Vol. 78 Wednesday, 

No. 89 May 8, 2013 

Part II 

Department of Health and Human Services 

Centers for Medicare & Medicaid Services 

42 CFR Part 412 

Medicare Program; Inpatient Rehabilitation Facility Prospective Payment 

System for Federal Fiscal Year 2014; Proposed Rule 

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26880 Federal Register / Vol. 78, No. 89 / Wednesday, May 8, 2013 / Proposed Rules 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 412 

[CMS–1448–P] 

RIN 0938–AR66 

Medicare Program; Inpatient 

Rehabilitation Facility Prospective 

Payment System for Federal Fiscal 

Year 2014 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Proposed rule. 

SUMMARY: This proposed rule would 

update the prospective payment rates 

for inpatient rehabilitation facilities 

(IRFs) for federal fiscal year (FY) 2014 

(for discharges occurring on or after 

October 1, 2013 and on or before 

September 30, 2014) as required by the 

statute. We are also proposing to revise 

the list of diagnosis codes that are used 

to determine presumptive compliance 

under the ‘‘60 percent rule,’’ update the 

IRF facility-level adjustment factors, 

revise sections of the Inpatient 

Rehabilitation Facility-Patient 

Assessment Instrument, revise 

requirements for acute care hospitals 

that have IRF units, clarify the IRF 

regulation text regarding limitation of 

review, update references to previously 

changed sections in the regulations text, 

and revise and update quality measures 

and reporting requirements under the 

IRF quality reporting program. 

DATES: To be assured consideration, 

comments must be received at one of 

the addresses provided below, no later 

than 5 p.m. on July 1, 2013. 

ADDRESSES: In commenting, please refer 

to file code CMS–1448–P. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

You may submit comments in one of 

four ways (please choose only one of the 

ways listed): 

1. Electronically. You may submit 

electronic comments on this regulation 

to http://www.regulations.gov. Follow 

the ‘‘Submit a comment’’ instructions. 

2. By regular mail. You may mail 

written comments to the following 

address ONLY: Centers for Medicare & 

Medicaid Services, Department of 

Health and Human Services, Attention: 

CMS–1448–P, P.O. Box 8016, Baltimore, 

MD 21244–8016. 

Please allow sufficient time for mailed 

comments to be received before the 

close of the comment period. 

3. By express or overnight mail. You 

may send written comments to the 

following address only: Centers for 

Medicare & Medicaid Services, 

Department of Health and Human 

Services, Attention: CMS–1448–P, Mail 

Stop C4–26–05, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

4. By hand or courier. Alternatively, 

you may deliver (by hand or courier) 

your written comments only to the 

following addresses prior to the close of 

the comment period: 

a. For delivery in Washington, DC— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Room 445–G, Hubert 

H. Humphrey Building, 200 

Independence Avenue SW., 

Washington, DC 20201. 

(Because access to the interior of the 

Hubert H. Humphrey Building is not 

readily available to persons without 

Federal government identification, 

commenters are encouraged to leave 

their comments in the CMS drop slots 

located in the main lobby of the 

building. A stamp-in clock is available 

for persons wishing to retain a proof of 

filing by stamping in and retaining an 

extra copy of the comments being filed.) 

b. For delivery in Baltimore, MD— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

If you intend to deliver your 

comments to the Baltimore address, 

please call telephone number (410) 786– 

7195 in advance to schedule your 

arrival with one of our staff members. 

Comments erroneously mailed to the 

addresses indicated as appropriate for 

hand or courier delivery may be delayed 

and received after the comment period. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section. 

FOR FURTHER INFORMATION CONTACT: 

Gwendolyn Johnson, (410)786–6954, for 

general information about the proposed 

rule. Caroline Gallaher, (410) 786–8705, 

for information about the quality 

reporting program. Susanne Seagrave, 

(410) 786–0044 or Kadie Thomas, (410) 

786–0468, for information about the 

proposed payment policies and the 

proposed payment rates. 

SUPPLEMENTARY INFORMATION: The IRF 

PPS Addenda along with other 

supporting documents and tables 

referenced in this proposed rule are 

available through the Internet on the 

CMS Web site at http:// 

www.cms.hhs.gov/Medicare/MedicareFee-for-Service-Payment/ 

InpatientRehabFacPPS/. 

Inspection of Public Comments: All 

comments received before the close of 

the comment period are available for 

viewing by the public, including any 

personally identifiable or confidential 

business information that is included in 

a comment. We post all comments 

received before the close of the 

comment period on the following Web 

site as soon as possible after they have 

been received: http:// 

www.regulations.gov. Follow the search 

instructions on that Web site to view 

public comments. 

Comments received timely will also 

be available for public inspection as 

they are received, generally beginning 

approximately 3 weeks after publication 

of a document, at the headquarters of 

the Centers for Medicare & Medicaid 

Services, 7500 Security Boulevard, 

Baltimore, Maryland 21244, Monday 

through Friday of each week from 8:30 

a.m. to 4 p.m. To schedule an 

appointment to view public comments, 

phone 1–800–743–3951. 

Executive Summary 

A. Purpose 

This proposed rule updates the 

payment rates for inpatient 

rehabilitation facilities (IRFs) for federal 

fiscal year (FY) 2014 (for discharges 

occurring on or after October 1, 2013 

and on or before September 30, 2014) as 

required under section 1886(j)(3)(C) of 

the Social Security Act (the Act). 

Section 1886(j)(5) of the Act requires the 

Secretary to publish in the Federal 

Register on or before the August 1 that 

precedes the start of each fiscal year, the 

classification and weighting factors for 

the IRF prospective payment system’s 

(PPS) case-mix groups and a description 

of the methodology and data used in 

computing the prospective payment 

rates for that fiscal year. 

B. Summary of Major Provisions 

In this proposed rule, we use the 

methods described in the FY 2013 IRF 

PPS notice (77 FR 44618) to update the 

Federal prospective payment rates for 

FY 2014 using updated FY 2012 IRF 

claims and the most recent available IRF 

cost report data. We are also proposing 

to revise the list of diagnosis codes that 

are used to determine presumptive 

compliance under the ‘‘60 percent rule,’’ 

update the IRF facility-level adjustment 

factors using an enhanced estimation 

methodology, revise sections of the 

Inpatient Rehabilitation Facility-Patient 

Assessment Instrument, revise 

requirements for acute care hospitals 

that have IRF units, clarify the IRF 

regulation text regarding limitation of 

review, update references to previously 

changed sections in the regulations text, 

and revise and update quality measures 

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and reporting requirements under the 

IRF quality reporting program. 

C. Summary of Costs, Benefits and 

Transfers 

Provision description Total transfers 

FY 2014 IRF PPS payment rate update ............ The overall economic impact of this proposed rule is an estimated $150 million in increased 

payments from the Federal government to IRFs during FY 2014. 

To assist readers in referencing 

sections contained in this document, we 

are providing the following Table of 

Contents. 

Table of Contents 

I. Background 

A. Historical Overview of the Inpatient 

Rehabilitation Facility Prospective 

Payment System (IRF PPS) 

B. Provisions of the Affordable Care Act 

Affecting the IRF PPS in FY 2012 and 

Beyond 

C. Operational Overview of the Current IRF 

PPS 

II. Summary of Provisions of the Proposed 

Rule 

A. Proposed Updates to the IRF Federal 

Prospective Payment Rates for Federal 

Fiscal Year (FY) 2014 

B. Proposed Revisions to Existing 

Regulation Text 

III. Proposed Update to the Case-Mix Group 

(CMG) Relative Weights and Average 

Length of Stay Values for FY 2014 

IV. Proposed Updates to the Facility-Level 

Adjustment Factors for FY 2014 

A. Background on Facility-Level 

Adjustments 

B. Proposed Updates to the IRF FacilityLevel Adjustment Factors 

C. Budget Neutrality Methodology for the 

Updates to the IRF Facility-Level 

Adjustment Factors 

V. Proposed FY 2014 IRF PPS Federal 

Prospective Payment Rates 

A. Proposed Market Basket Increase Factor, 

Productivity Adjustment, Other 

Adjustment, and Secretary’s 

Recommendation for FY 2014 

B. Secretary’s Proposed Recommendation 

C. Proposed Labor-Related Share for FY 

2014 

D. Proposed Area Wage Adjustment 

E. Description of the Proposed IRF 

Standard Conversion Factor and 

Payment Rates for FY 2014 

F. Example of the Methodology for 

Adjusting the Proposed Federal 

Prospective Payment Rates 

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

A. Proposed Update to the Outlier 

Threshold Amount for FY 2014 

B. Proposed Update to the IRF Cost-toCharge Ratio Urban and Rural Ceilings 

VII. Proposed Refinements to the 

Presumptive Compliance Criteria 

Methodology 

A. Background on the Compliance 

Percentage 

B. Proposed Changes to the ICD–Q–CMCodes that Meet the Presumptive 

Compliance Criteria 

VIII. Proposed Non-Quality Related Revisions 

to IRF–PAI Sections 

A. Proposed Updates 

B. Proposed Additions 

C. Proposed Deletions 

D. Proposed Changes 

IX. Proposed Technical Corrections to the 

Regulations at § 412.130 

X. Proposed Revisions to the Conditions of 

Payment for IRF Units Under the IRF 

PPS 

XI. Proposed Clarification of the Regulations 

at § 412.630 

XII. Proposed Revision to the Regulations at 

§ 412.29 

XIII. Proposed Revisions and Updates to the 

Quality Reporting Program for IRFs 

A. Background and Statutory Authority 

B. Quality Measures Previously Finalized 

and Currently in Use for the IRF Quality 

Reporting Program 

C. Proposed New IRF QRP Quality 

Measures Affecting the FY 2016 and FY 

2017 IRF PPS Annual Increase Factor, 

and Subsequent Year Increase Factors 

D. Proposed Changes to the IRF–PAI That 

Are Related to the IRF Quality Reporting 

Program 

E. Proposed Change in Data Collection and 

Submission Periods for Future Program 

Years 

F. Proposed Reconsideration and Appeals 

Process 

G. Proposed Policy for Granting of a 

Waiver of the IRF QRP Data Submission 

Requirements in Case of Disaster or 

Extraordinary Circumstances 

H. Public Display of Data Quality Measures 

for the IRF QRP Program 

I. Method for Applying the Reduction to 

the FY 2014 IRF Increase Factor for IRFs 

that Fail to Meet the Quality Reporting 

Requirements 

XIV. Collection of Information Requirements 

A. ICRs Regarding IRF QRP 

B. ICRs Regarding Non-Quality Related 

Proposed Changes to the IRF–PAI 

XV. Response to Public Comments 

XVI. Regulatory Impact Analysis 

A. Statement of Need 

B. Overall Impacts 

C. Detailed Economic Analysis 

D. Alternatives Considered 

E. Accounting Statement 

F. Conclusion 

Regulation Text 

I. Background 

A. Historical Overview of the Inpatient 

Rehabilitation Facility Prospective 

Payment System (IRF PPS) 

Section 1886(j) of the Act provides for 

the implementation of a per discharge 

prospective payment system (PPS) for 

inpatient rehabilitation hospitals and 

inpatient rehabilitation units of a 

hospital (hereinafter referred to as IRFs). 

Payments under the IRF PPS 

encompass inpatient operating and 

capital costs of furnishing covered 

rehabilitation services (that is, routine, 

ancillary, and capital costs) but not 

direct graduate medical education costs, 

costs of approved nursing and allied 

health education activities, bad debts, 

and other services or items outside the 

scope of the IRF PPS. Although a 

complete discussion of the IRF PPS 

provisions appears in the original FY 

2002 IRF PPS final rule (66 FR 41316) 

and the FY 2006 IRF PPS final rule (70 

FR 47880), we are providing below a 

general description of the IRF PPS for 

fiscal years (FYs) 2002 through 2013. 

Under the IRF PPS from FY 2002 

through FY 2005, as described in the FY 

2002 IRF PPS final rule (66 FR 41316), 

the federal prospective payment rates 

were computed across 100 distinct casemix groups (CMGs). We constructed 95 

CMGs using rehabilitation impairment 

categories (RICs), functional status (both 

motor and cognitive), and age (in some 

cases, cognitive status and age may not 

be a factor in defining a CMG). In 

addition, we constructed five special 

CMGs to account for very short stays 

and for patients who expire in the IRF. 

For each of the CMGs, we developed 

relative weighting factors to account for 

a patient’s clinical characteristics and 

expected resource needs. Thus, the 

weighting factors accounted for the 

relative difference in resource use across 

all CMGs. Within each CMG, we created 

tiers based on the estimated effects that 

certain comorbidities would have on 

resource use. 

We established the federal PPS rates 

using a standardized payment 

conversion factor (formerly referred to 

as the budget neutral conversion factor). 

For a detailed discussion of the budget 

neutral conversion factor, please refer to 

our FY 2004 IRF PPS final rule (68 FR 

45684 through 45685). In the FY 2006 

IRF PPS final rule (70 FR 47880), we 

discussed in detail the methodology for 

determining the standard payment 

conversion factor. 

We applied the relative weighting 

factors to the standard payment 

conversion factor to compute the 

unadjusted federal prospective payment 

rates under the IRF PPS from FYs 2002 

through 2005. Within the structure of 

the payment system, we then made 

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adjustments to account for interrupted 

stays, transfers, short stays, and deaths. 

Finally, we applied the applicable 

adjustments to account for geographic 

variations in wages (wage index), the 

percentage of low-income patients, 

location in a rural area (if applicable), 

and outlier payments (if applicable) to 

the IRF’s unadjusted Federal 

prospective payment rates. 

For cost reporting periods that began 

on or after January 1, 2002 and before 

October 1, 2002, we determined the 

final prospective payment amounts 

using the transition methodology 

prescribed in section 1886(j)(1) of the 

Act. Under this provision, IRFs 

transitioning into the PPS were paid a 

blend of the Federal IRF PPS rate and 

the payment that the IRF would have 

received had the IRF PPS not been 

implemented. This provision also 

allowed IRFs to elect to bypass this 

blended payment and immediately be 

paid 100 percent of the federal IRF PPS 

rate. The transition methodology 

expired as of cost reporting periods 

beginning on or after October 1, 2002 

(FY 2003), and payments for all IRFs 

now consist of 100 percent of the federal 

IRF PPS rate. 

We established a CMS Web site as a 

primary information resource for the 

IRF PPS. The Web site is: http:// 

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

InpatientRehabFacPPS/ 

index.html?redirect=/ 

InpatientRehabFacPPS/ and may be 

accessed to download or view 

publications, software, data 

specifications, educational materials, 

and other information pertinent to the 

IRF PPS. 

Section 1886(j) of the Act confers 

broad statutory authority upon the 

Secretary to propose refinements to the 

IRF PPS. In the FY 2006 IRF PPS final 

rule (70 FR 47880) and in correcting 

amendments to the FY 2006 IRF PPS 

final rule (70 FR 57166) that we 

published on September 30, 2005, we 

finalized a number of refinements to the 

IRF PPS case-mix classification system 

(the CMGs and the corresponding 

relative weights) and the case-level and 

facility-level adjustments. These 

refinements included the adoption of 

the Office of Management and Budget’s 

(OMB) Core-Based Statistical Area 

(CBSA) market definitions, 

modifications to the CMGs, tier 

comorbidities, and CMG relative 

weights, implementation of a new 

teaching status adjustment for IRFs, 

revision and rebasing of the market 

basket index used to update IRF 

payments, and updates to the rural, lowincome percentage (LIP), and high-cost 

outlier adjustments. Beginning with the 

FY 2006 IRF PPS final rule (70 FR 47908 

through 47917), the market basket index 

used to update IRF payments is a market 

basket reflecting the operating and 

capital cost structures for freestanding 

IRFs, freestanding inpatient psychiatric 

facilities (IPFs), and long-term care 

hospitals (LTCHs) (hereafter referred to 

as the rehabilitation, psychiatric, and 

long-term care (RPL) market basket). 

Any reference to the FY 2006 IRF PPS 

final rule in this proposed rule also 

includes the provisions effective in the 

correcting amendments. For a detailed 

discussion of the final key policy 

changes for FY 2006, please refer to the 

FY 2006 IRF PPS final rule (70 FR 47880 

and 70 FR 57166). 

In the FY 2007 IRF PPS final rule (71 

FR 48354), we further refined the IRF 

PPS case-mix classification system (the 

CMG relative weights) and the caselevel adjustments, to ensure that IRF 

PPS payments would continue to reflect 

as accurately as possible the costs of 

care. For a detailed discussion of the FY 

2007 policy revisions, please refer to the 

FY 2007 IRF PPS final rule (71 FR 

48354). 

In the FY 2008 IRF PPS final rule (72 

FR 44284), we updated the federal 

prospective payment rates and the 

outlier threshold, revised the IRF wage 

index policy, and clarified how we 

determine high-cost outlier payments 

for transfer cases. For more information 

on the policy changes implemented for 

FY 2008, please refer to the FY 2008 IRF 

PPS final rule (72 FR 44284), in which 

we published the final FY 2008 IRF 

federal prospective payment rates. 

After publication of the FY 2008 IRF 

PPS final rule (72 FR 44284), section 

115 of the Medicare, Medicaid, and 

SCHIP Extension Act of 2007 (Pub. L. 

110–173, enacted on December 29, 

2007) (MMSEA), amended section 

1886(j)(3)(C) of the Act to apply a zero 

percent increase factor for FYs 2008 and 

2009, effective for IRF discharges 

occurring on or after April 1, 2008. 

Section 1886(j)(3)(C) of the Act required 

the Secretary to develop an increase 

factor to update the IRF federal 

prospective payment rates for each FY. 

Based on the legislative change to the 

increase factor, we revised the FY 2008 

federal prospective payment rates for 

IRF discharges occurring on or after 

April 1, 2008. Thus, the final FY 2008 

IRF Federal prospective payment rates 

that were published in the FY 2008 IRF 

PPS final rule (72 FR 44284) were 

effective for discharges occurring on or 

after October 1, 2007 and on or before 

March 31, 2008; and the revised FY 

2008 IRF Federal prospective payment 

rates were effective for discharges 

occurring on or after April 1, 2008 and 

on or before September 30, 2008. The 

revised FY 2008 federal prospective 

payment rates are available on the CMS 

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

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

In the FY 2009 IRF PPS final rule (73 

FR 46370), we updated the CMG relative 

weights, the average length of stay 

values, and the outlier threshold; 

clarified IRF wage index policies 

regarding the treatment of ‘‘New 

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

regulation text in response to section 

115 of the MMSEA to set the IRF 

compliance percentage at 60 percent 

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

practice of including comorbidities in 

the calculation of compliance 

percentages. We also applied a zero 

percent market basket increase factor for 

FY 2009 in accordance with section 115 

of the MMSEA. For more information on 

the policy changes implemented for FY 

2009, please refer to the FY 2009 IRF 

PPS final rule (73 FR 46370), in which 

we published the final FY 2009 IRF 

federal prospective payment rates. 

In the FY 2010 IRF PPS final rule (74 

FR 39762) and in correcting 

amendments to the FY 2010 IRF PPS 

final rule (74 FR 50712) that we 

published on October 1, 2009, we 

updated the federal prospective 

payment rates, the CMG relative 

weights, the average length of stay 

values, the rural, LIP, and teaching 

status adjustment factors, and the 

outlier threshold; implemented new IRF 

coverage requirements for determining 

whether an IRF claim is reasonable and 

necessary; and revised the regulation 

text to require IRFs to submit patient 

assessments on Medicare Advantage 

(MA) (Medicare Part C) patients for use 

in the 60 percent rule calculations. Any 

reference to the FY 2010 IRF PPS final 

rule in this proposed rule also includes 

the provisions effective in the correcting 

amendments. For more information on 

the policy changes implemented for FY 

2010, please refer to the FY 2010 IRF 

PPS final rule (74 FR 39762 and 74 FR 

50712), in which we published the final 

FY 2010 IRF federal prospective 

payment rates. 

After publication of the FY 2010 IRF 

PPS final rule (74 FR 39762), section 

3401(d) of the Patient Protection and 

Affordable Care Act (Pub. L. 111–148, 

enacted on March 23, 2010) as amended 

by section 10319 of the same Act and by 

section 1105 of the Health Care and 

Education Reconciliation Act of 2010 

(Pub. L. 111–152, enacted on March 30, 

2010) (collectively, hereafter referred to 

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as ‘‘The Affordable Care Act’’), amended 

section 1886(j)(3)(C) of the Act and 

added section 1886(j)(3)(D) of the Act. 

Section 1886(j)(3)(C) of the Act requires 

the Secretary to estimate a multi-factor 

productivity adjustment to the market 

basket increase factor, and to apply 

other adjustments as defined by the Act. 

The productivity adjustment applies to 

FYs from 2012 forward. The other 

adjustments apply to FYs 2010 to 2019. 

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

1886(j)(3)(D)(i) of the Act defined the 

adjustments that were to be applied to 

the market basket increase factors in 

FYs 2010 and 2011. Under these 

provisions, the Secretary was required 

to reduce the market basket increase 

factor in FY 2010 by a 0.25 percentage 

point adjustment. Notwithstanding this 

provision, in accordance with section 

3401(p) of the Affordable Care Act, the 

adjusted FY 2010 rate was only to be 

applied to discharges occurring on or 

after April 1, 2010. Based on the selfimplementing legislative changes to 

section 1886(j)(3) of the Act, we 

adjusted the FY 2010 Federal 

prospective payment rates as required, 

and applied these rates to IRF 

discharges occurring on or after April 1, 

2010 and on or before September 30, 

2010. Thus, the final FY 2010 IRF 

federal prospective payment rates that 

were published in the FY 2010 IRF PPS 

final rule (74 FR 39762) were used for 

discharges occurring on or after October 

1, 2009 and on or before March 31, 

2010; and the adjusted FY 2010 IRF 

federal prospective payment rates 

applied to discharges occurring on or 

after April 1, 2010 and on or before 

September 30, 2010. The adjusted FY 

2010 federal prospective payment rates 

are available on the CMS Web site at 

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

Medicare-Fee-for-Service-Payment/ 

InpatientRehabFacPPS/Data-Files.html. 

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) also required the 

Secretary to reduce the market basket 

increase factor in FY 2011 by a 0.25 

percentage point adjustment. The FY 

2011 IRF PPS notice (75 FR 42836) and 

the correcting amendments to the FY 

2011 IRF PPS notice (75 FR 70013, 

November 16, 2010) described the 

required adjustments to the FY 2011 

and FY 2010 IRF PPS Federal 

prospective payment rates and outlier 

threshold amount for IRF discharges 

occurring on or after April 1, 2010 and 

on or before September 30, 2011. It also 

updated the FY 2011 Federal 

prospective payment rates, the CMG 

relative weights, and the average length 

of stay values. Any reference to the FY 

2011 IRF PPS notice in this proposed 

rule also includes the provisions 

effective in the correcting amendments. 

For more information on the FY 2010 

and FY 2011 adjustments or the updates 

for FY 2011, please refer to the FY 2011 

IRF PPS notice (75 FR 42836 and 75 FR 

70013). 

In the FY 2012 IRF PPS final rule (76 

FR 47836), we updated the IRF federal 

prospective payment rates, rebased and 

revised the RPL market basket, and 

established a new quality reporting 

program for IRFs in accordance with 

section 1886(j)(7) of the Act. We also 

revised regulations text for the purpose 

of updating and providing greater 

clarity. For more information on the 

policy changes implemented for FY 

2012, please refer to the FY 2012 IRF 

PPS final rule (76 FR 47836), in which 

we published the final FY 2012 IRF 

federal prospective payment rates. 

The FY 2013 IRF PPS notice (77 FR 

44618) described the required 

adjustments to the FY 2013 federal 

prospective payment rates and outlier 

threshold amount for IRF discharges 

occurring on or after October 1, 2012 

and on or before September 30, 2013. It 

also updated the FY 2013 federal 

prospective payment rates, the CMG 

relative weights, and the average length 

of stay values. For more information on 

the updates for FY 2013, please refer to 

the FY 2013 IRF PPS notice (77 FR 

44618). 

B. Provisions of the Affordable Care Act 

Affecting the IRF PPS in FY 2012 and 

Beyond 

The Affordable Care Act included 

several provisions that affect the IRF 

PPS in FYs 2012 and beyond. In 

addition to what was discussed above, 

section 3401(d) of the Affordable Care 

Act also added section 

1886(j)(3)(C)(ii)(I) (providing for a 

‘‘productivity’’ adjustment’’ for fiscal 

year 2012 and each subsequent fiscal 

year). The proposed productivity 

adjustment for FY 2014 is discussed in 

section V.A. of this proposed rule. 

Section 3401(d) of the Affordable Care 

Act requires an additional 0.3 

percentage point adjustment to the IRF 

increase factor for FY 2014, as discussed 

in section V.A. of this proposed rule. 

Section 1886(j)(3)(C)(ii)(II) of the Act 

notes that the application of these 

adjustments to the market basket update 

may result in an update that is less than 

0.0 for a fiscal year and in payment rates 

for a fiscal year being less than such 

payment rates for the preceding fiscal 

year. 

Section 3004(b) of the Affordable Care 

Act also addressed the IRF PPS 

program. It reassigned the previouslydesignated section 1886(j)(7) of the Act 

to section 1886(j)(8) and inserted a new 

section 1886(j)(7), which contains new 

requirements for the Secretary to 

establish a quality reporting program for 

IRFs. Under that program, data must be 

submitted in a form and manner, and at 

a time specified by the Secretary. 

Beginning in FY 2014, section 

1886(j)(7)(A)(i) will require application 

of a 2 percentage point reduction of the 

applicable market basket increase factor 

for IRFs that fail to comply with the 

quality data submission requirements. 

Application of the 2 percentage point 

reduction may result in an update that 

is less than 0.0 for a fiscal year and in 

payment rates for a fiscal year being less 

than such payment rates for the 

preceding fiscal year. Reporting-based 

reductions to the market basket increase 

factor will not be cumulative; they will 

only apply for the FY involved. 

Under section 1886(j)(7)(D)(i) and (ii) 

of the Act, the Secretary is generally 

required to select quality measures for 

the IRF quality reporting program from 

those that have been endorsed by the 

consensus-based entity which holds a 

performance measurement contract 

under section 1890(a) of the Act. This 

contract is currently held by the 

National Quality Forum (NQF). So long 

as due consideration is given to 

measures that have been endorsed or 

adopted by a consensus-based 

organization, section 1886(j)(7)(D)(ii) of 

the Act authorizes the Secretary to 

select non-endorsed measures for 

specified areas or medical topics when 

there are no feasible or practical 

endorsed measure(s). Under section 

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

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Secretary is required to publish the 

measures that will be used in FY 2014 

no later than October 1, 2012. 

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

requires the Secretary to establish 

procedures for making the IRF PPS 

quality reporting data available to the 

public. In so doing, the Secretary must 

ensure that IRFs have the opportunity to 

review any such data prior to its release 

to the public. Future rulemaking will 

address these public reporting 

obligations. 

C. Operational Overview of the Current 

IRF PPS 

As described in the FY 2002 IRF PPS 

final rule, upon the admission and 

discharge of a Medicare Part A fee-forservice patient, the IRF is required to 

complete the appropriate sections of a 

patient assessment instrument (PAI), 

designated as the Inpatient 

Rehabilitation Facility-Patient 

Assessment Instrument (IRF–PAI). In 

addition, beginning with IRF discharges 

occurring on or after October 1, 2009, 

the IRF is also required to complete the 

appropriate sections of the IRF–PAI 

upon the admission and discharge of 

each Medicare Part C (Medicare 

Advantage) patient, as described in the 

FY 2010 IRF PPS final rule. All required 

data must be electronically encoded into 

the IRF–PAI software product. 

Generally, the software product 

includes patient classification 

programming called the GROUPER 

software. The GROUPER software uses 

specific IRF–PAI data elements to 

classify (or group) patients into distinct 

CMGs and account for the existence of 

any relevant comorbidities. 

The GROUPER software produces a 5- 

digit CMG number. The first digit is an 

alpha-character that indicates the 

comorbidity tier. The last 4 digits 

represent the distinct CMG number. 

Free downloads of the Inpatient 

Rehabilitation Validation and Entry 

(IRVEN) software product, including the 

GROUPER software, are available on the 

CMS Web site at http:// 

www.cms.hhs.gov/Medicare/MedicareFee-for-Service-Payment/ 

InpatientRehabFacPPS/Software.html. 

Once a Medicare fee-for-service Part A 

patient is discharged, the IRF submits a 

Medicare claim as a Health Insurance 

Portability and Accountability Act of 

1996 (Pub. L. 104–191, enacted on 

August 21, 1996) (HIPAA), compliant 

electronic claim or, if the 

Administrative Simplification 

Compliance Act of 2002 (Pub. L. 107– 

105, enacted on December 27, 2002) 

(ASCA) permits, a paper claim (a UB– 

04 or a CMS–1450 as appropriate) using 

the five-digit CMG number and sends it 

to the appropriate Medicare fiscal 

intermediary (FI) or Medicare 

Administrative Contractor (MAC). In 

addition, once a Medicare Advantage 

patient is discharged, in accordance 

with the Medicare Claims Processing 

Manual chapter 3 section 20.3 (Pub. 

100–04), hospitals (including IRFs) must 

submit an informational only bill (TOB 

111) which includes Condition Code 04 

to their Medicare contractor. This will 

ensure that the Medicare Advantage 

days are included in the hospital’s 

Supplemental Security Income (SSI) 

ratio (used in calculating the IRF lowincome percentage adjustment) for 

Fiscal Year 2007 and beyond. Claims 

submitted to Medicare must comply 

with both ASCA and HIPAA. 

Section 3 of the ASCA amends section 

1862(a) of the Act by adding paragraph 

(22) which requires the Medicare 

program, subject to section 1862(h) of 

the Act, to deny payment under Part A 

or Part B for any expenses for items or 

services ‘‘for which a claim is submitted 

other than in an electronic form 

specified by the Secretary.’’ Section 

1862(h) of the Act, in turn, provides that 

the Secretary shall waive such denial in 

situations in which there is no method 

available for the submission of claims in 

an electronic form or the entity 

submitting the claim is a small provider. 

In addition, the Secretary also has the 

authority to waive such denial ‘‘in such 

unusual cases as the Secretary finds 

appropriate.’’ For more information, see 

the ‘‘Medicare Program; Electronic 

Submission of Medicare Claims’’ final 

rule (70 FR 71008, November 25, 2005). 

CMS instructions for the limited 

number of Medicare claims submitted 

on paper are available at http:// 

www.cms.gov/manuals/downloads/ 

clm104c25.pdf. 

Section 3 of the ASCA operates in the 

context of the administrative 

simplification provisions of HIPAA, 

which include, among others, the 

requirements for transaction standards 

and code sets codified in 45 CFR, parts 

160 and 162, subparts A and I through 

R (generally known as the Transactions 

Rule). The Transactions Rule requires 

covered entities, including covered 

healthcare providers, to conduct 

covered electronic transactions 

according to the applicable transaction 

standards. (See the CMS program claim 

memoranda at http://www.cms.gov/ 

ElectronicBillingEDITrans/ and listed in 

the addenda to the Medicare 

Intermediary Manual, Part 3, section 

3600). 

The Medicare FI or 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 providerspecific data, to adjust the IRF’s 

prospective payment for interrupted 

stays, transfers, short stays, and deaths, 

and then applies the applicable 

adjustments to account for the IRF’s 

wage index, percentage of low-income 

patients, rural location, and outlier 

payments. For discharges occurring on 

or after October 1, 2005, the IRF PPS 

payment also reflects the teaching status 

adjustment that became effective as of 

FY 2006, as discussed in the FY 2006 

IRF PPS final rule (70 FR 47880). 

II. Summary of Provisions of the 

Proposed Rule 

In this proposed rule, we are 

proposing to update the IRF Federal 

prospective payment rates, to revise the 

list of eligible International 

Classification of Diseases, Ninth 

Revision, Clinical Modification (ICD–9– 

CM) diagnosis codes that are eligible 

under the ‘‘60 percent rule,’’ to update 

the IRF facility-level adjustment factors, 

to revise the Inpatient Rehabilitation 

Facility-Patient Assessment Instrument 

(IRF–PAI), to revise requirements for 

acute care hospitals that have IRF units, 

clarify the IRF regulation text regarding 

limitation of review, and to revise and 

update quality measures and reporting 

requirements under the quality 

reporting program for IRFs. We are also 

proposing to revise existing regulations 

text for the purpose of updating and 

providing greater clarity. These 

proposals are as follows: 

A. Proposed Updates to the IRF Federal 

Prospective Payment Rates for Federal 

Fiscal Year (FY) 2014 

The proposed updates to the IRF 

federal prospective payment rates for FY 

2014 are as follows: 

• Update the FY 2014 IRF PPS 

relative weights and average length of 

stay values using the most current and 

complete Medicare claims and cost 

report data in a budget neutral manner, 

as discussed in section III. of this 

proposed rule. 

• Update the FY 2014 IRF PPS 

facility-level adjustment factors, using 

the most current and complete Medicare 

claims and cost report data with an 

enhanced estimation methodology, in a 

budget neutral manner, as discussed in 

section IV. of this proposed rule. 

• Update the FY 2014 IRF PPS 

payment rates by the proposed market 

basket increase factor, based upon the 

most current data available, with a 0.3 

percentage point reduction as required 

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

1886(j)(3)(D)(iii) of the Act and a 

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proposed productivity adjustment 

required by section 1886(j)(3)(C)(ii)(I) of 

the Act, as described in section V. of 

this proposed rule. 

• Discuss the Secretary’s Proposed 

Recommendation for updating IRF PPS 

payments for FY 2014, in accordance 

with the statutory requirements, as 

described in section V. of this proposed 

rule. 

• Update the FY 2014 IRF PPS 

payment rates by the FY 2014 wage 

index and the labor-related share in a 

budget neutral manner, as discussed in 

section V. of this proposed rule. 

• Describe the calculation of the IRF 

Standard Payment Conversion Factor for 

FY 2014, as discussed in section V. of 

this proposed rule. 

• Update the outlier threshold 

amount for FY 2014, as discussed in 

section VI. of this proposed rule. 

• Update the cost-to-charge ratio 

(CCR) ceiling and urban/rural average 

CCRs for FY 2014, as discussed in 

section VI. of this proposed rule. 

• Describe proposed revisions to the 

list of eligible ICD–9–CM diagnosis 

codes that meet the presumptive 

compliance criteria in section VII. of 

this proposed rule. 

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

section VIII. of this proposed rule. 

• Describe proposed revisions and 

updates to quality measures and 

reporting requirements under the 

quality reporting program for IRFs in 

accordance with section 1886(j)(7) of the 

Act, as discussed in section XIII. of this 

proposed rule. 

B. Proposed Revisions to Existing 

Regulation Text 

In this proposed rule, we are also 

proposing the following revisions to the 

existing regulations: 

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

specify a minimum required number of 

beds that are not excluded from the 

inpatient prospective payment system 

(IPPS) for a hospital that has an IRF 

unit, as described in section X. of this 

proposed rule. 

• Technical corrections to § 412.130, 

to reflect prior changes to the 

regulations at § 412.29 and § 412.30 that 

we made in the FY 2012 IRF PPS final 

rule (76 FR 47836), as described in 

section IX. of this proposed rule. 

• Clarifications to § 412.630, to reflect 

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

Act, as described in section XI. of this 

proposed rule. 

• Revision to § 412.29(d), to clarify 

that Medicare requires the rehabilitation 

physician’s review and concurrence on 

the preadmission screening for 

Medicare Part A fee-for-service patients 

only, as described in section XII. of this 

proposed rule. 

III. Proposed Update to the Case-Mix 

Group (CMG) Relative Weights and 

Average Length of Stay Values for FY 

2014 

As specified in § 412.620(b)(1), we 

calculate a relative weight for each CMG 

that is proportional to the resources 

needed by an average inpatient 

rehabilitation case in that CMG. For 

example, cases in a CMG with a relative 

weight of 2, on average, will cost twice 

as much as cases in a CMG with a 

relative weight of 1. Relative weights 

account for the variance in cost per 

discharge due to the variance in 

resource utilization among the payment 

groups, and their use helps to ensure 

that IRF PPS payments support 

beneficiary access to care, as well as 

provider efficiency. 

In this proposed rule, we propose to 

update the CMG relative weights and 

average length of stay values for FY 

2014. As required by statute, we always 

use the most recent available data to 

update the CMG relative weights and 

average lengths of stay. For FY 2014, we 

are proposing to use the FY 2012 IRF 

claims and FY 2011 IRF cost report data. 

These data are the most current and 

complete data available at this time. 

Currently, only a small portion of the 

FY 2012 IRF cost report data are 

available for analysis, but the majority 

of the FY 2012 IRF claims data are 

available for analysis. 

In this proposed rule, we propose to 

apply these data using the same 

methodologies that we have used to 

update the CMG relative weights and 

average length of stay values in the FY 

2011 notice (75 FR 42836), the FY 2012 

final rule (76 FR 47836), and the FY 

2013 notice (77 FR 44618). In 

calculating the CMG relative weights, 

we use a hospital-specific relative value 

method to estimate operating (routine 

and ancillary services) and capital costs 

of IRFs. The process used to calculate 

the CMG relative weights for this 

proposed rule is as follows: 

Step 1. We estimate the effects that 

comorbidities have on costs. 

Step 2. We adjust the cost of each 

Medicare discharge (case) to reflect the 

effects found in the first step. 

Step 3. We use the adjusted costs from 

the second step to calculate CMG 

relative weights, using the hospitalspecific relative value method. 

Step 4. We normalize the FY 2014 

CMG relative weights to the same 

average CMG relative weight from the 

CMG relative weights implemented in 

the FY 2013 IRF PPS notice (77 FR 

44618). 

Consistent with the methodology that 

we have used to update the IRF 

classification system in each instance in 

the past, we are proposing to update the 

CMG relative weights for FY 2014 in 

such a way that total estimated 

aggregate payments to IRFs for FY 2014 

are the same with or without the 

changes (that is, in a budget neutral 

manner) by applying a budget neutrality 

factor to the standard payment amount. 

To calculate the appropriate proposed 

budget neutrality factor for use in 

updating the FY 2014 CMG relative 

weights, we propose to use the 

following steps: 

Step 1. Calculate the estimated total 

amount of IRF PPS payments for FY 

2014 (with no proposed changes to the 

CMG relative weights). 

Step 2. Calculate the estimated total 

amount of IRF PPS payments for FY 

2014 by applying the proposed changes 

to the CMG relative weights (as 

discussed above). 

Step 3. Divide the amount calculated 

in step 1 by the amount calculated in 

step 2 to determine the proposed budget 

neutrality factor (1.0000) that would 

maintain the same total estimated 

aggregate payments in FY 2014 with and 

without the proposed changes to the 

CMG relative weights. 

Step 4. Apply the proposed budget 

neutrality factor (1.0000) to the FY 2013 

IRF PPS standard payment amount after 

the application of the budget-neutral 

wage adjustment factor. 

In section V.E. of this proposed rule, 

we discuss the proposed use of the 

existing methodology to calculate the 

standard payment conversion factor for 

FY 2014. 

