Vol. 79 Wednesday, 

No. 151 August 6, 2014 

Part II 

Department of Health and Human Services 

Center for Medicare & Medicaid Services 

42 CFR Part 412 

Medicare Program; Inpatient Rehabilitation Facility Prospective Payment 

System for Federal Fiscal Year 2015; Final Rule 


tkelley on DSK3SPTVN1PROD with RULES2
45872 Federal Register / Vol. 79, No. 151 / Wednesday, August 6, 2014 / Rules and Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 412 

[CMS–1608–F] 

RIN 0938–AS09 

Medicare Program; Inpatient 

Rehabilitation Facility Prospective 

Payment System for Federal Fiscal 

Year 2015 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Final rule. 

SUMMARY: This final rule updates the 

prospective payment rates for inpatient 

rehabilitation facilities (IRFs) for federal 

fiscal year (FY) 2015 as required by the 

statute. This final rule finalizes a policy 

to collect data on the amount and mode 

(that is, Individual, Concurrent, Group, 

and Co-Treatment) of therapy provided 

in the IRF setting according to therapy 

discipline, revises the list of diagnosis 

and impairment group codes that 

presumptively meet the ‘‘60 percent 

rule’’ compliance criteria, provides a 

way for IRFs to indicate on the Inpatient 

Rehabilitation Facility-Patient 

Assessment Instrument (IRF–PAI) form 

whether the prior treatment and severity 

requirements have been met for arthritis 

cases to presumptively meet the ‘‘60 

percent rule’’ compliance criteria, and 

revises and updates quality measures 

and reporting requirements under the 

IRF quality reporting program (QRP). 

This rule also delays the effective date 

for the revisions to the list of diagnosis 

codes that are used to determine 

presumptive compliance under the ‘‘60 

percent rule’’ that were finalized in FY 

2014 IRF PPS final rule and adopts the 

revisions to the list of diagnosis codes 

that are used to determine presumptive 

compliance under the ‘‘60 percent rule’’ 

that are finalized in this rule. This final 

rule also addresses the implementation 

of the International Classification of 

Diseases, 10th Revision, Clinical 

Modification (ICD–10–CM), for the IRF 

prospective payment system (PPS), 

which will be effective when ICD–10– 

CM becomes the required medical data 

code set for use on Medicare claims and 

IRF–PAI submissions. 

DATES: The updated IRF prospective 

payment rates are applicable for IRF 

discharges occurring on or after October 

1, 2014, and on or before September 30, 

2015 (FY 2015). In addition, the 

revisions to the list of diagnosis codes 

that are used to determine presumptive 

compliance under the ‘‘60 percent rule’’ 

that were finalized in FY 2014 IRF PPS 

final rule (78 FR 47860) and the 

revisions to the lists of diagnosis codes 

and impairment group codes finalized 

in this rule are applicable for 

compliance review periods beginning 

on or after October 1, 2015. The change 

to the Inpatient Rehabilitation FacilityPatient Assessment Instrument (IRF– 

PAI) form to indicate whether the prior 

treatment and severity requirements 

have been met for arthritis cases to 

presumptively meet the ‘‘60 percent 

rule’’ compliance criteria is applicable 

October 1, 2015. The implementation of 

the International Classification of 

Diseases, 10th Revision, Clinical 

Modification (ICD–10–CM), for the IRF 

prospective payment system (PPS), is 

applicable when ICD–10–CM becomes 

the required medical data code set for 

use on Medicare claims and IRF–PAI 

submissions. The updated quality 

measures and reporting requirements 

under the IRF QRP are applicable for 

IRF discharges occurring on or after 

October 1, 2014. The two new IRF 

quality measures will require data 

submission beginning with admissions 

and discharges occurring on or after 

January 1, 2015: (1) National Healthcare 

Safety Network (NHSN) Facility-Wide 

Inpatient Hospital-Onset MethicillinResistant Staphylococcus aureus 

(MRSA) Bacteremia Outcome Measure 

(NQF #1716); and (2) National 

Healthcare Safety Network (NHSN) 

Facility-Wide Inpatient Hospital-Onset 

Clostridium difficile Infection (CDI) 

Outcome Measure (NQF #1717). 

FOR FURTHER INFORMATION CONTACT: 

Gwendolyn Johnson, (410) 786–6954, 

for general information. 

Charles Padgett, (410) 786–2811, for 

information about the quality reporting 

program. 

Kadie Thomas, (410) 786–0468, or 

Susanne Seagrave, (410) 786–0044, for 

information about the payment policies 

and the proposed payment rates. 

SUPPLEMENTARY INFORMATION: The IRF 

PPS Addenda along with other 

supporting documents and tables 

referenced in this final rule are available 

through the Internet on the CMS Web 

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

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

Executive Summary 

A. Purpose 

This final rule updates the payment 

rates for IRFs for FY 2015 (that is, for 

discharges occurring on or after October 

1, 2014, and on or before September 30, 

2015) 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 PPS’s case-mix 

groups and a description of the 

methodology and data used in 

computing the prospective payment 

rates for that fiscal year. It also makes 

policy changes to programs associated 

with IRFs. 

B. Summary of Major Provisions 

In this final rule, we use the methods 

described in the FY 2014 IRF PPS final 

rule (78 FR 47860) to update the federal 

prospective payment rates for FY 2015 

using updated FY 2013 IRF claims and 

the most recent available IRF cost report 

data. We are also finalizing a policy to 

collect data on the amount and mode 

(that is, Individual, Concurrent, Group, 

and Co-Treatment) of therapy provided 

in the IRF setting according to therapy 

discipline, revising the list of 

impairment group codes that 

presumptively meet the ‘‘60 percent 

rule’’ compliance criteria, providing a 

way for IRFs to indicate on the Inpatient 

Rehabilitation Facility-Patient 

Assessment Instrument (IRF–PAI) form 

whether the prior treatment and severity 

requirements have been met for arthritis 

cases to presumptively meet the ‘‘60 

percent rule’’ compliance criteria, and 

revising and updating quality measures 

and reporting requirements under the 

IRF QRP. In this final rule, we also 

address the implementation of the 

International Classification of Diseases, 

10th Revision, Clinical Modification 

(ICD–10–CM), for the IRF prospective 

payment system (PPS), effective when 

ICD–10–CM becomes the required 

medical data code set for use on 

Medicare claims and IRF–PAI 

submissions. 

C. Summary of Impacts 


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Federal Register / Vol. 79, No. 151 / Wednesday, August 6, 2014 / Rules and Regulations 45873 

Provision description Transfers 

FY 2015 IRF PPS payment rate update ............................ The overall economic impact of this final rule is an estimated $180 million in increased payments from the Federal government to IRFs during FY 2015. 

Provision description Costs 

New quality reporting program requirements .................... The total costs in FY 2015 for IRFs as a result of the new quality reporting requirements are estimated to be $852,238 

New Individual, Concurrent, Group, and Co-Treatment 

Therapy reporting requirements.

The total costs in FY 2016 for IRFs as a result of the new Individual, Concurrent, 

Group, and Co-Treatment reporting requirements are estimated to be $1.2 million. 

To assist readers in referencing 

sections contained in this document, we 

are providing the following Table of 

Contents. 

Table of Contents 

I. Background 

A. Historical Overview of the Inpatient 

Rehabilitation Facility Prospective 

Payment System (IRF PPS) 

B. Provisions of the Affordable Care Act 

Affecting the IRF PPS in FY 2012 and 

Beyond 

C. Operational Overview of the Current IRF 

PPS 

II. Summary of Provisions of the Proposed 

Rule 

III. Analysis and Responses to Public 

Comments 

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

Relative Weights and Average Length of 

Stay Values for FY 2015 

V. Freezing the Facility-Level Adjustment 

Factors at FY 2014 Levels 

A. Background on Facility-Level 

Adjustments 

B. Freezing the Facility-Level Adjustment 

Factors at FY 2014 Levels 

VI. FY 2015 IRF PPS Federal Prospective 

Payment Rates 

A. Market Basket Increase Factor, 

Productivity Adjustment, and Other 

Adjustment for FY 2015 

B. Development of an IRF-Specific Market 

Basket 

C. Secretary’s Final Recommendation 

D. Labor-Related Share for FY 2015 

E. Wage Adjustment 

F. Description of the IRF Standard 

Conversion Factor and Payment Rates for 

FY 2015 

G. Example of the Methodology for 

Adjusting the Federal Prospective 

Payment Rates 

VII. Update to Payments for High-Cost 

Outliers Under the IRF PPS 

A. Update to the Outlier Threshold 

Amount for FY 2015 

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

Ceiling and Urban/Rural Averages 

VIII. Refinements to the Presumptive 

Compliance Methodology 

A. Background on the Compliance 

Percentage 

B. Changes to the Diagnosis Codes That 

Are Used To Determine Presumptive 

Compliance 

C. Changes to the Impairment Group Codes 

That Meet Presumptive Compliance 

Criteria 

IX. Data Collection of the Amount and Mode 

(Individual, Concurrent, Group, and CoTreatment) of Therapy Provided in IRFs 

According to Occupational, Speech, and 

Physical Therapy Disciplines 

X. Revision to the IRF–PAI for Arthritis 

Conditions 

XI. International Classification of Diseases, 

10th Revision, Clinical Modification 

(ICD–10–CM), Conversion 

A. Background on the Use of Diagnosis 

Information in the IRF PPS 

B. Conversion of Diagnosis Information 

from ICD–9–CM to ICD–10–CM for the 

IRF PPS 

XII. Revisions and Updates to the Quality 

Reporting Program for IRFs 

A. Background and Statutory Authority 

B. Quality Measures Previously Finalized 

for and Currently Used in the IRF 

Quality Reporting Program 

C. New IRF QRP Quality Measures 

Affecting the FY 2017 Adjustments to 

the IRF PPS Annual Increase Factor and 

Beyond 

D. IRF QRP Quality Measures and 

Concepts Under Consideration for Future 

Years 

E. Timeline for Data Submission for New 

IRF QRP Quality Measures Affecting the 

FY 2017 Adjustments to the IRF PPS 

Annual Increase Factor 

F. Timing for New IRFs to Begin Reporting 

Quality Data under the IRF QRP 

Affecting the FY 2017 Adjustments to 

the IRF PPS Annual Increase Factor and 

Beyond 

G. IRF QRP Reconsideration and Appeals 

Procedures for the FY 2016 Adjustments 

to the IRF PPS Annual Increase Factor 

and Beyond 

H. IRF QRP Data Submission Exception or 

Extension Requirements for the FY 2017 

Adjustments to the IRF PPS Annual 

Increase Factor and Beyond 

I. Public Display of Quality Measure Data 

for the IRF QRP 

J. IRF QRP Data Completion Thresholds for 

the FY 2016 Adjustments to the IRF PPS 

Annual Increase Factor and Beyond 

K. Data Validation Process for the FY 2017 

Adjustments to the IRF PPS Annual 

Increase Factor and Beyond 

L. Electronic Health Record and Health 

Information Exchange 

M. Method for Applying the Reduction to 

the FY 2015 IRF Increase Factor for IRFs 

That Fail to Meet the Quality Reporting 

Requirements 

XIII. Miscellaneous Comments 

XIV. Provisions of the Final Regulations 

XV. Collection of Information Requirements 

A. ICRs Regarding the IRF QRP 

B. ICRs Regarding Individual, Concurrent, 

Group, and Co-Treatment Therapy Data 

on the IRF–PAI 

XVI. Regulatory Impact Analysis 

A. Statement of Need 

B. Overall Impacts 

C. Detailed Economic Analysis 

D. Alternatives Considered 

E. Accounting Statement 

F. Conclusion 

Acronyms, Abbreviations, and Short 

Forms 

Because of the many terms to which 

we refer by acronym, abbreviation, or 

short form in this final rule, we are 

listing the acronyms, abbreviation, and 

short forms used and their 

corresponding terms in alphabetical 

order below. 

The Act The Social Security Act 

ADC Average Daily Census 

The Affordable Care Act Patient Protection 

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

enacted on March 23, 2010) 

AHIMA American Health Information 

Management Association 

ASCA Administrative Simplification 

Compliance Act (Pub. L. 107–105, enacted 

on December 27, 2002) 

BBA Balanced Budget Act of 1997 (Pub. L. 

105–33, enacted on August 5, 1997) 

BLS U.S. Bureau of Labor Statistics 

CAH Critical Access Hospitals 

CAUTI Catheter-Associated Urinary Tract 

Infection 

CBSA Core-Based Statistical Area 

CCR Cost-to-Charge Ratio 

CDC The Centers for Disease Control and 

Prevention 

CDI Clostridium difficile Infection 

CFR Code of Federal Regulations 

CMG Case-Mix Group 

CMS Centers for Medicare & Medicaid 

Services 

DRA Deficit Reduction Act of 2005 (Pub. L. 

109–171, enacted February 8, 2006) 

DSH Disproportionate Share Hospital 

DSH PP Disproportionate Share Patient 

Percentage 

EHR Electronic Health Record 

ESRD End-Stage Renal Disease 

FR Federal Register 

FY Federal Fiscal Year 

GEMs General Equivalence Mappings 

HAI Healthcare Associated Infection 

HCP Health Care Personnel 

HHS U.S. Department of Health & Human 

Services 

HIE Health Information Exchange 


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HIPAA Health Insurance Portability and 

Accountability Act of 1996 (Pub. L. 104– 

191, enacted on August 21, 1996) 

ICD–9–CM The International Classification 

of Diseases, 9th Revision, Clinical 

Modification 

ICD–10–CM The International 

Classification of Diseases, 10th Revision, 

Clinical Modification 

ICRs Information Collection Requirements 

IGC Impairment Group Code 

IGI IHS Global Insight 

IPF Inpatient Psychiatric Facility 

IPPS Inpatient Prospective Payment System 

IQR Inpatient Quality Reporting Program 

IRF Inpatient Rehabilitation Facility 

IRF–PAI Inpatient Rehabilitation FacilityPatient Assessment Instrument 

IRF PPS Inpatient Rehabilitation Facility 

Prospective Payment System 

IRVEN Inpatient Rehabilitation Validation 

and Entry 

LIP Low-Income Percentage 

LPN Licensed Practical Nurse 

LTCH Long-Term Care Hospital 

MAC Medicare Administrative Contractor 

MAP Measure Applications Partnership 

MA (Medicare Part C) Medicare Advantage 

MedPAC Medicare Payment Advisory 

Commission 

MDS Minimum Data Set 

MFP Multifactor Productivity 

MMSEA Medicare, Medicaid, and SCHIP 

Extension Act of 2007 (Pub. L. 110–173, 

enacted on December 29, 2007) 

MRSA Methicillin-Resistant 

Staphylococcus aureus 

MUC Measures under Consideration 

NHSN National Healthcare Safety Network 

NPP National Priorities Partnership 

NQF National Quality Forum 

OMB Office of Management and Budget 

ONC Office of the National Coordinator for 

Health Information Technology 

PAI Patient Assessment Instrument 

PPS Prospective Payment System 

PRA Paperwork Reduction Act of 1995 

(Pub. L. 104–13, enacted on May 22, 1995) 

PRRB Provider Reimbursement Review 

Board 

QM Quality Measure 

QRP Quality Reporting Program 

RIA Regulatory Impact Analysis 

RIC Rehabilitation Impairment Category 

RFA Regulatory Flexibility Act (Pub. L. 96– 

354, enacted on September 19, 1980) 

RN Registered Nurse 

RPL Rehabilitation, Psychiatric, and LongTerm Care market basket 

SSI Supplemental Security Income 

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 (collectively, hereinafter 

referred to as IRFs). Payments under the 

IRF PPS encompass inpatient operating 

and capital costs of furnishing covered 

rehabilitation services (that is, routine, 

ancillary, and capital costs), but not 

direct graduate medical education costs, 

costs of approved nursing and allied 

health education activities, bad debts, 

and other services or items outside the 

scope of the IRF PPS. Although a 

complete discussion of the IRF PPS 

provisions appears in the original FY 

2002 IRF PPS final rule (66 FR 41316) 

and the FY 2006 IRF PPS final rule (70 

FR 47880), we are providing below a 

general description of the IRF PPS for 

fiscal years (FYs) 2002 through 2013. 

Under the IRF PPS from FY 2002 

through FY 2005, as described in the FY 

2002 IRF PPS final rule (66 FR 41316), 

the federal prospective payment rates 

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

CMGs using rehabilitation impairment 

categories (RICs), functional status (both 

motor and cognitive), and age (in some 

cases, cognitive status and age may not 

be a factor in defining a CMG). In 

addition, we constructed five special 

CMGs to account for very short stays 

and for patients who expire in the IRF. 

For each of the CMGs, we developed 

relative weighting factors to account for 

a patient’s clinical characteristics and 

expected resource needs. Thus, the 

weighting factors accounted for the 

relative difference in resource use across 

all CMGs. Within each CMG, we created 

tiers based on the estimated effects that 

certain comorbidities would have on 

resource use. 

We established the federal PPS rates 

using a standardized payment 

conversion factor (formerly referred to 

as the budget-neutral conversion factor). 

For a detailed discussion of the budgetneutral conversion factor, please refer to 

our FY 2004 IRF PPS final rule (68 FR 

45684 through 45685). In the FY 2006 

IRF PPS final rule (70 FR 47880), we 

discussed in detail the methodology for 

determining the standard payment 

conversion factor. 

We applied the relative weighting 

factors to the standard payment 

conversion factor to compute the 

unadjusted federal prospective payment 

rates under the IRF PPS from FYs 2002 

through 2005. Within the structure of 

the payment system, we then made 

adjustments to account for interrupted 

stays, transfers, short stays, and deaths. 

Finally, we applied the applicable 

adjustments to account for geographic 

variations in wages (wage index), the 

percentage of low-income patients, 

location in a rural area (if applicable), 

and outlier payments (if applicable) to 

the IRFs’ 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 IRFs would have 

received had the IRF PPS not been 

implemented. This provision also 

allowed IRFs to elect to bypass this 

blended payment and immediately be 

paid 100 percent of the federal IRF PPS 

rate. The transition methodology 

expired as of cost reporting periods 

beginning on or after October 1, 2002 

(FY 2003), and payments for all IRFs 

now consist of 100 percent of the federal 

IRF PPS rate. 

We established a CMS Web site as a 

primary information resource for the 

IRF PPS which is available at http://

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

InpatientRehabFacPPS/index.html. The 

Web site may be accessed to download 

or view publications, software, data 

specifications, educational materials, 

and other information pertinent to the 

IRF PPS. 

Section 1886(j) of the Act confers 

broad statutory authority upon the 

Secretary to propose refinements to the 

IRF PPS. In the FY 2006 IRF PPS final 

rule (70 FR 47880) and in correcting 

amendments to the FY 2006 IRF PPS 

final rule (70 FR 57166) that we 

published on September 30, 2005, we 

finalized a number of refinements to the 

IRF PPS case-mix classification system 

(the CMGs and the corresponding 

relative weights) and the case-level and 

facility-level adjustments. These 

refinements included the adoption of 

the Office of Management and Budget’s 

(OMB) Core-Based Statistical Area 

(CBSA) market definitions, 

modifications to the CMGs, tier 

comorbidities, and CMG relative 

weights, implementation of a new 

teaching status adjustment for IRFs, 

revision and rebasing of the market 

basket index used to update IRF 

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

outlier adjustments. Beginning with the 

FY 2006 IRF PPS final rule (70 FR 47908 

through 47917), the market basket index 

used to update IRF payments is a market 

basket reflecting the operating and 

capital cost structures for freestanding 

IRFs, freestanding inpatient psychiatric 

facilities (IPFs), and long-term care 

hospitals (LTCHs) (hereafter referred to 

as the rehabilitation, psychiatric, and 

long-term care (RPL) market basket). 

Any reference to the FY 2006 IRF PPS 

final rule in this final rule also includes 

the provisions effective in the correcting 


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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, teaching status 

adjustment factors, and the outlier 

threshold; implemented new IRF 

coverage requirements for determining 

whether an IRF claim is reasonable and 

necessary; and revised the regulation 

text to require IRFs to submit patient 

assessments on Medicare Advantage 

(MA) (Medicare Part C) patients for use 

in the 60 percent rule calculations. Any 

reference to the FY 2010 IRF PPS final 

rule in this final rule also includes the 

provisions effective in the correcting 

amendments. For more information on 

the policy changes implemented for FY 

2010, please refer to the FY 2010 IRF 

PPS final rule (74 FR 39762 and 74 FR 

50712), in which we published the final 

FY 2010 IRF federal prospective 

payment rates. 

After publication of the FY 2010 IRF 

PPS final rule (74 FR 39762), section 

3401(d) of the Patient Protection and 

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

enacted on March 23, 2010), as 

amended by section 10319 of the same 

Act and by section 1105 of the Health 

Care and Education Reconciliation Act 

of 2010 (Pub. L. 111–152, enacted on 

March 30, 2010) (collectively, hereafter 

referred to as ‘‘The Affordable Care 

Act’’), amended section 1886(j)(3)(C) of 

the Act and added section 1886(j)(3)(D) 

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

Act requires the Secretary to estimate a 

multi-factor productivity adjustment to 

the market basket increase factor, and to 

apply other adjustments as defined by 

the Act. The productivity adjustment 

applies to FYs from 2012 forward. The 

other adjustments apply to FYs 2010 to 

2019. 

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

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

adjustments that were to be applied to 

the market basket increase factors in 

FYs 2010 and 2011. Under these 

provisions, the Secretary was required 

to reduce the market basket increase 

factor in FY 2010 by a 0.25 percentage 

point adjustment. Notwithstanding this 

provision, in accordance with section 

3401(p) of the Affordable Care Act, the 

adjusted FY 2010 rate was only to be 

applied to discharges occurring on or 

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

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

adjusted the FY 2010 federal 

prospective payment rates as required, 

and applied these rates to IRF 

discharges occurring on or after April 1, 

2010, and on or before September 30, 

2010. Thus, the final FY 2010 IRF 

federal prospective payment rates that 

were published in the FY 2010 IRF PPS 

final rule (74 FR 39762) were used for 

discharges occurring on or after October 

1, 2009, and on or before March 31, 

2010, and the adjusted FY 2010 IRF 

federal prospective payment rates 

applied to discharges occurring on or 

after April 1, 2010, and on or before 

September 30, 2010. The adjusted FY 

2010 federal prospective payment rates 

are available on the CMS Web site at 

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

Medicare-Fee-for-Service-Payment/

InpatientRehabFacPPS/Data-Files.html. 

In addition, sections 1886(j)(3)(C) and 

(D) of the Act also affected the FY 2010 

IRF outlier threshold amount because 

they required an adjustment to the FY 

2010 RPL market basket increase factor, 

which changed the standard payment 

conversion factor for FY 2010. 

Specifically, the original FY 2010 IRF 

outlier threshold amount was 

determined based on the original 

estimated FY 2010 RPL market basket 

increase factor of 2.5 percent and the 

standard payment conversion factor of 

$13,661. However, as adjusted, the IRF 

prospective payments are based on the 

adjusted RPL market basket increase 

factor of 2.25 percent and the revised 

standard payment conversion factor of 

$13,627. To maintain estimated outlier 

payments for FY 2010 equal to the 

established standard of 3 percent of total 

estimated IRF PPS payments for FY 

2010, we revised the IRF outlier 

threshold amount for FY 2010 for 

discharges occurring on or after April 1, 

2010, and on or before September 30, 

2010. The revised IRF outlier threshold 

amount for FY 2010 was $10,721. 

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

1886(j)(3)(D)(i) of the Act also required 

the Secretary to reduce the market 

basket increase factor in FY 2011 by a 

0.25 percentage point adjustment. The 

FY 2011 IRF PPS notice (75 FR 42836) 


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and the correcting amendments to the 

FY 2011 IRF PPS notice (75 FR 70013) 

described the required adjustments to 

the FY 2011 and FY 2010 IRF PPS 

federal prospective payment rates and 

outlier threshold amount for IRF 

discharges occurring on or after April 1, 

2010, and on or before September 30, 

2011. It also updated the FY 2011 

federal prospective payment rates, the 

CMG relative weights, and the average 

length of stay values. Any reference to 

the FY 2011 IRF PPS notice in this final 

rule also includes the provisions 

effective in the correcting amendments. 

For more information on the FY 2010 

and FY 2011 adjustments or the updates 

for FY 2011, please refer to the FY 2011 

IRF PPS notice (75 FR 42836 and 75 FR 

70013). 

In the FY 2012 IRF PPS final rule (76 

FR 47836), we updated the IRF federal 

prospective payment rates, rebased and 

revised the RPL market basket, and 

established a new quality reporting 

program for IRFs in accordance with 

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

revised regulation text for the purpose 

of updating and providing greater 

clarity. For more information on the 

policy changes implemented for FY 

2012, please refer to the FY 2012 IRF 

PPS final rule (76 FR 47836), in which 

we published the final FY 2012 IRF 

federal prospective payment rates. 

The 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). 

In the FY 2014 IRF PPS final rule (78 

FR 47860), we updated the federal 

prospective payment rates, the CMG 

relative weights, and the outlier 

threshold amount. We also updated the 

facility-level adjustment factors using an 

enhanced estimation methodology, 

revised the list of diagnosis codes that 

count toward an IRF’s 60 percent rule 

compliance calculation to determine 

‘‘presumptive compliance,’’ revised 

sections of the Inpatient Rehabilitation 

Facility-Patient Assessment Instrument 

(IRF–PAI), revised requirements for 

acute care hospitals that have IRF units, 

clarified the IRF regulation text 

regarding limitation of review, updated 

references to previously changed 

sections in the regulations text, and 

revised and updated quality measures 

and reporting requirements under the 

IRF quality reporting program. For more 

information on the policy changes 

implemented for FY 2014, please refer 

to the FY 2014 IRF PPS final rule (78 FR 

47860), in which we published the final 

FY 2014 IRF federal prospective 

payment rates. 

B. Provisions of the Affordable Care Act 

Affecting the IRF PPS in FY 2012 and 

Beyond 

The Affordable Care Act included 

several provisions that affect the IRF 

PPS in FYs 2012 and beyond. In 

addition to what was discussed above, 

section 3401(d) of the Affordable Care 

Act also added section 

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

‘‘productivity adjustment’’ for fiscal 

year 2012 and each subsequent fiscal 

year). The productivity adjustment for 

FY 2015 is discussed in section VI.A. of 

this final rule. Section 3401(d) of the 

Affordable Care Act requires an 

additional 0.2 percentage point 

adjustment to the IRF increase factor for 

FY 2015, as discussed in section VI.A. 

of this final rule. Section 

1886(j)(3)(C)(ii)(II) of the Act notes that 

the application of these adjustments to 

the market basket update may result in 

an update that is less than 0.0 for a fiscal 

year and in payment rates for a fiscal 

year being less than such payment rates 

for the preceding fiscal year. 

Section 3004(b) of the Affordable Care 

Act also addressed the IRF PPS 

program. It reassigned the previously 

designated section 1886(j)(7) of the Act 

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

section 1886(j)(7), which contains 

requirements for the Secretary to 

establish a quality reporting program for 

IRFs. Under that program, data must be 

submitted in a form and manner and at 

a time specified by the Secretary. 

Beginning in FY 2014, section 

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

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). 

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 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- 

character CMG number. The first 

character is an alphabetic character that 

indicates the comorbidity tier. The last 

4 characters are numeric characters that 

represent the distinct CMG number. 

Free downloads of the Inpatient 

Rehabilitation Validation and Entry 

(IRVEN) software product, including the 

Grouper software, are available on the 

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

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

Software.html. 

Once a Medicare Fee-for-Service Part 

A patient is discharged, the IRF submits 

a Medicare claim as a Health Insurance 

Portability and Accountability Act of 


tkelley on DSK3SPTVN1PROD with RULES2
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1996 (Pub. L. 104–191, enacted on 

August 21, 1996) (HIPAA) compliant 

electronic claim or, if the 

Administrative Simplification 

Compliance Act of 2002 (Pub. L. 107– 

105, enacted on December 27, 2002) 

(ASCA) permits, a paper claim (a UB– 

04 or a CMS–1450 as appropriate) using 

the five-character CMG number and 

sends it to the appropriate Medicare 

Administrative Contractor (MAC). In 

addition, once a 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 MAC. This will ensure that the 

Medicare Advantage days are included 

in the hospital’s Supplemental Security 

Income (SSI) ratio (used in calculating 

the IRF low-income percentage 

adjustment) for Fiscal Year 2007 and 

beyond. Claims submitted to Medicare 

must comply with both ASCA and 

HIPAA. 

Section 3 of the ASCA amends section 

1862(a) of the Act by adding paragraph 

(22) which requires the Medicare 

program, subject to section 1862(h) of 

the Act, to deny payment under Part A 

or Part B for any expenses for items or 

services ‘‘for which a claim is submitted 

other than in an electronic form 

specified by the Secretary.’’ Section 

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

the Secretary shall waive such denial in 

situations in which there is no method 

available for the submission of claims in 

an electronic form or the entity 

submitting the claim is a small provider. 

In addition, the Secretary also has the 

authority to waive such denial ‘‘in such 

unusual cases as the Secretary finds 

appropriate.’’ For more information, see 

the ‘‘Medicare Program; Electronic 

Submission of Medicare Claims’’ final 

rule (70 FR 71008). Our instructions for 

the limited number of Medicare claims 

submitted on paper are available at 

http://www.cms.gov/manuals/

downloads/clm104c25.pdf. 

Section 3 of the ASCA operates in the 

context of the administrative 

simplification provisions of HIPAA, 

which include, among others, the 

requirements for transaction standards 

and code sets codified in 45 CFR, parts 

160 and 162, subparts A and I through 

R (generally known as the Transactions 

Rule). The Transactions Rule requires 

covered entities, including covered 

health care providers, to conduct 

covered electronic transactions 

according to the applicable transaction 

standards. (See the CMS program claim 

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

ElectronicBillingEDITrans/ and listed in 

the addenda to the Medicare 

Intermediary Manual, Part 3, section 

3600). 

The MAC processes the claim through 

its software system. This software 

system includes pricing programming 

called the ‘‘Pricer’’ software. The Pricer 

software uses the CMG number, along 

with other specific claim data elements 

and provider-specific data, to adjust the 

IRF’s prospective payment for 

interrupted stays, transfers, short stays, 

and deaths, and then applies the 

applicable adjustments to account for 

the IRF’s wage index, percentage of lowincome patients, rural location, and 

outlier payments. For discharges 

occurring on or after October 1, 2005, 

the IRF PPS payment also reflects the 

teaching status adjustment that became 

effective as of FY 2006, as discussed in 

the FY 2006 IRF PPS final rule (70 FR 

47880). 

II. Summary of Provisions of the 

Proposed Rule 

In the FY 2015 IRF PPS proposed rule 

(79 FR 26308), we proposed to update 

the IRF Federal prospective payment 

rates, to collect data on the amount and 

mode (that is, Individual, Group, and 

Co-Treatment) of therapies provided in 

the IRF setting according to therapy 

discipline, to revise the list of diagnosis 

and impairment group codes that 

presumptively meet the 60 percent rule 

compliance criteria, provide for a new 

item on the IRF–PAI form to indicate 

whether the prior treatment and severity 

requirements have been met for arthritis 

cases to presumptively meet the 60 

percent rule compliance criteria, and to 

revise and update quality measures and 

reporting requirements under the IRF 

QRP. In the FY 2015 IRF PPS proposed 

rule (79 FR 26308), we also addressed 

the implementation of the International 

Classification of Diseases, 10th 

Revision, Clinical Modification (ICD– 

10–CM), for the IRF prospective 

payment system (PPS), effective when 

ICD–10–CM becomes the required 

medical data code set for use on 

Medicare claims and IRF–PAI 

submissions. 

The proposed updates to the IRF 

federal prospective payment rates for FY 

2015 were as follows: 

• Update the FY 2015 IRF PPS 

relative weights and average length of 

stay values using the most current and 

complete Medicare claims and cost 

report data in a budget-neutral manner, 

as discussed in section III of the FY 

2015 IRF PPS proposed rule (79 FR 

26308, 26314 through 26318). 

• Discuss our rationale for freezing 

the IRF facility-level adjustment factors 

at FY 2014 levels, as discussed in 

section IV of the FY 2015 IRF PPS 

proposed rule (79 FR 26308, 26318 

through 26319). 

• Update the FY 2015 IRF PPS 

payment rates by the proposed market 

basket increase factor, based upon the 

most current data available, with a 0.2 

percentage point reduction as required 

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

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

proposed productivity adjustment 

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

the Act, as described in section V of the 

FY 2015 IRF PPS proposed rule (79 FR 

26308, 26319 through 26321). 

• Discuss the Secretary’s Proposed 

Recommendation for updating IRF PPS 

payments for FY 2015, in accordance 

with the statutory requirements, as 

described in section V of the FY 2015 

IRF PPS proposed rule (79 FR 26308 at 

26321). 

• Update the FY 2015 IRF PPS 

payment rates by the FY 2015 wage 

index and the labor-related share in a 

budget-neutral manner, as discussed in 

section V of the FY 2015 IRF PPS 

proposed rule (79 FR 26308, 26321 

through 26322). 

• Describe the calculation of the IRF 

Standard Payment Conversion Factor for 

FY 2015, as discussed in section V of 

the FY 2015 IRF PPS proposed rule (79 

FR 26308 at 26322). 

• Update the outlier threshold 

amount for FY 2015, as discussed in 

section VI of the FY 2015 IRF PPS 

proposed rule (79 FR 26308, 26324 

through 26325). 

• Update the cost-to-charge ratio 

(CCR) ceiling and urban/rural average 

CCRs for FY 2015, as discussed in 

section VI of the FY 2015 IRF PPS 

proposed rule (79 FR 26308 at 26325). 

• Describe proposed revisions to the 

list of eligible diagnosis codes that are 

used to determine presumptive 

compliance under the 60 percent rule in 

section VII of the FY 2015 IRF PPS 

proposed rule (79 FR 26308 at 26327). 

• Describe proposed revisions to the 

list of eligible impairment group codes 

that presumptively meet the 60 percent 

rule compliance criteria in section VII of 

the FY 2015 IRF PPS proposed rule (79 

FR 26308, 26328 through 26329). 

• Describe proposed data collection 

of the amount and mode (that is, of 

Individual, Group, and Co-Treatment) of 

therapies provided in IRFs according to 

occupational, speech, and physical 

therapy disciplines via the IRF–PAI in 

section VIII of the FY 2015 IRF PPS 

proposed rule (79 FR 26308, 26329 

through 26330). 

• Describe a proposed revision to the 

IRF–PAI to add a new data item for 

arthritis conditions in section IX of the 


tkelley on DSK3SPTVN1PROD with RULES2
45878 Federal Register / Vol. 79, No. 151 / Wednesday, August 6, 2014 / Rules and Regulations 

FY 2015 IRF PPS proposed rule (79 FR 

26308, 26330 through 26331). 

• Describe the conversion of the IRF 

PPS to ICD–10–CM, effective when ICD– 

10–CM becomes the required medical 

data code set for use on Medicare claims 

and IRF–PAI submissions, in section X 

of the FY 2015 IRF PPS proposed rule 

(79 FR 26308, 26331 through 26333). 

• 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 XI of the FY 

2015 IRF PPS proposed rule (79 FR 

26308, 26333 through 26345). 

III. Analysis and Responses to Public 

Comments 

We received 66 timely responses from 

the public, many of which contained 

multiple comments on the FY 2015 IRF 

PPS proposed rule (79 FR 26308). We 

received comments from various trade 

associations, inpatient rehabilitation 

facilities, individual physicians, 

therapists, clinicians, health care 

industry organizations, law firms and 

health care consulting firms. The 

following sections, arranged by subject 

area, include a summary of the public 

comments that we received, and our 

responses. 

IV. Update to the Case-Mix Group 

(CMG) Relative Weights and Average 

Length of Stay Values for FY 2015 

As specified in § 412.620(b)(1), we 

calculate a relative weight for each CMG 

that is proportional to the resources 

needed by an average inpatient 

rehabilitation case in that CMG. For 

example, cases in a CMG with a relative 

weight of 2, on average, will cost twice 

as much as cases in a CMG with a 

relative weight of 1. Relative weights 

account for the variance in cost per 

discharge due to the variance in 

resource utilization among the payment 

groups, and their use helps to ensure 

that IRF PPS payments support 

beneficiary access to care, as well as 

provider efficiency. 

In the FY 2015 IRF PPS proposed rule 

(79 FR 26308, 26314 through 26318), we 

proposed to update the CMG relative 

weights and average length of stay 

values for FY 2015. 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 2015, we proposed to use 

the FY 2013 IRF claims and FY 2012 

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 2013 IRF cost 

report data are available for analysis, but 

the majority of the FY 2013 IRF claims 

data are available for analysis. 

In the FY 2015 IRF PPS proposed rule 

(79 FR 26308, 26314 through 26318), we 

proposed to apply these data using the 

same methodologies that we have used 

to update the CMG relative weights and 

average length of stay values each fiscal 

year since we implemented an update to 

the methodology to use the more 

detailed cost-to-charge ratio (CCRs) data 

from the cost reports of IRF subprovider 

units of primary acute care hospitals, 

instead of CCR data from the associated 

primary care hospitals, to calculate 

IRFs’ average costs per case, as 

discussed in the FY 2009 IRF PPS final 

rule (73 FR 46372). In calculating the 

CMG relative weights, we use a 

hospital-specific relative value method 

to estimate operating (routine and 

ancillary services) and capital costs of 

IRFs. The process used to calculate the 

CMG relative weights for this 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 2015 

CMG relative weights to the same 

average CMG relative weight from the 

CMG relative weights implemented in 

the FY 2014 IRF PPS final rule (78 FR 

47860). 

Consistent with the methodology that 

we have used to update the IRF 

classification system in each instance in 

the past, we proposed to update the 

CMG relative weights for FY 2015 in 

such a way that total estimated 

aggregate payments to IRFs for FY 2015 

are the same with or without the 

changes (that is, in a budget-neutral 

manner) by applying a budget neutrality 

factor to the standard payment amount. 

To calculate the appropriate budget 

neutrality factor for use in updating the 

FY 2015 CMG relative weights, we use 

the following steps: 

Step 1. Calculate the estimated total 

amount of IRF PPS payments for FY 

2015 (with no changes to the CMG 

relative weights). 

Step 2. Calculate the estimated total 

amount of IRF PPS payments for FY 

2015 by applying the changes to the 

CMG relative weights (as discussed 

above). 

Step 3. Divide the amount calculated 

in step 1 by the amount calculated in 

step 2 to determine the budget 

neutrality factor (1.0000) that would 

maintain the same total estimated 

aggregate payments in FY 2015 with and 

without the changes to the CMG relative 

weights. 

Step 4. Apply the budget neutrality 

factor (1.0000) to the FY 2014 IRF PPS 

standard payment amount after the 

application of the budget-neutral wage 

adjustment factor. 

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

discuss the use of the existing 

methodology to calculate the standard 

payment conversion factor for FY 2015. 

