.  412.634(b). We are also making minor 
grammatical edits to the IRF QRP measure removal factor language to 
align with the language of other programs.

[[Page 38558]]

D. Quality Measures Currently Adopted for the FY 2020 IRF QRP

    The IRF QRP currently has 18 measures for the FY 2020 program year, 
which are outlined in Table 11.

  Table 11--Quality Measures Currently Adopted for the FY 2020 IRF QRP
------------------------------------------------------------------------
            Short name                  Measure name and data source
------------------------------------------------------------------------
                                 IRF-PAI
------------------------------------------------------------------------
Pressure Ulcer....................  Percent of Residents or Patients
                                     With Pressure Ulcers That Are New
                                     or Worsened (Short Stay) (NQF
                                     #0678) *.
Pressure Ulcer/Injury.............  Changes in Skin Integrity Post-Acute
                                     Care: Pressure Ulcer/Injury.
Patient Influenza Vaccine.........  Percent of Residents or Patients Who
                                     Were Assessed and Appropriately
                                     Given the Seasonal Influenza
                                     Vaccine (Short Stay) (NQF #0680).
Application of Falls..............  Application of Percent of Residents
                                     Experiencing One or More Falls with
                                     Major Injury (Long Stay) (NQF
                                     #0674).
Application of Functional           Application of Percent of Long-Term
 Assessment.                         Care Hospital (LTCH) Patients with
                                     an Admission and Discharge
                                     Functional Assessment and a Care
                                     Plan That Addresses Function (NQF
                                     #2631).
DRR...............................  Drug Regimen Review Conducted With
                                     Follow-Up for Identified Issues--
                                     Post Acute Care (PAC) Inpatient
                                     Rehabilitation Facility (IRF)
                                     Quality Reporting Program (QRP).
Change in Self-Care...............  IRF Functional Outcome Measure:
                                     Change in Self-Care Score for
                                     Medical Rehabilitation Patients
                                     (NQF #2633).
Change in Mobility................  IRF Functional Outcome Measure:
                                     Change in Mobility Score for
                                     Medical Rehabilitation Patients
                                     (NQF #2634).
Discharge Self-Care Score.........  IRF Functional Outcome Measure:
                                     Discharge Self-Care Score for
                                     Medical Rehabilitation Patients
                                     (NQF #2635).
Discharge Mobility Score..........  IRF Functional Outcome Measure:
                                     Discharge Mobility Score for
                                     Medical Rehabilitation Patients
                                     (NQF #2636).
------------------------------------------------------------------------
                                  NHSN
------------------------------------------------------------------------
CAUTI.............................  National Healthcare Safety Network
                                     (NHSN) Catheter-Associated Urinary
                                     Tract Infection Outcome Measure
                                     (NQF #0138).
MRSA..............................  National Healthcare Safety Network
                                     (NHSN) Facility-wide Inpatient
                                     Hospital-onset Methicillin-
                                     resistant Staphylococcus aureus
                                     (MRSA) Bacteremia Outcome Measure
                                     (NQF #1716).
CDI...............................  National Healthcare Safety Network
                                     (NHSN) Facility-wide Inpatient
                                     Hospital-onset Clostridium
                                     difficile Infection (CDI) Outcome
                                     Measure (NQF #1717).
HCP Influenza Vaccine.............  Influenza Vaccination Coverage among
                                     Healthcare Personnel (NQF #0431).
------------------------------------------------------------------------
                              Claims-Based
------------------------------------------------------------------------
MSPB IRF..........................  Medicare Spending Per Beneficiary
                                     (MSPB)-Post Acute Care (PAC) PAC
                                     IRF QRP.
DTC...............................  Discharge to Community--PAC IRF QRP.
PPR 30 day........................  Potentially Preventable 30-Day Post-
                                     Discharge Readmission Measure for
                                     IRF QRP.
PPR Within Stay...................  Potentially Preventable Within Stay
                                     Readmission Measure for IRFs.
------------------------------------------------------------------------
* The measure will be replaced with the Changes in Skin Integrity Post-
  Acute Care: Pressure Ulcer/Injury measure, effective October 1, 2018.

    While we did not solicit comments on currently adopted or future 
IRF QRP measures, we received several comments.
    Comment: Several commenters suggested additional measures that 
could be removed from the IRF QRP, including the NHSN Catheter 
Associated Urinary Tract Infection (CAUTI) Outcome Measure (NQF #0138); 
the NHSN Facility-wide Inpatient Hospital-onset Clostridium difficile 
Infection (CDI) Outcome Measure (NQF #1717); Influenza Vaccination 
among Healthcare Personnel (NQF #0431); Application of Percent of 
Residents Experiencing one or more falls with major injury; and 
Application of percent of LTCH patients with an admission and discharge 
functional assessment and a care plan that addresses function.
    Response: We thank the commenters for their comments. We did not 
propose any changes to our previously finalized measures, nor did we 
propose additional measure removals from the IRF QRP. We will take 
these comments into account as we engage in future measure selection 
activities for the IRF QRP.
    Comment: A few commenters suggested future measures for the IRF 
QRP, including a measure on Pneumococcal Vaccination Coverage, an adult 
immunization composite measure, and a standardized patient care survey.
    Response: While we did not solicit public comment about future 
measures, we will take these comments into account as we engage in 
future measure development and selection activities for the IRF QRP.

E. Removal of Two IRF QRP Measures

    We proposed to remove two measures from the IRF QRP measure set. 
Beginning with the FY 2020 IRF QRP, we proposed to remove the National 
Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset 
Methicillin-resistant Staphylococcus aureus (MRSA) Bacteremia Outcome 
Measure (NQF #1716). We also proposed to remove one measure beginning 
with the FY 2021 IRF QRP: Percent of Residents or Patients Who Were 
Assessed and Appropriately Given the Seasonal Influenza Vaccine (Short 
Stay) (NQF #0680). We discuss these proposals below.

[[Page 38559]]

1. Removal of National Healthcare Safety Network (NHSN) Facility-Wide 
Inpatient Hospital-Onset Methicillin-Resistant Staphylococcus aureus 
(MRSA) Bacteremia Outcome Measure (NQF #1716) Beginning With the FY 
2020 IRF QRP
    We proposed to remove the measure, Facility-wide Inpatient 
Hospital-onset Methicillin-resistant Staphylococcus aureus (MRSA) 
Bacteremia Outcome Measure (NQF #1716), from the IRF QRP measure set 
beginning with the FY 2020 IRF QRP under measure removal Factor 8. The 
costs associated with a measure outweigh the benefit of its continued 
use in the IRF QRP.
    We originally adopted this measure in the FY 2015 IRF PPS final 
rule (79 FR 45911 through 45913). The measure assesses MRSA infections 
caused by a strain of MRSA bacteria that has become resistant to 
antibiotics commonly used to treat MRSA infections. The measure is 
reported as a Standardized Infection Ratio (SIR) of hospital-onset 
unique blood source MRSA laboratory-identified events among all 
inpatients in the facility.
    The data on this measure is submitted by IRFs via the National 
Health Safety Network (NHSN), and we adopted it for use in several 
quality reporting programs because we believe that MRSA is a serious 
healthcare associated infection. To calculate a measure rate for an 
individual IRF, we must be able to attribute to the IRF at least one 
expected MRSA infection during the reporting period. However, we have 
found that the number of IRFs with expected MRSA infections during a 
given reporting period is extraordinarily low. For 99.9 percent of 
IRFs, the expected MRSA infection incident rate is less than one, which 
is too low to use for purposes of generating a reliable standardized 
infection ratio. As a result, we are unable to calculate reliable 
measure rates and publicly report those rates for almost all IRFs 
because their expected infection rates during a given reporting period 
are less than one. Therefore, while we still recognize that MRSA is a 
serious healthcare associated infection, the benefit of this NHSN 
Facility-wide Inpatient Hospital-onset MRSA Bacteremia Outcome Measure 
(NQF #1716) is small. For this reason, we believe that the burden 
required for data collection and submission on this measure and the 
costs associated with this measure, which include the costs to maintain 
and publicly report it for the IRF QRP and the costs for a small number 
of IRFs to track their rates when reliable rates cannot be calculated 
for most IRFs, outweigh the benefit of its continued use in the 
program.
    Therefore, we proposed to remove this measure from the IRF QRP, 
beginning with the FY 2020 IRF QRP.
    We proposed that IRFs would no longer be required to submit data on 
this measure for the purposes of the IRF QRP beginning with October 1, 
2018 admissions and discharges.
    We invited public comment on this proposal.
    Comment: Several commenters supported the proposal to remove this 
measure from the IRF QRP.
    Response: We thank the commenters for their support.
    Final Decision: After considering public comment, we are finalizing 
our proposal to remove the NHSN Facility-wide Inpatient Hospital-onset 
MRSA Bacteremia Outcome Measure (NQF #1716) from the IRF QRP beginning 
with the FY 2020 IRF QRP. IRFs will no longer be required to submit 
data on this measure for the purposes of the IRF QRP beginning with 
October 1, 2018 admissions and discharges.
2. Removal of Percent of Residents or Patients Who Were Assessed and 
Appropriately Given the Seasonal Influenza Vaccine (Short Stay) (NQF 
#0680) Beginning With the FY 2021 IRF QRP
    We proposed to remove the measure, Percent of Residents or Patients 
Who Were Assessed and Appropriately Given the Seasonal Influenza 
Vaccine (Short Stay) (NQF #0680), from the IRF QRP beginning with the 
FY 2021 IRF QRP under measure removal Factor 1. Measure performance 
among IRFs is so high and unvarying that meaningful distinctions in 
improvements in performance can no longer be made.
    In the FY 2014 IRF PPS final rule (78 FR 47910 through 47911), we 
adopted the Percent of Residents or Patients Who Were Assessed and 
Appropriately Given the Seasonal Influenza Vaccine (Short Stay) measure 
(NQF #0680) to assess vaccination rates among IRF patients because many 
patients receiving care in the IRF setting are 65 years and older and 
considered to be the target population for the influenza vaccination.
    This process measure reports the percentage of stays in which the 
patient was assessed and appropriately given the influenza vaccine for 
the most recent influenza vaccination season. In our evaluation of this 
measure, we identified that IRF performance has been high and 
relatively stable, demonstrating nominal improvements across influenza 
seasons since data collection began. Our analysis of this particular 
measure revealed that for the 2015-2016 and the 2016-2017 influenza 
seasons, nearly every IRF patient was assessed and more than 75 percent 
of IRFs (n = 836) are vaccinating IRF patients who have not already 
received a flu vaccination at 90 percent or higher. Further, throughout 
the last two influenza seasons, the number of IRFs who achieved a 
perfect score (100 percent) on this measure has grown substantially, 
increasing by approximately 50 percent from 146 IRFs (12.9 percent) in 
the 2015-2016 influenza season to 210 IRFs (18.8 percent) in the 2016-
2017 influenza season.
    The Percent of Residents or Patients Who Were Assessed and 
Appropriately Given the Seasonal Influenza Vaccine (Short Stay) (NQF 
#0680) measure rates are also unvarying. With respect to the 2015-2016 
influenza season, the mean performance score was 91.04 percent, and 
with respect to the 2016-2017 influenza season, the mean performance 
score on this measure was 93.88 percent. The proximity of these mean 
rates to the maximum score of 100 percent suggests a potential ceiling 
effect and a lack of variation that restricts distinction between 
facilities. Given that performance among IRFs has remained so high and 
that no meaningful distinction in performance can be made across the 
majority of IRFs, we proposed the removal of this measure.
    Therefore, we proposed to remove this measure from the IRF QRP 
beginning with the FY 2021 IRF QRP under measure removal Factor 1. 
Measure performance among IRFs is so high and unvarying that meaningful 
distinctions in improvements in performance can no longer be made.
    We proposed that IRFs would no longer be required to submit data on 
this measure for the purposes of the IRF QRP beginning with patients 
discharged on or after October 1, 2018. We also stated that we plan to 
remove these data elements from the IRF-PAI version 3.0, effective 
October 1, 2019, and that beginning with October 1, 2018 discharges, 
IRFs should enter a dash (-) for O0250A, O0250B, and O0250C until the 
IRF-PAI version 3.0 is released.
    Comment: Several commenters, including MedPAC, supported the 
proposal to remove the Percent of Residents or Patients Who Were 
Assessed and Appropriately Given the Seasonal Influenza Vaccine (Short 
Stay) (NQF #0680) (Patient Influenza Vaccine) measure from the IRF QRP. 
Several commenters stated that the removal of this measure will allow 
providers to