Table 1, ‘‘Proposed Relative Weights 

and Average Length of Stay Values for 

Case-Mix Groups,’’ presents the CMGs, 

the comorbidity tiers, the proposed 

corresponding relative weights, and the 

proposed average length of stay values 

for each CMG and tier for FY 2014. The 

average length of stay for each CMG is 

used to determine when an IRF 

discharge meets the definition of a 

short-stay transfer, which results in a 

per diem case level adjustment. The 

proposed relative weights and average 

length of stay values shown in Table 1 

are subject to change for the final rule 

if more recent data become available for 

use in these analyses. 

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

CMG CMG Description (M=motor, 

C=cognitive, A=age) 

Relative weight Average length of stay 

Tier1 Tier2 Tier3 None Tier1 Tier2 Tier3 None 

0101 ....... Stroke M>51.05 ........................... 0.8001 0.7122 0.6556 0.6248 9 9 9 8 

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

and C>18.5.

0.9921 0.8831 0.8129 0.7748 11 12 10 10 

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

and C<18.5.

1.1613 1.0337 0.9516 0.9069 13 13 12 11 

0104 ....... Stroke M>38.85 and M<44.45 ..... 1.2210 1.0869 1.0006 0.9536 14 12 12 12 

0105 ....... Stroke M>34.25 and M<38.85 ..... 1.4283 1.2715 1.1704 1.1154 15 14 14 14 

0106 ....... Stroke M>30.05 and M<34.25 ..... 1.6327 1.4534 1.3379 1.2751 16 17 16 15 

0107 ....... Stroke M>26.15 and M<30.05 ..... 1.8413 1.6391 1.5088 1.4380 19 20 17 17 

0108 ....... Stroke M<26.15 and A>84.5 ....... 2.3160 2.0616 1.8978 1.8087 23 24 22 21 

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

and A<84.5.

2.1034 1.8724 1.7236 1.6426 21 21 19 20 

0110 ....... Stroke M<22.35 and A<84.5 ....... 2.7387 2.4380 2.2443 2.1388 28 28 25 25 

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

and C>23.5.

0.8068 0.6835 0.6059 0.5641 10 10 8 8 

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

and M<53.35 and C>23.5.

1.0536 0.8926 0.7912 0.7366 12 10 10 10 

0203 ....... Traumatic brain injury M>44.25 

and C<23.5.

1.2422 1.0524 0.9329 0.8685 14 13 12 11 

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

and M<44.25.

1.3000 1.1013 0.9762 0.9089 12 13 12 12 

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

and M<40.65.

1.5755 1.3347 1.1831 1.1015 17 16 14 14 

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

and M<28.75.

1.9459 1.6485 1.4613 1.3605 18 19 17 16 

0207 ....... Traumatic brain injury M<22.05 ... 2.5684 2.1759 1.9287 1.7957 33 26 21 20 

0301 ....... Non-traumatic brain injury 

M>41.05.

1.0992 0.9462 0.8502 0.7859 10 11 11 10 

0302 ....... Non-traumatic brain injury 

M>35.05 and M<41.05.

1.3735 1.1824 1.0625 0.9820 13 14 12 12 

0303 ....... Non-traumatic brain injury 

M>26.15 and M<35.05.

1.6221 1.3964 1.2548 1.1597 16 16 14 14 

0304 ....... Non-traumatic brain injury 

M<26.15.

2.1731 1.8708 1.6810 1.5537 24 21 19 18 

0401 ....... Traumatic spinal cord injury 

M>48.45.

1.1451 0.9494 0.8847 0.7923 13 13 11 10 

0402 ....... Traumatic spinal cord injury 

M>30.35 and M<48.45.

1.4139 1.1724 1.0924 0.9784 17 14 14 12 

0403 ....... Traumatic spinal cord injury 

M>16.05 and M<30.35.

2.3069 1.9128 1.7823 1.5963 26 23 20 20 

0404 ....... Traumatic spinal cord injury 

M<16.05 and A>63.5.

4.2117 3.4921 3.2539 2.9142 46 41 35 34 

0405 ....... Traumatic spinal cord injury 

M<16.05 and A<63.5.

3.4483 2.8592 2.6642 2.3861 37 32 31 27 

0501 ....... Non-traumatic spinal cord injury 

M>51.35.

0.8500 0.6729 0.6328 0.5761 9 9 8 8 

0502 ....... Non-traumatic spinal cord injury 

M>40.15 and M<51.35.

1.1064 0.8759 0.8237 0.7500 12 11 10 10 

0503 ....... Non-traumatic spinal cord injury 

M>31.25 and M<40.15.

1.4276 1.1302 1.0628 0.9677 15 13 13 12 

0504 ....... Non-traumatic spinal cord injury 

M>29.25 and M<31.25.

1.6534 1.3089 1.2309 1.1207 14 16 14 14 

0505 ....... Non-traumatic spinal cord injury 

M>23.75 and M<29.25.

1.9495 1.5433 1.4514 1.3214 21 18 17 16 

0506 ....... Non-traumatic spinal cord injury 

M<23.75.

2.7308 2.1619 2.0330 1.8510 30 25 23 21 

0601 ....... Neurological M>47.75 .................. 0.9661 0.7875 0.7272 0.6589 10 10 9 9 

0602 ....... Neurological M>37.35 and 

M<47.75.

1.2904 1.0518 0.9713 0.8801 12 12 11 11 

0603 ....... Neurological M>25.85 and 

M<37.35.

1.6184 1.3191 1.2182 1.1038 15 15 14 13 

0604 ....... Neurological M<25.85 .................. 2.1563 1.7575 1.6231 1.4706 22 19 18 17 

0701 ....... Fracture of lower extremity 

M>42.15.

0.9445 0.8052 0.7712 0.6996 10 10 10 9 

0702 ....... Fracture of lower extremity 

M>34.15 and M<42.15.

1.2149 1.0357 0.9920 0.8999 12 12 12 11 

0703 ....... Fracture of lower extremity 

M>28.15 and M<34.15.

1.4770 1.2591 1.2060 1.0940 15 15 14 13 

0704 ....... Fracture of lower extremity 

M<28.15.

1.8753 1.5987 1.5312 1.3891 18 18 18 17 

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

CMG CMG Description (M=motor, 

C=cognitive, A=age) 

Relative weight Average length of stay 

Tier1 Tier2 Tier3 None Tier1 Tier2 Tier3 None 

0801 ....... Replacement of lower extremity 

joint M>49.55.

0.7009 0.6238 0.5675 0.5200 7 8 7 7 

0802 ....... Replacement of lower extremity 

joint M>37.05 and M<49.55.

0.9206 0.8193 0.7453 0.6830 10 10 9 9 

0803 ....... Replacement of lower extremity 

joint M>28.65 and M<37.05 

and A>83.5.

1.2478 1.1105 1.0103 0.9257 12 13 13 12 

0804 ....... Replacement of lower extremity 

joint M>28.65 and M<37.05 

and A<83.5.

1.1083 0.9863 0.8973 0.8222 11 12 11 10 

0805 ....... Replacement of lower extremity 

joint M>22.05 and M<28.65.

1.3678 1.2173 1.1075 1.0148 15 15 13 12 

0806 ....... Replacement of lower extremity 

joint M<22.05.

1.6590 1.4765 1.3433 1.2308 17 17 15 15 

0901 ....... Other orthopedic M>44.75 ........... 0.9026 0.7480 0.6895 0.6254 11 9 9 8 

0902 ....... Other orthopedic M>34.35 and 

M<44.75.

1.2051 0.9987 0.9206 0.8350 12 12 11 11 

0903 ....... Other orthopedic M>24.15 and 

M<34.35.

1.5094 1.2509 1.1530 1.0459 15 15 14 13 

0904 ....... Other orthopedic M<24.15 ........... 1.9660 1.6293 1.5019 1.3623 19 18 17 16 

1001 ....... Amputation, lower extremity 

M>47.65.

1.0372 0.9443 0.8131 0.7478 12 11 10 10 

1002 ....... Amputation, lower extremity 

M>36.25 and M<47.65.

1.3081 1.1909 1.0255 0.9431 13 13 12 12 

1003 ....... Amputation, lower extremity 

M<36.25.

1.9330 1.7599 1.5154 1.3936 19 20 17 16 

1101 ....... Amputation, non-lower extremity 

M>36.35.

1.2388 1.1334 1.0487 1.0147 13 13 12 12 

1102 ....... Amputation, non-lower extremity 

M<36.35.

1.7069 1.5618 1.4450 1.3981 16 17 16 16 

1201 ....... Osteoarthritis M>37.65 ................ 0.9482 0.9350 0.8467 0.7752 9 11 10 10 

1202 ....... Osteoarthritis M>30.75 and 

M<37.65.

1.1813 1.1649 1.0549 0.9659 14 14 13 12 

1203 ....... Osteoarthritis M<30.75 ................ 1.4671 1.4468 1.3101 1.1995 13 17 15 14 

1301 ....... Rheumatoid, other arthritis 

M>36.35.

1.1815 0.9991 0.9005 0.8171 12 10 11 10 

1302 ....... Rheumatoid, other arthritis 

M>26.15 and M<36.35.

1.5305 1.2942 1.1666 1.0585 16 15 14 13 

1303 ....... Rheumatoid, other arthritis 

M<26.15.

1.9677 1.6639 1.4998 1.3608 18 19 17 16 

1401 ....... Cardiac M>48.85 ......................... 0.8864 0.7216 0.6539 0.5919 9 9 9 8 

1402 ....... Cardiac M>38.55 and M<48.85 ... 1.1973 0.9747 0.8832 0.7995 12 11 11 10 

1403 ....... Cardiac M>31.15 and M<38.55 ... 1.4604 1.1889 1.0773 0.9752 14 14 12 12 

1404 ....... Cardiac M<31.15 ......................... 1.8618 1.5157 1.3734 1.2433 19 17 15 14 

1501 ....... Pulmonary M>49.25 ..................... 1.0003 0.8590 0.7747 0.7436 10 9 9 9 

1502 ....... Pulmonary M>39.05 and 

M<49.25.

1.2590 1.0812 0.9751 0.9359 12 12 11 11 

1503 ....... Pulmonary M>29.15 and 

M<39.05.

1.5224 1.3074 1.1791 1.1318 15 14 13 13 

1504 ....... Pulmonary M<29.15 ..................... 1.8896 1.6227 1.4634 1.4047 21 17 16 15 

1601 ....... Pain syndrome M>37.15 .............. 1.0309 0.8817 0.8282 0.7568 9 10 10 9 

1602 ....... Pain syndrome M>26.75 and 

M<37.15.

1.3536 1.1577 1.0874 0.9937 12 14 13 12 

1603 ....... Pain syndrome M<26.75 .............. 1.7052 1.4584 1.3699 1.2518 18 17 15 15 

1701 ....... Major multiple trauma without 

brain or spinal cord injury 

M>39.25.

1.0875 0.9493 0.8541 0.7718 11 12 11 10 

1702 ....... Major multiple trauma without 

brain or spinal cord injury 

M>31.05 and M<39.25.

1.3611 1.1881 1.0689 0.9659 13 14 13 12 

1703 ....... Major multiple trauma without 

brain or spinal cord injury 

M>25.55 and M<31.05.

1.6427 1.4339 1.2901 1.1658 17 16 14 14 

1704 ....... Major multiple trauma without 

brain or spinal cord injury 

M<25.55.

2.0841 1.8193 1.6368 1.4790 24 20 18 18 

1801 ....... Major multiple trauma with brain 

or spinal cord injury M>40.85.

1.1476 1.0623 0.9340 0.7874 14 13 12 10 

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

CMG CMG Description (M=motor, 

C=cognitive, A=age) 

Relative weight Average length of stay 

Tier1 Tier2 Tier3 None Tier1 Tier2 Tier3 None 

1802 ....... Major multiple trauma with brain 

or spinal cord injury M>23.05 

and M<40.85.

1.7108 1.5837 1.3924 1.1739 18 19 17 14 

1803 ....... Major multiple trauma with brain 

or spinal cord injury M<23.05.

2.7350 2.5317 2.2259 1.8766 32 28 23 22 

1901 ....... Guillain Barre M>35.95 ................ 1.0958 0.9305 0.9064 0.8886 13 10 11 11 

1902 ....... Guillain Barre M>18.05 and 

M<35.95.

2.1340 1.8120 1.7652 1.7305 23 21 18 20 

1903 ....... Guillain Barre M<18.05 ................ 3.5000 2.9719 2.8951 2.8382 41 32 31 30 

2001 ....... Miscellaneous M>49.15 ............... 0.8897 0.7304 0.6716 0.6138 9 9 8 8 

2002 ....... Miscellaneous M>38.75 and 

M<49.15.

1.1865 0.9741 0.8956 0.8186 12 11 11 10 

2003 ....... Miscellaneous M>27.85 and 

M<38.75.

1.4910 1.2241 1.1254 1.0286 14 14 13 12 

2004 ....... Miscellaneous M<27.85 ............... 1.9537 1.6039 1.4746 1.3478 20 18 17 15 

2101 ....... Burns M>0 ................................... 2.1782 1.5737 1.4885 1.4056 24 21 17 16 

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

3 days or fewer.

................ ................ ................ 0.1541 ................ ................ ................ 3 

5101 ....... Expired, orthopedic, length of 

stay is 13 days or fewer.

................ ................ ................ 0.6604 ................ ................ ................ 8 

5102 ....... Expired, orthopedic, length of 

stay is 14 days or more.

................ ................ ................ 1.4552 ................ ................ ................ 17 

5103 ....... Expired, not orthopedic, length of 

stay is 15 days or fewer.

................ ................ ................ 0.7653 ................ ................ ................ 9 

5104 ....... Expired, not orthopedic, length of 

stay is 16 days or more.

................ ................ ................ 1.9930 ................ ................ ................ 22 

Generally, updates to the CMG 

relative weights result in some increases 

and some decreases to the CMG relative 

weight values. Table 2 shows how the 

application of the proposed revisions for 

FY 2014 would affect particular CMG 

relative weight values, which affect the 

overall distribution of payments within 

CMGs and tiers. Note that, because we 

propose to implement the CMG relative 

weight revisions in a budget neutral 

manner (as described above), total 

estimated aggregate payments to IRFs 

for FY 2014 would not be affected as a 

result of the CMG relative weight 

revisions. However, the proposed 

revisions would affect the distribution 

of payments within CMGs and tiers. 

TABLE 2—DISTRIBUTIONAL EFFECTS OF THE PROPOSED CHANGES TO THE CMG RELATIVE WEIGHTS

[FY 2013 Values Compared With FY 2014 Values] 

Percentage change Number of cases 

affected 

Percentage of 

cases affected 

Increased by 15% or more .......................................................................................................................... 0 0.0 

Increased by between 5% and 15% ........................................................................................................... 2,325 0.7 

Changed by less than 5% ........................................................................................................................... 340,496 98.7 

Decreased by between 5% and 15% .......................................................................................................... 1,939 0.6 

Decreased by 15% or more ........................................................................................................................ 92 0.0 

As Table 2 shows, almost 99 percent 

of all IRF cases are in CMGs and tiers 

that would experience less than a 5 

percent change (either increase or 

decrease) in the CMG relative weight 

value as a result of the proposed 

revisions for FY 2014. The largest 

increase in the proposed CMG relative 

weight values that affects a particularly 

large number of IRF discharges is a 0.9 

percent increase in the CMG relative 

weight value for CMG 0704—Fracture of 

Lower Extremity, with a motor score 

less than 28.15—in the ‘‘no 

comorbidity’’ tier. In the FY 2012 data, 

18,770 IRF discharges (5.4 percent of all 

IRF discharges) were classified into this 

CMG and tier. 

The largest decrease in a CMG relative 

weight value affecting the most cases is 

a 2.0 percent decrease in the CMG 

relative weight for CMG 0903—Other 

Orthopedic with a motor score between 

24.15 and 34.35—in the no comorbidity 

tier. In the FY 2012 IRF claims data, this 

change affects 6,605 cases (1.9 percent 

of all IRF cases). 

The changes in the average length of 

stay values for FY 2014, compared with 

the FY 2013 average length of stay 

values, are small and do not show any 

particular trends in IRF length of stay 

patterns. 

IV. Proposed Updates to the FacilityLevel Adjustment Factors for FY 2014 

A. Background on Facility-Level 

Adjustments 

Section 1886(j)(3)(A)(v) of the Act 

confers broad authority upon the 

Secretary to adjust the per unit payment 

rate ‘‘by such . . . factors as the 

Secretary determines are necessary to 

properly reflect variations in necessary 

costs of treatment among rehabilitation 

facilities.’’ For example, we adjust the 

federal prospective payment amount 

associated with a CMG to account for 

facility-level characteristics such as an 

IRF’s LIP, teaching status, and location 

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in a rural area, if applicable, as 

described in § 412.624(e). 

In the FY 2010 IRF PPS final rule (74 

FR 39762), we updated the adjustment 

factors for calculating the rural, LIP, and 

teaching status adjustments based on 

the most recent three consecutive years’ 

worth of IRF claims data (at that time, 

FY 2006, FY 2007, and FY 2008) and the 

most recent available corresponding IRF 

cost report data. As discussed in the FY 

2010 IRF PPS proposed rule (74 FR 

21060 through 21061), we observed 

relatively large year-to-year fluctuations 

in the underlying data used to compute 

the adjustment factors, especially the 

teaching status adjustment factor. 

Therefore, we implemented a 3-year 

moving average approach to updating 

the facility-level adjustment factors in 

the FY 2010 IRF PPS final rule (74 FR 

39762) to provide greater stability and 

predictability of Medicare payments for 

IRFs. 

Each year, we review the major 

components of the IRF PPS to maintain 

and enhance the accuracy of the 

payment system. For FY 2010, we 

implemented a change to our 

methodology that was designed to 

decrease the IRF PPS volatility by using 

a 3-year moving average to calculate the 

facility-level adjustment factors. For FY 

2011, we issued a notice to update the 

payment rates, which did not include 

any policy changes or changes to the 

IRF facility-level adjustments. As we 

found that the implementation of the 3- 

year moving average did not fully 

address year-to-year fluctuations, in the 

FY 2012 IRF PPS proposed rule (76 FR 

24214 at 24225 through 24226) we 

analyzed the effects of having used a 

weighting methodology. The 

methodology assigned greater weight to 

some facilities than to others in the 

regression analysis used to estimate the 

facility-level adjustment factors. As we 

found that this weighting methodology 

inappropriately exaggerated the cost 

differences among different types of IRF 

facilities, we proposed to remove the 

weighting factor from our analysis and 

update the IRF facility-level adjustment 

factors for FY 2012 using an unweighted regression analysis. However, 

after carefully considering all of the 

comments that we received on the 

proposed FY 2012 updates to the 

facility-level adjustment factors, we 

decided to hold the facility-level 

adjustment factors at FY 2011 levels for 

FY 2012 to conduct further research on 

the underlying data and the best 

methodology for calculating the facilitylevel adjustment factors. We based this 

decision, in part, on comments we 

received about the financial hardships 

that the proposed updates would create 

for facilities with teaching programs and 

a higher disproportionate share of lowincome patients. 

B. Proposed Updates to the IRF FacilityLevel Adjustment Factors 

Since the FY 2012 final rule (76 FR 

47836), we have conducted further 

research into the best methodology to 

use to estimate the IRF facility-level 

adjustment factors, to ensure that the 

adjustment factors reflect as accurately 

as possible the costs of providing IRF 

care across the full spectrum of IRF 

providers. Our recent research efforts 

have shown that significant differences 

exist between the cost structures of 

freestanding IRFs and the cost structures 

of IRF units of acute care hospitals (and 

critical access hospitals, otherwise 

known as ‘‘CAHs’’). We have found that 

these cost structure differences 

substantially influence the estimates of 

the adjustment factors. Therefore, we 

believe that it is important to control for 

these cost structure differences between 

hospital-based and freestanding IRFs in 

our regression analysis, so that these 

differences do not inappropriately 

influence the adjustment factor 

estimates. In Medicare’s payment 

system for the treatment of end-stage 

renal disease (ESRD), we already control 

for the cost structure differences 

between hospital-based and 

freestanding facilities in the regression 

analyses that are used to set payment 

rates. Also, we received comments from 

an IRF industry association on the FY 

2012 IRF PPS proposed rule suggesting 

that the addition of this particular 

control variable to the model could 

improve the methodology for estimating 

the IRF facility-level adjustment factors. 

Thus, we propose to add an indicator 

variable to our 3-year moving average 

methodology for updating the IRF 

facility-level adjustments that would 

have an assigned value of ‘‘1’’ if the 

facility is a freestanding IRF hospital 

and have an assigned value of ‘‘0’’ if the 

facility is an IRF unit of an acute care 

hospital (or CAH). Adding this variable 

to the regression analysis enables us to 

control for the differences in costs that 

are primarily due to the differences in 

cost structures between freestanding 

and hospital-based IRFs, so that those 

differences do not become 

inappropriately intertwined with our 

estimates of the differences in costs 

between rural and urban facilities, high 

LIP percentage and low LIP percentage 

facilities, and teaching and non-teaching 

facilities. Further, by including this 

variable in the regression analysis, we 

greatly improve our ability to predict an 

IRF’s average cost per case (that is, the 

R-squared of the regression model 

increases from about 11 percent to 41 

percent). In this way, it enhances the 

precision with which we can estimate 

the IRF facility-level adjustments. 

Therefore, in this proposed rule, we 

propose to use the same methodology 

used in the FY 2010 IRF PPS final rule 

(74 FR 39762), including the 3-year 

moving average approach, with the 

addition of this new control variable, 

which equals ‘‘1’’ if the facility is a 

freestanding IRF hospital and ‘‘0’’ if it 

is an IRF unit of an acute care hospital 

(or a CAH). We propose to update the 

adjustment factors using the most recent 

three years’ worth of IRF claims data 

(FY 2010, FY 2011, and FY 2012) and 

the most recent available corresponding 

IRF cost report data. As we did in the 

FY 2010 IRF PPS final rule (74 FR 

39762), we propose to use the cost 

report data that corresponds with each 

IRF claim, when available. In the rare 

instances in which the corresponding 

year’s cost report data are not available, 

we propose to use the most recent 

available cost report data, as we also did 

in the FY 2010 IRF PPS final rule (74 

FR 39762). 

To calculate the proposed updates to 

the rural, LIP, and teaching status 

adjustment factors for FY 2014, we 

propose to use the following steps: 

[Steps 1 and 2 are performed 

independently for each of three years of 

IRF claims data: FY 2010, FY 2011, and 

FY 2012.] 

Step 1. Calculate the average cost per 

case for each IRF in the IRF claims data. 

Step 2. Use logarithmic regression 

analysis on average cost per case to 

compute the coefficients for the rural, 

LIP, and teaching status adjustments. 

We are also proposing to incorporate an 

additional indicator variable to account 

for whether a facility is a freestanding 

IRF hospital or a unit of an acute care 

hospital (or a CAH). 

Step 3. Calculate a simple mean for 

each of the coefficients across the three 

years of data (using logarithms for the 

LIP and teaching status adjustment 

coefficients (because they are 

continuous variables), but not for the 

rural adjustment coefficient (because the 

rural variable is either zero (if not rural) 

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

teaching status adjustment factors, we 

convert these factors back out of the 

logarithmic form. 

Based on this methodology, we 

propose to update the rural adjustment 

factor for FY 2014 from 18.4 percent to 

14.28 percent. We propose to update the 

LIP adjustment factor for FY 2014 from 

0.4613 to 0.3158 and the teaching status 

adjustment factor for FY 2014 from 

0.6876 to 0.9859. The proposed 

adjustment factors are subject to change 

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for the final rule if more data become 

available for use in these analyses. 

Further, although we believe that 

updating the facility-level adjustment 

factors with the proposed methodology 

will enhance the accuracy and fairness 

of the IRF PPS payment rates, we 

recognize that this would result in 

significant financial impacts for IRF 

providers. Thus, we welcome comments 

from the industry on whether updating 

the adjustment factors at this time or 

freezing them at the current levels for an 

additional year would be a better 

approach. 

C. Budget Neutrality Methodology for 

the Updates to the IRF Facility-Level 

Adjustment Factors 

Consistent with the way that we 

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

and teaching status adjustments factors) 

in the FY 2006 IRF PPS final rule (70 

FR 47880 and 70 FR 57166), which was 

the only year in which we updated 

these adjustment factors, we propose to 

make changes to the rural, LIP, and 

teaching status adjustment factors for 

FY 2014 in such a way that total 

estimated aggregate payments to IRFs 

for FY 2014 would be the same with or 

without the proposed changes (that is, 

in a budget neutral manner) by applying 

budget neutrality factors for each of 

these three changes to the standard 

payment amount. To calculate the 

proposed budget neutrality factors used 

to update the rural, LIP, and teaching 

status adjustment factors, we propose to 

use the following steps: 

Step 1. Using the most recent 

available data (currently FY 2011), 

calculate the estimated total amount of 

IRF PPS payments that would be made 

in FY 2014 (without applying the 

proposed changes to the rural, LIP, or 

teaching status adjustment factors). 

Step 2. Calculate the estimated total 

amount of IRF PPS payments that would 

be made in FY 2014 if the proposed 

update to the rural adjustment factor 

were applied. 

Step 3. Divide the amount calculated 

in step 1 by the amount calculated in 

step 2 to determine the proposed budget 

neutrality factor (1.0030) that would 

maintain the same total estimated 

aggregate payments in FY 2014 with and 

without the proposed change to the 

rural adjustment factor. 

Step 4. Calculate the estimated total 

amount of IRF PPS payments that would 

be made in FY 2014 if the proposed 

update to the LIP adjustment factor were 

applied. 

Step 5. Divide the amount calculated 

in step 1 by the amount calculated in 

step 4 to determine the proposed budget 

neutrality factor (1.0174) that would 

maintain the same total estimated 

aggregate payments in FY 2014 with and 

without the proposed change to the LIP 

adjustment factor. 

Step 6. Calculate the estimated total 

amount of IRF PPS payments that would 

be made in FY 2014 if the proposed 

update to the teaching status adjustment 

factor were applied. 

Step 7. Divide the amount calculated 

in step 1 by the amount calculated in 

step 6 to determine the proposed budget 

neutrality factor (0.9966) that would 

maintain the same total estimated 

aggregate payments in FY 2014 with and 

without the proposed change to the 

teaching status adjustment factor. 

Step 8. Apply the proposed budget 

neutrality factors for the updates to the 

rural, LIP, and teaching status 

adjustment factors to the FY 2013 IRF 

PPS standard payment amount after the 

application of the proposed budget 

neutrality factors for the wage 

adjustment and the CMG relative 

weights. 

The proposed budget neutrality 

factors for the proposed changes to the 

rural, LIP, and teaching status 

adjustment factors are subject to change 

in the final rule if more recent data 

become available for use in these 

analyses or if the proposed payment 

policies associated with the proposed 

budget neutrality factors change. In 

section V.E of this proposed rule, we 

discuss the proposed methodology for 

calculating the standard payment 

conversion factor for FY 2014. 

V. Proposed FY 2014 IRF PPS Federal 

Prospective Payment Rates 

A. Proposed Market Basket Increase 

Factor, Productivity Adjustment, Other 

Adjustment, and Secretary’s 

Recommendation for FY 2014 

Section 1886(j)(3)(C) of the Act 

requires the Secretary to establish an 

increase factor that reflects changes over 

time in the prices of an appropriate mix 

of goods and services included in the 

covered IRF services, which is referred 

to as a market basket index. According 

to section 1886(j)(3)(A)(i) of the Act, the 

increase factor shall be used to update 

the IRF federal prospective payment 

rates for each FY. Sections 

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

of the Act required the application of a 

0.3 percentage point reduction to the 

market basket increase factor for FY 

2014. In addition, section 

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

application of a productivity 

adjustment, as described below. Thus, 

in this proposed rule, we are proposing 

to update the IRF PPS payments for FY 

2014 by a market basket increase factor 

based upon the most current data 

available, with a productivity 

adjustment as required by section 

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

described below and a 0.3 percentage 

point reduction as required by sections 

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

of the Act. 

For this proposed rule, we propose to 

use the same methodology described in 

the FY 2012 IRF PPS final rule (76 FR 

47836 at 47848 through 47863) to 

compute the FY 2014 market basket 

increase factor and labor-related share. 

In that final rule, we rebased the RPL 

market basket from a 2002 base year to 

a 2008 base year. Based on IHS Global 

Insight’s first quarter 2013 forecast, the 

most recent estimate of the 2008-based 

RPL market basket increase factor for FY 

2014 is 2.5 percent. IHS Global Insight 

(IGI) is an economic and financial 

forecasting firm that contracts with CMS 

to forecast the components of providers’ 

market baskets. 

In accordance with section 

1886(j)(3)(C)(ii)(I) of the Act, and using 

the methodology described in the FY 

2012 IRF PPS final rule (76 FR 47836, 

47858 through 47859), we propose to 

apply a productivity adjustment to the 

FY 2014 RPL market basket increase 

factor. The statute defines the 

productivity adjustment to be equal to 

the 10-year moving average of changes 

in annual economy-wide private 

nonfarm business multifactor 

productivity (MFP) (as projected by the 

Secretary for the 10-year period ending 

with the applicable FY cost reporting 

period, or other annual period) (the 

‘‘MFP adjustment’’). The Bureau of 

Labor Statistics (BLS) is the agency that 

publishes the official measure of private 

nonfarm business MFP. We refer readers 

to the BLS Web site at http:// 

www.bls.gov/mfp to obtain the historical 

BLS-published MFP data. The 

projection of MFP is currently produced 

by IGI, using the methodology described 

in the FY 2012 IRF PPS final rule (76 

FR 47836, 47859). The most recent 

estimate of the MFP adjustment for FY 

2014 (the 10-year moving average of 

MFP for the period ending FY 2014) is 

0.4 percent, which was calculated using 

the methodology described in the FY 

2012 IRF PPS final rule (76 FR 47836, 

47858 through 47859) and is based on 

IGI’s first quarter 2013 forecast. 

Thus, in accordance with section 

1886(j)(3)(C) of the Act, we propose to 

base the FY 2014 market basket update, 

which is used to determine the 

applicable percentage increase for the 

IRF payments, on the most recent 

estimate of the FY 2008-based RPL 

market basket (currently estimated to be 

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2.5 percent based on IGI’s first quarter 

2013 forecast). We propose to then 

reduce this percentage increase by the 

current estimate of the MFP adjustment 

for FY 2014 of 0.4 percentage point (the 

10-year moving average of MFP for the 

period ending FY 2014 based on IGI’s 

first quarter 2013 forecast), which was 

calculated as described in the FY 2012 

IRF PPS final rule (76 FR 47836, 47859). 

Following application of the 

productivity adjustment, we propose to 

further reduce the applicable percentage 

increase by 0.3 percentage point, as 

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

and 1886(j)(3)(D)(iii) of the Act. 

Therefore, the current estimate of the 

proposed FY 2014 IRF update is 1.8 

percent (2.5 percent market basket 

update less 0.4 percentage point MFP 

adjustment less 0.3 percentage point 

legislative adjustment). Furthermore, we 

also are proposing that if more recent 

data are subsequently available (for 

example, a more recent estimate of the 

market basket and MFP adjustment), we 

would use such data, if appropriate, to 

determine the FY 2014 market basket 

update and MFP adjustment in the final 

rule. 

B. Secretary’s Proposed 

Recommendation 

For FY 2014, the Medicare Payment 

Advisory Commission (MedPAC) 

recommends that a 0 percent update be 

applied to IRF PPS payment rates for FY 

2013. As discussed above, and in 

accordance with sections 1886(j)(3)(C) 

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

Secretary is proposing to update IRF 

PPS payment rates for FY 2014 by an 

adjusted market basket increase factor of 

1.8 percent because section 1886(j)(3)(C) 

of the Act does not provide the 

Secretary with the authority to apply a 

different update factor to IRF PPS 

payment rates for FY 2014. 

C. Proposed Labor-Related Share for FY 

2014 

The proposed labor-related share for 

FY 2014 is updated using the 

methodology described in the FY 2012 

IRF PPS final rule (76 FR 47836, 47860 

through 47863). Using this method and 

IGI’s first quarter 2013 forecast of the 

2008-based RPL market basket, the 

proposed IRF labor-related share for FY 

2014 is the sum of the FY 2014 relative 

importance of each labor-related cost 

category. This figure reflects the 

different rates of price change for these 

cost categories between the base year 

(FY 2008) and FY 2014. As shown in 

Table 3, the proposed FY 2014 laborrelated share is 69.658 percent. We 

propose that if a more recent estimate of 

the FY 2014 labor-related share is 

subsequently available, we would use 

such data, if appropriate, to determine 

the FY 2014 labor-related share in the 

final rule. 

TABLE 3—PROPOSED FY 2014 IRF RPL LABOR-RELATED SHARE RELATIVE IMPORTANCE

Proposed FY 2014 

Relative Importance 

Labor-Related Share 

Wages and Salaries ............................................................................................................................................................ 48.491 

Employee Benefits ............................................................................................................................................................... 13.019 

Professional Fees: Labor-Related ....................................................................................................................................... 2.069 

Administrative and Business Support Services ................................................................................................................... 0.417 

All Other: Labor-Related Services ....................................................................................................................................... 2.086 

Subtotal ................................................................................................................................................................................ 66.082 

Labor-Related Portion of Capital Costs (.46) ...................................................................................................................... 3.576 

Total Labor-Related Share ........................................................................................................................................... 69.658 

Source: IHS Global Insight, Inc. 1st quarter 2013 forecast; Historical Data through 4th quarter, 2012. 

D. Proposed Area Wage Adjustment 

Section 1886(j)(6) of the Act requires 

the Secretary to adjust the proportion of 

rehabilitation facilities’ costs 

attributable to wages and wage related 

costs (as estimated by the Secretary from 

time to time) by a factor (established by 

the Secretary) reflecting the relative 

hospital wage level in the geographic 

area of the rehabilitation facility 

compared to the national average wage 

level for those facilities. The Secretary 

is required to update the IRF PPS wage 

index on the basis of information 

available to the Secretary on the wages 

and wage-related costs to furnish 

rehabilitation services. Any adjustment 

or updates made under section 

1886(j)(6) of the Act for a FY are made 

in a budget neutral manner. 

In the FY 2009 IRF PPS final rule (73 

FR 46378), we maintained the 

methodology described in the FY 2006 

IRF PPS final rule to determine the wage 

index, labor market area definitions and 

hold harmless policy consistent with 

the rationale outlined in the FY 2006 

IRF PPS final rule (70 FR 47880, 47917 

through 47926). 

For FY 2014, we are maintaining the 

policies and methodologies described in 

the FY 2012 IRF PPS final rule (76 FR 

47836, at 47863 through 47865) relating 

to the labor market area definitions and 

the wage index methodology for areas 

with wage data. Thus, we are using the 

CBSA labor market area definitions and 

the FY 2013 pre-reclassification and 

pre-floor hospital wage index data. In 

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

the Act, the FY 2013 pre-reclassification 

and pre-floor hospital wage index is 

based on data submitted for hospital 

cost reporting periods beginning on or 

after October 1, 2008, and before 

October 1, 2009 (that is, FY 2009 cost 

report data). 

The labor market designations made 

by the OMB include some geographic 

areas where there are no hospitals and, 

thus, no hospital wage index data on 

which to base the calculation of the IRF 

PPS wage index. We propose to 

continue to use the same methodology 

discussed in the FY 2008 IRF PPS final 

rule (72 FR 44299) to address those 

geographic areas where there are no 

hospitals and, thus, no hospital wage 

index data in which to base the 

calculation for the FY 2014 IRF PPS 

wage index. 

In accordance with our established 

methodology, we have historically 

adopted any CBSA changes that are 

published in the OMB bulletin that 

corresponds with the hospital wage data 

used to determine the IRF PPS wage 

index. The OMB bulletins are available 

at http://www.whitehouse.gov/omb/ 

bulletins/index.html. 

In keeping with the established IRF 

PPS wage index policy, we propose to 

use the prior year’s (FY 2013) pre-floor, 

pre-reclassified hospital wage index 

data to derive the FY 2014 applicable 

IRF PPS wage index. We anticipate 

using the FY 2014 pre-floor, prereclassified hospital wage index data to 

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derive the applicable IRF PPS wage 

index for FY 2015. We note, however, 

that the proposed FY 2014 pre-floor, 

pre-reclassified hospital wage index 

does not use OMB’s new 2010 Censusbased area delineations, which were 

outlined in the February 28, 2013 OMB 

Bulletin 13–01. This bulletin contains a 

number of significant changes. For 

example, there are new CBSAs, counties 

that change from urban to rural, 

counties that change from rural to 

urban, and existing CBSAs that are 

being split apart. The OMB Bulletin 

with these changes was not published in 

time for us to incorporate these changes 

into the FY 2014 pre-floor, prereclassified hospital wage index, since 

the proposed rule was already in the 

advanced stages of development at that 

time and the changes and their 

ramifications would need to be 

extensively reviewed and verified prior 

to their inclusion in the rule. We 

therefore intend to propose the 

incorporation of these CBSA changes in 

our FY 2015 hospital wage index. 

Assuming that we would continue to 

follow our established methodology for 

the IRF PPS wage index, this means that 

the 2010 Census-based CBSA changes 

would not be reflected in the IRF PPS 

wage index until FY 2016. 

To calculate the wage-adjusted facility 

payment for the payment rates set forth 

in this proposed rule, we multiply the 

unadjusted Federal payment rate for 

IRFs by the proposed FY 2014 laborrelated share based on the FY 2008- 

based RPL market basket (69.658 

percent) to determine the labor-related 

portion of the standard payment 

amount. We then multiply the laborrelated portion by the applicable IRF 

wage index from the tables in the 

addendum to this proposed rule. These 

tables are available through the Internet 

on the CMS Web site at http:// 

www.cms.hhs.gov/Medicare/MedicareFee-for-Service-Payment/ 

InpatientRehabFacPPS/. Table A is for 

urban areas and Table B is for rural 

areas. 

Adjustments or updates to the IRF 

wage index made under section 

1886(j)(6) of the Act must be made in a 

budget neutral manner. We calculate a 

proposed budget neutral wage 

adjustment factor as established in the 

FY 2004 IRF PPS final rule (68 FR 

45689), codified at § 412.624(e)(1), as 

described in the steps below. We use the 

listed steps to ensure that the proposed 

FY 2014 IRF standard payment 

conversion factor reflects the update to 

the wage indexes (based on the FY 2009 

hospital cost report data) and the 

proposed labor-related share in a budget 

neutral manner: 

Step 1. Determine the total amount of 

the estimated FY 2013 IRF PPS rates, 

using the FY 2013 standard payment 

conversion factor and the labor-related 

share and the wage indexes from FY 

2013 (as published in the FY 2013 IRF 

PPS notice (77 FR 44618)). 

Step 2. Calculate the total amount of 

estimated IRF PPS payments using the 

FY 2013 standard payment conversion 

factor and the proposed FY 2014 laborrelated share and CBSA urban and rural 

wage indexes. 

Step 3. Divide the amount calculated 

in step 1 by the amount calculated in 

step 2. The resulting quotient is the 

proposed FY 2014 budget neutral wage 

adjustment factor of 1.0011. 

Step 4. Apply the proposed FY 2014 

budget neutral wage adjustment factor 

from step 3 to the FY 2013 IRF PPS 

standard payment conversion factor 

after the application of the adjusted 

market basket update to determine the 

proposed FY 2014 standard payment 

conversion factor. 