Table 1, ‘‘Relative Weights and 

Average Length of Stay Values for CaseMix Groups,’’ presents the CMGs, the 

comorbidity tiers, the corresponding 

relative weights, and the average length 

of stay values for each CMG and tier for 

FY 2015. The average length of stay for 

each CMG is used to determine when an 

IRF discharge meets the definition of a 

short-stay transfer, which results in a 

per diem case level adjustment. 

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

CMG 

CMG description 

(M=motor, C=cognitive, 

A=age) 

Relative weight Average length of stay 

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

0101 ............ Stroke M>51.05 ...................... 0.7853 0.7150 0.6512 0.6248 9 10 8 8 

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

and C>18.5.

0.9836 0.8955 0.8155 0.7826 11 11 10 10 

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

and C<18.5.

1.1636 1.0594 0.9648 0.9258 12 14 12 12 

0104 ............ Stroke M>38.85 and M<44.45 1.2121 1.1036 1.0050 0.9644 13 13 12 12 

0105 ............ Stroke M>34.25 and M<38.85 1.4155 1.2888 1.1737 1.1262 14 14 14 14 

0106 ............ Stroke M>30.05 and M<34.25 1.6135 1.4691 1.3379 1.2838 16 16 15 15 

0107 ............ Stroke M>26.15 and M<30.05 1.8026 1.6412 1.4946 1.4342 17 19 17 17 


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

CMG 

CMG description 

(M=motor, C=cognitive, 

A=age) 

Relative weight Average length of stay 

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

0108 ............ Stroke M<26.15 and A>84.5 .. 2.2467 2.0456 1.8629 1.7876 22 24 21 21 

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

and A<84.5.

2.0570 1.8728 1.7055 1.6366 19 20 19 19 

0110 ............ Stroke M<22.35 and A<84.5 .. 2.6928 2.4518 2.2328 2.1425 28 27 24 24 

0201 ............ Traumatic brain injury 

M>53.35 and C>23.5.

0.8145 0.6636 0.5954 0.5680 10 9 8 8 

0202 ............ Traumatic brain injury 

M>44.25 and M<53.35 and 

C>23.5.

1.0591 0.8629 0.7741 0.7385 12 10 9 10 

0203 ............ Traumatic brain injury 

M>44.25 and C<23.5.

1.2162 0.9909 0.8890 0.8481 13 12 12 11 

0204 ............ Traumatic brain injury 

M>40.65 and M<44.25.

1.3397 1.0915 0.9793 0.9342 12 13 12 12 

0205 ............ Traumatic brain injury 

M>28.75 and M<40.65.

1.5924 1.2974 1.1640 1.1104 14 15 14 14 

0206 ............ Traumatic brain injury 

M>22.05 and M<28.75.

1.9327 1.5747 1.4127 1.3477 19 18 16 16 

0207 ............ Traumatic brain injury 

M<22.05.

2.5640 2.0890 1.8741 1.7880 32 25 21 20 

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

M>41.05.

1.1022 0.9324 0.8453 0.7798 10 11 10 10 

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

M>35.05 and M<41.05.

1.3799 1.1673 1.0582 0.9762 13 13 12 12 

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

M>26.15 and M<35.05.

1.6371 1.3849 1.2555 1.1583 16 15 14 14 

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

M<26.15.

2.1541 1.8222 1.6520 1.5240 23 21 18 17 

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

M>48.45.

1.0264 0.8790 0.8131 0.7251 12 12 10 9 

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

M>30.35 and M<48.45.

1.4108 1.2081 1.1176 0.9966 15 14 14 13 

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

M>16.05 and M<30.35.

2.3059 1.9747 1.8268 1.6289 26 21 20 20 

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

M<16.05 and A>63.5.

4.0832 3.4967 3.2348 2.8845 54 40 33 33 

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

M<16.05 and A<63.5.

3.3355 2.8564 2.6425 2.3563 26 34 29 27 

0501 ............ Non-traumatic spinal cord injury M>51.35.0.8418 0.6804 0.6237 0.5643 9 10 9 8 

0502 ............ Non-traumatic spinal cord injury M>40.15 and M<51.35.1.1580 0.9359 0.8579 0.7763 11 12 10 10 

0503 ............ Non-traumatic spinal cord injury M>31.25 and M<40.15.1.4373 1.1616 1.0648 0.9635 15 13 13 12 

0504 ............ Non-traumatic spinal cord injury M>29.25 and M<31.25.1.6935 1.3687 1.2546 1.1352 17 15 15 14 

0505 ............ Non-traumatic spinal cord injury M>23.75 and M<29.25.1.9365 1.5651 1.4346 1.2981 20 17 17 16 

0506 ............ Non-traumatic spinal cord injury M<23.75.2.7066 2.1875 2.0052 1.8144 26 25 23 21 

0601 ............ Neurological M>47.75 ............ 1.0293 0.8149 0.7526 0.6862 9 10 9 9 

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

M<47.75.

1.3283 1.0516 0.9713 0.8856 12 12 11 11 

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

M<37.35.

1.6727 1.3243 1.2231 1.1152 15 15 13 13 

0604 ............ Neurological M<25.85 ............ 2.1908 1.7345 1.6020 1.4607 21 19 17 17 

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

M>42.15.

0.9700 0.8060 0.7727 0.7036 10 9 10 9 

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

M>34.15 and M<42.15.

1.2429 1.0327 0.9901 0.9016 13 12 12 11 

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

M>28.15 and M<34.15.

1.5056 1.2511 1.1994 1.0922 15 15 14 13 

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

M<28.15.

1.9359 1.6086 1.5421 1.4044 19 18 17 17 

0801 ............ Replacement of lower extremity joint M>49.55.0.7402 0.6068 0.5608 0.5172 8 8 7 7 

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

M<49.55.

0.9891 0.8109 0.7495 0.6912 10 10 9 9 


tkelley on DSK3SPTVN1PROD with RULES2
45880 Federal Register / Vol. 79, No. 151 / Wednesday, August 6, 2014 / Rules and Regulations 

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

CMG 

CMG description 

(M=motor, C=cognitive, 

A=age) 

Relative weight Average length of stay 

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

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

M<37.05 and A>83.5.

1.3374 1.0963 1.0133 0.9345 13 13 12 12 

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

M<37.05 and A<83.5.

1.1821 0.9690 0.8956 0.8260 12 12 11 10 

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

M<28.65.

1.4702 1.2053 1.1140 1.0274 14 14 13 12 

0806 ............ Replacement of lower extremity joint M<22.05.1.7663 1.4479 1.3383 1.2342 16 17 15 14 

0901 ............ Other orthopedic M>44.75 ..... 0.9386 0.7581 0.7069 0.6392 10 9 9 8 

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

and M<44.75.

1.2382 1.0000 0.9325 0.8432 12 12 11 10 

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

and M<34.35.

1.5552 1.2561 1.1713 1.0591 15 15 14 13 

0904 ............ Other orthopedic M<24.15 ..... 1.9772 1.5968 1.4890 1.3464 19 18 17 16 

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

M>47.65.

1.0224 0.9300 0.8055 0.7365 11 12 10 10 

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

M>36.25 and M<47.65.

1.3168 1.1978 1.0374 0.9485 14 14 12 11 

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

M<36.25.

1.8778 1.7081 1.4794 1.3527 18 19 17 16 

1101 ............ Amputation, non-lower extremity M>36.35.1.2643 1.0143 1.0050 0.8569 12 13 12 10 

1102 ............ Amputation, non-lower extremity M<36.35.1.8936 1.5192 1.5052 1.2835 17 19 16 15 

1201 ............ Osteoarthritis M>37.65 ........... 1.0034 0.9522 0.8881 0.8256 10 11 11 10 

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

M<37.65.

1.1916 1.1308 1.0547 0.9805 11 12 12 12 

1203 ............ Osteoarthritis M<30.75 ........... 1.5133 1.4360 1.3393 1.2452 13 16 15 15 

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

M>36.35.

1.2220 0.9887 0.8677 0.8181 12 12 10 10 

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

M>26.15 and M<36.35.

1.5913 1.2874 1.1299 1.0653 17 14 13 13 

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

M<26.15.

2.0302 1.6425 1.4416 1.3591 18 19 16 15 

1401 ............ Cardiac M>48.85 .................... 0.9032 0.7324 0.6671 0.6051 9 10 8 8 

1402 ............ Cardiac M>38.55 and 

M<48.85.

1.1947 0.9689 0.8825 0.8004 12 11 11 10 

1403 ............ Cardiac M>31.15 and 

M<38.55.

1.4699 1.1920 1.0857 0.9847 14 13 12 12 

1404 ............ Cardiac M<31.15 .................... 1.8493 1.4998 1.3660 1.2390 18 17 15 14 

1501 ............ Pulmonary M>49.25 ............... 0.9998 0.8150 0.7537 0.7283 10 10 9 8 

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

M<49.25.

1.2986 1.0586 0.9791 0.9461 13 11 11 10 

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

M<39.05.

1.5918 1.2976 1.2001 1.1597 15 14 13 13 

1504 ............ Pulmonary M<29.15 ............... 1.9688 1.6049 1.4843 1.4343 20 17 15 15 

1601 ............ Pain syndrome M>37.15 ........ 0.9445 0.8763 0.8085 0.7620 10 10 9 10 

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

M<37.15.

1.2509 1.1606 1.0708 1.0092 13 13 13 12 

1603 ............ Pain syndrome M<26.75 ........ 1.5845 1.4703 1.3565 1.2784 14 17 16 15 

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

brain or spinal cord injury 

M>39.25.

1.0432 0.9290 0.8566 0.7881 11 11 10 10 

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

brain or spinal cord injury 

M>31.05 and M<39.25.

1.3109 1.1674 1.0764 0.9903 13 14 12 12 

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

brain or spinal cord injury 

M>25.55 and M<31.05.

1.5378 1.3694 1.2627 1.1617 16 16 15 14 

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

brain or spinal cord injury 

M<25.55.

1.9856 1.7682 1.6303 1.5000 20 20 18 17 

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

brain or spinal cord injury 

M>40.85.

1.0662 0.9437 0.8082 0.7231 11 11 10 9 


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Federal Register / Vol. 79, No. 151 / Wednesday, August 6, 2014 / Rules and Regulations 45881 

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

CMG 

CMG description 

(M=motor, C=cognitive, 

A=age) 

Relative weight Average length of stay 

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

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

brain or spinal cord injury 

M>23.05 and M<40.85.

1.6884 1.4945 1.2798 1.1451 17 16 15 14 

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

brain or spinal cord injury 

M<23.05.

2.8097 2.4869 2.1297 1.9055 32 28 22 22 

1901 ............ Guillain Barre M>35.95 .......... 1.0421 0.9341 0.9263 0.8837 15 10 13 11 

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

M<35.95.

1.8757 1.6814 1.6672 1.5905 25 19 18 19 

1903 ............ Guillain Barre M<18.05 .......... 3.3752 3.0255 3.0000 2.8620 44 31 36 31 

2001 ............ Miscellaneous M>49.15 ......... 0.8827 0.7250 0.6681 0.6098 9 8 8 8 

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

M<49.15.

1.1872 0.9751 0.8986 0.8201 12 11 11 10 

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

M<38.75.

1.5061 1.2370 1.1400 1.0405 15 14 13 12 

2004 ............ Miscellaneous M<27.85 ......... 1.9507 1.6021 1.4765 1.3475 20 18 16 15 

2101 ............ Burns M>0 .............................. 1.8405 1.6766 1.5548 1.3534 27 18 17 16 

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

stay is 3 days or fewer.

................ ................ ................ 0.1549 ................ ................ ................ 2 

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

stay is 13 days or fewer.

................ ................ ................ 0.6791 ................ ................ ................ 7 

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

stay is 14 days or more.

................ ................ ................ 1.5539 ................ ................ ................ 16 

5103 ............ Expired, not orthopedic, 

length of stay is 15 days or 

fewer.

................ ................ ................ 0.7274 ................ ................ ................ 8 

5104 ............ Expired, not orthopedic, 

length of stay is 16 days or 

more.

................ ................ ................ 1.9477 ................ ................ ................ 21 

Generally, updates to the CMG 

relative weights result in some increases 

and some decreases to the CMG relative 

weight values. Table 2 shows how we 

estimate that the application of the 

proposed revisions for FY 2015 would 

affect particular CMG relative weight 

values, which would 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 2015 

would not be affected as a result of the 

proposed CMG relative weight 

revisions. However, the revisions will 

affect the distribution of payments 

within CMGs and tiers. 

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

[FY 2014 values compared with FY 2015 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% ....................................................................................................................... 1,023 0.3 

Changed by less than 5% ....................................................................................................................................... 382,960 99.4 

Decreased by between 5% and 15% ...................................................................................................................... 1,288 0.3 

Decreased by 15% or more .................................................................................................................................... 25 0.0 

As Table 2 shows, more than 99 

percent of all IRF cases are in CMGs and 

tiers that will experience less than a 5 

percent change (either increase or 

decrease) in the CMG relative weight 

value as a result of the revisions for FY 

2015. The largest estimated increase in 

the proposed CMG relative weight 

values that affects the largest number of 

IRF discharges is a 1.2 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 2013 

claims data, 20,017 IRF discharges (5.2 

percent of all IRF discharges) were 

classified into this CMG and tier. 

The largest decrease in a CMG relative 

weight value affecting the largest 

number of IRF cases is a 0.8 percent 

decrease in the CMG relative weight for 

CMG 0604—Neurological, with a motor 

score less than 25.85-in the ‘‘no 

comorbidity’’ tier. In the FY 2013 IRF 

claims data, this change would have 

affected 8,766 cases (2.3 percent of all 

IRF cases). 

The changes in the average length of 

stay values for FY 2015, compared with 

the FY 2014 average length of stay 

values, are small and do not show any 

particular trends in IRF length of stay 

patterns. 

We received 1 comment on the 

proposed update to the CMG relative 

weights and average length of stay 

values for FY 2015, which is 

summarized below. 


tkelley on DSK3SPTVN1PROD with RULES2
45882 Federal Register / Vol. 79, No. 151 / Wednesday, August 6, 2014 / Rules and Regulations 

Comment: The commenter requested 

that we provide more detail about the 

use of the CCR data in the CMG relative 

weight calculations. Additionally, the 

commenter requested that we outline 

the methodology used to calculate the 

average length of stay values in the IRF 

PPS rule. 

Response: A key variable used to 

calculate the CMG relative weights is a 

facility’s average cost per case, which is 

obtained by averaging the estimated cost 

per case for every patient discharged 

from the facility in a given fiscal year. 

To obtain the estimated cost per case for 

a given IRF patient, we start by pulling 

the appropriate charges from the 

Medicare claim for that patient. Then, 

we calculate the appropriate CCRs from 

the Medicare cost report submitted by 

the facility. The CCRs are then 

multiplied by the charges from the 

Medicare claim to obtain the estimated 

IRF cost for the case. This variable is 

used as the dependent variable in the 

regression analysis to estimate the CMG 

relative weights. 

In conjunction with the publication of 

the IRF PPS FY 2014 final rule, we 

posted our methodology for calculating 

the average length of stay values on the 

IRF PPS Web site at http://

www.cms.gov/medicare/medicare-feefor-service-payment/inpatientrehab

facpps/research.html. 

Final Decision: After careful 

consideration of the public comments, 

we are finalizing our proposal to update 

the CMG relative weight and average 

length of stay values for FY 2015. These 

updates are effective October 1, 2014. 

V. Freezing the Facility-Level 

Adjustment Factors at FY 2014 Levels 

A. Background on Facility-Level 

Adjustments 

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

confers broad authority upon the 

Secretary to adjust the per unit payment 

rate ‘‘by such . . . factors as the Secretary 

determines are necessary to properly 

reflect variations in necessary costs of 

treatment among rehabilitation 

facilities.’’ For example, we adjust the 

federal prospective payment amount 

associated with a CMG to account for 

facility-level characteristics such as an 

IRF’s LIP, teaching status, and location 

in a rural area, if applicable, as 

described in § 412.624(e). 

In the FY 2010 IRF PPS final rule (74 

FR 39762), we updated the adjustment 

factors for calculating the rural, LIP, and 

teaching status adjustments based on 

the most recent three consecutive years’ 

worth of IRF claims data (at that time, 

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

most recent available corresponding IRF 

cost report data. As discussed in the FY 

2010 IRF PPS proposed rule (74 FR 

21060 through 21061), we observed 

relatively large year-to-year fluctuations 

in the underlying data used to compute 

the adjustment factors, especially the 

teaching status adjustment factor. 

Therefore, we implemented a 3-year 

moving average approach to updating 

the facility-level adjustment factors in 

the FY 2010 IRF PPS final rule (74 FR 

39762) to provide greater stability and 

predictability of Medicare payments for 

IRFs. 

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, 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. Freezing the Facility-Level 

Adjustment Factors at FY 2014 Levels 

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 

reflect the significant differences that 

exist between the cost structures of 

freestanding IRFs and the cost structures 

of IRF units of acute care hospitals (and 

critical access hospitals, otherwise 

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

these cost structure differences 

substantially influence the estimates of 

the adjustment factors. Therefore, we 

believe that it is important to control for 

these cost structure differences between 

hospital-based and freestanding IRFs in 

our regression analysis, so that these 

differences do not inappropriately 

influence the adjustment factor 

estimates. In Medicare’s payment 

system for the treatment of end-stage 

renal disease (ESRD), we already control 

for the cost structure differences 

between hospital-based and 

freestanding facilities in the regression 

analyses that are used to set payment 

rates. Also, we received comments from 

an IRF industry association on the FY 

2012 IRF PPS proposed rule suggesting 

that the addition of this particular 

control variable to the model could 

improve the methodology for estimating 

the IRF facility-level adjustment factors. 

Thus, in the FY 2014 IRF PPS 

proposed rule, we proposed to add an 

indicator variable to our 3-year moving 

average methodology for updating the 

IRF facility-level adjustments that 

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

the facility is a freestanding IRF hospital 

or would 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, highLIP percentage and low-LIP percentage 

facilities, and teaching and non-teaching 

facilities. Further, by including this 

variable in the regression analysis, we 

greatly improve our ability to predict an 

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

R-squared of the regression model 

increases from about 11 percent to about 

41 percent). In this way, it enhances the 

precision with which we can estimate 

the IRF facility-level adjustments. 

In the FY 2014 IRF PPS final rule (78 

FR 47860), we finalized our decision to 

add an indicator variable for a facility’s 

freestanding/hospital-based status to the 

payment regression, and, with that 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 151 / Wednesday, August 6, 2014 / Rules and Regulations 45883 

change, to update the IRF facility-level 

adjustment factors for FY 2014 using the 

same methodology, with the exception 

of adding the indicator variable, that we 

used in updating the FY 2010 IRF 

facility-level adjustment factors, 

including the 3-year moving average 

approach. Thus, in the FY 2014 IRF PPS 

final rule, we finalized a rural 

adjustment of 14.9 percent, a LIP 

adjustment factor of 0.3177, and a 

teaching status adjustment factor of 

1.0163 for FY 2014. 

Based on the substantive changes to 

the facility-level adjustment factors that 

were adopted in the FY 2014 final rule, 

we are freezing the facility-level 

adjustment factors for FY 2015 and all 

subsequent years at the FY 2014 levels 

while we continue to monitor the most 

current IRF claims data available and 

evaluate the effects of the FY 2014 

changes. Additionally, we want to allow 

providers time to acclimate to the FY 

2014 changes. At such future time as 

our data analysis may indicate the need 

for further updates to the facility-level 

adjustment factors, we would propose to 

update the adjustment factors through 

notice and comment rulemaking. 

We received 4 comments on our 

proposal to freeze the facility-level 

adjustment factors at FY 2014 levels for 

FY 2015 and all subsequent years 

(unless and until we propose to update 

them again through future notice and 

comment rulemaking), which are 

summarized below. 

Comment: The majority of 

commenters support our proposal to 

freeze the facility-level adjustment 

factors. However, those same 

commenters encourage CMS to continue 

to analyze changes to the facility-level 

adjustments and adjust all three factors 

at a minimum of every three years. 

Additionally, commenters 

recommended that CMS make the 

methodology and findings available to 

the public. 

Response: We appreciate the 

commenters’ support with our decision 

to freeze the facility-level adjustment 

factors. As discussed in the proposed 

rule, we believe that it is appropriate to 

freeze the facility-level adjustment 

factors at FY 2014 levels while we 

continue to monitor the most current 

IRF claims data available and evaluate 

the effects of the FY 2014 changes. 

Additionally, this will allow providers 

time to acclimate to the FY 2014 

changes that were implemented. We 

will continue to monitor the data and 

periodically update the adjustment 

factors, as needed, to ensure the 

accuracy of IRF PPS payment rates. 

Rather than specify an exact period, 

such as every 3 years, for updating the 

adjustment factors, we believe that it is 

better for the overall efficiency of the 

IRF PPS payment system to update the 

adjustment factors whenever it appears 

that the benefits of updating (in terms of 

improved accuracy of payment rates) 

outweigh the costs (in terms of less 

stability in the annual payment rates). 

At such time as we determine that the 

data support updating the adjustment 

factors or changes in the methodology, 

we will make our findings available 

through the rulemaking process. 

Comment: One commenter suggested 

that CMS be more transparent about the 

criteria the agency is using to determine 

when changes to the facility-level 

adjustments occur. For example, the 

commenter suggested CMS adopt a 

minimum threshold of annual change 

for the adjustment factors, such as 5 to 

10 percent and examine unfreezing the 

adjustment factors and issuing an 

update if analysis finds that any of the 

factors meet or exceed the suggested 

threshold. 

Response: While we agree with 

transparency during this process, we do 

not believe that setting a minimum 

threshold of annual change would be 

beneficial to the industry or to the 

Medicare program. As stated in our 

previous response, we believe that 

monitoring the data and making 

periodic changes when the benefits of 

such changes outweigh the costs is the 

most appropriate way to enhance both 

the accuracy and the stability of the IRF 

PPS payment system. In addition, we 

disagree with the suggestion that we 

should publicize the interim results that 

we use in making these determinations 

each time. We believe that this would 

only serve to confuse the industry, as 

the adjustment factors tend to fluctuate 

significantly from one period to the next 

and providers would potentially be 

confused about which adjustment 

factors were being proposed for 

implementation and which ones were 

not. 

Comment: One commenter suggested 

that depending on the magnitude of any 

change in facility level adjustments, 

CMS should also propose a transition to 

phase in the implementation. 

Response: Thank you for your 

comment. We will certainly take this 

recommendation into consideration for 

the future. 

Final Decision: After careful 

consideration of the public comments, 

we are finalizing our proposal to freeze 

the facility-level adjustment factors for 

FY 2015 and all subsequent years 

(unless and until we propose to update 

them again through future notice and 

comment rulemaking). 

VI. FY 2015 IRF PPS Federal 

Prospective Payment Rates 

A. Market Basket Increase Factor, 

Productivity Adjustment, and Other 

Adjustment for FY 2015 

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)(iv) 

of the Act required the application of a 

0.2 percentage point reduction to the 

market basket increase factor for FY 

2015. In addition, section 

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

application of a productivity 

adjustment, as described below. Thus, 

in the FY 2015 IRF PPS proposed rule, 

we proposed to update the IRF PPS 

payments for FY 2015 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 0.2 percentage 

point reduction as required by sections 

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

of the Act. 

For this final rule, we use the same 

methodology described in the FY 2012 

IRF PPS final rule (76 FR 47836 at 

47848 through 47863) to compute the 

FY 2015 market basket increase factor 

and labor-related share. In that final 

rule, we described the market basket 

(referred to as the RPL market basket) as 

reflecting a FY 2008 base year. Based on 

IHS Global Insight’s second quarter 

2014 forecast, the most recent estimate 

of the 2008-based RPL market basket 

increase factor for FY 2015 is 2.9 

percent. IHS Global Insight (IGI) is an 

economic and financial forecasting firm 

that contracts with CMS to forecast the 

components of providers’ market 

baskets. 

In accordance with section 

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

the methodology described in the FY 

2012 IRF PPS final rule (76 FR 47836, 

47858 through 47859), we apply a 

productivity adjustment to the FY 2015 

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 


tkelley on DSK3SPTVN1PROD with RULES2
45884 Federal Register / Vol. 79, No. 151 / Wednesday, August 6, 2014 / Rules and Regulations 

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 2015 (the 10-year moving average 

of MFP for the period ending FY 2015) 

is 0.5 percent, which was calculated 

using the methodology described in the 

FY 2012 IRF PPS final rule (76 FR 

47836, 47858 through 47859) and is 

based on IGI’s second quarter 2014 

forecast. 

Thus, in accordance with section 

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

2015 market basket update, which is 

used to determine the applicable 

percentage increase for the IRF 

payments, on the most recent estimate 

of the FY 2008-based RPL market basket 

(currently estimated to be 2.9 percent 

based on IGI’s second quarter 2014 

forecast). We then reduce this 

percentage increase by the current 

estimate of the MFP adjustment for FY 

2015 of 0.5 percentage point (the 10- 

year moving average of MFP for the 

period ending FY 2015 based on IGI’s 

second quarter 2014 forecast), which 

was calculated as described in the FY 

2012 IRF PPS final rule (76 FR 47836, 

47859). Following application of the 

MFP, we further reduce the applicable 

percentage increase by 0.2 percentage 

point, as required by sections 

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

of the Act. Therefore, the current 

estimate of the FY 2015 IRF update is 

2.2 percent (2.9 percent market basket 

update, less 0.5 percentage point MFP 

adjustment, less 0.2 percentage point 

legislative adjustment). 

We received 5 comments on the 

proposed market basket increase factor, 

which are summarized below. 

Comment: While several commenters 

supported the update to IRF payment 

rates for FY 2015, one commenter stated 

that the update to the IRF payment rates 

is not warranted based on the review of 

many factors—including indicators of 

beneficiary access to rehabilitative 

services, the supply of providers, and 

Medicare margins. The commenter said 

that Medicare’s current payment rates 

for IRFs appear to be adequate and, 

therefore, recommended no update to 

IRF payment rates for FY 2015. 

Response: We are finalizing the IRF 

PPS payment update for FY 2015 of 2.2 

percent (2.9 percent market basket 

update, less 0.5 percentage point MFP 

adjustment, less 0.2 percentage point 

legislative adjustment), as section 

1886(j)(3)(C) of the Act does not provide 

the Secretary with the authority to apply 

a different update factor to IRF PPS 

payment rates for FY 2015. 

Comment: Several commenters 

expressed concern about the 

applicability of the productivity 

adjustment to the IRF setting. One 

commenter suggested that we take into 

consideration the unique needs of 

rehabilitation patients and the highly 

skilled professional teams who provide 

their care. This commenter also stated 

that CMS should be mindful that 

increasing reimbursement financial 

pressures without allowing IRFs to 

improve their efficiency in ways that 

best serve patients may result in barriers 

to access for the most complex and 

needy Medicare beneficiaries. Another 

commenter noted that while CMS is 

bound by the Affordable Care Act to 

apply specific market basket reductions 

to the full market basket update in FY 

2015 and subsequent years, they believe 

it is unlikely that productivity 

improvements will be generated by 

rehabilitation hospitals at a pace 

matching the productivity of the 

economy at large on an ongoing, 

consistent basis. The commenter also 

noted that services provided in 

rehabilitation hospitals are very labor 

intensive through the provision of 

hands-on care by physical therapists, 

occupational therapists, speech 

therapists and rehabilitation nursing 

staff, and that many of the treatment 

plans do not lend themselves to 

continual productivity improvements. 

The commenter said that we should 

carefully monitor the impact that the 

productivity adjustments have on IRFs 

and provide feedback to Congress as 

appropriate. 

Response: Section 1886(j)(3)(C)(ii)(I) 

of the Act requires the application of a 

productivity adjustment that must be 

applied to the IRF PPS market basket 

update. We will continue to monitor the 

impact of the payment updates, 

including the effects of the productivity 

adjustment, on IRF provider margins as 

well as beneficiary access to care. 

Final Decision: Based on careful 

consideration of the comments, we are 

finalizing the FY 2015 market basket 

update for IRF payments of 2.2 percent, 

which is the most recent estimate of the 

FY 2008-based RPL market basket 

adjusted for productivity and the FY15 

legislative reduction. Therefore, the 

current estimate of the FY 2015 IRF 

update is 2.2 percent (2.9 percent 

market basket update, less 0.5 

percentage point MFP adjustment, less 

0.2 percentage point legislative 

adjustment). 

B. Development of an IRF-Specific 

Market Basket 

In the FY 2010 IRF PPS proposed rule 

(74 FR 21062), we expressed our interest 

in exploring the possibility of creating a 

stand-alone, or IRF-specific, market 

basket that reflects the cost structures of 

only IRF providers. We noted that, of 

the available options, one would be to 

join the Medicare cost report data from 

freestanding IRF providers with data 

from hospital-based IRF providers. We 

indicated that an examination of the 

Medicare cost report data comparing 

freestanding and hospital-based IRFs 

revealed considerable differences 

between the two for cost levels and cost 

structures. At that time, we stated that 

we were unable to fully explain the 

differences in costs between 

freestanding and hospital-based IRFs 

and solicited comments regarding our 

findings. We summarized and 

responded to several public comments 

we received on the potential creation of 

a stand-alone IRF market basket in the 

FY 2010 IRF final rule (74 FR 39776 

through 39778). At that time, we stated 

the need for further research regarding 

the differences in cost levels and cost 

structures between freestanding IRFs 

and hospital-based IRFs. 

Since the FY 2010 IRF PPS final rule 

was published, we have made 

significant progress on the development 

of a stand-alone, or IRF-specific, market 

basket. Our research has focused on 

addressing several concerns regarding 

the use of the hospital-based IRF 

Medicare cost report data in the 

calculation of the major market basket 

cost weights. As discussed above, one 

concern is the cost level differences for 

hospital-based IRFs relative to 

freestanding IRFs that were not readily 

explained by the specific characteristics 

of the individual providers and the 

patients that they serve (for example, 

characteristics related to case mix, 

urban/rural status, teaching status). 

Furthermore, we are concerned about 

the variability in the cost report data 

among these hospital-based IRF 

providers and the potential impact on 

the market basket cost weights. These 

concerns led us to consider whether it 

is appropriate to use the universe of IRF 

providers to derive an IRF-specific 

market basket. 

Recently, we have investigated the 

use of regression analysis to evaluate the 

effect of including hospital-based IRF 

Medicare cost report data in the 

calculation of cost distributions. We 

created preliminary regression models 

to try to explain variations in costs per 


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discharge across both freestanding and 

hospital-based IRFs. These models were 

intended to capture the effects of 

facility-level and patient-level 

characteristics (for example, wage 

index, urban/rural status, ownership 

status, length-of-stay, occupancy rate, 

case mix, and Medicare utilization) on 

IRF costs per discharge. Using the 

results from the preliminary regression 

analyses, we identified smaller subsets 

of hospital-based and freestanding IRF 

providers where the predicted costs per 

discharge using the regression model 

closely matched the actual costs per 

discharge for each IRF. We then derived 

different sets of cost distributions using 

(1) these subsets of IRF providers and 

(2) the entire universe of freestanding 

and hospital-based IRF providers 

(including those IRFs for which the 

variability in cost levels remains 

unexplained). After comparing these 

sets of cost distributions, the differences 

were not substantial enough for us to 

conclude that the inclusion of those IRF 

providers with unexplained variability 

in costs in the calculation of the cost 

distributions is a major cause of 

concern. 

Another concern with incorporating 

the hospital-based IRF data in the 

derivation of an IRF-specific market 

basket is the complexity of the Medicare 

cost report data for these providers. The 

freestanding IRFs independently submit 

a Medicare cost report for their 

facilities, making it relatively 

straightforward to obtain the cost 

categories necessary to determine the 

major market basket cost weights. 

However, cost report data submitted for 

a hospital-based IRF are embedded in 

the Medicare cost report submitted for 

the entire hospital facility in which the 

IRF is located. Therefore, adjustments 

would have to be made to obtain cost 

weights that represent just the hospitalbased IRF (as opposed to the hospital as 

a whole). For example, ancillary costs 

for services such as therapy, radiology, 

and laboratory services for the entire 

hospital would need to be appropriately 

converted to a value that only represents 

the hospital-based IRF unit’s costs. The 

preliminary method we have developed 

to allocate these costs is complex and 

still needs to be fully evaluated before 

we are ready to propose an IRF-specific 

market basket that would reflect both 

hospital-based and freestanding IRF 

data. 

In our ongoing research, we are also 

evaluating the differences in salary costs 

as a percent of total costs for both 

hospital-based and freestanding IRFs. 

Salary costs are historically the largest 

component of the market baskets. Based 

on our review of the data reported on 

the applicable Medicare cost reports, 

our initial findings (using the 

preliminary allocation method as 

discussed above) have shown that the 

hospital-based IRF salary costs as a 

percent of total costs tend to be lower 

than those of freestanding IRFs. We are 

still evaluating the method for deriving 

salary costs as a percent of total costs, 

and one of the main issues is to further 

investigate the percentage of ancillary 

costs that should be appropriately 

allocated to the IRF salary costs for the 

hospital-based IRF, as discussed above. 

Also, as stated in the FY 2012 IRF PPS 

final rule (76 FR 47836, 47851), effective 

for cost reports beginning on or after 

May 1, 2010, we finalized a revised 

Hospital and Hospital Health Care 

Complex Cost Report, Form CMS 2552– 

10 (74 FR 31738). The report is available 

for download from the CMS Web site at 

http://www.cms.gov/Research-StatisticsData-and-Systems/Files-for-Order/Cost

Reports/Hospital-2010-form.html. The 

revised Hospital and Hospital Health 

Care Complex Cost Report includes a 

new worksheet (Worksheet S–3, part V) 

that identifies the contract labor costs 

and benefit costs for the hospital/

hospital care complex, is applicable to 

sub-providers and units. As we gain 

access to the data reported by IRFs on 

this new form, we plan to evaluate the 

appropriateness of using these data to 

derive benefits and contract labor cost 

weights for the market basket instead of 

the data and methods currently used for 

the RPL market basket. This includes 

comparing these data with costs 

submitted on the other forms composing 

the Medicare cost report. 

For the reasons discussed above, 

while we believe we have made 

significant progress on the development 

of an IRF-specific market basket, we 

believe that further research is required 

at this time. As a result, we did not 

propose an IRF-specific market basket 

for FY 2015. We plan to complete our 

research during the remainder of this 

year and, provided that we are prepared 

to draw conclusions from our research, 

may propose an IRF-specific market 

basket for the FY 2016 rulemaking 

cycle. 

We received 4 comments on the 

development of an IRF-specific market 

basket, which are summarized below. 

Comment: One commenter agreed 

with the continued use of the RPL 

market basket instead of changing to a 

rehabilitation-specific market basket. 

The commenter noted that CMS has 

utilized the RPL Market Basket for 

several years and that CMS has not been 

able to reconcile the cost structure 

issues between freestanding and 

hospital-based rehabilitation facilities. 

The commenter stated that CMS’s 

description of attempts to adjust and 

convert costs and data from the hospital 

cost report for the hospital-based 

rehabilitation units will not ultimately 

reflect the true cost of that hospitalbased unit, as it will be artificially 

derived based on assumptions and 

comparisons to freestanding 

rehabilitation facilities. Further, the 

commenter stated, the hospital-based 

rehabilitation unit is part of a higher 

cost structure facility, and any future 

rehabilitation market basket should 

reflect that. 

Response: We have made significant 

progress in addressing our initial 

concerns of the research that showed 

substantial cost differences between 

hospital-based and freestanding IRF 

providers. Nonetheless, we concur with 

the commenter’s concerns about the 

difficulty of disentangling cost of 

hospital-based IRFs from the overall 

hospital. We note that our regression 

analysis, detailed above, provides a start 

at addressing these issues. However, we 

disagree with the commenter’s claim 

that data from hospital-based providers 

will not reflect the true cost of the 

hospital-based unit. We believe that the 

approach described above, while more 

complicated than only using 

freestanding facility cost report data, 

would directly reflect the costs of the 

hospital-based unit and be a technical 

improvement. As noted above, we will 

continue to research and analyze the 

development of an IRF-specific market 

basket that uses the most appropriate 

and reliable data sources and methods 

and provide detailed explanations of the 

proposed methodology most likely in 

the FY 2016 proposed rule. 

Comment: Several commenters 

supported the proposal to have a standalone IRF market basket, but urged CMS 

to share findings and materials in a 

transparent manner in order to allow the 

IRF community to validate and analyze 

these research activities. 

Response: As the commenters 

suggested, we will continue to research 

and analyze the development of an IRFspecific market basket that uses the 

most appropriate and reliable data 

sources and methods. We anticipate 

proposing to use an IRF-specific market 

basket in the FY 2016 IRF proposed 

rule, and the public will have the 

opportunity to comment on our market 

basket methodology and data sources 

during the 60-day comment period 

following the publication of the 

proposed rule. 

Final Decision: After careful 

consideration of the comments, we will 

continue to research the possibility of 

creating and proposing an IRF-specific 


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market basket based on data from both 

freestanding and hospital-based IRF 

facilities in the future. 

C. Secretary’s Final Recommendation 

For FY 2015, the Medicare Payment 

Advisory Commission (MedPAC) 

recommends that a 0.0 percent update 

be applied to IRF PPS payment rates. As 

discussed above, and in accordance 

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

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

proposes to update IRF PPS payment 

rates for FY 2015 by an adjusted market 

basket increase factor of 2.2 percent, as 

section 1886(j)(3)(C) of the Act does not 

provide the Secretary with the authority 

to apply a different update factor to IRF 

PPS payment rates for FY 2015. 

We did not receive any public 

comments on the Secretary’s 

recommendation. 

D. Labor-Related Share for FY 2015 

The labor-related share for FY 2015 is 

updated using the methodology 

described in the FY 2012 IRF PPS final 

rule (76 FR 47836, 47860 through 

47863). Using this method and IGI’s 

second quarter 2014 forecast of the 

2008-based RPL market basket, the 

proposed IRF labor-related share for FY 

2015 is the sum of the FY 2015 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 2015. As shown in 

Table 3, the FY 2015 labor-related share 

is 69.294 percent. 

TABLE 3—FY 2015 IRF RPL LABORRELATED SHARE RELATIVE IMPORTANCE

FY 2015 

Relative 

importance 

laborrelated share 

Wages and Salaries ............. 48.271 

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

Professional Fees: Labor- ....

Related ................................. 2.058 

Administrative and Business 

Support Services .................. 0.415 

All Other: Labor-Related 

Services ............................ 2.061 

Subtotal ................................. 65.741 

Labor-Related Portion of 

Capital Costs (.46) ............ 3.553 

Total Labor-Related 

Share ......................... 69.294 

Source: IHS Global Insight, Inc. Second 

quarter 2014 forecast; Historical Data through 

1st quarter 2014. 