[[Page 38560]]

devote more time to patient care by reducing the burden of collecting 
and reporting data. A few commenters, including MedPAC, suggested 
focusing on more meaningful measures, as this measure is no longer 
effective in improving the quality of care or patient outcomes. A few 
commenters requested that CMS provide guidance to clarify the 
appropriateness of dash use for the IRF-PAI influenza vaccine items 
beginning FY 2019.
    Response: We appreciate the support from MedPAC and other 
commenters for the proposed removal of the Patient Influenza Vaccine 
measure from the IRF QRP. Due to IRFs effectively assessing and 
vaccinating patients across the 2015-2016 and 2016-2017 influenza 
seasons, performance on this measure has remained so high that we are 
no longer able to make meaningful distinctions in improvements in 
performance. Removing the Patient Influenza Vaccine measure due to its 
high and unvarying performance will allow providers to address highest 
priority issues for improving overall health and focus more on 
meaningful measures that are most vital to patient outcomes in the IRF 
setting. We will provide ongoing guidance to IRFs to clarify that use 
of a dash for IRF-PAI items O0250A, O0250B, and O0250C beginning FY 
2019 is appropriate and will not cause a non-compliance determination.
    Comment: Some commenters did not support the removal of the Patient 
Influenza Vaccine measure from the IRF QRP, citing concerns with 
patient care consequences that could occur as a result of its removal. 
One commenter stated that the Patient Influenza Vaccine measure is an 
important safety measure that may be overlooked if providers are no 
longer required to report data. Another commenter indicated that 
removing the measure will send the impression that preventative health 
services, such as immunizations, are not a priority in the inpatient 
setting, could leave a vulnerable population of Medicare-beneficiaries 
more susceptible to vaccine-preventable illness, and may generate 
reporting confusion among providers.
    Response: While we understand that assessing and appropriately 
vaccinating patients are important components of the care process, many 
patients admitted to IRFs come from an acute care setting where 
influenza vaccinations are tracked and, due to that tracking, have 
already been immunized before they are admitted to the IRF. For that 
reason, the process of assessing IRF patients for influenza vaccination 
is duplicative of a process that most of these patients have already 
undergone. In addition, our analysis has shown that IRFs regularly 
assess and vaccinate their patients when appropriate to do so. As a 
result, we do not believe that the removal of the measure from the IRF 
QRP will lead to lower immunization rates in the IRF patient 
population.
    Final decision: After careful consideration of the public comments, 
we are finalizing our proposal to remove the Percent of Residents or 
Patients Who Were Assessed and Appropriately Given the Seasonal 
Influenza Vaccine (Short Stay) (NQF #0680) measure from the IRF QRP 
beginning with the FY 2021 IRF QRP. IRFs will no longer be required to 
submit data on this measure for the purposes of the IRF QRP beginning 
with patients discharged on or after October 1, 2018. We plan to remove 
these data elements from the IRF-PAI version 3.0, effective October 1, 
2019. Beginning with October 1, 2018 discharges, IRFs should enter a 
dash (-) for O0250A, O0250B, and O0250C until the IRF-PAI version 3.0 
is released.

F. IMPACT Act Implementation Update

    In the FY 2018 IRF PPS final rule (82 FR 36285 through 36286), we 
stated that we intended to specify two measures that would satisfy the 
domain of accurately communicating the existence and provision of the 
transfer of health information and care preferences under section 
1899B(c)(1)(E) of the Act no later than October 1, 2018, and intended 
to propose to adopt them for the FY 2021 IRF QRP with data collection 
beginning on or about October 1, 2019.
    In the FY 2019 IRF PPS proposed rule (83 FR 21002 through 21003), 
we stated that, as a result of the input provided during a public 
comment period between November 10, 2016 and December 11, 2016, input 
provided by a technical expert panel (TEP), and pilot measure testing 
conducted in 2017, we are engaging in continued development work on 
these two measures, including supplementary measure testing and 
providing the public with an opportunity for comment in 2018. We stated 
that we would reconvene a TEP for these measures in mid-2018, which 
occurred in April 2018. We stated that we now intend to specify the 
measures under section 1899B(c)(1)(E) of the Act no later than October 
1, 2019, and intend to propose to adopt the measures for the FY 2022 
IRF QRP, with data collection beginning with patients discharged on or 
after October 1, 2020. For more information on the pilot testing, we 
refer readers to https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    Comment: A few commenters supported the updated implementation 
timeline for the transfer of health information and care preference 
domain measures, allowing additional time for measure development. A 
commenter further stated that, given the complexity of the draft 
measures under development for this domain, it is important that CMS 
prioritize sound measure development to ensure that the measures are 
implementable, minimally burdensome to providers, and add value beyond 
current care practices.
    Response: We appreciate the commenters' support.
    Comment: A few commenters noted the extension of the IMPACT Act 
measure deadline for the transfer of health information and care 
preferences domain measures and requested further explanation and 
clarification for extending quality measure implementation beyond 
statutory deadlines. Another commenter questions why the agency is 
delaying these measures, but did not delay the implementation of other 
measures, such as the Section GG functional assessment items and 
measures despite multiple requests from stakeholders to delay 
implementation to facilitate more deliberation, input, and research.
    Response: In the FY 2016 proposed and final rules, we described the 
statutory timeline for measure specification under the IMPACT Act and 
how that timeline was not feasible in light of operational and other 
practical constraints. We outlined our historical timeline for 
developing and adopting quality measures, which pre-dates the IMPACT 
Act, and how that timeline takes into consideration the time needed to 
specify and adopt valid and reliable measures, as well as give IRFs 
enough notice of their new data reporting obligations. We intended to 
specify the measures required by the IMPACT Act in accordance with our 
historical timeline in order to ensure that the measures we adopt are 
developed in a transparent manner that involves stakeholder input, MAP 
review, and NQF endorsement.
    We have largely been able to comply with the implementation 
timeline we set forth in the FY 2016 proposed and final rules. The 
measures we have adopted in accordance with that timeline were 
developed in a transparent manner and incorporate both expert and 
stakeholder input. They were also reviewed by the MAP and, in many 
cases, are NQF-endorsed for at least one of the four PAC settings. We

[[Page 38561]]

also considered the input of stakeholders who requested that we conduct 
further testing and research before we adopted various measures and 
determined, based on our own assessment of the evidence, as well as 
input of experts and other stakeholders, that the measures were valid 
and reliable enough to be adopted.
    The two measures that would satisfy the domain of accurately 
communicating the existence and provision of the transfer of health 
information and care preferences that are currently under development 
do not enjoy a level of support that is akin to the support that we 
received for other IMPACT Act measures. Results from the pilot test of 
the original measure concept recommended CMS to continue to further 
modify the measures to increase the usefulness and feasibility of the 
constructs for PAC settings. The core concern of the MAP was the 
measure testing, including incomplete development, and other topics 
such as what information would be needed at the time of transfer and 
measure attribution issues. Based on input from the MAP and more 
recently from stakeholders and our own research, we have determined 
that the measures are not sufficiently developed at this time to 
support their use in the four PAC settings, and we have concluded that 
it is better to delay their implementation while we engage in further 
development and testing than it would be to adopt the measures 
prematurely.

G. Form, Manner, and Timing of Data Submission Under the IRF QRP

    Under our current policy, IRFs report data on IRF QRP assessment-
based measures and standardized patient assessment data by completing 
applicable sections of the IRF-PAI and submitting the IRF-PAI to CMS 
through the Quality Improvement Evaluation System (QIES) Assessment 
Submission and Processing (ASAP) system. For more information on IRF 
QRP reporting through the Quality Improvement and Evaluation System 
Assessment Submission and Processing (QIES ASAP) system, refer to the 
``Related Links'' section at the bottom of https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Software.html. Data on IRF QRP measures that are also collected by the 
Centers for Disease Control and Prevention (CDC) for other purposes are 
reported by IRFs to the CDC through the NHSN, and the CDC then 
transmits the relevant data to CMS. Information regarding the CDC's 
NHSN is available at https://www.cdc.gov/nhsn/index.html. We refer 
readers to the FY 2018 IRF PPS final rule (82 FR 36291 through 36292) 
for the data collection and submission timeframes that we finalized for 
the IRF QRP.
    We previously codified at Sec.  412.634(b)(1) of our regulations 
the requirement that IRFs submit data on measures specified under 
sections 1886(j)(7)(D), 1899B(c)(1), and 1899B(d)(1) of the Act in the 
form and manner, and at a time, specified by CMS. In the FY 2019 IRF 
PPS proposed rule (83 FR 21003), we proposed to revise Sec.  
412.634(b)(1) to include the policy we previously finalized in the FY 
2018 IRF PPS final rule (82 FR 36292 through 36293) that IRFs must also 
submit standardized patient assessment data required under section 
1899B(b)(1) of the Act in the form and manner, and at a time, specified 
by CMS.
    We invited public comment on this proposal.
    Comment: One commenter supported the codification of the policy 
that IRFs must also submit standardized patient assessment data 
required under section 1899B(b)(1) of the Act in the form and manner, 
and at a time, specified by CMS.
    Response: We appreciate the commenter's support for this proposal.
    Comment: Several commenters expressed concern about data submission 
using the National Healthcare Safety Network (NHSN), including the 
additional time and effort required to submit data using this method.
    Response: We acknowledge the commenters' concerns, but note that we 
did not propose changes to the data submission requirements related to 
the NHSN. We refer readers to the IRF NHSN website for IRFs, https://www.cdc.gov/nhsn/inpatient-rehab/index.html, which contains guidelines 
and protocols for NHSN submission, along with Frequently Asked 
Questions and resources for data submission.
    Final decision: After careful consideration of the public comments, 
we are finalizing our proposal to revise Sec.  412.634(b)(1) and codify 
in our regulations that IRFs must also submit standardized patient 
assessment data required under section 1899B(b)(1) of the Act in the 
form and manner, and at a time, specified by CMS.

H. Changes to Reconsideration Requirements Under the IRF QRP

    Section 412.634(d)(1) of our regulations states, in part, that IRFs 
found to be non-compliant with the quality reporting requirements for a 
particular fiscal year will receive a letter of non-compliance through 
the Quality Improvement and Evaluation System Assessment Submission and 
Processing (QIES-ASAP) system, as well as through the United States 
Postal Service.
    In the FY 2019 IRF PPS proposed rule (83 FR 21003), we proposed to 
revise Sec.  412.634(d)(1) to expand the methods by which we would 
notify an IRF of non-compliance with the IRF QRP requirements for a 
program year. Revised Sec.  412.634(d)(1) would state that we would 
notify IRFs of non-compliance with the IRF QRP requirements via a 
letter sent through at least one of the following notification methods: 
The QIES-ASAP system, the United States Postal Service, or via an email 
from the Medicare Administrative Contractor (MAC). We believe that this 
change will address feedback from providers who requested additional 
methods for notification.
    We also proposed to revise Sec.  412.634(d)(5) to clarify that we 
will notify IRFs, in writing, of our final decision regarding any 
reconsideration request using the same notification process.
    We invited public comments on these proposals.
    Comment: One commenter was supportive of our proposal to use the 
same process to notify IRFs of both non-compliance and our final 
decision on reconsideration requests.
    Response: We appreciate the commenter's support.
    Comment: Many commenters supported the efforts by CMS to provide 
more methods of communication for notifying IRFs of IRF QRP non-
compliance and reconsideration decisions. A few commenters requested 
additional details about the logistics of these methods of 
notification, and a few had concerns that this would add uncertainty to 
the notification process. Some providers expressed confusion about how 
many methods of notification would be required. One commenter requested 
a timeline for this change. Some commenters questioned who in the 
provider organization would receive the notification or wanted the 
option to designate one person.
    Response: We thank commenters for their support. We will use at 
least one method of notification, and providers will be notified 
regarding the specific method of communication that we will use via the 
IRF QRP Reconsideration and Exception & Extension website at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/IRF-Quality-Reporting-Reconsideration-and-Exception-and-Extension.html and announcements via 
the PAC listserv. The announcements will be posted annually following 
the May 15 data