We discuss the calculation of the 

proposed standard payment conversion 

factor for FY 2014 in section V.E. of this 

proposed rule. 

E. Description of the Proposed IRF 

Standard Conversion Factor and 

Payment Rates for FY 2014 

To calculate the proposed standard 

payment conversion factor for FY 2014, 

as illustrated in Table 4, we begin by 

applying the proposed adjusted market 

basket increase factor for FY 2014 that 

was adjusted in accordance with 

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

to the standard payment conversion 

factor for FY 2013 ($14,343). Applying 

the proposed 1.8 percent adjusted 

market basket increase factor for FY 

2014 to the revised standard payment 

conversion factor for FY 2013 of $14,343 

yields a standard payment amount of 

$14,601. Then, we apply the proposed 

budget neutrality factor for the FY 2014 

wage index and labor-related share of 

1.0011, which results in a standard 

payment amount of $14,617. We next 

apply the proposed budget neutrality 

factors for the revised CMG relative 

weights of 1.0000, which results in a 

standard payment conversion factor of 

$14,617 for FY 2014. 

We then apply the proposed budget 

neutrality factors for the facility 

adjustments. Applying the budget 

neutrality factor for the revised rural 

adjustment of 1.0030 results in a 

standard payment conversion factor of 

$14,661. We then apply the budget 

neutrality factor for the revised LIP 

adjustment of 1.0174 resulting in a 

standard payment conversion factor of 

$14,916. Lastly, we apply the budget 

neutrality factor for the revised teaching 

adjustment of 0.9966 which results in a 

final standard payment conversion 

factor of $14,865. 

TABLE 4—CALCULATIONS TO DETERMINE THE PROPOSED FY 2014 STANDARD PAYMENT CONVERSION FACTOR

Explanation for adjustment Calculations 

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

Market Basket Increase Factor for FY 2014 (2.5 percent), reduced by 0.3 percentage point in accordance with sections 

1886(j)(3)(C) and (D) of the Act and a 0.4 percentage point reduction for the productivity adjustment as required by section 

1886(j)(3)(C)(ii)(I) of the Act ......................................................................................................................................................... × 1.018 

Budget Neutrality Factor for the Wage Index and Labor-Related Share ........................................................................................ × 1.0011 

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

Budget Neutrality Factor for the Update to the Rural Adjustment Factor ....................................................................................... × 1.0030 

Budget Neutrality Factor for the Update to the LIP Adjustment Factor .......................................................................................... × 1.0174 

Budget Neutrality Factor for the Update to the Teaching Status Adjustment Factor ..................................................................... × 0.9966 

Proposed FY 2014 Standard Payment Conversion Factor ..................................................................................................... = 14,865 

After the application of the CMG 

relative weights described in Section III 

of this proposed rule, to the proposed 

FY 2014 standard payment conversion 

factor ($14,865), the resulting proposed 

unadjusted IRF prospective payment 

rates for FY 2014 are shown in Table 5. 

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TABLE 5—PROPOSED FY 2014 PAYMENT RATES

CMG Payment rate 

tier 1 

Payment rate 

tier 2 

Payment rate 

tier 3 

Payment rate 

no comorbidity 

0101 ................................................................................................................. $ 11,893.49 $ 10,586.85 $ 9,745.49 $ 9,287.65 

0102 ................................................................................................................. 14,747.57 13,127.28 12,083.76 11,517.40 

0103 ................................................................................................................. 17,262.72 15,365.95 14,145.53 13,481.07 

0104 ................................................................................................................. 18,150.17 16,156.77 14,873.92 14,175.26 

0105 ................................................................................................................. 21,231.68 18,900.85 17,398.00 16,580.42 

0106 ................................................................................................................. 24,270.09 21,604.79 19,887.88 18,954.36 

0107 ................................................................................................................. 27,370.92 24,365.22 22,428.31 21,375.87 

0108 ................................................................................................................. 34,427.34 30,645.68 28,210.80 26,886.33 

0109 ................................................................................................................. 31,267.04 27,833.23 25,621.31 24,417.25 

0110 ................................................................................................................. 40,710.78 36,240.87 33,361.52 31,793.26 

0201 ................................................................................................................. 11,993.08 10,160.23 9,006.70 8,385.35 

0202 ................................................................................................................. 15,661.76 13,268.50 11,761.19 10,949.56 

0203 ................................................................................................................. 18,465.30 15,643.93 13,867.56 12,910.25 

0204 ................................................................................................................. 19,324.50 16,370.82 14,511.21 13,510.80 

0205 ................................................................................................................. 23,419.81 19,840.32 17,586.78 16,373.80 

0206 ................................................................................................................. 28,925.80 24,504.95 21,722.22 20,223.83 

0207 ................................................................................................................. 38,179.27 32,344.75 28,670.13 26,693.08 

0301 ................................................................................................................. 16,339.61 14,065.26 12,638.22 11,682.40 

0302 ................................................................................................................. 20,417.08 17,576.38 15,794.06 14,597.43 

0303 ................................................................................................................. 24,112.52 20,757.49 18,652.60 17,238.94 

0304 ................................................................................................................. 32,303.13 27,809.44 24,988.07 23,095.75 

0401 ................................................................................................................. 17,021.91 14,112.83 13,151.07 11,777.54 

0402 ................................................................................................................. 21,017.62 17,427.73 16,238.53 14,543.92 

0403 ................................................................................................................. 34,292.07 28,433.77 26,493.89 23,729.00 

0404 ................................................................................................................. 62,606.92 51,910.07 48,369.22 43,319.58 

0405 ................................................................................................................. 51,258.98 42,502.01 39,603.33 35,469.38 

0501 ................................................................................................................. 12,635.25 10,002.66 9,406.57 8,563.73 

0502 ................................................................................................................. 16,446.64 13,020.25 12,244.30 11,148.75 

0503 ................................................................................................................. 21,221.27 16,800.42 15,798.52 14,384.86 

0504 ................................................................................................................. 24,577.79 19,456.80 18,297.33 16,659.21 

0505 ................................................................................................................. 28,979.32 22,941.15 21,575.06 19,642.61 

0506 ................................................................................................................. 40,593.34 32,136.64 30,220.55 27,515.12 

0601 ................................................................................................................. 14,361.08 11,706.19 10,809.83 9,794.55 

0602 ................................................................................................................. 19,181.80 15,635.01 14,438.37 13,082.69 

0603 ................................................................................................................. 24,057.52 19,608.42 18,108.54 16,407.99 

0604 ................................................................................................................. 32,053.40 26,125.24 24,127.38 21,860.47 

0701 ................................................................................................................. 14,039.99 11,969.30 11,463.89 10,399.55 

0702 ................................................................................................................. 18,059.49 15,395.68 14,746.08 13,377.01 

0703 ................................................................................................................. 21,955.61 18,716.52 17,927.19 16,262.31 

0704 ................................................................................................................. 27,876.33 23,764.68 22,761.29 20,648.97 

0801 ................................................................................................................. 10,418.88 9,272.79 8,435.89 7,729.80 

0802 ................................................................................................................. 13,684.72 12,178.89 11,078.88 10,152.80 

0803 ................................................................................................................. 18,548.55 16,507.58 15,018.11 13,760.53 

0804 ................................................................................................................. 16,474.88 14,661.35 13,338.36 12,222.00 

0805 ................................................................................................................. 20,332.35 18,095.16 16,462.99 15,085.00 

0806 ................................................................................................................. 24,661.04 21,948.17 19,968.15 18,295.84 

0901 ................................................................................................................. 13,417.15 11,119.02 10,249.42 9,296.57 

0902 ................................................................................................................. 17,913.81 14,845.68 13,684.72 12,412.28 

0903 ................................................................................................................. 22,437.23 18,594.63 17,139.35 15,547.30 

0904 ................................................................................................................. 29,224.59 24,219.54 22,325.74 20,250.59 

1001 ................................................................................................................. 15,417.98 14,037.02 12,086.73 11,116.05 

1002 ................................................................................................................. 19,444.91 17,702.73 15,244.06 14,019.18 

1003 ................................................................................................................. 28,734.05 26,160.91 22,526.42 20,715.86 

1101 ................................................................................................................. 18,414.76 16,847.99 15,588.93 15,083.52 

1102 ................................................................................................................. 25,373.07 23,216.16 21,479.93 20,782.76 

1201 ................................................................................................................. 14,094.99 13,898.78 12,586.20 11,523.35 

1202 ................................................................................................................. 17,560.02 17,316.24 15,681.09 14,358.10 

1203 ................................................................................................................. 21,808.44 21,506.68 19,474.64 17,830.57 

1301 ................................................................................................................. 17,563.00 14,851.62 13,385.93 12,146.19 

1302 ................................................................................................................. 22,750.88 19,238.28 17,341.51 15,734.60 

1303 ................................................................................................................. 29,249.86 24,733.87 22,294.53 20,228.29 

1401 ................................................................................................................. 13,176.34 10,726.58 9,720.22 8,798.59 

1402 ................................................................................................................. 17,797.86 14,488.92 13,128.77 11,884.57 

1403 ................................................................................................................. 21,708.85 17,673.00 16,014.06 14,496.35 

1404 ................................................................................................................. 27,675.66 22,530.88 20,415.59 18,481.65 

1501 ................................................................................................................. 14,869.46 12,769.04 11,515.92 11,053.61 

1502 ................................................................................................................. 18,715.04 16,072.04 14,494.86 13,912.15 

1503 ................................................................................................................. 22,630.48 19,434.50 17,527.32 16,824.21 

1504 ................................................................................................................. 28,088.90 24,121.44 21,753.44 20,880.87 

1601 ................................................................................................................. 15,324.33 13,106.47 12,311.19 11,249.83 

1602 ................................................................................................................. 20,121.26 17,209.21 16,164.20 14,771.35 

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26894 Federal Register / Vol. 78, No. 89 / Wednesday, May 8, 2013 / Proposed Rules 

TABLE 5—PROPOSED FY 2014 PAYMENT RATES—Continued 

CMG Payment rate 

tier 1 

Payment rate 

tier 2 

Payment rate 

tier 3 

Payment rate 

no comorbidity 

1603 ................................................................................................................. 25,347.80 21,679.12 20,363.56 18,608.01 

1701 ................................................................................................................. 16,165.69 14,111.34 12,696.20 11,472.81 

1702 ................................................................................................................. 20,232.75 17,661.11 15,889.20 14,358.10 

1703 ................................................................................................................. 24,418.74 21,314.92 19,177.34 17,329.62 

1704 ................................................................................................................. 30,980.15 27,043.89 24,331.03 21,985.34 

1801 ................................................................................................................. 17,059.07 15,791.09 13,883.91 11,704.70 

1802 ................................................................................................................. 25,431.04 23,541.70 20,698.03 17,450.02 

1803 ................................................................................................................. 40,655.78 37,633.72 33,088.00 27,895.66 

1901 ................................................................................................................. 16,289.07 13,831.88 13,473.64 13,209.04 

1902 ................................................................................................................. 31,721.91 26,935.38 26,239.70 25,723.88 

1903 ................................................................................................................. 52,027.50 44,177.29 43,035.66 42,189.84 

2001 ................................................................................................................. 13,225.39 10,857.40 9,983.33 9,124.14 

2002 ................................................................................................................. 17,637.32 14,480.00 13,313.09 12,168.49 

2003 ................................................................................................................. 22,163.72 18,196.25 16,729.07 15,290.14 

2004 ................................................................................................................. 29,041.75 23,841.97 21,919.93 20,035.05 

2101 ................................................................................................................. 32,378.94 23,393.05 22,126.55 20,894.24 

5001 ................................................................................................................. ........................ ........................ ........................ 2,290.70 

5101 ................................................................................................................. ........................ ........................ ........................ 9,816.85 

5102 ................................................................................................................. ........................ ........................ ........................ 21,631.55 

5103 ................................................................................................................. ........................ ........................ ........................ 11,376.18 

5104 ................................................................................................................. ........................ ........................ ........................ 29,625.95 

F. Example of the Methodology for 

Adjusting the Proposed Federal 

Prospective Payment Rates 

Table 6 illustrates the methodology 

for adjusting the proposed federal 

prospective payments (as described in 

sections V.A. through V.C. of this 

proposed rule). The following examples 

are based on two hypothetical Medicare 

beneficiaries, both classified into CMG 

0110 (without comorbidities). The 

proposed unadjusted federal 

prospective payment rate for CMG 0110 

(without comorbidities) appears in 

Table 5. 

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 

1.0155), a wage index of 0.8472, and a rural 

adjustment of 14.28 percent. Facility B, an 

urban teaching hospital, has a DSH 

percentage of 15 percent (which would result 

in a LIP adjustment of 1.0451 percent), a 

wage index of 0.8862, and a teaching status 

adjustment of 0.0610. 

To calculate each IRF’s labor and non-labor 

portion of the proposed Federal prospective 

payment, we begin by taking the proposed 

unadjusted Federal prospective payment rate 

for CMG 0110 (without comorbidities) from 

Table 5. Then, we multiply the proposed 

labor-related share for FY 2014 (69.658 

percent) described in section V.C. of this 

proposed rule by the proposed unadjusted 

federal prospective payment rate. To 

determine the non-labor portion of the 

proposed federal prospective payment rate, 

we subtract the labor portion of the proposed 

federal payment from the proposed 

unadjusted Federal prospective payment. 

To compute the proposed wage-adjusted 

federal prospective payment, we multiply the 

labor portion of the proposed federal 

payment by the appropriate wage index 

found in tables A and B. These tables are 

available through the Internet on the CMS 

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

Medicare/Medicare-Fee-for-Service-Payment/ 

InpatientRehabFacPPS/. The resulting figure 

is the wage-adjusted labor amount. Next, we 

compute the proposed wage-adjusted federal 

payment by adding the wage-adjusted labor 

amount to the non-labor portion. 

Adjusting the proposed wage-adjusted 

federal payment by the facility-level 

adjustments involves several steps. First, we 

take the wage-adjusted Federal prospective 

payment and multiply it by the appropriate 

rural and LIP adjustments (if applicable). 

Second, to determine the appropriate amount 

of additional payment for the teaching status 

adjustment (if applicable), we multiply the 

teaching status adjustment (0.0610, in this 

example) by the wage-adjusted and ruraladjusted amount (if applicable). Finally, we 

add the additional teaching status payments 

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

Table 6 illustrates the components of the 

adjusted payment calculation. 

TABLE 6—EXAMPLE OF COMPUTING THE IRF FY 2014 FEDERAL PROSPECTIVE PAYMENT

Steps Rural facility A 

(Spencer Co., IN) 

Urban facility B 

(Harrison Co., IN) 

1 .................. Unadjusted Federal Prospective Payment ..................................................................... $ 31,793.26 $ 31,793.26 

2 .................. Labor Share .................................................................................................................... × 0.69658 × 0.69658 

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

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

5 .................. Wage-Adjusted Amount ................................................................................................. = 18,762.56 = 19,626.27 

6 .................. Nonlabor Amount ........................................................................................................... + 9,646.71 + 9,646.71 

7 .................. Wage-Adjusted Federal Payment .................................................................................. = 28,409.27 = 29,272.98 

8 .................. Rural Adjustment ............................................................................................................ × 1.1428 × 1.000 

9 .................. Wage- and Rural- Adjusted Federal Payment ............................................................... = 32,466.11 = 29,272.98 

10 ................ LIP Adjustment ............................................................................................................... × 1.0155 × 1.0451 

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

12 ................ FY 2014 Wage- and Rural-Adjusted Federal Prospective Payment ............................. 32,466.11 29,272.98 

13 ................ Teaching Status Adjustment .......................................................................................... × 0 × 0.0610 

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

15 ................ FY 2014 Wage-, Rural-, and LIP-Adjusted Federal Prospective Payment Rate ........... + 32,969.33 + 30,593.19 

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TABLE 6—EXAMPLE OF COMPUTING THE IRF FY 2014 FEDERAL PROSPECTIVE PAYMENT—Continued 

16 ................ Total FY 2014 Adjusted Federal Prospective Payment ................................................. = 32,969.33 = 32,378.84 

Thus, the proposed adjusted payment 

for Facility A would be $32,969.33 and 

the proposed adjusted payment for 

Facility B would be $32,378.84. 

VI. Proposed Update to Payments for 

High-Cost Outliers Under the IRF PPS 

A. Proposed Update to the Outlier 

Threshold Amount for FY 2014 

Section 1886(j)(4) of the Act provides 

the Secretary with the authority to make 

payments in addition to the basic IRF 

prospective payments for cases 

incurring extraordinarily high costs. A 

case qualifies for an outlier payment if 

the estimated cost of the case exceeds 

the adjusted outlier threshold. We 

calculate the adjusted outlier threshold 

by adding the IRF PPS payment for the 

case (that is, the CMG payment adjusted 

by all of the relevant facility-level 

adjustments) and the adjusted threshold 

amount (also adjusted by all of the 

relevant facility-level adjustments). 

Then, we calculate the estimated cost of 

a case by multiplying the IRF’s overall 

CCR by the Medicare allowable covered 

charge. If the estimated cost of the case 

is higher than the adjusted outlier 

threshold, we make an outlier payment 

for the case equal to 80 percent of the 

difference between the estimated cost of 

the case and the outlier threshold. 

In the FY 2002 IRF PPS final rule (66 

FR 41362 through 41363), we discussed 

our rationale for setting the outlier 

threshold amount for the IRF PPS so 

that estimated outlier payments would 

equal 3 percent of total estimated 

payments. For the 2002 IRF PPS final 

rule, we analyzed various outlier 

policies using 3, 4, and 5 percent of the 

total estimated payments, and we 

concluded that an outlier policy set at 

3 percent of total estimated payments 

would optimize the extent to which we 

could reduce the financial risk to IRFs 

of caring for high-cost patients, while 

still providing for adequate payments 

for all other (non-high cost outlier) 

cases. 

Subsequently, we updated the IRF 

outlier threshold amount in the FYs 

2006 through 2012 IRF PPS final rules 

and the FY 2011 and FY 2013 notices 

(70 FR 47880, 71 FR 48354, 72 FR 

44284, 73 FR 46370, 74 FR 39762, 75 FR 

42836, 76 FR 47836, 76 FR 59256, and 

77 FR 44618, respectively) to maintain 

estimated outlier payments at 3 percent 

of total estimated payments. We also 

stated in the FY 2009 final rule (73 FR 

46370 at 46385) that we would continue 

to analyze the estimated outlier 

payments for subsequent years and 

adjust the outlier threshold amount as 

appropriate to maintain the 3 percent 

target. 

To update the IRF outlier threshold 

amount for FY 2014, we propose to use 

FY 2012 claims data and the same 

methodology that we used to set the 

initial outlier threshold amount in the 

FY 2002 IRF PPS final rule (66 FR 41316 

and 41362 through 41363), which is also 

the same methodology that we used to 

update the outlier threshold amounts for 

FYs 2006 through 2013. Based on an 

analysis of this updated data, we 

estimate that IRF outlier payments as a 

percentage of total estimated payments 

are approximately 2.8 percent in FY 

2014. Therefore, we propose to update 

the outlier threshold amount to $10,111 

to maintain estimated outlier payments 

at approximately 3 percent of total 

estimated aggregate IRF payments for 

FY 2014. 

B. Proposed Update to the IRF Cost-toCharge Ratio Urban and Rural Ceilings 

In accordance with the methodology 

stated in the FY 2004 IRF PPS final rule 

(68 FR 45674, 45692 through 45694), we 

apply a ceiling to IRFs’ CCRs. Using the 

methodology described in that final 

rule, we propose to update the national 

urban and rural CCRs for IRFs, as well 

as the national CCR ceiling for FY 2014, 

based on analysis of the most recent 

data that is available. We apply the 

national urban and rural CCRs in the 

following situations: 

• New IRFs that have not yet 

submitted their first Medicare cost 

report. 

• IRFs whose overall CCR is in excess 

of the national CCR ceiling for FY 2014, 

as discussed below. 

• Other IRFs for which accurate data 

to calculate an overall CCR are not 

available. 

Specifically, for FY 2014, we estimate 

a proposed national average CCR of 

0.638 for rural IRFs, which we calculate 

by taking an average of the CCRs for all 

rural IRFs using their most recently 

submitted cost report data. Similarly, 

we estimate a national average CCR of 

0.511 for urban IRFs, which we 

calculate by taking an average of the 

CCRs for all urban IRFs using their most 

recently submitted cost report data. We 

apply weights to both of these averages 

using the IRFs’ estimated costs, meaning 

that the CCRs of IRFs with higher costs 

factor more heavily into the averages 

than the CCRs of IRFs with lower costs. 

For this proposed rule, we have used 

the most recent available cost report 

data (FY 2011). This includes all IRFs 

whose cost reporting periods begin on 

or after October 1, 2010, and before 

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

2011 cost report was missing or had an 

‘‘as submitted’’ status, we used data 

from a previous fiscal year’s (that is, FY 

2004 through FY 2010) settled cost 

report for that IRF. We do not use cost 

report data from before FY 2004 for any 

IRF because changes in IRF utilization 

since FY 2004 resulting from the 60 

percent rule and IRF medical review 

activities suggest that these older data 

do not adequately reflect the current 

cost of care. 

In accordance with past practice, we 

propose to set the national CCR ceiling 

at 3 standard deviations above the mean 

CCR. Using this method, the national 

CCR ceiling is set at 1.43 for FY 2014. 

This means that, if an individual IRF’s 

CCR exceeds this ceiling of 1.43 for FY 

2014, we would replace the IRF’s CCR 

with the appropriate national average 

CCR (either rural or urban, depending 

on the geographic location of the IRF). 

We estimate the national CCR ceiling 

by: 

Step 1. Taking the national average 

CCR (weighted by each IRF’s total costs, 

as discussed above) of all IRFs for which 

we have sufficient cost report data (both 

rural and urban IRFs combined). 

Step 2. Estimating the standard 

deviation of the national average CCR 

computed in step 1. 

Step 3. Multiplying the standard 

deviation of the national average CCR 

computed in step 2 by a factor of 3 to 

compute a statistically significant 

reliable ceiling. 

Step 4. Adding the result from step 3 

to the national average CCR of all IRFs 

for which we have sufficient cost report 

data, from step 1. 

We note that the proposed national 

average rural and urban CCRs and our 

estimate of the national CCR ceiling in 

this section are subject to change in the 

final rule if more recent data become 

available for use in these analyses. 

VII. Proposed Refinements to the 

Presumptive Compliance Criteria 

Methodology 

A. Background on the Compliance 

Percentage 

The compliance percentage has been 

part of the criteria for defining IRFs 

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26896 Federal Register / Vol. 78, No. 89 / Wednesday, May 8, 2013 / Proposed Rules 

since implementation of the IPPS in 

1983. In the September 1, 1983 interim 

final rule with comment period (48 FR 

39752) which allowed IRFs to be paid 

separately from the IPPS, the initial 

compliance percentage was set at 75 

percent. The 1983 interim rule 

stipulated that in accordance with 

sections 1886(d)(1)(B) and 

1886(d)(1)(B)(ii) of the Act, a 

rehabilitation hospital and a 

rehabilitation unit were excluded from 

the IPPS. Sections 1886(d)(1)(B) and 

1886(d)(1)(B)(ii) of the Act also give the 

Secretary the discretion to define a 

rehabilitation hospital and unit. 

A hospital or unit deemed excluded 

from the IPPS and paid under the IRF 

PPS must meet the general requirements 

in subpart B and subpart P of part 412. 

Subject to the special payment 

provisions of § 412.22(c), a hospital or 

unit must meet the general criteria set 

forth in § 412.22 and in the regulations 

at § 412.23(b), § 412.25, and § 412.29 

that specify the criteria for a provider to 

be classified as a rehabilitation hospital 

or unit. Hospitals and units meeting 

these criteria are eligible to be paid on 

a prospective payment basis as an IRF 

under the IRF PPS. 

The 1983 interim final rule stipulated 

that one of the criteria for being 

classified as an IRF was that, during the 

facility’s most recently completed 12- 

month cost reporting period, the 

hospital must be primarily engaged in 

furnishing intensive rehabilitation 

services, as demonstrated by patient 

medical records, indicating that at least 

75 percent of the IRF’s patient 

population were treated for one or more 

of the 10 medical conditions specified 

in the regulation that typically required 

the intensive inpatient rehabilitation 

treatment provided in an IRF. These 

criteria, along with other related criteria, 

distinguished an inpatient rehabilitation 

hospital or unit from a hospital that 

furnished general medical or surgical 

services, as well as rehabilitation 

services. We believed then, as we do 

now, that by examining the types of 

conditions for which a hospital’s 

inpatients are treated, and the 

proportion of patients treated for 

conditions that typically require 

intensive inpatient rehabilitation, we 

would be able to distinguish those 

hospitals in which the provision of 

rehabilitation services was primary 

rather than secondary. Thus, Medicare 

pays for rehabilitation services at IRFs at 

a higher rate than other hospitals 

because IRFs are designed to offer 

specialized inpatient rehabilitation care 

to patients with intensive needs. 

The original medical conditions 

specified under the compliance 

percentage, or ‘‘75 percent rule,’’ were 

stroke, spinal cord injury, congenital 

deformity, amputation, major multiple 

trauma, fracture of femur (hip fracture), 

brain injury, and polyarthritis 

(including rheumatoid arthritis). In the 

January 3, 1984 final rule (49 FR 234), 

we expanded the list of eligible medical 

conditions to include neurological 

disorders (including multiple sclerosis, 

motor neuron diseases, polyneuropathy, 

muscular dystrophy, and Parkinson’s 

disease) and burns. In the May 7, 2004 

final rule (69 FR 25752), we modified 

and expanded the list of eligible 

medical conditions by removing 

polyarthritis and substituting three more 

clearly defined arthritis-related 

conditions. The three conditions that 

replaced polyarthritis included the 

following: 

• Active, polyarticular rheumatoid 

arthritis, psoriatic arthritis, and 

seronegative arthropathies resulting in 

significant functional impairment of 

ambulation and other activities of daily 

living, which has not improved after an 

appropriate, aggressive, and sustained 

course of outpatient therapy services or 

services in other less intensive 

rehabilitation settings immediately 

preceding the inpatient rehabilitation 

admission or which results from a 

systemic disease activation immediately 

before admission, but has the potential 

to improve with more intensive 

rehabilitation. 

• Systemic vasculidities with joint 

inflammation, resulting in significant 

functional impairment of ambulation 

and other activities of daily living, 

which has not improved after an 

appropriate, aggressive, and sustained 

course of outpatient therapy services or 

services in other less intensive 

rehabilitation settings immediately 

preceding the inpatient rehabilitation 

admission or which results from a 

systemic disease activation immediately 

before admission, but has the potential 

to improve with more intensive 

rehabilitation. 

• Severe or advanced osteoarthritis 

(osteoarthrosis or degenerative joint 

disease) involving three or more major 

joints (elbow, shoulders, hips, or knees) 

with joint deformity and substantial loss 

of range of motion, atrophy, significant 

functional impairment of ambulation 

and other activities of daily living, 

which has not improved after an 

appropriate, aggressive, and sustained 

course of outpatient therapy services or 

services in other less intensive 

rehabilitation settings immediately 

preceding the inpatient rehabilitation 

admission but has the potential to 

improve with more intensive 

rehabilitation. (A joint replaced by a 

prosthesis is no longer considered to 

have osteoarthritis, or other arthritis, 

even though this condition was the 

reason for the joint replacement.) 

In the May 7, 2004 final rule (69 FR 

25752), a 13th condition was also added 

to include patients who undergo knee 

and/or hip joint replacement during an 

acute hospitalization immediately 

preceding the inpatient rehabilitation 

stay and also meet at least one of the 

following specific criteria: 

• Underwent bilateral knee or hip 

joint replacement surgery during the 

acute hospitalization immediately 

preceding the IRF admission. 

• Are extremely obese patients as 

measured by the patient’s Body Mass 

Index (BMI) of at least 50, at the time 

of admission to the IRF. 

• Are patients considered to be’’frail 

elderly,’’ as determined by a patient’s 

age of 85 or older, at the time of 

admission to the IRF (the provision 

currently states only that the patients be 

age 85 or older at the time of admission 

to the IRF.) 

In 2002, we surveyed Medicare fiscal 

intermediaries to determine how they 

were enforcing the 75 percent rule. 

Although the 75 percent rule was one of 

the criteria that was used to distinguish 

an IRF from an acute care hospital from 

1983 to 2004, we found evidence that 

different fiscal intermediaries were 

enforcing the rule differently. We found 

fiscal intermediaries were using 

inconsistent methods to determine 

whether IRFs were in compliance with 

the regulation, and that some IRFs were 

not being reviewed for compliance at 

all. This led to concerns that some IRFs 

might have been out of compliance with 

the regulation and inappropriately 

classified as IRFs, while other IRFs may 

have been held to overly high standards. 

Because of these concerns we sought to 

establish a more uniform enforcement of 

the 75 percent rule. 

In the May 16, 2003 IRF PPS proposed 

rule (68 FR 26786), we solicited 

comments on the regulatory 

requirements of the 75 percent rule. 

Though we did not, at that time, 

propose amending the regulatory 

requirements for the 75 percent rule 

located in then § 412.23(b)(2), we did 

propose to amend these requirements in 

the September 9, 2003 proposed rule 

titled, ‘‘Medicare Program; Changes to 

the Criteria for Being Classified as an 

Inpatient Rehabilitation Facility’’ (68 FR 

53266). In that rule, we proposed some 

revisions to the 75 percent rule, 

including lowering the compliance 

percentage to 65 percent during a 3-year 

transition period for cost reporting 

periods between January 1, 2004 and 

January 1, 2007. Also, in response to 

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comments on the September 9, 2003 

proposed rule and as stated above, the 

May 7, 2004 final rule (69 FR 25752) 

expanded the number of medical 

conditions that would meet the 

compliance percentage from 10 to 13 

and provided that patient comorbidities 

may also be included in determining an 

IRF’s compliance with the requirements 

during the transition period. 

In the September 9, 2003 proposed 

rule, we defined a ‘‘comorbidity’’ as a 

specific patient condition that is 

secondary to the patient’s principal 

diagnosis or impairment that is the 

primary reason for the inpatient 

rehabilitation stay. In the May 7, 2004 

rule, we adopted the provision to use a 

patient with a comorbidity counting 

towards the compliance threshold 

during the transition period. In the 

determination of the compliance 

percentage, a patient comorbidity 

counts toward the percentage if the 

comorbidity falls in one of the 

conditions specified at § 412.29(b)(2) 

and has caused significant decline in 

functional ability in the individual that 

even in the absence of the admitting 

condition, the individual would require 

the intensive rehabilitation treatment 

that is unique to IRFs. 

Anticipating that IRFs needed some 

time to adjust and adapt their processes 

to the changes in the enforcement of the 

75 percent rule, in the May 7, 2004 final 

rule, we provided IRFs with a 3-year 

phase-in period (cost reporting periods 

beginning on or after July 1, 2004 

through July 1, 2007) to establish the 

compliance threshold of 75 percent of 

the IRF’s total patient population. The 

3-year phase-in period was intended to 

begin with cost reporting periods on or 

after July 1, 2004 with the threshold at 

50 percent of the IRF’s population and 

gradually increase to 60 percent, then to 

65 percent, and then to expire with cost 

reporting periods beginning on or after 

July 1, 2007, when the compliance 

percentage would once again be at 75 

percent. 

Section 5005 of the Deficit Reduction 

Act of 2005 (DRA, Pub. L. 109–171, 

enacted February 8, 2006) and section 

1886(d)(1)(B) of the Act modified the 

provisions of the 75 percent rule 

originally specified in the May 7, 2004 

final rule. To reflect these statutory 

changes, in the August 7, 2007 final rule 

(72 FR 44284), we revised the 

regulations to prolong the overall 

duration of the phased transition to the 

full 75 percent threshold by stipulating 

that an IRF must meet the full 75 

percent compliance threshold as of its 

first cost reporting period that starts on 

or after July 1, 2008. We also extended 

the policy of using a patient’s 

comorbidities to the extent they met the 

conditions as outlined in the regulations 

to determine compliance with the 

classification criteria at then 

§ 412.23(b)(2)(1) to the first cost 

reporting period that starts on or after 

July 1, 2008. 

Subsequently, section 115 of the 

MMSEA amended section 5005 of the 

DRA to revise elements of the 75 

percent rule that are used to classify 

IRFs. In accordance with the statute, in 

the August 8, 2008 final rule (73 FR 

46370), we revised the compliance rate 

that IRFs must meet to be excluded from 

the IPPS and be paid under the IRF PPS 

to 60 percent for cost reporting periods 

beginning in or after July 1, 2006. Also, 

in accordance with the statute, we 

required that patient comorbidities that 

satisfy the criteria as specified at then 

§ 412.23(b)(2)(i) [now located at 

§ 412.29(b)(1) and § 412.29(b)(2)] be 

included in calculations used to 

determine whether an IRF meets the 60 

percent compliance percentage for cost 

reporting periods beginning on or after 

July 1, 2007. As a result of these 

changes, the requirements started being 

referred to as the ‘‘60 percent rule,’’ 

instead of the ‘‘75 percent rule.’’ The 

regulations finalized in the FY 2009 IRF 

PPS Final Rule (73 FR 46370) continue 

to be in effect. 

Though an IRF must serve an 

inpatient population of whom at least 

60 percent meet the compliance 

percentage criteria specified at 

§ 412.29(b), the existing regulation 

allows for 40 percent of reasonable and 

necessary admissions to an IRF to fall 

outside of the 13 qualifying medical 

conditions. Still, the ‘‘60 percent rule’’ 

is one of the primary ways we 

distinguish an IRF from an acute care 

hospital. As Medicare payments for IRF 

services are generally significantly 

higher than Medicare payments for 

similar services provided in acute care 

hospital settings, we believe that it is 

important to maintain and enforce the 

60 percent rule compliance criteria to 

ensure that the higher Medicare 

payments are appropriately allocated to 

those providers that are providing IRFlevel services. 

B. Proposed Changes to the ICD–9–CM 

Codes That Meet the Presumptive 

Compliance Criteria 

The presumptive methodology is one 

of two ways that contractors may 

evaluate an IRF’s compliance with the 

60 percent rule compliance criteria (the 

other methodology is called the medical 

review methodology). IRFs may be 

evaluated using the presumptive 

methodology only if their Medicare feefor-service and Medicare Advantage 

populations combined make-up over 

half of their total patient populations, so 

that the Medicare populations can be 

presumed to be representative of the 

IRF’s total patient population. Thus, if 

an IRF is eligible to use the presumptive 

methodology to evaluate its compliance 

with the IRF 60 percent rule, all of its 

IRF–PAI assessments from the most 

recently completed 12 month 

compliance review period are examined 

(with the use of a computer program) to 

determine whether they contain any of 

the codes listed on the presumptive 

methodology list. Under the rule, each 

IRF is given the option of whether the 

Medicare contractor reviews all IRF 

discharges from that period, or all 

admissions from that period. Each 

selected assessment is presumptively 

categorized as either meeting or not 

meeting the IRF 60 percent rule 

requirements based upon the primary 

reason for the patient to be treated in the 

IRF (the impairment group) and the 

ICD–9–CM codes listed as either the 

etiologic diagnosis (the etiologic 

problem that led to the condition for 

which the patient is receiving 

rehabilitation) or one of 10 

comorbidities on the assessment. An 

impairment group code is not an ICD– 

9–CM code, but part of a separate 

unique set of codes specifically 

developed for the IRF PPS for assigning 

the primary reason for admission to an 

IRF. The ICD–9–CM diagnosis codes 

that may be used to categorize a patient 

as meeting the 60 percent rule criteria 

if those codes appear on the patient’s 

IRF–PAI assessment as either the 

etiologic diagnosis or as a comorbid 

condition are listed in ‘‘Appendix C: 

ICD–9–CM Codes That Meet 

Presumptive Compliance Criteria.’’ This 

list can be downloaded from the 

October 1, 2007 IRF Compliance Rule 

Specification Files on the Medicare IRF 

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

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

Criteria.html. 

The underlying premise of the 

presumptive methodology ICD–9–CM 

code list is that it represents those codes 

that would be expected to 

‘‘presumptively’’ meet the 60 percent 

rule compliance criteria. That is, it 

reflects those particular diagnosis codes 

that, if a patient is coded using one of 

those codes, would more than likely be 

expected to meet the requirement either 

that the patient required intensive 

rehabilitation services for treatment of 

one or more of the conditions specified 

at § 412.29(b)(2) or had a comorbidity 

that caused significant decline in 

functional ability such that, even in the 

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absence of the admitting condition, the 

patient would require the intensive 

rehabilitation treatment that is unique to 

inpatient rehabilitation facilities and 

cannot be appropriately performed in 

another care setting. 

Recently, we began a close 

examination of the list of ICD–9–CM 

codes that are currently deemed to meet 

the 60 percent rule under the 

presumptive method to begin the 

process of converting this code list to 

ICD–10–CM. Upon this examination, we 

found that changes over time (including 

changes in the use of the individual 

codes, changes in clinical practice, 

changes in the frequency of various 

types of illness and disability, and 

changes to the application of 60 percent 

rule itself) supported our updating the 

ICD–9–CM codes that are deemed to 

count toward a facility’s 60 percent rule 

compliance. Such updates would ensure 

that the codes better reflect the 

regulations at § 412.29(b). 

Our review included taking a fresh 

look at the regulations in § 412.29(b), 

which revealed that the following parts 

of the regulation were not being 

adequately addressed in the current 

application of the presumptive method 

of calculating compliance with the IRF 

60 percent rule: 

• The details of the requirements in 

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

that the IRF must serve ‘‘an inpatient 

population of whom at least 60 percent 

required intensive rehabilitation 

services for treatment of one or more of 

the conditions specified . . .’’, and 

• The details of the requirements 

regarding the specific conditions under 

which a patient’s comorbidity may be 

used to show that a patient meets the 60 

percent rule criteria, specifically that, 

‘‘The comorbidity has caused significant 

decline in functional ability in the 

individual that, even in the absence of 

the admitting condition, the individual 

would require the intensive 

rehabilitation treatment that is unique to 

inpatient rehabilitation facilities . . . 

and that cannot be appropriately 

performed in another care setting . . .’’ 

These requirements must be met in 

conjunction with a patient having one of 

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

for the case to meet the 60 percent rule 

compliance criteria. It is not enough for 

the patient to just have one of the 13 

conditions. Mindful of these 

requirements, we took a fresh look at the 

ICD–9–CM codes on the presumptive 

methodology list. 

Further, the regulations in § 412.29 

also specify that the arthritis conditions 

only meet the 60 percent rule 

compliance criteria if certain severity 

and prior treatment criteria are met. It 

is impossible to discern from the ICD– 

9–CM codes themselves whether or not 

the required severity and prior 

treatment criteria are met for those 

patients being treated for arthritis 

conditions. This type of information can 

only be assessed on medical review. 

Thus, we found that the presence of the 

ICD–9–CM code, by itself, cannot allow 

us to presume that patients meet all of 

the requirements for being counted 

toward a facility’s meeting the 60 

percent rule requirements. As such, we 

believe that certain ICD–9–CM codes 

currently on the presumptive 

methodology list do not necessarily 

demonstrate a patient’s meeting the 

requirements for inclusion in a facility’s 

60 percent compliance threshold, and, 

as such, should be removed from the list 

to better reflect the regulations. 