We received one comment on the 

proposed IRF labor-related share for FY 

2015, which is summarized below. 

Comment: One commenter supported 

using the latest available data to update 

the IRF PPS and noted that the current 

methodology relies upon acute care 

hospital data for certain items (that is, 

employee benefits, contract labor) that 

were not collected in RPL settings. The 

commenter also noted that changes to 

the Medicare cost report (Form 2552– 

10) were implemented to gather 

additional information on labor costs. 

The commenter requested that CMS 

continue to review the available data 

and, if appropriate, implement changes 

to allow the use of IRF-specific data for 

all cost categories, weights and price 

proxies. 

Response: We appreciate the 

commenter’s concerns with respect to 

the data for the benefits and contract 

labor categories. We have been 

monitoring and analyzing the data that 

is being reported based on the revised 

cost report and instructions. We hope to 

use this data in the future if it is 

statistically representative and we have 

a reliable response rate for these data. 

Final Decision: After careful 

consideration of the comments, we are 

finalizing the FY 2015 labor-related 

share of 69.294 percent. 

E. Wage Adjustment 

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

the Secretary to adjust the proportion of 

rehabilitation facilities’ costs 

attributable to wages and wage-related 

costs (as estimated by the Secretary from 

time to time) by a factor (established by 

the Secretary) reflecting the relative 

hospital wage level in the geographic 

area of the rehabilitation facility 

compared to the national average wage 

level for those facilities. The Secretary 

is required to update the IRF PPS wage 

index on the basis of information 

available to the Secretary on the wages 

and wage-related costs to furnish 

rehabilitation services. Any adjustment 

or updates made under section 

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

in a budget-neutral manner. 

For FY 2015, we are maintaining the 

policies and methodologies described in 

the FY 2012 IRF PPS final rule (76 FR 

47836, at 47863 through 47865) related 

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 2014 pre-reclassification and 

pre-floor hospital wage index data. In 

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

the Act, the FY 2014 pre-reclassification 

and pre-floor hospital wage index is 

based on data submitted for hospital 

cost reporting periods beginning on or 

after October 1, 2009, and before 

October 1, 2010 (that is, FY 2010 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 will continue to 

use the same methodology discussed in 

the FY 2008 IRF PPS final rule (72 FR 

44299) to address those geographic areas 

where there are no hospitals and, thus, 

no hospital wage index data on which 

to base the calculation for the FY 2015 

IRF PPS wage index. 

In accordance with our established 

methodology, we have historically 

adopted any CBSA changes that are 

published in the OMB bulletin that 

corresponds with the hospital wage data 

used to determine the IRF PPS wage 

index. The OMB bulletins are available 

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

bulletins/index.html. 

In keeping with the established IRF 

PPS wage index policy; we will use the 

prior year’s (FY 2014) pre-floor, prereclassified hospital wage index data to 

derive the FY 2015 applicable IRF PPS 

wage index. We anticipate using the FY 

2014 pre-floor, pre-reclassified hospital 

wage index data to derive the applicable 

IRF PPS wage index for FY 2015. We 

note, however, that the FY 2014 prefloor, pre-reclassified hospital wage 

index does not use OMB’s new 2010 

Census-based area delineations, which 

were outlined in the February 28, 2013, 

OMB Bulletin 13–01, as we did not 

receive these changes in time to 

incorporate them into the FY 2014 

hospital wage index. We therefore 

intend to consider the incorporation of 

these CBSA changes during the 

development of the FY 2015 hospital 

wage index. Assuming that we would 

continue to follow our established 

methodology for the IRF PPS wage 

index, this means that the 2010 Censusbased CBSA changes would not be 

considered for inclusion in the IRF PPS 

wage index until FY 2016. 

To calculate the wage-adjusted facility 

payment for the payment rates set forth 

in this final rule, we multiply the 

unadjusted Federal payment rate for 

IRFs by the FY 2015 labor-related share 

based on the FY 2008-based RPL market 

basket (69.294 percent) to determine the 

labor-related portion of the standard 

payment amount. We then multiply the 

labor-related portion by the applicable 

IRF wage index from the tables in the 

addendum to this final rule. These 

tables are available through the Internet 

on the CMS Web site at http://

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

InpatientRehabFacPPS/. Table A is for 


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urban areas, and Table B is for rural 

areas. 

Adjustments or updates to the IRF 

wage index made under section 

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

budget-neutral manner. We calculate a 

budget-neutral wage adjustment factor 

as established in the FY 2004 IRF PPS 

final rule (68 FR 45689), codified at 

§ 412.624(e)(1), as described in the steps 

below. We use the listed steps to ensure 

that the FY 2015 IRF standard payment 

conversion factor reflects the update to 

the wage indexes (based on the FY 2010 

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

manner: 

Step 1. Determine the total amount of 

the estimated FY 2014 IRF PPS rates, 

using the FY 2014 standard payment 

conversion factor and the labor-related 

share and the wage indexes from FY 

2014 (as published in the FY 2014 IRF 

PPS final rule (78 FR 47860)). 

Step 2. Calculate the total amount of 

estimated IRF PPS payments using the 

FY 2015 standard payment conversion 

factor and the FY 2015 labor-related 

share and CBSA urban and rural wage 

indexes. 

Step 3. Divide the amount calculated 

in step 1 by the amount calculated in 

step 2. The resulting quotient is the FY 

2015 budget-neutral wage adjustment 

factor of 1.0017. 

Step 4. Apply the FY 2015 budgetneutral wage adjustment factor from 

step 3 to the FY 2014 IRF PPS standard 

payment conversion factor after the 

application of the adjusted market 

basket update to determine the FY 2015 

standard payment conversion factor. 

We discuss the calculation of the 

standard payment conversion factor for 

FY 2015 in section VI.F. of this final 

rule. 

We received 4 comments on the 

proposed IRF wage adjustment for FY 

2015, which are summarized below. 

Comment: Several commenters 

expressed concern regarding the 

possible incorporation of the 2010 

Census-based CBSA changes in the 

calculation of the wage index and the 

time frame over which the changes 

would be implemented. More 

specifically, these commenters urged 

CMS to establish a two-year or four-year 

phase-in for the wage index changes, 

particularly for providers most 

adversely affected by the new CBSA 

delineations. 

Response: We appreciate all of the 

comments on this topic and support for 

the proposed FY 2015 wage index 

methodology. We will take these 

comments into consideration during the 

development of the FY 2016 IRF PPS 

wage index. 

Comment: Commenters recommended 

that we develop a new methodology for 

area wage adjustment that eliminates 

hospital wage index reclassifications for 

all hospitals and reduces the problems 

associated with annual fluctuations in 

wage indices and across geographic 

boundaries. These commenters also 

recommended that we consider wage 

index policies under the current IPPS 

because IRFs compete in a similar labor 

pool as acute care hospitals. The 

commenters suggested that the IPPS 

wage index policies would allow IRFs to 

benefit from the IPPS reclassification 

and/or floor policies. One commenter 

further recommended that until a new 

wage index system is implemented, we 

institute a ‘‘smoothing’’ variable to the 

current process to reduce the 

fluctuations IRFs annually experience. 

Response: Consistent with our 

previous responses to these comments 

(most recently published in our FY 2014 

IRF PPS final rule (78 FR 47874)), we 

note that the IRF PPS does not account 

for geographic reclassification under 

sections 1886(d)(8) and (d)(10) of the 

Act, and does not apply the ‘‘rural 

floor’’ under section 4410 of the BBA. 

Furthermore, as we do not have an IRFspecific wage index, we are unable to 

determine at this time the degree, if any, 

to which a geographic reclassification 

adjustment or a ‘‘rural floor’’ policy 

under the IRF PPS would be 

appropriate. The rationale for our 

current wage index policies is fully 

described in the FY 2006 IRF PPS final 

rule (70 FR 47880, 47926 through 

47928). 

Additionally, while some commenters 

recommended that we adopt IPPS 

reclassification and/or floor policies, we 

note the Medicare Payment Advisory 

Commission (MedPAC’s) June 2007 

report to the Congress, titled ‘‘Report to 

Congress: Promoting Greater Efficiency 

in Medicare,’’ (available at http://

www.medpac.gov/documents/Jun07_

EntireReport.pdf) recommends that 

Congress ‘‘repeal the existing hospital 

wage index statute, including 

reclassification and exceptions, and give 

the Secretary authority to establish new 

wage index systems.’’ We continue to 

believe it would not be prudent at this 

time to adopt the IPPS wage index 

policies, such as reclassification and/or 

floor policies, and will, therefore, 

continue to use the CBSA labor market 

area definitions and the prereclassification and pre-floor hospital 

wage index data based on 2010 cost 

report data in this final rule. 

With regard to issues mentioned 

about ensuring that the wage index 

minimizes fluctuations, matches the 

costs of labor in the market, and 

provides for a single wage index policy, 

section 3137(b) of the Affordable Care 

Act required us to submit a report to the 

Congress by December 31, 2011 that 

includes a plan to reform the hospital 

wage index system. The report that we 

submitted is available online at http:// 

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

PPS/Wage-Index-Reform.html. 

However, we will continue to monitor 

the IPPS wage index to identify any 

policy changes that may be appropriate 

for IRFs. This is consistent with our 

previous responses to these recurring 

comments. 

Final Decision: After careful 

consideration of the comments, we are 

finalizing use of the FY 2014 pre-floor, 

pre-reclassified hospital wage index 

data to derive the applicable IRF PPS 

wage index for FY 2015. 

F. Description of the IRF Standard 

Conversion Factor and Payment Rates 

for FY 2015 

To calculate the standard payment 

conversion factor for FY 2015, as 

illustrated in Table 4, we begin by 

applying the adjusted market basket 

increase factor for FY 2015 that was 

adjusted in accordance with sections 

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

standard payment conversion factor for 

FY 2014 ($14,846). Applying the 2.2 

percent adjusted market basket increase 

factor for FY 2015 to the standard 

payment conversion factor for FY 2014 

of $14,846 yields a standard payment 

amount of $15,173. Then, we apply the 

budget neutrality factor for the FY 2015 

wage index and labor-related share of 

1.0017, which results in a standard 

payment amount of $15,198. We next 

apply the budget neutrality factors for 

the revised CMG relative weights of 

1.0000, which results in the proposed 

standard payment conversion factor of 

$15,198 for FY 2015. 

TABLE 4—CALCULATIONS TO DETERMINE THE FY 2015 STANDARD PAYMENT CONVERSION FACTOR

Explanation for adjustment Calculations 

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

Market Basket Increase Factor for FY 2015 (2.9 percent), reduced by a 0.5 

percentage point reduction 

for the productivity adjustment as required by section 1886(j)(3)(C)(ii)(I) of 

the Act, and reduced by 

0.2 percentage points in 

accordance with paragraphs 1886(j)(3)(C) and 

(D) of the Act .................... × 1.0220 


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TABLE 4—CALCULATIONS TO DETERMINE THE FY 2015 STANDARD PAYMENT CONVERSION FACTOR—Continued 

Explanation for adjustment Calculations 

Budget Neutrality Factor for 

the Wage Index and 

Labor-Related Share ......... × 1.0017 

Budget Neutrality Factor for 

the Revisions to the CMG 

Relative Weights ............... × 1.0000 

TABLE 4—CALCULATIONS TO DETERMINE THE FY 2015 STANDARD PAYMENT CONVERSION FACTOR—Continued 

Explanation for adjustment Calculations 

FY 2015 Standard Payment 

Conversion Factor ............. = $15,198 

We did not receive any comments on 

the proposed FY 2015 standard payment 

conversion factor. 

Final Decision: As we did not receive 

any comments on the proposed FY 2015 

standard payment conversion factor, we 

are finalizing the IRF standard payment 

conversion factor at $15,198 for FY 

2015. 

After the application of the CMG 

relative weights described in section IV 

of this final rule, to the FY 2015 

standard payment conversion factor 

($15,198), the resulting unadjusted IRF 

prospective payment rates for FY 2015 

are shown in Table 5. 

TABLE 5—FY 2015 PAYMENT RATES

CMG Payment rate 

Tier 1 

Payment rate 

Tier 2 

Payment rate 

Tier 3 

Payment rate 

no comorbidity 

0101 ................................................................................................................. $11,934.99 $10,866.57 $9,896.94 $9,495.71 

0102 ................................................................................................................. 14,948.75 13,609.81 12,393.97 11,893.95 

0103 ................................................................................................................. 17,684.39 16,100.76 14,663.03 14,070.31 

0104 ................................................................................................................. 18,421.50 16,772.51 15,273.99 14,656.95 

0105 ................................................................................................................. 21,512.77 19,587.18 17,837.89 17,115.99 

0106 ................................................................................................................. 24,521.97 22,327.38 20,333.40 19,511.19 

0107 ................................................................................................................. 27,395.91 24,942.96 22,714.93 21,796.97 

0108 ................................................................................................................. 34,145.35 31,089.03 28,312.35 27,167.94 

0109 ................................................................................................................. 31,262.29 28,462.81 25,920.19 24,873.05 

0110 ................................................................................................................. 40,925.17 37,262.46 33,934.09 32,561.72 

0201 ................................................................................................................. 12,378.77 10,085.39 9,048.89 8,632.46 

0202 ................................................................................................................. 16,096.20 13,114.35 11,764.77 11,223.72 

0203 ................................................................................................................. 18,483.81 15,059.70 13,511.02 12,889.42 

0204 ................................................................................................................. 20,360.76 16,588.62 14,883.40 14,197.97 

0205 ................................................................................................................. 24,201.30 19,717.89 17,690.47 16,875.86 

0206 ................................................................................................................. 29,373.17 23,932.29 21,470.21 20,482.34 

0207 ................................................................................................................. 38,967.67 31,748.62 28,482.57 27,174.02 

0301 ................................................................................................................. 16,751.24 14,170.62 12,846.87 11,851.40 

0302 ................................................................................................................. 20,971.72 17,740.63 16,082.52 14,836.29 

0303 ................................................................................................................. 24,880.65 21,047.71 19,081.09 17,603.84 

0304 ................................................................................................................. 32,738.01 27,693.80 25,107.10 23,161.75 

0401 ................................................................................................................. 15,599.23 13,359.04 12,357.49 11,020.07 

0402 ................................................................................................................. 21,441.34 18,360.70 16,985.28 15,146.33 

0403 ................................................................................................................. 35,045.07 30,011.49 27,763.71 24,756.02 

0404 ................................................................................................................. 62,056.47 53,142.85 49,162.49 43,838.63 

0405 ................................................................................................................. 50,692.93 43,411.57 40,160.72 35,811.05 

0501 ................................................................................................................. 12,793.68 10,340.72 9,478.99 8,576.23 

0502 ................................................................................................................. 17,599.28 14,223.81 13,038.36 11,798.21 

0503 ................................................................................................................. 21,844.09 17,654.00 16,182.83 14,643.27 

0504 ................................................................................................................. 25,737.81 20,801.50 19,067.41 17,252.77 

0505 ................................................................................................................. 29,430.93 23,786.39 21,803.05 19,728.52 

0506 ................................................................................................................. 41,134.91 33,245.63 30,475.03 27,575.25 

0601 ................................................................................................................. 15,643.30 12,384.85 11,438.01 10,428.87 

0602 ................................................................................................................. 20,187.50 15,982.22 14,761.82 13,459.35 

0603 ................................................................................................................. 25,421.69 20,126.71 18,588.67 16,948.81 

0604 ................................................................................................................. 33,295.78 26,360.93 24,347.20 22,199.72 

0701 ................................................................................................................. 14,742.06 12,249.59 11,743.49 10,693.31 

0702 ................................................................................................................. 18,889.59 15,694.97 15,047.54 13,702.52 

0703 ................................................................................................................. 22,882.11 19,014.22 18,228.48 16,599.26 

0704 ................................................................................................................. 29,421.81 24,447.50 23,436.84 21,344.07 

0801 ................................................................................................................. 11,249.56 9,222.15 8,523.04 7,860.41 

0802 ................................................................................................................. 15,032.34 12,324.06 11,390.90 10,504.86 

0803 ................................................................................................................. 20,325.81 16,661.57 15,400.13 14,202.53 

0804 ................................................................................................................. 17,965.56 14,726.86 13,611.33 12,553.55 

0805 ................................................................................................................. 22,344.10 18,318.15 16,930.57 15,614.43 

0806 ................................................................................................................. 26,844.23 22,005.18 20,339.48 18,757.37 

0901 ................................................................................................................. 14,264.84 11,521.60 10,743.47 9,714.56 

0902 ................................................................................................................. 18,818.16 15,198.00 14,172.14 12,814.95 

0903 ................................................................................................................. 23,635.93 19,090.21 17,801.42 16,096.20 

0904 ................................................................................................................. 30,049.49 24,268.17 22,629.82 20,462.59 

1001 ................................................................................................................. 15,538.44 14,134.14 12,241.99 11,193.33 

1002 ................................................................................................................. 20,012.73 18,204.16 15,766.41 14,415.30 

1003 ................................................................................................................. 28,538.80 25,959.70 22,483.92 20,558.33 

1101 ................................................................................................................. 19,214.83 15,415.33 15,273.99 13,023.17 

1102 ................................................................................................................. 28,778.93 23,088.80 22,876.03 19,506.63 

1201 ................................................................................................................. 15,249.67 14,471.54 13,497.34 12,547.47 


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TABLE 5—FY 2015 PAYMENT RATES—Continued 

CMG Payment rate 

Tier 1 

Payment rate 

Tier 2 

Payment rate 

Tier 3 

Payment rate 

no comorbidity 

1202 ................................................................................................................. 18,109.94 17,185.90 16,029.33 14,901.64 

1203 ................................................................................................................. 22,999.13 21,824.33 20,354.68 18,924.55 

1301 ................................................................................................................. 18,571.96 15,026.26 13,187.30 12,433.48 

1302 ................................................................................................................. 24,184.58 19,565.91 17,172.22 16,190.43 

1303 ................................................................................................................. 30,854.98 24,962.72 21,909.44 20,655.60 

1401 ................................................................................................................. 13,726.83 11,131.02 10,138.59 9,196.31 

1402 ................................................................................................................. 18,157.05 14,725.34 13,412.24 12,164.48 

1403 ................................................................................................................. 22,339.54 18,116.02 16,500.47 14,965.47 

1404 ................................................................................................................. 28,105.66 22,793.96 20,760.47 18,830.32 

1501 ................................................................................................................. 15,194.96 12,386.37 11,454.73 11,068.70 

1502 ................................................................................................................. 19,736.12 16,088.60 14,880.36 14,378.83 

1503 ................................................................................................................. 24,192.18 19,720.92 18,239.12 17,625.12 

1504 ................................................................................................................. 29,921.82 24,391.27 22,558.39 21,798.49 

1601 ................................................................................................................. 14,354.51 13,318.01 12,287.58 11,580.88 

1602 ................................................................................................................. 19,011.18 17,638.80 16,274.02 15,337.82 

1603 ................................................................................................................. 24,081.23 22,345.62 20,616.09 19,429.12 

1701 ................................................................................................................. 15,854.55 14,118.94 13,018.61 11,977.54 

1702 ................................................................................................................. 19,923.06 17,742.15 16,359.13 15,050.58 

1703 ................................................................................................................. 23,371.48 20,812.14 19,190.51 17,655.52 

1704 ................................................................................................................. 30,177.15 26,873.10 24,777.30 22,797.00 

1801 ................................................................................................................. 16,204.11 14,342.35 12,283.02 10,989.67 

1802 ................................................................................................................. 25,660.30 22,713.41 19,450.40 17,403.23 

1803 ................................................................................................................. 42,701.82 37,795.91 32,367.18 28,959.79 

1901 ................................................................................................................. 15,837.84 14,196.45 14,077.91 13,430.47 

1902 ................................................................................................................. 28,506.89 25,553.92 25,338.11 24,172.42 

1903 ................................................................................................................. 51,296.29 45,981.55 45,594.00 43,496.68 

2001 ................................................................................................................. 13,415.27 11,018.55 10,153.78 9,267.74 

2002 ................................................................................................................. 18,043.07 14,819.57 13,656.92 12,463.88 

2003 ................................................................................................................. 22,889.71 18,799.93 17,325.72 15,813.52 

2004 ................................................................................................................. 29,646.74 24,348.72 22,439.85 20,479.31 

2101 ................................................................................................................. 27,971.92 25,480.97 23,629.85 20,568.97 

5001 ................................................................................................................. ........................ ........................ ........................ 2,354.17 

5101 ................................................................................................................. ........................ ........................ ........................ 10,320.96 

5102 ................................................................................................................. ........................ ........................ ........................ 23,616.17 

5103 ................................................................................................................. ........................ ........................ ........................ 11,055.03 

5104 ................................................................................................................. ........................ ........................ ........................ 29,601.14 

G. Example of the Methodology for 

Adjusting the Federal Prospective 

Payment Rates 

Table 6 illustrates the methodology 

for adjusting the federal prospective 

payments (as described in sections VI.A. 

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

following examples are based on two 

hypothetical Medicare beneficiaries, 

both classified into CMG 0110 (without 

comorbidities). The unadjusted federal 

prospective payment rate for CMG 0110 

(without comorbidities) appears in 

Table 6. 

Example: One beneficiary is in 

Facility A, an IRF located in rural 

Spencer County, Indiana, and another 

beneficiary is in Facility B, an IRF 

located in urban Harrison County, 

Indiana. Facility A, a rural non-teaching 

hospital has a Disproportionate Share 

Hospital (DSH) percentage of 5 percent 

(which would result in a LIP adjustment 

of 1.0156), a wage index of 0.8513, and 

a rural adjustment of 14.9 percent. 

Facility B, an urban teaching hospital, 

has a DSH percentage of 15 percent 

(which would result in a LIP adjustment 

of 1.0454 percent), a wage index of 

0.8852, and a teaching status adjustment 

of 0.0784. 

To calculate each IRF’s labor and nonlabor portion of the Federal prospective 

payment, we begin by taking the 

unadjusted Federal prospective 

payment rate for CMG 0110 (without 

comorbidities) from Table 5. Then, we 

multiply the labor-related share for FY 

2015 (69.294 percent) described in 

section VI.D. of this final rule by the 

unadjusted federal prospective payment 

rate. To determine the non-labor portion 

of the federal prospective payment rate, 

we subtract the labor portion of the 

federal payment from the unadjusted 

federal prospective payment. 

To compute the wage-adjusted federal 

prospective payment, we multiply the 

labor portion of the federal payment by 

the appropriate wage index found in 

tables A and B. These tables are 

available through the Internet on the 

CMS Web site at http://

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

RehabFacPPS/. The resulting figure is 

the wage-adjusted labor amount. Next, 

we compute the wage-adjusted federal 

payment by adding the wage-adjusted 

labor amount to the non-labor portion. 

Adjusting the wage-adjusted federal 

payment by the facility-level 

adjustments involves several steps. 

First, we take the wage-adjusted Federal 

prospective payment and multiply it by 

the appropriate rural and LIP 

adjustments (if applicable). Second, to 

determine the appropriate amount of 

additional payment for the teaching 

status adjustment (if applicable), we 

multiply the teaching status adjustment 

(0.0784, in this example) by the wageadjusted and rural-adjusted amount (if 

applicable). Finally, we add the 

additional teaching status payments (if 

applicable) to the wage, rural, and LIPadjusted federal prospective payment 

rates. Table 6 illustrates the components 

of the adjusted payment calculation. 


tkelley on DSK3SPTVN1PROD with RULES2
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TABLE 6—EXAMPLE OF COMPUTING THE IRF FY 2015 FEDERAL PROSPECTIVE PAYMENT

Steps Rural Facility A 

(Spencer Co., IN) 

Urban Facility B 

(Harrison Co., IN) 

1 ................ Unadjusted Federal Prospective Payment ......................................................... $32,561.72 $32,561.72 

2 ................ Labor Share ........................................................................................................ × 0.69294 × 0.69294 

3 ................ Labor Portion of Federal Payment ..................................................................... = $22,563.32 = $22,563.32 

4 ................ CBSA-Based Wage Index (shown in the Addendum, Tables 1 and 2) ............. × 0.8513 × 0.8852 

5 ................ Wage-Adjusted Amount ...................................................................................... = $19,208.15 = $19,973.05 

6 ................ Non-Labor Amount ............................................................................................. + $9,998.40 + $9,998.40 

7 ................ Wage-Adjusted Federal Payment ...................................................................... = $29,206.55 = $29,971.45 

8 ................ Rural Adjustment ................................................................................................ × 1.149 × 1.000 

9 ................ Wage- and Rural-Adjusted Federal Payment .................................................... = $33,558.33 = $29,971.45 

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

11 ................ FY 2015 Wage-, Rural- and LIP-Adjusted Federal Prospective Payment Rate = $34,081.84 = $31,332.15 

12 ................ FY 2015 Wage- and Rural-Adjusted Federal Prospective Payment ................. $33,558.33 $29,971.45 

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

14 ................ Teaching Status Adjustment Amount ................................................................. = $0.00 = $2,349.76 

15 ................ FY 2015 Wage-, Rural-, and LIP-Adjusted Federal Prospective Payment Rate + $34,081.84 + $31,332.15 

16 ................ Total FY 2015 Adjusted Federal Prospective Payment ..................................... = $34,081.84 = $33,691.92 

Thus, the adjusted payment for 

Facility A would be $34,081.84, and the 

adjusted payment for Facility B would 

be $33,681.92. 

VII. Update to Payments for High-Cost 

Outliers Under the IRF PPS 

A. Update to the Outlier Threshold 

Amount for FY 2015 

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 2014 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, 78 FR 47860, 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 2015, we proposed to use 

FY 2013 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 2014. 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 update the outlier 

threshold amount to $8,848 to maintain 

estimated outlier payments at 

approximately 3 percent of total 

estimated aggregate IRF payments for 

FY 2015. 

We received 3 comments on the 

proposed update to the FY 2015 outlier 

threshold amount to maintain estimated 

outlier payments at approximately 3 

percent of total estimated IRF payments, 

which are summarized below. 

Comment: Several commenters 

expressed support for the proposed 

update to the outlier threshold amount 

to maintain estimated IRF outlier 

payments for FY 2015 at 3 percent of 

total IRF PPS payments. However, some 

commenters expressed concerns that 

actual IRF outlier payments in recent 

years have tended to fall below 3 

percent of total IRF PPS payments. 

These commenters requested that we 

revise the methodology used to set the 

outlier threshold amount to ensure that 

we pay out the full 3 percent in outlier 

payments or incorporate any unused 

outlier payments from years in which 

aggregate outlier payments are below 

the 3 percent target back into the IRF 

PPS base payments for subsequent 

years. 

Response: We will continue to 

monitor our IRF outlier policies to 

ensure that they continue to compensate 

IRFs for treating unusually high-cost 

patients and, thereby, promote access to 

care for patients who are likely to 

require unusually high-cost care. 

Although actual outlier payments in the 

most recent 4-year period have tended 

to be just slightly below the 3 percent 

target, actual outlier payments ranged at 

or above 3 percent for the 4-year period 

from FY 2007 through FY 2010. In fact, 

actual outlier payments in FY 2008 were 

4.2 percent of total IRF PPS payments. 

As we have indicated in previous IRF 

PPS final rules, we do not make 

adjustments to IRF PPS payment rates 

for the sole purpose of accounting for 

differences between projected and 

actual outlier payments. We use the best 

available data at the time to establish an 

outlier threshold for IRF PPS payments 

prior to the beginning of each fiscal year 

so that estimated outlier payments for 

that fiscal year will equal 3 percent of 

total estimated IRF PPS payments. We 


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evaluate the status of our outlier 

expenditures annually, and if there is a 

difference from our projection, that 

information is used to make a 

prospective adjustment to lower or raise 

the outlier threshold for the upcoming 

fiscal year. We believe a retrospective 

adjustment would not be appropriate. 

This includes instances where we have 

overestimated, as well as 

underestimated, outlier payments. If 

outlier payments for a given year turn 

out to be greater than projected, we do 

not recoup money from hospitals; if 

outlier payments for a given year are 

lower than projected, we do not make 

an adjustment to account for the 

difference. Payments for a given 

discharge in a given fiscal year are 

generally intended to reflect or address 

the average costs of that discharge in 

that year; that goal would be 

undermined if we adjusted IRF PPS 

payments to account for 

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

IRF outliers in previous years. 

Final Decision: Having carefully 

considered the public comments 

received and also taking into account 

the most recent available data, we are 

finalizing the outlier threshold amount 

of $8,848 to maintain estimated outlier 

payments at approximately 3 percent of 

total estimated aggregate IRF payments 

for FY 2015. This update is effective 

October 1, 2014. We will continue to 

monitor trends in IRF outlier payments 

to ensure that they are working as 

intended to compensate IRFs for treating 

exceptionally high-cost IRF patients. 

B. Update to the IRF Cost-to-Charge 

Ratio Ceiling and Urban/Rural Averages 

In accordance with the methodology 

stated in the FY 2004 IRF PPS final rule 

(68 FR 45674, 45692 through 45694), we 

apply a ceiling to IRFs’ CCRs. Using the 

methodology described in that final 

rule, we update the national urban and 

rural CCRs for IRFs, as well as the 

national CCR ceiling for FY 2015, 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 2015, 

as discussed below. 

• Other IRFs for which accurate data 

to calculate an overall CCR are not 

available. 

Specifically, for FY 2015, we estimate 

a national average CCR of 0.569 for rural 

IRFs, which we calculated by taking an 

average of the CCRs for all rural IRFs 

using their most recently submitted cost 

report data. Similarly, we estimate a 

national average CCR of 0.443 for urban 

IRFs, which we calculated by taking an 

average of the CCRs for all urban IRFs 

using their most recently submitted cost 

report data. We apply weights to both of 

these averages using the IRFs’ estimated 

costs, meaning that the CCRs of IRFs 

with higher costs factor more heavily 

into the averages than the CCRs of IRFs 

with lower costs. For this final rule, we 

have used the most recent available cost 

report data (FY 2012). This includes all 

IRFs whose cost reporting periods begin 

on or after October 1, 2011, and before 

October 1, 2012. If, for any IRF, the FY 

2012 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 2011) settled cost 

report for that IRF. We do not use cost 

report data from before FY 2004 for any 

IRF because changes in IRF utilization 

since FY 2004 resulting from the 60 

percent rule and IRF medical review 

activities suggest that these older data 

do not adequately reflect the current 

cost of care. 

In accordance with past practice, we 

will set the national CCR ceiling at 3 

standard deviations above the mean 

CCR. Using this method, the national 

CCR ceiling would be 1.37 for FY 2015. 

This means that, if an individual IRF’s 

CCR exceeds this proposed ceiling of 

1.37 for FY 2015, 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 calculated the national 

CCR ceiling by: 

Step 1. Taking the national average 

CCR (weighted by each IRF’s total costs, 

as discussed above) of all IRFs for which 

we have sufficient cost report data (both 

rural and urban IRFs combined). 

Step 2. Estimating the standard 

deviation of the national average CCR 

computed in step 1. 

Step 3. Multiplying the standard 

deviation of the national average CCR 

computed in step 2 by a factor of 3 to 

compute a statistically significant 

reliable ceiling. 

Step 4. Adding the result from step 3 

to the national average CCR of all IRFs 

for which we have sufficient cost report 

data, from step 1. 

We did not receive any comments on 

the proposed updates to the IRF CCR 

ceilings and urban/rural averages. 

Final Decision: As we did not receive 

any comments on the proposed updates 

to the IRF CCR ceiling and the urban/ 

rural averages for FY 2015, we are 

finalizing the national average urban 

CCR at 0.443, the national average rural 

CCR at 0.569, and the national CCR 

ceiling at 1.37 percent for FY 2015. 

These updates are effective October 1, 

2014. 

VIII. Refinements to the Presumptive 

Compliance Methodology 

A. Background on the Compliance 

Percentage 

The compliance percentage has been 

part of the criteria for defining IRFs 

since implementation of the Inpatient 

Prospective Payment System (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 


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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 were used to distinguish 

an IRF from an acute care hospital from 

1983 to 2004, we found evidence that 

different fiscal intermediaries were 

enforcing the rule differently. We found 

fiscal intermediaries were using 

inconsistent methods to determine 

whether IRFs were in compliance with 

the regulation, and that some IRFs were 

not being reviewed for compliance at 

all. This led to concerns that some IRFs 

might have been out of compliance with 

the regulation and inappropriately 

classified as IRFs, while other IRFs may 

have been held to overly high standards. 

Because of these concerns we sought to 

establish a more uniform enforcement of 

the 75 percent rule. 

In the May 16, 2003, IRF PPS 

proposed rule (68 FR 26786), we 

solicited comments on the regulatory 

requirements of the 75 percent rule. 

Though we did not, at that time, 

propose amending the regulatory 

requirements for the 75 percent rule 

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

propose to amend these requirements in 

the September 9, 2003, proposed rule 

titled, ‘‘Medicare Program; Changes to 

the Criteria for Being Classified as an 

Inpatient Rehabilitation Facility’’ (68 FR 

53266). In that rule, we proposed some 

revisions to the 75 percent rule, 

including lowering the compliance 

percentage to 65 percent during a 3-year 

transition period for cost reporting 

periods between January 1, 2004, and 

January 1, 2007. Also, in response to 

comments on the September 9, 2003, 

proposed rule and as stated above, the 

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

expanded the number of medical 

conditions that would meet the 

compliance percentage from 10 to 13 

and provided that patient comorbidities 

may also be included in determining an 

IRF’s compliance with the requirements 

during the transition period. 

In the September 9, 2003, proposed 

rule, we defined ‘‘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, 


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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 criteria for 

medical conditions that may be counted 

toward an IRF’s compliance calculation 

for the 60 percent rule to ensure that the 

higher Medicare payments are 

appropriately allocated to those 

providers that are providing IRF-level 

services. 

B. Changes to the Diagnosis Codes That 

Are Used To Determine Presumptive 

Compliance 

In the FY 2014 IRF PPS final rule (78 

FR 47860, 47881 through 47895), we 

revised the list of ICD–9–CM diagnosis 

codes that are used to determine 

presumptive compliance, effective for 

compliance review periods beginning 

on or after October 1, 2014. These 

revisions were based on an analysis of 

the ICD–9–CM code list that determined 

the clinical appropriateness of each 

individual ICD–9–CM code’s inclusion 

on the list. As a result of this analysis, 

we also intended to remove all of the 

status post-amputation diagnoses codes, 

but these codes were inadvertently 

omitted from the FY 2014 IRF PPS 

proposed and final rules. These codes, 

listed in Table 7, are used to indicate 

that a patient has the sequela or residual 

effect of a condition. 

As we stated in the FY 2014 IRF PPS 

final rule (78 FR 47860, 47881), the 

ICD–9–CM diagnosis codes included on 

the ‘‘ICD–9–CM Codes That Meet 

Presumptive Compliance Criteria’’ list 

are ones that demonstrate that the 

patient meets criteria for the medical 

conditions that may be counted toward 

an IRF’s compliance percentage under 

the presumptive compliance 

methodology. Further, we stated that the 

underlying premise of the presumptive 

compliance methodology list is that it 

represents particular diagnosis codes 

that, if applicable to a given patient, 

would more than likely mean that the 

patient required intensive rehabilitation 

services in an IRF for treatment of one 

or more of the conditions specified at 

§ 412.29(b)(2) or that they had a 

comorbidity that caused significant 

decline in functional ability such that, 

even in the absence of the admitting 

condition, the patient would require the 

intensive rehabilitation treatment that is 

unique to IRFs and cannot be 

appropriately treated in another care 

setting. For the reasons described below, 

we do not believe that the ICD–9–CM 

diagnosis codes listed in Table 7 meet 

either of these criteria. We believe it is 

impossible to determine, from the 

presence of such diagnosis codes alone, 

whether a patient with an amputation 

status or prosthetic fitting and 

adjustment needs has a condition for 

which he or she would qualify for 

treatment in an IRF. Some patients with 

an amputation status or prosthetic 

fitting and adjustment needs will not 

require close medical supervision by a 

physician or weekly interdisciplinary 

team conferences to achieve their goals, 

while others may require these services. 

We believe that rehabilitation associated 

with an amputation status or prosthetic 

fitting and adjustment needs 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 an amputation status or 

prosthetic fitting and adjustment needs, 

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 an 

amputation status or prosthetic fitting 

and adjustment diagnosis code. If a 

patient with one of the diagnosis codes 

listed in Table 7 has additional 

comorbidities that would necessitate 

treatment in an IRF, then those 

additional comorbidities would qualify 

the patient for inclusion in the 

calculation of the IRF’s compliance 

percentage under the presumptive 

compliance methodology. Thus, we are 

removing the status post-amputation 

diagnosis codes listed in Table 7 from 

the list of ‘‘ICD–9–CM Codes That Meet 

Presumptive Compliance Criteria.’’ The 

removal of these codes will be effective 

for compliance review periods 

beginning on or after October 1, 2015, 

and the changes will be incorporated 

into the ICD–10 lists (discussed below) 

when ICD–10–CM becomes the required 

medical data code set for use on 

Medicare claims and IRF–PAI 

submissions. 

TABLE 7—ICD–9–CM CODES REMOVED FROM ‘‘ICD–9–CM CODES

THAT MEET PRESUMPTIVE COMPLIANCE CRITERIA’’ 

ICD–9–CM 

Code Diagnosis 

V49.65 ......... Below elbow amputation status. 

V49.66 ......... Above elbow amputation status. 

V49.67 ......... Shoulder amputation status. 

V49.73 ......... Foot amputation status. 

V49.74 ......... Ankle amputation status. 

V49.75 ......... Below knee amputation status. 

V49.76 ......... Above knee amputation status. 

V49.77 ......... Hip amputation status. 

V52.0 ........... Fitting and adjustment of artificial arm (complete) (partial). 

V52.1 ........... Fitting and adjustment of artificial leg (complete) (partial). 

We received 44 comments on the 

proposed changes to the diagnosis codes 

that are used to determine presumptive 


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compliance, which are summarized 

below. 

Comment: Citing studies, several 

commenters emphasized that research 

indicates that amputees receive 

substantial benefits from care in the IRF 

setting compared to other post-acute 

care settings. Another commenter stated 

that proper fitting and training for the 

use of a prosthesis is a complex clinical 

exercise that requires the intensive 

multidisciplinary services provided in 

IRFs. 

Response: We agree that some 

patients that present with an 

amputation status or prosthetic fitting or 

adjustment may require the close 

medical supervision by a rehabilitation 

physician and weekly interdisciplinary 

team conferences uniquely provided in 

IRFs to achieve their therapeutic goals. 

However, we believe that it cannot be 

determined from the amputation status 

or prosthetic fitting or adjustment 

diagnosis codes alone whether a patient 

presents with the clinical complexity 

that would require an IRF level of care. 

