38514 Federal Register / Vol. 83, No. 151 / Monday, August 6, 2018 / Rules and Regulations 

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. 

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 (FIMTM) 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 FIMTM

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 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 

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 § 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 


sradovich on DSK3GMQ082PROD with RULES3
Federal Register / Vol. 83, No. 151 / Monday, August 6, 2018 / Rules and Regulations 38515 

1Meaningful Measures web page: https://

www.cms.gov/Medicare/Quality-Initiatives-PatientAssessment-Instruments/QualityInitiativesGenInfo/ 

MMF/General-info-Sub-Page.html. 

2See 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. 

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 FIMTM

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 update ............ The overall economic impact of this final rule is an estimated $105 million in increased payments from the Federal government to IRFs during FY 2019. 

Provision Description Costs 

Removal of FIMTM Items from IRF–PAI ............. The total reduction in costs in FY 2020 for IRFs as a result of the removal of the FIMTM instrument and associated Function Modifiers from the IRF-PAI is estimated to be $10.5 million. 

Removal of certain IRF coverage requirements The total reduction in costs in FY 2019 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. 

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. 

The Meaningful Measures Framework 

has the following objectives: 

• Address high-impact measure areas 

that safeguard public health; 

• Patient-centered and meaningful to 

patients; 

• Outcome-based where possible; 

• Fulfill each program’s statutory 

requirements; 

• 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); 

• Significant opportunity for 

improvement; 

• Address measure needs for 

population based payment through 

alternative payment models; and 

• 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

Quality priority Meaningful Measure area 

Making Care Safer by Reducing Harm Caused in the Delivery of Care ..... Healthcare-Associated Infections. 

Preventable Healthcare Harm. 

Strengthen Person and Family Engagement as Partners in Their Care ..... Care is Personalized and Aligned with Patient’s Goals. 

End of Life Care according to Preferences. 

Patient’s Experience of Care. 

Patient Reported Functional Outcomes. 


sradovich on DSK3GMQ082PROD with RULES3
38516 Federal Register / Vol. 83, No. 151 / Monday, August 6, 2018 / Rules and Regulations 

TABLE 1—MEANINGFUL MEASURES FRAMEWORK DOMAINS AND MEASURE AREAS—Continued 

Quality priority Meaningful Measure area 

Promote Effective Communication and Coordination of Care ...................... Medication Management. 

Admissions and Readmissions to Hospitals. 

Transfer of Health Information and Interoperability. 

Promote Effective Prevention and Treatment of Chronic Disease ............... Preventive Care. 

Management of Chronic Conditions. 

Prevention, Treatment, and Management of Mental Health. 

Prevention and Treatment of Opioid and Substance Use Disorders. 

Risk Adjusted Mortality. 

Work with Communities to Promote Best Practices of Healthy Living ......... Equity of Care. 

Community Engagement. 

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: 

• Eliminating disparities; 

• Tracking measurable outcomes and 

impact; 

• Safeguarding public health; 

• Achieving cost savings; 

• Improving access for rural 

communities; and 

• 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 budgetneutral conversion factor, please refer to 

our FY 2004 IRF PPS final rule (68 FR 

45684 through 45685). In the FY 2006 

IRF PPS final rule (70 FR 47880), we 

discussed in detail the methodology for 

determining the standard payment 

conversion factor. 

We applied the relative weighting 

factors to the standard payment 

conversion factor to compute the 

unadjusted 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. 


sradovich on DSK3GMQ082PROD with RULES3
Federal Register / Vol. 83, No. 151 / Monday, August 6, 2018 / Rules and Regulations 38517 

We established a CMS website as a 

primary information resource for the 

IRF PPS which is available at http://

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

PPS/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 longterm 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 caselevel adjustments, to ensure that IRF 

PPS payments would continue to reflect 

as accurately as possible the costs of 

care. For a detailed discussion of the FY 

2007 policy revisions, please refer to the 

FY 2007 IRF PPS final rule (71 FR 

48354). 

In the FY 2008 IRF PPS final rule (72 

FR 44284), we updated the 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-ServicePayment/InpatientRehabFacPPS/DataFiles.html. 

In the FY 2009 IRF PPS final rule (73 

FR 46370), we updated the CMG relative 

weights, the average length of stay 

values, and the outlier threshold; 

clarified IRF wage index policies 

regarding the treatment of ‘‘New 

England deemed’’ counties and multicampus hospitals; and revised the 

regulation text in response to section 

115 of the MMSEA to set the IRF 

compliance percentage at 60 percent 

(the ‘‘60 percent rule’’) and continue the 

practice of including comorbidities in 

the calculation of compliance 

percentages. We also applied a zero 

percent market basket increase factor for 

FY 2009 in accordance with section 115 

of the MMSEA. For more information on 

the policy changes implemented for FY 

2009, please refer to the FY 2009 IRF 

PPS final rule (73 FR 46370), in which 

we published the final FY 2009 IRF 

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 


sradovich on DSK3GMQ082PROD with RULES3
38518 Federal Register / Vol. 83, No. 151 / Monday, August 6, 2018 / Rules and Regulations 

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-ServicePayment/InpatientRehabFacPPS/DataFiles.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 facilitylevel 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 IRFspecific 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 


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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 fivecharacter 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-ServicePayment/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 lowincome patients, rural location, and 

outlier payments. For discharges 

occurring on or after October 1, 2005, 

the IRF PPS payment also reflects the 

teaching status adjustment that became 

effective as of FY 2006, as discussed in 

the FY 2006 IRF PPS final rule (70 FR 

47880). 

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 


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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 realtime, 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-exchangeframework-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 FIMTM

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: 

• 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). 

• 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). 

• 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). 

• 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). 

• 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). 

• 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). 

• 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). 

• Remove the FIMTM 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). 

• 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). 

• 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). 

• 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). 

• 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 § 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 


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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 hospitalspecific 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 CaseMix 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

CMG CMG description 

(M = motor, C = cognitive, A = age) 

Relative weight Average length of stay 

Tier 1 Tier 2 Tier 3 

No 

comorbidities 

tier 

Tier 1 Tier 2 Tier 3 

No 

comorbidities 

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 and C > 18.5 ........... 1.0706 0.9315 0.8533 0.8159 11 12 10 10 

0103 ...... Stroke M > 44.45 and M < 51.05 and C < 18.5 ........... 1.2391 1.0781 0.9876 0.9443 12 13 11 12 

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 and A < 84.5 ........... 2.0857 1.8147 1.6624 1.5896 19 19 18 18 

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 and C > 23.5 ........... 0.8235 0.6628 0.5922 0.5527 9 9 8 7 

0202 ...... Traumatic brain injury M > 44.25 and M < 53.35 and 

C > 23.5.