Therefore, we performed a clinical 

analysis of the ICD–9–CM code list to 

determine the clinical appropriateness 

of each individual ICD–9–CM code’s 

inclusion on the list, and a statistical 

analysis of the ICD–9–CM diagnoses 

code list to enhance our understanding 

of how individual ICD–9–CM codes are 

being used by IRFs. Based on these 

analyses, we are proposing specific 

revisions to the ICD–9–CM code list that 

are described below in sections VII.B.1 

through VII.B.6 of this proposed rule. 

We encourage stakeholders comment 

on the following proposals. All such 

public comment(s) will be addressed in 

the final rule. 

1. Non-Specific Diagnosis Codes 

We believe that highly descriptive 

codes provide the best and clearest way 

to ensure the appropriateness of a given 

patient’s inclusion in the presumptive 

method of calculating a facility’s 

compliance percentage. Therefore, 

whenever possible, we believe that the 

most specific code that describes a 

medical disease, condition, or injury 

should be documented on the IRF–PAI. 

Generally, ‘‘unspecified’’ codes are used 

when there is lack of information about 

location or severity of medical 

conditions in the medical record. 

However, site and/or severity of 

condition is an important determinant 

in assessing whether a patient’s 

principal or secondary diagnosis falls 

into the 13 qualifying conditions and, as 

such, should count toward the facility’s 

compliance with the 60 percent rule. 

For this reason, and in accordance with 

ICD–9–CM coding guidelines, we 

believe that specific diagnosis codes 

that narrowly identify anatomical sites 

where disease, injury, or condition exist 

should be required when coding 

patients’ conditions on the IRF–PAI 

whenever such codes are available. 

Furthermore, on the same note, we 

believe that one should also include on 

the IRF–PAI the more descriptive ICD– 

9–CM code that indicates the degree of 

injury in instances of burns. In 

accordance with these principles, we 

propose to remove non-specific codes 

from Appendix C whenever more 

specific codes are available as we 

believe imprecise codes would 

inappropriately categorize an overly 

broad segment of the patient population 

as having the conditions required for 

inclusion in a facility’s compliance 

percentage. If the IRF does not have 

enough information about the patient’s 

condition to code the more specific 

codes on the IRF–PAI, we would expect 

the IRF to seek out additional 

information from the patient’s acute 

care hospital medical record to 

determine the appropriate, more 

specific code to use. 

For example, the current ICD–9–CM 

codes 820.8 ‘‘Unspecified part of neck of 

femur, closed’’ and 820.9 ‘‘Unspecified 

part of neck of femur, open’’, which 

indicate hip fractures, could be replaced 

with more specific codes (820.01– 

820.09, 820.11–820.19, 820.21–820.22, 

or 820.31–820.32). We believe that the 

proposed removal of the unspecified 

codes listed in Table 7, ‘‘Proposed ICD– 

9–CM Codes To Be Removed From the 

Appendix C: ICD–9–CM Codes That 

Meet Presumptive Compliance Criteria,’’ 

would not negatively impact a 

provider’s ability to meet the 

compliance percentage threshold 

because these diagnoses could be coded 

under the aforementioned more specific 

codes. More specific codes will aid us 

in determining (by the nature of the site, 

severity, degree of injury, etc.) whether 

a patient’s principal or secondary 

diagnosis falls into the 13 qualifying 

conditions and should count toward the 

60 percent rule. 

2. Arthritis Codes 

Our analysis of the list of ICD–9–CM 

codes that are currently deemed to meet 

the 60 percent rule required us to 

reexamine the overall application of the 

compliance criteria in regards to the 

arthritis codes. Utilization patterns for 

the arthritis codes indicated that some 

of the codes in this category are coded 

far more frequently than we had 

anticipated, given the severity and prior 

treatment requirements outlined in 

regulation. When we adopted the 

arthritis conditions in the FY 2004 final 

rule (69 FR 25752), we did so because 

we believed that these conditions were 

appropriate for treatment in an IRF. 

However, we limited the arthritis 

conditions to those that were 

sufficiently severe and in which 

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intensive inpatient rehabilitation would 

be an appropriate modality of treatment. 

We anticipated that less severe arthritic 

conditions could be satisfactorily 

managed outside of IRFs since these 

cases would not require the intensive 

therapy provided in the inpatient 

rehabilitation setting. Likewise, we 

expected that even in cases where 

patients with arthritis conditions severe 

enough to require intensive inpatient 

rehabilitation, some patients would 

improve after an appropriate, aggressive, 

and sustained course of treatment in an 

outpatient setting. ‘‘An appropriated, 

aggressive, and sustained course of 

treatment in an outpatient setting’’ is 

defined in Chapter 3, section 140.1.1.C 

of the Medicare Claims Processing 

Manual (Pub. 100–04). We believe that 

there may be arthritis ICD–9–CM codes 

entered on the IRF–PAI for cases that do 

not meet the severity and prior 

treatment requirements outlined in 

regulation. Thus, after reexamining our 

application of the compliance criteria in 

regards to the arthritis codes, we 

determined that factors beyond the ICD– 

9–CM code should be reviewed to 

establish whether these IRF patients 

should be included in the IRF’s 

compliance percentage. 

In the regulations at § 412.29(b)(2)(x) 

through § 412.29(b)(2)(xii), we describe 

3 medical conditions that, if present, 

make a patient eligible for inclusion in 

the calculation of the compliance 

percentage if additional circumstances 

are met. The 3 medical conditions are as 

follows: 

• Active, polyarticular rheumatoid 

arthritis, psoriatic arthritis, and 

seronegative arthropathies resulting in 

significant functional impairment of 

ambulation and other activities of daily 

living that have not improved after an 

appropriate, aggressive, and sustained 

course of outpatient therapy services or 

services in other less intensive 

rehabilitation settings immediately 

preceding the inpatient rehabilitation 

admission or that result from a systemic 

disease activation immediately before 

admission, but have the potential to 

improve with more intensive 

rehabilitation. 

• Systemic vasculidities with joint 

inflammation, resulting in significant 

functional impairment of ambulation 

and other activities of daily living that 

have not improved after an appropriate, 

aggressive, and sustained course of 

outpatient therapy services or services 

in other less intensive rehabilitation 

settings immediately preceding the 

inpatient rehabilitation admission or 

that result from a systemic disease 

activation immediately before 

admission, but have the potential to 

improve with more intensive 

rehabilitation. 

• Severe or advanced osteoarthritis 

(osteoarthrosis or degenerative joint 

disease) involving two or more major 

weight bearing joints (elbow, shoulders, 

hips, or knees, but not counting a joint 

with a prosthesis) with joint deformity 

and substantial loss of range of motion, 

atrophy of muscles surrounding the 

joint, significant functional impairment 

of ambulation and other activities of 

daily living that have not improved after 

the patient has participated in an 

appropriate, aggressive, and sustained 

course of outpatient therapy services or 

services in other less intensive 

rehabilitation settings immediately 

preceding the inpatient rehabilitation 

admission but have the potential to 

improve with more intensive 

rehabilitation. (A joint replaced by a 

prosthesis no longer is considered to 

have osteoarthritis, or other arthritis, 

even though this condition was the 

reason for the joint replacement.) 

As stated above, the inclusion of 

patients with these medical conditions 

in the compliance percentage is 

conditioned on those patients meeting 

certain severity and prior treatment 

requirements. However, the ICD–9–CM 

diagnosis codes that reflect these 

arthritis and arthropathy conditions do 

not provide any information about 

whether or not these additional 

eligibility requirements were met. We 

believe that a qualitative assessment 

(such as a medical review) is necessary 

to determine if the medical record 

would support inclusion of individuals 

with the arthritis and arthropathy 

conditions outlined in our regulations at 

§ 412.29(b)(2)(x) through 

§ 412.29(b)(2)(xii) in a facility’s 

compliance percentage. Thus, we 

propose to remove the ICD–9–CM 

diagnosis codes associated with the 

medical conditions outlined in our 

regulations at § 412.29(b)(2)(x) through 

§ 412.29(b)(2)(xii) from the presumptive 

method ICD–9–CM code list in 

Appendix C. 

We expect that the FI/MAC will be 

able, upon medical review, to include 

those patients in a facility’s 60 percent 

rule compliance percentage in 

accordance with chapter 3, § 140.1.4 of 

the Medicare Claims Processing Manual 

(Pub. 100–04) after it has confirmed the 

severity and prior treatment 

requirements. So IRFs will continue to 

be able to include these individuals in 

their compliance percentages. In Table 

7, we list the ICD–9–CM codes 

associated with the medical conditions 

listed at § 412.29(b)(2)(x) through 

§ 412.29(b)(2)(xii) that we propose to 

remove from Appendix C. 

3. Some Congenital Anomaly Diagnosis 

Codes 

Though congenital deformity is one of 

the 13 medical conditions that may 

generally qualify for inclusion in the 

presumptive method for calculating 

compliance with the 60 percent rule, we 

find that some of the specific ICD–9–CM 

diagnosis codes in Appendix C for 

congenital anomalies represent such 

serious conditions that a patient with 

one of these conditions would be 

unlikely to be able to meaningfully 

participate in an intensive rehabilitation 

therapy program. For example, 

Craniorachischisis (ICD–9–CM code 

740.1) is a congenital malformation 

where the neural tube from the 

midbrain down to the upper sacral 

region of the spinal cord remains open. 

The neural tube is the embryo’s 

precursor to the central nervous system, 

which comprises the brain and spinal 

cord. Similarly, Iniencephaly (ICD–9– 

CD code 740.2) is a congenital 

malformation in which parts of the 

brain do not form and the patient does 

not have a neck. If a patient with one 

of these conditions were able to 

participate in the intensive 

rehabilitation services provided in an 

IRF, then the FI/MAC would be able to 

count that case toward an IRF’s 60 

percent rule compliance calculation 

upon medical review. However, because 

beneficiaries with these diagnoses likely 

would not be able to actively participate 

in an intensive rehabilitation program, 

we do not believe that we can 

presumptively include such cases in an 

IRF’s compliance percentage. Thus, we 

propose to remove these congenital 

deformity codes, and others like them, 

from Appendix C. All of the congenital 

anomaly diagnosis codes that we 

propose to remove from appendix C are 

listed in Table 7. 

4. Unilateral Upper Extremity 

Amputations Diagnosis Codes 

Though amputation is generally one 

of the 13 medical conditions that qualify 

for inclusion in the presumptive method 

for calculating compliance with the 60 

percent rule, we propose the removal of 

certain ICD–9–CM codes for unilateral 

upper extremity amputations from 

Appendix C because we believe that it 

is impossible to determine, from the 

presence of such ICD–9–CM codes 

alone, whether a patient with such a 

unilateral upper extremity amputation 

has a condition for which he or she 

would qualify for treatment in an IRF. 

Some patients with upper extremity 

amputations will not require close 

medical supervision by a physician or 

weekly interdisciplinary team 

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conferences to achieve their goals, while 

others may require these services. We 

believe that rehabilitation associated 

with unilateral upper extremity 

amputations does not necessarily need 

to be accompanied by the close medical 

management provided in IRFs, as long 

as the patient does not have any 

additional comorbidities that have 

caused significant decline in his or her 

functional ability that, in the absence of 

the unilateral upper extremity 

amputation, would necessitate 

treatment in an IRF. That is to say, a 

patient’s need for intensive 

rehabilitation services provided in an 

IRF may depend on other conditions 

which cannot be solely identified 

through the presence of a unilateral 

upper extremity amputation ICD–9–CM 

code. If the patient has comorbidities 

that would necessitate treatment in an 

IRF, then those comorbidities could 

qualify the patient for inclusion in the 

presumptive method of calculating 

compliance with the 60 percent rule 

requirements. If the codes for such a 

patient’s comorbidities do not appear in 

Appendix C, they could be found on 

medical review to meet the criteria for 

inclusion in the IRF’s 60 percent rule 

compliance rate. Thus, we propose to 

remove the unilateral upper extremity 

amputation ICD–9–CM codes listed in 

Table 7. 

5. Miscellaneous Diagnosis Codes That 

Do Not Require Intensive Rehabilitation 

Services For Treatment 

We have identified additional ICD–9– 

CM diagnosis codes in Appendix C that 

should not be included in the listing 

because as single conditions, they do 

not serve as an indication of a patient 

qualifying for inclusion in an IRF’s 

compliance percentage under the 

presumptive method for calculating 

compliance with the 60 percent rule. 

These patients generally do not require 

intensive rehabilitation services or 

cannot be shown to have undergone 

appropriate diagnostic testing based on 

the ICD–9–CM code alone. For the 

reasons discussed below, we propose to 

remove the following ICD–9–CM codes 

from Appendix C. (These ICD–9–CM 

codes are also listed in Table 7): 

• Tuberculous (abscess, meningitis, 

and encephalitis or myelitis) and 

Tuberculoma (of the meninges, brain, or 

spinal cord) where a bacterial or 

histological examination was not done 

(see Table 7 for specific codes)— 

Appropriate patient care dictates that 

the IRF physician must document the 

means by which the organism, whether 

it be bacteriologic or histologic, was 

tested. We are proposing to remove 

these codes from the list in Appendix C 

because the subclassification indicates 

that a bacteriologic or histologic 

examination has not been performed. 

• Postherpetic polyneuropathy 

(053.13)—This is a condition 

characterized by severe pain, which 

typically requires pain medication or 

other pain control therapies but does 

not typically require the intensive 

inpatient rehabilitation services of an 

IRF. In fact, the prescriptive hands-on 

therapeutic interventions provided in an 

IRF could exacerbate the patient’s pain. 

For these reasons, we are proposing to 

remove this code from Appendix C. 

• Louping ill (063.1)—This ICD–9– 

CM code refers to an acute viral disease 

primarily of sheep that is not endemic 

to the United States. Louping ill disease 

has been recognized in Scotland for 

centuries, but only 39 cases of human 

infection have been described and none 

of these cases have been observed in the 

United States. Louping ill is a disease 

which has many manifestations, not all 

requiring inpatient rehabilitation 

hospital services. We believe that the 

ICD–9–CM code for this diagnosis does 

not provide the information necessary 

for us to determine presumptively if the 

patient should count toward the IRF’s 

compliance threshold. However, as with 

all of the codes that we are proposing to 

remove from appendix C, if someone 

with this diagnosis were to be admitted 

to an IRF, where appropriate, it could be 

found by an FI/MAC to meet the 60 

percent rule requirements on medical 

review. 

• Brain death (348.82)—We believe 

that it is unlikely that a patient with this 

condition would require the intensive 

inpatient rehabilitation services 

provided in an IRF. For this reason, we 

propose to remove this code from 

Appendix C. 

• Myasthenia gravis without (acute) 

exacerbation (358.00)—Although we 

believe that a patient experiencing an 

acute attack of Myasthenia Gravis could 

potentially require the services of an IRF 

(see ICD–9 code 358.01 ‘‘Myasthenia 

gravis with (acute) exacerbation’’), the 

ICD–9–CM code that we propose to 

remove from appendix C is used for 

patients who are not experiencing an 

acute exacerbation of the condition and 

most likely do not require the intensive 

inpatient rehabilitation services 

provided in an IRF. 

• Other specified myotonic disorder 

(359.29)—Myotonia fluctuans, myotonia 

permanens, and paramyotonia 

congenital reflect conditions that are 

exacerbated by exercise. Therefore, 

these conditions would not likely 

require the intensive inpatient 

rehabilitation services of an IRF. 

Therefore, we are proposing to remove 

it from the list in appendix C. 

• Periodic paralysis (359.3)—The 

treatment for periodic paralysis involves 

pharmaceutical interventions and 

lifestyle changes that control exercise 

and activity, but patients with this 

condition do not generally require the 

intensive inpatient rehabilitation 

services of an IRF. In fact, it is unclear 

how the intensive inpatient 

rehabilitation services provided in an 

IRF would effectively treat this 

condition. Thus, we propose to remove 

this code from the list in Appendix C. 

• Brachial plexus lesions (353.0)— 

Care and treatment for this condition 

affecting an upper extremity do not 

typically require close medical 

supervision by a physician or weekly 

interdisciplinary team meetings to reach 

the patient’s goals. Thus, patients with 

this condition do not typically require 

the intensive inpatient rehabilitation 

services provided in an IRF. Therefore, 

we propose to remove this code from 

the list in appendix C. 

• Neuralgic amyothrophy (353.5)— 

This condition is also known as 

Parsonage-Turner syndrome or brachial 

plexus neuritis. It is a distinct 

peripheral nervous system disorder 

characterized by attacks of extreme 

neuropathic pain and rapid multifocal 

weakness and atrophy in the upper 

limbs. Patients with this condition do 

not typically require close medical 

supervision by a physician or weekly 

interdisciplinary team meetings to reach 

the patient’s therapy goals. Thus, 

patients with this condition do not 

typically require the intensive inpatient 

rehabilitation services provided in an 

IRF. Therefore, we propose to remove 

this code from the list Appendix C. 

• Other nerve root and plexus 

disorders (353.8)—More descriptive 

codes provide the clearest way to ensure 

the appropriateness of a patient’s 

inclusion in the compliance percentage. 

For example, Lumbosacral plexus 

lesions (353.1) could substitute for 

Other nerve root and plexus disorders 

(353.8). Thus, patients with this 

condition do not typically require the 

intensive inpatient rehabilitation 

services provided in an IRF. Therefore, 

we propose to remove this code from 

the list in Appendix C. 

6. Additional Diagnosis Codes 

During our review of the diagnosis 

codes that meet the 60 percent 

compliance criteria, we did not identify 

any ICD–9–CM codes that would be 

appropriate to add to the list. However, 

we welcome public comment regarding 

ICD–9–CM diagnosis codes that are not 

currently on the presumptive 

mstockstill on DSK4VPTVN1PROD with PROPOSALS2

Federal Register / Vol. 78, No. 89 / Wednesday, May 8, 2013 / Proposed Rules 26901 

methodology list of codes that 

stakeholders believe should be added to 

the list and that specifically identify one 

of the conditions listed at § 412.29(b)(2), 

that require intensive inpatient 

rehabilitation, and can be presumptively 

identified by a ICD–9–CM code. 

TABLE 7—PROPOSED ICD–9–CM CODES TO BE REMOVED FROM APPENDIX C: ICD–9–CM CODES THAT MEET

PRESUMPTIVE COMPLIANCE CRITERIA

ICD–9–CM 

Code Diagnosis 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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26902 Federal Register / Vol. 78, No. 89 / Wednesday, May 8, 2013 / Proposed Rules 

TABLE 7—PROPOSED ICD–9–CM CODES TO BE REMOVED FROM APPENDIX C: ICD–9–CM CODES THAT MEET

PRESUMPTIVE COMPLIANCE CRITERIA—Continued 

ICD–9–CM 

Code Diagnosis 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Federal Register / Vol. 78, No. 89 / Wednesday, May 8, 2013 / Proposed Rules 26903 

TABLE 7—PROPOSED ICD–9–CM CODES TO BE REMOVED FROM APPENDIX C: ICD–9–CM CODES THAT MEET

PRESUMPTIVE COMPLIANCE CRITERIA—Continued 

ICD–9–CM 

Code Diagnosis 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

mstockstill on DSK4VPTVN1PROD with PROPOSALS2

26904 Federal Register / Vol. 78, No. 89 / Wednesday, May 8, 2013 / Proposed Rules 

TABLE 7—PROPOSED ICD–9–CM CODES TO BE REMOVED FROM APPENDIX C: ICD–9–CM CODES THAT MEET

PRESUMPTIVE COMPLIANCE CRITERIA—Continued 

ICD–9–CM 

Code Diagnosis 

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

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

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

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

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

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

804.00 ............... Closed fractures involving skull or face with other bones, without mention of intracranial injury, unspecified state of consciousness. 

804.09 ............... Closed fractures involving skull of face with other bones, without mention of intracranial injury, with concussion, unspecified. 

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

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

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

state of consciousness. 

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

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

state of consciousness. 

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

unspecified. 

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

state of consciousness. 

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

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

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

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

state of consciousness. 

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

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

of consciousness. 

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

unspecified. 

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

state of consciousness. 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

mstockstill on DSK4VPTVN1PROD with PROPOSALS2

Federal Register / Vol. 78, No. 89 / Wednesday, May 8, 2013 / Proposed Rules 26905 

TABLE 7—PROPOSED ICD–9–CM CODES TO BE REMOVED FROM APPENDIX C: ICD–9–CM CODES THAT MEET

PRESUMPTIVE COMPLIANCE CRITERIA—Continued 

ICD–9–CM 

Code Diagnosis 

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

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

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

consciousness. 

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

851.90 ............... Other and unspecified cerebral laceration and contusion, with open intracranial wound, unspecified state of consciousness. 

851.99 ............... Other and unspecified cerebral laceration and contusion, with open intracranial wound, with concussion, unspecified. 

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

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

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

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

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

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

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

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

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

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

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

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

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

of consciousness. 

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

unspecified. 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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TABLE 7—PROPOSED ICD–9–CM CODES TO BE REMOVED FROM APPENDIX C: ICD–9–CM CODES THAT MEET

PRESUMPTIVE COMPLIANCE CRITERIA—Continued 

ICD–9–CM 

Code Diagnosis 

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

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

site. 

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

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

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

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

VIII. Proposed Non-Quality Related 

Revisions to IRF–PAI Sections 

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

the Secretary is authorized to require 

rehabilitation facilities that provide 

inpatient hospital services to submit 

such data as the Secretary deems 

necessary to establish and administer 

the prospective payment system under 

subsection P. The collection of patient 

data is indispensable for the successful 

development and implementation of the 

IRF payment system. In the August 7, 

2001 final rule, the inpatient 

rehabilitation facility patient assessment 

instrument (IRF–PAI) was adopted as 

the standardized patient assessment 

instrument under the IRF prospective 

payment system (PPS). The IRF–PAI 

was established for, and is still used to 

gather data to classify patients for 

payment under the IRF PPS. As 

discussed in section XII. of this 

proposed rule, it is also now used to 

collect certain data for the IRF Quality 

Reporting Program. IRFs are currently 

required to complete an IRF–PAI for 

every Medicare Part A, B or C patient 

who is admitted to, or discharged from 

an IRF. 

Although there have been significant 

advancements in the industry, no IRF 

PPS payment-related changes have been 

made to the IRF–PAI form since its 

implementation—in FY 2002. We are 

proposing to amend certain response 

options, add additional data points, 

remove certain outdated items and 

change certain references to ensure that 

our policies reflect the current data 

needs of the IRF PPS program. 

A. Proposed Updates 

We propose to amend the response 

codes on the following items in the IRF– 

PAI: 

• Item 15A: Admit From (Formerly 

item 15) 

• Item 16A: Pre-Hospital Living 

Situation (Formerly item 16) 

• Item 44D: Patient’s Discharge 

Destination/Living Setting (Formerly 

item 44A) 

To minimize possible confusion due 

to the use of different sets of status 

codes on the IRF–PAI and the CMS– 

1450 (also referred to as the UB–04) 

claim form, we believe that the IRF–PAI 

status codes should be changed to 

mirror those used on the CMS–1450 

claim form. We believe this proposed 

update would help decrease the rate of 

coding errors on CMS–1450 claim 

forms. We believe this proposal would 

provide response options that mirror 

another commonly used instrument in 

the Medicare context allowing providers 

to use only one common set of response 

codes. We propose to amend the 

response options for the three items 

listed above to: 

• 01—Home (private home/apt., 

board/care, assisted living, group home) 

• 02—Short-term General Hospital 

• 03—Skilled Nursing Facility (SNF) 

• 50—Hospice 

• 62—Another Inpatient 

Rehabilitation Facility 

• 63—Long-Term Care Hospital 

(LTCH) 

• 64—Medicaid Nursing Facility 

• 65—Inpatient Psychiatric Facility 

• 66—Critical Access Hospital 

• 99—Not Listed 

We also propose to update the options 

for responding to item 20B: Secondary 

Source. We find that the current 

response options for this data element 

exceed what we need to operate IRF 

PPS. Therefore, to decrease burden on 

IRFs through the implementation of 

simplified response options, we propose 

to limit secondary source response 

options to the following: 

• 02—Medicare—Fee for Service 

• 51—Medicare—Medicare 

Advantage 

• 99—Not Listed 

B. Proposed Additions 

Further, we propose to add (or 

expand) the following items to the IRF– 

PAI: 

• Item 25A: Height 

• Item 26A: Weight 

• Item 24: Comorbid Conditions (15 

additional spaces) 

• Item 44C: Was the patient 

discharged alive? 

• Signature of Persons Completing 

the IRF–PAI 

Items ‘‘25A: Height’’ and ‘‘26A: 

Weight,’’ are important items to collect 

for use in the classification of facilities 

for payment under the IRF–PPS as well 

as for the risk adjustment of quality 

measures (as described in section XII. of 

this proposed rule). In the regulations at 

§ 412.29(b)(2), we specify a list of 

comorbid conditions that, if certain 

conditions are met, may qualify a 

patient for inclusion in an IRF’s 60 

percent rule compliance percentage. For 

example, a patient with a lowerextremity joint replacement comorbidity 

would qualify if the patient had a 

bilateral joint replacement, is over the 

age of 85, and/or has a BMI greater than 

50. BMI is calculated using height and 

weight. As such, by adding a patients’ 

height and weight information to the 

IRF–PAI we expect that the FI/MAC will 

be able, upon medical review, to 

include these patients in a facilities’ 60 

percent rule compliance percentage in 

accordance with chapter 3, § 140.14 of 

the Medicare Claims Processing Manual 

(Pub. 100.4), after it has confirmed any 

other severity and prior treatment 

requirements that may apply. 

We also propose adding 15 additional 

spaces for providers to document 

patients’ comorbid medical conditions 

at item 24: Comorbid Conditions 

(located in the medical information 

section of the IRF–PAI). The IRF–PAI 

currently has ten spaces available for 

providers to enter ICD codes for 

comorbid conditions. If finalized, the 

IRF–PAI would have a total of 25 

spaces. Such expansion would support 

IRFs as they seek to code with greater 

specificity to support presumptive 

compliance percentage findings, and 

would be in keeping with recent 

industry-driven changes. 

In response to the industry’s request 

to update the claim form to allow for 

better accounting for patients 

comorbidities, added 15 additional 

spaces were added to the claim form for 

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providers to document ICD codes. We 

believe that the number of data elements 

allowed on the IRF–PAI should mirror 

the number allowed on the claim. 

Additionally, the ICD–10 coding 

scheme, which will be used beginning 

on October 1, 2014 is much more 

specific than the current ICD–9 coding. 

Therefore, when the agency moves from 

ICD–9 to ICD–10 coding, providers may 

need the additional spaces to code 

because of the greater specificity under 

ICD–10. 

Furthermore, we propose to add a 

new item 44C: ‘‘Was the patient 

discharged alive?’’ to the discharge 

information section on the IRF–PAI. 

Adding this item as a standalone item 

would allow facilities that reply ‘‘no’’ to 

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

which describe a living patient’s 

discharge destination. This will reduce 

the burden on the time it takes to 

complete the IRF–PAI. Facilities that 

respond ‘‘yes’’ to item 44C will 

complete items 44D, 44E and 45 as they 

apply to the patient. We believe that 

adding this question as a standalone 

item would provide greater clarity for 

providers when documenting patient 

information on the IRF–PAI. 

We propose adding a page to the IRF– 

PAI dedicated as the signature page for 

persons completing the IRF–PAI. As of 

the effective date of the IRF Coverage 

Requirements, see the August 7, 2009 

FY 2010 IRF PPS final rule (74 FR 

39762), the IRF–PAI forms must be 

maintained in the patient’s medical 

record at the IRF (either in electronic or 

paper format), and information in the 

IRF–PAI must correspond with all of the 

information provided in the patient’s 

IRF medical record. We received 

multiple public comments on the FY 

2010 IRF PPS proposed rule regarding 

the requirement to include that IRF–PAI 

in the medical record questioning 

whether IRFs would need to adhere to 

the conditions of participation in 

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

medical record entries must be legible, 

complete, dated, timed, and 

authenticated in written or electronic 

form by the person responsible for 

providing or evaluating the service 

provided, consistent with hospital 

policies and procedures. When CMS 

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

Medicare-Fee-for-Service-Payment/ 

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

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

providers responded by asking for a 

place on the IRF–PAI where they would 

be able to document the required 

authentication. The proposed addition 

of a page for signatures of persons 

completing the IRF–PAI would fulfill 

providers’ request to have an organized 

way to document who in the IRF has 

completed the assessment of the patient 

and when that assessment took place. 

We also believe that having a signature 

page for those completing the IRF–PAI 

will ensure that providers are satisfying 

both the IRF coverage requirements and 

the conditions of participation 

requirements. 

C. Proposed Deletions 

We propose to delete the following 

items from the IRF–PAI: 

• Item 18: Pre-Hospital Vocational 

Category 

• Item 19: Pre-Hospital Vocational 

Effort 

• Item 25: Is patient comatose at 

admission? 

• Item 26: Is patient delirious at 

admission? 

• Item 28: Clinical signs of 

dehydration 

We no longer believe that these items 

are necessary and in the interest of 

reducing burden on providers we would 

like to delete them. 

Items 18: Pre-Hospital Vocational 

Category and 19: Pre-Hospital 

Vocational Effort (which are currently 

located in the admission identification 

section on the IRF–PAI) are not used for 

payment or quality purposes. While 

these items will, if finalized, be dropped 

from the IRF–PAI form, however, we 

would note that these data elements 

could be significant in a treatment 

context, in which case we would expect 

them to appear in the patient’s medical 

record. For example, we believe that 

these data elements could be relevant 

during the care planning/discharge 

process as well as during 

interdisciplinary team meetings. 

We also note, that items 25: Is patient 

comatose at admission, 26: Is patient 

delirious at admission, and 28: Clinical 

signs of dehydration (which are 

currently located in the medical 

information section on the IRF–PAI) are 

voluntary items that are not used for our 

payment or quality program purposes. 

Therefore, we do not believe it is 

necessary to collect this information on 

the IRF–PAI. Furthermore, to the extent 

such information would be relevant to 

the provision of patient care; this 

information should be captured in 

either the transfer documentation from 

the referring physician, or the patients’ 

initial assessment documentation. As 

such, continuing to require this 

information on the IRF–PAI would be 

duplicative since the items should be 

well documented in the patients’ 

medical record from their stay at the 

facility. 

D. Proposed Changes 

We are proposing to replace all 

references to the ICD–9–CM code(s) in 

the IRF–PAI with references to ICD 

code(s). This change would allow CMS 

to forgo making additional changes to 

the IRF–PAI when the adopted ICD 

code(s) change. 

Proposed Technical Correction 

We are proposing a technical 

correction at items 44D, 44E and 45 to 

conform to the additions proposed 

above. We believe that adding language 

to these items indicating that the 

question can be skipped depending 

upon how item 44C is answered, will 

help reduce submission errors for 

providers when filling out the IRF–PAI. 

A draft of the IRF–PAI, with the 

proposed revisions discussed 

throughout this proposed rule is 

available for download on the IRF PPS 

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

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

IRFPAI.html. 

IX. Proposed Technical Corrections to 

the Regulations at § 412.130 

In the FY 2012 IRF PPS final rule (76 

FR 47869 through 47873), we revised 

the regulations for inpatient 

rehabilitation facilities at § 412.23(b), 

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

update and simplify the policies, to 

eliminate unnecessary repetition and 

confusion, and to enhance consistency 

with the IRF coverage requirements. 

Among other revisions, we removed the 

regulations that were formerly in 

§ 412.30, and revised and consolidated 

the requirements regarding ‘‘new’’ IRFs 

and ‘‘new’’ IRF beds that previously 

existed in § 412.30 into the revised 

regulations at § 412.29(c). However, we 

have recently discovered that § 412.130, 

which outlines the policies regarding 

retroactive adjustments for incorrectly 

excluded hospitals and units, was not 

updated to reflect the changes to 

§ 412.30 and § 412.29. Specifically, 

§ 412.130 still references regulations in 

§ 412.30 that were revised and 

consolidated into § 412.29(c). Further, it 

still references regulations that were 

formerly in § 412.23(b)(2), but were 

moved into § 412.29(b) in the FY 2012 

IRF PPS final rule (76 FR 47869 through 

47873). 

Thus, in this proposed rule, we 

propose to make the following technical 

corrections to the regulations in 

§ 412.130 to conform with the revisions 

to the regulations in § 412.23(b), 

§ 412.29, and § 412.30 that were 

implemented in the FY 2012 IRF PPS 

final rule (76 FR 47869 through 47873): 

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• Replace the current reference to 

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

the new reference to § 412.29(c), 

• Replace all of the current references 

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

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

§ 412.29(b), 

• Replace the current reference to 

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

new reference to § 412.29(c), and 

• Replace the current reference to 

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

new reference to § 412.29(c). 

X. Proposed Revisions to the Conditions 

of Payment for IRF Units Under the IRF 

PPS 

The regulations at § 412.25 specify the 

requirements for an IRF unit to be 

excluded from the inpatient prospective 

payment system (IPPS) specified in 

§ 412.1(a)(1) and to instead be paid 

under the IRF PPS specified in 

§ 412.1(a)(3). The requirements at 

§ 412.25 are unique to IRF units of 

hospitals, whereas the requirements at 

§ 412.29 apply to both freestanding IRF 

hospitals and IRF units of hospitals. 

Among the requirements at § 412.25 is 

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

that the institution of which the IRF 

unit is a part must have ‘‘enough beds 

that are not excluded from the 

prospective payment systems to permit 

the provision of adequate cost 

information, as required by § 413.24(c) 

of this chapter.’’ We have not previously 

specified how many such beds the 

hospital, of which the IRF unit is a part, 

must have to meet this requirement. 

However, we have recently received 

questions from providers about whether 

one or two hospital beds that are 

certified for payment under the IPPS, in 

some cases beds that are rarely used for 

patient care, would meet the 

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

believe this does not meet the 

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

provides for the hospital of which the 

IRF unit is a part to be an IPPS hospital, 

which we believe is not demonstrated 

by the presence of just one or two 

hospital beds. 

Further, we are unclear how the IRF 

unit that is part of a hospital with only 

one or two beds would be able to meet 

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

that specifies that an IRF unit must have 

beds that are ‘‘physically separate from 

(that is, not commingled with) the 

hospital’s other beds.’’ The requirement 

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

some sort of physical separation (such 

as a different floor, a different wing, and 

different building, etc.) that separates 

the IRF unit from the rest of the hospital 

beds. We believe that it is unlikely that 

this requirement would be met in the 

situation in which the hospital of which 

the IRF unit is a part only has one or 

two beds, in some cases beds that are 

rarely used for patient care. 

Thus, we propose to specify at 

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

hospital beds that the IPPS hospital 

must have to meet the requirements at 

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

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

also applies to inpatient psychiatric 

facilities (IPFs), these facilities have 

their own requirements at § 412.27 for 

payment under the IPF PPS that we are 

not proposing to change in this 

proposed rule. IPFs should continue 

following the regulations at § 412.27. 

We propose to specify in 

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

which the IRF unit is a part must have 

at least 10 staffed and maintained 

hospital beds that are not excluded from 

the IPPS, or at least 1 staffed and 

maintained hospital bed for every 10 

certified IRF beds, whichever number is 

greater. If the institution is not able to 

meet this proposed requirement, then 

we propose that the IRF unit should 

instead be classified as an IRF hospital. 

We also propose to exclude CAHs that 

have IRF units from these requirements, 

as CAHs already have very specific bed 

size restrictions. We welcome 

stakeholder comments on the specific 

minimum hospital bed requirements for 

IRFs that we are proposing in this rule. 

XI. Proposed Clarification of the 

Regulations at § 412.630 

In the original rule establishing a 

prospective payment system for 

Medicare payment of inpatient hospital 

services provided by a rehabilitation 

hospital or by a rehabilitation unit of a 

hospital, we stated that that there would 

be no administrative or judicial review, 

under sections 1869 and 1878 of the Act 

or otherwise, of the establishment of 

case-mix groups, the methodology for 

the classification of patients within 

these groups, the weighting factors, the 

prospective payment rates, outlier and 

special payments and area wage 

adjustments. See 66 FR 41316, 41319 

(August 7, 2001). Our intent was to 

honor the full breadth of the preclusion 

of administrative or judicial review 

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

Act. However, the regulatory text 

reflecting the preclusion of review has 

been at times improperly interpreted to 

allow review of adjustments authorized 

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

Because we interpret the preclusion of 

review at section 1886(j)(8) of the Act to 

apply to all payments authorized under 

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

believe that there should be 

administrative or judicial review of any 

part of the prospective rate. 

Accordingly, we are proposing to clarify 

our regulation at § 412.630 by deleting 

the word ‘‘unadjusted’’ so that the 

regulation would clearly preclude 

review of ‘‘the Federal per discharge 

payment rates.’’ This clarification will 

better conform the regulation to the 

statutory language. 

As such, in accordance with sections 

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

are proposing to revise the regulations at 

§ 412.630 to clarify that administrative 

or judicial review under sections 1869 

or 1878 of the Act, or otherwise, is 

prohibited with regard to the 

establishment of the methodology to 

classify a patient into the case-mix 

groups and the associated weighting 

factors, the federal per discharge 

payment rates, additional payments for 

outliers and special payments, and the 

area wage index. 

XII. Proposed Revision to the 

Regulations at § 412.29 

According to the regulations at 

§ 412.29(d), to be excluded from the 

inpatient prospective payment system 

(IPPS) and instead be paid under the 

IRF PPS, a facility must ‘‘have in effect 

a preadmission screening procedure 

under which each prospective patient’s 

condition and medical history are 

reviewed to determine whether the 

patient is likely to benefit significantly 

from an intensive inpatient hospital 

program. This procedure must ensure 

that the preadmission screening is 

reviewed and approved by a 

rehabilitation physician prior to the 

patient’s admission to the IRF.’’ The 

latter sentence of this regulation is 

based on the preadmission screening 

requirement for Medicare coverage of 

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

requirement was repeated in both places 

for consistency. 

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

specify that this requirement applies to 

patients ‘‘for whom the IRF seeks 

payment’’ from Medicare. We believe 

that the analogous requirement in 

§ 412.29(d) should also clearly state that 

it applies only to patients for whom the 

IRF is seeking payment directly from 

Medicare. Other payer sources, such as 

private insurance, have their own IRF 

admission requirements, and we do not 

believe that it would be appropriate to 

interfere with or duplicate the 

requirements that other payer sources 

may already have in place. Thus, we 

propose to amend § 412.29(d) to clarify 

that the IRF’s preadmission screening 

procedure must ensure that the 

preadmission screening for a Medicare 

Part A fee-for-service patient is 

reviewed and approved by a 

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1The version of the CAUTI measure that was 

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

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

Per 1,000 Urinary Catheter Days for ICU patients. 