Indeed, we believe that many patients 

who are appropriately coded with these 

diagnosis codes can be effectively cared 

for in other care settings. As we stated 

in the FY 2015 IRF PPS proposed rule 

(79 FR 26308, 26327) and the FY 2014 

IRF PPS final rule (78 FR 47860, 47881), 

the underlying premise of the 

presumptive compliance methodology 

list is that it represents particular 

diagnosis codes that, if applicable to a 

given patient, would more than likely 

mean that the patient required intensive 

rehabilitation services in an IRF for 

treatment of one or more of the 

conditions specified at § 412.29(b)(2) or 

that they had a comorbidity that caused 

significant decline in functional ability 

such that, even in the absence of the 

admitting condition, the patient would 

require the intensive rehabilitation 

treatment that is unique to IRFs and 

cannot be appropriately treated in 

another care setting. Therefore, we 

believe that the mere presence of an 

amputation status or prosthetic fitting or 

adjustment code alone does not provide 

us with enough information to 

determine whether the patient meets all 

of the requirements necessary to count 

for the 60 percent rule in § 412.29(b)(2). 

Comment: One commenter suggested 

that the rationale provided by CMS for 

the removal of the amputation status 

codes confuses the concepts of medical 

necessity with IRF classification. The 

commenter stated that an amputee 

would only be admitted to a 

rehabilitation hospital by a 

rehabilitation physician if he or she 

needed intensive rehabilitation services. 

The commenter further stated that even 

though many amputees may not need 

intensive inpatient rehabilitation 

services, the mere referral and 

subsequent admission to an IRF would 

mean that the patient needs the 

intensive services provided by the IRF. 

Response: We disagree with this 

comment. The regulatory requirements 

at § 412.29(b) specify that at least 60 

percent of an IRF’s patient population 

must require intensive rehabilitation 

services in an IRF for treatment of one 

or more of the conditions specified at 

§ 412.29(b)(2) or that they have a 

comorbidity that caused significant 

decline in functional ability such that, 

even in the absence of the admitting 

condition, the patient would require the 

intensive rehabilitation treatment that is 

unique to IRFs and cannot be 

appropriately treated in another care 

setting. For a patient to require intensive 

rehabilitation services in an IRF for 

treatment of a particular condition, that 

patient must require the close medical 

supervision and interdisciplinary 

approach to care that are unique to care 

in an IRF. This is not based on the IRF 

coverage requirements, but rather it is 

based directly on the regulatory 

language in § 412.29(b) that details the 

requirements that IRFs must meet to 

adhere to the 60 percent rule and 

thereby be classified for payment under 

the IRF PPS. 

Comment: Several commenters stated 

that the proposed removal of the status 

post amputation diagnoses codes from 

‘‘ICD–9–CM Codes That Meet 

Presumptive Compliance Criteria’’ list 

would limit access to patients that 

would meet admission criteria as 

specified in § 412.29(b)(2). One 

commenter stated that the effect of the 

proposed removal of the amputation 

status post diagnosis codes would be to 

cause more IRFs to have to undergo 

medical review, and the IRFs would 

respond by restricting admission for 

certain types of patients in order to 

avoid having to go through medical 

review. 

Response: We do not believe that the 

proposed removal of these diagnosis 

codes will have a significant effect on 

access to care for these patients, as we 

estimate that only about 2 percent of all 

IRF patients are currently coded with 

these diagnoses, and these diagnosis 

codes are only used to meet the 60 

percent rule requirements 0.3 percent of 

the time. In addition, the proposed 

removal of these codes from the 

presumptive compliance method does 

not necessarily mean that a patient with 

one of these diagnosis codes cannot be 

included in the IRF’s population that 

meets the 60 percent rule. As we 

described in the FY 2014 IRF PPS final 

rule, we use a bifurcated sub-regulatory 

approach to determining compliance 

with the rule, in which an IRF’s data is 

first evaluated to determine whether or 

not the IRF is presumptively compliant 

with the 60 percent rule requirements. 

If so, then the IRF is presumed to meet 

the regulatory requirements. If not, then 

the IRF is evaluated using the more 

intensive medical review compliance 

method. If a patient with one of these 

diagnosis codes presents with the 

clinical complexity that would require 

an IRF level of care, then this 

information can be determined by the 

medical review, and the patient can 

then be included in the IRF’s patient 

population that meets the 60 percent 

rule requirements. We will closely 

monitor the data to ensure that there are 

no unintended consequences of these 

policies on access to care. 

Comment: One commenter stated that 

amputations in older adult populations 

are often the byproduct of multiple 

comorbid conditions (for example, 

diabetes or peripheral vascular disease) 

that make this population more at risk 

for post-surgical complications, such as 

risk of non-healing surgical incision. 

Response: We agree that a patient 

with multiple comorbid conditions, 

such as diabetes or peripheral vascular 

disease affecting the surgical stump 

incision, may present with a need for 

intensive rehabilitation services 

provided in an IRF that could not be 

solely identified through the presence of 

an amputation status or prosthetic 

fitting or adjustment diagnosis code. 

These patients may meet the 60 percent 

rule requirements based on the presence 

of one of their other comorbid 

conditions, or the patients’ clinical 

complexity may be determined on 

medical review, and the patient can 

then be included in the IRF’s patient 

population that meets the 60 percent 

rule requirements. 

Comment: One commenter requested 

that we apply any changes to the 

presumptive compliance methodology 

to an IRF’s full 12-month compliance 

review period, instead of applying them 

to only part of an IRF’s compliance 

review period. 

Response: As the commenter 

suggested, all of the proposed changes 

to the presumptive compliance 

methodology are being applied effective 

for full 12-month compliance review 

periods, and will not be applied to only 

part of an IRF’s compliance review 

period. 

Comment: Several commenters 

suggested that we delay implementation 

of the proposed removal of the 

amputation status diagnosis codes and 

the other changes to the presumptive 


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compliance methodology. For example, 

one commenter specifically 

recommended that we delay 

implementation of changes to the 

presumptive compliance methodology 

until changes to the IRF–PAI and the 

associated limited medical review 

process are implemented. Another 

commenter recommended that we delay 

implementation of any further changes 

to the presumptive compliance method 

until at least October 1, 2015, and one 

commenter recommended that we delay 

implementation of any changes to the 

‘‘non-specific ICD codes,’’ which we 

finalized in the FY 2014 IRF PPS final 

rule (78 FR 47884 through 47887), for at 

least one year following the 

implementation of the ICD–10–CM 

medical code data set, to give providers 

more time to adapt to the added 

specificity of the coding provided for 

under ICD–10–CM. Another commenter 

suggested that we delay implementation 

of the changes to the presumptive 

compliance method to give us more 

time to thoroughly evaluate the policies, 

since the changes to the presumptive 

compliance method that we finalized in 

the FY 2014 IRF PPS final rule and the 

changes to the presumptive compliance 

method that we proposed in the FY 

2015 IRF PPS proposed rule, taken 

together, would cause as many as 15 

percent of IRF Medicare cases to fail the 

presumptive compliance method. 

Finally, several commenters 

recommended that we keep the ICD–9– 

CM codes used in the presumptive 

compliance method as they are now—as 

of the date of this final rule, neither the 

changes finalized in the FY 2014 IRF 

PPS nor the changes proposed in the FY 

2015 IRF PPS proposed rule have taken 

effect—or delay implementation of 

additional IGC exclusions until we 

transition to ICD–10–CM. 

Response: We agree with these 

commenters that delaying the effective 

date of the changes to the presumptive 

compliance method would give CMS 

more time to put processes in place to 

mitigate some of the additional burden 

of increased medical reviews, and 

would allow providers more time to 

adapt to these changes. Though several 

of the commenters explicitly 

recommended that we delay the changes 

to the presumptive compliance method 

that were proposed in the FY 2015 IRF 

PPS proposed rule, none of the 

commenters explicitly stated that we 

should delay implementation of the 

changes to the presumptive compliance 

method that we finalized in the FY 2014 

IRF PPS final rule. However, we 

interpret several of the comments to 

mean that we should delay both sets of 

changes, so as to effectuate all of the 

related policies at the same time. For 

example, several of the commenters 

suggested delaying implementation of 

the ‘‘presumptive compliance’’ changes, 

without distinguishing between the 

changes that we finalized in the FY 

2014 IRF PPS final rule and the changes 

that we proposed in the FY 2015 IRF 

PPS proposed rule. In addition, one 

commenter referred specifically to the 

impetus for recommending a delay 

being the significant impact that the 

changes would have on ‘‘15 percent’’ of 

IRF cases that would no longer meet the 

presumptive compliance criteria. Other 

commenters referenced this ‘‘15 

percent’’ figure as the percentage of IRF 

cases that would be affected if we were 

to change from using the current 

presumptive compliance method to 

using the revised presumptive 

compliance method that would result 

from both the changes that we finalized 

in the FY 2014 IRF PPS final rule and 

the changes that were proposed in the 

FY 2015 IRF PPS proposed rule. Thus, 

we believe that the commenter was 

recommending a delay of both sets of 

presumptive compliance method 

changes, so as to effectuate all of the 

related policies at the same time. 

Therefore, based on our review of 

these comments, and to allow for the 

revisions to the IRF–PAI and the 

associated limited medical review 

process discussed in section X. of this 

final rule to take effect prior to 

implementation of the changes to the 

presumptive compliance method, we 

are implementing all of the changes to 

the presumptive compliance method for 

compliance review periods beginning 

on or after October 1, 2015. That is, we 

are delaying the effective date of the 

changes to the presumptive compliance 

method that we finalized in the FY 2014 

IRF PPS final rule until compliance 

review periods beginning on or after 

October 1, 2015, and we are also 

delaying the changes to the presumptive 

compliance method that we are 

finalizing in this final rule so that they 

also take effect for compliance review 

periods beginning on or after October 1, 

2015. This represents a one-year 

delayed effective date for all of these 

changes. We believe that it will be much 

less confusing for providers to have all 

of the changes to the presumptive 

compliance method take effect at the 

same time. 

We do not believe that it is necessary 

to delay implementation of these 

changes for an additional year after 

ICD–10–CM becomes the required 

medical code data set for use on IRF 

claims and on the IRF–PAI. Given that 

the effective date of the use of ICD–10– 

CM has been delayed twice, and given 

that the ICD–10–CM code lists, which 

will be used when ICD–10–CM becomes 

the required medical code data set with 

respect to IRF claims and the IRF–PAI, 

are available for download on the CMS 

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

Medicare/Medicare-Fee-for-ServicePayment/InpatientRehabFacPPS/DataFiles.html in conjunction with the 

publication of this final rule, we believe 

that IRFs will have sufficient 

opportunity to become familiar with the 

added specificity of the coding offered 

in ICD–10–CM. 

Comment: Several commenters 

suggested that CMS continue to count 

amputation status codes toward an IRF’s 

compliance percentage, but do so in 

conjunction with other related 

information provided in the IRF–PAI. 

The commenters stated that the 

amputation status codes could be used 

in combination with the Etiologic 

Diagnosis, which would reflect recent 

injury. One commenter suggested that 

an indicator could be added that could 

be ‘‘paired up’’ with the codes in order 

to maintain automation and avoid the 

burden of increased medical review. 

Another commenter stated that 

comorbid conditions listed on the IRF– 

PAI could also provide an appropriate 

clinical picture that would 

‘‘presumptively’’ indicate that the 

patient meets conditions outlined at 

§ 412.29(b)(2). Moreover, one 

commenter suggested that the added 

specificity of coding provided for in the 

ICD–10–CM coding may supply 

additional information that may help 

support the amputation status diagnosis 

as a ‘‘presumptively’’ qualifying 

condition. 

Response: We thank the commenters 

for their suggestions. However, we 

continue to believe that it cannot be 

determined from the amputation status 

or prosthetic fitting or adjustment 

diagnosis codes alone whether a patient 

presents with the clinical complexity 

that would require an IRF level of care, 

and, for this reason, we do not believe 

that it is appropriate to continue to 

include these codes on the ‘‘ICD–9–CM 

Codes That Meet Presumptive 

Compliance’’ list. However, as we 

indicated above, these patients can 

continue to be counted under the 

medical review methodology if their 

clinical complexity is shown in the 

medical record to require an IRF level 

of care. In fact, as the one commenter 

mentioned, the patient’s comorbid 

conditions as listed on the IRF–PAI and 

described in the patient’s medical 

record do contribute to an overall 

‘‘picture’’ of the patient’s condition, but 

at this time, this information cannot be 


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determined using a computer program 

and can only be determined through a 

medical review of the patient’s clinical 

record. 

While we agree that ICD–10–CM 

coding will likely provide more 

specificity and more information, we 

continue to believe that these 

amputation status or prosthetic fitting or 

adjustment diagnosis codes, even under 

ICD–10–CM, do not provide enough 

information about the clinical 

complexity of the case to warrant 

continued inclusion on the list of 

diagnosis codes that meets the 

presumptive compliance criteria. We 

will consider the commenters 

suggestions for future refinements to the 

IRF–PAI and to the presumptive 

compliance methodology. 

Comment: One commenter 

recommended that CMS ensure that 

MACs understand the importance of IRF 

care to patients with amputations 

(especially those with other 

comorbidities) since there could be an 

increase in medical review for 

amputation cases. 

Response: We appreciate the 

commenter’s suggestion, and we plan to 

carry out training and outreach with 

MACs to review policy changes to the 

presumptive compliance methodology. 

Final Decision: After carefully 

considering the comments that we 

received on the proposed removal of the 

status post-amputation diagnoses codes 

from the ‘‘ICD–9–CM Codes That Meet 

Presumptive Compliance Criteria’’ list, 

we are finalizing these proposed 

changes to the list. The changes to the 

list of diagnosis codes that are used to 

determine presumptive compliance 

under the 60 percent rule are effective 

for compliance review periods 

beginning on or after October 1, 2015. 

C. Changes to the Impairment Group 

Codes That Meet Presumptive 

Compliance Criteria 

An ‘‘impairment group code’’ is not 

an ICD diagnosis 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. These codes are listed in the IRF– 

PAI Training Manual (see section II, 

item #21, and Appendix A). The IRF– 

PAI Training Manual is available 

through the Internet on the CMS Web 

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

Medicare-Fee-for-Service-Payment/

InpatientRehabFacPPS/IRFPAI.html. 

If an IRF is eligible to use the 

presumptive methodology to evaluate 

its compliance with the 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 lists (that is, ‘‘ICD–9–CM 

Codes That Meet Presumptive 

Compliance Criteria’’ and ‘‘Impairment 

Groups That Meet Presumptive 

Compliance Criteria’’). 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 diagnosis 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 25 

comorbidities on the assessment. 

Not all impairment group codes 

(IGCs) meet the presumptive 

compliance criteria. The underlying 

premise of the list of eligible IGCs that 

are used to determine presumptive 

compliance (similar to the diagnosis 

codes listed in ‘‘ICD–9–CM Codes That 

Meet Presumptive Compliance 

Criteria’’) includes particular IGCs that, 

if applicable to a given patient, would 

more than likely mean that the patient 

required intensive rehabilitation 

services for treatment of one or more of 

the conditions specified at 

§ 412.29(b)(2). The current list of 

eligible IGCs that meet presumptive 

compliance criteria, Appendix B: 

Impairment Group Codes That Meet 

Presumptive Compliance Criteria, 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. Again, this list contains 

only those IGCs that meet the 

presumptive compliance criteria. 

1. Removal of IGCs for Unilateral Upper 

Extremity Amputations and Arthritis 

From Appendix B: Impairment Group 

Codes That Meet Presumptive 

Compliance Criteria 

In the FY 2014 IRF PPS final rule (78 

FR 47889 through 47895), we finalized 

(applicable for compliance review 

periods beginning on or after October 1, 

2014) the removal of certain ICD–9–CM 

codes for unilateral upper extremity 

amputations from the list of ‘‘ICD–9–CM 

Codes That Meet Presumptive 

Compliance Criteria’’ because we 

believed that it is impossible to 

determine, from the presence of such 

ICD–9–CM codes alone, whether a 

patient with such a unilateral upper 

extremity amputation has a condition 

for which he or she would need 

intensive rehabilitation services for 

treatment of one or more of the 

conditions specified in § 412.29(b)(2). 

Further, we stated that a patient’s need 

for intensive inpatient rehabilitative 

services for the treatment of one or more 

of these conditions would depend on 

the presence of additional comorbidities 

that caused significant decline in his or 

her functional ability to an extent that 

would necessitate treatment in an IRF. 

If the patient has one or more of the 

comorbidities on the list of ‘‘ICD–9–CM 

Codes That Meet Presumptive 

Compliance Criteria,’’ then the patient 

would already qualify as meeting the 

presumptive compliance criteria. We 

concluded that if the diagnosis codes for 

such a patient’s comorbidities do not 

appear on the list of ‘‘ICD–9–CM Codes 

That Meet Presumptive Compliance 

Criteria,’’ then the patient could still be 

considered for inclusion in the IRF’s 

compliance percentage following 

medical review and confirmation that 

the case meets the criteria for one or 

more of the medical conditions in the 

regulations. 

In the FY 2014 IRF PPS final rule (78 

FR 47887 through 47895), we also 

finalized (applicable for compliance 

review periods beginning on or after 

October 1, 2014) the removal of ICD–9– 

CM diagnosis codes for arthritis 

conditions from the list of ‘‘ICD–9–CM 

Codes That Meet Presumptive 

Compliance Criteria’’ because the 

inclusion of patients with these medical 

conditions in the presumptive 

compliance calculation of the IRF’s 

compliance percentage is conditioned 

on those patients meeting the described 

severity and prior treatment 

requirements. However, the ICD–9–CM 

diagnosis codes that reflect these 

arthritis and arthropathy conditions do 

not provide any information about the 

severity of the condition or whether the 

prior treatment requirements were met. 

Therefore, we stated in the FY 2014 IRF 

PPS final rule that we believe that 

additional information beyond the 

presence of the code is necessary to 

determine if the medical record would 

support inclusion of individuals with 

the arthritis and arthropathy conditions 

outlined in our regulations under 

§ 412.29(b)(2)(x) through 

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

compliance calculation of the facility’s 

compliance percentage. For this reason, 

we finalized the removal of the ICD–9– 

CM diagnosis codes associated with the 

medical conditions outlined in our 

regulations under § 412.29(b)(2)(x) 

through § 412.29(b)(2)(xii) from the list 

of ‘‘ICD–9–CM Codes That Meet 

Presumptive Compliance Criteria.’’ 

However, we also stated that we expect 


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that the MACs will be able, upon 

medical review, to include those 

patients in a facility’s compliance 

percentage upon confirmation that the 

severity and prior treatment 

requirements were met. 

Consistent with our rationale in the 

FY 2014 IRF PPS final rule for removing 

the ICD–9–CM diagnoses codes for 

unilateral upper extremity amputations 

and the arthritis and arthropathy 

conditions, we are making conforming 

changes to the IGCs in this final rule by 

removing four IGCs from Appendix B: 

Impairment Group Codes That Meet 

Presumptive Compliance Criteria. Thus, 

we will remove the following codes 

from Appendix B: Impairment Group 

Codes That Meet Presumptive 

Compliance Criteria: 

• IGC 0005.1—Unilateral Upper Limb 

Above the Elbow (AE), 

• IGC 0005.2—Unilateral Upper Limb 

Below the Elbow (BE), 

• IGC 0006.1—Rheumatoid Arthritis, 

and 

• IGC 0006.9—Other Arthritis. 

2. Other Changes to Appendix B: 

Impairment Group Codes That Meet 

Presumptive Compliance Criteria 

We will revise Appendix B: 

Impairment Group Codes That Meet 

Presumptive Compliance Criteria by 

revising the diagnosis codes listed as 

exclusions on the table and by revising 

the title of the table. 

In the FY 2014 IRF PPS final rule (78 

FR 47860, 47881 through 47895), we 

finalized (applicable for compliance 

review periods beginning on or after 

October 1, 2014) the removal of certain 

ICD–9–CM codes from the list of ‘‘ICD– 

9–CM Codes That Meet Presumptive 

Compliance Criteria.’’ Accordingly, we 

exclude these diagnosis codes from 

counting if they are the patient’s 

Etiologic Diagnosis (that is, the etiologic 

problem that led to the condition for 

which the patient is receiving 

rehabilitation). That is, a given IGC that 

would otherwise meet the presumptive 

compliance criteria will not meet such 

criteria if the patient has one of the 

‘‘excluded’’ Etiologic Diagnoses for that 

IGC. 

In addition, in the FY 2014 IRF PPS 

final rule (78 FR 47860, 47883), we 

implemented a change in the titles of 

some tables used in the presumptive 

compliance methodology to no longer 

use alphabet characters or the 

‘‘Appendix’’ labels to identify these 

tables. Consistent with the intent to 

reduce confusion among tables, and 

effective October 1, 2014, we will 

identify Appendix B: Impairment Group 

Codes That Meet Presumptive 

Compliance Criteria as ‘‘Impairment 

Group Codes That Meet Presumptive 

Compliance Criteria.’’ 

In addition, we provided an 

additional new table, ‘‘Impairment 

Group Codes That Meet Presumptive 

Compliance Criteria,’’ that lists Etiologic 

Diagnosis codes that are excluded from 

counting under related IGCs in ICD–10– 

CM code format. For example, ICD–10– 

CM code G72.3, ‘‘Periodic Paralysis’’ is 

an excluded Etiologic Diagnosis code 

under IGC 0003.8, ‘‘Neuromuscular 

Disorders.’’ Further, to accommodate 

the Etiologic Diagnosis code exclusions, 

we have reformatted this table. A 

revised table containing the 

‘‘Impairment Group Codes That Meet 

Presumptive Compliance Criteria,’’ with 

the ICD–10–CM Etiologic Diagnosis 

exclusions, can be viewed on the 

Medicare IRF PPS Web site at http://

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

FacPPS/Data-Files.html. The changes to 

the table, ‘‘Impairment Group Codes 

That Meet Presumptive Compliance 

Criteria,’’ will be effective for 

compliance review periods beginning 

on or after October 1, 2015. 

We received 49 comments on the 

proposed changes to the impairment 

group codes that meet presumptive 

compliance criteria, which are 

summarized below. 

Comment: Several commenters 

expressed concerns that a potential 

unintended consequence of excluding 

the proposed arthritis diagnosis codes 

under IGCs 0008.51, 0008.52, 0008.61, 

0008.62, 0008.71, and 0008.72 would be 

that most lower extremity joint 

replacement cases that currently satisfy 

the 60 percent rule, that is, bilateral 

joint replacement cases and unilateral 

joint replacement cases involving 

patients 85 years of age or older and/or 

who have a BMI of 50 or greater, would 

no longer be included in an IRF’s 

presumptive compliance percentage. 

Response: We appreciate the 

commenters’ careful review of the 

proposed Etiologic Diagnosis exclusions 

for IGCs 0008.51, 0008.52, 0008.61, 

0008.62, 0008.71, and 0008.72, and we 

agree with these commenters that there 

would have been unintended 

consequences of excluding the proposed 

arthritis diagnosis codes from these 

IGCs. As we intend to continue to count 

bilateral lower-extremity joint 

replacement cases and unilateral lowerextremity joint replacement cases 

involving patients 85 years of age or 

older and/or who have a BMI of 50 or 

greater as meeting the 60 percent rule 

criteria under the presumptive 

compliance method, we will remove the 

proposed Etiologic Diagnosis exclusions 

from IGCs 0008.51, 0008.52, 0008.61, 

0008.62, 0008.71, and 0008.72. 

Comment: Several commenters 

expressed concern that the impact of the 

proposed changes to the presumptive 

compliance criteria, the changes 

proposed in the FY 2015 proposed rule 

and the changes finalized in the FY 

2014, will be to increase the number of 

IRFs that will fail to meet presumptive 

compliance. 

Response: We agree with commenters 

that one of the likely consequences of 

the changes to the presumptive 

compliance method will be an increase 

in the number of IRFs that will fail the 

presumptive compliance method and 

will have to be evaluated using the 

medical review method. However, we 

believe that the proposed changes to the 

IGCs That Meet Presumptive 

Compliance Criteria are necessary to 

continue appropriate enforcement of the 

regulations in § 412.29(b). We believe 

that it is impossible to determine from 

the presence of one of the IGCs or 

Etiologic Diagnoses alone whether the 

patient’s clinical complexity requires an 

IRF level of care, or, in the case of an 

arthritis code, whether the patient meets 

the severity and prior treatment 

requirements in regulation at 

§ 412.29(b)(2). This information can 

only be obtained through a review of the 

patient’s medical record. 

However, to mitigate some of the 

added burden on providers of the 

additional medical reviews, we discuss 

a new policy in section X of this final 

rule that will allow some arthritis cases 

to count toward the presumptive 

compliance method based on a limited 

medical review of these cases. We 

believe that this new policy will 

alleviate some of the burden associated 

with additional medical reviews. 

Comment: One commenter expressed 

concern about the removal of IGC 

0005.1—Unilateral upper limb above 

the elbow (AE) and IGC 0005.2— 

Unilateral upper limb below the elbow 

(BE), as the commenter said that these 

patients have impairments related to the 

ability to conduct activities of daily 

living that are most appropriately 

treated using the intensive rehabilitation 

therapy provided in an IRF. 

Response: As we indicated in the FY 

2014 IRF PPS final rule (78 FR 47860, 

at 47890), we believe that some patients 

with upper extremity amputations 

might require treatment in an IRF, 

depending on the clinical complexity of 

the particular case or the presence of 

any other complicating factors or 

comorbidities. However, we expect that 

many patients with these upper 

extremity amputations will not require 

close medical supervision by a 


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physician or weekly interdisciplinary 

team conferences to achieve their goals, 

and can be treated effectively in other 

care settings. If the patient has 

additional comorbidities causing 

significant decline in his or her 

functional ability which, in the absence 

of the unilateral upper extremity 

amputation, would require treatment in 

an IRF, then the patient will still be able 

to be counted towards meeting the 60 

percent rule criteria. Additionally, the 

patient can still be counted towards 

meeting the 60 percent rule criteria on 

medical review, if appropriate. 

However, we continue to believe that a 

patient’s need for the intensive 

rehabilitation services provided in an 

IRF depends on other factors which 

cannot be adequately determined 

through the mere presence of IGC 

0005.1—Unilateral upper limb above 

the elbow (AE) and IGC 0005.2— 

Unilateral upper limb below the elbow 

(BE). Thus, we are removing these IGCs 

from the IGCs That Meet the 

Presumptive Compliance Criteria. 

Comment: One commenter expressed 

concern about the proposed addition of 

non-specific diagnosis codes to the 

Etiologic Diagnosis exclusions for some 

of the IGCs because this commenter said 

that it is often ‘‘administratively 

unrealistic’’ to obtain detailed medical 

information from a transferring facility, 

especially in cases where the IRF 

admission is not directly from an acute 

care hospital. The commenter said that 

non-specific codes should not be 

viewed as reflecting poor 

documentation or poor coding. 

Response: As we stated in the FY 

2014 IRF PPS final rule (78 FR 47860, 

47884), we believe that highly 

descriptive coding provides the best and 

clearest way to document the 

appropriateness of a given patient’s 

admission, and would improve our 

ability to use the presumptive 

compliance method of calculating a 

facility’s 60 percent rule compliance 

percentage. Therefore, whenever 

possible, we believe that the most 

specific code that describes a medical 

disease, condition, or injury should be 

used to document diagnoses on the IRF– 

PAI. We also stated in the FY 2014 IRF 

PPS final rule (78 FR 47860, 47884) that 

we believe imprecise codes would 

inappropriately categorize an overly 

broad segment of the patient population 

as having the conditions required for 

inclusion in a facility’s presumptive 

compliance calculation, which would 

result in an inflated compliance 

percentage. In the FY 2014 IRF PPS final 

rule (78 FR 47860, 47885), we also 

stated that if the IRF does not have 

enough information about the patient’s 

condition to code the more specific 

codes on the IRF–PAI, we would expect 

the IRF to seek out additional 

information from the patient’s acute 

care hospital medical record to 

determine the appropriate, more 

specific code to use. The ICD–9–CM 

diagnosis codes that are listed as 

exclusions on ‘‘Impairment Group 

Codes That Meet Presumptive 

Compliance Criteria’’ are consistent 

with the list of diagnosis codes we 

removed from ‘‘ICD–9–CM Codes That 

Meet Presumptive Compliance Criteria.’’ 

Comment: Several commenters 

expressed concerns about possible 

inconsistencies in the specific IGC 

exclusions that we proposed in the FY 

2015 IRF PPS proposed rule. For 

example, one commenter pointed out 

that we were proposing to exclude the 

Etiologic Diagnosis of ICD–9–CM code 

850.5—Concussion with loss of 

consciousness of unspecified duration 

for IGC 0002.22—Brain dysfunction, 

Traumatic, Closed Injury. However, we 

were not proposing to exclude, ICD–9– 

CM code 850.0—Concussion with no 

loss of consciousness from this same 

IGC. 

Response: We thank the commenter 

for their careful review and analysis of 

the IGCs That Meet Presumptive 

Compliance Criteria. We have reviewed 

the IGCs That Meet Presumptive 

Compliance Criteria in light of these 

comments, and we agree with the 

commenter’s suggestion that this 

represents an inadvertent inconsistency. 

Thus, we are adding ICD–9–CM code 

850.0—Concussion with no loss of 

consciousness as an Etiologic Diagnosis 

exclusion to the list of Etiologic 

Diagnosis exclusions under IGC 

0002.22—Brain dysfunction, Traumatic, 

Closed Injury. 

Comment: One commenter stated that 

we excluded ICD–9–CM diagnosis code 

438.20—Late effects of cerebrovascular 

disease, hemiplegia affecting 

unspecified side from IGC 0001.9— 

Other Stroke, but did not list this 

diagnosis code as an exclusion for other 

stroke IGCs. 

Response: ICD–9–CM diagnosis code 

438.20 is not listed as an exclusion for 

the other stroke IGCs because the other 

stroke IGCs either specify side of body 

involvement or no paresis. 

Comment: One commenter suggested 

that as many as 10 percent of IRF cases 

will no longer qualify toward an IRF’s 

presumptive compliance percentage 

should the proposed removal of IGC 

0005.1, IGC 0005.2, IGC 0006.1, and IGC 

0006.9 and the exclusion of Rheumatoid 

and Osteoarthritis diagnosis codes from 

hip and knee joint replacement be 

finalized. 

Response: As discussed above, the 

commenters led us to discover that there 

would have been unintended 

consequences of excluding the proposed 

arthritis Etiologic Diagnosis codes from 

IGCs0008.51, 0008.52, 0008.61, 0008.62, 

0008.71, and 0008.72. As we intend to 

continue to count bilateral lowerextremity joint replacement cases and 

unilateral lower-extremity joint 

replacement cases involving patients 85 

years of age or older and/or who have 

a BMI of 50 or greater as meeting the 60 

percent rule criteria under the 

presumptive compliance method, we 

are removing the proposed Etiologic 

Diagnosis exclusions from these IGCs. 

We believe that this change 

substantially reduces the estimated 

percentage of IRF cases that will no 

longer qualify toward an IRF’s 

presumptive compliance percentage. 

However, with respect to the remaining 

IRF cases that will no longer qualify 

toward an IRF’s presumptive 

compliance percentage, we continue to 

believe that this is appropriate because 

the case’s compliance with the 60 

percent rule criteria cannot be 

adequately determined through the 

mere presence of the IGC or ICD–9–CM 

diagnosis code alone. 

Comment: Several commenters 

indicated that the proposed changes to 

‘‘Impairment Group Codes That Meet 

Presumptive Compliance Criteria’’ (and 

the above discussed removal of the 

amputation status diagnosis codes) 

would likely lead to reduced access to 

IRF care. The commenters noted that for 

certain types of patients, IRFs would be 

in the position of choosing between 

admitting these patients and facing 

‘‘additional risk’’ associated with 

medical reviews, or not admitting these 

types of patients. Many of these 

commenters said that such changes are 

unnecessary in light of past regulatory 

actions, such as the regulatory 

refinements of the 60 percent rule that 

were implemented in 2004 and the more 

stringent IRF coverage requirements that 

were implemented in 2010, that have 

already reduced the number of IRF 

admissions and increased the average 

IRF case mix. 

Response: We acknowledge that some 

IRFs may seek to avoid the possibility 

of medical review by limiting admission 

of patients with certain conditions, such 

as arthritis or unilateral upper-extremity 

amputations. However, this is not our 

intent in implementing this policy. The 

intent of these changes to the 

presumptive compliance method is 

obtain enough information to ensure 

that patients who are counted as 

meeting the 60 percent rule in 

§ 412.29(b) are appropriately meeting 


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the regulatory requirements. Although 

previous regulatory refinements have 

improved the IRF payment system, we 

believe that the proposed updates to the 

presumptive compliance method serve 

to further enhance the accuracy and 

appropriateness of the payment system. 

As discussed in section X. of this final 

rule, we are concurrently implementing 

policies designed to minimize the 

burden created by the operational 

aspects of this policy. 

Comment: One commenter suggested 

that the removal of IGC 0006.1— 

Rheumatoid Arthritis and IGC 0006.9— 

Other Arthritis should coincide with the 

implementation of the proposed new 

IRF–PAI item, so that these IGCs could 

still be used to presumptively determine 

an IRF’s compliance with the 60 percent 

rule. The commenter also suggested that 

the new IRF–PAI item and associated 

limited medical review should replace 

the current policy of requiring a full 

medical review if an IRF fails the 

presumptive compliance method. 

Response: We agree with the 

commenter’s suggestion that the 

effective date of the removal of IGC 

0006.1—Rheumatoid Arthritis and IGC 

0006.9—Other Arthritis should coincide 

with the implementation of the new 

proposed IRF–PAI item. Additionally, 

we believe that it makes the most sense 

to implement the changes to the 

presumptive methodology, both those 

that were finalized in the FY 2014 IRF 

PPS final rule and those that we are 

finalizing in this section of this final 

rule, for compliance review periods 

beginning on or after October 1, 2015, to 

aid in mitigating the potential burden 

for additional medical review as a result 

of the finalized policy changes. As 

discussed in more detail in section X. of 

this final rule, the new IRF–PAI item for 

arthritis conditions will allow IRFs to 

indicate whether there are any arthritis 

codes (either IGC or ICD–9–CM 

diagnosis codes) on a patient’s IRF–PAI 

that meet all of the regulatory 

requirements specified in 

§ 412.29(b)(2)(x), (xi), or (xii). If so, then 

we will perform a limited medical 

review on these cases to ensure that the 

requirements are met. If we find that all 

of the requirements are met, those 

arthritis cases will be allowed to count 

toward the IRF’s presumptive 

compliance percentage. As the new 

IRF–PAI item is being added for IRF 

discharges occurring on or after October 

1, 2015, we believe it makes sense to 

delay the effective dates of the changes 

to the presumptive methodology 

finalized in the FY 2014 IRF PPS final 

rule and those changes to the 

presumptive methodology being 

finalized in this section of this final 

rule. Therefore, we are delaying the 

effective date of the presumptive 

methodology changes finalized in the 

FY 2014 IRF PPS final rule and the 

additional presumptive methodology 

changes that we are finalizing in this 

section of this final rule, so that they 

will become effective for compliance 

review periods beginning on or after 

October 1, 2015. 

However, we do not agree with the 

suggestion that the limited medical 

review should replace the full medical 

review entirely. The medical review 

method has been the more detailed and 

comprehensive method for enforcing the 

60 percent rule since the rule was first 

implemented in the mid-1980s, and 

continues to be an important way of 

accurately determining whether IRFs 

meet the criteria in § 412.29(b) to be 

excluded from the IPPS and be paid 

instead under the IRF PPS. 

Comment: One commenter expressed 

concern that the changes to the 

presumptive compliance methodology 

finalized in the FY 2014 IRF PPS final 

rule and the changes proposed in the FY 

2015 IRF PPS proposed rule constitute 

an ‘‘end run’’ around the statutory limit 

on the compliance threshold of 60 

percent established by Congress. 

Response: We disagree with the 

commenter’s assertion that we are 

changing the 60 percent compliance 

threshold. We do not believe that the 

changes finalized in the FY 2014 IRF 

PPS final rule or the changes proposed 

in the FY 2015 IRF PPS proposed rule 

erode the underlying principle of the 60 

percent rule that requires an IRF to 

demonstrate that it ‘‘served an inpatient 

population of whom at least 60 percent 

required intensive rehabilitation 

services for treatment of one or more of 

the conditions specified at paragraph 

(b)(2).’’ We are not revising the criteria 

that govern the 13 medical conditions 

that may be counted toward an IRF’s 60 

percent rule compliance percentage. As 

we have stated in the FY 2014 IRF PPS 

final rule and the FY 2015 IRF PPS 

proposed rule, we are refining the lists 

used for the presumptive compliance 

methodology because we believe that 

certain ICD diagnosis codes on the lists 

do not necessarily demonstrate a 

patient’s meeting the medical condition 

(including severity and prior treatment) 

requirements for inclusion in a facility’s 

60 percent compliance calculation 

under the presumptive methodology 

method. Thus, we are removing these 

codes so that the presumptive 

methodology lists better reflect the 

regulations. Furthermore, the criteria 

under which a case may count under 

medical review have not changed. 

Comment: Several commenters stated 

that ICD–9–CM codes 820.8—Closed 

fracture of unspecified part of neck of 

femur and 820.9—Open fracture of 

unspecified part of neck of femur 

should not be exclusions under IGC 

0008.11—Status Post Unilateral Hip 

Fracture and IGC 0008.12—Status Post 

Bilateral Hip Fractures. The commenters 

said that the ICD–9–CM codes 820.8 and 

820.9 are often used as Etiologic 

Diagnoses in combination with IGCs 

0008.11 and 0008.12. One commenter 

said that the diagnosis codes 820.8 and 

820.9 still represent a hip fracture and 

that the more specific information 

regarding where on the neck of the 

femur the fracture occurred would not 

be readily available to the IRF and 

would in any case not meaningfully 

impact care. 

Response: The use of an ICD–9–CM 

code beginning with 820, by definition, 

indicates that the patient has 

experienced a fracture of the neck of the 

femur. However, this code requires that 

decimal points be used following the 

number to ensure specificity. Diagnosis 

codes 820.00 through 820.32, by 

differentiating between an intracapsular 

and an extracapsular fracture of the 

proximal femur, provide a degree of 

specificity not offered by diagnosis 

codes 820.8 and 820.9. Therefore, as we 

proposed, we will exclude ICD–9–CM 

codes 820.8 and 820.9 as Etiologic 

Diagnosis codes under IGC 0008.11— 

Status Post Unilateral Hip Fracture and 

IGC 0008.12—Status Post Bilateral Hip 

Fractures. IGC 0008.11 and IGC 0008.12 

will continue to count toward 60 

percent compliance under the 

presumptive compliance method if 

coded with Etiologic Diagnosis codes 

820.00 through 820.32. 