1.1508 0.9263 0.8275 0.7724 10 11 10 10 

0203 ...... Traumatic brain injury M > 44.25 and C < 23.5 ........... 1.2723 1.0240 0.9149 0.8539 13 13 11 10 

0204 ...... Traumatic brain injury M > 40.65 and M < 44.25 ......... 1.3841 1.1141 0.9953 0.9290 13 13 11 11 

0205 ...... Traumatic brain injury M > 28.75 and M < 40.65 ......... 1.6330 1.3143 1.1743 1.0960 14 15 13 13 

0206 ...... Traumatic brain injury M > 22.05 and M < 28.75 ......... 1.9661 1.5825 1.4139 1.3196 18 18 15 15 

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 > 41.05 ........................... 1.1727 0.9483 0.8703 0.8135 11 11 10 10 

0302 ...... Non-traumatic brain injury M > 35.05 and M < 41.05 .. 1.4347 1.1603 1.0648 0.9953 12 13 12 12 

0303 ...... Non-traumatic brain injury M > 26.15 and M < 35.05 .. 1.6572 1.3402 1.2300 1.1496 15 14 13 13 

0304 ...... Non-traumatic brain injury M < 26.15 ........................... 2.1203 1.7147 1.5737 1.4709 20 19 16 16 

0401 ...... Traumatic spinal cord injury M > 48.45 ........................ 1.0040 0.8097 0.7490 0.6855 10 10 9 9 

0402 ...... Traumatic spinal cord injury M > 30.35 and M < 48.45 1.4873 1.1996 1.1096 1.0155 14 13 13 12 

0403 ...... Traumatic spinal cord injury M > 16.05 and M < 30.35 2.3688 1.9105 1.7673 1.6175 25 22 19 18 

0404 ...... Traumatic spinal cord injury M < 16.05 and A > 63.5 .. 4.0377 3.2566 3.0125 2.7571 45 36 31 30 

0405 ...... Traumatic spinal cord injury M < 16.05 and A > 63.5 .. 3.6175 2.9177 2.6989 2.4701 26 35 29 26 

0501 ...... Non-traumatic spinal cord injury M > 51.35 .................. 0.9171 0.7145 0.6605 0.6070 9 10 8 8 

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

51.35.

1.2182 0.9491 0.8774 0.8063 11 11 10 10 


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TABLE 2—RELATIVE WEIGHTS AND AVERAGE LENGTH OF STAY VALUES FOR CASE-MIX GROUPS—Continued 

CMG CMG description 

(M = motor, C = cognitive, A = age) 

Relative weight Average length of stay 

Tier 1 Tier 2 Tier 3 

No 

comorbidities 

tier 

Tier 1 Tier 2 Tier 3 

No 

comorbidities 

tier 

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

40.15.

1.5156 1.1809 1.0916 1.0031 14 13 12 12 

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

31.25.

1.7426 1.3577 1.2551 1.1533 16 14 14 13 

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

29.25.

1.9957 1.5550 1.4374 1.3209 18 17 16 15 

0506 ...... Non-traumatic spinal cord injury M < 23.75 .................. 2.6996 2.1034 1.9443 1.7867 26 23 21 20 

0601 ...... Neurological M > 47.75 ................................................. 1.0736 0.8242 0.7624 0.6948 9 9 9 8 

0602 ...... Neurological M > 37.35 and M < 47.75 ........................ 1.3920 1.0686 0.9884 0.9008 12 12 11 10 

0603 ...... Neurological M > 25.85 and M < 37.35 ........................ 1.7124 1.3146 1.2159 1.1082 14 14 13 13 

0604 ...... Neurological M < 25.85 ................................................. 2.2148 1.7003 1.5727 1.4334 19 17 16 16 

0701 ...... Fracture of lower extremity M > 42.15 .......................... 1.0280 0.8387 0.7948 0.7171 10 10 9 9 

0702 ...... Fracture of lower extremity M > 34.15 and M < 42.15 1.3083 1.0674 1.0115 0.9127 12 12 12 11 

0703 ...... Fracture of lower extremity M > 28.15 and M < 34.15 1.5600 1.2728 1.2062 1.0883 14 14 14 13 

0704 ...... Fracture of lower extremity M < 28.15 .......................... 1.9907 1.6242 1.5392 1.3888 18 18 17 16 

0801 ...... Replacement of lower extremity joint M > 49.55 .......... 0.8391 0.6841 0.6185 0.5754 8 8 8 7 

0802 ...... Replacement of lower extremity joint M > 37.05 and M 

< 49.55.

1.0766 0.8777 0.7936 0.7382 11 9 9 9 

0803 ...... Replacement of lower extremity joint M > 28.65 and M 

< 37.05 and A > 83.5.

1.4123 1.1514 1.0410 0.9684 13 13 12 11 

0804 ...... Replacement of lower extremity joint M > 28.65 and M 

< 37.05 and A > 83.5.

1.2727 1.0376 0.9381 0.8727 12 12 11 10 

0805 ...... Replacement of lower extremity joint M > 22.05 and M 

< 28.65.

1.5169 1.2367 1.1181 1.0401 14 14 12 12 

0806 ...... Replacement of lower extremity joint M < 22.05 .......... 1.8691 1.5238 1.3777 1.2816 17 17 15 14 

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 < 44.75 ................. 1.3030 1.0230 0.9479 0.8736 12 12 11 10 

0903 ...... Other orthopedic M > 24.15 and M < 34.35 ................. 1.6262 1.2768 1.1831 1.0903 14 14 13 12 

0904 ...... Other orthopedic M < 24.15 .......................................... 2.0372 1.5995 1.4821 1.3659 17 17 16 15 

1001 ...... Amputation, lower extremity M > 47.65 ........................ 1.0941 0.9260 0.8226 0.7584 11 11 10 9 

1002 ...... Amputation, lower extremity M > 36.25 and M < 47.65 1.3984 1.1835 1.0513 0.9693 13 13 12 12 

1003 ...... Amputation, lower extremity M < 36.25 ........................ 2.0247 1.7136 1.5222 1.4034 18 18 16 15 

1101 ...... Amputation, non-lower extremity M > 36.35 ................. 1.3618 1.0044 1.0044 0.8832 12 11 11 11 

1102 ...... Amputation, non-lower extremity M < 36.35 ................. 1.9208 1.4167 1.4167 1.2458 17 15 15 13 

1201 ...... Osteoarthritis M > 37.65 ............................................... 1.1125 0.9541 0.8710 0.7877 11 10 10 9 