However, shortly after the FY 2012 IRF PPS final 

rule was published, this measure was submitted by 

the CDC (measure steward) to the NQF for a 

measure maintenance review, The CDC asked for 

changes to the measure, including expansion of the 

scope of the measure to non-ICU patient care 

locations and additional healthcare facility settings, 

including IRFs. The name of the measure was 

changed to reflect the character of the revised 

CAUTI measure. This measure is now titled 

‘‘National Health Safety Network (NHSN) Catheter 

Associated Urinary Tract Infection (CAUTI) 

Outcome Measure.’’ 

rehabilitation physician prior to the 

patient’s admission to the IRF. We 

continue to believe that the basic 

preadmission screening procedure itself 

is an important element of providing 

quality IRF care to all patients and, thus, 

we propose to require that the basic 

preadmission screening procedure 

requirement remain in place for all 

patients regardless. 

XIII. Proposed Revisions and Updates 

to the Quality Reporting Program for 

IRFs 

A. Background and Statutory Authority 

Section 3004(b) of the Affordable Care 

Act added section 1886(j)(7) to the Act, 

which requires the Secretary to 

implement a quality reporting program 

(QRP) for IRFs. This program applies to 

freestanding IRF hospitals, IRF units 

that are affiliated with an acute care 

facility, and IRF units affiliated with a 

critical access hospital (CAH). 

Beginning in FY 2014, section 

1886(j)(7)(A)(i) of the Act requires the 

reduction of the applicable IRF PPS 

annual increase factor, as previously 

modified under section 1886(j)(3)(D) of 

the Act, by 2 percentage points for any 

IRFs that fail to submit data to the 

Secretary in accordance with 

requirements established by the 

Secretary for that fiscal year. Section 

1886(j)(7)(A)(ii) of the Act notes that 

this reduction may result in the increase 

factor being less than 0.0 for a fiscal 

year, and in payment rates under this 

subsection for a fiscal year being less 

than the payment rates for the preceding 

fiscal year. Any reduction based on 

failure to comply with the reporting 

requirements is, in accordance with 

section 1886(j)(7)(B) of the Act, limited 

to the particular fiscal year involved. 

The reductions are not to be cumulative 

and will not be taken into account in 

computing the payment amount under 

subsection (j) for a subsequent fiscal 

year. 

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

requires that each IRF submit data to the 

Secretary on quality measures specified 

by the Secretary. The required quality 

measure data must be submitted to the 

Secretary in a form, manner and time, 

specified by the Secretary. 

The Secretary is generally required to 

specify measures that have been 

endorsed by the entity with a contract 

under section 1890(a) of the Act. This 

contract is currently held by the 

National Quality Forum (NQF), which is 

a voluntary consensus standard-setting 

organization. The NQF was established 

to standardize health care quality 

measurement and reporting through its 

consensus development process. 

We have generally adopted NQFendorsed measures in our reporting 

programs. However, section 

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

‘‘in the case of a specified area or 

medical topic determined appropriate 

by the Secretary for which a feasible and 

practical measure has not been endorsed 

by the entity with a contract under 

section 1890(a) of the Act, the Secretary 

may specify a measure that is not so 

endorsed, so long as due consideration 

is given to measures that have been 

endorsed or adopted by a consensusbased organization identified by the 

Secretary.’’ Under section 

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

Secretary was required to publish the 

selected measures that will be 

applicable to the FY 2014 IRF PPS no 

later than October 1, 2012. 

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

requires the Secretary to establish 

procedures for making data submitted 

under the IRF QRP available to the 

public. The Secretary must ensure that 

each IRF is given the opportunity to 

review the data that is to be made public 

prior to the publication or posting of 

this data. 

We seek to promote higher quality 

and more efficient health care for all 

patients who receive care in acute and 

post-acute care settings. Our efforts are, 

in part, effectuated by quality reporting 

programs coupled with the public 

reporting of data collected under those 

programs. The initial framework of the 

IRF QRP was established in the FY 2012 

IRF PPS final rule (76 FR 47873). 

B. Quality Measures Previously 

Finalized and Currently in Use for the 

IRF Quality Reporting Program 

1. Background 

In the FY 2012 IRF PPS final rule, we 

adopted applications of 2 quality 

measures for use in the first data 

reporting cycle of the IRF QRP: (1) An 

application of ‘‘Catheter-Associated 

Urinary Tract Infection [CAUTI] for 

Intensive Care Unit Patients’’ 1

(NQF#0138); and (2) an application of 

‘‘Percent of Residents with Pressure 

Ulcers that Are New or Worsened 

(short-stay)’’ (NQF #0678). We adopted 

applications of these two measures 

because neither of them, at the time, 

was endorsed by the NQF for the IRF 

setting. We also discussed our plans to 

propose a 30-Day All Cause Risk 

Standardized Post IRF Discharge 

Hospital Readmission Measure at a later 

date (76 FR 47874 through 47878). 

In the CY 2013 OPPS/ASC proposed 

rule (77 FR 45193 through 45196), we 

proposed: (1) To adopt updates to the 

CAUTI measure that had been adopted 

by NQF after we had adopted an 

application of the prior version of the 

measure for the IRF QRP; (2) to adopt a 

policy that would allow any measure 

adopted for use in the IRF QRP to 

remain in effect until the measure was 

actively removed, suspended, or 

replaced (we also proposed to apply this 

proposal to the CAUTI and pressure 

ulcer measures that had already been 

adopted for use in the IRF QRP); and (3) 

to utilize a subregulatory process to 

incorporate NQF updates to IRF quality 

measure specifications that do not 

substantively change the nature of the 

measure. We also informed stakeholders 

that CMS had submitted an ad hoc 

request for NQF review of the pressure 

ulcer measure with a request to endorse 

the measure’s use in two additional care 

settings—Long-Term Care Hospitals 

(LTCHs) and IRFs. Assuming that the 

review resulted in no substantive 

changes to the pressure ulcer measure, 

we noted that, if adopted, we would use 

the proposed subregulatory process to 

incorporate any NQF updates and 

revisions to the pressure ulcer measure 

specifications for the IRF QRP Program 

(77 FR 45196). 

In the CY 2013 OPPS/ASC final rule 

(77 FR 68500 through 68507), we 

adopted the policies and measures as 

proposed, with one exception. At the 

time of the CY 2013 OPPS/ASC final 

rule, the NQF had endorsed the pressure 

ulcer measure for the IRF setting, and 

re-titled it to cover both residents and 

patients within LTCH and IRF settings, 

in addition to the Nursing Home/Skilled 

Nursing Facility setting. Although the 

measure had been expanded to the IRF 

setting, we concluded that it was not 

possible to adopt the NQF endorsed 

measure ‘‘Percent of Residents or 

Patients with Pressure Ulcers That Are 

New or Worsened (short-stay)’’ (NQF 

#0678). Public comments revealed that 

the ‘‘Quality Indicator’’ section of the 

IRF–PAI did not contain the data 

elements that would be needed to 

calculate a risk-adjusted measure. As a 

result, we decided to: (1) Adopt an 

application of NQF #0678 that was a 

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26910 Federal Register / Vol. 78, No. 89 / Wednesday, May 8, 2013 / Proposed Rules 

non-risk-adjusted pressure ulcer 

measure (numerator and denominator 

data only); (2) collect the data required 

for the numerator and the denominator 

using the current version of the IRF– 

PAI; (3) delay public reporting of 

pressure ulcer measure results until we 

could amend the IRF–PAI to add the 

data elements necessary for riskadjusting NQF #0678, and then (4) 

adopt the NQF-endorsed version of the 

measure covering the IRF setting 

through rulemaking (77 FR 68507). 

2. Previously Finalized IRF QRP Quality 

Measures 

i. National Healthcare Safety Network 

(NHSN) Catheter Associated Urinary 

Tract Infection (CAUTI) Outcome 

Measure (NQF #0138) 

In the FY 2013 OPPS/ASC final rule 

we adopted the current version of NQF 

#0138 NHSN Catheter Associated 

Urinary Tract Infection (CAUTI) 

Outcome Measure (replacing an 

application of this measure which we 

initially adopted in the FY 2012 IRF 

PPS (76 FR 47874 through 47886)). The 

NQF endorsed measure applies to the 

FY 2015 IRF PPS annual increase factor 

and all subsequent payment 

determinations (77 FR 68504 through 

68505). 

Since the publication of the FY 2013 

OPPS/ASC final rule, the NHSN CAUTI 

measure has not changed. Furthermore, 

we have not removed, suspended, or 

replaced this measure and it remains an 

active part of the IRF QRP. Additional 

information about this measure can be 

found at http://www.qualityforum.org/

QPS/0138. Our procedures for data 

submission for this measure have also 

remained the same. IRFs should 

continue to submit their CAUTI 

measure data to the Centers for Disease 

Control and Prevention (CDC) NHSN. 

Details regarding submission of IRF 

CAUTI data to NHSN can be found at 

the NHSN Web site at http://www.cdc.

gov/nhsn/inpatient-rehab/index.html. 

ii. Application of Percent of Residents 

or Patients With Pressure Ulcers That 

Are New or Worsened (short-stay) (NQF 

#0678) 

In the CY 2103 OPPS/ASC final rule 

(77 FR 68500 through 68507) we 

finalized adoption of a non-riskadjusted application of this measure 

using the current version of the IRF– 

PAI. We also stated that we would not 

begin public reporting of this measure 

until we had adopted the NQF-endorsed 

version of this measure. To adopt the 

NQF-endorsed version of this measure, 

we had to update the existing IRF–PAI 

to include the additional data elements 

necessary to risk adjust this measure. 

We also delayed public reporting of 

pressure ulcer measure results until we 

could use notice and comment 

rulemaking to amend the IRF–PAI to 

add the data elements necessary for risk 

adjusting NQF #0678 (77 FR 68507). We 

are not proposing any changes to the 

application of measure #0678 finalized 

in the FY 2013 OPPS/ASC final rule for 

the FY 2015 and FY 2016 IRF PPS 

annual increase factor. Furthermore, we 

have not removed, suspended, or 

replaced this measure and it remains an 

active part of the IRF QRP. Additional 

information about this measure can be 

found at http://www.qualityforum.org/

QPS/0678. Our procedures for data 

submission for this measure also have 

remained the same. IRFs should 

continue to collect and submit pressure 

ulcer measure data during CY 2013 

using the IRF–PAI released on October 

1, 2012 for the FY 2015 IRF PPS annual 

increase factor. Further, IRFs should 

continue to collect and submit pressure 

ulcer measure data during the first three 

quarters of CY 2014 using the IRF–PAI 

released on October 1, 2012 for the FY 

2016 IRF PPS annual increase factor. 

However, we propose to adopt a 

revised version of the IRF–PAI starting 

October 1, 2014. This revised version of 

the IRF–PAI would allow collection of 

data elements necessary for risk 

adjustment of NQF #0678; therefore, we 

are proposing to adopt the NQF #0678 

as specified (for example, including 

risk-adjustment) for the FY 2017 

payment determination and subsequent 

fiscal year payment determinations. 

TABLE 8—QUALITY MEASURES FINALIZED IN THE CY 2013 OPPS/ASC FINAL RULE AFFECTING THE FY 2015 IRF 

ANNUAL INCREASE FACTOR AND SUBSEQUENT YEAR INCREASE FACTORS

NQF Measure ID Measure title 

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

(CAUTI) Outcome Measure ∂

Application of NQF #0678 ........................................... Percent of Residents or Patients with Pressure Ulcers That are New or Worsened 

(Short-Stay) * 

∂ Using CDC/NHSN. 

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

C. Proposed New IRF QRP Quality 

Measures Affecting the FY 2016 and FY 

2017 IRF PPS Annual Increase Factor, 

and Subsequent Year Increase Factors 

1. General Considerations Used For 

Selection of Quality Measures for the 

IRF QRP 

The successful development of an IRF 

quality reporting program that promotes 

the delivery of high quality healthcare 

services in IRFs is our paramount 

concern. We seek to adopt measures for 

the IRF QRP that promote better, safer, 

and more efficient care. Our measure 

selection activities for the IRF QRP must 

take into consideration input we receive 

from a multi-stakeholder group, the 

Measure Applications Partnership 

(MAP), which is convened by the NQF 

as part of a pre-rulemaking process that 

we have established and are required to 

follow under section 1890A of the Act. 

The MAP is a public-private partnership 

comprised of multi-stakeholder groups 

convened by the NQF for the primary 

purpose of providing input to CMS on 

the selection of certain categories of 

quality and efficiency measures, as 

required by section 1890A(a)(3) of the 

Act. By February 1st of each year, the 

NQF must provide MAP input to CMS. 

We have taken the MAP’s input into 

consideration in selecting measures for 

this proposed rule. Input from the MAP 

is located at http://www.qualityforum.

org/Setting_Priorities/Partnership/

Measure_Applications_

Partnership.aspx. For more details 

about the pre-rulemaking process, see 

the FY 2013 IPPS/LTCH PPS final rule 

(77 FR 53376). 

We also take into account national 

priorities, such as those established by 

the National Priorities Partnership 

(NPP) at http://www.qualityforum.org/ 

npp/, the HHS Strategic Plan http://

www.hhs.gov/secretary/about/priorities/

priorities.html and the National Strategy 

for Quality Improvement in Healthcare 

located at (http://www.healthcare.gov/

news/reports/nationalqualitystrategy

032011.pdf). 

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Federal Register / Vol. 78, No. 89 / Wednesday, May 8, 2013 / Proposed Rules 26911 

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

Effectiveness of influenza vaccine in healthcare 

professionals: A randomized trial. JAMA. 1999; 281: 

908–913. 

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

Novel influenza A (H1N1) virus infections among 

health-care personnel—United States, April–May 

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

641–645. 

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

and control of influenza with vaccines: 

Recommendations of the Advisory Committee on 

Immunization Practices (ACIP), 2010. MMWR 

Recomm Rep. 2010. 59(08): 1–62. 

To the extent practicable, we have 

sought to adopt measures that have been 

endorsed by a national consensus 

organization, recommended by multistakeholder organizations, and 

developed with the input of providers, 

purchasers/payers, and other 

stakeholders. 

For the FY 2016 IRF PPS annual 

increase factor, in addition to retaining 

the previously discussed CAUTI and 

Pressure Ulcer measures, we are 

proposing to adopt one new measure: 

Influenza Vaccination Coverage among 

Healthcare Personnel Measure (NQF 

#0431). For the FY 2017 IRF PPS annual 

increase factor we are proposing to 

adopt three quality measures: (1) AllCause Unplanned Readmission Measure 

for 30 Days Post Discharge from 

Inpatient Rehabilitation Facilities, (2) 

Percent of Residents or Patients Who 

Were Assessed and Appropriately Given 

the Seasonal Influenza Vaccine (ShortStay) (NQF #0680), and (3) the NQF 

endorsed version of Percent of Residents 

or Patients with Pressure Ulcers that are 

New or Worsened (Short-Stay) (NQF 

#0678). We discuss each in turn below. 

2. New Quality Measures Proposed for 

Quality Data Reporting Affecting the FY 

2016 IRF PPS Annual Increase Factor 

i. Proposed IRF QRP Measure #1: 

Influenza Vaccination Coverage Among 

Healthcare Personnel (NQF #0431) 

We propose to adopt the CDC 

developed Influenza Vaccination 

Coverage among Healthcare Personnel 

(NQF #0431) measure that is currently 

collected by the CDC via the NHSN. 

This measure reports on the percentage 

of health care personnel who receive the 

influenza vaccination. This measure 

was included on the CMS’ List of 

Measures under Consideration for 

December 1, 2012 that CMS made 

publicly available. The measure was 

reviewed by the MAP and was included 

in the MAP input that was transmitted 

to CMS on February 1, 2013, as required 

by section 1890A(a)(3) of the Act. The 

MAP fully supported the use of this 

measure in the IRF setting, indicating it 

promotes alignment across quality 

reporting programs (for example, with 

Long-Term Care Hospital Quality 

Reporting Program (LTCHQR Program) 

and Hospital Inpatient Quality 

Reporting Program (Hospital IQR)) and 

addresses a core measure concept. 

Health care personnel are at risk for 

both acquiring influenza from patients 

and transmitting it to patients, and 

health care personnel often come to 

work when ill.2 One early report of 

health care personnel influenza 

infections during the 2009 H1N1 

influenza pandemic estimated 50 

percent of infected health care 

personnel had contracted the influenza 

virus from patients or coworkers in the 

healthcare setting.3

The CDC Advisory Committee on 

Immunization Practices (ACIP) 

guidelines recommend that all health 

care personnel get an influenza vaccine 

every year to protect themselves and 

patients.4 Even though levels of 

influenza vaccination among health care 

personnel have slowly increased over 

the past 10 years, less than 50 percent 

of health care personnel each year 

received the influenza vaccination until 

the 2009 and 2010 seasons, when an 

estimated 62 percent of health care 

personnel got a seasonal influenza 

vaccination. In the 2010 and 2011 

season, 63.5 percent of health care 

personnel reported influenza 

vaccination. Increased influenza 

vaccination coverage among health care 

personnel is expected to result in 

reduced morbidity and mortality related 

to influenza virus infection among 

patients, aligning with the NQS’s aims 

of better care and healthy people/ 

communities. This measure has been 

finalized for reporting in the Hospital 

IQR Program, LTCHQR Program, and 

the Ambulatory Surgical Center Quality 

Reporting Program (ASCQR Program). 

We refer readers to the NHSN Manual, 

Healthcare Personnel Safety Component 

Protocol Module, Influenza Vaccination 

and Exposure Management Modules, 

which is available at the CDC Web site 

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

specifications and additional details. 

We propose that, for the IRF QRP, the 

Influenza Vaccination Coverage Among 

Healthcare Personnel measure (NQF 

#0431) have its own reporting period to 

align with the influenza vaccination 

season, which is defined by the CDC as 

October 1st (or when the vaccine 

becomes available) through March 31st. 

IRFs will submit their data for this 

measure to the NHSN (http://www.cdc.

gov/nhsn/). It is a secure Internet based 

surveillance system maintained by the 

CDC, and can be utilized by all types of 

health care facilities in the United 

States, including IRFs. NHSN collects 

data via a web based tool hosted by the 

CDC. Information on the NHSN system, 

including protocols, report forms, and 

guidance documents can be found at the 

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

nhsn/. NHSN will submit data to CMS 

on behalf of the facility. 

For the FY 2016 IRF PPS annual 

increase factor, we propose that the data 

collection will cover the period from 

October 1, 2014 (or when the vaccine 

becomes available) through March 31, 

2015. Details related to the use of NHSN 

for data submission and information on 

definitions, numerator data, 

denominator data, data analyses, and 

measure specifications for the Influenza 

Vaccination Coverage among Healthcare 

Personnel (NQF #0431) measure can be 

found at http://www.cdc.gov/nhsn/

inpatient-rehab/hcp-vacc/index.html. 

Because IRFs are already using the 

NHSN for the submission of CAUTI 

data, the administrative burden related 

to data collection and submission for 

this measure under the IRF QRP should 

be minimal. 

While IRFs can enter information in 

NHSN at any point during the influenza 

season for NQF #0431, data submission 

is only required once per influenza 

season, unlike the other measure 

finalized for the IRF QRP that utilizes 

NHSN (CAUTI measure NQF #0138). 

For example, IRFs can choose to submit 

influenza vaccination data on a monthly 

basis. However, each time an IRF 

submits these data, it will be asked to 

provide a cumulative total of 

vaccinations for the ‘‘current’’ influenza 

season. Thus, entering this information 

at the end of the influenza season would 

yield the same total number of 

vaccinations. The NHSN system will not 

track the individual number of 

vaccinations on a monthly basis, but, 

rather, will track the cumulative total of 

vaccinations for the ‘‘current’’ influenza 

season. We propose that the final 

deadline associated with this measure 

align with another CMS deadline for IRF 

HAI reporting into NHSN, which is May 

15th. IRF QRP data collection timelines 

and submission deadlines are discussed 

below. 

Also, we note that data collection for 

this measure is not 12 months, as with 

other measures, but is approximately 6 

months (October 1 (or when the vaccine 

becomes available) through March 31 of 

the following year). We note that this 

data collection period is applicable only 

to NQF #0431 Influenza Vaccination 

Coverage Among Healthcare Personnel, 

and not applicable to any other IRF QRP 

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26912 Federal Register / Vol. 78, No. 89 / Wednesday, May 8, 2013 / Proposed Rules 

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

August 18, 2011/Rules and Regulations, C1a. 

6MedPAC, Report to Congress, Medicare Payment 

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

chapters/Mar12_Ch09.pdf. 

7Bernard SL, Dalton K, Lenfestey NF, Jarrett NM, 

Nguyen KH, Sorensen AV, Thaker S, West ND. 

Study to support a CMS Report to Congress: Assess 

feasibility of extending the hospital-acquired 

conditions—present on admission IPPS payment 

policy to non-IPPS payment environments. 

Prepared for the Centers for Medicare & Medicaid 

Services (CMS Contract No. HHSM–500–T00007). 

2011. 

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

Sanchez GM, Johnson AE, et al. A reengineered 

hospital discharge program to decrease 

rehospitalization: a randomized trial. Ann Intern 

Med 2009;150(3):178–87. 

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

C, Kramer AM. Preparing patients and caregivers to 

participate in care delivered across settings: the 

Care Transitions Intervention. J Am Geriatr Soc 

2004;52(11):1817–25. 

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

Finlayson K, Hamilton K. Fewer emergency 

readmissions and better quality of life for older 

adults at risk of hospital readmission: a randomized 

controlled trial to determine the effectiveness of a 

24-week exercise and telephone follow-up program. 

J Am Geriatr Soc 2009;57(3):395–402. 

11 Garasen H, Windspoll R, Johnsen R. 

Intermediate care at a community hospital as an 

alternative to prolonged general hospital care for 

elderly patients: a randomized controlled trial. BMC 

Public Health 2007;7:68. 

12 Koehler BE, Richter KM, Youngblood L, Cohen 

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

30-day post discharge hospital readmission or 

emergency department (ED) visit rates in high-risk 

elderly medical patients through delivery of a 

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

218. 

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

R, Mezey M, Pauly M. Comprehensive discharge 

planning for the hospitalized elderly. A randomized 

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

1006. 

14Naylor MD, Brooten D, Campbell R, Jacobsen 

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

discharge planning and home follow-up of 

hospitalized elders: a randomized clinical trial. 

Jama 1999;281(7):613–20. 

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

Hirschman KB.The Importance of Transitional Care 

measures, proposed or adopted, unless 

explicitly stated. The measure 

specifications for this measure can be 

found at http://www.cdc.gov/nhsn/

inpatient-rehab/hcp-vacc/index.html 

and at http://www.qualityforum.org/

QPS/0431. 

We are seeking comments on the 

proposed use of the Influenza 

Vaccination Coverage among Healthcare 

Personnel (NQF #0431) measure for the 

FY 2016 IRF PPS annual increase factor 

and subsequent years. 

TABLE 9—SUMMARY OF FY 2016 IRF 

PPS ANNUAL INCREASE FACTOR

Continued Data Collection: 

• NQF #0138: National Health Safety 

Network (NHSN) Catheter-associated 

Urinary Tract Infection (CAUTI) Outcome Measure ∂

• Application of NQF #0678: Percent of 

Residents with Pressure Ulcers That 

are New or Worsened (Short-Stay) * 

Proposed New IRF QRP Measures Affecting 

the FY 2016 IRF PPS Annual Increase 

Factor and Subsequent Year Increase Factors: 

• NQF #0431: Influenza Vaccination 

Coverage among Healthcare Personnel ∂

∂ Using CDC NHSN. 

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

3. Quality Measures Proposed for 

Quality Data Reporting Affecting the FY 

2017 IRF PPS Annual Increase Factor 

and Subsequent Years 

We are proposing to adopt two 

additional quality measures, and replace 

an existing quality measure for the IRF 

QRP for the FY 2017 payment 

determination and subsequent payment 

determinations. The new measures 

being proposed are (1) All-Cause 

Unplanned Readmission Measure for 30 

Days Post Discharge from Inpatient 

Rehabilitation Facilities, and (2) Percent 

of Residents or Patients Who Were 

Assessed and Appropriately Given the 

Seasonal Influenza Vaccine (Short-Stay) 

(NQF #0680). In addition, we propose to 

replace the application of Percent of 

Residents or Patients with Pressure 

Ulcers That Are New or Worsened 

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

of the NQF endorsed version of this 

measure. We discuss each in turn 

below. 

i. Proposed IRF QRP Measure #1: AllCause Unplanned Readmission Measure 

for 30 Days Post Discharge From 

Inpatient Rehabilitation Facilities 

We propose to adopt the All-Cause 

Unplanned Readmission Measure for 30 

Days Post Discharge from Inpatient 

Rehabilitation Facilities. This measure 

estimates the risk-standardized rate of 

unplanned, all-cause hospital 

readmissions for cases discharged from 

an IRF who were readmitted to a shortstay acute care hospital or LTCH, within 

30 days of an IRF discharge. This is a 

claims-based measure not requiring 

reporting of new data by IRFs, and 

hence, will not be used to determine IRF 

reporting compliance for the IRF QRP. 

Addressing unplanned hospital 

readmissions is a high priority for HHS 

and CMS as our focus continues on 

promoting patient safety, eliminating 

healthcare associated infections, 

improving care transitions, and 

reducing the cost of healthcare. 

Readmissions are costly to the Medicare 

program and have been cited as 

sensitive to improvements in 

coordination of care and discharge 

planning for patients.5 Although the 

literature on readmissions is mainly 

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

discharge planning, communications 

and coordination arise at discharge from 

other inpatient facilities. 

IRFs provide intensive rehabilitation 

services to patients after an injury, 

illness, or surgery. According to 

MedPAC, the average length of stay for 

most patients in an IRF is 13.1 days.6 In 

2010, almost 360,000 Medicare fee-forservice (FFS) beneficiaries received care 

in IRFs and cost the Medicare FFS 

program over $6 billion dollars. The 

unadjusted readmission rate to an IPPS 

hospital in the 30 days following an IRF 

discharge was about 15 percent.7 With 

such a large proportion of patients being 

readmitted to a hospital level of care, we 

are proposing a risk-adjusted measure of 

readmission rate, the All-Cause 

Unplanned Readmission Measure for 30 

Days Post Discharge from Inpatient 

Rehabilitation Facilities. An IRF’s 

readmission rate is affected by complex 

and critical aspects of care such as 

communication between providers or 

between providers and patients; 

prevention of, and response to, 

complications; patient safety; and 

coordinated transitions to the 

community or a less intense level of 

care. While disease-specific measures of 

readmission are useful in identifying 

deficiencies in care for specific groups 

of patients, they account for only a 

small minority of total readmissions. By 

contrast, a facility-wide, all-cause 

readmission reflects a broader 

assessment of the quality of care in IRFs, 

and may consequently better promote 

quality improvement and inform 

consumers about quality. 

While some readmissions are 

unavoidable, such as those resulting 

from the inevitable progression of 

disease or worsening of chronic 

conditions, readmissions may also 

result from poor quality of care or 

inadequate transitions between care 

settings. Randomized controlled trials in 

short-stay acute care hospitals have 

shown that improvement in the 

following areas can directly reduce 

hospital readmission rates: quality of 

care during the initial admission; 

improvement in communication with 

patients, their caregivers and their 

clinicians; patient education; predischarge assessment; and coordination 

of care after discharge. Successful 

randomized trials have reduced 30-day 

readmission rates by 20–40 

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

found evidence that interventions 

associated with discharge planning 

helped to reduce readmission rates,15

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Federal Register / Vol. 78, No. 89 / Wednesday, May 8, 2013 / Proposed Rules 26913 

in Achieving Health Reform. Health Affairs 2011; 

30(4):746–754. 

16National Quality Forum. ‘‘Patient Outcomes: 

All-Cause Readmissions Expedited Review 2011’’. 

July 2012. pp12 

illustrating how hospitals may influence 

readmission rates through best 

practices. 

Because many studies have shown 

readmissions to be related to quality of 

care, and that interventions have been 

able to reduce 30-day readmission rates, 

we believe it is appropriate to include 

an all-condition readmission rate as a 

quality measure in the IRF QRP. 

Promoting quality improvements 

leading to successful transitions of care 

for patients moving from the IRF setting 

to the community or another post-acute 

care setting, and reducing preventable 

facility-wide readmission rates, is 

consistent with the National Quality 

Strategy priorities of safer, better 

coordinated care and lower costs. 

CMS’s approach to developing this 

measure is consistent with NQFendorsed Hospital-Wide (HWR) RiskAdjusted All-Cause Unplanned 

Readmission Measure (NQF #1789) 

(http://www.qualityforum.org/

Publications/2012/07/Patient_

Outcomes_All-Cause_Readmissions_

Expedited_Review_2011.aspx) finalized 

for the Hospital IQR Program in the FY 

2013 IPPS/LTCH PPS Final Rule (FR 77 

53521 through 53528). To the extent 

appropriate, the proposed IRF measure 

is being harmonized with the HWR 

measure and other measures of 

readmission rates developed for postacute care (PAC) settings, including 

LTCHs. 

The All-Cause Unplanned 

Readmission Measure for 30 Days Post 

Discharge from Inpatient Rehabilitation 

Facilities measure assesses returns to 

short-stay acute care hospitals or LTCHs 

within 30 days of discharge from an IRF 

to the community or another care setting 

of lesser intensity. Patient readmissions 

are tracked using Medicare claims data 

for 30 days after discharge, to the date 

of patient death, if the patient dies 

within 30 days of discharge. Because 

patients differ in complexity and 

morbidity, the measure is risk-adjusted 

for patient case-mix. The measure also 

excludes planned readmissions, because 

these are not considered to be indicative 

of poor quality of care on the part of the 

IRF. 

A model developed by a CMS 

measure development contractor 

predicts admission rates while 

accounting for patient demographics, 

primary condition in the prior short 

stay, comorbidities, and a few other 

patient factors. While estimating the 

predictive power of the patient 

characteristics, the model also estimates 

a facility specific effect common to 

patients treated at that facility. Similar 

to the Hospital IQR Program hospitalwide readmission measure, the 

proposed IRF QRP measure is the ratio 

of the number of risk-adjusted predicted 

unplanned readmissions for each 

individual IRF, including the estimated 

facility effect, to the average number of 

risk-adjusted predicted unplanned 

readmissions for the same patients 

treated across IRFs. A ratio above one 

indicates a higher than expected 

readmission rate, or lower level of 

quality, while a ratio below one 

indicates a lower than expected 

readmission rate, or higher level of 

quality (The methodology report 

detailing the development of the IPPS 

hospital-wide measure and the NQF 

report may be downloaded from: http:// 

www.qualityforum.org/Publications/

2012/07/Patient_Outcomes_All-Cause_

Readmissions_Expedited_Review_

2011.aspx.) 

The patient population includes IRF 

patients who: 

• Were discharged alive from the IRF 

• Had 12 months of Medicare Part A, 

fee-for-service coverage prior to the IRF 

stay 

• Had 30 days of Medicare Part A, 

fee-for-service coverage post discharge. 

• Had an IPPS hospital stay within 

the 30 days prior to the IRF stay. 

• Were aged 18 years or above when 

admitted to the IRF. 

As with the Hospital IQR Program 

hospital-wide readmission measure, 

patients whose principal diagnosis was 

cancer and whose treatment was nonsurgical are excluded. Studies of this 

population that were reviewed for the 

Hospital IQR Program readmission 

measure showed them to have a 

different trajectory of illness and 

mortality than other patient 

populations.16 The measure also 

excludes patients who died during the 

IRF stay, IRF patients under the age of 

18, or IRF patients discharged against 

medical advice (AMA). 

Readmissions that are not included in 

the measure are: 

• Transfers from an IRF to another 

IRF or IPPS hospital 

• Readmissions within the 30 day 

window that are usually considered 

planned due to the nature of the 

procedures and principal diagnoses of 

the readmission. 

• IRF stays that are problematic (e.g., 

with stays that overlap wholly or in 

part) 

The planned readmission list includes 

the planned procedures specified in the 

Hospital-Wide All-Cause Unplanned 

Readmission Measure (HWR) (NQF 

#1789) used in the Hospital IQR 

Program, plus other procedures that 

were determined in consultation with 

technical expert panels. In addition to 

the list of planned procedures is a list 

of diagnoses which, if found as the 

principal diagnosis on the readmission 

claim, would indicate that the 

procedure occurred during an 

unplanned readmission. 

A discharged patient is tracked until 

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

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

(3) the patient is readmitted to an acute 

level of care (short or long term). If 

multiple readmissions occur, only the 

first is considered for this measure. If 

the readmission is unplanned, it is 

counted as a readmission in the measure 

rate. If the readmission is planned, the 

readmission is not counted in the 

measure rate. The occurrence of a 

planned readmission ends the 30-day 

window of the index discharge from the 

IRF. 

Readmission rates are risk-adjusted 

for patient case-mix characteristics, 

independent of quality. The riskadjustment model accounts for 

demographic characteristics, principal 

diagnosis, co-morbidities, length of stay 

in the prior IPPS hospital, critical care 

days in the prior IPPS hospital, number 

of IPPS hospital stays in the prior year, 

and the occurrence of various surgery 

types in the prior IPPS hospital stay. In 

modeling IRF readmissions, all patients 

are included in a single model modeling 

separate patient types separately as was 

done in the IPPS measure, an approach 

different from the five-cohort approach 

of the HWR measure, adapted to 

account for a substantially smaller 

patient population. 

While the HWR measure used one 

year of data, the smaller IRF patient 

population leads us to propose merging 

two years of data for the IRF QRP. This 

approach is similar to that used by the 

Hospital IQR Program condition-specific 

readmission measures, which use three 

years of claims data. Merging multiple 

years produces more precise estimates 

of the effects of all the risk adjusters, 

and increases the sample size associated 

with each facility. Larger patient 

samples are better to be able to 

meaningfully to distinguish facility 

performance. Under the exception 

authority in section 1886(m)(5)(D)(ii) of 

the Act, we are proposing to use this 

measure in the IRF QRP. This section 

provides that in the case of a specified 

area or medical topic determined 

appropriate by the Secretary for which 

a feasible and practical measure has not 

been endorsed by the entity with a 

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26914 Federal Register / Vol. 78, No. 89 / Wednesday, May 8, 2013 / Proposed Rules 

17National Quality Forum. Measure Applications 

Partnership Pre-Rulemaking Report: 2013 

Recommendations of Measures Under 

Consideration by HHS: February 2013. Available at 

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

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

18Centers for Medicare & Medicaid Services 

(2011, May). Adult Immunization: Overview. 

Retrieved from https://www.cms.gov/ 

Immunizations/. 

19 Gorina Y, Kelly T, Lubitz J, et al. (2008, 

February). Trends in influenza and pneumonia 

among older persons in the United States. Aging 

Trends no. 8. Retrieved from http://www.cdc.gov/ 

nchs/data/ahcd/agingtrends/08influenza.pdf. 

20Centers for Disease Control and Prevention. 

(2008, September). Influenza e-brief: 2008–2009 flu 

facts for policymakers. Retrieved from http:// 

www.cdc.gov/washington/pdf/flu_newsletter.pdf. 

21Zorowitz, RD. Stroke Rehabilitation Quality 

Indicators: Raising the Bar in the Inpatient 

Rehabilitation Facility. Topics in Stroke 

Rehabilitation 2010; 17 (4):294–304. 

22Centers for Medicare & Medicaid Services. 

MDS 3.0 Item Subsets VI.10.4 for the April 1, 2012 

Release. Retrieved from https://www.cms.gov/ 

NursingHomeQualityInits/ 

30_NHOIMDS30TechnicalInformation.asp. 

23The LTCH CARE Data Set Version 2.00, the 

data collection instrument for the submission of the 

Percent of Residents or Patients with Pressure 

Ulcers That are New or Worsened (Short-Stay) 

measure and the Percent of Residents or Patients 

Who Were Assessed and Appropriately Given the 

Seasonal Influenza Vaccine (Short-Stay) measure, is 

currently under review by the Office of 

Management and Budget (OMB) in accordance with 

the Paperwork Reduction Act (PRA) http:// 

www.gpo.gov/fdsys/pkg/FR-2013-02-01/pdf/2013- 

02155.pdf. The LTCH CARE Data Set Version 1.01 

was approved on April 24, 2012 by OMB in 

accordance with the PRA. The OMB Control 

Number is 0938–1163. Expiration Date April 30, 

2013. 

contract under section 1890(a), the 

Secretary may specify a measure that is 

not so endorsed as long as due 

consideration is given to measures that 

have been endorsed or adopted by a 

consensus organization identified by the 

Secretary. 

We were not able to identify an 

appropriate readmission measure for 

IRFs. In 2012, NQF endorsed two 

hospital-wide readmission measures, 

the National Committee for Quality 

Assurance (NCQA) measure intended 

for health plans, Plan All-Cause 

Readmissions (NQF #1768), and CMS’ 

Hospital-Wide All-Cause Unplanned 

Readmission Measure (HWR) (NQF 

#1789), of which the latter is the basis 

of the All-Cause Unplanned 

Readmission Measure for 30 Days Post 

Discharge from Inpatient Rehabilitation 

Facilities measure being proposed here. 

This measure was present on CMS’s List 

of Measures Under Consideration, and 

the most recent MAP Pre-Rulemaking 

Report noted that ‘‘readmission 

measures are also examples of measures 

that MAP recommends be standardized 

across settings, yet customized to 

address the unique needs of the 

heterogeneous Post-Acute Care/LongTerm Care (PAC/LTC) population. 

(http://www.qualityforum.org/ 

Publications/2013/02/MAP_PreRulemaking_Report_- 

February_2013.aspx pp. 177-180). 

Although supported the direction of this 

measure, they cautioned that required 

further development. MAP has also 

continually noted the need for care 

transition measures in PAC/LTC 

performance measurement programs. 

Setting-specific admission and 

readmission measures under 

consideration would address this 

need’’.17

We intend to seek NQF endorsement 

of the All-Cause Unplanned 

Readmission Measure for 30 Days Post 

Discharge from Inpatient Rehabilitation 

Facilities measure. As this is a claimsbased measure not requiring reporting of 

new data by IRFs, this measure will not 

be used to determine IRF reporting 

compliance for the IRF QRP. We are 

proposing to begin reporting feedback to 

IRFs on performance of this measure in 

CY 2016. The initial provider feedback 

will be based on CY 2013 and CY 2014 

Medicare FFS claims data related to IRF 

readmissions. The readmission measure 

will be part of the IRF public reporting 

program once public reporting is 

instated. Additional Details pertaining 

to this measure can be found on the IRF 

Quality Reporting Program Web site at 

http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/ 

index.html. We intend to provide details 

pertaining to the public reporting, such 

as provider preview of performance 

results, of this measure in our upcoming 

rules. 

We seek public comment on our 

proposal to adopt the All-Cause 

Unplanned Readmission Measure for 30 

Days Post Discharge from Inpatient 

Rehabilitation Facilities. 

ii. Proposed IRF QRP Quality Measure 

#2: Percent of Residents or Patients Who 

Were Assessed and Appropriately Given 

the Seasonal Influenza Vaccine (ShortStay) (NQF #0680) 

We are proposing to add the NQF# 

0680 Percent of Residents or Patients 

who were assessed and Appropriately 

Given the Seasonal Influenza 

Vaccination (Short-Stay) measure to the 

IRF QRP, and we propose to collect the 

data for this measure through the 

addition of data items to the Quality 

Indicator section of the IRF–PAI. This 

measure was on CMS’s list of measures 

under consideration that were reviewed 

by the MAP and was included in the 

MAP input that was transmitted to 

CMS, as required by the pre-rulemaking 

process in section 1890A(a)(3) of the 

Act. The MAP panel supported the use 

of this measure in the IRF setting, noting 

that it promotes alignment across 

settings and addresses a core measure 

concept. A MAP finding of ‘‘supported’’ 

indicates the measure is appropriate for 

immediate inclusion in the program 

measure set. (MAP Pre-Rulemaking 

Report: 2013 Recommendations on 

Measures Under Consideration by HHS, 

Pages 20 and 178, February 2013). 