Final Decision: After carefully 

considering the comments that we 

received on the proposed changes to the 

IGCs That Meet Presumptive 

Compliance Criteria, we are revising the 

list of excluded ICD–9–CM diagnosis 

codes for some IGCs from ‘‘Impairment 

Group Codes That Meet Presumptive 

Compliance Criteria’’ as follows: We are 

removing the ICD–9–CM diagnosis code 

exclusions under IGC 0008.51 through 

IGC 0008.72. We are also excluding 

ICD–9–CM diagnosis code 850.0 under 

IGC 0002.22. The final ‘‘Impairment 

Group Codes That Meet Presumptive 

Compliance Criteria’’ list that reflects 

specific changes to the proposed 

policies listed above, is available for 

download from the CMS Web site at 

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

Medicare-Fee-for-Service-Payment/

InpatientRehabFacPPS/Data-Files.html. 

The presumptive methodology changes 

that we had finalized in the FY 2014 IRF 


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PPS final rule and the additional 

presumptive methodology changes that 

we are finalizing in this section of this 

final rule will become effective for 

compliance review periods beginning 

on or after October 1, 2015. 

IX. Data Collection of the Amount and 

Mode (Individual, Concurrent, Group, 

and Co-Treatment) of Therapy Provided 

in IRFs According to Occupational, 

Speech, and Physical Therapy 

Disciplines 

Prior to the implementation of the IRF 

PPS in January 2002, Medicare payment 

for IRF services under section 101(a) of 

the Tax Equity and Fiscal Responsibility 

Act of 1982 (Pub. L. 97–248, enacted 

September 3, 1982) was based on the 

reasonable costs incurred in furnishing 

services to Medicare beneficiaries, 

subject to a limit on allowable costs per 

discharge. Thus, for therapy services, 

Medicare reimbursed IRFs based on the 

reasonable costs incurred in furnishing 

appropriate levels of Individual Therapy 

or Group Therapy, which meant that 

IRFs had limited financial incentives to 

provide more of one mode of therapy 

than another. We presumed that 

decisions about the mode of therapy 

delivery were likely to be based on the 

needs of the patient and on the best way 

to assist patients in meeting their 

individualized rehabilitation goals. 

With the advent of the IRF PPS 

beginning in January 2002, Medicare 

began reimbursing IRFs using a set 

prospective payment amount that was 

intended to cover the costs of all 

treatment and services, including 

therapy services, provided to patients in 

the IRF. This increased the financial 

incentives for IRFs to give patients more 

Group Therapy and less Individual 

Therapy, because Individual Therapy is 

more costly to provide. Although we 

know that the financial incentives for 

the provision of Individual Therapy and 

Group Therapy changed, we do not 

know whether IRFs provided different 

modes of therapy in response to the new 

incentives or how much Individual 

Therapy and Group Therapy IRFs 

currently provide. Medicare does not 

currently collect data from IRFs on the 

amount of Individual, Concurrent, 

Group, and Co-Treatment Therapies 

provided by therapy discipline. We 

believe that it is important to begin 

collecting these data to determine what 

services Medicare is paying for under 

the IRF prospective payment system, 

which would allow us to analyze 

whether we are paying appropriately for 

services currently rendered by IRFs. 

Medicare administrative data (such as 

the IRF claims data) do not currently 

provide the level of detailed information 

about the mode and type of therapy 

provided to IRF patients that we need to 

perform these analyses. Thus, this 

proposed new data collection will assist 

us in the development of appropriate 

coverage and payment criteria for the 

provision of Group Therapy in the IRF 

setting. We believe that these coverage 

and payment criteria are important to 

balance the beneficial aspects of Group 

Therapy for certain patients in certain 

instances with the IRF requirements for 

an intensive rehabilitation therapy 

program. 

In the FY 2010 IRF PPS proposed rule 

(74 FR 21070, 21071), in which we 

proposed a revised set of Medicare 

coverage requirements for IRF services, 

we discussed the relative value of 

Individual Therapy versus Group 

Therapy in the IRF setting. To improve 

our understanding of when Group 

Therapy is most appropriate in IRFs, we 

solicited comments in that proposed 

rule on the types of patients for whom 

Group Therapy is appropriate, and the 

specific amount of Group Therapy that 

may be beneficial for these types of 

patients. Subsequently, we discussed 

the comments in the FY 2010 IRF PPS 

final rule (74 FR 39796, 39797). 

Although the comments on the FY 2010 

IRF PPS proposed rule did not offer any 

clinical study results or any data that 

would be helpful to us in developing 

coverage and payment criteria for the 

provision of Group Therapy in IRFs, the 

comments did suggest an important role 

for Group Therapy in the provision of 

therapies in IRFs. However, the majority 

of commenters remarked that Group 

Therapy should be limited in some way. 

Many commenters agreed that Group 

Therapy is a good adjunct to Individual 

Therapy, but should not be the primary 

source of therapy services provided in 

IRFs. Several commenters 

recommended that we limit the amount 

of Group Therapies provided in IRFs, 

and that we also limit the number of 

patients who can participate in a Group 

Therapy session. Commenters also 

suggested that Group Therapy sessions 

should be comprised of patients with 

similar diagnoses. We agreed with the 

commenters that Group Therapy should 

not be the primary source of therapy 

given to patients in IRFs. Group 

Therapy should be used in IRFs 

primarily as an adjunct to Individual 

Therapy services, which is the standard 

of care in IRFs, as Group Therapy may 

not uniformly represent the level of 

intensive rehabilitation therapy required 

and paid for in the IRF setting. In the 

final rule, we also stated that we would 

consider adopting specific coverage and 

payment criteria for Group Therapy 

practice in IRFs through future 

rulemaking. 

When an authorized clinician deems 

it to be necessary, we continue to 

believe that Group Therapy can serve as 

an appropriate mode of therapy delivery 

that can be beneficial to the particular 

needs of IRF patients as an adjunct to 

Individual Therapy. Anecdotally, we 

understand that Group Therapy remains 

a widely used mode of therapy in the 

IRF setting. But as we stated in the FY 

2010 IRF PPS final rule, we believe that 

it would be inappropriate for IRFs to 

provide essentially all therapy in the 

form of Group Therapy because we do 

not believe that this is in the best 

interest of the patients, or that it reflects 

the services for which the IRF 

prospective payment system was 

established to pay. Therefore, to better 

understand the ways in which therapy 

services are currently being provided in 

IRFs, we are adding a new Therapy 

Information Section to the IRF–PAI to 

record the amount and mode of therapy 

(that is, Individual, Concurrent, Group, 

and Co-Treatment) patients receive in 

each therapy discipline (that is, physical 

therapy, occupational therapy, and 

speech-language pathology). 

For purposes of recording therapy 

services in IRFs, we proposed to define 

Individual Therapy as the provision of 

therapy services by one licensed or 

certified therapist (or licensed therapy 

assistant, under the appropriate 

direction of a licensed or certified 

therapist) to one patient at a time (this 

is sometimes referred to as ‘‘one-onone’’ therapy). In the proposed rule, we 

defined Group Therapy as the provision 

of therapy services by one licensed or 

certified therapist (or licensed therapy 

assistant, under the appropriate 

direction of a licensed or certified 

therapist) to between 2 and 6 IRF 

patients at one time, regardless of 

whether those 2 to 6 IRF patients are 

performing the same activity or different 

activities. As discussed in our responses 

to comments below, we will instead 

define Group Therapy as one licensed or 

certified therapist (or licensed therapy 

assistant, under the appropriate 

direction of a licensed therapist) treating 

2 to 6 patients at the same time who are 

performing the same or similar 

activities. We proposed to define CoTreatment as the provision of therapy 

services by more than one licensed or 

certified therapist (or licensed therapy 

assistant, under the appropriate 

direction of a licensed therapist) from 

different therapy disciplines to one 

patient at the same time. For example, 

Co-Treatment could involve one 

physical therapist and one occupational 

therapist working with one patient at 


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the same time to achieve the patient’s 

goals. Because Co-Treatment is 

appropriate for specific clinical 

circumstances and is not suitable for all 

patients, its use should be limited. As 

discussed in our responses to comments 

below, we will define Concurrent 

Therapy as one licensed or certified 

therapist treating 2 patients at the same 

time who are performing different 

activities. 

We will collect this information in a 

new Therapy Information Section on the 

IRF–PAI, which will be effective for IRF 

discharges beginning on or after October 

1, 2015. The new Therapy Information 

section will be completed as part of the 

patient’s discharge assessment. In this 

new section, the IRF will record how 

many minutes of Individual, 

Concurrent, Group, and Co-Treatment 

Therapies the patient received, 

according to each therapy discipline 

(that is, physical therapy, occupational 

therapy, and speech-language 

pathology), during the first week (7 

calendar day period) of the IRF stay; 

how many minutes of Individual, 

Concurrent, Group, and Co-Treatment 

Therapies the patient received, 

according to each therapy discipline, 

during the second week (7 calendar day 

period) of the IRF stay. In the proposed 

rule, we proposed that IRFs would also 

collect the average number of minutes of 

Individual, Group, and Co-Treatment 

therapies the patient received, according 

to each therapy discipline, during all 

subsequent weeks (7 calendar day 

periods) of the IRF stay, beginning with 

the third week. For Co-Treatment, each 

therapist will record the amount of time 

spent with the patient. That is, if a 

physical therapist and an occupational 

therapist both worked with the patient 

from 9:00 a.m. to 9:30 a.m., then each 

therapist would record 30 minutes with 

the patient in the Co-Treatment section 

of the IRF–PAI. The draft of the IRF–PAI 

for FY 2016 that includes this new 

Therapy Information section is available 

for download from the IRF PPS Web site 

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

Medicare-Fee-for-Service-Payment/

InpatientRehabFacPPS/IRFPAI.html in 

conjunction with the publication of this 

final rule. We will use these data for the 

following purposes: 

• To analyze the types of therapy 

services Medicare is currently paying 

for under the IRF prospective payment 

system; and 

• To monitor the amount of therapy 

given and the use of different therapy 

modes in IRFs to support future 

rulemaking in this area. 

For example, we are considering 

using these data to propose limits on the 

amount of Group Therapy that may be 

provided in IRFs through future 

rulemaking. One such limit that we are 

currently considering is that an IRF 

patient may receive no more than 25 

percent of his or her total therapy 

treatment time in Group Therapy, 

similar to the limit that currently exists 

in the skilled nursing facility (SNF) 

setting, as discussed in the FY 2000 SNF 

PPS and Consolidated Billing final rule 

(64 FR 41644, 41662). We specifically 

solicited public comment on all of these 

proposals, including whether 25 percent 

is the most appropriate limit to establish 

for the IRF setting. 

We received 43 comments on the data 

collection regarding the amount and 

mode (Individual, Concurrent, Group, 

and Co-Treatment) of therapy provided 

in IRFs according to Occupational, 

Speech, and Physical Therapy 

Disciplines, which are summarized 

below. 

Comment: Overall, several 

commenters supported CMS’s proposed 

therapy collection item on the IRF–PAI, 

with one commenter indicating that 

collection of these data could lead to 

significant improvements in quality of 

care and accuracy of payments in the 

IRF PPS. 

Response: We appreciate the support 

from the commenters regarding the new 

therapy item on the IRF–PAI. To date, 

we have been unable to track changes in 

the provision of therapy to patients 

because Medicare does not collect data 

on therapy modalities (Individual, 

Concurrent, Group, and Co-Treatment) 

by each therapy discipline (that is, 

physical therapy, occupational therapy, 

and speech-language pathology). We 

believe that by adding this item to the 

IRF–PAI, we will be able to determine 

the current services for which Medicare 

is paying and whether limits on the 

amount of group therapy that may be 

provided to IRF patients are needed. 

Comment: Several commenters 

expressed concern that the proposed 

collection method changes the 

collection criteria for the weeks 

subsequent to the second week. 

Commenters suggested that this change 

introduces the potential for confusion 

and error because facilities will have to 

monitor every patient on the unit to 

determine when the third week of the 

stay will begin. Additionally, these 

commenters suggested that we should 

collect data on the total number of 

minutes of therapy provided to patients, 

by mode and type of therapy, only once 

at discharge based on the total number 

of minutes provided to the patient 

throughout the IRF stay, as it would 

lessen the burden of the data collection. 

Response: After careful consideration 

of these comments, we agree that 

collecting average number of minutes of 

therapy, by mode and type of therapy, 

for weeks 3 and beyond may have the 

potential to create confusion for 

providers. For this reason and in order 

to minimize provider burden, we are 

choosing not to finalize this proposal, 

and will instead only collect total 

number of minutes of therapy by mode 

and discipline for weeks 1 and 2. We 

believe that it would greatly improve 

our understanding of the provision of 

therapy in IRFs to collect data on the 

amount of therapy provided, by mode 

and type of therapy, for week 1 of the 

IRF stay (that is, the first 7 consecutive 

calendar days starting with the day of 

admission) and for week 2 of the IRF 

stay (that is, the second 7 consecutive 

calendar days of the IRF stay). Since the 

average length of stay in an IRF is 13 

days, and to minimize the burden of this 

data collection effort, we will not 

require data to be reported beyond week 

2 of the IRF stay. We believe that 

collecting total number of minutes of 

therapy, by mode and type of therapy, 

only for weeks 1 and 2 of the IRF stay 

is sufficient to help us to be able to 

develop future policy and improve the 

quality of care and accuracy of 

payments in the IRF PPS. Additionally, 

since our intent is to collect the most 

specific information regarding therapy 

data that we can, we recognize that 

collecting the average amount of therapy 

for weeks 3 and on, will perhaps not 

provide us with the specificity that we 

are seeking at this time. However, we 

may propose to require data collection 

on weeks 3 and beyond of the IRF stay 

through future notice and comment 

rulemaking if we later determine that 

such data is needed to better inform 

future policymaking. 

While we recognize that the 

commenters believe that collecting the 

number of minutes of therapy, by mode 

and type of therapy, for the whole IRF 

stay only at the time of the patient’s 

discharge from the IRF would lessen the 

burden of this data collection, we do not 

believe that this would provide us with 

level of detail that we believe we would 

need to develop future policy in this 

area or to understand what services we 

are paying for with the IRF benefit. 

Comment: Several commenters 

suggested that CMS should seek to 

achieve its objective of better 

understanding therapy usage and 

outcomes within IRFs, by funding a 

study on the utilization of various 

therapy modes in IRFs. 

Response: Unfortunately, we are not 

able to fund a study of therapy usage 

and outcomes, but we would welcome 

learning from such studies conducted 

by others. Clinical evidence linking 


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therapy usage with patient outcomes 

would greatly improve our 

understanding of these issues, and 

would not only enhance future 

policymaking in this area, but we 

believe would also inform and enhance 

the quality of care provided in IRFs and 

other post-acute care settings. 

Comment: Several commenters 

expressed concern regarding CMS’s 

definition of each therapy mode, most 

specifically, Group Therapy. One 

commenter suggested that we should be 

more consistent in our definitions of the 

different modes of therapy across 

Medicare payment settings. Many of the 

commenters indicated that studies 

regarding the benefits of one mode of 

therapy over another are very limited, 

and wanted to know what clinical basis 

we used when deciding that a group 

should be comprised of 2–6 patients. 

Other commenters urged CMS to 

recognize Concurrent Therapy as a 

distinct mode of therapy and not 

include it in the Group Therapy 

definition. 

Response: After carefully reviewing 

the comments regarding the definitions 

of the different modes of therapy, we 

agree with commenters that Concurrent 

Therapy should be removed from the 

definition of Group Therapy and 

recognized as a distinct mode of 

therapy. We initially included 

Concurrent Therapy with Group 

Therapy because we wanted to lessen 

the burden on providers. However, we 

understand from the comments that 

separating out Concurrent Therapy from 

Group Therapy may actually make it 

easier for providers to report the data, as 

they already record data separately 

according to Concurrent Therapy and 

Group Therapy in the medical record. 

We also understand from the comments 

that it would make it easier for 

providers if we were to use the same 

definitions for the different modes of 

therapy, to the extent feasible, across 

Medicare’s post-acute care settings. We 

believe that such consistency across 

settings will serve to improve the 

accuracy and reliability of the data we 

receive. As we also believe that it would 

be useful for us to better understand the 

provision of Concurrent Therapy in 

IRFs, separate from the provision of 

Group Therapy, we are revising our 

proposal, and will collect data instead 

on Individual, Concurrent, Group, and 

Co-Treatment Therapies. 

Furthermore, in response to 

comments, we will generally define 

these terms using the same definitions 

for Individual, Concurrent, and CoTreatment, that we currently use in the 

SNF PPS (see Chapter 3 Sec. O of the 

Minimum Data Set (MDS) Manual, 

version 3.0 located at, http://

www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/NursingHomeQualityInits/

MDS30RAIManual.html). We generally 

concur that, when appropriate, it is 

important to apply definitions 

consistently across Medicare’s postacute care settings. Thus, we are 

defining Individual Therapy as the 

provision of therapy services by one 

licensed or certified therapist (or 

licensed therapy assistant, under the 

appropriate direction of a licensed or 

certified therapist) to one patient at a 

time (this is sometimes referred to as 

‘‘one-on-one’’ therapy), Co-Treatment as 

the provision of therapy services by 

more than one licensed or certified 

therapist (or licensed therapy assistant, 

under the appropriate direction of a 

licensed therapist) from different 

therapy disciplines to 1 patient at the 

same time, and Concurrent Therapy as 

one licensed or certified therapist 

treating 2 patients at the same time who 

are performing different activities. 

However, we have decided not to use 

the exact SNF definition for Group 

Therapy in IRFs. Based on our review of 

the public comments, we believe it is 

appropriate to broaden the SNF 

definition for the purposes of this IRF 

data collection effort. We may still 

consider changes to the definition of 

Group Therapy for the IRF setting in the 

future, based on our review of the data 

we receive and based on any additional 

feedback from providers. In the SNF 

setting, the data collection regarding 

Group Therapy is used to allocate a 

therapist’s time for the purpose of 

classifying a particular patient into the 

appropriate case-mix group for 

payment. Since the purpose of the data 

collection in the IRF setting differs, we 

believe that the same interpretation is 

not needed. Additionally, since we have 

decided to separate Concurrent Therapy 

from the definition of Group Therapy, 

we have changed the definition of 

Group Therapy to ensure patients are 

performing the same or similar 

activities. Two patients performing 

different activities would now be 

defined as Concurrent Therapy. We will 

define Group Therapy as the provision 

of therapy services by one licensed or 

certified therapist (or licensed therapy 

assistant, under the appropriate 

direction of a licensed or certified 

therapist) treating 2 to 6 patients at the 

same time who are performing the same 

or similar activities. 

We plan to update the IRF–PAI 

Training Manual to inform providers, in 

more detail, regarding completion of the 

Therapy Data Collection Section. 

We agree with many of the 

commenters that evidence regarding the 

clinical efficacy of the various modes of 

therapy for different patient populations 

is lacking. In the FY 2010 IRF PPS 

proposed rule (74 FR 21052, 21070), we 

specifically asked for this type of 

information, and the commenters told 

us that such information is largely 

unavailable. We would welcome any 

information that might be available to 

better understand this issue. However, 

we believe that the absence of such 

clinical evidence makes it all the more 

imperative that we start by collecting 

data on the amounts, types, and modes 

of therapy provided in IRFs to inform 

future policymaking. 

We do not specifically know of the 

existence of any clinical evidence on the 

optimal number of patients for Group 

Therapy. We would be interested in any 

studies that developed such clinical 

evidence. In the absence of such 

evidence and solely for the purposes of 

collecting the data, we proposed to 

define Group Therapy as one therapist 

working with 2 to 6 patients at the same 

time. We proposed 6 patients as the 

upper limit for group therapy in IRFs 

because we believe that more than 6 

patients in a group would likely make 

the group more difficult for a therapist 

to supervise and manage, and might 

decrease the benefits to patients of the 

group interaction. We did not receive 

any comments suggesting that a Group 

Therapy session in an IRF should 

include more than 6 patients, and in fact 

received several comments in support of 

using 6 as an upper limit on the number 

of patients. Thus, we will use the 

definition of Group Therapy as one 

therapist working with 2 to 6 patients 

who are all performing the same or 

similar activities solely for the purposes 

of this data collection effort. We may 

consider revising this definition for the 

IRF setting through future rulemaking 

based on the availability of new 

evidence or further feedback on this 

issue. 

Comment: While a few commenters 

were supportive of our consideration of 

25 percent as the most appropriate limit 

to establish for the provision of Group 

Therapy in the IRF setting, the majority 

of commenters urged CMS not to by 

impose a 25 percent threshold limiting 

the amount of Group Therapy an IRF 

patient can receive. Many commenters 

said that a potential cap on the 

provision of Group Therapy in IRFs was 

premature in the absence of data and 

studies to support an appropriate limit. 

These commenters also indicated that 

such a limit would not sufficiently 

recognize the professional judgment of 

the treating clinicians who, they believe, 


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are best equipped to determine the 

modality and duration of therapy a 

patient needs. Additionally, several 

commenters suggested that IRF patients 

should not be held to the same therapy 

standards and assignment of minutes as 

SNF patients since the two populations 

are very different. 

Response: While we appreciate the 

positive feedback from the commenters 

who supported the idea of a potential 

threshold, after careful review of the 

comments, the majority of commenters 

suggested placing a cap on the amount 

of Group Therapy that IRF patients 

should receive would be premature at 

this time. We appreciate the concerns 

raised by these commenters and believe 

that it would be prudent to give more 

consideration to setting a cap, and the 

appropriate threshold for such a cap, 

regarding the provision of Group 

Therapy. We believe that collecting and 

analyzing the current delivery of 

therapy services will help inform any 

future policymaking. At such time that 

we believe a threshold is needed on the 

amount of Group Therapy provided, we 

will consider policy development 

through notice and comment 

rulemaking. 

If, through future rulemaking, we do 

decide to impose a Group Therapy 

threshold, we do not believe that this 

would limit the professional judgment 

of the treating clinicians. We know that 

clinicians are best equipped to 

determine the modality and duration of 

therapy that any particular patient 

needs. With that being said, we believe 

that the preponderance of therapy given 

in an IRF should be Individual, since 

that is the only way that we believe that 

an IRF patient is truly receiving the 

intensive rehabilitation therapy program 

typically provided in an IRF, and we 

want to be sure that continues to be the 

standard. A potential threshold for the 

provision of group therapy in IRFs 

would serve to further clarify what we 

mean by ‘‘preponderance.’’ 

Comment: One commenter expressed 

concern that we might believe that all 

IRF patients should receive 100 percent 

individual therapy. Another commenter 

suggested that we explicitly recognize 

the clinical value that Group Therapy 

provides over other therapy modes for 

certain patients. 

Response: We do not believe that all 

IRF patients should only receive 

individualized therapy. We understand 

that different types of patients need 

different motivation and various forms 

of therapy in order to achieve their 

therapy goals. As we indicated in the 

proposed rule (79 FR 26329), when an 

authorized clinician deems it to be 

necessary, we continue to believe that 

Group Therapy can serve as an 

appropriate mode of therapy delivery 

that can be beneficial to the particular 

needs of IRF patients as an adjunct to 

Individual Therapy. An important goal 

of rehabilitation is community 

reintegration and groups are important 

to that process. The interaction with 

other patients provides tremendous 

psychosocial benefits, providing 

encouragement and confidence in skills 

learned. However, we believe that the 

preponderance of therapy provided to 

patients in IRFs should be individual 

therapy in order to reflect the intensity 

of therapy provided in IRFs. 

Comment: Several commenters 

suggested that we provide additional 

information about how IRFs should 

allocate or attribute minutes among 

patients participating in a Concurrent 

Therapy or Group Therapy session on 

the IRF–PAI. 

Response: We will include more 

detailed information regarding 

completion of the Therapy Data 

Collection Section of the IRF–PAI in an 

update to the IRF–PAI Training Manual 

that we will post on the IRF PPS Web 

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

Medicare-Fee-for-Service-Payment/

InpatientRehabFacPPS prior to October 

1, 2015. 

Final Decision: After careful 

consideration of the comments we 

received on the proposed therapy data 

collection on the IRF–PAI, we are 

finalizing our collection of data on the 

amount and mode (that is, Individual, 

Concurrent, Group, and Co-Treatment) 

of therapy provided in the IRF setting 

according to therapy discipline (that is, 

physical therapy, occupational therapy, 

and speech-language pathology). These 

data will be collected on a revised IRF– 

PAI form which is available for 

download from the CMS Web site 

[http://cms.gov/Medicare/Medicare-Feefor-Service-Payment/InpatientRehab

FacPPS/index.html] in conjunction with 

this final rule. This requirement will 

become effective for IRF discharges 

occurring on or after October 1, 2015. 

X. Revision to the IRF–PAI for Arthritis 

Conditions 

In the FY 2014 IRF PPS final rule (78 

FR 47860, 47881 through 47895), we 

revised the list of ICD–9–CM diagnosis 

codes used to determine presumptive 

compliance, effective for compliance 

review periods beginning on or after 

October 1, 2014. As part of these 

revisions, we removed all of the ICD–9– 

CM codes for arthritis conditions 

because we found that such codes did 

not provide any information as to 

whether the patients met the severity 

and prior treatment requirement 

portions of the criteria for the medical 

conditions that may be counted toward 

an IRF’s compliance percentage under 

the presumptive compliance method. As 

we said in the FY 2014 IRF PPS final 

rule, we did not adopt any and all 

arthritis conditions in the May 7, 2004, 

final rule (69 FR 25752). Rather, we only 

included certain kinds of arthritic 

conditions which met defined severity 

and prior treatment requirements. We 

anticipated that less severe arthritic 

conditions could be satisfactorily 

managed outside of IRFs, as these cases 

would not require the intensive therapy 

provided in the inpatient rehabilitation 

setting. 

We received a number of comments 

on the FY 2014 IRF PPS proposed rule 

(78 FR 26880) regarding the proposed 

removal of the ICD–9–CM codes for 

arthritis. The majority of commenters 

suggested that removing ICD–9–CM 

codes for arthritis would increase the 

use of the medical review method, 

which is more burdensome for both 

CMS and for IRFs. Several commenters 

suggested that IRFs should not be 

required to undergo a ‘‘full medical 

review’’ if they fail to meet the required 

compliance percentage using the 

presumptive compliance method. 

Instead, commenters suggested use of a 

‘‘limited medical review’’ in which only 

arthritis and systemic vasculidities 

cases would be reviewed. We said in the 

FY 2014 IRF PPS final rule (78 FR 47860 

at 47888 through 47889) that we would 

use the time afforded by the 1-year 

delayed implementation to consider the 

feasibility of minimizing any burdens 

created by the operational aspects of 

this policy. 

In keeping with what we stated in the 

FY 2014 IRF PPS final rule, in the FY 

2015 IRF PPS proposed rule (79 FR 

26308 at 26330 through 26331), we 

proposed to add an item to the IRF–PAI 

form for an IRF to record the specific 

arthritis diagnosis code(s) for each 

patient that meets the severity and prior 

treatment requirements outlined in the 

regulation. By coding arthritis diagnosis 

codes in this section, the IRF would 

indicate that the patient’s arthritis 

conditions met all of the severity and 

prior treatment requirements (as 

outlined in regulation at 

§ 412.29(b)(2)(x) through 

§ 412.29(b)(2)(xii)) to be counted toward 

an IRF’s compliance percentage under 

the presumptive compliance method. 

The purpose of the proposed new 

item is to provide us with the additional 

severity and prior treatment information 

necessary for us to identify the arthritis 

diagnoses that are appropriate to count 

toward an IRF’s compliance percentage 

under the presumptive compliance 


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method, thus reducing the medical 

review burden. If an IRF’s presumptive 

compliance percentage is below the 

compliance threshold (currently, 60 

percent), but inclusion of the arthritis 

codes reported in the new proposed 

data item would result in the IRF’s 

presumptive compliance percentage 

meeting or exceeding the compliance 

threshold, then we proposed to perform 

a ‘‘limited’’ medical review on a 

statistically valid random sample of the 

cases documented under this new 

proposed item to ensure that the 

severity and prior treatment 

requirements were actually met. The 

number of cases from the statistically 

valid random sample found to meet the 

severity and prior treatment 

requirements would be extrapolated to 

the total number of cases documented 

under the new proposed item (that is, if 

70 percent of the cases in the 

statistically valid random sample meet 

the severity and prior treatment 

requirements, we would presume that 

70 percent of all of the cases 

documented in the new proposed item 

met the severity and prior treatment 

requirements). If the IRF’s presumptive 

compliance percentage meets or exceeds 

the compliance threshold (currently, 60 

percent) with the addition of the 

compliant cases documented under the 

new proposed item, then the IRF will be 

presumed to meet the 60 percent rule 

requirements using the presumptive 

compliance method. However, if the 

number of compliant cases documented 

under the new proposed item does not 

result in the IRF’s presumptive 

compliance percentage meeting or 

exceeding the compliance threshold 

(currently 60 percent), then the normal 

medical review procedures for IRFs not 

meeting the compliance threshold 

(currently 60 percent) under the 

presumptive compliance method would 

apply. A draft of the proposed new IRF– 

PAI for FY 2016, with the new proposed 

item, was made available for download 

on the IRF PPS Web site at http://

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

InpatientRehabFacPPS/IRFPAI.html in 

conjunction with the release of the 

proposed rule. 

The purpose of the proposal is to 

reduce the medical review burden 

associated with the removal of the ICD– 

9–CM codes for arthritis conditions 

from the presumptive methodology, 

while still allowing us to ensure that the 

arthritis diagnosis codes included in the 

calculation of an IRF’s compliance 

percentage under the presumptive 

compliance method meet the severity 

and prior treatment regulatory 

requirements. 

We received 21 comments on our 

proposed revision to the IRF–PAI to add 

a data item for arthritis conditions, 

which are summarized below. 

Comment: Several commenters 

supported the proposed revision to the 

IRF–PAI to allow providers to indicate 

whether the case coded with the 

arthritis condition met the prior 

treatment and severity requirements. 

Commenters especially supported the 

associated limited medical review 

process as described in the proposed 

rule. However, many commenters said 

that asking IRFs to code the arthritis 

diagnosis codes twice would create 

confusion, increase provider burden, 

and possibly lead to duplicative coding. 

Several commenters suggested that we 

instead provide for a simplified yes/no 

field on the IRF–PAI to indicate whether 

the case meets the prior treatment and 

severity regulatory requirements. 

Response: We appreciate the 

commenters’ suggestions. Based on our 

review of the suggestions offered by the 

commenters, we believe that a much 

simpler approach than what we had 

proposed would be to provide an item 

on the IRF–PAI allowing the IRF to 

indicate whether or not the IRF–PAI 

contains any arthritis codes which meet 

the severity and prior treatment 

regulatory requirements at 

§ 412.29(b)(2)(x) through 

§ 412.29(b)(2)(xii). This approach would 

also be easier to administer. Thus, we 

are adopting this change to item #24A 

of the IRF–PAI form, instead of the 

additional IRF–PAI item that had been 

proposed for that item. The new item 

#24A would instead ask the IRF to mark 

the box if there are any arthritis codes 

listed in items #21, 22, or 24 that meet 

the severity and prior treatment 

regulatory requirements at 

§ 412.29(b)(2)(x) through 

§ 412.29(b)(2)(xii). 

Comment: Several commenters 

indicated that IRFs are sometimes 

unable to obtain the necessary 

information about a patient’s course of 

treatment prior to the IRF admission. 

These commenters suggested that the 

prior treatment requirements should be 

removed from the regulation. 

Response: The requirement that 

patients with arthritis conditions 

admitted to IRFs must not have shown 

adequate improvement following an 

appropriate, aggressive, and sustained 

course of outpatient therapy services or 

services in other less intensive 

rehabilitation settings has been in 

regulation since this requirement was 

finalized in the May 7, 2004 final rule 

(69 FR 25752). As stated in that final 

rule, the rehabilitation prescriptions for 

many types of arthritis conditions, 

especially osteoarthritis, typically 

involve outpatient therapy several times 

a week for 4 weeks or more. Although 

we recognized in that final rule that 

some very unusual cases may require 

intensive therapies and the 

interdisciplinary approach to care 

typically provided in IRFs, we believe 

that patients should have participated in 

a required course of appropriate, 

sustained, and aggressive outpatient 

treatment (or treatment in a lessintensive setting) which failed to 

improve the patient’s condition in order 

to demonstrate that the IRF admission is 

reasonable and necessary. This 

requirement allows us to be able to 

count toward the 60 percent rule those 

‘‘exceptional’’ cases that the IRF is able 

to demonstrate truly require the 

intensive and interdisciplinary level of 

care provided in an IRF, without 

counting the majority of cases we 

believe do not represent the type of 

patient requiring intensive 

rehabilitation in an IRF. 

These requirements have been in 

regulation for almost a decade. Until 

now, IRFs have not expressed any 

concerns to us regarding their inability 

to obtain the required prior treatment 

information, and many IRFs treat a 

significant number of these patients. We 

do not believe difficulties obtaining 

prior treatment information are a 

widespread problem among IRFs. 

Further, we believe that a patient’s prior 

course of treatment is useful and 

important clinical information for the 

treating physicians and therapists in the 

IRF to design the most effective 

treatment plan for the patient. Thus, we 

believe that the prior treatment 

information is necessary and important 

information for the IRF to obtain, both 

to meet the regulatory requirements and 

to provide the most effective care to the 

patient, and we disagree with the 

commenter’s suggestion that this 

requirement should be removed from 

the regulation. 

Final Decision: After carefully 

considering the comments we received 

on the proposed new item on the IRF– 

PAI to indicate the arthritis codes that 

meet the prior treatment and severity 

regulatory requirements, we are 

modifying our proposal, based on the 

commenters’ suggestions, to simplify it. 

Instead of the new item we had 

proposed for item #24A on the IRF–PAI, 

we will instead ask IRFs to mark the box 

in item #24A if there are any arthritis 

codes listed in items #21, 22, or 24 that 

meet the severity and prior treatment 

regulatory requirements at 

§ 412.29(b)(2)(x) through 


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§ 412.29(b)(2)(xii). If an IRF’s 

presumptive compliance percentage is 

below the compliance threshold 

(currently, 60 percent), but inclusion of 

the cases that have been marked in the 

affirmative in the new item #24A in the 

IRF’s presumptive compliance 

percentage would cause the IRF’s 

presumptive compliance percentage to 

exceed 60 percent, then we will perform 

a ‘‘limited’’ medical review on a 

statistically valid random sample of 

such cases. The number of cases from 

the statistically valid random sample 

that are found to meet the severity and 

prior treatment requirements would be 

extrapolated to the total number of cases 

that have been marked in the affirmative 

by the IRF in the new item #24A. For 

example, if 70 percent of the IRF’s cases 

in the statistically valid random sample 

are found to meet the severity and prior 

treatment requirements, we would 

presume that 70 percent of all of the 

IRF’s cases marked in the affirmative by 

the IRF in the new item #24A met the 

severity and prior treatment 

requirements. If the IRF’s presumptive 

compliance percentage meets or exceeds 

the compliance threshold (currently, 60 

percent) with the addition of the 

compliant cases that are found to meet 

the severity and prior treatment 

requirements by this method, then the 

IRF will be presumed to meet the 60 

percent rule requirements using the 

presumptive compliance method. 

However, if the number of compliant 

cases that are found to meet the severity 

and prior treatment requirements by this 

method do not result in the IRF’s 

presumptive compliance percentage 

meeting or exceeding the compliance 

threshold (currently 60 percent), 

medical review procedures for IRFs not 

meeting the compliance threshold 

(currently 60 percent) under the 

presumptive compliance method would 

apply. A draft of the proposed new IRF– 

PAI for FY 2016, with the simpler item 

#24A, is available for download on the 

IRF PPS Web site at http://

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

InpatientRehabFacPPS/IRFPAI.html in 

conjunction with this final rule. 

Because item #24A is specifically 

intended to mitigate some of the burden 

of additional medical reviews that 

would be required as a result of the 

refinements to the presumptive 

compliance method that are finalized in 

section VIII of this final rule, we believe 

that this change to the IRF–PAI should 

have an effective date that is as close as 

possible to the effective date of the 

refinements to the presumptive 

compliance method. However, as noted 

in section VIII of this final rule, the 

refinements to the presumptive 

compliance method are effective for 

compliance review periods beginning 

on or after October 1, 2015, but changes 

to the IRF–PAI must instead be 

implemented for all IRF discharges 

occurring on or after a specific date and 

cannot be done on a compliance review 

period basis. Thus, an effective date for 

new IRF–PAI item #24A of October 1, 

2015, will enable this change to take 

effect on or before any IRFs are subject 

to the new presumptive compliance 

method. This change to the IRF–PAI is 

effective for IRF discharges on or after 

October 1, 2015. 

XI. International Classification of 

Diseases, 10th Revision, Clinical 

Modification (ICD–10–CM), Conversion 

A. Background on the Use of Diagnosis 

Information in the IRF PPS 

As described in section I.C. of this 

final rule, IRFs are required to complete 

the appropriate sections of a PAI, 

designated as the IRF–PAI, upon the 

admission and discharge of a Medicare 

Part A Fee-for-Service patient. 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 (74 FR 

39762, 39798 through 39800). Several 

sections of the IRF–PAI (currently, items 

#22, 24, 46, and 47) require IRFs to 

report diagnosis information for 

patients. Until ICD–10–CM becomes the 

required medical data code set for use 

on Medicare claims and IRF–PAI 

submissions, we will continue to use 

the ICD–9–CM medical data code set. 

Medicare uses the diagnosis information 

recorded on the IRF–PAI for the 

following purposes: 

(1) To case-mix adjust the IRF PPS 

payment for a patient by assigning the 

patient to an appropriate payment tier 

based on the patient’s comorbidities. 

(2) To determine, using the 

presumptive compliance method, 

whether an IRF presumptively meets the 

60 percent rule requirements in 

§ 412.29(b). 

As described in more detail in the FY 

2002 IRF PPS final rule (66 FR 41316), 

we developed a list of diagnosis codes 

(previously, ICD–9–CM codes) that, if 

coded as a comorbidity in item #22 on 

a patient’s IRF–PAI, would result in that 

patient being assigned to one of three 

higher-paying payment tiers under the 

IRF PPS. In the FY 2006 IRF PPS final 

rule (70 FR 57166), we updated and 

revised the list of diagnosis codes (at 

that time, ICD–9–CM codes). We refer to 

the current list of diagnosis codes that, 

if present on a patient’s IRF–PAI, result 

in the patient being assigned to a higherpaying tier as the ‘‘List of 

Comorbidities’’ in this final rule. 

In addition to determining the 

appropriate tier assignment for case-mix 

adjusting IRF PPS payments, the 

diagnosis coding on the IRF–PAI is also 

used within the presumptive 

compliance method that typically serves 

as the first step in determining an IRF’s 

compliance with the 60 percent rule. As 

discussed in more detail in section VII. 

of this final rule, the presumptive 

compliance method is one of two ways 

that MACs may evaluate an IRF’s 

compliance with the 60 percent rule 

(the other method being the medical 

review method). The diagnosis coding 

on the IRF–PAI assessments from an 

IRF’s 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 diagnosis codes that are listed in the 

‘‘ICD–9–CM Codes That Meet 

Presumptive Compliance Criteria’’ 

(which is also known as the 

presumptive methodology list). 