[[Page 38562]]

submission deadline--prior to the distribution of the initial notices 
of non-compliance determination in late spring/early summer. Messaging 
will include method of communication for the notices, instructions for 
sending a reconsideration request, and the final deadline for 
submitting the request. This policy would be effective October 1, 2018.
    With regard to the point of contact for a specific facility, our 
notifications are sent to the point of contact on file in the QIES 
database. This information is populated via ASPEN. It is the 
responsibility of the facility to ensure that this information is up-
to-date. For information regarding how to update provider information 
in QIES, we refer providers to https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/Downloads/How-to-Update-IRF-Demographic-Data-1-4-18-Final.pdf.
    Comment: A few commenters did not support the use of MACs in the 
notification process, citing concerns that this might cause additional 
confusion. One commenter noted that MACs do not have prior experience 
with the IRF QRP, and are too bureaucratically complex for efficient 
provider communication. Several commenters suggested utilizing the 
existing QRP Helpdesk contractor to communicate QRP non-compliance.
    Response: The MACs have been active in the notification process 
since the establishment of the IRF QRP. MACs serve as the primary 
operational contact between the Medicare FFS program and IRFs, and they 
work with CMS and the agency's other contractors to implement the 2 
percent reduction in the annual increase factor within the Fiscal 
Intermediary Standard System (FISS). They also send to IRFs both the 
initial notices of non-compliance with the requirements of the IRF QRP 
and the final decisions on reconsideration requests. We are confident 
that the MACs will continue to be a valuable addition to the 
notification process.
    Final decision: After careful consideration of the public comments, 
we are finalizing our proposal to revise Sec.  412.634(d)(1) to state 
that we will notify IRFs of non-compliance with the IRF QRP 
requirements via a letter sent through at least one of the following 
notification methods: The QIES-ASAP system, the United States Postal 
Service, or via an email from the Medicare Administrative Contractor 
(MAC). We are also finalizing our proposal to revise Sec.  
412.634(d)(5) to clarify that we will notify IRFs, in writing, of our 
final decision regarding any reconsideration request using the same 
notification process.

I. Policies Regarding Public Display of Measure Data for the IRF QRP

    Section 1886(j)(7)(E) of the Act requires the Secretary to 
establish procedures for making the IRF QRP data available to the 
public after ensuring that an IRF has the opportunity to review its 
data prior to public display. Measure data are currently displayed on 
the IRF Compare website, an interactive web tool that assists 
individuals by providing information on IRF quality of care to those 
who need to select an IRF. For more information on IRF Compare, we 
refer readers to https://www.medicare.gov/inpatientrehabilitationfacilitycompare/.
    In the FY 2019 IRF PPS proposed rule (83 FR 21003), we proposed to 
begin publicly displaying data on the following four assessment-based 
measures in CY 2020, or as soon thereafter as technically feasible: (1) 
Change in Self-Care (NQF #2633); (2) Change in Mobility (NQF #2634); 
(3) Discharge Self-Care Score (NQF #2635); (4) and Discharge Mobility 
Score (NQF #2636). Data collection for these four assessment-based 
measures began with patients discharged on or after October 1, 2016. We 
proposed to display data for these assessment-based measures based on 
four rolling quarters of data, initially using discharges from January 
1, 2019 through December 31, 2019 (Quarter 1 2019 through Quarter 4 
2019). To ensure the statistical reliability of the data for these four 
assessment-based measures, we also proposed that if an IRF has fewer 
than 20 cases during any four consecutive rolling quarters of data that 
we are displaying for any of these measures, then we would note in our 
public display of that measure that with respect to that IRF the number 
of cases/patient stays is too small to publicly report.
    We sought public comment on these proposals.
    Comment: One commenter supported the proposal to begin publicly 
displaying the four assessment-based measures on the IRF Compare 
website in CY 2020.
    Response: We appreciate the commenter's support.
    Comment: A few commenters recommended that CMS provide education 
for IRFs prior to the public display of the four assessment-based 
measures. The commenters requested training for providers on the 
calculation and interpretation of their performance data in the CASPER 
reports to ensure accurate public reporting. Some commenters also 
requested increased transparency regarding the statistical 
methodologies that CMS uses to calculate provider performance.
    Response: We recently held provider training in May 2018 on the 
interpretation of the assessment-based quality measure data on the 
CASPER reports as well as the data review process prior to public 
reporting. These and other training materials are posted on the IRF QRP 
website at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/index.html. We intend to 
hold additional training programs on this topic and will include 
information on the calculation of the performance data including for 
the four assessment-based measures: (1) Change in Self-Care (NQF 
#2633); (2) Change in Mobility (NQF #2634); (3) Discharge Self-Care 
Score (NQF #2635); (4) and Discharge Mobility Score (NQF #2636). 
Information related to measure calculation is currently available in 
IRF QM User's Manual, available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/IRF-Quality-Reporting-Program-Measures-Information-.html. We 
will continue to closely monitor the performance data and assist IRFs 
on CASPER and public reporting efforts through ongoing stakeholder 
education, national trainings, IRF provider announcements, website 
postings, CMS Open Door Forums, and responses to help desk inquiries.
    Comment: Some commenters provided recommendations on the public 
display of the assessment-based measures. One commenter suggested 
revising the measure names to better distinguish the measures and that 
CMS provide an explanation of the differences between these assessment-
based measures in different post-acute care settings. This commenter 
further recommended that the data displayed on the IRF Compare website 
be stratified by clinical conditions to make the data more valuable for 
patients and their caregivers. Another commenter suggested that the 
assessment-based measures be divided into two larger categories labeled 
``Self-Care'' and ``Mobility'' for further clarity, and recommended 
that the observed, expected, and national values be publicly displayed 
on the IRF Compare website.
    Response: We appreciate commenters' suggestions on the public 
display of the assessment-based measures on the IRF Compare website, 
and we will take these suggestions into consideration. We would like to 
clarify that the measure names that will be displayed on the IRF 
Compare website will use consumer-

[[Page 38563]]

friendly language that differs from the technical measure name. A 
crosswalk between the consumer-friendly name and the technical measure 
name is available on the IRF Compare website at https://www.medicare.gov/inpatientrehabilitationfacilitycompare/#about/theData.
    Comment: MedPAC expressed concern about the functional status and 
other quality measure data that would be publicly displayed on the IRF 
Compare website. MedPAC cautioned that because functional status data 
are gathered through patient observation, there are concerns regarding 
the objectivity of this data and encouraged CMS to monitor the accuracy 
of the data and to confirm the inter-rater reliability of the four 
assessment-based measures to be displayed on the IRF Compare website.
    Response: We thank MedPAC for its feedback regarding the public 
display of the four assessment-based measures. We understand these 
concerns and will continue to monitor the reliability and validity of 
all IRF QRP measures, including these measures, by conducting training 
on how to properly collect and report the measure data, and conducting 
our own testing as part of our measure monitoring activities.
    Comment: Some commenters opposed the public display of the four 
assessment-based measures on the IRF Compare website in CY 2020. One 
commenter requested that CMS defer, or suspend, the public display of 
the assessment-based measures that we proposed to publicly report until 
providers have been given the opportunity to review the risk adjustment 
model and evaluate their performance. Other commenters said they do not 
support the proposal without first receiving more information on the 
way these measures will be publicly displayed.
    A few commenters requested that CMS provide additional information 
on providers' CASPER reports. Another commenter was concerned that risk 
adjusted data are not currently available on the CASPER reports, and 
therefore, IRFs do not have sufficient information to track their 
performance and ensure that their provider-level performance is 
accurately represented on IRF Compare. One commenter suggested that CMS 
provide actionable patient-level data for these measures in the 
providers' CASPER reports.
    Response: We plan to provide IRFs with the intercept and 
coefficient values needed for risk-adjustment in the fall of 2018. We 
also plan to include data on the four assessment-based measures, 
including patient-level data and risk-adjusted data, in the CASPER 
reports that we provide to IRFs in the fall of 2018, and training to 
assist IRFs in interpreting those data and how the data will be 
publicly reported. We believe that this information will allow IRFs to 
track their performance and ensure that their performance is accurately 
represented on IRF Compare. Details about the risk adjustment model 
variables and the calculation of these assessment-based measures can 
currently be found in the IRF QM User's Manual, available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/IRF-Quality-Reporting-Program-Measures-Information-.html.
    Comment: One commenter stated that there is currently no 
standardization of the beneficiary populations across IMPACT Act 
measures and recommended that CMS align these patient populations 
across PAC settings. If this cannot be done, the commenter then 
suggested using a uniform population, such as on Medicare Part A 
patients, for the purposes of public reporting for cross-setting 
comparisons. The commenter further recommended that in the future the 
data should be stratified by payer status, and that CMS should work 
with stakeholders to develop appropriate reporting methods for non-
Medicare patients. Another commenter expressed concern about the 
standardization of Section GG functional status data and related 
measures across PAC settings and about the accurate depiction of 
differences between settings viewed on public websites.
    Response: We thank the commenters for their comments. We would like 
to note that as we continue to develop and refine all quality measures 
for purposes of assessment and public reporting, we are working to 
align Medicare patient populations across the PAC settings. We will 
take into consideration the suggestion to use a uniform patient 
population for purposes of reporting cross-setting comparisons. We will 
ensure that all future development work will be aided by public comment 
and work with our stakeholders.
    Comment: We received comments on a number of other issues related 
to public display. One commenter recommended implementing consumer 
testing prior to public reporting. A few commenters recommended that 
CMS provide patient-level feedback data for their claims-based measures 
to help IRFs improve their quality of care. One commenter requested 
that CMS evaluate the use of performance categories on the IRF Compare 
website and either remove the current performance categories or use a 
different methodology.
    Response: We thank commenters for their comments. We will consider 
the commenters' suggestions about consumer testing and the use of 
performance categories, and we will provide the details prior to 
publicly reporting the four assessment-based measures. We did not 
propose any changes related to the public display of claims-based or 
CDC NHSN measures, which currently include performance categories, or 
to provide patient-level feedback data for their claims-based measures. 
However, we appreciate the feedback and will consider the commenters' 
concerns as we continue to monitor and evaluate measure performance and 
reporting methods.
    Final decision: After consideration of the public comments, we are 
finalizing our proposal to begin publicly displaying data on the 
following four assessment-based measures in CY 2020, or as soon 
thereafter as technically feasible: (1) Change in Self-Care (NQF 
#2633); (2) Change in Mobility (NQF #2634); (3) Discharge Self-Care 
Score (NQF #2635); (4) and Discharge Mobility Score (NQF #2636) based 
on four rolling quarters of data, initially using discharges from 
January 1, 2019 through December 31, 2019 (Quarter 1 2019 through 
Quarter 4 2019).

J. Method for Applying the Reduction to the FY 2019 IRF Increase Factor 
for IRFs That Fail To Meet the Quality Reporting Requirements

    As previously noted, section 1886(j)(7)(A)(i) of the Act requires 
the application of a 2-percentage point reduction of the applicable 
market basket increase factor for payments for discharges occurring 
during such fiscal year for IRFs that fail to comply with the quality 
data submission requirements. We proposed to apply a 2-percentage point 
reduction to the applicable FY 2019 market basket increase factor in 
calculating an adjusted FY 2019 standard payment conversion factor to 
apply to payments for only those IRFs that failed to comply with the 
data submission requirements. As previously noted, application of the 
2-percentage point reduction may result in an update that is less than 
0.0 for a fiscal year and in payment rates for a fiscal year being less 
than such payment rates for the preceding fiscal year. Also, reporting-
based reductions to the market basket increase factor will not be 
cumulative; they will only apply for the FY involved.
    We invited public comment on the proposed method for applying the 
reduction to the FY 2019 IRF increase

[[Page 38564]]

factor for IRFs that fail to meet the quality reporting requirements.
    Comment: Some commenters suggested that CMS provide flexibility in 
its application of the IRF QRP payment penalty for IRFs who make a 
good-faith effort to comply and submit quality reporting data.
    Response: We interpret the commenter's suggestion that CMS take 
into consideration case by case exceptions and apply leniency for 
providers have attempted but failed to submit their quality reporting 
data for the IRF QRP. While we did not seek comment on flexibilities on 
which the penalty is applied, we note that we have provided flexibility 
where the failure of the IRF to comply with the requirements of the IRF 
QRP stemmed from circumstances beyond its control. For example, we have 
finalized policies that grant exceptions or extensions for IRFs if we 
determine that a systemic problem with one of our data collection 
systems affected the ability of IRFs to submit data (79 FR 45920). We 
have also adopted policies (78 FR 47920) that allow us to grant 
exemptions or extensions to an IRF if it has experienced an 
extraordinary circumstance beyond its control. In addition we set the 
reporting compliance threshold at 95 percent rather than at 100 percent 
to data to for account for the rare instances when assessment data 
collection and submission maybe impossible, such as when patients have 
been discharged emergently, or against medical advice.
    Table 12 shows the calculation of the adjusted FY 2019 standard 
payment conversion factor that will be used to compute IRF PPS payment 
rates for any IRF that failed to meet the quality reporting 
requirements for the applicable reporting period.