Although influenza is prevalent 

among all population groups, the rates 

of death and serious complications 

related to influenza are highest among 

those ages 65 and older and those with 

medical complications that put them at 

higher risk. The CDC reports that an 

average of 36,000 Americans die 

annually from influenza and its 

complications, and most of these deaths 

are among people 65 years of age and 

over.18 In 2004, approximately 70,000 

deaths were caused by influenza and 

pneumonia, and more than 85 percent 

of these deaths were among the 

elderly.19 Given that many individuals 

receiving health care services in IRFs 

are elderly and/or have several medical 

conditions, many IRF patients are 

within the target population for the 

influenza immunization.20 21

We propose to add the data elements 

needed for this measure, as an influenza 

data item set, to the Quality Indicator 

section of the IRF–PAI. This item set is 

described below entitled, ‘‘Proposed 

Changes to the IRF–PAI That Are 

Related to the IRF Quality Reporting 

Program.’’ We are proposing that data 

for this measure will be collected using 

a revised version of the IRF–PAI that 

includes a new data item set designed 

to assess patients’ influenza vaccination 

status. The revised IRF–PAI would be 

effective on October 1, 2014. These 

proposed data set items are harmonized 

with data elements (O0250: Influenza 

Vaccination Status) from the Minimum 

Data Set (MDS) 3.0 and LTCH CARE 

Data Set item sets.22 23 The 

specifications and data elements for this 

proposed measure are available in the 

MDS 3.0 QM User’s Manual available on 

our Web site at https://www.cms.gov/ 

NursingHomeQualityInits/Downloads/ 

MDS30QM-Manual.pdf. 

For purposes of this measure, the 

influenza vaccination season consists of 

October 1st (or when the vaccine 

becomes available) through March 31st 

each year. We are proposing that while 

an IRF’s compliance with reporting 

quality data for this measure will be 

based on the calendar year, the measure 

calculation and public reporting of this 

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Federal Register / Vol. 78, No. 89 / Wednesday, May 8, 2013 / Proposed Rules 26915 

24National Quality Forum, Consensus Standards 

Approval Committee Wednesday, July 11, 2012. 

Transcript. Available: http://www.qualityforum.org/ 

WorkArea/linkit.aspx?LinkIdentifier=id&

ItemID=71612. 

25Press Release: NQF Removes Time-Limited 

Endorsement Status for 13 Measures, Measures 

Now Have Endorsed Status. August 1, 2012. 

Available: http://www.qualityforum.org/News_

And_Resources/Press_Releases/2012/NQF_

Removes_Time-Limited_Endorsement_for_13_

Measures;_Measures_Now_Have_Endorsed_

Status.aspx. 

measure (once public reporting is 

instated) will be based on the influenza 

vaccination season starting on October 1 

(or when vaccine becomes available) 

and ending on March 31 of the 

subsequent year. 

The IRF–PAI Training Manual will 

indicate how providers should complete 

these items during the time period 

outside of the vaccination season 

(October 1 (or when vaccine becomes 

available) through March 31). The 

measure specifications for this measure, 

Percent of Residents or Patients Who 

Were Assessed and Appropriately Given 

the Seasonal Influenza Vaccine (ShortStay) (NQF #0680), can be found on the 

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

Medicare/Quality-Initiatives-PatientAssessment-Instruments/ 

NursingHomeQualityInits/ 

NHQIQualityMeasures.html. Measure 

specifications are located in the 

download titled: MDS 3.0 QM User’s 

Manual V6.0. Additional information on 

this measure can also be found at 

http: 

//www.qualityforum.org/QPS/0680. 

Additional discussion related to the 

timing and submission of this measure 

is provided in this proposed rule. 

We invite public comment on our 

proposal to use the Percent of Residents 

or Patients Who Were Assessed and 

Appropriately Given the Seasonal 

Influenza Vaccine (Short-Stay) (NQF 

#0680) measure for the FY 2017 IRF PPS 

annual increase factor and subsequent 

years. 

iii. Proposed IRF QRP Quality Measure 

#3: Percent of Residents or Patients 

With Pressure Ulcers That Are New or 

Worsened (Short-Stay) (NQF #0678)— 

Proposal To Adopt the NQF Endorsed 

Version of This Measure 

In the CY 2013 OPPS/ASC final rule 

(77 FR 68507) we finalized adoption of 

a non-risk-adjusted application of this 

measure, using the IRF–PAI released on 

October 1, 2012 for data collection. 

Although the measure was expanded to 

the IRF setting in 2012, the existing 

IRF–PAI needed to be updated to 

include the additional data elements 

required to risk adjust the measure prior 

to adopting the NQF measure. We also 

stated that we would not begin public 

reporting of this measure until we had 

adopted the NQF-endorsed version of 

this measure, and we would use the 

rulemaking process to solicit public 

comments on changes made to the IRF– 

PAI to collect elements necessary for 

risk adjustment of NQF #0678 (77 FR 

68507). 

If these proposed data elements 

related to risk adjustment data element 

are finalized, we also propose to remove 

the use of the currently adopted nonrisk adjusted application of the measure 

and adopt the NQF-endorsed version of 

NQF #0678 for the FY 2017 IRF PPS 

increase factor. NQF #0678 underwent 

review for expansion to the IRF setting 

by the NQF Consensus Standards 

Approval Committee (CSAC) on July 11, 

2012 and was subsequently ratified by 

the NQF Board of Directors for 

expansion to IRF settings on August 1, 

2012.24 25 The title of the measure was 

changed to Percent of Residents or 

Patients with Pressure Ulcers that are 

New or Worsened (short-stay) to reflect 

this expansion. Updated specifications, 

reflecting the expansion, are available 

on the NQF Web site at http:// 

www.qualityforum.org/QPS/0678. We 

further propose to collect data for this 

measure using a revised version of the 

IRF–PAI beginning on October 1, 2014 

for the FY 2017 IRF PPS annual increase 

factor. Our proposals related to a revised 

IRF–PAI are discussed in this proposed 

rule. The measure specifications for this 

NQF endorsed measure, Percent of 

Residents or Patients with Pressure 

Ulcers That Are New or Worsened 

(short-stay) (NQF #0678) can be found 

on the CMS Web site: http://www.cms.

gov/Medicare/Quality-InitiativesPatient-Assessment-Instruments/

NursingHomeQualityInits/NHQIQuality

Measures.html. Measure specifications 

are located in the download titled: MDS 

3.0 QM User Manual V6.0. Additional 

information about the measure can also 

be found at http://www.qualityforum.

org/QPS/0678. 

In summary, we propose to adopt the 

NQF-endorsed version of NQF #0678, 

with data collection beginning October 

1, 2014 using the revised version of 

IRF–PAI, for quality reporting affecting 

the FY 2017 IRF PPS annual increase 

factor. Further, we propose to remove 

the current non-risk adjusted 

application of this measure when the 

revised IRF–PAI is implemented on 

October 1, 2014. Note that until 

September 30, 2014, IRFs should 

continue to submit pressure ulcer data 

using the IRF–PAI released on October 

1, 2012 for the purposes of data 

submission requirements for the FY 

2015 and FY 2016 IRF PPS increase 

factor. Changes to the IRF–PAI and 

additional information regarding data 

submission are discussed in this 

proposed rule. 

We invite public comment regarding 

our proposed removal of the currently 

adopted non-risk adjusted application of 

the Percent of Residents or Patients with 

Pressure Ulcers That Are New or 

Worsened (short-stay) (NQF #0678) and 

the adoption of the NQF endorsed 

version of the Percent of Residents or 

Patients with Pressure Ulcers That Are 

New or Worsened (NQF #0678). 

TABLE 10—SUMMARY OF FY 2017 IRF PPS ANNUAL INCREASE FACTOR

Continued Data Collection: 

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

Continued Data Collection of Proposed New IRF QRP Measures Affecting the FY 2016 IRF PPS Annual Increase Factor: 

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

Proposed New IRF QRP Measures Affecting the FY 2017 IRF PPS Annual Increase Factor: 

• All-Cause Unplanned Readmission Measure for 30 Days Post Discharge from Inpatient Rehabilitation Facilities ∧

• NQF #0680: Percent of Residents or Patients Who Were Assessed and Appropriately Given the Seasonal Influenza Vaccine (ShortStay) * 

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

+ Using CDC/NHSN. 

* Using the IRF–PAI released October 1, 2014. 

caret; Medicare Fee-For-Service claims data. 

mstockstill on DSK4VPTVN1PROD with PROPOSALS2

26916 Federal Register / Vol. 78, No. 89 / Wednesday, May 8, 2013 / Proposed Rules 

D. Proposed Changes to the IRF–PAI 

That Are Related to the IRF Quality 

Reporting Program 

1. General Background 

A version of the IRF–PAI has been in 

use in the IRF setting since January 1, 

2002, when IRFs first began receiving 

payment under the IRF PPS. IRFs must 

submit a completed IRF–PAI for each 

Medicare Part A, B, and C patient that 

is admitted and discharged from the 

IRF. 

The IRF PPS utilizes information from 

the IRF–PAI to classify patients into 

distinct groups based on clinical 

characteristics and expected resource 

needs. Separate payments are calculated 

for each group, including the 

application of case and facility level 

adjustments available at http://www.

cms.gov/Medicare/Medicare-Fee-forService-Payment/InpatientRehabFac

PPS/index.html. 

We are proposing to release an 

updated version of the IRF–PAI on 

October 1, 2014. Proposed revisions 

include data elements that will (1) 

Allow for risk adjustment of the NQF 

#0678 Percent of Residents or Patients 

with Pressure Ulcers That Are New or 

Worsened (Short-Stay), (2) allow for 

more detailed data collection related to 

NQF #0678 Percent of Residents or 

Patients with Pressure Ulcers That Are 

New or Worsened (Short-Stay), and (3) 

allow for data collection for NQF #0680 

Percent of Residents or Patients Who 

Were Assessed and Appropriately Given 

the Seasonal Influenza Vaccine (ShortStay). We also propose to adopt a new 

numbering schema for the IRF–PAI. 

Note that we are proposing both 

mandatory and voluntary additions to 

the IRF–PAI. Collection of voluntary 

data elements by IRFs will have no 

impact on measure calculations or on 

our determination of whether the IRF 

has met the reporting requirements 

under the IRF QRP. In contrast, failure 

to complete any adopted mandatory 

data elements may result in noncompliance with the IRF QRP 

requirements and subject the facility to 

a 2 percentage point reduction in its 

annual increase factor. In addition to 

clearly indicating which items are 

mandatory and which are voluntary in 

this proposal, we will post on our Web 

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

Quality-Initiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/

index.html a detailed matrix that 

identifies which data elements will be 

required, and which will be voluntary. 

The October 1, 2012 release of the 

IRF–PAI, the proposed October 1, 2014 

release of the IRF–PAI, inclusive of all 

the changes proposed here, and 

information about the IRF–PAI 

submission process can be found at 

https://www.cms.gov/Medicare/ 

Medicare-Fee-for-Service-Payment/ 

InpatientRehabFacPPS/IRFPAI.html. A 

PRA package for the revised IRF–PAI 

discussed here has been submitted for 

the Office of Management and Budget’s 

(OMB) review and approval. 

2. Background Related To Collection of 

Pressure Ulcer Data Elements Using the 

IRF–PAI 

In the FY 2012 IRF PPS final rule, we 

finalized a proposal to adopt an 

application of the NQF #0678 ‘‘Percent 

of Residents with Pressure Ulcers That 

Are New or Worsened (Short-Stay)’’ 

measure for use in the IRF QRP, 

beginning with the IRF PPS annual 

increase factor for FY 2014. We also 

finalized our proposal to collect the data 

for this pressure ulcer measure using the 

IRF–PAI. To do this, we deleted the set 

of voluntary quality questions that had 

been located in the ‘‘Quality Indicator’’ 

section of the IRF–PAI and replaced 

them with a new required set of 

pressure ulcer quality measure data 

items, numbered 48A to 50D. These 

revisions to the IRF–PAI went into effect 

on October 1, 2012. 

Since the publication of the FY 2012 

IRF PPS final rule we have received 

numerous comments about the current 

version of the IRF–PAI from IRF 

providers, provider organizations, and 

advocacy groups. In the CY 2013 OPPS/ 

ASC final rule, we discussed a number 

of specific public comments related to 

pressure ulcer data that we received in 

response to the CY 2013 OPPS/ASC IRF 

proposed rule (77 FR 68506). 

Commenters expressed specific 

concerns regarding the ability of the 

data elements in the IRF–PAI to 

sufficiently risk-adjust the measure. We 

agreed that there were limitations 

related to the risk adjustment data items 

that are on the IRF–PAI that went into 

effect on October 1, 2012, impacting the 

ability to calculate the measure using all 

of the risk adjustment related covariates. 

As a result, the CY 2013 OPPS/ASC 

final rule adopted an application of 

#0680 without risk-adjustment for FY 

2015 and subsequent years (77 FR 

68507). 

In response to the comments and 

feedback received in previous rules 

discussed above, we propose 

modifications to the data items in both 

the admission and discharge IRF–PAI 

assessments. 

3. Proposed Revisions to the IRF–PAI To 

Add Mandatory Risk Adjustment Data 

Items for NQF #0678 Percent of 

Residents or Patients With Pressure 

Ulcers That Are New or Worsened 

(Short-Stay) 

We are proposing to update the 

current IRF–PAI to include data 

elements that are necessary to risk 

adjust the Percent of Residents or 

Patients with Pressure Ulcers That Are 

New or Worsened (Short-Stay) (NQF 

#0678). These include the addition of 

the following indicator boxes to the 

IRF–PAI admission assessment: (1) 

Peripheral Vascular Disease, (2) 

Peripheral Arterial Disease, and (3) 

Diabetes. The additions would be 

placed in the Quality Indicators section 

of the revised IRF–PAI. 

We further determined that risk 

adjustment factors related to height and 

weight had inadvertently been left off of 

the revised version of the IRF–PAI that 

became effective on October 1, 2012. We 

are now proposing to add height and 

weight to the IRF–PAI to correct this 

oversight. 

We further propose adding the height 

and weight items into the ‘‘Medical 

Information’’ section if the IRF–PAI. As 

a general rule, we would place all data 

items related to quality reporting and 

quality measures within the Quality 

Indicator section of the IRF–PAI. 

However, the height and weight items 

have a dual purpose because they can be 

used for the calculation of Body Mass 

Index (BMI), which is used as one part 

of the analysis for compliance with the 

60 percent rule. Even though the height 

and weight items are placed in the 

‘‘Medical Information’’ section of the 

IRF–PAI, they are also being added to 

the IRF–PAI for calculating risk 

adjustment for the pressure ulcer 

measure. Failure to provide height and 

weight could result in a finding of noncompliance with the reporting 

requirements. 

We invite public comment on our 

proposal to include data elements 

required for risk-adjustment of #0678 

Percent of Patients with Pressure Ulcers 

That Are New or Worsened Measure as 

mandatory data collection elements in 

the revised IRF–PAI. 

4. Proposed Revisions to the IRF–PAI To 

Add Voluntary Data Items Related to 

NQF #0678 Percent of Residents or 

Patients With Pressure Ulcers That Are 

New or Worsened (Short-Stay) 

The pressure ulcer measure 

numerator for the NQF #0678 endorsed 

version of the ‘‘Percent of Patients with 

Pressure Ulcers That Are New or 

Worsened’’ measure looks at the number 

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Federal Register / Vol. 78, No. 89 / Wednesday, May 8, 2013 / Proposed Rules 26917 

26Centers for Medicare & Medicaid Services. 

MDS 3.0 Item Subsets V1.10.4 for the April 1, 2012 

Release. Retrieved from https://www.cms.gov/

NursingHomeQualityInits/30_NHQIMDS30

TechnicalInformation.asp. 

27The LTCH CARE Data Set Version 2.00, the 

data collection instrument for the submission of the 

Percent of Residents or Patients with Pressure 

Ulcers That are New or Worsened (Short-Stay) 

measure and the Percent of Residents or Patients 

Who Were Assessed and Appropriately Given the 

Seasonal Influenza Vaccine (Short-Stay) measure, is 

currently under review by the Office of 

Management and Budget (OMB) in accordance with 

the Paperwork Reduction Act (PRA) http://www.

gpo.gov/fdsys/pkg/FR-2013-02-01/pdf/2013-

02155.pdf. The LTCH CARE Data Set Version 1.01 

was approved on April 24, 2012 by OMB in 

accordance with the PRA. The OMB Control 

Number is 0938–1163. Expiration Date April 30, 

2013. 

of patients with a target assessment 

during the selected time window who 

have one or more Stage 2 through 4 

pressure ulcer(s) that are new or that 

have worsened compared with the 

previous assessment. According to the 

NQF Web site, in its description of NQF 

#0678, ‘‘Stage 1 pressure ulcers are 

excluded from this measure because 

recent studies have identified 

difficulties in objectively measuring 

them across different populations.’’ The 

measure numerator also does not 

include unstageable pressure ulcers. 

The data that is mandatory for IRFs to 

report under the IRF QRP are those that 

meet the requirements of the application 

of NQF #0678 that we finalized in the 

CY 2013 OPPS/ASC Final Rule. As 

noted above, we are proposing to add 

additional mandatory data items to 

accommodate this. If our proposal to 

adopt the NQF-endorsed version of this 

measure is finalized, the mandatory data 

would remain the same. 

We are also proposing to add 

voluntary data items to the IRF–PAI 

Quality Indicators section, designed to 

address commenters’ concerns about the 

adequacy of current pressure ulcer data 

items. Some commenters expressed 

concern that the current data items 

would not allow for documentation of 

all relevant categories of pressure ulcers, 

such as unstageable pressure ulcers. As 

modified, our proposed admission 

assessment consists of 2 main topics: (1) 

Unhealed Pressure Ulcers; and (2) 

Pressure Ulcer Risk Conditions. Also, 

the discharge assessment consists of 2 

main topics: (1) Unhealed Pressure 

Ulcers; and (2) Healed Pressure Ulcers. 

Within each main topic there are subtopics that contain a set of questions. 

The provider is asked to document how 

many pressure ulcers, if any, the patient 

has at each stage upon admission. We 

have added new questions that extend 

beyond stages 2 through 4 pressure 

ulcers, covering the presence of stage 1 

pressure ulcers, as well as unstageable 

pressure ulcers that are due to a nonremovable device or dressing, to slough 

or eschar, or deep tissue injury. We note 

that the discharge assessment differs 

somewhat from the admission 

assessment with regard to the pressure 

ulcer questions. A copy of the proposed 

new IRF–PAI can be found at https://

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

PPS/IRFPAI.html. 

We have added greater specificity to 

the pressure ulcer items to allow 

providers to document pressure ulcers 

in more detail. In describing the 

inadequacy they perceived in the 

present pressure ulcer items, providers 

described such situations as those in 

which a patient is admitted into an IRF 

with an unstageable pressure ulcer that 

is a suspected deep tissue injury (DTI). 

During the course of the IRF stay the 

DTI evolves into a stage 3 and, after 

several days, worsens to a stage 4. On 

the current version of the IRF–PAI, 

providers have no ability to document 

the presence of an unstageable pressure 

ulcer that existed when the patient was 

admitted. Whether or not the IRF 

believes there is an unstageable pressure 

ulcer, the IRF must document that the 

patient had no pressure ulcers on the 

admission assessment. However later, 

after the DTI worsens to a stage 3, if the 

IRF judges from the nature of the 

pressure ulcer that it was extremely 

likely to have been present at 

admission, the IRF would have to go 

back and change their documentation 

on the admission assessment to reflect 

that the patient actually had a stage 3 

pressure ulcer upon admission. Upon 

discharge, the IRF would document that 

the patient has a stage 4 pressure ulcer. 

With the new proposed pressure ulcer 

data items, the IRF would be able to 

document the presence of the 

unstageable pressure ulcer or suspected 

DTI on the admission assessment. The 

proposed revisions to the IRF–API 

would allow the IRF to give a more 

complete and accurate picture of the 

progression of this pressure ulcer when 

the patient is discharged. 

While Stage 1 and unstageable 

pressure ulcers are not part of the NQF 

#0678 endorsed version of the ‘‘Percent 

of Patients with Pressure Ulcers That 

Are New or Worsened,’’ and are not 

mandatory, we nonetheless believe that 

it is appropriate and important for us to 

collect this information. As the measure 

steward for this measure, CMS would 

like to gather and analyze data regarding 

Stage 1 and unstageable pressure ulcers 

to help determine if any modification to 

the existing measure should be made. 

This data could also help us determine 

if any additional pressure ulcer 

measures should be developed. For 

example, collecting data about Stage 1 

pressure ulcers could provide us with 

information that would allow us to 

assess whether these pressure ulcers can 

now be objectively measured across 

different populations. 

Additionally, some pressure ulcers 

that are present on admission can 

become stageable and then worsen to a 

higher stage during the IRF stay. Access 

to data on this scenario would assist us 

in determining whether including 

unstageable and Stage 1 measures in the 

measure results may be appropriate in 

the future. We might accomplish this by 

expanding the current measure or 

developing an entirely new pressure 

ulcer measure. 

We invite public comment on our 

proposed revisions to the IRF–PAI 

related to voluntary items for NQF 

#0678 Percent of Residents or Patients 

with Pressure Ulcers That Are New or 

Worsened (Short-Stay). 

5. Proposed Revisions to the IRF–PAI to 

Add Mandatory Data Items related to 

NQF #0680 Percent of Residents or 

Patients Who Were Assessed and 

Appropriately Given the Seasonal 

Influenza Vaccine (Short-Stay) 

We are also proposing changes to the 

IRF–PAI discharge assessment to 

include the addition of the data 

elements necessary to report the data 

necessary for the proposed measure, 

Percent of Residents or Patients Who 

Were Assessed and Appropriately Given 

the Seasonal Influenza Vaccine (ShortStay) (NQF #0680). These items will be 

based on the items from the MDS 3.0 

and LTCH CARE Data Set items.26 27

There are three data elements collected 

in relation to this measure: Two are 

used to calculate the measure and a 

third is used to ensure internal 

consistency and data accuracy. The 

items are as follows: Did the patient 

receive the influenza vaccine in this 

facility for this year’s influenza 

vaccination season? Date influenza 

vaccine was received; and, If influenza 

vaccine not received, state reason. These 

questions allow the IRF to report if and 

when an influenza vaccine was given at 

the facility. It also allows the IRF to 

indicate why a vaccine was not given if 

that is the case. Further details on the 

specifications and data elements for this 

measure are available in the MDS 3.0 

QM User’s Manual available on our Web 

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

Quality-Initiatives-Patient-AssessmentInstruments/NursingHomeQualityInits/

NHQIQualityMeasures.html. Measure 

specifications are located in the 

download titled: MDS 3.0 QM User’s 

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26918 Federal Register / Vol. 78, No. 89 / Wednesday, May 8, 2013 / Proposed Rules 

Manual V6.0. Measure information is 

also available at http://www.quality

forum.org/QPS/0680. 

We invite public comment on our 

proposed revisions to the IRF–PAI 

related to NQF #0680 Percent of 

Residents or Patients Who Were 

Assessed and Appropriately Given the 

Seasonal Influenza Vaccine (Short-Stay). 

6. Proposed Revisions to the IRF–PAI 

Related to Numbering of Quality 

Indicator Items. 

Finally, in the revised IRF–PAI, we 

include changes in the numbering 

scheme used in the Quality Indicator 

section of the IRF–PAI from a 

‘‘consecutive numbering scheme’’ for 

numbering assessment items to a 

numbering scheme that allows greater 

flexibility for item removal and 

insertion. Problems arise with a 

consecutive numbering scheme when 

items are removed or new ones are 

inserted because this changes the 

numbers of some or all of the items 

around them. Other CMS post-acute 

care data collection vehicles, such as the 

MDS 3.0, and the LTCH CARE Data Set, 

have adopted a more flexible numbering 

schema that allows insertion or removal 

of items without requiring renumbering 

of the remaining items. We propose 

adopting a similar numbering schema in 

the revised IRF–PAI. A less flexible 

numbering system that necessitates 

renumbering items on the IRF–PAI in 

the event of such changes will result in 

a given item number having very 

different meanings on different versions 

of the IRF–PAI item set. 

For more details about our plans for 

changes to the IRF–PAI, see https://

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

PPS/IRFPAI.html. 

We invite public comments about our 

proposed changes to the numbering 

schema of the IRF–PAI. 

E. Proposed Change in Data Collection 

and Submission Periods for Future 

Program Years 

The FY 2012 IRF PPS final rule 

included an initial framework for the 

IRF QRP. In that rule we also finalized 

the initial quality measures to be used 

in the IRF QRP, stated how data for 

these measures would to be collected, 

and selected the time periods for the 

data collection and reporting of the 

quality data. 

The FY 2012 IRF PPS final rule 

finalized the initial IRF QRP data 

reporting cycle, affecting the FY 2014 

payment determination, as beginning on 

October 1, 2012 and ending on 

December 31, 2012. Beginning in 2013 

for the FY 2015 payment determination, 

and for subsequent years, we finalized 

that quality reporting cycles be based on 

a full calendar year (CY) cycle (76 FR 

47879). 

When there are new measures added 

to the quality reporting program that 

will be collected on the IRF–PAI, that 

data collection instrument must be 

updated accordingly. The next update to 

the IRF–PAI will take place on October 

1, 2014. Under current policy, the IRF 

QRP data collection cycle for the FY 

2016 payment determination will not 

begin until January 1, 2014. 

To accommodate the revised data 

collection instrument, we are proposing 

to change the IRF–PAI data collection 

periods for the FY 2016 and FY 2017 

payment determinations in order to 

align with the release of the new version 

of the IRF–PAI on October 1, 2014. We 

propose to shorten the data collection 

period impacting the FY 2016 IRF PPS 

annual increase factor to nine months, 

so that the next reporting period may 

begin on October 1, 2014 using the new 

version of the IRF–PAI. Under this 

proposal, the next data collection period 

would run from January 1, 2014 to 

September 30, 2014 and affect the IRF 

PPS annual increase factor for FY 2016. 

Starting October 1, 2014, we propose 

to start fiscal year data collection 

periods, such that data collected for 

discharges during October 1, 2014 to 

September 30, 2015 will affect the FY 

2017 IRF PPS annual increase factor. We 

further propose that data collection 

continue on FY cycles unless there is an 

event that requires that this cycle be 

amended. We intend to provide public 

announcements in the event the 

established cycles must be changed. 

Note that, as a result of this proposal, 

data submitted on the IRF–PAI and data 

submitted using the NHSN will have 

two separate data collection and 

submission schedules. We provide more 

details on this distinction below. We 

invite public comment on our proposal 

to alter the IRF–PAI data collection 

periods impacting the FY 2016 and FY 

2017 increase factors in a way that 

aligns with the release of the next 

version of the IRF–PAI instrument. 

1. Proposed Implementation of 

Quarterly Data Submission Deadlines 

for the IRF QRP 

In the FY 2012 IRF PPS rule we stated 

that ‘‘details regarding data submission 

and reporting requirements for this 

measure will be posted on the CMS Web 

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

Quality-Initiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/

index.html no later than January 31, 

2012’’ (FR 76 47879). Further data 

submission details for the IRF QRP were 

posted on the CMS IRF QRP Web site on 

January 31, 2012, as promised. In 

addition, data submission details were 

disseminated to IRFs at various times 

from January 31, 2012 to December 31, 

2012, through an in-person training held 

on May 2, 2012, Open Door Forums, 

list-serve announcements, IRF QRP Web 

page postings and responses to IRF QRP 

Helpdesk inquiries. In these 

communications, we announced that 

the final data submission deadline for 

the IRF QRP would be May 15th for all 

measures finalized for the FY 2014 

payment determination and each 

subsequent payment determination. 

We realize the value in providing 

clear submission deadlines for the IRF 

QRP and we believe that we should 

provide deadlines that clearly 

distinguish between data submitted 

using the NHSN and data submitted 

using the IRF–PAI. Further, it is 

important to have distinct deadlines at 

which point data submitted afterward, 

including data modifications and 

corrections, could not be used for 

reporting or IRF PPS annual increase 

factor determinations. For purposes of 

the FY 2016 and subsequent year IRF 

PPS annual increase factors, and for the 

purposes of applying quarterly 

deadlines for public reporting purposes, 

we propose the inclusion of quarterly 

data submission deadlines in addition 

to the previously finalized deadlines. 

We believe that this will ensure timely 

submission of data. 

2. Quarterly Submission Timelines of 

Data Reported Using the IRF–PAI 

For the purposes of quality data 

reported using the IRF–PAI for the IRF 

QRP, we have proposed timeframes 

described below that we believe will 

provide sufficient time for IRFs and 

CMS to meet quality reporting 

requirements and allow CMS to 

harmonize IRF QRP data submission 

deadlines with the LTCHQR Program 

and Hospital IQR. Beginning with data 

collection and reporting impacting the 

FY 2016 annual increase factor, we 

propose that IRFs follow the deadlines 

presented in the tables below to 

complete submission of data for each 

quarter. For each quarter outlined in the 

tables below during which IRFs are 

required to collect data, we propose a 

final deadline occurring approximately 

135 days after the end of each quarter 

by which all data collected during that 

quarter must be submitted. We believe 

that this is a reasonable amount of time 

to allow IRFs to submit data and make 

any necessary corrections. We have 

summarized these deadlines in the 

tables below. 

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TABLE 11—PROPOSED TIMELINES FOR SUBMISSION OF IRF QRP PROGRAM QUALITY DATA USING IRF–PAI * FOR FY 

2016 IRF PPS ANNUAL INCREASE FACTOR +: APPLICATION OF NQF #0678 PERCENT OF RESIDENTS OR PATIENTS

WITH PRESSURE ULCERS THAT ARE NEW OR WORSENED (SHORT-STAY) 

Quarter IRF–PAI data collection period 

IRF–PAI data submission 

deadline for corrections 

of the IRF QRP 

FY 2016 Annual Increase Factor 

Quarter 1 .................................... January 1, 2014–March 31, 2014 ............................................................................. August 15, 2014. 

Quarter 2 .................................... April 1, 2014–June 30, 2014 ..................................................................................... November 15, 2014. 

Quarter 3 .................................... July 1, 2014–September 30, 2014 ............................................................................ February 15, 2015. 

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

+FY 2016 APU determination is based on 3 quarters of data submission for the pressure ulcer measure. 

TABLE 12—PROPOSED TIMELINES FOR SUBMISSION OF IRF QRP PROGRAM QUALITY DATA USING IRF–PAI * FOR FY 

2017 IRF PPS ANNUAL INCREASE FACTOR: NQF #0678 PERCENT OF RESIDENTS OR PATIENTS WITH PRESSURE

ULCERS THAT ARE NEW OR WORSENED (SHORT-STAY), AND NQF #0680 PERCENT OF RESIDENTS OR PATIENTS

WHO WERE ASSESSED AND APPROPRIATELY GIVEN THE SEASONAL INFLUENZA VACCINE (SHORT-STAY) 

Quarter IRF–PAI data collection period 

IRF–PAI data submission 

deadline for corrections 

of the IRF QRP 

FY 2017 Annual Increase Factor 

Quarter 1 .................................... October 1, 2014–December 31, 2014 ....................................................................... May 15, 2015. 

Quarter 2 .................................... January 1, 2015–March 31, 2015 ............................................................................. August 15, 2015. 

Quarter 3 .................................... April 1, 2015–June 30, 2015 ..................................................................................... November 15, 2015. 

Quarter 4 .................................... July 1, 2015–September 30, 2015 ............................................................................ February 15, 2016. 

* Using October 1, 2014 release of IRF–PAI. 

3. Quarterly Submission Timelines of 

Data Reported Using NHSN 

For the purposes of reporting quality 

data using the NHSN, specifically 

CAUTI reporting and reporting of the 

staff influenza immunization measure, 

we are specifically proposing to align 

with CMS’s established submission 

deadlines in the Hospital IQR and the 

LTCHQR Programs. The CDC 

recommends that a facility report 

Healthcare Acquired Infection (HAI) 

events such as CAUTI, as close to the 

time of the event as is possible, and 

certainly within 30 days. CMS 

recommends adherence to this 

approach. In addition, we propose that 

IRFs report CAUTI events, including 

null events, on a monthly level using 

the NHSN. 

For the purposes of continuity, we 

propose to continue the calendar year 

basis of reporting CAUTI, using 

quarterly deadlines as established by the 

Hospital IQR program. Final submission 

deadlines for measures collected 

through the NHSN are shown in the 

tables below. 

TABLE 13—PROPOSED TIMELINES FOR SUBMISSION OF IRF QRP PROGRAM QUALITY DATA USING CDC/NSHN FOR FY 

2016 AND FY 2017 IRF PPS ANNUAL INCREASE FACTOR: NATIONAL HEALTH SAFETY NETWORK (NHSN) CATHETERASSOCIATED URINARY TRACT INFECTION (CAUTI) OUTCOME MEASURE

Quarter CDC/NHSN data collection period CDC/NHSN data submission deadline 

FY 2016 Annual Increase Factor 

Quarter 1 .................................... January 1, 2014–March 31, 2014 ............................................................................. August 15, 2014. 

Quarter 2 .................................... April 1, 2014–June 30, 2014 ..................................................................................... November 15, 2014. 

Quarter 3 .................................... July 1, 2014–September 30, 2014 ............................................................................ February 15, 2015. 

Quarter 4 .................................... October 1, 2014–December 31, 2014 ....................................................................... May 15, 2015. 

FY 2017 Annual Increase Factor 

Quarter 1 .................................... January 1, 2015–March 31, 2015 ............................................................................. August 15, 2015. 

Quarter 2 .................................... April 1, 2015–June 30, 2015 ..................................................................................... November 15, 2015. 

Quarter 3 .................................... July 1, 2015–September 30, 2015 ............................................................................ February 15, 2016. 

Quarter 4 .................................... October 1, 2015–December 31, 2015 ....................................................................... May 15, 2016. 

Further, we propose to apply to IRF 

QRP the same deadlines established for 

the reporting of the Influenza 

Vaccination Coverage Among Health 

Personnel (NQF #0431) measure in the 

Hospital IQR Program and proposed in 

the LTCH QRP. 

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26920 Federal Register / Vol. 78, No. 89 / Wednesday, May 8, 2013 / Proposed Rules 

TABLE 14—PROPOSED TIMELINES FOR SUBMISSION OF IRF QRP PROGRAM QUALITY DATA USING CDC/NSHN FOR FY 

2016 AND FY 2017 IRF PPS ANNUAL INCREASE FACTOR: NQF #0431 INFLUENZA VACCINATION COVERAGE AMONG

HEALTHCARE PERSONNEL

Data collection timeframe 

CDC/NHSN Data submission 

deadline 

FY 2016 Annual Increase Factor 

October 1, 2014 (or when the influenza vaccine becomes available)—March 31, 2015 ................................................. May 15, 2015. 

FY 2017 Annual Increase Factor 

October 1, 2015 (or when the influenza vaccine becomes available)—March 31, 2016 ................................................. May 15, 2016. 

We invite public comment on the 

proposed data submission quarterly and 

final deadlines for the purposes of 

reporting data using the IRFPAI and for 

the purposes of reporting data using the 

NHSN. 

F. Proposed Reconsideration and 

Appeals Process 

At the conclusion of any given data 

reporting period, we will review the 

data received from each IRF during that 

reporting period to determine if the IRF 

has reported the required amount and 

type of data. IRFs that are found to be 

non-compliant with the reporting 

requirements set forth for that reporting 

cycle could receive a reduction in the 

amount of 2 percentage points to their 

IRF PPS increase factor for the 

upcoming payment year. 

We are aware that there may be 

situations in which an IRF provider has 

evidence to dispute a finding of noncompliance. We further understand that 

there may be times when a provider 

may be prevented from submitting 

quality data due to the occurrence of 

extraordinary circumstances beyond 

their control (for example, natural 

disasters). It is our goal not to penalize 

IRF providers in these circumstances or 

to unduly increase their burden during 

these times. 

We are also aware, for the purposes of 

the IRF Quality Reporting Program, that 

we will be making compliance 

determinations for the FY 2014 payment 

determination in the coming months 

and believe that providers should have 

the opportunity to request a 

reconsideration if the circumstances 

warrant. In addition, adding a 

reconsideration process to the IRF 

Quality Reporting program will make it 

consistent with other established quality 

reporting programs, a number of which 

already offer this opportunity. We are 

therefore providing a mechanism that 

will allow IRFs to request 

reconsiderations pertaining to their FY 

2014 payment determinations and that 

of subsequent fiscal years. 

Specifically, as part of the mechanism 

to allow for IRFs to request a 

reconsideration, IRFs found to be noncompliant with the reporting 

requirements during a given reporting 

cycle will be notified of that finding. 

IRFs will be informed: (1) That they 

have been identified as being noncompliant with the IRF Quality 

Reporting Program’s reporting 

requirements for the reporting cycle in 

question; (2) that they will be scheduled 

to receive a reduction in the amount of 

2 percentage points to their PPS 

increase factor for the upcoming 

payment year; (3) that they may file a 

request for reconsideration if they 

believe that the finding of noncompliance is erroneous, or that if they 

were non-compliant, they have a valid 

and justifiable excuse for this noncompliance; and (4) that they must 

follow a defined process on how to file 

a request for reconsideration, which will 

be described in the notification. 

Upon the conclusion of our review of 

each request for reconsideration, we 

will render a decision. We may reverse 

our initial finding of non-compliance if: 

(1) The IRF provides proof of full 

compliance with all requirements 

during the reporting period; or (2) the 

IRF provides adequate proof of a valid 

or justifiable excuse for non-compliance 

if the IRF was not able to comply with 

requirements during the reporting 

period. We will uphold our initial 

finding of non-compliance if the IRF 

cannot show any justification for noncompliance. 

We intend to provide details 

pertaining to the reconsideration 

process, and the mechanisms related to 

provider requests for reconsideration of 

their payment determinations, such as 

filing requests, required content, 

supporting documentation, and 

mechanisms of notification and final 

determinations on the IRF QRP Web site 

this spring at http://www.cms.gov/

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

comment on the proposed procedures 

for reconsideration and appeals. 

G. Proposed Policy for Granting of a 

Waiver of the IRF QRP Data Submission 

Requirements in Case of Disaster or 

Extraordinary Circumstances 

Our experience with other quality 

reporting programs has shown that there 

are times when providers are unable to 

submit quality data due to the 

occurrence of extraordinary 

circumstances beyond their control (for 

example, natural or man-made 

disasters). We define a ‘‘disaster’’ as any 

natural or man-made catastrophe which 

causes damages of sufficient severity 

and magnitude to partially or 

completely destroy or delay access to 

medical records and associated 

documentation. Natural disasters could 

include events such as hurricanes, 

tornadoes, earthquakes, volcanic 

eruptions, fires, mudslides, snowstorms, 

and tsunamis. Man-made disasters 

could include such events as terrorist 

attacks, bombings, floods caused by 

man-made actions, civil disorders, and 

explosions. A disaster may be 

widespread or impact multiple 

structures or be isolated and impact a 

single site only. 