Additionally, the computer program 

examines the impairment group codes, 

which are not ICD–9–CM or ICD–10–CM 

codes, but are instead 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 computer program compares 

the impairment group codes listed in 

item #21 to the list of ‘‘Impairment 

Group Codes That Meet Presumptive 

Compliance Criteria’’ to determine 

whether the patient’s impairment group 

code presumptively meets the 60 

percent rule requirements. In certain 

cases, the list of ‘‘Impairment Group 

Codes That Meet Presumptive 

Compliance Criteria’’ contains Etiologic 

Diagnosis exclusions. For example, 

impairment group code 0005.4, which 

represents a unilateral lower limb 

amputation below the knee is included 

on the list of ‘‘Impairment Group Codes 

that Meet Presumptive Compliance 

Criteria,’’ unless the associated Etiologic 

Diagnosis recorded on the patient’s IRF– 

PAI in item #22 is 895.0 (under ICD–9– 

CM), which indicates a traumatic 

amputation of the toe or toes. Therefore, 

the list of ‘‘Impairment Group Codes 

That Meet Presumptive Compliance 

Criteria’’ contains diagnosis code 

information (currently ICD–9–CM 

codes) in addition to impairment group 

codes. 

These lists contain diagnosis code 

information (currently in the form of 


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ICD–9–CM diagnosis codes) which is 

used to case-mix adjust payments, 

determine an IRF’s presumptive 

compliance with the 60 percent rule, 

and to assist IRFs in accurately 

completing the impairment group code 

information on the IRF–PAI. As such, 

these lists must all be converted to ICD– 

10–CM for the IRF PPS to assign 

payments and classify IRF facilities 

appropriately when ICD–10–CM 

becomes the required medical data code 

set for use on Medicare claims and IRF– 

PAI submissions. 

B. Conversion of Diagnosis Information 

From ICD–9–CM to ICD–10–CM for the 

IRF PPS 

In the September 5, 2012, final rule, 

‘‘Administrative Simplification: 

Adoption of a Standard for a Unique 

Health Plan Identifier; Addition to the 

National Provider Identifier 

Requirements; and a Change to the 

Compliance Date for the International 

Classification of Diseases, 10th Edition 

(ICD–10–CM and ICD–10–PCS) Medical 

Data Code Sets’’ (77 FR 54664), the 

Department of Health and Human 

Services announced a delay in the 

implementation of the ICD–10–CM and 

ICD–10–PCS code sets from October 1, 

2013, to October 1, 2014. The transition 

to the ICD–10 code sets is required for 

entities covered by the Health Insurance 

Portability and Accountability Act of 

1996 (HIPAA). On April 1, 2014, the 

Protecting Access to Medicare Act of 

2014 (Pub. L. No. 113–93) (PAMA) was 

enacted. Section 212 of PAMA, titled 

‘‘Delay in Transition from ICD–9 to 

ICD–10 Code Sets,’’ provides that ‘‘[t]he 

Secretary of Health and Human Services 

may not, prior to October 1, 2015, adopt 

ICD–10 code sets as the standard for 

code sets under section 1173(c) of the 

Social Security Act (42 U.S.C. 1320d– 

2(c)) and section 162.1002 of title 45, 

Code of Federal Regulations.’’ As of 

now, the Secretary has not implemented 

this provision under HIPAA. 

We are addressing the conversion of 

ICD–9–CM to ICD–10–CM codes for the 

IRF PPS in this final rule, but in light 

of PAMA, the effective date of those 

changes would be the date when ICD– 

10–CM becomes the required medical 

data code set for use on Medicare claims 

and IRF–PAI submissions. Until that 

time, we will continue to require use of 

the ICD–9–CM codes for the IRF PPS. 

CMS, along with our support 

contractor 3M, has spent several years 

implementing a process for the 

transition from the use of ICD–9–CM 

diagnosis codes to ICD–10–CM codes 

within both the IRF PPS Grouper and 

the software for evaluating IRFs’ 

compliance with the 60 percent rule. As 

this will be the first time that ICD–10– 

CM codes have been used for the IRF 

PPS, we invited public comment in the 

proposed rule on our translation of the 

diagnosis code lists into ICD–10–CM. 

To ensure a smooth transition from 

the use of ICD–9–CM diagnosis codes to 

ICD–10–CM codes for the IRF PPS and 

to allow for public comment on these 

lists, we proposed ICD–10–CM lists that 

were available for download from the 

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

Medicare/Medicare-Fee-for-ServicePayment/InpatientRehabFacPPS/DataFiles.html. The proposed ICD–10–CM 

code lists were intended to be used 

when ICD–10–CM becomes the required 

medical data code set for use on 

Medicare claims and IRF–PAI 

submissions. To convert these lists from 

ICD–9–CM to ICD–10–CM, we used the 

General Equivalence Mappings (GEMs) 

that were developed as a tool to assist 

in converting ICD–9–CM-based 

applications to ICD–10–CM. The GEMs 

tool is a comprehensive translation 

dictionary that was developed over a 3- 

year period by CMS and the Centers for 

Disease Control and Prevention (CDC), 

with input from both the American 

Hospital Association and the American 

Health Information Management 

Association (AHIMA). They can be used 

to translate any ICD–9–CM-based data 

into ICD–10–CM. For more information 

on GEMs, please refer to the General 

Equivalence Mappings Frequently 

Asked Questions Booklet, which is 

available for download from the CMS 

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

Medicare/Coding/ICD10/ICD-10-MSDRG-Conversion-Project.html. Like a 

translation dictionary, the GEMs tool is 

based on the complete meaning of a 

given code, where ‘‘meaning’’ refers to 

the correspondence between the official 

documents (tabular and index) that 

define each code set. The GEMs tool 

contains a complete and comprehensive 

bidirectional set of mappings between 

ICD–9–CM and ICD–10–CM. 

Our intention in converting the ICD– 

9–CM diagnosis codes to ICD–10–CM 

diagnosis codes within the IRF PPS was 

for the converted codes to reflect the 

same ‘‘meaning’’ as the original codes. 

That is, except for the specific changes 

to the ‘‘Impairment Group Codes That 

Meet Presumptive Compliance Criteria’’ 

list and to the ‘‘ICD–9–CM Codes That 

Meet Presumptive Compliance Criteria’’ 

list described in section VIII of this final 

rule, we did not intend to add 

conditions to, or delete conditions from, 

the ICD–9–CM codes used in the IRF 

PPS. Thus, for all IRF lists containing an 

ICD–9–CM code, we used the 2014 

GEMs, which can be downloaded from 

the CMS Web site at http://

www.cms.gov/Medicare/Coding/ICD10/

2014-ICD-10-CM-and-GEMs.html to 

create a translation list, and then we 

reviewed and revised that translation 

list to ensure that all of the codes on the 

new ICD–10–CM list reflect as closely as 

possible the same ‘‘meaning’’ as the 

codes that were present on the old ICD– 

9–CM list. 

The majority of ICD–9–CM codes have 

straightforward translation alternative(s) 

in ICD–10–CM, where the diagnoses 

classified to a given ICD–9–CM code are 

replaced by one or more ICD–10–CM 

codes. Wherever possible, we erred on 

the side of including a given ICD–10– 

CM code if we believed that a patient 

coded with that ICD–10–CM code 

would have been correctly coded with 

the associated ICD–9–CM prior to the 

transition from ICD–9–CM to ICD–10– 

CM. Our intent is that the meaning of 

the diagnosis codes is thereby 

unchanged because all of the patient 

records that would have been correctly 

coded using the ICD–9–CM codes are 

correctly coded using one or more of the 

specific ICD–10–CM codes. For 

example, the ICD–9–CM code 582.1, 

‘‘Human herpesvirus 6 encephalitis,’’ 

translates directly to the ICD–10–CM 

code B1001, ‘‘Human herpesvirus 6 

encephalitis.’’ 

Below, we note two issues within 

ICD–10–CM coding that differ from 

ICD–9–CM coding, and therefore, 

require special attention to ensure 

correct coding of patient diagnoses 

under ICD–10–CM. 

• Combination Diagnosis Codes in 

ICD–9–CM and ICD–10–CM—Both ICD– 

9–CM and ICD–10–CM contain 

diagnosis codes called combination 

codes, meaning that one code contains 

two or more diagnoses. Typically, one 

diagnosis in the combination code is a 

chronic disease, such as diabetes, and 

the other diagnosis is an associated 

manifestation or complication of the 

disease, such as diabetic nephropathy. 

ICD–10–CM contains many new 

combination codes that are not 

contained in ICD–9–CM. In terms of a 

coded record, this means that the same 

diagnoses coded with one ICD–10–CM 

combination code may require two or 

more ICD–9–CM codes to capture a 

comparable level of detail. In addition, 

ICD–9–CM contains combination codes 

with diagnosis terminology that was 

revised or deleted from ICD–10–CM, 

with the result that the same diagnoses 

coded with one ICD–9–CM code may 

require two or more ICD–10–CM codes 

to capture a comparable level of detail. 

For example, ICD–9–CM code 115.11, 

‘‘Infection by Histoplasma duboisii, 

meningitis’’ translates to a pair of ICD– 

10–CM codes, ‘‘B39.5—Histoplasmosis 


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duboisii’’ and code ‘‘G02—Meningitis in 

other infectious and parasitic diseases 

classified elsewhere.’’ In such instances, 

the intent of our policy is unchanged 

because the patient records that would 

have been correctly coded using the 

single ICD–9–CM code will now be 

correctly coded using a combination of 

ICD–10–CM codes. Furthermore, to 

maintain the same meaning and reflect 

the same diagnoses as the ICD–9–CM 

code in such instances, we require the 

patient’s IRF–PAI record to have all of 

the relevant combination of ICD–10–CM 

codes present to reflect the condition on 

the list. If only one of the ICD–10–CM 

codes required to reflect the condition 

on the list is included on the IRF–PAI, 

the record will not accurately reflect the 

same diagnoses as the ICD–9–CM code. 

We note that, in some cases, IRFs may 

need to use a combination of ICD–10– 

CM codes to represent an Etiologic 

Diagnosis on the IRF–PAI form. For this 

reason, we will add additional spaces to 

the Etiologic Diagnosis field (Item #22) 

on the IRF–PAI, effective October 1, 

2015. The new draft IRF–PAI form for 

IRF discharges occurring on or after 

October 1, 2015, is available for 

download from the CMS Web site at 

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

Medicare-Fee-for-Service-Payment/

InpatientRehabFacPPS/IRFPAI.html. 

• Seventh Character Extensions in 

ICD–10–CM—Certain codes in ICD–10– 

CM require the use of a seventh 

character in the code, where each 

seventh character of the code has one of 

the following meanings: 

++ The seventh character ‘‘A’’ in the 

code indicates that the diagnosis is an 

initial encounter. 

++ The seventh character ‘‘D’’ in the 

code indicates that the patient is 

receiving aftercare for the injury or 

illness. 

++ The seventh character ‘‘S’’ in the 

code indicates that the patient no longer 

requires care for any aspect of the initial 

injury or illness itself, but that the 

patient is receiving care for a late effect 

of the injury or illness. 

In the IRF PPS context, these seventh 

character extensions only apply to ICD– 

10–CM diagnosis codes related to 

certain types of injuries. The 

corresponding ICD–9–CM diagnosis 

codes currently listed on the ‘‘List of 

Comorbidities,’’ ‘‘ICD–9–CM Codes That 

Meet Presumptive Compliance Criteria,’’ 

and ‘‘Impairment Group Codes That 

Meet Presumptive Compliance Criteria’’ 

only map to the seventh character 

extensions of ‘‘A’’ and ‘‘S,’’ but not to 

the seventh character extension of ‘‘D,’’ 

using the GEMs tool. Thus, including 

codes under ICD–10–CM with the 

seventh character extension of ‘‘D’’ 

would mean adding conditions to the 

lists that were not included on the lists 

under ICD–9–CM. As we indicated 

previously, we did not intend to add, 

delete, or alter the conditions included 

on these lists in transitioning from ICD– 

9–CM to ICD–10–CM. Thus, we are not 

including ICD–10–CM codes with the 

seventh character extension of ‘‘D’’ on 

the ICD–10–CM versions of the ‘‘List of 

Comorbidities,’’ ‘‘ICD–9–CM Codes That 

Meet Presumptive Compliance Criteria,’’ 

or ‘‘Impairment Group Codes That Meet 

Presumptive Compliance Criteria.’’ In 

the IRF context, we define the patient as 

having a current diagnosis requiring the 

use of the seventh character extension of 

‘‘A’’ if the patient requires current 

treatment for the injury and if the 

diagnosis has a direct effect on the 

patient’s rehabilitation therapy program 

in the IRF. 

In addition, ICD–10–CM injury codes 

specify that traumatic fractures are 

coded using the appropriate seventh 

character extension for an initial 

encounter, where each seventh 

character of the code has one of the 

following meanings: 

• The seventh character ‘‘A’’ in the 

code indicates that the diagnosis is an 

initial encounter for closed fracture. 

• The seventh character ‘‘B’’ in the 

code indicates that the diagnosis is an 

initial encounter for open fracture. 

• The seventh character ‘‘C’’ in the 

code indicates that the diagnosis is an 

initial encounter for open fracture type 

IIIA, IIIB, or IIIC. 

We used the GEMs tool and the 

guiding rationales described above to 

translate the following lists of ICD–9– 

CM diagnosis codes for the IRF PPS into 

lists of ICD–10–CM diagnosis codes: 

• List of Comorbidities—This file 

contains the list of comorbidities (ICD– 

9–CM codes) that are used to determine 

placement in tiers within the IRF 

Grouper software. Placement in one of 

the higher-paying tiers, which is 

triggered by the presence of one of the 

comorbidities on this list, results in a 

higher prospective payment amount for 

the IRF. 

• ICD–9–CM Codes That Meet 

Presumptive Compliance Criteria—This 

file contains the list of diagnoses (ICD– 

9–CM codes) that are used for 

determining presumptive compliance 

with the IRF 60 percent rule. 

• Impairment Group Codes That Meet 

Presumptive Compliance Criteria—This 

file contains the list of IGCs that meet 

presumptive compliance criteria for the 

60 percent rule. While the IGC codes 

themselves are not ICD–9–CM diagnosis 

codes, the file contains a list of Etiologic 

Diagnosis codes (ICD–9–CM codes) that 

are excluded from particular IGCs. That 

is, a given IGC that would otherwise 

meet the presumptive compliance 

criteria will not meet such criteria if the 

patient has one of the ‘‘excluded’’ 

Etiologic Diagnoses for that IGC. 

The converted ICD–10–CM code 

tables associated with each of these lists 

are available for download from the 

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

Medicare/Medicare-Fee-for-ServicePayment/InpatientRehabFacPPS/DataFiles.html in conjunction with this final 

rule. 

We received 3 comments on our 

proposed translation of the lists into 

ICD–10–CM, effective when ICD–10–CM 

becomes the required medical data code 

set for use on Medicare claims and IRF– 

PAI submissions, which are 

summarized below. 

Comment: One commenter expressed 

concern about using the GEMs tool as 

the only means of converting the 

diagnosis codes from ICD–9–CM to ICD– 

10–CM, as this commenter said that the 

GEMs tool is limited in its ability to 

capture all of the clinical nuances of the 

coding conversion. This commenter 

suggested some enhanced conversions 

related to specific codes. 

Response: As we described in the 

proposed rule, we used the GEMs tool 

as our starting point in converting the 

ICD–9–CM codes to ICD–10–CM, but we 

also reviewed and revised the resulting 

translation list from GEMs to ensure that 

all of the codes on the new ICD–10–CM 

list reflect as closely as possible the 

same ‘‘meaning’’ as the codes that were 

present on the old ICD–9–CM list. Thus, 

we did not use the GEMs tool as the sole 

method of converting the codes, but 

instead started with the GEMs tool 

translation and then reviewed and 

revised the translated lists from a 

clinical perspective to ensure that we 

were appropriately capturing the 

clinical nuances of the ICD–9–CM to 

ICD–10–CM conversions. We appreciate 

the commenter’s specific suggestions 

regarding particular code translations, 

and we will carefully consider the 

suggestions in finalizing the ICD–10– 

CM lists for implementation when ICD– 

10–CM becomes the required medical 

data code set for use on Medicare claims 

and IRF–PAI submissions. 

Comment: One commenter requested 

that we provide a crosswalk from ICD– 

9–CM to ICD–10–CM to assist IRFs in 

better understanding the specific 

diagnosis codes that will be used for the 

IRF PPS when ICD–10–CM becomes the 

required medical data code set for use 

on Medicare claims and IRF–PAI 

submissions. 

Response: The GEMs tool already 

provides a crosswalk from ICD–9–CM to 

ICD–10–CM, and it is readily available 


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45908 Federal Register / Vol. 79, No. 151 / Wednesday, August 6, 2014 / Rules and Regulations 

for download from the CMS Web site at 

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

ICD10/2014-ICD-10-CM-and-GEMs.html 

for use by all providers. We believe that 

providing a crosswalk ourselves apart 

from the GEMs tool that already exists 

would potentially create added 

confusion. 

Comment: One commenter expressed 

support for our proposal to use the 

GEMs tool to convert diagnosis codes 

from ICD–9–CM to ICD–10–CM, but 

indicated some specific ICD–10–CM 

codes that the commenter believed 

should be added to the various ICD–10– 

CM lists. The specific ICD–10–CM codes 

that this commenter suggested for 

inclusion on the lists are divided into 3 

categories. The first category includes 

those ICD–10–CM codes that the 

commenter said they believe may 

represent inconsistencies between the 

GEMs tool conversion of ICD–9–CM 

codes and our proposed translation of 

those codes in the proposed ICD–10–CM 

code lists. The second and third 

categories contain ICD–10–CM 

diagnosis codes that represent clinical 

conditions that the commenter said they 

believe should be added to the ICD–10– 

CM Codes That Meet Presumptive 

Compliance Criteria and the List of 

Comorbidities, respectively, and that are 

not currently reflected on these same 

lists in ICD–9–CM. 

Response: We appreciate the 

commenter’s detailed analysis of the 

converted ICD–10–CM lists that were 

published on the CMS Web site in 

conjunction with the proposed rule, and 

the specific suggestions this commenter 

provided regarding codes that we may 

have inadvertently omitted from the 

lists. We will carefully consider all of 

the specific ICD–10–CM codes that the 

commenter noted to ensure that we do 

not inadvertently omit any ICD–10–CM 

codes that should be included based on 

the use of the GEMs tool and our 

subsequent review and revision of these 

ICD–10–CM codes to ensure that they 

reflect the same clinical meaning as the 

ICD–9–CM codes that are currently on 

the respective lists. However, as we 

indicated in the proposed rule, we do 

not intend to add conditions to, or 

delete conditions from, the ICD–10–CM 

Codes That Meet Presumptive 

Compliance Criteria or the List of 

Comorbidities in translating the codes 

from ICD–9–CM to ICD–10–CM. Thus, 

at this time, we will not add the ICD– 

10–CM codes that would add additional 

clinical conditions to the lists. However, 

we will take the commenter’s 

suggestions into consideration for future 

rulemaking. 

Final Decision: After carefully 

considering the comments that we 

received on our proposed translation of 

the ICD–9–CM code lists into ICD–10– 

CM using the GEMs tool, we are 

finalizing the ICD–10–CM lists that are 

available for download from the CMS 

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

Medicare/Medicare-Fee-for-ServicePayment/InpatientRehabFacPPS/DataFiles.html for use when ICD–10–CM 

becomes the required medical data code 

set for use on Medicare claims and IRF– 

PAI submissions. 

XII. 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 IRFs, as well as IRF units 

that are affiliated with acute care 

facilities, which includes critical access 

hospitals (CAHs). 

Beginning in FY 2014, section 

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

reduction of the applicable IRF PPS 

annual increase factor, as previously 

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

the Act, by 2 percentage points for any 

IRF that fails 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 

subsection (j) for a fiscal year being less 

than such 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 for 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. 

Additional information regarding NQF 

and its consensus development process 

is available at http://www.

qualityforum.org/Measuring_

Performance/Measuring_Performance.

aspx. 

We have adopted NQF-endorsed 

measures in our reporting programs. 

However, section 1886(j)(7)(D)(ii) of the 

Act provides that ‘‘[i]n the case of a 

specified area or medical topic 

determined appropriate by the Secretary 

for which a feasible and practical 

measure has not been endorsed by the 

entity with a contract under section 

1890(a) [of the Act], the Secretary may 

specify a measure that is not so 

endorsed as long as due consideration is 

given to measures that have been 

endorsed or adopted by a consensus 

organization identified by the 

Secretary.’’ 

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

requires the Secretary to establish 

procedures for making data submitted 

under the IRF QRP available to the 

public. The Secretary must ensure that 

each IRF is given the opportunity to 

review the data that is to be made public 

prior to the publication or posting of 

this data. 

We seek to promote higher quality 

and more efficient health care for all 

patients who receive care in acute and 

post-acute care settings. Our efforts are, 

in part, effectuated by quality reporting 

programs coupled with the public 

reporting of data collected under those 

programs. The initial framework of the 

IRF QRP was established in the FY 2012 

IRF PPS final rule (76 FR 47873). 

B. Quality Measures Previously 

Finalized for and Currently Used in the 

IRF Quality Reporting Program 

1. Measures Finalized in the FY 2012 

IRF PPS Final Rule 

In the FY 2012 IRF PPS final rule (76 

FR 47874 through 47878), we adopted 

applications of 2 quality measures for 

use in the first data reporting cycle of 

the IRF QRP: (1) An application of 

Catheter-Associated Urinary Tract 

Infection (CAUTI) for Intensive Care 

Unit Patients (NQF#0138); and (2) an 

application of Percent of Residents with 

Pressure Ulcers That Are New or 

Worsened (Short-Stay) (NQF #0678). We 

adopted applications of these 2 

measures because neither of them, at the 

time, was endorsed by the NQF for the 

IRF setting. We also discussed our plans 

to propose a 30-Day All-Cause RiskStandardized Post-IRF Discharge 

Hospital Readmission Measure. 


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2. Measures Finalized in the CY 2013 

OPPS/ASC Final Rule 

In the CY 2013 OPPS/ASC final rule 

(77 FR 68500 through 68507), we 

adopted: 

• Updates to the CAUTI measure to 

reflect the NQF’s expansion of this 

quality measure to the IRF setting, 

replacing our previous adoption of an 

application of the quality measure for 

the IRF QRP; 

• A policy that would allow any 

quality measure adopted for use in the 

IRF QRP to remain in effect until the 

measure was actively removed, 

suspended, or replaced (and specifically 

applied this policy to the CAUTI and 

Pressure Ulcer measures that had 

already been adopted for use in the IRF 

QRP); and 

• A subregulatory process to 

incorporate NQF updates to IRF quality 

measure specifications that do not 

substantively change the nature of the 

measure. 

At the time of the CY 2013 OPPS/ASC 

final rule, the NQF had endorsed the 

Pressure Ulcer measure for the IRF 

setting, and retitled it to cover both 

residents and patients within LongTerm Care Hospitals (LTCH) and IRF 

settings, in addition to the Nursing 

Home/Skilled Nursing Facility setting. 

Although the quality measure had been 

expanded to the IRF setting, we 

concluded that it was not possible to 

adopt the NQF-endorsed measure 

Percent of Residents or Patients with 

Pressure Ulcers That Are New or 

Worsened (Short-Stay) (NQF #0678) 

because it is a risk-adjusted measure, 

and the ‘‘Quality Indicator’’ section of 

the IRF–PAI did not contain the data 

elements that would be needed to 

calculate a risk-adjusted quality 

measure. As a result, we decided to: (1) 

Adopt an application of the Pressure 

Ulcer measure that was a non-riskadjusted Pressure Ulcer measure 

(numerator and denominator data only); 

(2) collect the data required for the 

numerator and the denominator using 

the then-current version of the IRF–PAI; 

(3) delay public reporting of Pressure 

Ulcer measure results until we could 

amend the IRF–PAI to add the data 

elements necessary for risk-adjusting the 

Pressure Ulcer measure, and then (4) 

adopt the NQF-endorsed version of the 

measure covering the IRF setting 

through rulemaking (77 FR 68507). 

a. National Healthcare Safety Network 

(NHSN) Catheter-Associated Urinary 

Tract Infection (CAUTI) Outcome 

Measure (NQF #0138) 

In the CY 2013 OPPS/ASC final rule, 

we adopted the current version of 

NHSN CAUTI Outcome Measure (NQF 

#0138) (replacing an application of this 

measure that we initially adopted in the 

FY 2012 IRF PPS (76 FR 47874 through 

47886)). The NQF-endorsed measure 

applies to the FY 2015 adjustments to 

the IRF PPS annual increase factor and 

all subsequent annual increase factors 

(77 FR 68504 through 68505). 

Since the publication of the CY 2013 

OPPS/ASC final rule, the NHSN CAUTI 

quality measure has not changed, 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 the NHSN can be 

found at the NHSN Web site at http:// 

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

index.html. 

b. Application of Percent of Residents or 

Patients With Pressure Ulcers That Are 

New or Worsened (Short-Stay) (NQF 

#0678) 

In the CY 2013 OPPS/ASC final rule 

(77 FR 68500 through 68507), we 

adopted a non-risk-adjusted application 

of this measure using the 2012 version 

of the IRF–PAI. 

3. Measures Finalized in the FY 2014 

IRF/PPS Final Rule 

For the FY 2016 adjustments to the 

IRF PPS annual increase factor, in 

addition to retaining the previously 

discussed CAUTI and Pressure Ulcer 

measures, we finalized the adoption of 

one new measure: Influenza Vaccination 

Coverage among Healthcare Personnel 

(NQF #0431) (78 FR 47902 through 

47921). In addition, for the FY 2017 

adjustments to the IRF PPS annual 

increase factor, we adopted 3 quality 

measures: (1) All-Cause Unplanned 

Readmission Measure for 30 Days PostDischarge from Inpatient Rehabilitation 

Facilities; (2) Percent of Residents or 

Patients Who Were Assessed and 

Appropriately Given the Seasonal 

Influenza Vaccine (Short-Stay) (NQF 

#0680); and (3) the NQF-endorsed 

version of Percent of Residents or 

Patients with Pressure Ulcers That Are 

New or Worsened (Short-Stay) (NQF 

#0678). 

a. Influenza Vaccination Coverage 

Among Healthcare Personnel (NQF 

#0431) 

In the FY 2014 IRF PPS final rule (78 

FR 47905 through 47906), we adopted 

the CDC developed Influenza 

Vaccination Coverage among Healthcare 

Personnel (NQF #0431) quality measure 

that is currently collected by the CDC 

via the NHSN. This measure reports on 

the percentage of IRF health care 

personnel (HCP) who receive the 

influenza vaccination. 

In the FY 2014 IRF PPS final rule, we 

finalized that the Influenza Vaccination 

Coverage among Healthcare Personnel 

(NQF #0431) measure have its own 

reporting period to align with the 

influenza vaccination season, which is 

defined by the CDC as October 1 (or 

when the vaccine becomes available) 

through March 31. We further finalized 

that IRFs will submit their data for this 

measure to the NHSN (http://

www.cdc.gov/nhsn/). The NHSN is a 

secure Internet-based healthcareassociated infection tracking system 

maintained by the CDC and can be 

utilized by all types of health care 

facilities in the United States, including 

IRFs. The NHSN collects data via a webbased tool hosted by the CDC. 

Information on the NHSN system, 

including protocols, report forms, and 

guidance documents, can be found at 

http://www.cdc.gov/nhsn/. NHSN will 

submit the HCP influenza vaccination 

adherence percentage data to CMS on 

behalf of the facility. We also finalized 

that for the FY 2016 adjustments to the 

IRF PPS annual increase factor, data 

collection will cover the period from 

October 1, 2014 (or when the vaccine 

becomes available), through March 31, 

2015. 

Details related to the use of the 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 

measure data, the additional 

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 

vaccination season for the Influenza 

Vaccination Coverage among Healthcare 

Personnel (NQF #0431) measure, data 

submission is only required once per 

influenza vaccination season, unlike the 

CAUTI measure, which is the other 

quality measure finalized for the IRF 

QRP that utilizes the CDC NHSN. We 

finalized that the final deadline for data 

submission associated with this quality 

measure will be May 15th of each year. 


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45910 Federal Register / Vol. 79, No. 151 / Wednesday, August 6, 2014 / Rules and Regulations 

Also, the data collection period for 

this quality measure is not 12 months, 

as with other measures, but is 

approximately 6 months (that is, 

October 1, or when the vaccine becomes 

available, through March 31 of the 

following year). This data collection 

period is applicable only to Influenza 

Vaccination Coverage among Healthcare 

Personnel (NQF #0431), and is not 

applicable to any other IRF QRP 

measures, proposed or adopted, unless 

explicitly stated. The measure 

specifications for this measure can be 

found at http://www.cdc.gov/nhsn/

inpatient-rehab/hcp-vacc/index.html 

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

QPS/0431. 

b. All-Cause Unplanned Readmission 

Measure for 30 Days Post-Discharge 

From Inpatient Rehabilitation Facilities 

(NQF #2502, Under Review at NQF; see 

http://www.qualityforum.org/All-Cause_

Admissions_and_Readmissions_

Measures.aspx) 

In the FY 2014 IRF PPS final rule (78 

FR 47906 through 47910), we adopted 

an All-Cause Unplanned Readmission 

Measure for 30 Days Post-Discharge 

from Inpatient Rehabilitation Facilities. 

This quality measure estimates the riskstandardized rate of unplanned, allcause hospital readmissions for cases 

discharged from an IRF who were 

readmitted to a short-stay acute care 

hospital or LTCH, within 30 days of an 

IRF discharge. We noted that this is a 

claims-based measure that will not 

require reporting of new data by IRFs 

and thus will not be used to determine 

IRF reporting compliance for the IRF 

QRP. Please note that this measure is 

not NQF-endorsed, but it was submitted 

by CMS to the NQF for review on 

February 5, 2014 (http://www.quality

forum.org/All-Cause_Admissions_and_

Readmissions_Measures.aspx). 

c. Percent of Residents or Patients Who 

Were Assessed and Appropriately Given 

the Seasonal Influenza Vaccine (ShortStay) (NQF #0680) 

In the FY 2014 IRF PPS final rule (78 

FR 47906 through 47911), we adopted 

the Percent of Residents or Patients Who 

Were Assessed and Appropriately Given 

the Seasonal Influenza Vaccine (ShortStay) (NQF #0680) measure for the IRF 

QRP, and we will collect the data for 

this measure through the addition of 

data items to the ‘‘Quality Indicator’’ 

section of the IRF–PAI. 

We also added the data elements 

needed for this measure, as an influenza 

data item set, to the ‘‘Quality Indicator’’ 

section of the IRF–PAI, and data for this 

measure will be collected using this 

revised version of the IRF–PAI. The 

revised IRF–PAI will become effective 

on October 1, 2014. These data elements 

are harmonized with data elements 

(O0250: Influenza Vaccination Status) 

from the Minimum Data Set (MDS) 3.0 

and the LTCH CARE Data Set Version 

2.01, and the specifications and data 

elements for this measure are available 

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

Medicare-Fee-for-Service-Payment/

InpatientRehabFacPPS/IRFPAI.html. 

For purposes of this quality measure, 

the influenza vaccination season takes 

place from October 1 (or when the 

vaccine becomes available) through 

March 31 each year. The measure 

calculation and public reporting of this 

measure (once public reporting is 

implemented) will also be based on the 

influenza vaccination season, starting 

on October 1 (or when the vaccine 

becomes available) and ending on 

March 31 of the subsequent year. 

The IRF–PAI Training Manual 

indicates how providers should 

complete these items during the time 

period outside of the vaccination season 

(that is, prior to October 1, or when the 

vaccine becomes available, and after 

March 31 of the following year). The 

measure specifications for this measure, 

Percent of Residents or Patients Who 

Were Assessed and Appropriately Given 

the Seasonal Influenza Vaccine (ShortStay) (NQF #0680), can be found on the 

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

Medicare/Quality-Initiatives-PatientAssessment-Instruments/

NursingHomeQualityInits/

NHQIQualityMeasures.html. Additional 

information on this measure can also be 

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

QPS/0680. 

d. Percent of Residents or Patients With 

Pressure Ulcers That Are New or 

Worsened (Short-Stay) (NQF #0678)— 

Adoption of the NQF-Endorsed Version 

of This Measure 

In the FY 2014 IRF PPS final rule (78 

FR 47911 through 47912), we adopted 

the NQF-endorsed version of the 

Percent of Residents or Patients With 

Pressure Ulcers That Are New or 

Worsened (Short-Stay) (NQF #0678), 

with data collection beginning October 

1, 2014, using the revised version of the 

IRF–PAI, for quality reporting affecting 

the FY 2017 adjustments to the IRF PPS 

annual increase factor and subsequent 

year annual increase factors. We noted 

in the rule that, until September 30, 

2014, IRFs should continue to submit 

pressure ulcer data using the version of 

the IRF–PAI released on October 1, 

2012, for the purposes of data 

submission requirements for the FY 

2015 and FY 2016 adjustments to the 

annual IRF PPS increase factor. 

In the FY 2014 IRF PPS final rule (78 

FR 47912 through 47916), we also 

adopted a revised version of the IRF– 

PAI starting October 1, 2014, for the FY 

2017 adjustments to the IRF PPS annual 

increase factor and subsequent year 

annual increase factors. 

We received several comments and 

questions related to previously finalized 

measures and our current policies. 

While we greatly appreciate the 

commenters’ views on such previously 

finalized measures and policies, we did 

not make any proposals relating to them 

in the FY 2015 IRF PPS proposed rule. 

As such, we will not address these 

comments in this final rule. However, 

we will consider all of these comments 

in future rulemaking and program 

development. 

TABLE 8—QUALITY MEASURES FINALIZED IN THE FY 2014 IRF PPS FINAL RULE AFFECTING THE FY 2016 AND 2017 

ADJUSTMENTS TO THE IRF ANNUAL INCREASE FACTORS AND SUBSEQUENT YEAR INCREASE FACTORS

NQF measure ID Measure title 

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

NQF #0680 * ......... Percent of Residents or Patients Who Were Assessed and Appropriately Given the Seasonal Influenza Vaccine (Short-Stay). 

NQF #0678 * ......... Percent of Residents or Patients with Pressure Ulcers That Are New or Worsened (Short-Stay)—Adoption of the NQF-Endorsed Version of this 

Measure. 

NQF #2502 ** ....... All-Cause Unplanned Readmission Measure for 30 Days Post-Discharge from Inpatient Rehabilitation Facilities. 

+ Using the CDC NHSN. 

* Using the IRF–PAI Version 1.2 that is effective on October 1, 2014; available at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Downloads/IRFPAI-FINAL-for-Use-Oct2014-updated-v4.pdf. 

** Not NQF-endorsed, currently under review by NQF. (See http://www.qualityforum.org/All-Cause_Admissions_and_Readmissions_Measures.aspx). 


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1 Gorwitz RJ, Kruszon-Moran D, McAllister SK, et 

al. Changes in the prevalence of nasal colonization 

with Staphylococcus aureus in the United States, 

2001–2004. J Infect Dis 2008; 197: 1226–34. 

2 Department of Health and Human Services. 

National Action Plan to Prevent HealthcareAssociated Infections: Roadmap to Elimination. 

Available at http://www.hhs.gov/ash/initiatives/hai/ 

infection.html. 

3Centers for Disease Control and Prevention. 

State Has Implemented a MRSA Prevention 

Collaborative. Available at http://www.cdc.gov/hai/ 

stateplans/states-w-MRSA-collaborative.html. 

4Centers for Disease Control and Prevention. 

People at Risk of Acquiring MRSA Infections. 

Available at http://www.cdc.gov/mrsa/index.html. 

5Centers for Disease Control and Prevention. 

Management of Multidrug-Resistant Organisms in 

Healthcare Settings, 2006. Available at http://

www.cdc.gov/hicpac/pdf/guidelines/

MDROGuideline2006.pdf. 

6Rabinowitz RP, Kufera JA, Makely MJ. A Hidden 

Reservoir of Methicillin-resistant Staphylococcus 

aureus and Vancomyvin-resistant Enterococcus in 

Patients Newly Admitted to an Acute Rehabilitation 

Hospital. Physical Medicine & Rehabilitation 2012 

(4):18–22. 

7Bernard SL, Dalton K, Lenfestey N F, Jarrett NM, 

Nguyen KH, Sorensen AV, Thaker S, West ND. 

Continued 

C. New IRF QRP Quality Measures 

Affecting the FY 2017 Adjustments to 

the IRF PPS Annual Increase Factor and 

Beyond 

1. General Considerations Used for 

Selection of Quality Measures for the 

IRF QRP 

In the FY 2014 IRF PPS final rule (78 

FR 47094), we noted that the successful 

development of an IRF quality reporting 

program that promotes the delivery of 

high-quality health care services in IRFs 

is our paramount concern. We discussed 

several of the factors we had taken into 

account in selecting measures to 

propose and finalize. We do wish to 

note here that, in our measure selection 

activities for the IRF QRP, we must take 

into consideration input we receive 

from a multi-stakeholder group, the 

Measure Applications Partnership 

(MAP), which is convened by the NQF 

as part of a 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 1 of each year, the 

NQF must provide MAP input to CMS. 

We have taken the MAP’s input into 

consideration in selecting measures for 

this rule. Input from the MAP is located 

at https://www.qualityforum.org/

Publications/2014/01/MAP_PreRulemaking_Report__2014_

Recommendations_on_Measures_for_

More_than_20_Federal_Programs.aspx. 

We also take into account national 

priorities, such as those established by 

the National Priorities Partnership 

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

Setting_Priorities/NPP/National_

Priorities_Partnership.aspx, the HHS 

Strategic Plan at http://www.hhs.gov/

secretary/about/priorities/

priorities.html, the National Strategy for 

Quality Improvement in Health Care at 

http://www.ahrq.gov/workingforquality/

nqs/nqs2012annlrpt.pdf, and the CMS 

Quality Strategy at http://www.cms.gov/ 

Medicare/Quality-Initiatives-PatientAssessment-Instruments/

QualityInitiativesGenInfo/CMS-QualityStrategy.html. 

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 2017 adjustments to the 

IRF PPS annual increase factor, in 

addition to retaining the previously 

discussed CAUTI (NQF #0138), Pressure 

Ulcer, Patient Influenza Vaccination 

(NQF #0680), Healthcare Personnel 

Influenza Vaccination (NQF #0431), and 

Hospital Readmission (NQF #2502) 

quality measures, we proposed in the 

FY 2015 IRF PPS proposed rule (79 FR 

26336 through 26338) to adopt two new 

quality measures: (1) National 

Healthcare Safety Network (NHSN) 

Facility-Wide Inpatient Hospital-Onset 

Methicillin-Resistant Staphylococcus 

aureus (MRSA) Bacteremia Outcome 

Measure (NQF #1716), and (2) National 

Healthcare Safety Network (NHSN) 

Facility-Wide Inpatient Hospital-Onset 

Clostridium difficile Infection (CDI) 

Outcome Measure (NQF #1717). These 

quality measures are discussed in more 

detail below. 

a. National Healthcare Safety Network 

(NHSN) Facility-Wide Inpatient 

Hospital-Onset Methicillin-Resistant 

Staphylococcus aureus (MRSA) 

Bacteremia Outcome Measure (NQF 

#1716). 