    Table 12--Calculations To Determine the Adjusted FY 2019 Standard
   Payment Conversion Factor for IRFs That Failed To Meet the Quality
                          Reporting Requirement
------------------------------------------------------------------------
               Explanation for adjustment                  Calculations
------------------------------------------------------------------------
Standard Payment Conversion Factor for FY 2018..........         $15,838
Market Basket Increase Factor for FY 2019 (2.9 percent),        x 0.9935
 reduced by 0.8 percentage point for the productivity
 adjustment as required by section 1886(j)(3)(C)(ii)(I)
 of the Act, reduced by 0.75 percentage point in
 accordance with sections 1886(j)(3)(C) and (D) of the
 Act and further reduced by 2 percentage points for IRFs
 that failed to meet the quality reporting requirement..
Budget Neutrality Factor for the Wage Index and Labor-          x 1.0000
 Related Share..........................................
Budget Neutrality Factor for the Revisions to the CMG           x 0.9981
 Relative Weights.......................................
                                                         ---------------
    Adjusted FY 2019 Standard Payment Conversion Factor.       = $15,705
------------------------------------------------------------------------

    Our regulations currently address the 2 percentage point payment 
reduction for failure to meet requirements under the IRF QRP in two 
places: Sec. Sec.  412.624(c)(4) and 412.634(b)(2). We believe that 
these provisions are duplicative and proposed to revise the regulations 
so that the payment reduction is addressed only in Sec.  412.624(c)(4). 
As noted in section X.C. of this final rule, we are finalizing our 
proposal to remove the language regarding the payment reduction that is 
currently at Sec.  412.634(b)(2) and to codify that section instead the 
retention and removal policies for the IRF QRP.
    We also proposed to revise Sec.  412.624(c)(4)(i) to clarify that 
an IRF's failure to submit data under the IRF QRP in accordance with 
Sec.  412.634 will result in the 2 percentage point reduction to the 
applicable increase factor specified in Sec.  412.624(a)(3).
    Finally, we proposed to revise Sec.  412.624(c)(4) for greater 
consistency with the language of section 1886(j)(7)(A)(i) of the Act. 
Specifically, we would revise paragraph (i) to clarify that the 2 
percentage point reduction is applied ``after application of 
subparagraphs (C)(iii) and (D) of section 1886(j)(3) of the Act.'' In 
addition, we would add a new paragraph (iii) that clarifies that the 2 
percentage point reduction required under section 1886(j)(7)(A)(i) of 
the Act may result in an update that is less than 0.0 for a fiscal 
year. We sought public comment on these proposals.
    We did not receive any public comments on the revision of the 
regulatory text at Sec.  412.624(c).
    Final decision: We are finalizing our proposed revisions to our 
regulatory text at Sec.  412.624(c).

XI. Miscellaneous Comments

    We received several comments that were outside the scope of the FY 
2019 IRF PPS proposed rule. Specifically, we received comments 
regarding the processes for updating the IRF facility-level adjustment 
factors and the transparency of these updates, transitions for IRFs 
that are redesignated from rural to urban status due to CBSA updates, 
the IRF 60 percent rule and ICD-10-CM codes that might be appropriate 
for addition to the presumptive methodology, coverage of recreational 
therapy under the IRF PPS, participation of licensed therapy assistants 
in the interdisciplinary team meetings, requirements for hospitals to 
publicly report charges on the internet, access to IRF services for 
beneficiaries in Medicare Advantage plans, hospital-within-hospital 
requirements for satellite facilities, MedPAC recommendations regarding 
monitoring of inter-rater reliability concerns with the IRF-PAI, the 
role of residents in completing IRF documentation requirements, need 
for the overall plan of care, and the overall need to update rules on 
an ongoing basis to maintain their relevancy. We thank commenters for 
bringing these issues to our attention, and we will take these comments 
into consideration for potential policy refinements.

XII. Provisions of the Final Regulations

    In this final rule, we are adopting the provisions set forth in the 
FY 2019 IRF PPS proposed rule (83 FR 20972). Specifically:
    <bullet> We will update the FY 2019 IRF PPS relative weights and 
average length of stay values using the most current and complete 
Medicare claims and cost report data in a budget-neutral manner, as 
discussed in section IV. of this final rule.
    <bullet> The facility-level adjustments will remain frozen at FY 
2014 levels for FY 2015 and all subsequent years, as discussed in 
section V. of this final rule.
    <bullet> We will update the FY 2019 IRF PPS payment rates by the 
market basket increase factor, based upon the most current data 
available, with a 0.75 percentage point reduction as required by 
sections 1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(v) of the Act and a 
productivity adjustment required by section 1886(j)(3)(C)(ii)(I) of the 
Act, as described in section VI. of this final rule.
    <bullet> We will update the FY 2019 IRF PPS payment rates by the FY 
2019 wage index and the labor-related share in a

[[Page 38565]]

budget-neutral manner, as discussed in section VI. of this final rule.
    <bullet> We will calculate the final IRF standard payment 
conversion factor for FY 2019, as discussed in section VI. of this 
final rule.
    <bullet> We will update the outlier threshold amount for FY 2019, 
as discussed in section VII. of this final rule.
    <bullet> We will update the CCR ceiling and urban/rural average 
CCRs for FY 2019, as discussed in section VII. of this final rule.
    <bullet> We will remove the FIM\TM\ Instrument and Associated 
Function Modifiers from the IRF-PAI beginning with FY 2020 and make 
refinements to the case-mix classification system using 2 full years of 
data, beginning with FY 2020, as discussed in section VIII. of this 
final rule.
    <bullet> We will revise certain IRF coverage requirements beginning 
with FY 2019, as discussed in section IX. of this final rule.
    <bullet> We will adopt updates to the IRF QRP in accordance with 
sections 1886(j)(7) of the Act, as discussed in section X. of this 
final rule.

XIII. Request for Information on Promoting Interoperability and 
Electronic Healthcare Information Exchange Through Possible Revisions 
to the CMS Patient Health and Safety Requirements for Hospitals and 
Other Medicare- and Medicaid-Participating Providers and Suppliers

    In the FY 2019 IRF PPS proposed rule, we included a Request for 
Information (RFI) related to promoting interoperability and electronic 
healthcare information exchange (83 FR 20972 through 21015). We 
received 15 comments on this RFI, and appreciate the input provided by 
commenters.

XIV. Collection of Information Requirements

A. Statutory Requirement for Solicitation of Comments

    Under the Paperwork Reduction Act of 1995 (PRA), 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 OMB for review and approval. To fairly evaluate whether an 
information collection should be approved by OMB, section 3506(c)(2)(A) 
of the PRA requires that we solicit comment on the following issues:
    <bullet> The need for the information collection and its usefulness 
in carrying out the proper functions of our agency;
    <bullet> The accuracy of our estimate of the information collection 
burden;
    <bullet> The quality, utility, and clarity of the information to be 
collected; and
    <bullet> Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    This final rule makes reference to associated information 
collections that are not discussed in the regulation text contained in 
this document.

B. Collection of Information Requirements for Updates Related to the 
IRF PPS

    As discussed in section VIII.A of this final rule, we are removing 
the FIM\TM\ instrument and associated Function Modifiers from the IRF-
PAI beginning with FY 2020, that is, for all IRF discharges beginning 
on or after October 1, 2019. The removal of the FIM\TM\ instrument and 
associated Function Modifiers from the IRF-PAI would result in the 
removal of 11 data items. As a result, we estimate the burden and costs 
associated with the collection of this data will be reduced for IRFs. 
Specifically, we estimate the removal of the FIM\TM\ instrument and the 
associated Function Modifiers will save 25 minutes of nursing/clinical 
staff time used to report data on both admission and discharge which 
was the estimated time needed to complete these items when the FIMM\TM\ 
instrument was added to the IRF-PAI in the FY 2002 IRF PPS Final Rule 
(66 FR 41375). We believe that the FIM\TM\ items we are removing may be 
completed by social service assistants, Licensed Practical Nurses 
(LPN), recreational therapists, social workers, dietitians and 
nutritionists, Registered Nurses (RN), Occupational Therapists (OT), 
Speech Language Pathologists (SLP) and audiologists, and or Physical 
Therapists (PT), depending on the item. To estimate the burden 
associated with the collection of these data items, we obtained mean 
hourly wages for these staff from the U.S. Bureau of Labor Statistics' 
May 2017 National Occupational Employment and Wage Estimates (https://www.bls.gov/oes/current/oes_nat.htm) and doubled them to account for 
overhead and fringe benefits. We estimate IRF-PAI preparation and 
coding costs using a social worker hourly wage rate of $49.64, a social 
work assistant's hourly wage rate of $34.10, an RN hourly wage rate of 
$70.72, an LPN hourly wage rate of $43.96, a recreation therapist 
hourly wage rate of $47.76, a dietitian/nutritionist hourly wage rate 
of $57.84, a speech-language pathologist hourly wage rate of $76.70, an 
audiologist hourly wage rate of $76.96, an occupational therapist 
hourly wage rate of $81.38, and a physical therapist hourly wage rate 
of $84.68. Using the mean hourly wages (doubled to account for overhead 
and fringe benefits) for the staffing categories above, we calculate an 
average rate of $62.37. The $62.37 rate is a blend of all of these 
categories, and reflects the fact that IRF providers have historically 
used all of these clinicians for preparation and coding for the IRF-
PAI.
    To estimate the burden reduction associated with this change, we 
estimate that there are approximately 403,341 discharges from 1,126 
IRFs in FY 2017 resulting in an approximate average of 358 discharges 
per IRF annually. This equates to a reduction of 168,059 hours for all 
IRFs (403,341 discharges x 0.416 hours). This is 149 hours (168,059 
hours/1,126 IRFs) per IRF annually. We estimate the total cost savings 
per IRF will be approximately $9,293 (149 hours x $62.37) annually. We 
estimate that the total cost savings for all IRF providers will be 
approximately $10.5 million (1,126 IRFs x $9,293) annually.

C. Collection of Information Requirements for Updates Related to the 
IRF QRP

    An IRF that does not meet the requirements of the IRF QRP for a 
fiscal year will receive a 2 percentage point reduction to its 
otherwise applicable annual increase factor for that fiscal year. 
Information is not currently available to determine the precise number 
of IRFs that will receive less than the full annual increase factor for 
FY 2019 due to non-compliance with the requirements of the IRF QRP.
    We believe that the burden associated with the IRF QRP is the time 
and effort associated with complying with the requirements of the IRF 
QRP. As of June 1, 2018, there are approximately 1,126 IRFs reporting 
quality data to CMS. For the purposes of calculating the costs 
associated with the collection of information requirements, we obtained 
mean hourly wages for these staff from the U.S. Bureau of Labor 
Statistics' May 2017 National Occupational Employment and Wage 
Estimates (http://www.bls.gov/oes/current/oes_nat.htm). To account for 
overhead and fringe benefits, we have doubled the hourly wage. These 
amounts are detailed in Table 13.