1202 ...... Osteoarthritis M > 30.75 and M < 37.65 ...................... 1.4092 1.2085 1.1032 0.9978 13 13 12 12 

1203 ...... Osteoarthritis M < 30.75 ............................................... 1.7067 1.4637 1.3361 1.2084 15 16 15 14 

1301 ...... Rheumatoid, other arthritis M > 36.35 .......................... 1.0977 0.9523 0.8893 0.8342 10 10 10 10 

1302 ...... Rheumatoid, other arthritis M > 26.15 and M < 36.35 1.4355 1.2454 1.1630 1.0909 12 13 13 12 

1303 ...... Rheumatoid, other arthritis M < 26.15 .......................... 1.7337 1.5041 1.4046 1.3175 14 17 15 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 < 49.25 ........................... 1.2970 1.1191 1.0134 0.9711 11 11 10 11 

1503 ...... Pulmonary M > 29.15 and M < 39.05 ........................... 1.5391 1.3280 1.2026 1.1524 14 13 12 12 

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 < 37.15 .................... 1.5361 1.1758 1.1169 1.0079 11 12 12 12 

1603 ...... Pain syndrome M < 26.75 ............................................. 1.8637 1.4266 1.3551 1.2228 12 16 15 14 

1701 ...... Major multiple trauma without brain or spinal cord injury M > 39.25.1.2825 0.9724 0.9103 0.8196 14 11 10 10 

1702 ...... Major multiple trauma without brain or spinal cord injury M > 31.05 and M < 39.25.1.5510 1.1760 1.1009 0.9912 14 14 12 11 

1703 ...... Major multiple trauma without brain or spinal cord injury M > 25.55 and M < 31.05.1.8097 1.3722 1.2846 1.1565 15 15 14 13 

1704 ...... Major multiple trauma without brain or spinal cord injury M < 25.55.2.3097 1.7513 1.6395 1.4761 20 19 17 16 

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

M > 40.85.

1.1285 1.0063 0.8504 0.7943 12 11 10 10 

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

M > 23.05 and M < 40.85.

1.6639 1.4838 1.2539 1.1712 16 17 14 13 

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

M < 23.05.

2.6145 2.3315 1.9703 1.8403 30 25 20 19 

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 < 35.95 ...................... 2.4651 1.7694 1.6622 1.6017 24 21 18 18 

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 < 49.15 ..................... 1.2597 1.0018 0.9306 0.8448 12 11 10 10 

2003 ...... Miscellaneous M > 27.85 and M < 38.75 ..................... 1.5484 1.2314 1.1438 1.0384 14 14 12 12 

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 is 3 days or fewer ..... .............. .............. .............. 0.1599 .............. .............. .............. 2 

5101 ...... Expired, orthopedic, length of stay is 13 days or fewer .............. .............. .............. 0.7539 .............. .............. .............. 8 

5102 ...... Expired, orthopedic, length of stay is 14 days or more .............. .............. .............. 1.6493 .............. .............. .............. 18 

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

fewer.

.............. .............. .............. 0.8091 .............. .............. .............. 8 


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TABLE 2—RELATIVE WEIGHTS AND AVERAGE LENGTH OF STAY VALUES FOR CASE-MIX GROUPS—Continued 

CMG CMG description 

(M = motor, C = cognitive, A = age) 

Relative weight Average length of stay 

Tier 1 Tier 2 Tier 3 

No 

comorbidities 

tier 

Tier 1 Tier 2 Tier 3 

No 

comorbidities 

tier 

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

more.

.............. .............. .............. 2.1145 .............. .............. .............. 21 

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 budgetneutral 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 weights Number of 

cases affected 

Percentage of 

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 

§ 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 


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38524 Federal Register / Vol. 83, No. 151 / Monday, August 6, 2018 / Rules and Regulations 

(unless and until we propose to update 

them again through future notice-andcomment 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-Dataand-Systems/Statistics-Trends-andReports/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. 


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Federal Register / Vol. 83, No. 151 / Monday, August 6, 2018 / Rules and Regulations 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-Dataand-Systems/Statistics-Trends-andReports/MedicareProgramRatesStats/ 

MarketBasketData.html. 

More detailed forecasts are readily 

available by request; please send an 

email to CMSDNHS@cms.hhs.gov 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 laborintensive 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 laborrelated 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 CapitalRelated 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 laborrelated 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- 


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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 

labor-related 

share 1

FY 2018 final 

labor related 

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 Services ................................................................................................... 0.8 0.8 

Installation, Maintenance, and Repair Services .................................................................................................. 1.9 1.9 

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 

1Based on the 2012-based IRF Market Basket, IGI’s 2nd quarter 2018 forecast with historical data through the 1st quarter of 2018. 2Federal Register (82 FR 36249). 

Final Decision: As we did not receive 

any comments on the proposed laborrelated 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 prereclassified 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 postacute and acute care providers, thereby 

allowing IRFs to demonstrate their costeffectiveness 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 prereclassification 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 


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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-Feefor-Service-Payment/AcuteInpatient

PPS/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 IRFspecific 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 prereclassification 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 prereclassification 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 


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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 crosswalking 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-Feefor-Service-Payment/InpatientRehabFac

PPS/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 § 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 budgetneutral 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 budgetneutral 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 budgetneutral wage index. 

Final Decision: As we did not receive 

any comments on the proposed 

methodology for calculating the budgetneutral 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), 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 .......................................................................................................................... × 1.0135 

Budget Neutrality Factor for the Wage Index and Labor-Related Share ............................................................................................ × 1.0000 

Budget Neutrality Factor for the Revisions to the CMG Relative Weights ......................................................................................... × 0.9981 


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TABLE 5—CALCULATIONS TO DETERMINE THE FY 2019 STANDARD PAYMENT CONVERSION FACTOR—Continued 

Explanation for adjustment Calculations 

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

CMG Payment rate 

tier 1 

Payment rate 

tier 2 

Payment rate 

tier 3 

Payment rate 

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 


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TABLE 6—FY 2019 PAYMENT RATES—Continued 

CMG Payment rate 

tier 1 

Payment rate 

tier 2 

Payment rate 

tier 3 

Payment rate 

no comorbidity 

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 nonlabor 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 laborrelated 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 nonlabor 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-Feefor-Service-Payment/InpatientRehabFac

PPS/Data-Files.html. The resulting 

figure is the wage-adjusted labor 

amount. Next, we compute the wageadjusted federal payment by adding the 

wage-adjusted labor amount to the nonlabor 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 wageadjusted and rural-adjusted amount (if 

applicable). Finally, we add the 


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additional teaching status payments (if 

applicable) to the wage, rural, and LIPadjusted prospective payment rates. 

Table 7 illustrates the components of 

the adjusted payment calculation. 