In certain instances of either natural 

or man-made disasters, an IRF may have 

the ability to conduct a full patient 

assessment, and record and save the 

associated data either during or before 

the occurrence of an extraordinary 

event. In this case, the extraordinary 

event has not caused the facility’s data 

files to be destroyed, but it could hinder 

the IRF’s ability to meet the quality 

reporting program’s data submission 

deadlines. In this scenario, the IRF 

would potentially have the ability to 

report the data at a later date, after the 

emergency circumstances have 

subsided. In such cases, a temporary 

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614.pdf. 

waiver of the IRF duty to report quality 

measure data may be appropriate. 

In other circumstances of natural or 

man-made disaster, an IRF may not have 

had the ability to conduct a full patient 

assessment, and record and save the 

associated data before the occurrence of 

an extraordinary event. In such a 

scenario, the facility does not have data 

to submit to CMS as a result of the 

extraordinary event. We believe that it 

is appropriate, in these situations, to 

grant a full waiver of the reporting 

requirements. 

It is our goal not to penalize IRF 

providers in these circumstances or to 

unduly increase their burden during 

these times. Therefore, we are proposing 

a process, for payment year 2015 and 

subsequent years, for IRF providers to 

request and for CMS to grant waivers 

with respect to the reporting of quality 

data when there are extraordinary 

circumstances beyond the control of the 

provider. When a waiver is granted, an 

IRF will not incur payment reduction 

penalties for failure to comply with the 

requirements of the IRF QRP. 

We are proposing a process that, in 

the event that an IRF seeks to request a 

waiver for quality reporting purposes for 

payment year 2015 and subsequent 

payment years, the IRF may request a 

waiver for one or more quarters by 

submitting a written request to CMS. We 

are proposing that IRFs compose a letter 

to CMS that documents the waiver 

request, with the information described 

below, and submit the letter to CMS via 

email to the IRF Help Desk at 

IRFQualityQuestions@cms.hhs.gov. IRFs 

that have filed a request for an IRF QRP 

disaster waiver with an IRF–PAI waiver 

request using the procedure that is 

described under our regulations at 42 

CFR 412.614 can indicate this in their 

letter to CMS for their request for a 

waiver for quality reporting purposes.28

Note that the subject of the email 

must read ‘‘Disaster Waiver Request’’ 

and the letter must contain the 

following information: 

• IRF CCN; 

• IRF name; 

• CEO or CEO-designated personnel 

contact information including name, 

telephone number, email address, and 

mailing address (the address must be a 

physical address, not a post office box); 

• IRF’s reason for requesting a waiver; 

• Evidence of the impact of 

extraordinary circumstances, including 

but not limited to photographs, 

newspaper and other media articles; and 

• A date when the IRF believes that 

it will again be able to submit IRF QRP 

data and a justification for the proposed 

date. 

We propose that the letter 

documenting the disaster waiver request 

be signed by the IRF’s CEO, and must 

be submitted within 30 days of the date 

that the extraordinary circumstances 

occurred. Following receipt of the letter, 

we would: (1) Provide a written 

acknowledgement, using the contact 

information provided in the letter, to the 

CEO or designated contact person, 

notifying them that the request has been 

received, and (2) after CMS has made a 

decision as to whether to grant to waiver 

request, provide a formal response to 

the CEO, or designated contact person 

notifying them of our decision. 

This proposal does not preclude CMS 

from granting waivers to IRFs that have 

not requested them when we determine 

that an extraordinary circumstance, 

such as an act of nature, affects an entire 

region or locale. If we make the 

determination to grant a waiver to IRFs 

in a region or locale, we propose to 

communicate this decision through 

routine communication channels to 

IRFs and vendors, including but not 

limited to issuing memos, emails, and 

notices on https://www.cms.gov/ 

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

We invite public comment on this 

proposal. 

H. Public Display of Data Quality 

Measures for the IRF QRP Program 

Under section 1886(j)(7)(E) of the Act, 

the Secretary is required to establish 

procedures for making data submitted 

under the IRF QRP available to the 

public. Section 1886(j)(7)(E) also 

requires procedures to ensure that each 

IRF provider has the opportunity to 

review that data that is to be made 

public with respect to its facility, prior 

to such data being made public. Section 

1886(j)(7)(E) of the Act requires CMS to 

report quality measures that relate to 

services furnished in IRFs on CMS’ Web 

site. 

Currently, the Agency is developing 

plans regarding the implementation of 

these provisions. We appreciate the 

need for transparency into the processes 

and procedures that will be 

implemented to allow for the public 

reporting of the IRF QRP data and to 

afford providers the opportunity to 

preview that data before it is made 

public. At this time, we have not 

established procedures or timelines for 

public reporting of data, but we intend 

to include related proposals in future 

rule making. We welcome public 

comments on what we should consider 

when developing future proposals 

related to public reporting. 

I. Method for Applying the Reduction to 

the FY 2014 IRF Increase Factor for IRFs 

That Fail To Meet the Quality Reporting 

Requirements 

As previously noted, section 

1886(j)(7)(A)(i) of the Act requires 

application of a 2 percentage point 

reduction of the applicable market 

basket increase factor for IRFs that fail 

to comply with the quality data 

submission requirements. FY 2014 is to 

be the first year that the mandated 

reduction will be applied for IRFs that 

failed to comply with the data 

submission requirements during the 

data collection period October 1, 2012 

through December 31, 2012. Thus, in 

compliance with 1886(j)(7)(A)(i) of the 

Act, we will apply a 2 percentage point 

reduction to the applicable FY 2014 

market basket increase factor (1.7 

percent) in calculating an adjusted FY 

2014 standard payment conversion 

factor to apply to payments for only 

those IRFs that failed to comply with 

the data submission requirements. As 

noted previously, application of the 2 

percentage point reduction may result 

in an update that is less than 0.0 for a 

fiscal year and in payment rates for a 

fiscal year being less than such payment 

rates for the preceding fiscal year. Also, 

reporting-based reductions to the market 

basket increase factor will not be 

cumulative; they will only apply for the 

FY involved. Table 15 shows the 

calculation of the adjusted FY 2014 

standard payment conversion factor that 

will be used to compute IRF PPS 

payment rates for any IRF that failed to 

meet the quality reporting requirements 

for the period from October 1, 2012 

through December 31, 2012. 

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29According to the U.S. Bureau of Labor 

Statistics, the mean hourly wage for a Medical 

Records & Health Information Technician is $15.55. 

See: http://www.bls.gov/ooh/healthcare/medicalrecords-and-health-information-technicians.htm. 

30 15 minutes administrative staff time to collect 

and report staff influenza measure @ $15.55 per 

hour = $3.98 per IRF per year 

31At the time of the writing of this rule, there 

were 1161 IRFs reporting quality data to CMS. 

($3.98 per IRF per year × 1161 IRFs in U.S.= 

$4,621). 

TABLE 15—CALCULATIONS TO DETERMINE THE PROPOSED ADJUSTED FY 2014 STANDARD PAYMENT CONVERSION

FACTOR FOR IRFS THAT FAILED TO MEET THE QUALITY REPORTING REQUIREMENT

Explanation for adjustment Calculations 

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

Adjusted Market Basket Increase Factor for FY 2014 (2.5 percent), reduced by 0.3 percentage point in accordance with 

sections 1886(j)(3)(C) and (D) of the Act and a 0.4 percentage point reduction for the productivity adjustment as required 

by section 1886(j)(3)(C)(ii)(I) of the Act, further reduced by 2 percentage points for IRFs that failed to meet the quality reporting requirement .................................................................................................................................................................. × 0.99800 

Budget Neutrality Factor for the Wage Index and Labor-Related Share .................................................................................... × 1.0011 

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

Budget Neutrality Factor for the Update to the Rural Adjustment Factor ................................................................................... × 1.0030 

Budget Neutrality Factor for the Update to the LIP Adjustment Factor ...................................................................................... × 1.0174 

Budget Neutrality Factor for the Update to the Teaching Status Adjustment Factor ................................................................. × 0.9966 

Proposed Adjusted FY 2014 Standard Payment Conversion Factor .......................................................................................... = $14,573 

XIV. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

of 1995 we are required to provide 60- 

day notice in the Federal Register and 

solicit public comment before a 

collection of information requirement is 

submitted to the Office of Management 

and Budget (OMB) for review and 

approval. To fairly evaluate whether an 

information collection should be 

approved by OMB, section 3506(c)(2)(A) 

of the Paperwork Reduction Act of 1995 

requires that we solicit comment on the 

following issues: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 

This proposed rule does not impose 

any new information collection 

requirements as outlined in the 

regulation text. However, this proposed 

rule does make reference to associated 

information collections that are not 

discussed in the regulation text 

contained in this document. The 

following is a discussion of these 

information collections, some of which 

have already received OMB approval. 

We are soliciting public comment on 

each of these issues for the following 

sections of this document that contain 

information collection requirements 

(ICRs). 

A. ICRs Regarding IRF QRP 

As stated in section XIII. of the 

preamble of this proposed rule, we have 

proposed to introduce one new measure 

for use in the IRF QRP that will require 

IRF providers to submit new data 

beginning on October 1, 2014 and which 

will affect the increase factor for FY 

2016. This quality measure is: Influenza 

Vaccination Coverage among Healthcare 

Personnel (NQF #0431). We have also 

proposed to introduce for FY 2017 an 

All-Cause Unplanned Readmission 

Measure for 30 Days Post Discharge 

from Inpatient Rehabilitation Facilities. 

This measure is a claims-based measure 

that does not require submission of data 

by IRF providers. For FY 2017, we have 

proposed to adopt the Percent of 

Resident or Patients Who Were 

Assessed and Appropriately Given the 

Seasonal Influenza Vaccine (Short-Stay) 

(NQF#0680) measure. We have also 

proposed for FY 2017 to change from 

the use of a non-risk adjusted pressure 

ulcer measure, in which only numerator 

and denominator data is collected, to 

use of the NQF endorsed measure 

‘‘Percent of Residents or Patients with 

Pressure Ulcers That Are New or 

Worsened (Short-Stay)’’ (NQF #0678), 

which is a risk-adjusted measure. Each 

of these measures will be collected in 

the manner described below: 

1. Influenza Vaccination Coverage 

Among Healthcare Personnel 

(NQF #0431) 

In section XIII. of this proposed rule, 

we are proposing to add the new 

measure, Influenza Vaccination 

Coverage among Healthcare Personnel 

(NQF #0431) to the IRF QRP. IRFs will 

be required to collect data related to the 

number of healthcare personnel working 

at a facility who have been vaccinated 

against the influenza virus during a 

given influenza vaccination season. The 

CDC has determined that the influenza 

vaccination season begins on October 

1st (or when the vaccine becomes 

available) and ends on the following 

March 31st each year. This measure 

requires that the provider submit only 

one report to NHSN after the close of the 

data collection period each year. 

We believe that it has become a 

common practice for healthcare 

facilities, including IRFs, to promote 

vaccination of employees for the 

influenza virus and to keep records of 

which of their staff members received 

this vaccination each year. Therefore, 

we do not believe that IRFs will incur 

any additional burden related to the 

collection of the data for this measure. 

We anticipate that it will take 

approximately 15 minutes to prepare 

and transmit the required data for this 

measure to the CDC each year. The 

reporting of the data for this measure 

can be done while the provider is logged 

onto NHSN for the purpose of entering 

their CAUTI measure data. We believe 

that this task can be completed by an 

administrative person such as a Medical 

Secretary Medical Data Entry Clerk. The 

average hourly wage for Medical 

Records or Health Information 

Technicians is $15.55.29 We estimate 

that the annual cost to each IRF for the 

reporting of the staff influenza measure 

will be $3.98.30 The annual cost across 

the 1161 IRFs in the U.S. that are 

reporting data to CMS is estimated to be 

$4,621.31

2. All-Cause Unplanned Readmission 

Measure for 30 Days Post Discharge 

From Inpatient Rehabilitation Facilities 

As stated in section XIII. of this 

proposed rule, data for this measure will 

be collected from Medicare claims and 

therefore will not add any additional 

reporting burden for IRFs. 

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32MedPAC, A Data Book: Health Care Spending 

and the Medicare Program (June 2012), http:// 

www.medpac.gov/chapters/ 

Jun12DataBookSec8.pdf. 

33 359,000 IRF–PAIs per all IRFs per year/1161 

IRFs in U.S. = 309 IRF–PAIs per each IRF per year. 

309 IRF–PAI reports per IRF per year/12 months 

per year = 26 IRF–PAI reports per each IRF per year. 

34According to the U.S. Bureau of Labor 

Statistics, the mean hourly wage for a Registered 

Nurse is $33.23. (See http://www.bls.gov/oes/2011/ 

may/oes291111.htm) . 

35 25 minutes × 309 IRF–PAI assessments per 

each IRF per year = 7,725 minutes per each IRF per 

year. 

7,725 minutes per each IRF per year/60 minutes 

per hour = 128.75 hours per each IRF per year. 

128.75 hours per year × $33.23 per hour = 

$4,278.36 nursing wages per each IRF per year. 

36 $4,278.36 × 1161 IRF providers = $4,967,176 

per all IRFs per year. 

1. Percent of Residents or Patients With 

Pressure Ulcers That Are New or Have 

Worsened (Short-Stay) (NQF #0678) 

In section XIII of this proposed rule, 

we proposed to adopt the NQF endorsed 

version of the measure titled ‘‘Percent of 

Residents or Patients with Pressure 

Ulcers That Are New or Worsened 

(Short-Stay)’’ (NQF #0678). To support 

the standardized collection and 

calculation of this quality measure, we 

have proposed to modify the current 

Inpatient Rehabilitation Facility-Patient 

Assessment Instrument (IRF–PAI) by 

replacing the current pressure ulcer 

items with data elements similar or 

identical to those collected through the 

Minimum Data Set 3.0 (MDS 3.0) used 

in nursing homes. By building upon 

preexisting resources for data collection 

and submission, we intend to reduce 

administrative burden related to data 

collection and submission. We 

anticipate that the initial setup and 

acclimation to pressure ulcer data 

collection will have already occurred 

with the adoption of the Pressure Ulcer 

measure for the IRF QRP for the FY 

2014 payment determination. Therefore, 

we believe the transition to reporting 

additional data elements for this 

measure will be less burdensome. 

We expect that the admission and 

discharge pressure ulcer data will be 

collected by a clinician such as an RN 

because the assessment and staging of 

pressure ulcers requires a high degree of 

clinical judgment and experience. We 

estimate that it will take approximately 

10 minutes of time by the RN to perform 

the admission pressure ulcer 

assessment. We further estimate that it 

will take an additional 15 minutes of 

time to complete the discharge pressure 

ulcer assessment. We expect that during 

these time periods, the RN would be 

engaged in the collection of data for the 

purpose of the IRF QRP and would not 

be engaged in the performance of 

routine patient care. 

We estimate that there are 359,000 

IRF–PAI submissions per year 32 and 

that there are 1161 IRFs in the U.S. 

reporting quality data to CMS. Based on 

these figures, we estimate that each IRF 

will submit approximately 309 IRF– 

PAIs per year or 26 IRF–PAIs per 

month.33Assuming that each IRF–PAI 

submission requires 25 minutes of time 

by an RN at an average hourly wage of 

$33.23,34 the yearly cost to each IRF 

would be $4,278.36 35 and the 

annualized cost across all IRFs would be 

$4,967,176.36

We also expect that most IRFs will 

use administrative personnel, such as a 

medical secretary or medical data entry 

clerk, to perform the task of entering the 

IRF–PAI pressure ulcer assessment data 

into their electronic health record (EHR) 

system and/or the CMS JIRVEN 

program. We estimate that this data 

entry task will take no more than 3 

minutes per each IRF–PAI record or 

15.45 hours per each IRF annually or 

17,937 hours across all IRFs. As noted 

above, the average hourly wage for a 

Medical Records & Health Information 

Technician is $15.55. As we noted 

above, there are approximately 359,000 

IRF–PAI submissions per year and 1161 

IRFs reporting quality data to CMS. 

Given this wage information, the 

estimated total annual cost across all 

reporting IRFs for the time required for 

entry of pressure ulcer data into the 

IRF–PAI record is $278,930. We further 

estimate the average yearly cost to each 

individual IRF to be $240.25. 

We estimate that the combined 

annualized time burden related to the 

pressure ulcer data item set for work 

performed, by the both clinical and 

administrative staff will be 144.20 hours 

for each individual IRF and 167,416 

hours across all IRFs. The total 

estimated annualized cost for collection 

and submission of pressure ulcer data is 

$4,518.61 for each IRF and $5,246,106 

across all IRFs. We estimate the cost for 

each pressure ulcer submission to be 

$14.61. 

We are proposing to revise the IRF– 

PAI instrument to include the data set 

associated with this measure. 

2. Percent of Residents or Patients Who 

Were Assessed and Appropriately Given 

the Seasonal Influenza Vaccine (ShortStay) (NQF #0680) 

In section XIII. of the of this proposed 

rule, we have proposed to add the 

measure, Percent of Residents or 

Patients Who Were Assessed and 

Appropriately Given the Seasonal 

Influenza Vaccine (Short-Stay) (NQF 

#0680) to the IRF QRP. We have further 

proposed to add a new set of 

standardized data elements now used in 

the MDS 3.0 to the IRF–PAI to collect 

the data required for this measure. 

As noted above, IRFs are already 

required to complete and transmit 

certain IRF–PAI data on all Medicare 

Part A fee-for-service and Medicare Part 

C (Medicare Advantage) patients to 

receive payment from Medicare. By 

building upon preexisting resources for 

data collection and submission, we 

intend to reduce administrative burden 

related to data collection and 

submission. We anticipate that the 

initial setup and acclimation to data 

collection through the IRF–PAI for 

purposes of reporting of IRF quality 

measure data will have already occurred 

with the adoption of the Pressure Ulcer 

measure for the IRF QRP for the FY 

2014 payment determination. Therefore, 

we believe the transition to reporting an 

additional measure via the IRF–PAI may 

be less burdensome. 

We estimate that completion of the 

patient influenza measure item set will 

take approximately 5 minutes to 

complete. The patient influenza item set 

consists of three items (questions). Each 

item is straightforward and does not 

require physical assessment for 

completion. We estimate that it will take 

approximately 0.7 minutes to complete 

each item, or 2.1 minutes to complete 

the entire item set. However, in some 

cases, the person completing this item 

set may need to consult the patient’s 

medical record to obtain data about the 

patient’s influenza vaccination. 

Therefore, we have allotted 1.6 minutes 

per items or a total of 5 minutes to 

complete the item set. 

IRF staff will be required to perform 

a full influenza assessment only during 

the influenza vaccination season. The 

CDC defines that influenza vaccination 

season as the time period from October 

1st (or when the vaccine becomes 

available) through March 31 each year. 

From April 1st through September 30th, 

IRFs are not required to perform full 

influenza screening and may skip to the 

next item set after checking the 

selection which indicates that the 

patient’s IRF stay occurred outside of 

the influenza vaccination season. Our 

time estimate reflects the averaged 

amount of time necessary to complete 

the influenza item set both during and 

outside the influenza vaccination 

season. 

We anticipate that the patient 

influenza item set will be completed by 

a clinician such an RN, while 

completing the Quality indicator section 

of the IRF–PAI. It is most appropriate 

for an RN to complete the influenza 

item set because it involves performing 

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26924 Federal Register / Vol. 78, No. 89 / Wednesday, May 8, 2013 / Proposed Rules 

37 359,000 IRF–PAI reports per all IRFs per year/ 

1161 IRFs in U.S. = 309 IRF–PAI reports per each 

IRF per year. 

a skilled assessment to determine, from 

a patient’ records, whether the patient 

has received a vaccination and, if not, 

to discuss with the patient any 

medications or other related topics such 

as medication allergies, other 

vaccinations that the patient may have 

had, and any contraindications that 

might exist for receiving the influenza 

vaccination. The nurse has knowledge 

and experience to determine the 

relevance of this information to the 

patient influenza items and also 

determine if the patient should be given 

the influenza vaccination. 

As noted above, we estimate that it 

will take approximately 5 minutes to 

complete the patient influenza measure 

item set. We have noted above that there 

are approximately 359,000IRF–PAIs 

completed annually across all 1161 IRFs 

that report IRF quality data to CMS. 

This breaks down to approximately 309 

IRF–PAIs completed by each IRF 

yearly.37 We estimate that the annual 

time burden for reporting the patient 

influenza vaccination measure data is 

29,896 hours across all IRFs in the U.S. 

and 26 hours for each individual IRF. 

According to the U.S. Bureau of Labor, 

the hourly wage for a Registered Nurse 

is $33.23. Taking all of the above 

information into consideration, we 

estimate the annual cost across all IRFs 

for the submission of the patient 

influenza measure data to be $993,433. 

We further estimate the cost for each 

individual IRF to be $855.67. 

B. ICRs Regarding Non-Quality Related 

Proposed Changes to the IRF–PAI 

We propose to revise several items on 

the IRF–PAI to provide greater clarity 

for providers. The proposed changes 

include updating several items 

regarding the response options available 

to providers. Additionally, we are 

proposing to remove several items that 

we believe are unnecessary for 

providers to continue documenting on 

the IRF–PAI since those items are 

already being documented in the 

patients’ medical record. We are also 

proposing to add several items, such as 

a signature page, to fulfill providers’ 

request to have an organized way to 

document who has assessed the patient 

and when that assessment took place. 

We do not estimate any additional 

burden for IRFs to complete the IRF– 

PAI as a result of these proposals. We 

estimate the time that will be needed to 

complete the new non-quality related 

proposed items, equals the time that 

was needed to complete the previous 

non-quality related items. When the 

original burden estimates were 

completed for the IRF–PAI, we 

estimated that the proposed deletion of 

the non-quality related items would take 

approximately 3 minutes to complete. 

Thus, removing these items the IRF–PAI 

would decrease the total estimated 

burden of completing the non-quality 

related portions of the IRF–PAI by 3 

minutes. However, we estimate that it 

will take about 3 minutes to complete 

the new non-quality related items that 

we are proposing to add. Therefore, we 

estimate no net change in the amount of 

time associated with completing the 

non-quality related portions of the IRF– 

PAI and that the burden for completing 

these portions of the IRF–PAI will not 

change. 

We will be submitting a revision to 

the current IRF–PAI collection of 

information approval under (OMB 

control number 0938–0842) for OMB 

review and approval. 

If you comment on these information 

collection and recordkeeping 

requirements, please do either of the 

following: 

1. Submit your comments 

electronically as specified in the 

ADDRESSES section of this proposed rule; 

or 

2. Submit your comments to the 

Office of Information and Regulatory 

Affairs, Office of Management and 

Budget, 

Attention: CMS Desk Officer, CMS– 

1448–P, 

Fax: (202) 395–6974; or 

Email: 

OIRA_submission@omb.eop.gov. 

XV. Response to Public Comments 

Because of the large number of public 

comments we normally receive on 

Federal Register documents, we are not 

able to acknowledge or respond to them 

individually. We will consider all 

comments we receive by the date and 

time specified in the DATES section of 

this preamble, and, when we proceed 

with a subsequent document, we will 

respond to the comments in the 

preamble to that document. 

XV. Response to Comments 

Because of the large number of public 

comments we normally receive on 

Federal Register documents, we are not 

able to acknowledge or respond to them 

individually. We will consider all 

comments we receive by the date and 

time specified in the DATES section of 

this preamble, and, when we proceed 

with a subsequent document, we will 

respond to the comments in the 

preamble to that document. 

XVI. Regulatory Impact Analysis 

A. Statement of Need 

This proposed rule updates the IRF 

prospective payment rates for FY 2014 

as required under section 1886(j)(3)(C) 

of the Act. It responds to section 

1886(j)(5) of the Act, which requires the 

Secretary to publish in the Federal 

Register on or before the August 1 that 

precedes the start of each fiscal year, the 

classification and weighting factors for 

the IRF PPS’s case-mix groups and a 

description of the methodology and data 

used in computing the prospective 

payment rates for that fiscal year. 

This rule implements sections 

1886(j)(3)(C) and (D) of the Act. Section 

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

Secretary to apply a multi-factor 

productivity adjustment to the market 

basket increase factor, and to apply 

other adjustments as defined by the Act. 

The productivity adjustment applies to 

FYs from 2012 forward. The other 

adjustments apply to FYs 2010 through 

2019. 

This rule also proposes some policy 

changes within the statutory discretion 

afforded to the Secretary under section 

1886(j) of the Act. We propose to revise 

the list of diagnosis codes that are 

eligible under the ‘‘60 percent rule,’’ 

update the IRF facility-level adjustment 

factors, revise sections of the Inpatient 

Rehabilitation Facility-Patient 

Assessment Instrument, revise 

requirements for acute care hospitals 

that have IRF units, clarify the IRF 

regulation text regarding limitation of 

review, and revise and update quality 

measures under the IRF quality 

reporting program. We believe that the 

proposed policy changes would 

enhance the clarity, accuracy, and 

fairness of the IRF PPS. 

B. Overall Impacts 

We have examined the impacts of this 

proposed rule as required by Executive 

Order 12866 (September 30, 1993, 

Regulatory Planning and Review), 

Executive Order 13563 on Improving 

Regulation and Regulatory Review 

(January 18, 2011), the Regulatory 

Flexibility Act (September 19, 1980, 

Pub. L. 96–354)(RFA), section 1102(b) of 

the Act, section 202 of the Unfunded 

Mandates Reform Act of 1995 (Pub. L. 

104–4), Executive Order 13132 on 

Federalism (August 4, 1999), and the 

Congressional Review Act (5 U.S.C. 

804(2)). 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

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Federal Register / Vol. 78, No. 89 / Wednesday, May 8, 2013 / Proposed Rules 26925 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. A 

regulatory impact analysis (RIA) must 

be prepared for a major proposed rule 

with economically significant effects 

($100 million or more in any one year). 

We estimate the total impact of the 

proposed policy updates described in 

this proposed rule by comparing the 

estimated payments in FY 2014 with 

those in FY 2013. This analysis results 

in an estimated $150 million increase 

for FY 2014 IRF PPS payments. As a 

result, this proposed rule is designated 

as economically ‘‘significant’’ under 

section 3(f)(1) of Executive Order 12866, 

and hence a major rule under the 

Congressional Review Act. 

The Regulatory Flexibility Act (RFA) 

requires agencies to analyze options for 

regulatory relief of small entities, if a 

rule has a significant impact on a 

substantial number of small entities. For 

purposes of the RFA, small entities 

include small businesses, nonprofit 

organizations, and small governmental 

jurisdictions. Most IRFs and most other 

providers and suppliers are small 

entities, either by having revenues of $7 

million to $34.5 million in any 1 year, 

or by being nonprofit organizations that 

are not dominant in their markets. (For 

details, see the Small Business 

Administration’s final rule that set forth 

size standards for health care industries, 

at 65 FR 69432 at http://www.sba.gov/ 

sites/default/files/files/ 

Size_Standards_Table.pdf, effective 

March 26, 2012.) Because we lack data 

on individual hospital receipts, we 

cannot determine the number of small 

proprietary IRFs or the proportion of 

IRFs’ revenue that is derived from 

Medicare payments. Therefore, we 

assume that all IRFs (an approximate 

total of 1,200 IRFs, of which 

approximately 60 percent are nonprofit 

facilities) are considered small entities 

and that Medicare payment constitutes 

the majority of their revenues. The 

Department of Health and Human 

Services generally uses a revenue 

impact of 3 to 5 percent as a significance 

threshold under the RFA. As shown in 

Table 16, we estimate that the net 

revenue impact of this proposed rule on 

all IRFs is to increase estimated 

payments by approximately 2.0 percent. 

However, we find that certain categories 

of IRF providers would be expected to 

experience revenue impacts in the 3 to 

5 percent range. We estimate a 4.3 

percent overall impact for teaching IRFs 

with resident to average daily census 

ratios of 10 to 19 percent, a 9.3 percent 

overall impact for teaching IRFs with a 

resident to average daily census ratio 

greater than 19 percent, and a 3.5 

percent overall impact for IRFs with a 

DSH patient percentage of 0 percent. As 

a result, we anticipate this proposed 

rule would have a positive impact on a 

substantial number of small entities. 

Medicare fiscal intermediaries, 

Medicare Administrative Contractors, 

and carriers are not considered to be 

small entities. Individuals and States are 

not included in the definition of a small 

entity. 

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis if a rule may have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. This analysis must conform to 

the provisions of section 603 of the 

RFA. For purposes of section 1102(b) of 

the Act, we define a small rural hospital 

as a hospital that is located outside of 

a Metropolitan Statistical Area and has 

fewer than 100 beds. As discussed in 

detail below, the rates and policies set 

forth in this proposed rule would not 

have a significant impact (not greater 

than 3 percent) on rural hospitals based 

on the data of the 167 rural units and 

18 rural hospitals in our database of 

1,132 IRFs for which data were 

available. 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (Pub. L. 

104–04, enacted on March 22, 1995) 

also requires that agencies assess 

anticipated costs and benefits before 

issuing any rule whose mandates 

require spending in any one year of 

$100 million in 1995 dollars, updated 

annually for inflation. In 2013, that 

threshold level is approximately $141 

million. This proposed rule will not 

impose spending costs on State, local, or 

tribal governments, in the aggregate, or 

by the private sector, of greater than 

$141 million. 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a final 

rule that imposes substantial direct 

requirement costs on state and local 

governments, preempts state law, or 

otherwise has federalism implications. 

As stated above, this proposed rule will 

not have a substantial effect on State 

and local governments, preempt state 

law, or otherwise have a federalism 

implication. 

C. Detailed Economic Analysis 

1. Basis and Methodology of Estimates 

This proposed rule sets forth 

proposed policy changes and updates to 

the IRF PPS rates contained in the FY 

2013 notice (77 FR 44618). Specifically, 

this proposed rule proposes updates to 

the CMG relative weights and average 

length of stay values, the facility-level 

adjustment factors, the wage index, and 

the outlier threshold for high-cost cases. 

This proposed rule also applies a 

productivity adjustment to the FY 2014 

RPL market basket increase factor in 

accordance with section 

1886(j)(3)(C)(ii)(I) of the Act, and a 0.3 

percentage point reduction to the FY 

2014 RPL market basket increase factor 

in accordance with sections 

1886(j)(3)(C)(ii)(II) and (D)(ii) of the Act. 

Further, this proposed rule contains 

proposed changes to the list of ICD–9– 

CM codes that are used in the 60 

percent rule presumptive methodology 

and, in section XII of this rule. discusses 

the first implementation (in FY 2014) of 

the required 2 percentage point 

reduction of the market basket increase 

factor for any IRF that fails to meet the 

IRF quality reporting requirements, in 

accordance with section 1886(j)(7) of the 

Act. 

We estimate that the impact of the 

proposed changes and updates 

described in this proposed rule would 

be a net estimated increase of $150 

million in payments to IRF providers. 

This estimate does not include the 

estimated impacts of the proposed 

changes to the list of ICD–9–CM codes 

that are used in the 60 percent rule 

presumptive compliance (as discussed 

below) or the estimated impacts of the 

implementation (in FY 2014) of the 

required 2 percentage point reduction of 

the market basket increase factor for any 

IRF that fails to meet the IRF quality 

reporting requirements (as discussed in 

below). The impact analysis in Table 16 

of this proposed rule represents the 

projected effects of the proposed 

updates to IRF PPS payments for FY 

2014 compared with the estimated IRF 

PPS payments in FY 2013. We 

determine the effects by estimating 

payments while holding all other 

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 

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26926 Federal Register / Vol. 78, No. 89 / Wednesday, May 8, 2013 / Proposed Rules 

of other changes in the forecasted 

impact time period. Some examples 

could be legislative changes made by 

the Congress to the Medicare program 

that would impact program funding, or 

changes specifically related to IRFs. 

Although some of these changes may 

not necessarily be specific to the IRF 

PPS, the nature of the Medicare program 

is such that the changes may interact, 

and the complexity of the interaction of 

these changes could make it difficult to 

predict accurately the full scope of the 

impact upon IRFs. 

In updating the rates for FY 2014, we 

are proposing standard annual revisions 

described in this proposed rule (for 

example, the update to the wage and 

market basket indexes used to adjust the 

Federal rates). We are also 

implementing a productivity adjustment 

to the FY 2014 RPL market basket 

increase factor in accordance with 

section 1886(j)(3)(C)(ii)(I) of the Act, and 

a 0.3 percentage point reduction to the 

FY 2014 RPL market basket increase 

factor in accordance with sections 

1886(j)(3)(C)(ii)(II) and (D)(ii) of the Act. 

We estimate the total increase in 

payments to IRFs in FY 2014, relative to 

FY 2013, would be approximately $150 

million. 

This estimate is derived from the 

application of the FY 2014 RPL market 

basket increase factor, as reduced by a 

productivity adjustment in accordance 

with section 1886(j)(3)(C)(ii)(I) of the 

Act, and a 0.3 percentage point 

reduction in accordance with sections 

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

which yields an estimated increase in 

aggregate payments to IRFs of $135 

million. Furthermore, there is an 

additional estimated $15 million 

increase in aggregate payments to IRFs 

due to the proposed update to the 

outlier threshold amount. Outlier 

payments are estimated to increase 

under this proposal from approximately 

2.8 percent in FY 2013 to 3.0 percent in 

FY 2014. Therefore, summed together, 

we estimate that these updates will 

result in a net increase in estimated 

payments of $150 million from FY 2013 

to FY 2014. 

The effects of the proposed updates 

that impact IRF PPS payment rates are 

shown in Table 16. The following 

proposed updates that affect the IRF 

PPS payment rates are discussed 

separately below: 

• The effects of the proposed update 

to the outlier threshold amount, from 

approximately 2.8 percent to 3.0 percent 

of total estimated payments for FY 2014, 

consistent with section 1886(j)(4) of the 

Act. 

• The effects of the proposed annual 

market basket update (using the RPL 

market basket) to IRF PPS payment 

rates, as required by section 

1886(j)(3)(A)(i) and sections 

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

including a productivity adjustment in 

accordance with section 

1886(j)(3)(C)(i)(I) of the Act, and a 0.3 

percentage point reduction in 

accordance with sections 1886(j)(3)(C) 

and (D) of the Act. 

• The effects of applying the 

proposed budget-neutral labor-related 

share and wage index adjustment, as 

required under section 1886(j)(6) of the 

Act. 

• The effects of the proposed budgetneutral changes to the CMG relative 

weights and average length of stay 

values, under the authority of section 

1886(j)(2)(C)(i) of the Act. 

• The effects of the proposed updates 

to the Rural, LIP, and Teaching Status 

adjustment factors, using an updated 

methodology. 

• The total change in estimated 

payments based on the proposed FY 

2014 payment changes relative to the 

estimated FY 2013 payments. 

2. Description of Table 16 

Table 16 categorizes IRFs by 

geographic location, including urban or 

rural location, and location with respect 

to CMS’s 9 census divisions (as defined 

on the cost report) of the country. In 

addition, the table divides IRFs into 

those that are separate 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 16 shows the overall 

impact on the 1,132 IRFs included in 

the analysis. 

The next 12 rows of Table 16 contain 

IRFs categorized according to their 

geographic location, designation as 

either a freestanding 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 947 

IRFs located in urban areas included in 

our analysis. Among these, there are 731 

IRF units of hospitals located in urban 

areas and 216 freestanding IRF hospitals 

located in urban areas. There are 185 

IRFs located in rural areas included in 

our analysis. Among these, there are 167 

IRF units of hospitals located in rural 

areas and 18 freestanding IRF hospitals 

located in rural areas. There are 299 forprofit IRFs. Among these, there are 260 

IRFs in urban areas and 39 IRFs in rural 

areas. There are 685 non-profit IRFs. 

Among these, there are 570 urban IRFs 

and 115 rural IRFs. There are 148 

government-owned IRFs. Among these, 

there are 117 urban IRFs and 31 rural 

IRFs. 

The remaining four parts of Table 16 

show IRFs grouped by their geographic 

location within a region, by teaching 

status, and by DSH PP. First, IRFs 

located in urban areas are categorized 

with respect to their location within a 

particular one of the nine Census 

geographic regions. Second, IRFs 

located in rural areas are categorized 

with respect to their location within a 

particular one of the nine Census 

geographic regions. In some cases, 

especially for rural IRFs located in the 

New England, Mountain, and Pacific 

regions, the number of IRFs represented 

is small. IRFs are then grouped by 

teaching status, including non-teaching 

IRFs, IRFs with an intern and resident 

to average daily census (ADC) ratio less 

than 10 percent, IRFs with an intern and 

resident to ADC ratio greater than or 

equal to 10 percent and less than or 

equal to 19 percent, and IRFs with an 

intern and resident to ADC ratio greater 

than 19 percent. Finally, IRFs are 

grouped by DSH PP, including IRFs 

with zero DSH PP, IRFs with a DSH PP 

less than 5 percent, IRFs with a DSH PP 

between 5 and less than 10 percent, 

IRFs with a DSH PP between 10 and 20 

percent, and IRFs with a DSH PP greater 

than 20 percent. 

The estimated impacts of each 

proposed policy described in this 

proposed rule to the facility categories 

listed above are shown in the columns 

of Table 16. The description of each 

column is as follows: 

• Column (1) shows the facility 

classification categories described 

above. 

• Column (2) shows the number of 

IRFs in each category in our FY 2012 

analysis file. 

• Column (3) shows the number of 

cases in each category in our FY 2012 

analysis file. 

• Column (4) shows the estimated 

effect of the proposed adjustment to the 

outlier threshold amount. 

• Column (5) shows the estimated 

effect of the proposed update to the IRF 

PPS payment rates, which includes a 

productivity adjustment in accordance 

with section 1886(j)(3)(C)(ii)(I) of the 

Act, and a 0.3 percentage point 

reduction in accordance with sections 

1886(j)(3)(C)(ii)(II) and (D)(ii) of the Act. 

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• Column (6) shows the estimated 

effect of the proposed update to the IRF 

labor-related share and wage index, in a 

budget neutral manner. 

• Column (7) shows the estimated 

effect of the proposed update to the 

CMG relative weights and average 

length of stay values, in a budget neutral 

manner. 

• Column (8) shows the estimated 

effect of the proposed update to the 

facility adjustment factors using an 

updated methodology, in a budget 

neutral manner. 

• Column (9) compares our estimates 

of the payments per discharge, 

incorporating all of the proposed 

policies reflected in this proposed rule 

for FY 2014 to our estimates of 

payments per discharge in FY 2013. 

The average estimated increase for all 

IRFs is approximately 2.0 percent. This 

estimated net increase includes the 

effects of the proposed RPL market 

basket increase factor for FY 2014 of 2.5 

percent, reduced by a productivity 

adjustment of 0.4 percentage point in 

accordance with section 

1886(j)(3)(C)(ii)(I) of the Act, and further 

reduced by 0.3 percentage point in 

accordance with sections 

1886(j)(3)(C)(ii)(II) and (D)(ii) of the Act. 