[[Page 38566]]



     Table 13--U.S. Bureau of Labor Statistics' May 2017 National Occupational Employment and Wage Estimates
----------------------------------------------------------------------------------------------------------------
                                                                                   Overhead and      Adjusted
                Occupation title                    Occupation      Mean hourly   fringe benefit  hourly wage ($/
                                                       code         wage ($/hr)       ($/hr)            hr)
----------------------------------------------------------------------------------------------------------------
Registered Nurse (RN)...........................         29-1141          $35.65          $35.65          $71.30
Medical Records and Health Information                   29-2071           18.83           18.83           37.66
 Technician.....................................
----------------------------------------------------------------------------------------------------------------

    As discussed in section X.4. of this rule, we are finalizing our 
proposal to remove two measures from the IRF QRP.
    In section X.4.2 of the final rule, we are finalizing our proposal 
to remove the measure, Percent of Residents or Patients Who Were 
Assessed and Appropriately Given the Seasonal Influenza Vaccine (Short 
Stay) (NQF #0680), beginning with the FY 2021 IRF QRP. IRFs will no 
longer be required to submit data on this measure beginning with 
patients discharged on October 1, 2018, and the items will be removed 
from the IRF-PAI V3.0, effective October 1, 2019. As a result, the 
estimated burden and cost for IRFs for complying with requirements of 
the FY 2021 IRF QRP will be reduced. Specifically, we believe that 
there will be a 4.8 minute reduction in clinical staff time to report 
data per patient stay. We estimate 403,341 discharges from 1,126 IRFs 
annually. This equates to a decrease of 32,267 hours in burden for all 
IRFs (0.08 hours per assessment x 403,341 discharges). Given 4.8 
minutes of RN time at $71.30 per hour completing an average of 358 sets 
of IRF-PAI assessments per provider per year, we estimate that the 
total cost will be reduced by $2,043 per IRF annually, or $2,300,657 
for all IRFs annually. This decrease in burden will be accounted for in 
the information collection under OMB control number (0938-0842).
    In addition, we are finalizing our proposal to remove one CDC 
National Healthcare Safety Network (NHSN) measure, beginning with the 
FY 2020 IRF QRP, which will result in a decrease in burden and cost for 
IRFs. Providers will no longer be required to submit data beginning 
with October 1, 2018 admissions and discharges. We estimate that the 
removal of the National Healthcare Safety Network (NHSN) Facility-wide 
Inpatient Hospital-onset Methicillin-resistant Staphylococcus aureus 
(MRSA) Bacteremia Outcome Measure (NQF #1716) will result in a 3-hour 
(15 minutes per MRSA submission x 12 estimated submissions IRF per 
year) reduction in clinical staff time annually to report data which 
equates to a decrease of 3,378 hours (3 hours burden per IRF per year x 
1,126 total IRFs) in burden for all IRFs. Given 10 minutes of RN time 
at $71.30 per hour, and 5 minutes of Medical Records or Health 
Information Technician at $37.66 per hour, for the submission of 12 
estimated submissions of MRSA data to the NHSN per IRF per year, we 
estimate that the total cost of complying with requirements of the IRF 
QRP will be reduced by $180 per IRF annually, or $202,973 for all IRFs 
annually.
    In summary, the finalized IRF QRP measure removals will result in a 
burden reduction of $2,223 per IRF annually, and $2,503,630 for all 
IRFs annually.

XV. Regulatory Impact Analysis

A. Statement of Need

    This final rule updates the IRF prospective payment rates for FY 
2019 as required under section 1886(j)(3)(C) of the Act. It responds to 
section 1886(j)(5) of the Act, which requires the Secretary to publish 
in the Federal Register on or before the August 1 that precedes the 
start of each fiscal year, the classification and weighting factors for 
the IRF PPS's case-mix groups, and a description of the methodology and 
data used in computing the prospective payment rates for that fiscal 
year.
    This final rule also implements sections 1886(j)(3)(C) and (D) of 
the Act. Section 1886(j)(3)(C)(ii)(I) of the Act requires the Secretary 
to apply a multifactor productivity adjustment to the market basket 
increase factor, and to apply other adjustments as defined by the Act. 
The productivity adjustment applies to FYs from 2012 forward. The other 
adjustments apply to FYs 2010 through 2019.
    Furthermore, this final rule also adopts policy changes under the 
statutory discretion afforded to the Secretary under section 1886(j)(7) 
of the Act. Specifically, we are removing the FIM\TM\ instrument and 
associated Function Modifiers from the IRF-PAI, revising certain IRF 
coverage requirements, removing two measures from the IRF QRP measure 
set, and codifying policies that were previously finalized under the 
IRF QRP.

B. Overall Impact

    We have examined the impacts of this rule as required by Executive 
Order 12866 on Regulatory Planning and Review (September 30, 1993), 
Executive Order 13563 on Improving Regulation and Regulatory Review 
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 
1980, Pub. L. 96-354), section 1102(b) of the Act, section 202 of the 
Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104-4), 
Executive Order 13132 on Federalism (August 4, 1999), the Congressional 
Review Act (5 U.S.C. 804(2) and Executive Order 13771 on Reducing 
Regulation and Controlling Regulatory Costs (January 30, 2017).
    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). Section 
3(f) of Executive Order 12866 defines a ``significant regulatory 
action'' as an action that is likely to result in a rule: (1) Having an 
annual effect on the economy of $100 million or more in any 1 year, or 
adversely and materially affecting a sector of the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or state, local or tribal governments or communities (also 
referred to as ``economically significant''); (2) creating a serious 
inconsistency or otherwise interfering with an action taken or planned 
by another agency; (3) materially altering the budgetary impacts of 
entitlement grants, user fees, or loan programs or the rights and 
obligations of recipients thereof; or (4) raising novel legal or policy 
issues arising out of legal mandates, the President's priorities, or 
the principles set forth in the Executive Order.
    A regulatory impact analysis (RIA) must be prepared for major rules 
with economically significant effects ($100 million or more in any 1 
year). We estimate the total impact of the policy updates described in 
this final rule by comparing the estimated payments in FY 2019 with 
those in FY 2018. This analysis results in an estimated $105 million 
increase for FY 2019 IRF PPS

[[Page 38567]]

payments. Additionally we estimate that costs associated with the 
proposals to revise certain IRF coverage requirements and update the 
reporting requirements under the IRF quality reporting program result 
in an estimated $23 million reduction in costs in FY 2019 for IRFs. We 
also estimate that the provisions in this final rule will result in an 
estimated $18.5 million reduction in Medicare Part B spending from 
physicians billing one fewer visit to Medicare Part B. We estimate that 
this rulemaking is ``economically significant'' as measured by the $100 
million threshold, and hence also a major rule under the Congressional 
Review Act. Also, the rule has been reviewed by OMB. Accordingly, we 
have prepared a Regulatory Impact Analysis that, to the best of our 
ability, presents the costs and benefits of the rulemaking.

C. Anticipated Effects

1. Effects on IRFs
    The RFA requires agencies to analyze options for regulatory relief 
of small entities, if a rule has a significant impact on a substantial 
number of small entities. For purposes of the RFA, small entities 
include small businesses, nonprofit organizations, and small 
governmental jurisdictions. Most IRFs and most other providers and 
suppliers are small entities, either by having revenues of $7.5 million 
to $38.5 million or less in any 1 year depending on industry 
classification, or by being nonprofit organizations that are not 
dominant in their markets. (For details, see the Small Business 
Administration's final rule that set forth size standards for health 
care industries, at 65 FR 69432 at http://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf, effective March 26, 2012 and 
updated on February 26, 2016.) Because we lack data on individual 
hospital receipts, we cannot determine the number of small proprietary 
IRFs or the proportion of IRFs' revenue that is derived from Medicare 
payments. Therefore, we assume that all IRFs (an approximate total of 
1,120 IRFs, of which approximately 55 percent are nonprofit facilities) 
are considered small entities and that Medicare payment constitutes the 
majority of their revenues. The HHS generally uses a revenue impact of 
3 to 5 percent as a significance threshold under the RFA. As shown in 
Table 14, we estimate that the net revenue impact of this final rule on 
all IRFs is to increase estimated payments by approximately 1.3 
percent. The rates and policies set forth in this final rule will not 
have a significant impact (not greater than 3 percent) on a substantial 
number of small entities. Medicare Administrative Contractors are not 
considered to be small entities. Individuals and states are not 
included in the definition of a small entity. In addition, section 
1102(b) of the Act requires us to prepare a regulatory impact analysis 
if a rule may have a significant impact on the operations of a 
substantial number of small rural hospitals. This analysis must conform 
to the provisions of section 604 of the RFA. For purposes of section 
1102(b) of the Act, we define a small rural hospital as a hospital that 
is located outside of a Metropolitan Statistical Area and has fewer 
than 100 beds. As discussed in detail below in this section, the rates 
and policies set forth in this final rule will not have a significant 
impact (not greater than 3 percent) on a substantial number of rural 
hospitals based on the data of the 137 rural units and 11 rural 
hospitals in our database of 1,126 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) (UMRA) also requires that agencies 
assess anticipated costs and benefits before issuing any rule whose 
mandates require spending in any 1 year of $100 million in 1995 
dollars, updated annually for inflation. In 2018, that threshold is 
approximately $150 million. This final rule does not mandate any 
requirements for State, local, or tribal governments, or for the 
private sector.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it issues a proposed rule (and subsequent final 
rule) that imposes substantial direct requirement costs on state and 
local governments, preempts state law, or otherwise has federalism 
implications. As stated, this final rule will not have a substantial 
effect on state and local governments, preempt state law, or otherwise 
have a federalism implication.
    Executive Order 13771, titled Reducing Regulation and Controlling 
Regulatory Costs, was issued on January 30, 2017 and requires that the 
costs associated with significant new regulations ``shall, to the 
extent permitted by law, be offset by the elimination of existing costs 
associated with at least two prior regulations.'' This final rule is 
considered an E.O. 13771 deregulatory action. We estimate that this 
rule would generate $27.24 million in annualized cost savings, 
discounted at 7 percent relative to year 2016, over a perpetual time 
horizon. Details on the estimated costs savings of this rule can be 
found in the preceding analyses.
2. Detailed Economic Analysis
    This final rule updates to the IRF PPS rates contained in the FY 
2018 IRF PPS final rule (82 FR 36238). Specifically, this final rule 
updates the CMG relative weights and average length of stay values, the 
wage index, and the outlier threshold for high-cost cases. This final 
rule applies a MFP adjustment to the FY 2019 IRF market basket increase 
factor in accordance with section 1886(j)(3)(C)(ii)(I) of the Act, and 
a 0.75 percentage point reduction to the FY 2019 IRF market basket 
increase factor in accordance with sections 1886(j)(3)(C)(ii)(II) and 
(D)(v) of the Act. Further, this final rule contains revisions to 
remove the FIM\TM\ instrument and associated Function Modifiers from 
the IRF-PAI beginning in FY 2020, revise certain IRF coverage 
requirements, and revises and updates the IRF quality reporting 
requirements that are expected to result in some additional financial 
effects on IRFs. In addition, section X.J. of this final rule discusses 
the implementation of the required 2 percentage point reduction of the 
market basket increase factor for any IRF that fails to meet the IRF 
quality reporting requirements, in accordance with section 1886(j)(7) 
of the Act.
    We estimate that the impact of the changes and updates described in 
this final rule will be a net estimated increase of $105 million in 
payments to IRF providers. This estimate does not include the 
implementation of the required 2 percentage point reduction of the 
market basket increase factor for any IRF that fails to meet the IRF 
quality reporting requirements (as discussed in section X.J. of this 
final rule). The impact analysis in Table 14 of this final rule 
represents the projected effects of the updates to IRF PPS payments for 
FY 2019 compared with the estimated IRF PPS payments in FY 2018. We 
determine the effects by estimating payments while holding all other 
payment variables constant. We use the best data available, but we do 
not attempt to predict behavioral responses to these changes, and we do 
not make adjustments for future changes in such variables as number of 
discharges or case-mix.
    We note that certain events may combine to limit the scope or 
accuracy of our impact analysis, because such an analysis is future-
oriented and, thus, susceptible to forecasting errors because of other 
changes in the forecasted impact time period. Some examples could be 
legislative changes made by the Congress to the Medicare program that 
would impact program funding, or changes specifically related to IRFs.