TABLE 7—EXAMPLE OF COMPUTING THE FY 2019 IRF PROSPECTIVE PAYMENT

Steps Rural facility A 

(Spencer Co., IN) 

Urban facility B 

(Harrison Co., IN) 

1. Unadjusted Payment ............................................................................................................................... $33,765.86 $33,765.86 

2. Labor Share ............................................................................................................................................. × 0.705 × 0.705 

3. Labor Portion of Payment ....................................................................................................................... = 23,804.93 = 23,804.93 

4. CBSA-Based Wage Index (shown in the Addendum, Tables A and B) ................................................. × 0.8088 × 0.8689 

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 ..................................................................................................................................... × 1.149 ×1.000 

9. Wage- and Rural-Adjusted Payment ....................................................................................................... = 33,567.30 = 30,645.03 

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

11. Wage-, Rural- and LIP-Adjusted Payment ............................................................................................ = 34,090.95 = 32,036.32 

12. Wage- and Rural-Adjusted Payment ..................................................................................................... 33,567.30 30,645.03 

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

14. Teaching Status Adjustment Amount .................................................................................................... = 0.00 = 2,402.57 

15. Wage-, Rural-, and LIP-Adjusted Payment ........................................................................................... + 34,090.95 + 32,036.32 

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 budgetneutrality 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 


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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 nonoutlier 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 costto-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 


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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: 

• New IRFs that have not yet 

submitted their first Medicare cost 

report. 

• IRFs whose overall CCR is in excess 

of the national CCR ceiling for FY 2019, 

as discussed below in this section. 

• 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 FIMTM. 

Item 39 of the IRF–PAI version 2.0 

contains 18 of the FIMTM data elements 

and the FIMTM measurement scale that 

are used to score both motor and 

cognitive functioning at admission and 

discharge. The FIMTM data elements and 

measurement scale are collectively 

referred to as the FIMTM instrument. 

Additionally, items 29 through 38 of the 

IRF–PAI version 2.0 contain Function 

Modifiers associated with the FIMTM

instrument. The FIMTM 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: 

• GG0130A1 Eating. 

• GG0130B1 Oral hygiene. 

• GG0130C1 Toileting hygiene. 

• GG0130E1 Shower/bathe self. 

• GG0130F1 Upper-body dressing. 

• GG0130G1 Lower-body dressing. 

• GG0130H1 Putting on/taking off 

footwear. 

• GG0170A1 Roll left and right. 

• GG0170B1 Sit to lying. 

• GG0170C1 Lying to sitting on side 

of bed. 

• GG0170D1 Sit to stand. 

• GG0170E1 Chair/bed-to-chair 

transfer. 

• GG0170F1 Toilet transfer. 

• GG0170I1 Walk 10 feet. 

• GG0170J1 Walk 50 feet with two 

turns. 

• GG0170K1 Walk 150 feet. 

• GG0170M1 One step curb. 

• H0350 Bladder continence. 

• H0400 Bowel continence. 

• BB0700 Expression of ideas and 

wants. 

• BB0800 Understanding verbal 

content. 

• 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 FIMTM

instrument and associated Function 

Modifiers, we proposed to remove the 

FIMTM instrument and associated 

Function Modifiers from the IRF–PAI 

beginning with FY 2020 to reduce 

administrative burden on IRFs. 


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Currently, data elements in the FIMTM

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 FIMTM instrument data elements 

and provide additional information as to 

how the FIMTM 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 FIMTM 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 FIMTM 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 FIMTM

instrument and associated Function 

Modifiers is no longer necessary. 

Accordingly, we believe that continuing 

to collect the FIMTM instrument and 

associated Function Modifiers places 

undue burden on IRFs. Additionally, 

the removal of the FIMTM 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 FIMTM 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 FIMTM

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 FIMTM

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 

FIMTM 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, casemix, 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 

FIMTM 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 FIMTM 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 

§ 412.620(c) we proposed to replace our 

use of the FIMTM 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 casemix 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 


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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 casemix 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 FIMTM 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 FIMTM 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 FIMTM

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 

FIMTM instrument and associated 

Function Modifiers from the IRF–PAI 

beginning with FY 2020. As the data in 

the FIMTM 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 FIMTM

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 casemix 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 

FIMTM 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-ServicePayment/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 

FIMTM items to determine functional 

status, as the data items located in the 

Quality Indicators section are now 


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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 casemix classification system, as our 

analysis determined these to be the best 

predictors of cost. The removal of the 

FIMTM 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 FIMTM 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 FIMTM 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 FIMTM

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 

FIMTM 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 FIMTM data items use a 

7 level scale. Additionally, the FIMTM

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 FIMTM 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 selfcare 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. 


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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 

FIMTM 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 FIMTM 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

CMG CMG description 

(M = motor, A = age) 

Relative weight Average length of stay 

Tier 1 Tier 2 Tier 3 

No 

comorbidity 

tier 

Tier 1 Tier 2 Tier 3 

No 

comorbidity 

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 M >= 64 ................ 1.4929 1.2534 1.1272 1.0468 14 14 13 12 

0203 ...... Traumatic Brain Injury M < 64 and M >= 51 ................ 1.7699 1.4859 1.3363 1.2411 16 17 15 14 

0204 ...... Traumatic Brain Injury M < 51 and M >= 36 ................ 2.1753 1.8263 1.6424 1.5254 21 20 18 17 

0205 ...... Traumatic Brain Injury M < 36 ...................................... 2.6959 2.2634 2.0355 1.8904 36 24 22 19 


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TABLE 9—REVISED RELATIVE WEIGHTS AND AVERAGE LENGTH OF STAY VALUES FOR THE REVISED CASE-MIX GROUPS— 

Continued 

CMG CMG description 

(M = motor, A = age) 

Relative weight Average length of stay 

Tier 1 Tier 2 Tier 3 

No 

comorbidity 

tier 

Tier 1 Tier 2 Tier 3 

No 

comorbidity 

tier 

0301 ...... Non-Traumatic Brain Injury M >= 70 ............................ 1.2192 1.0096 0.9348 0.8735 11 11 11 10 

0302 ...... Non-Traumatic Brain Injury M < 70 and M >= 57 ........ 1.5403 1.2755 1.1810 1.1034 14 14 13 13 

0303 ...... Non-Traumatic Brain Injury M < 57 and M >= 45 ........ 1.8496 1.5316 1.4182 1.3251 17 16 15 15 

0304 ...... Non-Traumatic Brain Injury M < 45 and A >= 79 ......... 2.0666 1.7113 1.5846 1.4806 20 18 17 16 