It also includes the approximate 0.2 

percent overall estimated increase in 

estimated IRF outlier payments from the 

proposed update to the outlier threshold 

amount. Since we are making the 

proposed updates to the IRF wage 

index, the facility-level adjustments, 

and the CMG relative weights in a 

budget-neutral manner, they would not 

be expected to affect total estimated IRF 

payments in the aggregate. However, as 

described in more detail in each section, 

they would be expected to affect the 

estimated distribution of payments 

among providers. 

TABLE 16—IRF IMPACT TABLE FOR FY 2014 

[Columns 4–9 in %] 

Facility classification Number of 

IRFs 

Number of cases Outlier 

Adjusted 

market basket increase 

factor for FY 

2014 1

FY 2014 

CBSA wage 

index and 

labor-share 

CMG Facility 

adjust 

Total 

percent 

change 

(1) (2) (3) (4) (5) (6) (7) (8) (9) 

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

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

Rural unit .......................... 167 26,894 0.2 1.8 0.1 0.1 ¥2.8 ¥0.7 

Urban hospital .................. 216 168,159 0.1 1.8 ¥0.1 0.0 0.3 2.1 

Rural hospital ................... 18 5,874 0.1 1.8 ¥0.2 ¥0.1 ¥3.4 ¥1.9 

Urban For-Profit ............... 260 142,026 0.1 1.8 ¥0.2 0.0 0.3 2.0 

Rural For-Profit ................ 39 8,184 0.1 1.8 0.0 0.0 ¥3.3 ¥1.4 

Urban Non-Profit .............. 570 177,533 0.3 1.8 0.2 0.0 0.3 2.5 

Rural Non-Profit ............... 115 19,523 0.2 1.8 0.0 0.0 ¥2.8 ¥0.8 

Urban Government .......... 117 28,661 0.3 1.8 ¥0.2 0.0 0.3 2.3 

Rural Government ............ 31 5,061 0.3 1.8 0.1 0.1 ¥3.0 ¥0.7 

Urban ............................... 947 348,220 0.2 1.8 0.0 0.0 0.3 2.3 

Rural ................................. 185 32,768 0.2 1.8 0.0 0.0 ¥2.9 ¥0.9 

Urban by region 2

Urban New England ......... 31 16,756 0.1 1.8 0.8 0.0 0.1 2.7 

Urban Middle Atlantic ....... 140 59,219 0.2 1.8 0.0 0.0 0.7 2.7 

Urban South Atlantic ........ 130 62,331 0.1 1.8 ¥0.3 0.0 0.1 1.8 

Urban East North Central 182 52,383 0.3 1.8 0.2 0.0 0.6 2.9 

Urban East South Central 49 24,405 0.1 1.8 ¥0.8 0.0 0.5 1.6 

Urban West North Central 73 17,946 0.2 1.8 0.5 0.0 0.0 2.5 

Urban West South Central 171 67,357 0.2 1.8 ¥0.1 0.0 0.4 2.3 

Urban Mountain ............... 72 23,318 0.3 1.8 ¥0.5 0.0 0.2 1.7 

Urban Pacific .................... 99 24,505 0.4 1.8 0.7 0.0 ¥0.8 2.1 

Rural by region 2

Rural New England .......... 6 1,395 0.4 1.8 ¥0.4 ¥0.1 ¥2.1 ¥0.4 

Rural Middle Atlantic ........ 15 2,702 0.2 1.8 ¥0.3 0.0 ¥2.6 ¥0.9 

Rural South Atlantic ......... 24 5,546 0.1 1.8 0.0 0.1 ¥2.9 ¥0.9 

Rural East North Central 32 5,576 0.2 1.8 0.3 0.0 ¥2.8 ¥0.5 

Rural East South Central 22 3,834 0.2 1.8 0.0 0.1 ¥3.2 ¥1.2 

Rural West North Central 27 3,624 0.3 1.8 ¥0.7 0.0 ¥2.7 ¥1.4 

Rural West South Central 48 9,056 0.2 1.8 0.3 0.0 ¥3.5 ¥1.3 

Rural Mountain ................. 7 660 0.4 1.8 0.3 0.2 ¥2.0 0.6 

Rural Pacific ..................... 4 375 0.8 1.8 0.1 ¥0.1 ¥1.3 1.3 

Teaching Status 

Non-teaching .................... 1,015 332,827 0.2 1.8 0.0 0.0 ¥0.2 1.8 

Resident to ADC less 

than 10% ...................... 68 32,835 0.2 1.8 0.1 0.0 0.6 2.7 

Resident to ADC 10%– 

19% .............................. 37 13,743 0.3 1.8 0.1 0.0 2.1 4.3 

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TABLE 16—IRF IMPACT TABLE FOR FY 2014—Continued 

[Columns 4–9 in %] 

Facility classification Number of 

IRFs 

Number of 

cases Outlier 

Adjusted 

market basket increase 

factor for FY 

2014 1

FY 2014 

CBSA wage 

index and 

labor-share 

CMG Facility 

adjust 

Total 

percent 

change 

(1) (2) (3) (4) (5) (6) (7) (8) (9) 

Resident to ADC greater 

than 19% ...................... 12 1,583 0.2 1.8 0.4 0.0 6.7 9.3 

Disproportionate Share Patient Percentage (DSH PP) 

DSH PP = 0% .................. 39 7,929 0.8 1.8 0.2 0.0 0.7 3.5 

DSH PP less than 5% ..... 193 64,712 0.2 1.8 0.0 0.0 0.9 2.8 

DSH PP 5%–10% ............ 323 122,318 0.1 1.8 ¥0.1 0.0 0.4 2.3 

DSH PP 10%–20% .......... 349 125,863 0.2 1.8 0.1 0.0 0.0 2.0 

DSH PP greater than 20% 228 60,166 0.3 1.8 0.0 0.0 ¥1.3 0.7 

1This column reflects the impact of the RPL market basket increase factor for FY 2014 of 1.8 percent, which includes a market basket update 

of 2.5 percent, a 0.3 percentage point reduction in accordance with sections 1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(ii) of the Act and a 0.4 percentage point reduction for the productivity adjustment as required by section 1886(j)(3)(C)(ii)(I) of the Act. 2A map of states that comprise the 9 geographic regions can be found at (http://www.census.gov/geo/www/us_regdiv.pdf.). 

3. Impact of the Proposed Update to the 

Outlier Threshold Amount 

The proposed outlier threshold 

adjustment is presented in column 4 of 

Table 16. In the FY 2013 IRF PPS notice 

(77 FR 44618), we used FY 2011 IRF 

claims data (the best, most complete 

data available at that time) to set the 

outlier threshold amount for FY 2013 so 

that estimated outlier payments would 

equal 3 percent of total estimated 

payments for FY 2013. 

For this proposed rule, we are 

proposing to update our analysis using 

FY 2012 IRF claims data and, based on 

this updated analysis, we estimate that 

IRF outlier payments as a percentage of 

total estimated IRF payments are 2.8 

percent in FY 2013. Thus, we are 

proposing to adjust the outlier threshold 

amount in this proposed rule to set total 

estimated outlier payments equal to 3 

percent of total estimated payments in 

FY 2014. The estimated change in total 

IRF payments for FY 2014, therefore, 

includes an approximate 0.2 percent 

increase in payments because the 

estimated outlier portion of total 

payments is estimated to increase from 

approximately 2.8 percent to 3 percent. 

The impact of this proposed outlier 

adjustment update (as shown in column 

4 of Table 16) is to increase estimated 

overall payments to IRFs by about 0.2 

percent. We estimate the largest increase 

in payments from the update to the 

outlier threshold amount to be 0.8 

percent for rural IRFs in the Pacific 

region. We do not estimate that any 

group of IRFs would experience a 

decrease in payments from this 

proposed update. 

4. Impact of the Proposed Market Basket 

Update to the IRF PPS Payment Rates 

The proposed market basket update to 

the IRF PPS payment rates is presented 

in column 5 of Table 16. In the aggregate 

the proposed update would result in a 

net 1.8 percent increase in overall 

estimated payments to IRFs. This net 

increase reflects the estimated RPL 

market basket increase factor for FY 

2014 of 2.5 percent, reduced by the 0.3 

percentage point in accordance with 

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

1886(j)(3)(D)(ii) of the Act, and further 

reduced by a 0.4 percentage point 

productivity adjustment as required by 

section 1886(j)(3)(C)(ii)(I) of the Act. 

5. Impact of the Proposed CBSA Wage 

Index and Labor-Related Share 

In column 6 of Table 16, we present 

the effects of the proposed budget 

neutral update of the wage index and 

labor-related share. The proposed 

changes to the wage index and the 

labor-related share are discussed 

together because the wage index is 

applied to the labor-related share 

portion of payments, so the proposed 

changes in the two have a combined 

effect on payments to providers. As 

discussed in section V.C. of this 

proposed rule, we propose to decrease 

the labor-related share from 69.881 

percent in FY 2013 to 69.658 percent in 

FY 2014. 

In the aggregate, since these proposed 

updates to the wage index and the laborrelated share are applied in a budgetneutral manner as required under 

section 1886(j)(6) of the Act, we do not 

estimate that these proposed updates 

would affect overall estimated payments 

to IRFs. However, we estimate that these 

proposed updates would have small 

distributional effects. For example, we 

estimate the largest increase in 

payments from the proposed update to 

the CBSA wage index and labor-related 

share of 0.8 percent for urban IRFs in 

the New England region. We estimate 

the largest decrease in payments from 

the update to the CBSA wage index and 

labor-related share to be a 0.8 percent 

decrease for urban IRFs in the East 

South Central region. 

6. Impact of the Proposed Update to the 

CMG Relative Weights and Average 

Length of Stay Values. 

In column 7 of Table 16, we present 

the effects of the proposed budget 

neutral update of the CMG relative 

weights and average length of stay 

values. In the aggregate, we do not 

estimate that these proposed updates 

would affect overall estimated payments 

to IRFs. However, we would expect 

these proposed update to have small 

distributional effects. Freestanding rural 

hospitals will see a 0.1 decrease in 

payments as a result of these updates. 

The rural areas affected are New 

England and Pacific. The largest 

estimated increase in payments as a 

result of these updates is a 0.2 increase 

in the Mountain region. 

7. Impact of the Proposed Updates to the 

Facility-Level Adjustments 

In column 8 of Table 16, we present 

the effects of the proposed budget 

neutral updates to the IRF facility-level 

adjustment factors (the rural, LIP, and 

teaching status adjustment factors) for 

FY 2014. In the aggregate, we do not 

estimate that these proposed updates 

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would affect overall estimated payments 

to IRFs. However, we estimate that these 

proposed updates would have 

distributional effects, as shown in Table 

16. The largest estimated decrease in 

payments as a result of these proposed 

updates is a 3.5 percent decrease to 

rural IRFs in the West South Central 

region. The largest estimated increase in 

payments as a result of these proposed 

updates is a 6.7 percent increase for 

teaching IRFs with a resident to average 

daily census ratio greater than 19 

percent. 

8. Impact of the Proposed Refinements 

to the Presumptive Compliance Criteria 

Methodology 

As discussed in section VII. of this 

proposed rule, we are proposing 

changes to the list of ICD–9–CM codes 

available to meet the presumptive 

compliance criteria. We believe that 

these proposed changes would affect all 

1,132 IRFs, as these facilities would 

need to change their coding practices to 

continue to meet the 60 percent 

compliance percentage using the 

presumptive methodology. 

We estimate that the financial impact, 

in the absence of any behavioral 

responses to these proposed changes on 

the part of providers, would be a 

decrease of 6.9 percent (or $520 million) 

in overall estimated payments to IRFs. 

However, we believe that IRFs will be 

able to improve the specificity of their 

coding practices, alter their admitting 

practices, meet the 60 percent 

compliance threshold under medical 

review, and make other modifications to 

their operations to continue to meet the 

60 percent compliance threshold. 

For example, we estimate that about 

92 percent of the IRF cases that would 

potentially be affected by the proposed 

revisions to the presumptive 

methodology codes are affected by the 

removal of the non-specific codes. 

However, we have been careful to 

propose removal only of those nonspecific codes for which more specific 

codes for the same conditions will 

remain on the list of codes that meet the 

presumptive methodology. Thus, in all 

of these cases, we believe that the IRF 

will be able to switch to a more specific 

code for the same condition, leaving the 

IRF’s admission practices and 

classification status unaffected. 

However, we welcome comments on 

whether there are any particular nonspecific codes or situations in which 

switching to a more specific code would 

be unusually difficult for an IRF. 

Fewer than 1 percent of the cases that 

we estimate would be affected by the 

proposed revisions are affected by the 

Unilateral Upper Extremity Amputation 

codes, the Congenital Anomaly codes, 

and the Miscellaneous codes combined. 

Thus, we do not estimate that the 

proposed removal of these code groups 

would have a significant effect on IRF 

admission or coding practices, or 

classification status. However, we 

welcome comments on whether 

individual IRFs may specialize in any of 

these conditions and might therefore be 

disproportionately affected by these 

proposed revisions. 

Finally, approximately 7 percent of 

the cases that we estimate would be 

affected by the proposed revisions 

involve arthritis diagnoses. We estimate 

that the proposed revisions in this 

category would have the largest 

potential effects on providers because, 

by the very nature of these revisions, 

IRFs would not have another arthritis 

code on the list to code instead. We 

estimate that about 14 percent of all IRF 

cases are coded with the arthritis codes 

that we propose to remove from the list, 

and in 11 percent of these cases, the 

arthritis code is the only code that 

would qualify the patient as meeting the 

60 percent rule requirements. However, 

for the arthritis category of codes, we 

estimate that most of these cases will 

still be found to meet the 60 percent 

rule requirements under medical 

review, so we estimate that these 

proposed revisions will lead to few if 

any IRF declassifications. However, we 

welcome comments on whether there 

are any reasons to believe that the 

arthritis cases may not generally be 

found to count towards the 60 percent 

rule requirements under medical 

review. 

Historically, we have seen that IRFs 

adapt quickly to changes in the 60 

percent rule, as evidenced by the rapid 

response to changes over time in the 

compliance threshold. Thus, we have 

every reason to believe that they will 

adapt quickly to the proposed changes 

to the presumptive methodology list. In 

addition, the proposed changes would 

not affect how many patients would 

ultimately be shown to meet the 60 

percent rule criteria on medical review. 

For these reasons, we believe that our 

best estimate of the impact on IRFs of 

these changes is no net change in 

Medicare reimbursement payments. 

Instead, IRFs will quickly change their 

coding practices, admission practices, 

meet the 60 percent compliance 

threshold under medical review, and 

make other changes to their business 

practice to ensure that they continue to 

meet the 60 percent rule requirements; 

although we lack data to more precisely 

characterize the rule-induced costs, 

benefits and transfers that would be 

experienced by IRFs, their patients and 

other relevant entities, we note that the 

$520 million estimate appearing earlier 

in this section represents an upper 

bound (probably an extreme upper 

bound) on the costs that would be borne 

by IRFs. 

Should these proposed changes to the 

60 percent rule be finalized, we intend 

to closely monitor provider coding 

practices to identify whether those 

patients that we envisioned would be 

served under the IRF PPS are counting 

toward the presumptive compliance 

percentage. We will also monitor 

whether these proposed changes are 

having any unintended consequences in 

terms of limiting access to care. 

9. Effects of Proposed Updates to the 

IRF QRP 

In this rule, we are proposing to 

continue use of the pressure ulcer 

measure that was adopted in the FY 

2012 IRF PPS final rule but have 

proposed to change this measure for the 

IRF PPS increase factor for FY 2017, at 

which time we are proposing to adopt 

the NQF-endorsed version of this 

measure. We are further proposing to 

make revisions to the pressure ulcer 

items on the IRF–PAI that providers will 

use to collect data for this measure. 

IRFs will incur some financial impact 

from the use of the pressure ulcer 

measure item set that will be 

incorporated into the IRF–PAI. We 

expect that the admission and discharge 

pressure ulcer data will be collected by 

a clinician such as a registered nurse 

(RN) because the assessment and staging 

of pressure ulcers requires a high degree 

of clinical judgment and experience. We 

estimate that it will take approximately 

10 minutes of time by the RN to perform 

the admission pressure ulcer 

assessment. We further estimate that it 

will take 15 minutes of time to complete 

the discharge pressure ulcer assessment. 

During these time periods, the RN 

would be engaged in the collection of 

data for the purpose of the IRF quality 

reporting program and would not be 

performing patient care. An RN or 

clinician of a similar level of training 

and expertise should perform the 

pressure ulcer assessment and record 

this data on the IRF–PAI. 

We believe use of the NQF endorsed 

pressure ulcer measure will cause IRFs 

to incur additional annual financial 

burden in the amount of $4,518.61 and 

across all IRFs, $5,246,106. This burden 

is comprised of the clinical and 

administrative wages. The clinical 

wages are based on an average hourly 

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26930 Federal Register / Vol. 78, No. 89 / Wednesday, May 8, 2013 / Proposed Rules 

38According to the U.S. Bureau of Labor 

Statistics, the mean hourly wage for a Registered 

Nurse is $33.23. (See http://www.bls.gov/oes/2011/ 

may/oes291111.htm). 

39MedPAC, A Data Book: Health Care Spending 

and the Medicare Program (June 2012), http:// 

www.medpac.gov/chapters/ 

Jun12DataBookSec8.pdf. 

40 359,000 IRF–PAI reports per all IRFs per year/ 

1161 IRFs in U.S. = 309 IRF–PAI reports per each 

IRF per year. 309 IRF–PAI reports per IRF per year/ 

12 months per year = 26 IRF–PAI reports per each 

IRF per year. 

41 25 minutes × 309 IRF–PAI assessments per 

each IRF per year = 7,725 minutes per each IRF per 

year. 7,725 minutes per each IRF per year/60 

minutes per hour = 128.75 hours per each IRF per 

year. 128.75 hours per year × $33.23 per hour = 

$4,278.36 nursing wages per each IRF per year. 

42 $4,278.36 × 1161 IRF providers = $4,967,176 

per all IRFs per year. 

43MedPAC, A Data Book: Health Care Spending 

and the Medicare Program (June 2012), Page 129 

().(http://www.medpac.gov/chapters/ 

Jun12DataBookSec8.pdf). 

44According to the U.S. Bureau of Labor 

Statistics, the mean hourly wage for a Medical 

Records & Health Information Technician is $15.55. 

See: http://www.bls.gov/ooh/healthcare/medicalrecords-and-health-information-technicians.htm. 

45 15 minutes Admin staff time to collect and 

report staff influenza measure @ $15.55 per hour = 

$3.98 per IRF per year. 

46 $3.98 per IRF per year × 1161 IRFs in U.S.= 

$4,621. 

wage rate of $33.23.38 We estimate that 

there are 359,000 IRF–PAI submissions 

per year 39 and that there are 1161 IRFs 

in the U.S. that have reported quality 

data to CMS. Based on these figures, we 

estimate that each IRF will submit 

approximately 309 IRF–PAIs per year or 

25.75 IRF–PAIs per month.40 Assuming 

that each IRF–PAI submission requires 

25 minutes of time by an RN at an 

average hourly wage of $33.23, the 

yearly cost to each IRF would be 

$4,278.36 41 and the annualized cost 

across all IRFs would be $4,967,176.42

To calculate the total amount of 

administrative staff wages incurred, we 

estimate that this data entry task will 

take no more than 3 minutes per each 

IRF–PAI record or 15.45 hours per each 

IRF annually or 17,937 hours across all 

IRFs. According to the U.S. Bureau of 

Labor, the average hourly wage for 

Administrative Assistants is $15.55. As 

noted above, we have estimated that 

there are approximately 359,000 IRF– 

PAI submissions per year and 1161 IRFs 

in the U.S. that are reporting quality 

data to CMS. Given this wage 

information, the estimated total annual 

cost across all IRFs for the time required 

for entry of pressure ulcer data into the 

IRF–PAI record is $278,930. We further 

estimate the average yearly cost to each 

IRF to be $240.25. 

We are also proposing to add 3 new 

quality measures to the IRF QRP. These 

proposed measures include: (1) Percent 

of Residents or Patients Who Were 

Assessed and Appropriately Given the 

Seasonal Influenza Vaccine (Short-Stay) 

(NQF #0680), which will affect the FY 

2017 increase factor; (2) Influenza 

Vaccination Coverage among Healthcare 

Personnel (NQF #0431), which will 

affect the FY 2016 increase factor; and 

(3) an All-Cause Unplanned 

Readmission Measure for 30 Days Post 

Discharge from Inpatient Rehabilitation 

Facilities, which will affect the FY 2017 

increase factor. We discuss the impact 

of each measure upon IRFs below. 

We have proposed that IRFs will 

submit their data for the patient 

influenza measure (NQF #0680) on the 

IRF–PAI. We have further proposed to 

add a new data item set consisting of 3 

items to the IRF–PAI to collect the data 

for this measure. IRF staff will be 

required to perform a full influenza 

assessment only during the influenza 

vaccination season, which has been 

defined by the CDC as the time period 

from October 1st (or when the vaccine 

becomes available) through March 31 

each year. From April 1st through 

September 30th, IRFs are not required to 

perform a full influenza screening. Our 

time estimate reflects the averaged 

amount of time necessary to complete 

the influenza item set both during and 

outside the influenza vaccination 

season. 

We believe that it will be most 

appropriate for a clinician, such as an 

RN, to complete the influenza items 

because this assessment requires 

clinical judgment and knowledge of 

vaccinations. An administrative 

employee, such as a medical data entry 

clerk or administrative assistant would 

not have this level of knowledge. We do 

not believe that IRFs will require 

additional time by administrative staff 

to encode and transmit this data to 

CMS, because submission of an IRF–PAI 

for each patient is already required as a 

condition for payment. 

We estimate that it will take 

approximately 5 minutes to complete 

the patient influenza measure item set. 

According to MedPAC, there are 

approximately 359,000 43 IRF–PAIs 

completed annually across 1161 IRFs 

that reported quality data to CMS. This 

breaks down to approximately 309 IRF– 

PAIs completed by each IRF yearly. We 

estimate that the annual time burden for 

reporting the patient influenza 

vaccination measure data is 29,896 

hours across all IRFs in the U.S. and 

25.75 hours for each individual IRF. 

According to the U.S. Bureau of Labor, 

the hourly wage for a Registered Nurse 

is $33.23. The estimated annual cost 

across all IRFs in the U.S. for the 

submission of the patient influenza 

measure data is $993,433 and $855.67 

for each individual IRF. 

IRFs will submit their data for the 

staff immunization measure (NQF 

#0431) to the CDC’s healthcare acquired 

(HAI) surveillance Web site known as 

NHSN. Data collection for this measure 

is only required from October 1st (or 

when the vaccine becomes available) 

through March 31st each year, during 

which IRFs will be required to keep 

records of which staff members receive 

the influenza vaccination. However, 

IRFs are required to make one report to 

NHSN after the close of the reporting 

period on March 31st, by May 15th of 

each year. We do not believe that IRFs 

will incur any new burden associated 

with the collection of data during the 

influenza vaccination season. We 

believe that most IRFs already keep 

records related to the influenza 

vaccination of their staff because this 

impacts on many aspects of their 

business, including but not limited to 

staff absences, and transmission of 

illness to other staff and patients. 

We estimate that it will take each IRF 

approximately 15 minutes of time once 

per year to gather the data that was 

collected during the influenza 

vaccinations season, and prepare to 

make their report to NHSN. We do not 

estimate that it will take IRFs additional 

time to input their data into NHSN, 

once they have logged onto the system 

for the purpose of submitting their 

monthly CAUTI report. We believe that 

this task can be completed by an 

administrative person such as a Medical 

Secretary Medical Data Entry Clerk. As 

noted above, the average hourly wage 

for Medical Records or Health 

Information Technicians is $15.55.44 We 

estimate that the average yearly cost to 

each IRF for the reporting of this 

measure will be $3.98 45 and the cost 

across all IRFs will be $4,621.46

The proposed readmission measure is 

a claims based measure and, therefore, 

IRFs are not required to submit any data 

for this measure. We do not anticipate 

that IRFs will be impacted by any 

financial or time burdens as a result of 

the use of this measure for the IRF QRP. 

The IRF QRP was established under 

section 3004 of the Affordable Care Act 

(which added Section 1886(j)(7)(A)(i) to 

the Act). Section 1886(j)(7)(A)(i) 

requires the reduction of the applicable 

IRF PPS increase factor, as previously 

modified under section 1886(j)(3)(D) of 

the Act, by 2 percentage points for any 

IRFs that fail to submit data to the 

Secretary in accordance with 

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requirements established by the 

Secretary for that fiscal year. 

Over the past 18 months, we have 

received a great deal of positive 

feedback from IRFs about the IRF QRP, 

and overall, IRFs have been very 

receptive to the introduction of the ACA 

3004 IRF QRP into the IRF setting. The 

IRF provider community has shared 

many suggestions and ideas related to 

the IRF QRP. Outreach activities, such 

as a one day in-person training, and six 

open door forums were well attended. 

Given the amount of positive feedback 

and willingness to participate in the IRF 

QRP that has been demonstrated by 

IRFs, we anticipate that there will be a 

relatively small number of IRFs that fail 

to report the required type and amount 

of quality data. If finalized, our 

proposed reconsideration process would 

allow IRFs that receive an initial finding 

of non-compliance an opportunity to 

file a request for reconsideration of this 

finding. 

10. Impact of the Implementation of the 

2 Percentage Point Reduction in the 

Increase Factor for Failure to Meet the 

IRF Quality Reporting Requirements 

As discussed in section XIII. of this 

proposed rule and in accordance with 

section 1886(j)(7) of the Act, we will 

implement a 2 percentage point 

payment reduction in FY 2014 for IRFs 

that fail to report the required quality 

reporting data to us during the first IRF 

quality reporting period (from October 

1, 2012 through December 31, 2012). In 

section XIII., we discuss how the 2 

percentage point payment reduction 

will be applied. Currently, we cannot 

estimate the overall financial impacts of 

the application of this reduction on 

aggregate IRF PPS payments or on the 

distribution of IRF PPS payments among 

providers because we cannot predict the 

number of or types of IRFs that will fail 

to report the required quality reporting 

data. IRFs are currently required to 

complete the non-quality portions of the 

IRF–PAI to receive payment for all 

Medicare fee-for-service admissions. 

Therefore, we estimate that the number 

of IRFs that would fail to submit the 

additional quality reporting data on the 

IRF–PAI form is very low. Additionally, 

the Catheter Associated Urinary Tract 

Infections (CAUTI) quality reporting 

requirement would require IRFs to 

register with the National Healthcare 

Safety Network (NHSN) to submit the 

required data. At this time, we cannot 

predict how many IRFs would fail to 

register. 

The official reporting period end date 

for the first IRF quality reporting period 

is May 15, 2013. We expect a 

preliminary report of the IRFs that have 

failed to report the required data during 

the first quality reporting period to be 

developed by mid-June 2013. However, 

that list could change substantially 

during the proposed reconsideration 

process (described in section XIII. of 

this proposed rule) that would occur 

between June 2013 and September 2013. 

Therefore, we intend to closely monitor 

the effects of this new quality reporting 

program on IRF providers as we cannot 

predict the number of, or types of IRFs 

that would fail to report the required 

quality reporting data for the first 

quality reporting period. 

D. Alternatives Considered 

As stated in section XV.B. of this 

proposed rule, we estimate that the 

proposed changes discussed in the rule 

would result in a significant economic 

impact on IRFs. The overall impact on 

all IRFs is an estimated increase in FY 

2014 payments of $150 million (2.0 

percent), relative to FY 2013. The 

following is a discussion of the 

alternatives considered for the proposed 

IRF PPS updates contained in this 

proposed rule. 

Section 1886(j)(3)(C) of the Act 

requires the Secretary to update the IRF 

PPS payment rates by an increase factor 

that reflects changes over time in the 

prices of an appropriate mix of goods 

and services included in the covered 

IRF services. Thus, we did not consider 

alternatives to updating payments using 

the estimated RPL market basket 

increase factor for FY 2014. However, as 

noted previously in this proposed rule, 

section 1886(j)(3)(C)(ii)(I) requires the 

Secretary to apply a productivity 

adjustment to the market basket increase 

factor for FY 2014 and sections 

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

of the Act require the Secretary to apply 

a 0.3 percentage point reduction to the 

market basket increase factor for FY 

2014. Thus, in accordance with section 

1886(j)(3)(C) of the Act, we proposed to 

update IRF federal prospective 

payments in this proposed rule by 1.8 

percent (which equals the 2.5 percent 

estimated RPL market basket increase 

factor for FY 2014 reduced by 0.3 

percentage points, and further reduced 

by a 0.4 percentage point productivity 

adjustment as required by section 

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

We considered maintaining the 

existing CMG relative weights and 

average length of stay values for FY 

2014. However, in light of recently 

available data and our desire to ensure 

that the CMG relative weights and 

average length of stay values are as 

reflective as possible of recent changes 

in IRF utilization and case mix, we 

believe that it is appropriate to propose 

to update the CMG relative weights and 

average length of stay values at this time 

to ensure that IRF PPS payments 

continue to reflect as accurately as 

possible the current costs of care in 

IRFs. 

We considered maintaining the 

current facility-level adjustment factors 

(that is, the rural factor at 18.4 percent, 

the LIP factor at 0.4613, and teaching 

status adjustment factor at 0.6876) for an 

additional year. However, as discussed 

in more detail in section IV.B. of this 

proposed rule, our recent research 

efforts have shown significant 

differences in cost structures between 

freestanding IRFs and IRF units of acute 

care hospitals (and CAHs). We have 

found that these cost structure 

differences substantially influence the 

estimates of the adjustment factors. For 

this reason, our regression analysis 

found that the proposed inclusion of the 

control variable for a facility’s status as 

either a freestanding IRF hospital or an 

IRF unit of an acute care hospital (or a 

CAH) would greatly enhance the 

accuracy of the adjustment factors for 

FY 2014, as we incorporate updated 

data. Further, as noted previously, we 

received comments from an IRF 

industry association on the FY 2012 IRF 

PPS proposed rule suggesting this 

enhancement to the methodology. Thus, 

we believe that the best approach at this 

time is to propose to update the facilitylevel adjustment factors for FY 2014 

using this proposed enhancement to the 

methodology. However, we welcome 

comments on this approach and on 

whether or not the facility-level 

adjustment factors need updating at this 

time or should be frozen at their current 

levels for an additional year. 

We considered maintaining the 

existing outlier threshold amount for FY 

2014. However, analysis of updated FY 

2012 data indicates that estimated 

outlier payments would be lower than 3 

percent of total estimated payments for 

FY 2013, by approximately 0.2 percent, 

unless we updated the outlier threshold 

amount. Consequently, we propose 

adjusting the outlier threshold amount 

in this proposed rule to reflect a 0.2 

percent increase thereby setting the total 

outlier payments equal to 3 percent, 

instead of 2.8 percent, of aggregate 

estimated payments in FY 2014. 

Finally, we considered maintaining 

the current list of ICD–9–CM codes used 

to determine an IRF’s compliance with 

the 60 percent rule under the 

presumptive methodology, or 

maintaining some of the categories of 

codes that we are proposing to remove 

from the list in this proposed rule. 

However, we believe that the specific 

ICD–9–CM code removals that we are 

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proposing in section VII. of this 

proposed rule would result in a list that 

better reflects the 60 percent rule 

regulations. For example, the proposed 

removal of the non-specific diagnosis 

codes (as discussed in section VII. of 

this proposed rule) is in accordance 

with the trend toward requiring more 

specific coding in other Medicare 

payment settings, such as the IPPS. We 

believe that the incentives to use more 

specific codes, whenever possible, will 

also lead to improvements in the quality 

of care for patients by providing more 

detailed information that medical 

personnel can use to enhance the 

specificity of patients’ care plans. In 

addition, the proposed removal of the 

arthritis diagnosis codes (as discussed 

in section VII. of this proposed rule) 

would enable CMS to ensure that we 

only count patients as meeting the 60 

percent rule requirements if they have 

met the necessary severity and prior 

treatment requirements, information 

which is not discernible from the ICD– 

9–CM codes themselves. With respect to 

the other code categories that we are 

proposing to remove from the 

presumptive methodology list, we do 

not believe that patients who are coded 

with these codes would typically 

require treatment in an IRF, as described 

in more detail in section VII. of this 

proposed rule. However, we welcome 

comments on whether there are any 

specific reasons that we may not have 

previously considered that would argue 

for keeping certain of these codes on the 

presumptive methodology list. 

E. Accounting Statement 

As required by OMB Circular A–4 

(available at http:// 

www.whitehouse.gov/sites/default/files/ 

omb/assets/omb/circulars/a004/a4.pdf), in Table 17, we have prepared an 

accounting statement showing the 

classification of the expenditures 

associated with the provisions of this 

proposed rule. Table 17 provides our 

best estimate of the increase in Medicare 

payments under the IRF PPS as a result 

of the proposed updates presented in 

this proposed rule based on the data for 

1,132 IRFs in our database. 

TABLE 17—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED EXPENDITURES, FROM THE 2013 IRF PPS FISCAL

YEAR TO THE 2014 IRF PPS FISCAL YEAR

Category Transfers 

Annualized Monetized Transfers .............................................................. $150 million. 

From Whom to Whom? ............................................................................ Federal Government to IRF Medicare Providers. 

Estimated annualized cost to the federal government for the administration of the IRF quality reporting program.$2 million. (This cost is attributed to various sources, including but not 

limited to the CCSQ IRF measure developer contractor and the Division of National Systems). 

F. Conclusion 

Overall, the estimated payments per 

discharge for IRFs in FY 2014 are 

projected to increase by 2.0 percent, 

compared with the estimated payments 

in FY 2013, as reflected in column 9 of 

Table 16. IRF payments per discharge 

are estimated to increase 2.3 percent in 

urban areas and decrease 0.9 percent in 

rural areas, compared with estimated FY 

2013 payments. Payments per discharge 

to rehabilitation units are estimated to 

increase 2.5 percent in urban areas and 

decrease 0.7 percent in rural areas. 

Payments per discharge to freestanding 

rehabilitation hospitals are estimated to 

increase 2.1 percent in urban areas and 

decrease 1.9 percent in rural areas. 

Overall, IRFs are estimated to 

experience a net increase in payments 

as a result of the proposed policies in 

this proposed rule. The largest payment 

increase is estimated to be a 2.9 percent 

increase for urban IRFs located in the 

East North Central region. This is due to 

the large positive effect of the facility 

adjustment updates for urban IRFs in 

this region. 

In accordance with the provisions of 

Executive Order 12866, this proposed 

rule was reviewed by the Office of 

Management and Budget. 

List of Subjects in 42 CFR Part 412 

Administrative practice and 

procedure, Health facilities, Medicare, 

Puerto Rico, Reporting and 

recordkeeping requirements. 

For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services proposes to amend 

42 CFR chapter IV as follows: 

PART 412—PROSPECTIVE PAYMENT 

SYSTEMS FOR INPATIENT HOSPITAL 

SERVICES 

■ 1. The authority citation for part 412 

continues to read as follows: 

Authority: Sections 1102, 1862, and 1871 

of the Social Security Act (42 U.S.C. 1302, 

1395y, and 1395hh). 

■ 2. Section 412.25 is amended by 

revising paragraph (a)(1)(iii) to read as 

follows: 

§ 412.25 Excluded hospital units: Common 

requirements. 

(a) * * * 

(1) * * * 

(iii) Unless it is a unit in a critical 

access hospital, the hospital of which an 

IRF is a unit must have at least 10 

staffed and maintained hospital beds 

that are not excluded from the inpatient 

prospective payment system, or at least 

1 staffed and maintained hospital bed 

for every 10 certified inpatient 

rehabilitation facility beds, whichever 

number is greater. Otherwise, the IRF 

will be classified as an IRF hospital, 

rather than an IRF unit. In the case of 

an IPF unit, the hospital must have 

enough beds that are not excluded from 

the inpatient prospective payment 

system to permit the provision of 

adequate cost information, as required 

by § 413.24(c) of this chapter. 

* * * * * 

■ 3. Section 412.29 is amended by 

revising paragraph (d) to read as 

follows: 

§ 412.29 Classification criteria for payment 

under the inpatient rehabilitation facility 

prospective payment system. 

* * * * * 

(d) Have in effect a preadmission 

screening procedure under which each 

prospective patient’s condition and 

medical history are reviewed to 

determine whether the patient is likely 

to benefit significantly from an intensive 

inpatient hospital program. This 

procedure must ensure that the 

preadmission screening for each 

Medicare Part A fee-for-service patient 

is reviewed and approved by a 

rehabilitation physician prior to the 

patient’s admission to the IRF. 

* * * * * 

■ 4. Section 412.130 is amended by 

revising paragraphs (a)(1), (a)(2) and 

(a)(3) to read as follows: 

§ 412.130 Retroactive adjustments for 

incorrectly excluded hospitals and units. 

(a) * * * 

(1) A hospital that was excluded from 

the prospective payment systems 

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Federal Register / Vol. 78, No. 89 / Wednesday, May 8, 2013 / Proposed Rules 26933 

specified in § 412.1(a)(1) or paid under 

the prospective payment system 

specified in § 412.1(a)(3), as a new 

rehabilitation hospital for a cost 

reporting period beginning on or after 

October 1, 1991 based on a certification 

under § 412.29(c) of this part regarding 

the inpatient population the hospital 

planned to treat during that cost 

reporting period, if the inpatient 

population actually treated in the 

hospital during that cost reporting 

period did not meet the requirements of 

§ 412.29(b). 

(2) A hospital that has a unit excluded 

from the prospective payment systems 

specified in § 412.1(a)(1) or paid under 

the prospective payment system 

specified in § 412.1(a)(3), as a new 

rehabilitation unit for a cost reporting 

period beginning on or after October 1, 

1991, based on a certification under 

§ 412.29(c) regarding the inpatient 

population the hospital planned to treat 

in that unit during the period, if the 

inpatient population actually treated in 

the unit during that cost reporting 

period did not meet the requirements of 

§ 412.29(b). 

(3) A hospital that added new beds to 

its existing rehabilitation unit for a cost 

reporting period beginning on or after 

October 1, 1991 based on a certification 

under § 412.29(c) regarding the 

inpatient population the hospital 

planned to treat in these new beds 

during that cost reporting period, if the 

inpatient population actually treated in 

the new beds during that cost reporting 

period did not meet the requirements of 

§ 412.29(b). 

* * * * * 

■ 5. Section 412.630 is revised to read 

as follows: 

§ 412.630 Limitation on review. 

Administrative or judicial review 

under sections 1869 or 1878 of the Act, 

or otherwise, is prohibited with regard 

to the establishment of the methodology 

to classify a patient into the case-mix 

groups and the associated weighting 

factors, the Federal per discharge 

payment rates, additional payments for 

outliers and special payments, and the 

area wage index. 

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance; and Program No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program) 

Dated: April 16, 2013. 

Marilyn Tavenner, 

Acting Administrator, Centers for Medicare 

& Medicaid Services. 

Approved: April 25, 2013. 

Kathleen Sebelius, 

Secretary. 

[FR Doc. 2013–10755 Filed 5–2–13; 4:15 pm] 

BILLING CODE 4120–01–P 

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