[[Page 38568]]

Although some of these changes may not necessarily be specific to the 
IRF PPS, the nature of the Medicare program is such that the changes 
may interact, and the complexity of the interaction of these changes 
could make it difficult to predict accurately the full scope of the 
impact upon IRFs.
    In updating the rates for FY 2019, we are adopting standard annual 
revisions described in this final rule (for example, the update to the 
wage and market basket indexes used to adjust the federal rates). We 
are also implementing a productivity adjustment to the FY 2019 IRF 
market basket increase factor in accordance with section 
1886(j)(3)(C)(ii)(I) of the Act, and a 0.75 percentage point reduction 
to the FY 2017 IRF market basket increase factor in accordance with 
sections 1886(j)(3)(C)(ii)(II) and (D)(v) of the Act. We estimate the 
total increase in payments to IRFs in FY 2019, relative to FY 2018, 
will be approximately $105 million.
    This estimate is derived from the application of the FY 2019 IRF 
market basket increase factor, as reduced by a productivity adjustment 
in accordance with section 1886(j)(3)(C)(ii)(I) of the Act, and a 0.75 
percentage point reduction in accordance with sections 
1886(j)(3)(C)(ii)(II) and (D)(v) of the Act, which yields an estimated 
increase in aggregate payments to IRFs of $110 million. Furthermore, 
there is an additional estimated $5 million decrease in aggregate 
payments to IRFs due to the proposed update to the outlier threshold 
amount. Outlier payments are estimated to decrease from approximately 
3.1 percent in FY 2018 to 3.0 percent in FY 2019. Therefore, summed 
together, we estimate that these updates will result in a net increase 
in estimated payments of $105 million from FY 2018 to FY 2019.
    The effects of the updates that impact IRF PPS payment rates are 
shown in Table 14. The following updates that affect the IRF PPS 
payment rates are discussed separately below:
    <bullet> The effects of the update to the outlier threshold amount, 
from approximately 3.1 percent to 3.0 percent of total estimated 
payments for FY 2019, consistent with section 1886(j)(4) of the Act.
    <bullet> The effects of the annual market basket update (using the 
IRF market basket) to IRF PPS payment rates, as required by section 
1886(j)(3)(A)(i) and sections 1886(j)(3)(C) and (D) of the Act, 
including a productivity adjustment in accordance with section 
1886(j)(3)(C)(i)(I) of the Act, and a 0.75 percentage point reduction 
in accordance with sections 1886(j)(3)(C)(ii)(II) and (D)(v) of the 
Act.
    <bullet> The effects of applying the budget-neutral labor-related 
share and wage index adjustment, as required under section 1886(j)(6) 
of the Act.
    <bullet> The effects of the budget-neutral changes to the CMG 
relative weights and average length of stay values, under the authority 
of section 1886(j)(2)(C)(i) of the Act.
    <bullet> The total change in estimated payments based on the FY 
2019 payment changes relative to the estimated FY 2018 payments.
3. Description of Table 14
    Table 14 categorizes IRFs by geographic location, including urban 
or rural location, and location for CMS's 9 Census divisions (as 
defined on the cost report) of the country. In addition, the table 
divides IRFs into those that are separate rehabilitation hospitals 
(otherwise called freestanding hospitals in this section), those that 
are rehabilitation units of a hospital (otherwise called hospital units 
in this section), rural or urban facilities, ownership (otherwise 
called for-profit, non-profit, and government), by teaching status, and 
by disproportionate share patient percentage (DSH PP). The top row of 
Table 14 shows the overall impact on the 1,126 IRFs included in the 
analysis.
    The next 12 rows of Table 14 contain IRFs categorized according to 
their geographic location, designation as either a freestanding 
hospital or a unit of a hospital, and by type of ownership; all urban, 
which is further divided into urban units of a hospital, urban 
freestanding hospitals, and by type of ownership; and all rural, which 
is further divided into rural units of a hospital, rural freestanding 
hospitals, and by type of ownership. There are 978 IRFs located in 
urban areas included in our analysis. Among these, there are 709 IRF 
units of hospitals located in urban areas and 269 freestanding IRF 
hospitals located in urban areas. There are 148 IRFs located in rural 
areas included in our analysis. Among these, there are 137 IRF units of 
hospitals located in rural areas and 11 freestanding IRF hospitals 
located in rural areas. There are 389 for-profit IRFs. Among these, 
there are 349 IRFs in urban areas and 40 IRFs in rural areas. There are 
619 non-profit IRFs. Among these, there are 532 urban IRFs and 87 rural 
IRFs. There are 118 government-owned IRFs. Among these, there are 97 
urban IRFs and 21 rural IRFs.
    The remaining four parts of Table 14 show IRFs grouped by their 
geographic location within a region, by teaching status, and by DSH PP. 
First, IRFs located in urban areas are categorized for their location 
within a particular one of the nine Census geographic regions. Second, 
IRFs located in rural areas are categorized for their location within a 
particular one of the nine Census geographic regions. In some cases, 
especially for rural IRFs located in the New England, Mountain, and 
Pacific regions, the number of IRFs represented is small. IRFs are then 
grouped by teaching status, including non-teaching IRFs, IRFs with an 
intern and resident to average daily census (ADC) ratio less than 10 
percent, IRFs with an intern and resident to ADC ratio greater than or 
equal to 10 percent and less than or equal to 19 percent, and IRFs with 
an intern and resident to ADC ratio greater than 19 percent. Finally, 
IRFs are grouped by DSH PP, including IRFs with zero DSH PP, IRFs with 
a DSH PP less than 5 percent, IRFs with a DSH PP between 5 and less 
than 10 percent, IRFs with a DSH PP between 10 and 20 percent, and IRFs 
with a DSH PP greater than 20 percent.
    The estimated impacts of each policy described in this rule to the 
facility categories listed are shown in the columns of Table 14. The 
description of each column is as follows:
    <bullet> Column (1) shows the facility classification categories.
    <bullet> Column (2) shows the number of IRFs in each category in 
our FY 2019 analysis file.
    <bullet> Column (3) shows the number of cases in each category in 
our FY 2019 analysis file.
    <bullet> Column (4) shows the estimated effect of the adjustment to 
the outlier threshold amount.
    <bullet> Column (5) shows the estimated effect of the update to the 
IRF labor-related share and wage index, in a budget-neutral manner.
    <bullet> Column (6) shows the estimated effect of the update to the 
CMG relative weights and average length of stay values, in a budget-
neutral manner.
    <bullet> Column (7) compares our estimates of the payments per 
discharge, incorporating all of the policies reflected in this final 
rule for FY 2019 to our estimates of payments per discharge in FY 2018.
    The average estimated increase for all IRFs is approximately 1.3 
percent. This estimated net increase includes the effects of the IRF 
market basket increase factor for FY 2019 of 2.9 percent, reduced by a 
productivity adjustment of 0.8 percentage point in accordance with 
section 1886(j)(3)(C)(ii)(I) of the Act, and further reduced by 0.75 
percentage point in accordance with sections 1886(j)(3)(C)(ii)(II) and 
(D)(v) of the Act.

[[Page 38569]]

It also includes the approximate 0.1 percent overall decrease in 
estimated IRF outlier payments from the update to the outlier threshold 
amount. Since we are making the updates to the IRF wage index and the 
CMG relative weights in a budget-neutral manner, they will not be 
expected to affect total estimated IRF payments in the aggregate. 
However, as described in more detail in each section, they will be 
expected to affect the estimated distribution of payments among 
providers.

                                                         Table 14--IRF Impact Table for FY 2019
                                                           [Columns 4 through 7 in percentage]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                           FY 2019 CBSA
                 Facility classification                     Number of       Number of        Outlier     wage index and    CMG weights    Total percent
                                                               IRF's           cases                        labor-share                     change \1\
(1)                                                                  (2)             (3)             (4)             (5)             (6)             (7)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total...................................................           1,126         403,341            -0.1             0.0             0.0             1.3
Urban unit..............................................             709         170,586            -0.1             0.0             0.0             1.2
Rural unit..............................................             137          22,274            -0.1            -0.3             0.1             1.0
Urban hospital..........................................             269         206,108             0.0             0.0             0.0             1.3
Rural hospital..........................................              11           4,373             0.0             0.2             0.1             1.6
Urban For-Profit........................................             349         203,684             0.0             0.1             0.0             1.3
Rural For-Profit........................................              40           8,557            -0.1             0.1             0.1             1.4
Urban Non-Profit........................................             532         150,179            -0.1             0.0             0.0             1.2
Rural Non-Profit........................................              87          14,952            -0.1            -0.3             0.1             0.9
Urban Government........................................              97          22,831            -0.2            -0.1             0.0             1.2
Rural Government........................................              21           3,138            -0.1            -0.2             0.1             1.2
Urban...................................................             978         376,694            -0.1             0.0             0.0             1.3
Rural...................................................             148          26,647            -0.1            -0.2             0.1             1.1
Urban by region:
    Urban New England...................................              29          16,673            -0.1             0.0             0.0             1.3
    Urban Middle Atlantic...............................             141          53,414            -0.1             0.0             0.0             1.2
    Urban South Atlantic................................             112          49,765            -0.1            -0.3             0.0             0.9
    Urban East North Central............................             172          48,719            -0.1             0.1             0.1             1.4
    Urban East South Central............................              55          35,817             0.0             0.0            -0.1             1.3
    Urban West North Central............................             109          37,719            -0.1            -0.1             0.0             1.2
    Urban West South Central............................             184          82,002            -0.1             0.4             0.0             1.7
    Urban Mountain......................................              78          28,796            -0.1            -0.3             0.0             1.0
    Urban Pacific.......................................              98          23,789            -0.2             0.0             0.0             1.2
Rural by region:
    Rural New England...................................               5           1,282            -0.1             1.9             0.0             3.2
    Rural Middle Atlantic...............................              11           1,450            -0.1            -0.4             0.0             0.8
    Rural South Atlantic................................              13           2,716             0.0            -0.5             0.0             0.8
    Rural East North Central............................              25           4,558            -0.1            -0.6             0.1             0.7
    Rural East South Central............................              15           3,721             0.0            -0.2             0.1             1.3
    Rural West North Central............................              29           4,702            -0.1             0.1             0.1             1.4
    Rural West South Central............................              40           7,161            -0.1            -0.4             0.1             0.9
Rural Mountain..........................................               6             704            -0.2             0.4             0.2             1.7
Rural Pacific...........................................               4             353            -0.4            -0.3             0.0             0.7
Teaching status:
    Non-teaching........................................            1021         357,816            -0.1             0.0             0.0             1.3
    Resident to A DC less than 10%......................              62          33,936            -0.1             0.0             0.0             1.2
    Resident to A DC 10%-19%............................              29           9,489            -0.1             0.1             0.1             1.3
    Resident to A DC greater than 19%...................              14           2,100            -0.1             0.5             0.0             1.7
Disproportionate share patient percentage (DSH PP):
    DSH PP = 0%.........................................              24           4,936            -0.3             0.3             0.0             1.3
    DSH PP <5%..........................................             150          62,891            -0.1             0.0             0.0             1.2
    DSH PP 5%-10%.......................................             298         123,109            -0.1             0.1             0.0             1.3
    DSH PP 10%-20%......................................             372         135,115            -0.1             0.0             0.0             1.3
    DSH PP greater than 20%.............................             282          77,290            -0.1            -0.1             0.0             1.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ This column includes the impact of the updates in columns (4), (5), and (6) above, and of the IRF market basket increase factor for FY 2019 (2.9
  percent), reduced by 0.8 percentage point for the productivity adjustment as required by section 1886(j)(3)(C)(ii)(I) of the Act, and reduced by 0.75
  percentage point in accordance with sections 1886(j)(3)(C)(ii)(II) and -(D)(v) of the Act.