0305 ...... Non-Traumatic Brain Injury M < 45 and A < 79 ........... 2.2755 1.8843 1.7447 1.6302 21 21 18 17 

0401 ...... Traumatic Spinal Cord Injury M >= 64 ......................... 1.2999 1.0952 1.0122 0.9370 13 12 12 11 

0402 ...... Traumatic Spinal Cord Injury M < 64 and M >= 57 ...... 1.6630 1.4011 1.2949 1.1987 15 15 15 14 

0403 ...... Traumatic Spinal Cord Injury M < 57 and M >= 46 ...... 1.9672 1.6574 1.5318 1.4180 15 18 17 16 

0404 ...... Traumatic Spinal Cord Injury M < 46 and M >= 36 ...... 2.6209 2.2082 2.0408 1.8892 25 24 23 21 

0405 ...... Traumatic Spinal Cord Injury M < 36 and A < 63 ........ 3.1923 2.6895 2.4857 2.3010 34 29 27 24 

0406 ...... Traumatic Spinal Cord Injury M < 36 and A >= 63 ...... 3.6963 3.1142 2.8782 2.6643 46 34 28 29 

0501 ...... Non-Traumatic Spinal Cord Injury M >= 75 .................. 1.1291 0.9068 0.8382 0.7642 10 11 10 9 

0502 ...... Non-Traumatic Spinal Cord Injury M < 75 and M >= 

63.

1.4096 1.1322 1.0464 0.9541 14 13 12 11 

0503 ...... Non-Traumatic Spinal Cord Injury M < 63 and M >= 

52.

1.7905 1.4381 1.3292 1.2119 16 15 15 14 

0504 ...... Non-Traumatic Spinal Cord Injury M < 52 and M >= 

44.

2.2191 1.7823 1.6473 1.5020 21 19 18 17 

0505 ...... Non-Traumatic Spinal Cord Injury M < 44 .................... 2.8377 2.2792 2.1065 1.9206 27 24 22 21 

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 >= 67 ........................... 1.1960 0.9851 0.9487 0.8595 11 11 11 10 

0702 ...... Fracture of Lower Extremity M < 67 and M >= 55 ....... 1.5308 1.2608 1.2142 1.1001 14 14 14 13 

0703 ...... Fracture of Lower Extremity M < 55 and M >= 45 ....... 1.8510 1.5245 1.4682 1.3302 17 17 16 15 

0704 ...... Fracture of Lower Extremity M < 45 ............................. 2.0790 1.7124 1.6491 1.4941 18 18 18 17 

0801 ...... Replacement of Lower Extremity Joint M >= 67 .......... 1.0475 0.8892 0.8044 0.7437 10 10 9 9 

0802 ...... Replacement of Lower Extremity Joint M < 67 and M 

>= 56.

1.2925 1.0972 0.9926 0.9176 12 12 11 11 

0803 ...... Replacement of Lower Extremity Joint M < 56 and M 

>= 47.

1.5469 1.3132 1.1880 1.0982 15 15 13 12 

0804 ...... Replacement of Lower Extremity Joint M < 47 ............ 1.8517 1.5719 1.4220 1.3146 16 17 15 15 

0901 ...... Other Orthopedic M >= 69 ............................................ 1.1749 0.9376 0.8792 0.8083 11 11 10 10 

0902 ...... Other Orthopedic M < 69 and M >= 55 ........................ 1.5103 1.2052 1.1302 1.0390 13 14 13 12 

0903 ...... Other Orthopedic M < 55 and M >= 47 ........................ 1.8117 1.4457 1.3557 1.2463 15 16 15 14 

0904 ...... Other Orthopedic M < 47 .............................................. 2.0393 1.6273 1.5261 1.4029 17 17 16 16 

1001 ...... Amputation Lower Extremity M >= 67 .......................... 1.3231 1.1340 1.0276 0.9487 12 13 12 11 

1002 ...... Amputation Lower Extremity M < 67 and M >= 59 ...... 1.6372 1.4032 1.2715 1.1739 15 15 14 14 

1003 ...... Amputation Lower Extremity M < 59 and M >= 49 ...... 1.8961 1.6251 1.4726 1.3596 17 16 16 15 

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 >= 69 ............................. 1.1111 0.9753 0.9076 0.8570 10 11 10 11 

1302 ...... Rheumatoid Other Arthritis M < 69 and M >= 58 ......... 1.3176 1.1567 1.0764 1.0164 12 13 12 12 

1303 ...... Rheumatoid Other Arthritis M < 58 and A >= 72 ......... 1.6691 1.4652 1.3635 1.2875 13 17 14 14 

1304 ...... Rheumatoid Other Arthritis M < 58 and A < 72 ........... 1.7642 1.5487 1.4412 1.3609 14 17 15 15 

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 Brain or Spinal Cord 

Injury M >= 62.

1.4355 1.1154 1.0668 0.9504 14 13 12 11 

1702 ...... Major Multiple Trauma Without Brain or Spinal Cord 

Injury M < 62 and M >= 51.

1.7939 1.3938 1.3330 1.1876 16 15 15 14 

1703 ...... Major Multiple Trauma Without Brain or Spinal Cord 

Injury M < 51 and M >= 47.

2.0059 1.5585 1.4906 1.3280 17 16 16 15 

1704 ...... Major Multiple Trauma Without Brain or Spinal Cord 

Injury M < 47 and M >= 39.

2.1848 1.6975 1.6236 1.4465 19 18 17 16 

1705 ...... Major Multiple Trauma Without Brain or Spinal Cord 

Injury M < 39.

2.4250 1.8841 1.8020 1.6055 21 21 19 17 

1801 ...... Major Multiple Trauma With Brain or Spinal Cord Injury M >= 72.1.1980 1.0351 0.8752 0.8233 13 11 10 10 

1802 ...... Major Multiple Trauma With Brain or Spinal Cord Injury M < 72 and M >= 58.1.5335 1.3250 1.1204 1.0539 14 16 12 12 

1803 ...... Major Multiple Trauma With Brain or Spinal Cord Injury M < 58 and M >= 42.2.0608 1.7806 1.5056 1.4162 23 19 16 16 


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TABLE 9—REVISED RELATIVE WEIGHTS AND AVERAGE LENGTH OF STAY VALUES FOR THE REVISED CASE-MIX GROUPS— 

Continued 

CMG CMG description 

(M = motor, A = age) 

Relative weight Average length of stay 

Tier 1 Tier 2 Tier 3 

No 

comorbidity 

tier 

Tier 1 Tier 2 Tier 3 

No 

comorbidity 

tier 

1804 ...... Major Multiple Trauma With Brain or Spinal Cord Injury M < 42.2.9220 2.5248 2.1348 2.0081 34 25 23 22 

1901 ...... Guillain-Barre ́ M >= 54 .................................................. 1.5211 1.2331 1.1228 1.0834 16 15 12 13 

1902 ...... Guillain-Barre ́ 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 is 3 days or fewer ..... .............. .............. .............. 0.1801 .............. .............. .............. 3 

5101 ...... Expired, orthopedic, length of stay is 13 days or fewer .............. .............. .............. 0.6240 .............. .............. .............. 7 

5102 ...... Expired, orthopedic, length of stay is 14 days or more .............. .............. .............. 1.7071 .............. .............. .............. 18 

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

fewer.