In the FY 2015 IRF PPS proposed rule 

(79 FR 26336 through 26337), we 

proposed to adopt the CDC-developed 

National Healthcare Safety Network 

(NHSN) Facility-Wide Inpatient 

Hospital-Onset Methicillin-Resistant 

Staphylococcus aureus (MRSA) 

Bacteremia Outcome Measure (NQF 

#1716). The MRSA measure is a 

measure of hospital-onset unique blood 

source MRSA laboratory-identified 

events among all inpatients in the 

facility. This measure was adopted by 

the Hospital Inpatient Quality Reporting 

(IQR) Program in the FY 2012 IPPS/

LTCH PPS final rule (76 FR 51630, 

51645) for the FY 2015 payment 

determination, with data collection 

beginning on January 1, 2013. It was 

also adopted by the LTCH Quality 

Reporting (LTCHQR) Program in the FY 

2014 IPPS/LTCH PPS final rule (78 FR 

50712 through 50717) for the FY 2017 

payment determination, with data 

collection beginning on January 1, 2015. 

This measure is NQF-endorsed. We 

included the MRSA measure in the 

December 1, 2013 Measures under 

Consideration (MUC) list. The MAP 

conditionally supported the direction of 

this quality measure, noting that the 

measure is not ready for implementation 

and suggesting that we harmonize this 

measure with other infection measures. 

We respectfully disagree with the 

position of the MAP, as the MRSA 

measure is fully endorsed by the NQF 

for various settings, including the IRF 

setting, which speaks to its suitability 

for use in that setting. Methicillinresistant Staphylococcus aureus (S. 

aureus) infections are caused by a strain 

of S. aureus bacteria that has become 

resistant to antibiotics commonly used 

to treat S. aureus infections. Between 

2003 and 2004, an estimated 4.1 million 

persons in the United States had nasal 

colonization with MRSA.1 In addition, 

in 2005 there were an estimated 94,000 

invasive MRSA infections in the United 

States, which were associated with an 

estimated 18,000 deaths.2 Healthcareassociated MRSA infections occur 

frequently in patients whose treatment 

involves the use of invasive devices, 

such as catheters or ventilators. 

Currently, there are 22 States that 

have implemented a MRSA Prevention 

Collaborative, and at least 15 states that 

have reporting mandates for MRSA 

bacteremia in NHSN.3 For Medicare 

populations, MRSA infection is 

associated with increased cost, hospital 

length of stay, morbidity, and mortality. 

MRSA infections can be a consequence 

of poor quality of care.4 5 Older adults 

and patients in health care settings are 

most vulnerable to MRSA infections, as 

these patients may have weakened 

immune systems. A recent study 

reported that 9.2 percent of patients 

without a history of MRSA tested 

positive for MRSA at the time of the IRF 

admission.6 We also recently analyzed 

IRF claims submitted to Medicare 

during CY 2009. According to our 

analysis, IRFs reported a total of 3,464 

cases of MRSA in 2009, including cases 

either present on admission or acquired 

during the IRF stay (‘‘present on 

admission’’ indicators for ICD–9 codes 

are not available on the IRF claims).7


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45912 Federal Register / Vol. 79, No. 151 / Wednesday, August 6, 2014 / Rules and Regulations 

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. 

We believe it is important to collect data 

on MRSA infections acquired during the 

IRF stay, because MRSA infection is 

associated with increased cost, hospital 

length of stay, morbidity, and mortality. 

In the FY 2015 IRF PPS proposed rule 

(79 FR 26336 through 26337), we 

proposed to use the CDC/NHSN data 

collection and submission framework 

for reporting of the MRSA measure. This 

is the same framework currently used 

for reporting the CAUTI (NQF #0138) 

and Influenza Vaccination Coverage 

among Healthcare Personnel (NQF 

#0431) quality measures. Details related 

to the procedures for using the NHSN 

for data submission and information on 

definitions, numerator data, 

denominator data, data analyses, and 

measure specifications for the MRSA 

measure can be found at http://

www.qualityforum.org/QPS/1716 and 

http://www.cdc.gov/nhsn/inpatientrehab/mdro-cdi/index.html. For January 

2012 through January 2013, an 

estimated 15 IRFs reported laboratoryidentified MRSA event data into NHSN. 

We refer readers to section XI.B.3.a. of 

this final rule for more information on 

data collection and submission. We 

sought public comments on the National 

Healthcare Safety Network (NHSN) 

Facility-Wide Inpatient Hospital-Onset 

Methicillin-Resistant Staphylococcus 

aureus (MRSA) Bacteremia Outcome 

Measure (NQF #1716) for the FY 2017 

IRF PPS annual increase factor and 

subsequent years. Our responses to 

public comments on this measure are 

discussed in this section of the final 

rule. 

Comment: Several commenters 

expressed support of our proposal to 

adopt the MRSA measure, citing the 

importance of focusing on outcomes, 

such as healthcare-associated infections, 

because they are meaningful to patients 

and because of their impact on provider 

behavior. One commenter noted, as 

stated above, that the measure is NQFendorsed for the IRF setting. A few 

commenters expressed support for 

CMS’s effort to align IRF QRP quality 

measures with measures in other quality 

reporting initiatives. 

Response: We appreciate the 

commenters’ support for this outcome 

measure and recognition of our efforts to 

adopt measures for the IRF QRP that 

emphasize high-priority patient safety 

concerns and harmonize measures 

across settings, when applicable. 

Comment: Several commenters 

objected to the proposed MRSA 

healthcare-associated infection measure 

due to the low prevalence of MRSA in 

IRFs, indicating that the measure would 

not be a meaningful quality measure in 

IRFs. Several comments noted the 

MRSA measure received only 

‘‘conditional support’’ from the MAP, 

and several commenters noted that it 

would add additional data collection 

burden. 

Response: The MRSA measure is 

endorsed by the National Quality Forum 

for use in several settings, including 

IRFs. Because of the scope of the patient 

safety problem posed by MRSA to the 

IRF patient population, as discussed 

earlier in this section of the final rule, 

as well as its burden on the health care 

system, we continue to believe it is in 

the best interest of patients to adopt this 

measure for the IRF QRP in order to 

promote awareness and encourage 

implementation of MRSA control 

procedures in the IRF setting. The 

measure is on the list of NQF-endorsed 

measures and can be found on the NQF 

Web site at http://

www.qualityforum.org/QPS/1716. We 

note that we have taken the MAP’s 

input into consideration in selecting 

quality measures, as we are required to 

do under section 1890(a)(4) of the Act. 

However, we are not required to follow 

the MAP’s recommendations, but to take 

them into account when selecting 

measures for proposal. In addition to 

MAP input, we take a variety of other 

factors into account in selecting 

measures. In this instance, for example, 

the MRSA measure is NQF-endorsed for 

the IRF setting, an indication that it is 

appropriate for IRF patients. In addition, 

this measure is appropriate in light of 

the fact that MRSA infection most 

commonly affects older adults in 

hospitals or in facilities with longer 

lengths of stay and is associated with 

increased costs, hospital length of stay, 

morbidity, and mortality. For the 

reasons listed above, we continue to 

believe that this measure is appropriate 

for IRF patients. 

Comment: One commenter was 

concerned that it may be difficult to 

distinguish infections present on 

admission from those that are 

healthcare-associated infections. Several 

commenters expressed concern that 

adoption of this quality measure would 

lead to additional and inappropriate 

screening for these conditions when 

patients are admitted to an IRF, and one 

commenter noted a concern about 

antibiotic resistance. 

Response: The definition of MRSA 

laboratory-identified (LabID) events— 

used in the measure we proposed, 

National Healthcare Safety Network 

(NHSN) Facility-Wide Inpatient 

Hospital-Onset MRSA Bacteremia 

Outcome Measure (NQF #1716)—is 

provided in the measure specifications, 

which are posted on the NQF Web site 

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

1716, and it specifically addresses 

attribution through categorization of 

MRSA LabID events based on date 

admitted to the facility and date 

specimen collected, as well as by the 

current date and prior dates of specimen 

collection. As specified in the measure, 

Community-Onset (CO) is a LabID event 

collected as an outpatient or an 

inpatient less than or equal to 3 days 

after admission to the facility (that is, 

days 1, 2, or 3 of admission), while 

Healthcare Facility-Onset (HO) is 

defined as a LabID event collected from 

a patient greater than 3 days after 

admission to the facility (that is, days 4 

or later of admission). Data from 

emergency department and outpatient 

observation locations (that is, outpatient 

encounters) are also included in this 

reporting of CO and HO events, in order 

to ensure that events are accurately 

categorized and identified. The CO 

definition accounts for infections 

acquired outside the IRF setting, either 

in the community or in other health care 

settings. 

Regarding the commenter’s concern 

that adoption of this quality measure 

would lead to additional and 

inappropriate screening, per NHSN 

protocol, LabID events are to be reported 

only from specimens collected for 

clinical decision-making and never from 

screening or surveillance cultures. 

Because these required LabID events are 

to be reported only from MRSA blood 

specimens, they represent actual and 

serious infections that should be treated 

appropriately and according to 

physician decision, as MRSA bacteria 

should never be found in blood. 

Therefore, this reporting should not be 

a driver of inappropriate antibiotic use. 

Additionally, we believe it is imperative 

that we close the gap with respect to 

monitoring for this serious infection 

within the continuum of care. Because 

this measure has been finalized for 

several other health care settings (see 

the FY 2012 IPPS/LTCH PPS final rule 

(76 FR 51630, 51645) for IQR Program; 

FY 2014 IPPS/LTCH PPS final rule (78 

FR 50712 through 50717) for the 

LTCHQR Program), we believe that 

requiring IRFs to monitor for MRSA 

infections is necessary and will help 

further improve the quality of care 

provided to patients receiving services 

across the continuum of care. 

Comment: One commenter suggested 

collecting MRSA data for one year in 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 151 / Wednesday, August 6, 2014 / Rules and Regulations 45913 

8National Quality Forum. Measure Applications 

Partnership Pre-Rulemaking Report: 2014 

Recommendations of Measures Under 

Consideration by HHS: February 2014. Available at: 

https://www.qualityforum.org/Publications/2014/

01/MAP_Pre-Rulemaking_Report_2014_

Recommendations_on_Measures_for_More_than_

20_Federal_Programs.aspx. 

9McDonald LC, Coignard B, Dubberke E, et al. 

Recommendations for surveillance of Clostridium 

difficile-associated disease. Infect Control Hosp 

Epidemiol 2007;28:140–145. Available at: http://

www.jstor.org/stable/pdfplus/10.1086/511798.pdf?

acceptTC=true. 10Centers for Disease Control and Prevention. 

Investigating Clostridium difficile Infections Across 

the U.S. Available at http://www.cdc.gov/hai/eip/

pdf/Cdiff-factsheet.pdf. 11 Department of Health and Human Services. 

National Action Plan to Prevent Health CareAssociated Infections: Roadmap to Elimination. 

Available at http://www.hhs.gov/ash/initiatives/hai/ 

infection.html. 

12Centers for Disease Control and Prevention. 

Making Health Care Safer: Stopping C. difficile 

Infections. Available at: http://www.cdc.gov/

VitalSigns/HAI/index.html. 

13Centers for Disease Control and Prevention. 

Investigating Clostridium difficile Infections Across 

the U.S. Available at: http://www.cdc.gov/hai/eip/

pdf/Cdiff-factsheet.pdf. 

14Centers for Disease Control and Prevention. 

QuickStats: Rates of Clostridium difficile Infection 

Among Hospitalized Patients Aged ≥65 Years,* by 

Age Group—National Hospital Discharge Survey, 

United States, 1996–2009. MMWR, 60(34); 1171. 

Available at: http://www.cdc.gov/mmwr/preview/

mmwrhtml/mm6034a7.htm. 

15Centers for Disease Control and Prevention. 

Making Health Care Safer: Stopping C. difficile 

Infections. Available at: http://www.cdc.gov/

VitalSigns/HAI/index.html. 

16Aron J. Hall, Aaron T. Curns, L. Clifford 

McDonald, Umesh D. Parashar, and Ben A. 

Lopman. The Roles of Clostridium difficile and 

Norovirus Among Gastroenteritis-Associated Deaths 

in the United States, 1999–2007. Clinical Infectious 

Diseases 2012;55(2):216–23. Published by Oxford 

University Press on behalf of the Infectious Diseases 

Society of America 2012. DOI: 10.1093/cid/cis386. 

17 Dubberke ER, Reske KA, Olsen MA, McDonald 

LC, Fraser VJ. Short- and long-term attributable 

costs of Clostridium difficile-associated disease in 

nonsurgical inpatients. Clin Infect Dis 2008; 

46:497–504. Available at: http://

cid.oxfordjournals.org/content/46/4/497.long. 

18Centers for Disease Control and Prevention. 

Frequently Asked Questions about Clostridium 

difficile for Healthcare Providers. Available at: 

http://www.cdc.gov/HAI/organisms/cdiff/Cdiff_

faqs_HCP.html. 19Marciniak C, Chen D, Stein A, et al. Prevalence 

of Clostridium Difficile Colonization at Admission 

to Rehabilitation. Archives of Physical Medicine 

and Rehabilitation 2006; 87(8):1086–1090. 

20Bernard SL, Dalton K, Lenfestey N F, Jarrett 

NM, Nguyen KH, Sorensen AV, Thaker S, West ND. 

Study to support a CMS Report to Congress: Assess 

feasibility of extending the hospital-acquired 

conditions—present on admission IPPS payment 

policy to non-IPPS payment environments. 

Prepared for the Centers for Medicare & Medicaid 

Services (CMS Contract No. HHSM–500–T00007). 

2011. 

21Centers for Disease Control and Prevention. 

State Has Implemented a C. diff Prevention 

Collaborative. Available at: http://www.cdc.gov/hai/ 

stateplans/states-w-CDI-collaborative.html. 

order to determine if the measure is 

valuable. 

Response: We believe that this is 

unnecessary because quality measures 

already undergo maintenance review at 

regular intervals in order to evaluate the 

value of ongoing use of these measures. 

As noted above, it is important to collect 

data on MRSA infections acquired 

during the IRF stay because MRSA 

infections are associated with increased 

cost, hospital length of stay, morbidity, 

and mortality. 

Final Decision: Having carefully 

considered the comments we received 

on the National Healthcare Safety 

Network (NHSN) Facility-Wide 

Inpatient Hospital-Onset MRSA 

Bacteremia Outcome Measure (NQF 

#1716), we are finalizing the adoption of 

this measure as proposed for use in the 

IRF QRP. 

b. National Healthcare Safety Network 

(NHSN) Facility-Wide Inpatient 

Hospital-Onset Clostridium difficile 

Infection (CDI) Outcome Measure (NQF 

#1717) 

In the FY 2015 IRF PPS proposed rule 

(79 FR 26337 through 26338), we 

proposed to adopt the CDC-developed 

National Healthcare Safety Network 

(NHSN) Facility-Wide Inpatient 

Hospital-Onset Clostridium difficile 

Infection (CDI) Outcome Measure (NQF 

#1717) that is currently collected by the 

CDC via the NHSN. The CDI measure is 

a measure of hospital-onset CDI 

laboratory-identified events among all 

inpatients in the facility. This measure 

was adopted by the Hospital IQR 

Program in the FY 2012 IPPS/LTCH PPS 

final rule (76 FR 51630 through 51631) 

for the FY 2015 payment determination, 

with data collection having begun on 

January 1, 2013. It was also adopted by 

the LTCHQR program in the FY 2014 

IPPS/LTCH PPS final rule (78 FR 50712 

through 50717) for the FY 2017 payment 

determination, with data collection 

beginning on January 1, 2015. This 

measure is NQF-endorsed. We included 

the CDI measure in the December 1, 

2013 MUC list. The MAP supported this 

measure.8 CDI can cause a range of 

serious symptoms, including diarrhea, 

serious intestinal conditions, sepsis, and 

death.9 In the United States, CDI is 

responsible for an estimated 337,000 

infections and 14,000 deaths annually.10

According to the HHS National Action 

Plan to Prevent Health Care-Associated 

Infections, CDI rates have increased in 

recent years.11 The CDC estimates that 

CDIs cost more than $1 billion in 

additional health care costs each year.12

In recent years, CDIs have become more 

frequent, more severe, and more 

difficult to treat. Mortality rates for CDIs 

are highest in elderly patients.13 Rates of 

CDI among hospitalized patients aged 

65 years and older increased 200 

percent between 1996 and 2009, while 

deaths related to CDIs increased 400 

percent between 2000 and 2007, partly 

attributed to a stronger germ strain.14 15

Further, the emergence and continued 

rise of CDI as a leading cause of 

gastroenteritis hospitalizations and 

deaths, particularly in the elderly, has 

been documented.16 CDI is associated 

with increased patient care costs, 

hospital lengths of stay, morbidity, and 

mortality. CDI can be a consequence of 

poor quality of care for Medicare 

patients.17

Illness from CDI most commonly 

affects older adults in hospitals or in 

facilities with longer lengths of stay, 

where germs spread more easily, 

antibiotic use is more common, and 

people are especially vulnerable to 

infection.18 Considering CDIs are 

increasing in all health care facilities, 

and the IRF population is highly 

vulnerable to CDI, it is important to 

measure these rates in IRFs.19 According 

to an analysis of ICD–9 codes reported 

on Medicare claims, IRFs reported 7,720 

cases of CDI-associated disease in 

2009.20 Currently, the ‘‘present on 

admission’’ indicators for ICD–9 codes 

are not available on IRF claims. 

Therefore, we are unable to determine 

whether the 7,720 reported cases of CDI 

were present on admission or acquired 

during the IRF stay. There is evidence 

that CDIs are preventable, and therefore, 

surveillance and measuring infection 

rates is important to reducing infections 

and improving patient safety. Thirtyseven states have implemented a C. 

difficile Prevention Collaborative, and at 

least 15 states have reporting mandates 

for CDI LabID events in NHSN.21 The 

goal for the CDI measure is to collect 

and publicly report IRF data on CDIs so 

that IRFs will be better informed about 

the incidence of this condition and 

better equipped to prevent it. 

In the FY 2015 IRF PPS proposed rule 

(79 FR 26337 through 26338), we 

proposed to use the CDC/NHSN data 

collection and submission framework 

for reporting of the NHSN Facility-Wide 

Inpatient Hospital-Onset CDI Outcome 

Measure (NQF #1717). This framework 

is currently used for reporting the 

CAUTI (NQF #0138) and Influenza 

Vaccination Coverage among Healthcare 

Personnel (NQF #0431) measures. 

Details related to the procedures for 

using the NHSN for data submission 

and information on definitions, 

numerator data, denominator data, data 

analyses, and measure specifications for 

the NHSN Facility-Wide Inpatient 

Hospital-Onset CDI Outcome Measure 

(NQF #1717) can be found at http://

www.qualityforum.org/QPS/1717 and 


tkelley on DSK3SPTVN1PROD with RULES2
45914 Federal Register / Vol. 79, No. 151 / Wednesday, August 6, 2014 / Rules and Regulations 

http://www.cdc.gov/nhsn/inpatientrehab/mdro-cdi/index.html. 

We sought public comments on the 

National Healthcare Safety Network 

(NHSN) Facility-Wide Inpatient 

Hospital-Onset CDI Outcome Measure 

(NQF #1717) for the FY 2017 IRF PPS 

annual increase factor and subsequent 

years. The responses to public 

comments on this measure are 

discussed below in this section of the 

final rule. 

Comment: Several commenters 

supported the CMS proposal to adopt 

the CDI measure, citing the importance 

of focusing on outcomes, such as 

healthcare-associated infections, 

because they are meaningful to patients 

and because it can impact provider 

behavior. One commenter supported the 

measure because it encourages hospitals 

to focus on prevention and appropriate 

treatment and has important 

implications for patient outcomes, 

society, and reduced health care 

expenditures. One commenter noted the 

measure is NQF-endorsed for the IRF 

setting, and two commenters expressed 

support for CMS’s effort to align IRF 

QRP quality measures with measures in 

other quality reporting initiatives. A 

commenter who supports the measure 

suggested the significance of reporting 

CDIs is increased due to a higher than 

expected number of cases. 

Response: We appreciate the 

commenters’ support and recognition of 

the importance of the expansion of the 

IRF QRP to include this measure. C. 

difficile is a pathogen of serious 

concern, causing morbidity and 

mortality throughout the continuum of 

care. Transmission can only be 

controlled and infection prevented if 

monitoring occurs across the health care 

settings. 

Comment: Several commenters 

objected to the proposed CDI measure 

due to the low prevalence of CDIs in 

IRFs, indicating that the measure would 

not be a meaningful quality measure in 

IRFs. One commenter noted that it adds 

additional data collection burden. 

Response: The CDI measure is 

endorsed by the NQF for use in several 

settings, including the IRF setting. As 

with MRSA, because of the scope of the 

patient safety problem posed by CDI to 

the very vulnerable IRF population, as 

well as its burden on the health care 

system, we believe it is in the best 

interest of patients to adopt this 

measure to promote awareness and 

encourage immediate implementation of 

CDI control procedures within the IRF 

setting. The measure is on the list of 

NQF-endorsed measures and can be 

found on the NQF Web site at http://

www.qualityforum.org/QPS/1717. In 

addition, the MAP supported this 

quality measure for the IRF setting. This 

measure is appropriate in light of the 

fact that illness from CDI most 

commonly affects older adults in 

hospitals or in facilities with longer 

lengths of stay and is associated with 

increased costs, hospital length of stay, 

and those who have been treated with 

antibiotics. C. difficile is a pathogen of 

serious concern that causes patient 

morbidity and mortality throughout all 

health care settings. Furthermore, lack 

of monitoring for this serious infection 

in the IRF setting creates a monitoring 

gap within the continuum of care. 

Because this measure has been proposed 

and finalized for several other hospital 

settings, we believe that requiring IRFs 

to monitor for CDI is necessary and will 

help further improve the quality of care 

provided to Medicare beneficiaries. For 

all of the reasons we have discussed, we 

continue to believe this measure is 

appropriate for IRF patients. 

Comment: One commenter was 

concerned that it may be difficult to 

distinguish infections present on 

admission from those that are hospitalacquired infections. The commenter 

expressed concern about inappropriate 

screening for these conditions if the 

quality measure was adopted. 

Response: The definition of CDI LabID 

events, as provided in the measure 

specifications, which are posted on the 

NQF Web site at http://

www.qualityforum.org/QPS/1717, 

specifically addresses attribution 

through categorization of CDI LabID 

events based on date admitted to the 

facility and date specimen collected, as 

well as by the current date and prior 

dates of specimen collection. As 

specified in the measure, CommunityOnset (CO) is a LabID event collected as 

an outpatient or an inpatient less than 

or equal to 3 days after admission to the 

facility (that is, days 1, 2, or 3 of 

admission), while Community-Onset 

Healthcare Facility-Associated (CO– 

HCFA) is defined as a CO LabID event 

collected from a patient who was 

discharged from the facility within 4 

weeks prior to current date of stool 

specimen collection. Data from 

emergency department and outpatient 

observation locations (that is, outpatient 

encounters) are also included in this 

reporting of CO and HO events, in order 

to ensure that events are accurately 

categorized and identified. A Healthcare 

Facility-Onset (HO) is a LabID event 

collected more than 3 days after 

admission to the facility (that is, on or 

after day 4). The CDI measure is already 

in use in the hospital inpatient setting, 

where similar concerns have been raised 

and successfully addressed (see the FY 

2012 IPPS/LTCH PPS final rule (76 FR 

51630 through 51631) for the IQR 

program). We also note that the 

definition of CDI LabID events (as 

required by this measure) is based on 

laboratory testing and admission date 

data, and not clinical evaluation of the 

patient, allowing for a much less laborintensive method to track CDIs. This 

provides an infection measure of CDI 

health care acquisition, exposure 

burden, and infection burden based 

almost exclusively on laboratory data 

and limited admission date data, 

including patient care location. LabID 

events use NHSN forms to collect all 

required data, using the definitions of 

each data field. Per NHSN protocol, 

LabID events are to be reported only 

from specimens collected for clinical 

decision-making (that is, collected from 

patients with greater than or equal to 3 

unformed stools within 24 hours) and 

never from screening or surveillance 

cultures. 

Final Decision: Having carefully 

considered the comments we received 

on the National Healthcare Safety 

Network (NHSN) Facility-Wide 

Inpatient Hospital-Onset Clostridium 

difficile Infection (CDI) Outcome 

Measure (NQF #1717), we are finalizing 

the adoption of this measure as 

proposed for use in the IRF QRP. 

D. IRF QRP Quality Measures and 

Concepts Under Consideration for 

Future Years 

We are considering whether to 

propose one or more of the quality 

measures and quality measure topics 

listed in Table 9 for future years in the 

IRF QRP. We invited public comment 

on these quality measures and quality 

measure topics, specifically the clinical 

importance of reported measure data, 

the feasibility of measure data collection 

and implementation, current use of 

reported measure data, and usefulness 

of the reported measure data to inform 

quality of care delivered to IRF patients. 


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22Reistetter TA, Karmarkar AM, Graham JE, et al. 

Regional variation in stroke rehabilitation 

outcomes. Arch Phys Med Rehabil.95(1):29–38, Jan. 

2014. 

23O’Brien SR, Xue Y, Ingersoll G, et al. Shorter 

length of stay is associated with worse functional 

outcomes for medicare beneficiaries with stroke. 

Physical Therapy. 93(12):1592–1602, Dec. 2013. 

24O’Brien SR, Xue Y, Ingersoll G, et al. Shorter 

length of stay is associated with worse functional 

outcomes for medicare beneficiaries with stroke. 

Physical Therapy. 93(12):1592–1602, Dec. 2013. 

TABLE 9—FUTURE MEASURES AND MEASURE TOPICS UNDER CONSIDERATION FOR PROPOSAL FOR THE IRF QUALITY

REPORTING PROGRAM

National Quality Strategy Priority: Patient Safety: 

Application of Percent of Residents Experiencing One or More Falls with Major Injury (Long-Stay) (NQF #0674). 

National Quality Strategy Priority: Patient and Caregiver-Centered Care: 

Application of Percent of Residents Who Self-Report Moderate to Severe Pain (Short-Stay) (NQF #0676). 

Not Endorsed/Under Development—IRF Functional Outcome Measure: Change in Mobility Score for Medical Rehabilitation Patients. 

Not Endorsed/Under Development—IRF Functional Outcome Measure: Change in Self-Care Score for Medical Rehabilitation Patients. 

Not Endorsed/Under Development—IRF Functional Outcome Measure: Discharge Mobility Score for Medical Rehabilitation Patients. 

Not Endorsed/Under Development—IRF Functional Outcome Measure: Discharge Self-Care Score for Medical Rehabilitation Patients. 

In particular, we are considering 

whether to propose one or more of the 

following measures for future year IRP 

PPS increase factors: (1) IRF Functional 

Outcome Measure: Change in Mobility 

Score for Medical Rehabilitation 

Patients; (2) IRF Functional Outcome 

Measure: Change in Self-Care Score for 

Medical Rehabilitation Patients; (3) IRF 

Functional Outcome Measure: Discharge 

Mobility Score for Medical 

Rehabilitation Patients; (4) IRF 

Functional Outcome Measure: Discharge 

Self-Care Score for Medical 

Rehabilitation Patients; (5) Application 

of the Percent of Residents Experiencing 

One or More Falls with Major Injury 

(Long-Stay) (NQF #0674); and (6) 

Application of Percent of Residents 

Who Self-Report Moderate to Severe 

Pain (Short-Stay) (NQF #0676). 

IRFs are designed to provide intensive 

rehabilitation services to patients. 

Patients seeking care in IRFs are those 

whose illness, injury, or condition has 

resulted in a loss of function, and for 

whom rehabilitative care is expected to 

help regain that function. Examples of 

conditions treated in IRFs include 

stroke, spinal cord injury, hip fracture, 

brain injury, neurological disorders, and 

other diagnoses characterized by loss of 

function. 

Given that the primary goal of 

rehabilitation is improvement in 

functional status, IRF clinicians have 

traditionally assessed and documented 

patients’ functional statuses at 

admission and discharge to evaluate the 

effectiveness of the rehabilitation care 

provided to individual patients, as well 

as the effectiveness of the rehabilitation 

unit or hospital overall. In addition, 

research results have found differences 

in IRF patients’ functional outcomes, 

thus we believe there is an opportunity 

for improvement in this area. 

Differences in IRF patients’ functional 

outcomes have been found by 

geographic region, insurance type, and 

race/ethnicity after adjusting for key 

patient demographic characteristics and 

admission clinical status. This supports 

the need to monitor IRF patients’ 

functional outcomes. For example, 

Reistetter 22 examined discharge motor 

function and functional gain among IRF 

patients with stroke and found 

statistically significant differences in 

functional outcomes by U.S. geographic 

region, insurance type, and race/

ethnicity group after risk adjustment. 

O’Brien and colleagues 23 found 

differences in functional outcomes 

across race/ethnicity groups in their 

analysis of Medicare assessment data for 

patients with stroke after risk 

adjustment. O’Brien and colleagues 24

also noted that the overall IRF length of 

stay decreased 1.8 days between 2002 

and 2007 and that shorter IRF stays 

were significantly associated with lower 

functioning at discharge. 

We are currently developing 4 

functional status quality measures for 

the IRF setting: 

(1) Quality Measure: IRF Functional 

Outcome Measure: Change in Mobility 

Score for Medical Rehabilitation 

Patients for Medical Rehabilitation 

Patients; 

(2) Quality Measure: IRF Functional 

Outcome Measure: Change in Self-Care 

Score for Medical Rehabilitation 

Patients for Medical Rehabilitation 

Patients; 

(3) Quality Measure: IRF Functional 

Outcome Measure: Discharge Mobility 

Score for Medical Rehabilitation 

Patients for Medical Rehabilitation 

Patients; and 

(4) Quality Measure: IRF Functional 

Outcome Measure: Discharge Self-Care 

Score for Medical Rehabilitation 

Patients for Medical Rehabilitation 

Patients. 

We invited public comment on our 

intent to propose these measures for the 

FY 2019 adjustments to the IRF PPS 

annual increase factor and subsequent 

year increase factors. The draft measure 

specifications for these measures are 

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

Quality-Initiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/IRFQuality-Reporting-ProgramDetails.html. The development of these 

measures is expected to be completed in 

2014, at which time they will be 

submitted to the NQF, the entity with a 

contract under section 1890(a) of the 

Act, for review. Our responses to public 

comments on these quality measures are 

discussed in this section of the final 

rule. 

Comment: Several comments were 

received about the quality measure 

Application of the Percent of Residents 

Experiencing One or More Falls with 

Major Injury (Long-Stay) (NQF #0674). 

One commenter supported this measure. 

Several commenters opposed the 

measure, citing that the measure is not 

appropriate for the IRF setting and that 

it is unclear how a major fall is defined 

and what tool will be used to collect 

this data. 

Response: We thank the commenters 

for their input and will take these 

comments into consideration to inform 

our ongoing measure development 

efforts for this measure and our ongoing 

consideration of the potential to adopt 

this measure in the IRF QRP through 

future rulemaking. For the purpose of 

this measure, ‘‘major injury’’ is defined 

as including bone fractures, joint 

dislocations, closed head injuries with 

altered consciousness, or subdural 

hematoma. If selected for proposal, and 

finalized through the future rulemaking 

process, for data collection purposes, we 

would revise the IRF PAI to include the 

items used for this quality measure, 

which are found in the Minimum Data 

Set version 3.0. We believe that this 

measure is appropriate for the IRF 

setting. Fall-related injuries are the most 

common cause of accidental death in 

people aged 65 years and older, 

resulting in approximately 41 fallrelated deaths per 100,000 people per 


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45916 Federal Register / Vol. 79, No. 151 / Wednesday, August 6, 2014 / Rules and Regulations 

25L. Currie, Chapter 10: Fall and Injury 

Prevention. In: Patient Safety and Quality: An 

Evidence-Based Handbook for Nurses (Rockville: 

Agency for Healthcare Research and Quality, 2008). 

26U.S. Department of Health & Human Services, 

‘‘Implementation Guide to Prevention of Falls with 

Injury,’’ http://www.dcha.org/wp-content/uploads/

falls_change-package_508.pdf. 

27Centers for Disease Control and Prevention, 

‘‘Costs of Falls Among Older Adults,’’ http://

www.cdc.gov/homeandrecreationalsafety/falls/

fallcost.html. 

28L. Z. Rubenstein, C. M. Powers, and C. H. 

MacLean, ‘‘Quality indicators for the management 

and prevention of falls and mobility problems in 

vulnerable elders,’’ Ann Intern Med 135, no. 8 Pt 

2 (2001). 

year.25 26 In 2010, the total direct 

medical costs of fall injuries for people 

aged 65 years and older was $30 billion. 

The annual direct and indirect cost of 

fall injuries is expected to reach $54.9 

billion by 2020.27 Falls thus represent a 

significant cost burden to the entire 

health care system, with injurious falls 

accounting for 6 percent of medical 

expenses among those aged 65 years and 

older.28 This measure was developed by 

CMS and is currently NQF-endorsed for 

the Nursing Home/Skilled Nursing 

Facility setting. Further, we adopted 

this measure for the LTCH Quality 

Reporting Program in the FY 2014 IPPS/ 

LTCH PPS final rule (78 FR 50874 

through 50877). We included the Falls 

with Major Injury quality measure in the 

December 1, 2013 Measures Under 

Consideration (MUC) list, and the MAP 

conditionally supported this quality 

measure for the IRF setting. Additional 

information regarding NQF #0674, on 

which our application of the measure 

will be based, if proposed and adopted 

through future rulemaking process, is 

available at http://

www.qualityforum.org/QPS/0674. 

Comment: Several comments were 

received about the quality measure 

Application of Percent of Residents 

Who Self-Report Moderate to Severe 

Pain (Short-Stay) (NQF #0676). One 

commenter supported this measure. 

Several commenters opposed the 

measure, indicating that it is not 

appropriate for the IRF setting and does 

not take into account pain that may be 

a healthy part of a treatment protocol. 

One commenter opposed the measure 

because it was unclear when the 

assessment would be completed, noting 

that patients whose pain was 

inadequately assessed at a previous 

facility would be admitted to the IRF 

experiencing pain, and the commenter 

did not want pain present at the time of 

admission to be attributed to the IRF. 

This commenter also noted that it is not 

addressed how the self-report of pain 

would be conducted for cognitively 

impaired patients. 

Response: We thank the commenters 

for their input and will take these 

comments into consideration to inform 

our ongoing measure development 

efforts and our ongoing consideration of 

including this measure in the future. 

Comment: Several commenters 

expressed strong support for functional 

status quality measures because 

functional improvement is a key focus 

of IRF care. The commenters noted 

several issues that CMS should consider 

in the development of these functional 

status quality measures, including NQF 

endorsement as well as the importance 

of adequate risk adjustment and 

specified exclusion criteria. Several 

commenters requested that CMS 

consider using the FIM® instrument as 

part of the quality measure. One 

commenter suggested expediting the 

development of the functional status 

quality measures. 

Response: We appreciate the strong 

support for functional status measures 

in the IRF setting. The functional status 

quality measures are in development 

and will be submitted to NQF for 

consideration of endorsement in the fall. 

The draft quality measure specifications 

(version 2), including the inclusion and 

exclusion criteria, the risk adjustment 

variables and risk adjustment approach 

can be found on the CMS Web site at 

http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/

Downloads/Draft-Specifications-for-theFunctional-Status-Quality-Measures-forInpatient-Rehabilitation-FacilitiesVersion-2.pdf. We appreciate the 

commenters for their input on the 

quality measures and will take this 

feedback under consideration as we 

finalize the development of the IRF 

functional status quality measures. 

Comment: Several commenters 

questioned CMS’s future proposal of the 

self-care and mobility functional status 

quality measures due to their concern 

that the measures are not yet fully 

developed nor adequately risk adjusted. 

Response: The functional status 

quality measures have been under 

development for more than 3 years. The 

steps in measure development have 

included analysis, technical expert 

panel review, and public posting of 

specifications with public input. 

Nearing their completion, we anticipate 

submission of the quality measures to 

the NQF for its review this fall. The 

current specifications for the self-care 

quality measure lists 41 risk adjustors, 

and the mobility quality measure list 43 

risk adjustors. The risk adjustors were 

selected based on our review of the 

literature, input from the function 

expert panel and feedback from public 

comments. 

Comment: One commenter conveyed 

their concern regarding the use of the 

Continuity Assessment Record and 

Evaluation Tool (CARE Tool) as 

currently proposed, because the CARE 

Tool is not appropriate for data 

collection for the IRF setting. 

Response: We interpret the 

commenter’s comment to mean that 

they were concerned that we would use 

the CARE Tool as the data source for the 

functional status quality measures. We 

further interpret the commenter to mean 

that we would use the CARE Tool in its 

entirety for the collection of these 

measures because they believe that the 

use of the CARE Tool in its entirety 

would be inappropriate in an IRF. We 

would like to clarify that the functional 

status quality measures do not require 

data collection of the entire CARE Tool. 

The functional status measures were 

developed using a subset of the CARE 

Tool items (and their response codes), 

not the CARE Tool in its entirety. These 

particular assessment items (and 

response codes) used for the functional 

status measures, were derived from a 

subset of items within the CARE Tool 

which had been tested for reliability and 

validity in the IRF setting as part of the 

Post-Acute Payment Reform 

Demonstration (PAC PRD). A summary 

of the reliability and validity results are 

provided in the draft measure 

specifications posted at http://

www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/IRFQuality-Reporting-ProgramDetails.html. 

Comment: Several commenters 

conveyed concern related to undue 

burden associated with ‘‘double 

documentation’’ for the functional 

status quality measures. 

Response: We interpret the comment 

to refer to the collection of both existing 

data elements and additional similar or 

redundant data elements. We appreciate 

the concerns related to any undue 

burden, including collection of both 

existing data elements and additional 

similar data elements, and take such 

concerns under consideration. 

Comment: One commenter was 

concerned about relying on data from a 

demonstration that had flaws in data 

collection and testing, and wondered 

whether these quality measures will 

perform as intended. 