4. Impact of the Update to the Outlier Threshold Amount
    The estimated effects of the update to the outlier threshold 
adjustment are presented in column 4 of Table 14. In the FY 2018 IRF 
PPS final rule (82 FR 36238), we used FY 2016 IRF claims data (the 
best, most complete data available at that time) to set the outlier 
threshold amount for FY 2018 so that estimated outlier payments would 
equal 3 percent of total estimated payments for FY 2018.
    For the FY 2019 IRF PPS proposed rule (83 FR 20987), we used 
preliminary FY 2017 IRF claims data, and, based on that preliminary 
analysis, we estimated that IRF outlier payments as a percentage of 
total estimated IRF payments would be 3.4 percent in FY 2018. As we 
typically do between the proposed and final rules each year, we updated 
our FY 2017 IRF claims data to

[[Page 38570]]

ensure that we are using the most recent available data in setting IRF 
payments. Therefore, based on updated analysis of the most recent IRF 
claims data for this final rule, we now estimate that IRF outlier 
payments as a percentage of total estimated IRF payments are 3.1 
percent in FY 2018. Thus, we are adjusting the outlier threshold amount 
in this final rule to set total estimated outlier payments equal to 3 
percent of total estimated payments in FY 2019. The estimated change in 
total IRF payments for FY 2019, therefore, includes an approximate 0.1 
percent decrease in payments because the estimated outlier portion of 
total payments is estimated to decrease from approximately 3.1 percent 
to 3 percent.
    The impact of this outlier adjustment update (as shown in column 4 
of Table 14) is to decrease estimated overall payments to IRFs by about 
0.1 percent. We estimate the largest decrease in payments from the 
update to the outlier threshold amount to be 0.4 percent for rural IRFs 
in the Pacific region.
5. Impact of the CBSA Wage Index and Labor-Related Share
    In column 5 of Table 14, we present the effects of the budget-
neutral update of the wage index and labor-related share. The changes 
to the wage index and the labor-related share are discussed together 
because the wage index is applied to the labor-related share portion of 
payments, so the changes in the two have a combined effect on payments 
to providers. As discussed in section VI.C. of this final rule, we are 
updating the labor-related share from 70.7 percent in FY 2018 to 70.5 
percent in FY 2019.
6. Impact of the Update to the CMG Relative Weights and Average Length 
of Stay Values
    In column 6 of Table 14, we present the effects of the budget-
neutral update of the CMG relative weights and average length of stay 
values. In the aggregate, we do not estimate that these updates will 
affect overall estimated payments of IRFs. However, we do expect these 
updates to have small distributional effects.
7. Effects of the Removal of the FIM\TM\ Instrument and Associated 
Function Modifiers From the IRF-PAI Beginning in FY 2020
    As discussed in section VIII. of this final rule, we are removing 
the FIM\TM\ Instrument and Associated Function Modifiers from the IRF-
PAI beginning in FY 2020. We estimate that removal of these data items 
from the IRF-PAI will reduce administrative burden on IRF providers and 
reduce the costs incurred by IRFs by $10.5 million for FY 2020.
8. Effects of Revisions to Certain IRF PPS Requirements
    As discussed in section IX. of this final rule, in response to the 
RFI, we are removing and amending certain IRF coverage criteria 
requirements that are overly burdensome on IRF providers beginning in 
FY 2019, that is, all IRF discharges on or after October 1, 2018.
    We estimate the cost savings associated with our change to allow 
the post-admission physician evaluation to count as one of the required 
face-to-face physician visits, as discussed in section IX.A of this 
final rule, in the following way. We first estimate that the post-
admission physician evaluation takes approximately 60 minutes to 
complete and the required face-to-face physician visits take, on 
average, 30 minutes each to complete. Both of these requirements must 
be fulfilled by a rehabilitation physician. To estimate the burden 
reduction of this change, therefore, we obtained the hourly wage rate 
for a physician (there was not a specific wage rate for a 
rehabilitation physician) from the Bureau of Labor Statistics (http://www.bls.gov/ooh/healthcare/home.htm) to be $100.00. The hourly wage 
rate including fringe benefits and overhead is $200.00.
    In FY 2017, we estimate that there were approximately 1,126 total 
IRFs and on average 358 discharges per IRF annually. Therefore, there 
were an estimated seven patients (358 discharges/52 weeks) at the IRF 
per week. The rehabilitation physician spends 358 hours (60 minutes x 
358 discharges) annually completing the post-admission physician 
evaluation. If on average each IRF has seven patients per week and each 
face-to-face visit takes an estimated 30 minutes for the rehabilitation 
physician to complete, annually the rehabilitation physician spends an 
estimated 546 hours ((7 patients x 3 visits x 0.5 hours) x 52 weeks) 
completing the required face-to-face physician visits. On average, a 
rehabilitation physician currently spends 903 hours (357 hours + 546 
hours) annually completing post-admission physician evaluations and the 
required face-to-face physician visits.
    If we allow the post-admission physician evaluation to count as one 
of the face-to-face required physician visits, and to be documented as 
such in the IRF medical record, we would need to estimate the average 
time spent on one face-to-face visit ((7 patients x 1 visit x 0.5 
hours) x 52 weeks). Removing one of the face-to-face visits required in 
the first week of the IRF admission will save the rehabilitation 
physician approximately 182 hours ((7 patients x 1 visit x 0.5 hours) x 
52 weeks) annually per IRF. This is a savings of 204,932 hours across 
all IRFs annually (1,126 IRFs x 182 hours).
    To estimate the total cost savings per IRF annually, we multiply 
182 hours by $200.00 (average physician's salary doubled to account for 
fringe and overhead costs). Therefore, we can estimate the total cost 
savings per IRF will be $36,400 annually. We estimate that the total 
cost savings for allowing the post-admission physician evaluation to 
count as one of the required face-to-face physician visits, will be $41 
million (1,126 IRFs x $36,400) annually across the IRF setting. As 
described above, based on stakeholder feedback, we anticipate that 
rehabilitation physicians in a majority of IRFs will adopt this policy 
change; because there is some uncertainty, we assume in our burden 
reduction estimate that rehabilitation physicians in half of all IRFs 
will change their visiting practices accordingly. Therefore, we now 
estimate that the total cost savings for allowing the post-admission 
physician evaluation to count as one of the required face-to-face 
physician visits will be $20.5 million (563 IRFs x $36,400).
    We also note that fewer physician visits will result in Medicare 
savings from lower Part B payments to physicians under the physician 
fee schedule. The national average Medicare Part B payment for a 30 
minute moderate intensity ``subsequent'' visit (versus an initial 
visit) is $93. Therefore, if the estimated number of discharges per IRF 
is 358 and we multiply that by the estimated cost of one physician 
visit, then we estimate that the reduction in Part B billing per IRF 
would be approximately $33,000. Across the Medicare program for all 
IRFs, we estimate it would be approximately $37 million in Part B 
savings. However, we reduce this estimate by 50 percent, as we assume 
that only half of IRFs will adopt this policy. Therefore, we estimate 
that Medicare Part B payments to rehabilitation physicians in IRFs will 
be reduced by approximately $18.5 million.
    We do not estimate a cost savings in removing the admission order 
coverage criteria requirements as IRFs are still required to comply 
with the enforcement of the admission requirements located in 
Sec. Sec.  482.24(c), 482.12(c) and 412.3. Any increase in Medicare 
payments due to the change would be negligible given the anticipated 
low volume of claims that

[[Page 38571]]

would be payable under this revised policy that would not have been 
paid under the current policy. Therefore, we believe that the reduction 
of burden in this removal is in reducing the redundancy of requirements 
only.
    Therefore, we estimate that the removal and updates to these 
requirements will reduce unnecessary regulatory and administrative 
burden on IRF providers and reduce the costs incurred by IRFs by $20.5 
million for FY 2019. Additionally, we estimate that the removal and 
updates to these requirements will also reduce Medicare Part B payments 
by $18.5 million for FY 2019.
    Though we are unsure exactly how many, we recognize that some IRFs 
may have facility protocols in place that exceed our IRF requirements 
regarding how many times the rehabilitation physician must visit each 
patient per week and document these visits in the IRF medical record. 
While our requirement is a minimum of three face-to-face visits a week, 
we understand that it is not uncommon for IRFs institute a facility 
protocol requiring the rehabilitation physician to see the patient 
daily. To the extent that some IRFs are choosing to exceed our 
requirements, we recognize that the savings estimate could be lower 
than what we have projected.
9. Effects of the Requirements for the IRF QRP for FY 2020
    In accordance with section 1886(j)(7) of the Act, we will reduce by 
2 percentage points the market basket increase factor otherwise 
applicable to an IRF for a fiscal year if the IRF does not comply with 
the requirements of the IRF QRP for that fiscal year. In section VII.K 
of this final rule, we discuss the method for applying the 2 percentage 
point reduction to IRFs that fail to meet the IRF QRP requirements.
    As discussed in section X.4. of this final rule, we are removing 
two measures from the IRF QRP: Percent of Residents or Patients Who 
Were Assessed and Appropriately Given the Seasonal Influenza Vaccine 
(Short Stay) (NQF #0680) and the National Healthcare Safety Network 
(NHSN) Facility-wide Inpatient Hospital-onset Methicillin-resistant 
Staphylococcus aureus (MRSA) Bacteremia Outcome Measure (NQF #1716).
    We describe the estimated burden and cost reductions for both of 
these measures in section XIV.C of this rule. In summary, the finalized 
IRF QRP measure removals will result in a burden reduction of $2,223.26 
per IRF annually, and $2,503,629.76 for all IRFs annually.
    We intend to continue closely monitoring the effects of the IRF QRP 
on IRFs and to help perpetuate successful reporting outcomes through 
ongoing stakeholder education, national trainings, IRF announcements, 
website postings, CMS Open Door Forums, and general and technical help 
desks.

D. Alternatives Considered

    The following is a discussion of the alternatives considered for 
the IRF PPS updates contained in this final rule.
    Section 1886(j)(3)(C) of the Act requires the Secretary to update 
the IRF PPS payment rates by an increase factor that reflects changes 
over time in the prices of an appropriate mix of goods and services 
included in the covered IRF services. Thus, we did not consider 
alternatives to updating payments using the estimated IRF market basket 
increase factor for FY 2019. However, as noted previously in this final 
rule, section 1886(j)(3)(C)(ii)(I) of the Act requires the Secretary to 
apply a productivity adjustment to the market basket increase factor 
for FY 2019, and sections 1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(v) of 
the Act require the Secretary to apply a 0.75 percentage point 
reduction to the market basket increase factor for FY 2019. Thus, in 
accordance with section 1886(j)(3)(C) of the Act, we are updating the 
IRF federal prospective payments in this final rule by 1.35 percent 
(which equals the 2.9 percent estimated IRF market basket increase 
factor for FY 2019 reduced by a 0.8 percentage point productivity 
adjustment as required by section 1886(j)(3)(C)(ii)(I) of the Act and 
further reduced by 0.75 percentage point).
    We considered maintaining the existing CMG relative weights and 
average length of stay values for FY 2019. However, in light of 
recently available data and our desire to ensure that the CMG relative 
weights and average length of stay values are as reflective as possible 
of recent changes in IRF utilization and case-mix, we believe that it 
is appropriate to update the CMG relative weights and average length of 
stay values at this time to ensure that IRF PPS payments continue to 
reflect as accurately as possible the current costs of care in IRFs.
    We considered updating facility-level adjustment factors for FY 
2019. However, as discussed in more detail in the FY 2015 final rule 
(79 FR 45872), we believe that freezing the facility-level adjustments 
at FY 2014 levels for FY 2015 and all subsequent years (unless and 
until the data indicate that they need to be further updated) will 
allow us an opportunity to monitor the effects of the substantial 
changes to the adjustment factors for FY 2014, and will allow IRFs time 
to adjust to the previous changes.
    We considered maintaining the existing outlier threshold amount for 
FY 2019. However, analysis of updated FY 2019 data indicates that 
estimated outlier payments would be higher than 3 percent of total 
estimated payments for FY 2019, by approximately 0.1 percent, unless we 
updated the outlier threshold amount. Consequently, we are adjusting 
the outlier threshold amount in this final rule to reflect a 0.1 
percent decrease thereby setting the total outlier payments equal to 3 
percent, instead of 3.1 percent, of aggregate estimated payments in FY 
2019.
    We considered not removing the FIM<SUP>TM</SUP> instrument and 
associated Function Modifiers from the IRF-PAI in this final rule. 
However, in light of recently available data located in the Quality 
Indicators section of the IRF-PAI, we believe that removal of the 
FIM<SUP>TM</SUP> instrument and associated Function Modifiers is 
appropriate at this time. As the data items located in the Quality 
Indicators section of the IRF-PAI are now collected for all IRFs, we 
believe that the collection of the FIM data is duplicative and creates 
undue burden on providers. Consequently, we are removing these data 
items from the IRF-PAI beginning with FY 2020. Additionally, the 
removal of the FIM<SUP>TM</SUP> Instrument and associated Function 
Modifiers necessitates the incorporation of the data items from the 
Quality Indicators section of the IRF-PAI into the CMG classification 
system. To ensure that the CMGs, relative weights, and average length 
of stay values are as reflective as possible of recent changes in IRF 
utilization and case-mix, we believe that it is appropriate to 
incorporate the data items from the Quality Indicators section of the 
IRF-PAI into the development of the CMGs beginning with FY 2020.
    We considered not revising certain IRF PPS requirements, or 
revising them partially, in order to reduce burden in this final rule. 
Specifically, we considered not combining the post-admission physician 
evaluation with the required face-to-face physician visits, and 
continuing to require documentation of the post-admission physician 
evaluation and all three face-to-face physician visits in the IRF 
medical record in the first week of the patient's IRF stay. However, 
through the request for information, it was suggested that we focus on 
removing documentation and administrative burden in IRFs and we wanted 
to assist by combining two documentation requirements into one, thus 
reducing