.............. .............. .............. 0.6795 .............. .............. .............. 7 

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

more.

.............. .............. .............. 2.1069 .............. .............. .............. 21 

The following would be the most 

significant differences between the 

current CMGs and the revised CMGs: 

• There would be fewer CMGs than 

before (88 instead of 92 currently). 

• 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. 

• 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 

cases 

% Change in 

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 


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38540 Federal Register / Vol. 83, No. 151 / Monday, August 6, 2018 / Rules and Regulations 

TABLE 10—DISTRIBUTIONAL EFFECTS OF THE CHANGES TO THE CMGS—Continued 

Facility classification Number of 

IRFs 

Number of 

cases 

% Change in 

mean payment 

(1) (2) (3) (4) 

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 FIMTM

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 

FIMTM 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 FIMTM 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 FIMTM 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 FIMTM 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 FIMTM 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 FIMTM

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 casemix system. Many commenters noted 

they were supportive of the objective to 

eliminate duplicative data elements, 

and some were supportive of potentially 

removing the FIMTM in the future, but 

many commenters stated that finalizing 

the removal of the FIMTM data would be 

premature at this time. Commenters 

expressed concerns that the data items 

that we had proposed to replace the 

FIMTM data items have not been proven 

reliable or valid for payment purposes 

and requested to continue reporting data 

through the FIMTM 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 


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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/QualityInitiatives-Patient-AssessmentInstruments/Post-Acute-Care-QualityInitiatives/CARE-Item-Set-and-BCARE.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-Dataand-Systems/Statistics-Trends-andReports/Reports/Research-ReportsItems/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 FIMTM

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 FIMTM

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 FIMTM 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 FIMTM

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 FIMTM 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-Feefor-Service-Payment/InpatientRehabFac

PPS/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 

FIMTM 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 FIMTM 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 FIMTM scale and expressed concern 

that the scale for these items does not 

reflect progress between admission and 

discharge in a similar manner as the 

FIMTM 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, 


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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 FIMTM data for 

various purposes and that removing the 

FIMTM 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 FIMTM 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 FIMTM 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 FIMTM

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 FIMTM

instrument data on their own, but this 

choice has no bearing on our decision 

to remove the FIMTM items from the 

IRF–PAI to minimize regulatory burden 

on providers. 

Comment: One commenter noted that 

FIMTM items are universally understood 

across PAC settings and suggested that 

we should continue to collect the FIMTM

items. This commenter also suggested 

that we make the FIMTM 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 FIMTM 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 FIMTM 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 FIMTM 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 FIMTM

data to assess function and intervention 

outcomes. 

Response: As noted previously, the 

FIMTM data items and the Quality 

Indicator data items are very similar, 

and we therefore do not believe that the 

proposed removal of the FIMTM

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 FIMTM

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 

FIMTM 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 FIMTM

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 FIMTM, 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 


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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/QualityInitiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/IRFQuality-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/QualityInitiatives-Patient-AssessmentInstruments/NursingHomeQualityInits/ 

gg-training/. 

We also note that we receive 

questions about coding the items via the 

IRF QRP help desk email 

(IRF.questions@cms.hhs.gov), 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 ‘‘FrequentlyAsked 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/QualityInitiatives-Patient-AssessmentInstruments/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-PatientAssessment-Instruments/IRF-QualityReporting/IRF-PAI-and-IRF-QRPManual.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/QualityInitiatives-Patient-AssessmentInstruments/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/QualityInitiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/IRFQuality-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://

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Instruments/IRF-Quality-Reporting/IRFPAI-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 FIMTM

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/QualityInitiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/IRFPAI-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 

IRF.Questions@cms.hhs.gov. 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 

FIMTM instrument. These commenters 

said that using the new items and 

excluding the legacy cognitive FIMTM

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-PatientAssessment-Instruments/Post-AcuteCare-Quality-Initiatives/Downloads/ 

The-Development-and-Testing-of-theContinuity-Assessment-Record-andEvaluation-CARE-Item-Set-Final-Reporton-Reliability-Testing-Volume-2-of3.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-AssessmentInstruments/Post-Acute-Care-QualityInitiatives/Downloads/ContinuityAssessment-Record-and-EvaluationCARE-Item-Set-Video-ReliabilityTesting.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 familycentered care committee and the public. 

Comment: Several commenters 

suggested that because the data items in 

the FIMTM instrument and the data 

items collected in the Quality Indicators 

section of the IRF–PAI use different 

scales, there is a need to crosswalk 


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future performance to historical 

performance to ensure continuity in 

ongoing care improvement activities. 

Several commenters noted there are no 

available tools to crosswalk the FIMTM

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 FIMTM 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 FIMTM 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 FIMTM items, we believe 

that the FIMTM 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-PatientAssessment-Instruments/IRF-QualityReporting/IRF-Quality-ReportingProgram-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 

FIMTM 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 FIMTM 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 FIMTM 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 FIMTM 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 


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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 FIMTM 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 FIMTM 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. 


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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-ServicePayment/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 FIMTM

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, 


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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 FIMTM

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 postacute 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 FIMTM

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 


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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 FIMTM 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 


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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 § 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 postadmission 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 § 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 

§ 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 § 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-andGuidance/Guidance/Manuals/InternetOnly-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 § 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 

§ 412.622(a)(3)(iv) to provide that the 

post-admission physician evaluation 

required under § 412.622(a)(4)(ii) may 

count as one of the face-to-face 

physician visits required under 

§ 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 

§ 412.622(a)(4)(ii), including the 24-hour 

timeframe within which the postadmission physician evaluation 

requirement must be completed. 

We received 33 comments on the 

proposal to modify § 412.622(a)(3)(iv) to 

provide that the post-admission 

physician evaluation required under 

§ 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 § 412.622(a)(3)(iv) 

beginning with FY 2019, that is, for all 


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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 

§ 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 postadmission 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 postadmission 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 postadmission 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 subregulatory 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 § 412.622(a)(3)(iv) to provide 

that the post-admission physician 

evaluation required under 

§ 412.622(a)(4)(ii) may count as one of 

the face-to-face physician visits required 

under § 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 § 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 


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downloaded from the CMS website at 

https://www.cms.gov/Regulations-andGuidance/Guidance/Manuals/InternetOnly-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 § 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 § 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 inperson. 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 


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the rehabilitation physician leads the 

interdisciplinary team meeting inperson. 

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 § 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 § 412.606(a) as we 

believe that IRFs are already required to 

fulfill this requirement under 

§§ 482.12(c), 482.24(c), and 412.3. 

Under § 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-ManualsIOMs.html. 

Additionally, under § 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 §§ 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 

§ 412.606(a), this requirement would 

continue to be appropriately addressed 

through the enforcement of § 482.12(c) 

and § 482.24(c) of the hospital 

conditions of participation (CoPs), as 

well as the hospital admission order 

payment requirements at § 412.3. IRFs 

are responsible for meeting all of the 

inpatient hospital CoPs and the hospital 

admission order payment requirements 

at § 412.3, and, therefore, we believe 

that by removing the admission order 

documentation requirement at 

§ 412.606(a), we would be reducing both 

regulatory redundancy as well as 

administrative burden. 

Therefore, we proposed to amend 

§ 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 §§ 482.12(c), 

482.24(c), and 412.3. 

We received 21 comments on the 

proposal to amend § 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 § 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 

§ 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 

§ 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 

§ 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 § 412.3 as a 

requirement that IRFs will need to meet. 

While we proposed revisions to the 

language at § 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 

§ 412.3 as well as §§ 482.12(c) and 

482.24(c). We are finalizing our 

proposal to remove the admission order 

requirement at § 412.606(a) because it is 

duplicative. 

Final Decision: After careful 

consideration of the comments we 

received, we are finalizing our proposal 

to amend § 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 

§§ 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 § 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 


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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-ManualsIOMs.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 inperson 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-toface visit requirement for rehabilitation 

physicians. Specifically, we sought 

feedback regarding the following: 

• 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? 

• Would this assist facilities in rural 

areas where it may be difficult to 

employ an abundance of physicians? 

• Do stakeholders believe that 

assessing the patient remotely would 

affect the quality or intensity of the 

physician visit in any way? 

• How many and what types of visits 

do stakeholders believe should be able 

to be performed remotely? 

• From an operational standpoint, 

how would the remote visit work? 

• 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 § 412.622(a)(3), (4), 

and (5) 

Several of the requirements under 

§ 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 

§ 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-ManualsIOMs.html. 

In addition, under § 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 § 412.622(a)(3) at the time of 

admission, the patient’s medical record 

at the IRF must contain a postadmission 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-ManualsIOMs.html. 

In the feedback that we received in 

response to the RFI, it was suggested 

that we consider amending the 

requirements in § 412.622(a)(3)(iv) and 

§ 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 nonphysician practitioners to fulfill some of 

the requirements that rehabilitation 

physicians are currently required to 

complete. Specifically, we sought 

feedback regarding the following: 

• Do non-physician practitioners 

have the specialized training in 

rehabilitation that they need to have to 


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3See, 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 ValueBased Purchasing Programs.’’ December 2016, 

https://aspe.hhs.gov/pdf-report/report-congresssocial-risk-factors-and-performance-undermedicares-value-based-purchasing-programs. 

5Available at http://www.qualityforum.org/SES_

Trial_Period.aspx. 

assess IRF patients both medically and 

functionally? 

• How would the non-physician 

practitioner’s credentials be 

documented and monitored to ensure 

that IRF patients are receiving high 

quality care? 

• 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? 

• 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 


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6Available at: http://www.qualityforum.org/SES_

Trial_Period.aspx. 

7We 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. 

‘‘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. 

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

• Factor 1. Measure performance 

among IRFs is so high and unvarying 

that meaningful distinctions in 

improvements in performance can no 

longer be made. 

• Factor 2. Performance or 

improvement on a measure does not 

result in better patient outcomes. 

• Factor 3. A measure does not align 

with current clinical guidelines or 

practice. 

• Factor 4. A more broadly applicable 

measure (across settings, populations, or 

conditions) for the particular topic is 

available. 

• Factor 5. A measure that is more 

proximal in time to desired patient 

outcomes for the particular topic is 

available. 

• Factor 6. A measure that is more 

strongly associated with desired patient 

outcomes for the particular topic is 

available. 

• 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. 


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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 caseby-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 § 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 

§ 412.634(b) and, as discussed more 

fully in section X.J. of this final rule, 

remove the language in current 

§ 412.634(b)(2) related to the 2 

percentage point payment reduction 

because that payment reduction is also 

addressed at § 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 § 412.634(b)(2) and 

the updates to the regulatory text at 

§ 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. 


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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 Assessment.Application of Percent of Long-Term 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. 


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1. Removal of National Healthcare 

Safety Network (NHSN) Facility-Wide 

Inpatient Hospital-Onset MethicillinResistant 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 laboratoryidentified 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 Facilitywide 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 


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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/QualityInitiatives-Patient-AssessmentInstruments/Post-Acute-Care-QualityInitiatives/IMPACT-Act-of-2014/ 

IMPACT-Act-Downloads-andVideos.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 predates 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 


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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-Feefor-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 

§ 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 § 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 

§ 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 

§ 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 § 412.634(d)(1) would state that 

we would notify IRFs of noncompliance 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 

§ 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 noncompliance 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 noncompliance 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/QualityInitiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/IRFQuality-Reporting-Reconsideration-andException-and-Extension.html and 

announcements via the PAC listserv. 

The announcements will be posted 

annually following the May 15 data 


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submission deadline—prior to the 

distribution of the initial notices of noncompliance 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-PatientAssessment-Instruments/IRF-QualityReporting/Downloads/How-to-UpdateIRF-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 

§ 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 

§ 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/inpatient

rehabilitationfacilitycompare/. 

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/QualityInitiatives-Patient-AssessmentInstruments/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-PatientAssessment-Instruments/IRF-QualityReporting/IRF-Quality-ReportingProgram-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 assessmentbased 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 consumerVerDate Sep<11>2014 18:20 Aug 03, 2018 Jkt 244001 PO 00000 Frm 00050 Fmt 4701 Sfmt 4700 E:\FR\FM\06AUR3.SGM 06AUR3

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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/inpatient

rehabilitationfacilitycompare/#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 riskadjusted 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/QualityInitiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/IRFQuality-Reporting-Program-MeasuresInformation-.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, reportingbased 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 


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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), 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 ... × 0.9935 

Budget Neutrality Factor for the Wage Index and Labor-Related Share ............................................................................................ × 1.0000 

Budget Neutrality Factor for the Revisions to the CMG Relative Weights ......................................................................................... × 0.9981 

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: 

§§ 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 

§ 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 § 412.634(b)(2) and to 

codify that section instead the retention 

and removal policies for the IRF QRP. 