[[Page 38572]]

the medical record documentation requirements that the rehabilitation 
physician would need to meet. Additionally, we also considered not 
removing the admission order requirement from the IRF medical record. 
However, we felt that the requirement was duplicative and could be met 
by other requirements that are currently in place. Lastly, we 
considered not allowing rehabilitation physicians to lead the 
interdisciplinary team meeting remotely via other forms of 
communication without additional documentation of this in the IRF 
medical record. We also considered only relaxing this requirement for 
rural IRFs, as some of the commenters suggested. However, we believe 
that this policy change is appropriate and beneficial for all IRFs, not 
just rural, so we decided to finalize the policy as proposed. As we 
believe that rehabilitation physicians rarely conduct interdisciplinary 
team meetings remotely, we do not believe that this policy has 
significant financial implications for IRFs. However, we believe that 
it does advance the Agency's goal of placing patients over paperwork.
    Therefore, after the response that we received from providers 
regarding the RFI solicitation and comments that we received from the 
FY 2019 IRF PPS proposed rule, we believed that these specific coverage 
requirements were areas in which we could reduce unnecessary regulatory 
and administrative burden on IRF providers, while ensuring that IRF 
patients would continue to receive adequate care.

E. Regulatory Review Costs

    If regulations impose administrative costs on private entities, 
such as the time needed to read and interpret this final rule, we 
should estimate the cost associated with regulatory review. Due to the 
uncertainty involved with accurately quantifying the number of entities 
that will review the rule, we assume that the total number of unique 
commenters on FY 2019 IRF PPS proposed rule will be the number of 
reviewers of this final rule. We acknowledge that this assumption may 
understate or overstate the costs of reviewing this final rule. It is 
possible that not all commenters reviewed the FY 2019 IRF PPS proposed 
rule in detail, and it is also possible that some reviewers chose not 
to comment on the proposed rule. For these reasons we thought that the 
number of past commenters would be a fair estimate of the number of 
reviewers of this rule.
    We also recognize that different types of entities are in many 
cases affected by mutually exclusive sections of this final rule, and 
therefore for the purposes of our estimate we assume that each reviewer 
reads approximately 50 percent of the rule. We sought comments on this 
assumption.
    Using the wage information from the BLS for medical and health 
service managers (Code 11-9111), we estimate that the cost of reviewing 
this rule is $107.38 per hour, including overhead and fringe benefits 
(https://www.bls.gov/oes/current/oes_nat.htm). Assuming an average 
reading speed, we estimate that it would take approximately 2 hours for 
the staff to review half of this final rule. For each IRF that reviews 
the rule, the estimated cost is $214.76 (2 hours x $107.38). Therefore, 
we estimate that the total cost of reviewing this regulation is 
$23,408.84 ($214.76 x 109 reviewers).

F. Accounting Statement and Table

    As required by OMB Circular A-4 (available at http://www.whitehouse.gov/sites/default/files/omb/assets/omb/circulars/a004/a-4.pdf), in Table 15, we have prepared an accounting statement showing 
the classification of the expenditures associated with the provisions 
of this final rule. Table 15 provides our best estimate of the increase 
in Medicare payments under the IRF PPS as a result of the updates 
presented in this final rule based on the data for 1,126 IRFs in our 
database. In addition, Table 15 presents the costs associated with the 
new IRF quality reporting program requirements for FY 2019.

                     Table 15--Accounting Statement: Classification of Estimated Expenditure
----------------------------------------------------------------------------------------------------------------
                      Change in Estimated Transfers from FY 2018 IRF PPS to FY 2019 IRF PPS
-----------------------------------------------------------------------------------------------------------------
                Category                                                 Transfers
----------------------------------------------------------------------------------------------------------------
Annualized Monetized Transfers..........  $105 million.
From Whom to Whom?......................  Federal Government to IRF Medicare Providers.
----------------------------------------------------------------------------------------------------------------
                                            Change in Estimated Costs
----------------------------------------------------------------------------------------------------------------
                Category                                                   Costs
----------------------------------------------------------------------------------------------------------------
Annualized monetized cost in FY 2019 for  Reduction of $20.5 million.
 IRFs due to the removal of certain IRF
 coverage requirements.
Annualized monetized cost in FY 2020 for  Reduction of $10.5 million.
 IRFs due to the removal of FIM\TM\
 instrument and associated Function
 Modifiers from the IRF[dash]PAI.
Annualized monetized cost in FY 2019 for  Reduction of $2.5 million.
 IRFs due to new quality reporting
 program requirements.
----------------------------------------------------------------------------------------------------------------

G. Conclusion

    Overall, the estimated payments per discharge for IRFs in FY 2019 
are projected to increase by 1.3 percent, compared with the estimated 
payments in FY 2018, as reflected in column 7 of Table 14.
    IRF payments per discharge are estimated to increase by 1.3 percent 
in urban areas and 1.1 percent in rural areas, compared with estimated 
FY 2018 payments. Payments per discharge to rehabilitation units are 
estimated to increase 1.2 percent in urban areas and 1.0 percent in 
rural areas. Payments per discharge to freestanding rehabilitation 
hospitals are estimated to increase 1.3 percent in urban areas and 
increase 1.6 percent in rural areas.
    Overall, IRFs are estimated to experience a net increase in 
payments as a result of the policies in this final rule. The largest 
payment increase is estimated to be a 3.2 percent increase for rural 
IRFs located in the New England region. The analysis above, together 
with the remainder of this preamble, provides a Regulatory Impact 
Analysis.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

[[Page 38573]]

List of Subjects in 42 CFR Part 412

    Administrative practice and procedure, Health facilities, Medicare, 
Puerto Rico, Reporting and recordkeeping requirements.

    For the reasons set forth in the preamble, the Department of Health 
and Human Services amends 42 CFR chapter IV as set forth below:

PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL 
SERVICES

0
1. The authority citation for part 412 is revised to read as follows:

    Authority:  42 U.S.C. 1302 and 1395hh.


Sec.  412.606   [Amended]

0
2. Section 412.606 is amended by--
0
a. Removing paragraph (a); and
0
b. Redesignating paragraphs (b) and (c) as paragraphs (a) and (b).

0
3. Section 412.622 is amended by--
0
a. Revising paragraph (a)(3)(iv);
0
b. Redesignating paragraphs (a)(5)(A) through (C) as paragraphs 
(a)(5)(i) through (iii); and
0
c. Revising newly redesignated paragraph (a)(5)(i).
    The revisions read as follows:


Sec.  412.622  Basis of payment.

    (a) * * *
    (3) * * *
    (iv) Requires physician supervision by a rehabilitation physician, 
defined as a licensed physician with specialized training and 
experience in inpatient rehabilitation. The requirement for medical 
supervision means that the rehabilitation physician must conduct face-
to-face visits with the patient at least 3 days per week throughout the 
patient's stay in the IRF to assess the patient both medically and 
functionally, as well as to modify the course of treatment as needed to 
maximize the patient's capacity to benefit from the rehabilitation 
process. The post-admission physician evaluation described in paragraph 
(a)(4)(ii) of this section may count as one of the face-to-face visits.
* * * * *
    (5) * * *
    (i) The team meetings are led by a rehabilitation physician as 
defined in paragraph (a)(3)(iv) of this section, and further consist of 
a registered nurse with specialized training or experience in 
rehabilitation; a social worker or case manager (or both); and a 
licensed or certified therapist from each therapy discipline involved 
in treating the patient. All team members must have current knowledge 
of the patient's medical and functional status. The rehabilitation 
physician may lead the interdisciplinary team meeting remotely via a 
mode of communication such as video or telephone conferencing.
* * * * *

0
4. Section 412.624 is amended by revising paragraph (c)(4)(i) and 
adding paragraph (c)(4)(iii) to read as follows:


Sec.  412.624  Methodology for calculating the Federal prospective 
payment rates.

* * * * *
    (c) * * *
    (4) * * *
    (i) In the case of an IRF that is paid under the prospective 
payment system specified in Sec.  412.1(a)(3) that does not submit 
quality data to CMS in accordance with Sec.  412.634, the applicable 
increase factor specified in paragraph (a)(3) of this section, after 
application of subparagraphs (C)(iii) and (D) of section 1886(j)(3) of 
the Act, is reduced by 2 percentage points.
* * * * *
    (iii) The 2 percentage point reduction described in paragraph 
(c)(4)(i) of this section may result in the applicable increase factor 
specified in paragraph (a)(3) of this section being less than 0.0 for a 
fiscal year, and may result in payment rates under the prospective 
payment system specified in Sec.  412.1(a)(3) for a fiscal year being 
less than such payment rates for the preceding fiscal year.
* * * * *

0
5. Section 412.634 is amended by revising paragraphs (b), (d)(1) and 
(5) to read as follows:


Sec.  412.634  Requirements under the Inpatient Rehabilitation Facility 
(IRF) Quality Reporting Program (QRP).

* * * * *
    (b) Submission requirements. (1) IRFs must submit to CMS data on 
measures specified under sections 1886(j)(7)(D), 1899B(c)(1), 
1899B(d)(1) of the Act, and standardized patient assessment data 
required under section 1899B(b)(1) of the Act, as applicable. Such data 
must be submitted in the form and manner, and at a time, specified by 
CMS.
    (2) CMS may remove a quality measure from the IRF QRP based on one 
or more of the following factors:
    (i) Measure performance among IRFs is so high and unvarying that 
meaningful distinctions in improvements in performance can no longer be 
made;
    (ii) Performance or improvement on a measure does not result in 
better patient outcomes;
    (iii) A measure does not align with current clinical guidelines or 
practice;
    (iv) The availability of a more broadly applicable (across 
settings, populations, or conditions) measure for the particular topic;
    (v) The availability of a measure that is more proximal in time to 
desired patient outcomes for the particular topic;
    (vi) The availability of a measure that is more strongly associated 
with desired patient outcomes for the particular topic;
    (vii) The collection or public reporting of a measure leads to 
negative unintended consequences other than patient harm;
    (viii) The costs associated with a measure outweigh the benefit of 
its continued use in the program.
* * * * *
    (d) * * *
    (1) IRFs that do not meet the requirement in paragraph (b) of this 
section for a program year will receive a written notification of non-
compliance through at least one of the following methods: Quality 
Improvement and Evaluation System Assessment Submission and Processing 
(QIES ASAP) system, the United States Postal Service, or via an email 
from the Medicare Administrative Contractor (MAC).
* * * * *
    (5) CMS will notify IRFs, in writing, of its final decision 
regarding any reconsideration request through at least one of the 
following methods: QIES ASAP system, the United States Postal Service, 
or via an email from the Medicare Administrative Contractor (MAC).
* * * * *

    Dated: July 26, 2018.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
    Dated: July 26, 2018.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2018-16517 Filed 7-31-18; 4:15 pm]
 BILLING CODE 4120-01-P


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