We also proposed to revise 

§ 412.624(c)(4)(i) to clarify that an IRF’s 

failure to submit data under the IRF 

QRP in accordance with § 412.634 will 

result in the 2 percentage point 

reduction to the applicable increase 

factor specified in § 412.624(a)(3). 

Finally, we proposed to revise 

§ 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 § 412.624(c). 

Final decision: We are finalizing our 

proposed revisions to our regulatory text 

at § 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 facilitylevel 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, hospitalwithin-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: 

• 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. 

• 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. 

• 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. 

• We will update the FY 2019 IRF 

PPS payment rates by the FY 2019 wage 

index and the labor-related share in a 


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budget-neutral manner, as discussed in 

section VI. of this final rule. 

• We will calculate the final IRF 

standard payment conversion factor for 

FY 2019, as discussed in section VI. of 

this final rule. 

• We will update the outlier 

threshold amount for FY 2019, as 

discussed in section VII. of this final 

rule. 

• We will update the CCR ceiling and 

urban/rural average CCRs for FY 2019, 

as discussed in section VII. of this final 

rule. 

• We will remove the FIMTM

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. 

• We will revise certain IRF coverage 

requirements beginning with FY 2019, 

as discussed in section IX. of this final 

rule. 

• 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: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency; 

• The accuracy of our estimate of the 

information collection burden; 

• The quality, utility, and clarity of 

the information to be collected; and 

• 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 FIMTM

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 FIMTM

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 FIMTM 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 FIMMTM instrument was 

added to the IRF–PAI in the FY 2002 

IRF PPS Final Rule (66 FR 41375). We 

believe that the FIMTM 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 × 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 

× $62.37) annually. We estimate that the 

total cost savings for all IRF providers 

will be approximately $10.5 million 

(1,126 IRFs × $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. 


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TABLE 13—U.S. BUREAU OF LABOR STATISTICS’ MAY 2017 NATIONAL OCCUPATIONAL EMPLOYMENT AND WAGE

ESTIMATES

Occupation title Occupation 

code 

Mean hourly 

wage 

($/hr) 

Overhead and 

fringe benefit 

($/hr) 

Adjusted 

hourly wage 

($/hr) 

Registered Nurse (RN) .................................................................................... 29–1141 $35.65 $35.65 $71.30 

Medical Records and Health Information Technician ...................................... 29–2071 18.83 18.83 37.66 

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 × 

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 

× 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 × 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 

FIMTM 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 


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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 FIMTM

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. 


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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: 

• 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. 

• 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. 

• The effects of applying the budgetneutral labor-related share and wage 

index adjustment, as required under 

section 1886(j)(6) of the Act. 

• The effects of the budget-neutral 

changes to the CMG relative weights 

and average length of stay values, under 

the authority of section 1886(j)(2)(C)(i) 

of the Act. 

• The 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 forprofit 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: 

• Column (1) shows the facility 

classification categories. 

• Column (2) shows the number of 

IRFs in each category in our FY 2019 

analysis file. 

• Column (3) shows the number of 

cases in each category in our FY 2019 

analysis file. 

• Column (4) shows the estimated 

effect of the adjustment to the outlier 

threshold amount. 

• Column (5) shows the estimated 

effect of the update to the IRF laborrelated share and wage index, in a 

budget-neutral manner. 

• 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. 

• 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. 


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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] 

Facility classification Number of 

IRF’s 

Number of 

cases Outlier 

FY 2019 

CBSA wage 

index and 

labor-share 

CMG weights Total percent 

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 

1This 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 


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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 FIMTM

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 FIMTM

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 postadmission 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 × 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 × 3 visits × 0.5 hours) × 52 

weeks) completing the required face-toface physician visits. On average, a 

rehabilitation physician currently 

spends 903 hours (357 hours + 546 

hours) annually completing postadmission 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 × 1 

visit × 0.5 hours) × 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 × 

1 visit × 0.5 hours) × 52 weeks) annually 

per IRF. This is a savings of 204,932 

hours across all IRFs annually (1,126 

IRFs × 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-toface physician visits, will be $41 million 

(1,126 IRFs × $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-toface physician visits will be $20.5 

million (563 IRFs × $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 §§ 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 


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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 faceto-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 

FIMTM 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 

FIMTM 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 FIMTM

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 postadmission physician evaluation with 

the required face-to-face physician 

visits, and continuing to require 

documentation of the post-admission 

physician evaluation and all three faceto-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 


sradovich on DSK3GMQ082PROD with RULES3
38572 Federal Register / Vol. 83, No. 151 / Monday, August 6, 2018 / Rules and Regulations 

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 × 

$107.38). Therefore, we estimate that 

the total cost of reviewing this 

regulation is $23,408.84 ($214.76 × 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 IRFs due to the removal of certain IRF coverage 

requirements.

Reduction of $20.5 million. 

Annualized monetized cost in FY 2020 for IRFs due to the removal of FIMTM instrument and 

associated Function Modifiers from the IRF-PAI.

Reduction of $10.5 million. 

Annualized monetized cost in FY 2019 for IRFs due to new quality reporting program requirements.Reduction of $2.5 million. 

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. 


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

■ 1. The authority citation for part 412 

is revised to read as follows: 

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

§ 412.606 [Amended] 

■ 2. Section 412.606 is amended by— 

■ a. Removing paragraph (a); and 

■ b. Redesignating paragraphs (b) and 

(c) as paragraphs (a) and (b). 

■ 3. Section 412.622 is amended by— 

■ a. Revising paragraph (a)(3)(iv); 

■ b. Redesignating paragraphs (a)(5)(A) 

through (C) as paragraphs (a)(5)(i) 

through (iii); and 

■ c. Revising newly redesignated 

paragraph (a)(5)(i). 

The revisions read as follows: 

§ 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 postadmission physician evaluation 

described in paragraph (a)(4)(ii) of this 

section may count as one of the face-toface 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. 

* * * * * 

■ 4. Section 412.624 is amended by 

revising paragraph (c)(4)(i) and adding 

paragraph (c)(4)(iii) to read as follows: 

§ 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 § 412.1(a)(3) that does not 

submit quality data to CMS in 

accordance with § 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 

§ 412.1(a)(3) for a fiscal year being less 

than such payment rates for the 

preceding fiscal year. 

* * * * * 

■ 5. Section 412.634 is amended by 

revising paragraphs (b), (d)(1) and (5) to 

read as follows: 

§ 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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