Response: We interpreted the 

commenter’s concern to be a concern 

about the validity of the CARE items 

tested as part of the PAC PRD. We 

further interpret their concern being 

related to the measures performing ‘‘as 


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intended’’ to imply that they wonder if 

the measures would be able to depict 

quality. We have described the 

development and the assessment of the 

CARE items and examined the validity 

and reliability of these CARE items in 

reports that summarize this work and 

these reports are posted on the CMS 

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

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

The-Development-and-Testing-of-theContinuity-Assessment-Record-andEvaluation-CARE-Item-Set-Final-Reporton-the-Development-of-the-CARE-ItemSet-and-Current-AssessmentComparisons-Volume-3-of-3.pdf and 

http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/Post-Acute-Care-QualityInitiatives/Downloads/TheDevelopment-and-Testing-of-theContinuity-Assessment-Record-andEvaluation-CARE-Item-Set-Final-Reporton-the-Development-of-the-CARE-ItemSet-Volume-1-of-3.pdf. We anticipate 

that the quality measures will perform 

as intended and that they will provide 

information pertaining to quality due to 

the rigor applied in the development of 

the measures, including the risk 

adjustment variables used in measure 

calculation. In addition, we intend to 

perform ongoing analysis of the 

performance of the measures as part of 

our obligation as a quality measure 

steward. 

Comment: We received several 

comments pertaining to concerns 

surrounding the ability of the quality 

measures to capture small, but 

important levels of functional change, 

specifically concerns related to ‘‘floor 

and ceiling effects.’’ 

Response: We interpret the 

commenter to mean that ‘‘floor and 

ceiling effects’’ pertain to the 

assessment items used in the measure 

not being able to capture change for 

patients who would fall at the lower or 

upper ends of the measurement scale. 

We appreciate concerns related to any 

instrument that would have limitations 

such as these floor and ceiling effects. 

In the development of these quality 

measures this major concern was taken 

under consideration, and there was a 

focus on including items that would 

cover a wide range of functioning, thus 

minimizing limitations in measuring 

change for patients who are low 

functioning and patients who are high 

functioning. Details about the 

development of the CARE items can be 

found on the CMS Web site at http://

www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/

Downloads/Draft-Specifications-for-theFunctional-Status-Quality-Measures-forInpatient-Rehabilitation-FacilitiesVersion-2.pdf. 

Comment: Several commenters 

indicated concerns about the need for 

standardized training to ensure interrater reliability for the CARE function 

items and noted that this training would 

add additional burden to facilities. 

Response: We appreciate the 

commenters’ concerns related to data 

collection and the requirements that 

accompany the implementation of new 

quality measures and have addressed 

this in the past with public outreach 

including training sessions, webinars, 

open door forums, and help desk 

support. 

E. Timeline for Data Submission for 

New IRF QRP Quality Measures 

Affecting the FY 2017 Adjustments to 

the IRF PPS Annual Increase Factor 

In the FY 2015 IRF PPS proposed rule 

(79 FR 26339), we proposed the 

following data submission timeline for 

the quality measures for the FY 2017 

adjustments to the IRF PPS annual 

increase factor. We proposed that IRFs 

would be required to submit data on 

admissions and discharges occurring 

between January 1, 2015, and December 

31, 2015 (CY 2015), for the FY 2017 

adjustments to the IRF PPS annual 

increase factor. We proposed this time 

frame because we believe this will 

provide sufficient time for IRFs and 

CMS to put processes and procedures in 

place to meet the additional quality 

reporting requirements. Given these 

measures are collected through the 

CDC’s NHSN, and IRFs are already 

familiar with the NHSN reporting 

system, as they currently report the 

CAUTI measure, we believe this time 

frame will allow IRFs ample 

opportunity to begin reporting the 

MRSA and CDI measures. We also 

proposed the quarterly data submission 

deadlines for the FY 2017 adjustments 

to the IRF PPS annual increase factor to 

occur approximately 135 days after the 

end of each quarter, as outlined in the 

Table 10. Each quarterly deadline would 

be the date by which all data collected 

during the preceding quarter would be 

required to be submitted to us for 

measures using the IRF–PAI and to the 

CDC for measures using the NHSN. We 

invited public comment on these 

proposed timelines for data submission 

for the proposed IRF QRP quality 

measures for the FY 2017 adjustments to 

the IRF PPS annual increase factor. 

Comment: Several commenters 

recommended that CMS delay the 

adoption of the National Healthcare 

Safety Network (NHSN) Facility-Wide 

Inpatient Hospital-Onset MethicillinResistant Staphylococcus aureus 

(MRSA) Bacteremia Outcome Measure 

(NQF #1716), because it is not ready for 

implementation. They recommended 

additional education and training as 

well as additional testing should be 

conducted before implementation. 

Response: As the MRSA quality 

measure is already NQF-endorsed for 

the IRF setting, we do not believe that 

additional testing is required before 

implementation. By utilizing CDC’s 

NHSN for MRSA reporting, we are 

building upon IRFs’ ongoing experience 

with data reporting via the NHSN. 

Quality measures undergo maintenance 

review at regular intervals in order to 

evaluate the value of ongoing use of 

these measures. 

Comment: Several commenters 

recommended that CMS delay the 

adoption of the National Healthcare 

Safety Network (NHSN) Facility-Wide 

Inpatient Hospital-Onset Clostridium 

difficile Infection (CDI) Outcome 

Measure (NQF #1717), because it is not 

ready for implementation. They 

recommended additional testing should 

be conducted before implementation. 

Response: As the CDI quality measure 

is NQF-endorsed for the IRF setting, we 

do not believe that additional testing is 

required before implementation. By 

utilizing CDC’s NHSN for CDI reporting, 

we are building upon IRFs’ ongoing 

experience with data reporting via the 

NHSN, but recognize that additional 

education and training would be 

helpful. 

Final Decision: After careful 

consideration of the comments we 

received, we are finalizing our proposal 

to begin to submit data for the MRSA 

and CDI measures on admissions and 

discharges starting January 1, 2015, 

including the quarterly submission 

deadlines. While we have taken into 

consideration comments suggesting that 

we delay implementation of these 

measures, we do not believe we can 

delay closing the monitoring gap that 

would continue to exist if we delayed 

implementation of these important 

measures. Adjustments to the IRF PPS 

annual increase factor for the MRSA and 

CDI measures will begin with FY 2017. 


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TABLE 10—TIMELINES FOR SUBMISSION OF IRF QRP QUALITY DATA USING CDC/NSHN FOR FY 2017 ADJUSTMENTS TO

THE IRF PPS ANNUAL INCREASE FACTOR: NATIONAL HEALTH SAFETY NETWORK (NHSN) FACILITY-WIDE INPATIENT

HOSPITAL-ONSET METHICILLIN-RESISTANT STAPHYLOCOCCUS AUREUS (MRSA) BACTEREMIA OUTCOME MEASURE

(NQF #1716) AND NATIONAL HEALTHCARE SAFETY NETWORK (NHSN) FACILITY-WIDE INPATIENT HOSPITAL-ONSET

CLOSTRIDIUM DIFFICILE INFECTION (CDI) OUTCOME MEASURE (NQF #1717) * 

Quarter CDC/NHSN data collection period CDC/NHSN data 

submission deadline 

FY 2017 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. 

* The quarterly deadlines provided in this table apply to the CDC/NHSN data only. Timelines for submission of IRF–PAI data for the IRF PPS 

and Quality Indicator items are provided separately. 

TABLE 11—SUMMARY OF IRF QRP MEASURES AFFECTING THE FY 2017 ADJUSTMENTS TO THE IRF PPS ANNUAL

INCREASE FACTOR AND SUBSEQUENT YEAR INCREASE FACTORS

Continued IRF QRP Measure Affecting the FY 2015 Adjustments to the IRF PPS Annual Increase Factor and Subsequent Year Increase Factors: 

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

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

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

Continued IRF QRP Measures Affecting the FY 2017 Adjustments to the IRF PPS Annual Increase Factor and Subsequent Year Increase Factors: 

• NQF #2502: 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).* 

New IRF QRP Measures Affecting the FY 2017 Adjustments to the IRF PPS Annual Increase Factor and Subsequent Year Increase Factors: 

• NQF #1716: National Healthcare Safety Network (NHSN) Facility-Wide Inpatient Hospital-Onset Methicillin-Resistant Staphylococcus 

aureus (MRSA) Bacteremia Outcome Measure. 

• NQF #1717: National Healthcare Safety Network (NHSN) Facility-Wide Inpatient Hospital-Onset Clostridium difficile Infection (CDI) Outcome Measure. 

+ Using CDC/NHSN. 

* Using the IRF–PAI effective October 1, 2014. 

∧ Medicare Fee-for-Service claims data. 

** This measure is under review at NQF (http://www.qualityforum.org/All-Cause_Admissions_and_Readmissions_Measures.aspx). 

F. Timing for New IRFs To Begin 

Reporting Quality Data Under the IRF 

QRP Affecting the FY 2017 Adjustments 

to the IRF PPS Annual Increase Factor 

and Beyond 

In the FY 2015 IRF PPS proposed rule 

(79 FR 26340 through 26341), we 

proposed that for the FY 2017 

adjustments to the IRF PPS annual 

increase factor and subsequent year 

increase factors, that new IRFs be 

required to begin reporting quality data 

under the IRF QRP by no later than the 

first day of the calendar quarter 

subsequent to the quarter in which they 

have been designated as operating in the 

CASPER system. We invited public 

comment on this proposed timing for 

new IRFs to begin reporting quality data 

under the IRF QRP. 

Comment: We did not receive any 

comments on the above proposal. 

Final Decision: We are finalizing our 

policy regarding the timing for new IRFs 

to begin reporting quality data under the 

IRF QRP affecting the FY 2017 

adjustments to the IRF PPS annual 

increase factor and beyond, as proposed. 

G. IRF QRP Reconsideration and 

Appeals Procedures for the FY 2016 

Adjustments to the IRF PPS Annual 

Increase Factor and Beyond 

1. IRF QRP Reconsideration and 

Appeals for the FY 2014 and FY 2015 

Adjustments to the IRF PPS Annual 

Increase Factor 

In the FY 2014 IRF PPS final rule (78 

FR 47919), we finalized a voluntary 

process that allowed IRF providers the 

opportunity to seek reconsideration of 

our initial noncompliance decision for 

the FY 2014 and FY 2015 adjustments 

to the IRF PPS annual increase factor. 

We stated that we would notify IRFs 

found to be noncompliant with the IRF 

QRP reporting requirements that they 

may be subject to the 2-percentage point 

reduction to their IRF PPS annual 

increase factor. The purpose of this 

notification is to put the IRF on notice 

of the following: (1) That the IRF has 

been identified as being noncompliant 

with the IRF QRP reporting 

requirements for a given reporting 

period; (2) that the IRF will be 

scheduled to receive a 2-percentage 

point reduction to its IRF PPS annual 

increase factor for the applicable fiscal 

year; (3) that the IRF may file a request 

for reconsideration if it believes that the 

finding of noncompliance is erroneous, 

or that if it was noncompliant, it had a 

valid and justifiable excuse for this 

noncompliance; and (4) that, to receive 

reconsideration, the IRF must follow a 

defined process on how to file a request 

for reconsideration, which will be 

described in the notification. This 

defined process for filing a request for 

reconsideration was described on the 

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

Medicare/Quality-Initiatives-PatientAssessment-Instruments/IRF-QualityReporting/Reconsideration-andDisaster-Waiver-Requests.html. 

We further stated that upon the 

conclusion of our review of each request 


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for reconsideration, we would render a 

decision. We may reverse our initial 

finding of noncompliance if: (1) The IRF 

provides adequate proof of full 

compliance with all IRF QRP reporting 

requirements during the reporting 

period; or (2) the IRF provides adequate 

proof of a valid or justifiable excuse for 

noncompliance if the IRF was not able 

to comply with the requirements during 

the reporting period. We will uphold 

our initial finding of noncompliance if 

the IRF cannot show any justification 

for noncompliance. 

If an IRF is dissatisfied with either our 

initial finding of noncompliance or a 

CMS decision rendered at the 

reconsideration level, it can appeal the 

decision with the Provider 

Reimbursement Review Board (PRRB) 

under 42 CFR part 405, subpart R. We 

recommended, however, that IRF 

providers submit requests for 

reconsideration to us before submitting 

appeals to the PRRB. We noted that this 

order of appeals has had good success 

under other established quality 

reporting programs and, from an IRF 

perspective, it allows for the 

opportunity to resolve issues earlier in 

the process, when we have dedicated 

resources to consider all reconsideration 

requests before payment changes are 

applied to the IRF’s annual payment. 

2. IRF QRP Program Reconsideration 

and Appeals Procedures for the FY 2016 

Adjustments to the IRF PPS Annual 

Increase Factor and Beyond 

In the FY 2015 IRF PPS proposed rule 

(79 FR 26340 through 26341), we 

proposed, for the FY 2016 adjustments 

to the IRF PPS annual increase factor 

and subsequent year increase factors, to 

adopt an updated process, as described 

below, that will enable an IRF to request 

a reconsideration of our initial 

noncompliance decision in the event 

that an IRF believes that it was 

incorrectly identified as being subject to 

the 2-percentage point reduction to its 

IRF PPS annual increase factor due to 

noncompliance with the IRF QRP 

reporting requirements for a given 

reporting period. 

For the FY 2016 adjustments to the 

IRF PPS annual increase factor and 

subsequent year increase factors, we 

proposed that an IRF would receive a 

notification of noncompliance if we 

determine that the IRF did not submit 

data in accordance with section 

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

applicable fiscal year, and therefore, 

that the IRF is subject to a 2-percentage 

point reduction in the applicable IRF 

PPS annual increase factor as required 

by section 1886(j)(7)(A)(i) of the Act. We 

will only consider requests for 

reconsideration once a provider has 

been found to be noncompliant and not 

before. IRFs will have 30 days from the 

date of the initial notification of 

noncompliance to review the CMS 

determination and submit to us a 

request for reconsideration. This 

proposed time frame allows us to 

balance our desire to ensure that IRFs 

have the opportunity to request 

reconsideration with our need to 

complete the reconsideration process 

and provide IRFs with our decision in 

a timely manner. Notifications of 

noncompliance and any subsequent 

notifications from CMS will be sent via 

a traceable delivery method such as 

certified U.S. mail or registered U.S. 

mail. We will not accept any requests 

for reconsideration that are submitted 

after the 30-day deadline. 

We further proposed that as part of 

the IRF’s request for reconsideration, the 

IRF will be required to submit all 

supporting documentation and evidence 

demonstrating (1) full compliance with 

all IRF QRP reporting requirements 

during the reporting period or (2) a valid 

or justifiable excuse for noncompliance 

if the IRF was not able to comply with 

the requirements during the reporting 

period. We will be unable to review any 

reconsideration request that fails to 

provide the necessary documentation 

and evidence along with the request. 

The documentation and evidence may 

include copies of any communications 

that demonstrate its compliance with all 

IRF QRP reporting requirements, as well 

as any other records that support the 

IRF’s rationale for seeking 

reconsideration. A sample list of the 

proposed acceptable supporting 

documentation and evidence, as well as 

instructions for IRF providers to retrieve 

copies of the data submitted to CMS for 

the appropriate program year, can be 

found on the CMS Web site at http://

www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/

Reconsideration-and-Disaster-WaiverRequests.html. 

We proposed that providers may 

withdraw reconsideration requests at 

any time and may file new requests 

within the proposed 30-day deadline. 

We also proposed that, in very limited 

circumstances, we may extend the 

proposed deadline for submitting 

reconsideration requests. It will be the 

responsibility of a provider to request an 

extension and demonstrate that 

extenuating circumstances existed that 

prevented the filing of the 

reconsideration request by the proposed 

deadline. We will not respond to any 

other types of requests, such as requests 

for administrative review of the 

methodology and standards that 

determine the quality reporting 

requirements. 

We proposed that an IRF provider 

wishing to request a reconsideration of 

our initial noncompliance 

determination will be required to do so 

by submitting an email to the following 

email address: 

IRFQRPReconsiderations@cms.hhs.gov. 

Any request for reconsideration 

submitted to us by an IRF will be 

required to follow the guidelines 

outlined on the CMS Web site at http:// 

www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/

Reconsideration-and-Disaster-WaiverRequests.html. Following receipt of a 

request for reconsideration, we will 

provide— 

• An email acknowledgment, using 

the contact information provided in the 

reconsideration request, to the CEO or 

CEO-designated representative that the 

request has been received; and 

• Once we have reached a decision 

regarding the reconsideration request, 

an email to the IRF CEO or CEOdesignated representative, using the 

contact information provided in the 

reconsideration request, regarding our 

decision. 

We proposed to require any IRF that 

believes it was incorrectly identified as 

being subject to the 2-percentage point 

reduction to its IRF PPS annual increase 

factor to submit a request for 

reconsideration and receive a decision 

on that request before the IRF can file 

an appeal with the PRRB, as authorized 

by the Administrative Procedure Act. If 

the IRF is dissatisfied with the decision 

rendered at the reconsideration level, 

the IRF can appeal the decision with the 

PRRB under § 405.1835. We believe this 

proposed process is more efficient and 

less costly for us and for IRFs because 

it decreases the number of PRRB 

appeals by resolving issues earlier in the 

process. Additional information about 

the reconsideration process including 

requirements for submitting 

reconsideration request is posted on the 

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

Medicare/Quality-Initiatives-PatientAssessment-Instruments/IRF-QualityReporting/Reconsideration-andDisaster-Waiver-Requests.html. We 

invited public comment on the 

proposed procedures for reconsideration 

and appeals. The responses to the 

public comments we received on this 

proposal are discussed below. 

Comment: Several commenters 

supported the proposal to continue the 

reconsideration process for FY 2016. 


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Response: We thank the commenters 

for taking the time to express their 

support. 

Comment: One commenter supported 

the reconsideration process, but 

believed that it should be expanded to 

include reconsideration of the results of 

the data validation process described in 

section XII.K. of this final rule. 

Specifically, if two clinicians do not 

document the patient’s condition in the 

same way, but the rationale for the 

difference can be explained through the 

reconsideration and appeals process, 

then the provider should be allowed to 

use this process. 

Response: We thank the commenter 

for their support of the proposed 

reconsideration process. We believe the 

current reconsideration process could 

be utilized for reconsideration of the 

results of the validation process, as long 

as all of the supporting documentation 

necessary for the request for 

reconsideration was previously 

submitted at the time of validation (that 

is, as long as the reconsideration request 

was based on the same documentation 

that was submitted for validation). 

Final Decision: Having carefully 

considered the comments we received 

on the IRF QRP Reconsideration and 

Appeals procedures for the FY 2016 

adjustments to the IRF PPS annual 

increase factor and beyond, we are 

finalizing this policy as proposed. 

H. IRF QRP Data Submission Exception 

or Extension Requirements for the FY 

2017 Adjustments to the IRF PPS 

Annual Increase Factor and Beyond 

In the FY 2015 IRF PPS proposed rule 

(79 FR 26341 through 26342), for the 

IRF QRP’s data submission exception or 

extension requirements for the FY 2017 

adjustments to the IRF PPS annual 

increase factor and subsequent year 

increase factors, we proposed to 

continue using the IRF QRP’s disaster 

waiver requirements that were adopted 

in the FY 2014 IRF PPS final rule (78 

FR 47920) for the FY 2015 adjustments 

to the IRF PPS annual increase factor 

and subsequent year increase factors, 

which are outlined in this section, with 

the exception that the phrase ‘‘exception 

or extension’’ will be substituted for the 

word ‘‘waiver.’’ We also proposed, for 

the FY 2017 adjustments to the IRF PPS 

annual increase factor and subsequent 

year increase factors, that we may grant 

an exception or extension to IRFs if we 

determine that a systemic problem with 

one of our data collection systems 

directly affected the ability of the IRF to 

submit data. Because we do not 

anticipate that these types of systemic 

errors will happen often, we do not 

anticipate granting an exception or 

extension on this proposed basis 

frequently. We proposed that if we make 

the determination to grant an exception 

or extension, we will communicate this 

decision through routine 

communication channels to IRFs and 

vendors, including, but not limited to, 

issuing memos, emails, and notices on 

the CMS Web site at http://

www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/

index.html. 

In the FY 2014 IRF PPS final rule (78 

FR 47920), we finalized a process for 

IRF providers to request and for us to 

grant exceptions or extensions for the 

quality data reporting requirements of 

the IRF QRP for one or more quarters, 

beginning with the FY 2015 adjustments 

to the IRF PPS annual increase factor 

and subsequent year increase factors, 

when there are extraordinary 

circumstances beyond the control of the 

provider. 

In the event that an IRF seeks to 

request an exception or extension for 

quality reporting purposes, the IRF must 

request an exception or extension 

within 30 days of the occurrence of an 

extraordinary event by submitting a 

written request to CMS via email to the 

IRF QRP mailbox at 

IRFQRPReconsiderations@cms.hhs.gov. 

Exception or extension requests sent to 

us through any other channel will not 

be considered as a valid request for an 

exception or extension from the IRF 

QRP reporting requirements for any 

adjustment to the IRF PPS annual 

increase factor. The written request 

must contain all of the finalized 

requirements in the FY 2014 IRF PPS 

final rule (78 FR 47920) and on the CMS 

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

Medicare/Quality-Initiatives-PatientAssessment-Instruments/IRF-QualityReporting/Reconsideration-andDisaster-Waiver-Requests.html. When 

an exceptions or extension is granted, 

an IRF will not incur payment reduction 

penalties for failure to comply with the 

requirements of the IRF QRP, for the 

time frame specified by CMS. If an IRF 

is granted an exception, we will not 

require that the IRF submit any quality 

data for a given period of time. If we 

grant an extension to an IRF, the IRF 

will still remain responsible for 

submitting quality data collected during 

the time frame in question, although we 

will specify a revised deadline by which 

the IRF must submit this quality data. It 

is important to note that requesting an 

exception or extension from the 

requirements of the IRF QRP is separate 

and distinct from the purpose and 

requirements of § 412.614, which 

outline the requirements to follow if an 

IRF is requesting a waiver regarding 

consequences of failure to submit 

complete and timely IRF–PAI payment 

data specified in that regulation. IRFs 

that have filed and were granted an IRF– 

PAI waiver in accordance with 

§ 412.614 may so indicate when 

requesting an exception or extension 

from the IRF QRP requirements, but the 

submission of an IRF–PAI waiver 

request pursuant to § 412.614 will not 

be considered a valid request for an 

exception or extension from the IRF 

QRP requirements. To request an 

exception or extension from the IRF 

QRP requirements, the previously 

discussed process must be followed. 

Additionally, in the FY 2014 IRF PPS 

final rule (78 FR 47920), we finalized a 

policy that allowed us to grant waivers 

(which we are now calling exceptions or 

extensions) to IRFs that have not 

requested them if we determine that an 

extraordinary circumstance, such as an 

act of nature, affects an entire region or 

locale. We stated that if this 

determination was made, we will 

communicate this decision through 

routine communication channels to 

IRFs and vendors, including, but not 

limited to, issuing memos, emails, and 

notices on the CMS Web site at http:// 

www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/

index.html. 

We invited public comment on these 

proposals regarding the IRF QRP’s data 

submission exception or extension 

requirements for the FY 2017 

adjustments to the IRF PPS annual 

increase factor and subsequent year 

increase factors. The responses to the 

public comments we received on this 

proposal are discussed below. 

Comment: Several commenters 

supported the proposed Exception/

Exemption waiver proposal. 

Response: We thank the commenters 

for taking time to express their support. 

Final Decision: Having carefully 

considered the comments we received 

on the proposed IRF QRP data 

submission exception or extension 

requirements for the FY 2017 

adjustments to the IRF PPS annual 

increase factor and beyond, we are 

finalizing these requirements, as 

proposed. 

I. Public Display of Quality Measure 

Data for the IRF QRP 

Under section 1886(j)(7)(E) of the Act, 

the Secretary is required to establish 

procedures for making data submitted 

under the IRF QRP available to the 

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

also requires these procedures to ensure 

that each IRF provider has the 


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opportunity to review the data that is to 

be made public for its facility, prior to 

such data being made public. Section 

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

Secretary to report quality measures that 

relate to services furnished in IRFs on 

the CMS Web site at http://

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

InpatientRehabFacPPS/. 

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 make the public aware of our strategy 

in the future. We invited public 

comments on what we should consider 

when developing future proposals 

related to public reporting. Our 

responses to the public comments we 

received on this topic are discussed 

below. 

Comment: Several commenters 

encouraged CMS to report IRF quality 

data on Hospital Compare in the same 

manner that it reports data for acute care 

hospitals. One commenter encouraged 

CMS to report on IRF quality data as 

soon as possible. 

Response: We thank the commenters 

for taking the time to express these 

views and suggestions regarding public 

reporting and will take them into 

consideration for future public reporting 

development. 

J. IRF QRP Data Completion Thresholds 

for the FY 2016 Adjustments to the IRF 

PPS Annual Increase Factor and Beyond 

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 

IRF that fails to submit data on quality 

measures specified by the Secretary in 

accordance with the form and manner 

specified by the Secretary for that fiscal 

year. To date, we have not established 

a standard for compliance other than for 

IRF providers to submit all applicable 

required data for all finalized IRF QRP 

quality measures, by the previously 

finalized quarterly deadlines. We have 

also specifically required monthly 

submission of such quality data for the 

healthcare-associated infection or 

vaccination data, which is reported to 

the CDC. In the FY 2015 IRF PPS 

proposed rule (79 FR 26342 through 

26343), in reaction to the input received 

from our stakeholders seeking 

additional specificity related to required 

IRF QRP compliance affecting FY 

annual increase factor determinations 

and, due to the importance of ensuring 

the integrity of quality data submitted to 

CMS, we proposed to set specific IRF 

QRP thresholds for completeness of 

provider quality data beginning with 

data affecting the FY 2016 annual 

increase factor determination and 

beyond. 

The IRF QRP, through the FY 2012 

IRF PPS final rule, CY 2013 OPPS/ASC 

final rule, and FY 2014 IRF PPS final 

rule, requires providers to submit 

quality data using 2 separate data 

collection/submission mechanisms: 

Measures collected using the quality 

indicator section of the IRF–PAI are 

submitted through the CMS Quality 

Improvement Evaluation System (QIES); 

and measures stewarded by the Centers 

for Disease Control and Prevention 

(CDC) (Healthcare-associated Infection 

(HAI) measures and vaccination 

measures) are submitted using the 

CDC’s National Healthcare Safety 

Network (NHSN). While we have 

previously finalized a claims-based 

measure (All-Cause Unplanned 

Readmission Measure for 30 Days PostDischarge from Inpatient Rehabilitation 

Facilities), such measures do not require 

IRFs to actually submit quality data to 

us, as they are calculated using claims 

data submitted to us for payment 

purposes. Thus, with claims-based 

measures, there is no quality data to 

which we could apply the proposed 

data completion thresholds. To ensure 

that IRF providers are meeting an 

acceptable standard for completeness of 

submitted data, we proposed that for the 

FY 2016 annual increase factor and 

beyond, IRF providers must meet or 

exceed two separate program 

thresholds: One threshold for quality 

measures data collected using the 

quality indicator section of the IRF–PAI 

and submitted through QIES; and a 

second threshold for quality measures 

data collected and submitted using the 

CDC’s NHSN. We proposed that IRFs 

must meet or exceed both thresholds 

discussed below to avoid receiving a 2 

percentage point reduction to their IRF 

PPS annual increase factor for a given 

FY, beginning with FY 2016, which 

considers quality data submitted during 

CY 2014. We proposed to hold IRF 

providers accountable for two different 

data completion thresholds for each of 

the 2 data submission mechanisms: A 

95 percent data completion threshold 

for data collected using the quality 

indicator items on the IRF–PAI and 

submitted through QIES; and a 100 

percent threshold for data collected and 

submitted through the CDC’s NHSN. We 

have chosen to hold providers to the 

lower threshold of 95 percent for the 

quality indicator items on the IRF–PAI, 

as there has to be some margin for error 

related to IRF patients that have been 

discharged emergently or against 

medical advice, as these situations make 

it more difficult to collect and submit 

the mandatory IRF–PAI quality 

indicator items at discharge. We do not 

believe the same impediments exist for 

the infection, vaccination, or other 

quality measures data that IRFs submit 

to the CDC’s NHSN. 

1. IRF QRP Completion Threshold for 

the Required Quality Indicator Data 

Items on the IRF–PAI 

The quality indicator section of the 

IRF–PAI is composed of data collection 

items designed to inform quality 

measure calculations, including riskadjustment calculations as well as 

internal consistency checks for logical 

inaccuracies. In the FY 2015 IRF PPS 

proposed rule (79 FR 26342 through 

26343), we proposed that beginning 

with quality data affecting the FY 2016 

IRF PPS annual increase factor (CY 2014 

data) and beyond, IRF providers must 

meet or exceed a proposed IRF–PAI 

quality indicator data completion 

threshold of 95 percent. We proposed to 

assess the completeness of submitted 

data by verifying that, for all IRF–PAI 

Assessments submitted by any given 

IRF, at least 95 percent of those IRF–PAI 

Assessments must have 100 percent of 

the mandatory quality indicator data 

items completed where, for the 

purposes of this proposed rule, 

‘‘completed’’ is defined as having 

provided actual patient data as opposed 

to a non-informative response, such as 

a dash (–), that indicates the IRF was 

unable to provide patient data. The 

proposed threshold of 95 percent is 

based on the need for complete records, 

which allows appropriate analysis of 

quality measure data for the purposes of 

updating quality measure specifications 

as they undergo yearly and triennial 

measure maintenance reviews with the 

NQF. Additionally, complete data is 

needed to understand the validity and 

reliability of quality data items, 

including risk-adjustment models. 

Finally, we want to ensure complete 

quality data from IRF providers, which 

will ultimately be reported to the 

public, allowing our beneficiaries to 

gain an understanding of provider 

performance related to these quality 

metrics, and helping them to make 

informed health care choices. Our data 

suggests that the majority of current IRF 


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providers are in compliance with, or 

exceeding this proposed threshold 

already. However, we take comment on 

circumstances that might prevent IRFs 

from meeting this level of compliance. 

All items that we propose to require 

under the IRF QRP are identified in 

Chapter 4 of the IRF PAI Training 

Manual, which is available for 

download on the CMS Web site at 

http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/

index.html?redirect=/IRF-QualityReporting/. We additionally proposed 

that any IRF that does not meet the 

proposed requirement that 95 percent of 

all IRF–PAI assessments submitted 

contain 100 percent of all required 

quality indicator data items, will be 

subject to a reduction of 2 percentage 

points to the applicable FY IRF PPS 

annual increase factor beginning with 

FY 2016. To establish this program 

threshold, we analyzed IRF–PAI quality 

indicator data item submissions from 

January 2013 through September 2013, 

and we believe that the majority of IRF 

providers will be able to meet the 

proposed 95 percent data completion 

threshold. It is our intent to raise this 

threshold over the next 2 years, through 

the notice and comment rulemaking 

process. We proposed that this 

threshold will have to be met by IRFs, 

in addition to the CDC NHSN threshold 

discussed below, to avoid receiving a 2 

percentage point reduction to the 

applicable FY IRF PPS annual increase 

factor. 

2. IRF QRP Data Completion Threshold 

for Measures Submitted Using the 

Centers for Disease Control and 

Prevention (CDC) National Healthcare 

Safety Network (NHSN) 

The IRF QRP, through the FY 2012 

IRF PPS final rule, CY 2013 OPPS/ASC 

final rule, and FY 2014 IRF PPS final 

rule, requires that IRFs submit CDCstewarded quality measure data using 

the CDC’s NHSH, including data for the 

previously finalized CAUTI and 

Influenza Vaccination Coverage Among 

Healthcare Personnel (HCP) quality 

measures. More specifically, we require 

that IRFs follow CDC quality measure 

protocols, which require them to 

complete all data fields required for 

both numerator and denominator data 

within NHSN, including the ‘‘no 

events’’ field for any month during 

which no infection events were 

identified. IRFs are required to submit 

this data on a monthly basis (except for 

the HCP measure, which is only 

required to be reported once per year). 

However, IRFs have until the associated 

quarterly deadline (135 calendar days 

beyond the end of each CY quarter) by 

which to report infection data to the 

CDC for each of the 3 months within 

any give quarter. For more information 

on the IRF QRP quarterly deadlines, we 

refer you to Table 10 in section XI.E of 

this final rule. In the FY 2015 IRF PPS 

proposed rule (79 FR 26343), we 

proposed that, beginning with FY 2016 

IRF PPS annual increase factor and 

beyond, this previously finalized 

requirement for monthly reporting must 

be met, in addition to the proposed IRF– 

PAI quality indicator data item 

completion threshold discussed above, 

to avoid a 2 percentage point reduction 

to the applicable FY IRF PPS annual 

increase factor. That is, we proposed 

that IRFs must meet a threshold of 100 

percent for measures submitted via the 

NHSN, achieved by submitting relevant 

infection or vaccination data for each 

month of any given CY, in addition to 

meeting the above proposed data item 

completion threshold for required 

quality indicator items on the IRF–PAI. 

As the IRF QRP expands and IRFs begin 

reporting measures that were previously 

finalized, but not yet implemented, or 

newly proposed and finalized measures, 

we proposed to apply this same 

threshold. 

a. Application of the 2 Percentage Point 

Reduction for IRF Providers That Fail 

To Meet the Above-Proposed Data 

Completion Thresholds 

In the FY 2015 IRF PPS proposed rule 

(79 FR 26343), we proposed that IRFs 

must meet two separate data completion 

thresholds to avoid a 2 percentage point 

reduction to their applicable FY annual 

increase factor: A data completion 

threshold of 95 percent for those 

mandatory data elements collected 

using the quality indicator items on the 

IRF–PAI and submitted through QIES; 

and a second data completion threshold 

of 100 percent for quality measure data 

submitted through the CDC’s NHSN. We 

also proposed that these data 

completion thresholds must be met in 

addition to the below proposed data 

accuracy validation threshold of 75 

percent, to avoid a 2 percentage point 

reduction to their applicable FY annual 

increase factor. While we proposed that 

IRFs must meet both the data 

completion and data accuracy 

thresholds, IRFs cannot have their 

applicable annual increase factor 

reduced twice. That is, should an IRF 

provider fail to meet either one or both 

of the proposed thresholds, they will 

only receive one reduction of 2 

percentage points to their applicable FY 

annual increase factor. 

We invited comment on these 

proposals. Our responses to the public 

comments we received on this proposal 

are discussed below. 

Comment: A few commenters 

supported our proposal of data 

completeness standards, stating that 

these standards will facilitate more 

accurate public reporting in the future. 

Response: We thank the commenters 

for taking the time to express their 

support of our proposal. 

Comment: Several commenters 

believed we should delay the 

implementation of our data completion 

threshold. One commenter stated we 

should not implement this threshold 

until FY 2016, at the earliest. Other 

commenters stated that we should apply 

the standards no earlier than FY 2017. 

Response: We would submit that we 

proposed to begin applying this data 

completion threshold, beginning with 

the FY 2016 annual increase factor for 

IRFs (based on CY 2014 data), and 

interpret that the commenter stating that 

we should not implement this proposal 

until FY 2016, at the earliest, meant that 

we should apply this threshold to data 

collected during CY 2016, at the earliest. 

We believe that it is important that we 

begin evaluating the completeness of the 

quality data submitted to CMS as early 

as possible, in order to ensure the 

integrity of the IRF QRP data. This data 

may not only be used for public 

reporting, but is also used to inform 

important updates to quality measures 

undergoing maintenance at the NQF, 

that occurs on an annual or triennial 

basis. Additionally, quality data being 

submitted via the CDC’s NHSN during 

CY 2014, will be used to calculate a 

baseline ‘‘expected’’ ratio, as well as a 

Standard Infection Ratio (SIR). 

Incomplete quality data, including 

missing monthly submissions of NHSN 

data, will result in an incomplete, and 

therefore potentially misleading, SIR. 

We believe delaying implementation of 

the application of these data completion 

thresholds would be a disservice to 

Medicare beneficiaries, who will 

eventually use publically reported data 

to make better informed health care 

choices for themselves and their 

families. 

Comment: Several commenters stated 

that CMS should delay implementation 

and apply these standards no earlier 

than FY 2017, and additionally 

commented that it would be 

inappropriate and unfair to apply the 

data completeness standards to data 

submitted before the standards were 

proposed, and therefore, known to IRFs. 

One commenter stated that in the 

hospital IQR program, changes to data 

submission standards are proposed in 

advance of—not during or after—the 

data collection period. One commenter 


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stated that it would be impermissibly 

retroactive to apply data completeness 

thresholds to IRF data submitted prior 

to October 1, 2014. 

Response: We respectfully disagree 

with the commenters, and believe that 

we are within our authority to apply 

these data completion standards to 

quality data submitted to CMS prior to 

the effective date of this final rule. 

Currently, the compliance standard 

applicable to each IRF is to timely 

submit all required quality data to CMS, 

and IRFs should already be ensuring 

that the data they submit is complete 

and accurate. Thus, applying a data 

completion threshold to data submitted 

during CY 2014 ensures that IRFs are 

complying with applicable standards, 

and that payments made to IRFs are 

based on complete and accurate data. 

Comment: One commenter stated that 

it would be unfair for CMS to apply the 

proposed data completion threshold to 

data collected for the first 6 months 

using the newly revised IRF–PAI that 

will go into effect on October 1, 2014, 

and that CMS should only consider the 

second 6 months of data submitted 

using the new IRF–PAI when making 

compliance determinations. The 

commenter further stated that CMS has, 

in the past, used a partial year’s data to 

make compliance determinations, and 

should do so for the FY 2017 

compliance determinations, as IRFs will 

have a greater chance of submitting 

inaccurate or incomplete data until they 

are familiar with the updated IRF–PAI. 

Response: We thank the commenter 

for expressing their concern. However, 

we respectfully disagree with the 

commenter. While IRFs will be using a 

new version of the IRF–PAI beginning 

October 1, 2014, we do not believe that 

the expanded quality indicator section 

used for reporting quality data is so 

substantially different that IRFs will 

have difficulty submitting complete and 

accurate data. The newly expanded 

quality indicator section of the IRF–PAI 

includes only 1 additional mandatory 

item compared to the version that is in 

use currently. Additionally, the data 

completion threshold, initially, will 

only look at the mandatory pressure 

ulcer items, which remain the same; the 

new mandatory item is related to the 

Patient Influenza measure, and will not 

be considered when applying the data 

completion threshold for FY 2017 

compliance determinations. Any 

expansion of the application of this data 

completion threshold to IRF quality data 

will be addressed through notice-andcomment rulemaking. 

Final Decision: Having carefully 

considered the comments we received 

on the proposed IRF QRP data 

completion threshold, and for the 

reasons discussed above, we are 

finalizing the IRF data completion 

threshold for the FY 2016 adjustments 

to the IRF PPS annual increase factor 

and beyond, as proposed. 

K. Data Validation Process for the FY 

2017 Adjustments to the IRF PPS 

Annual Increase Factor and Beyond 

Historically, we have built 

consistency and internal validation 

checks into our data submission 

specifications to ensure that the basic 

elements of the IRF–PAI assessment 

conform to requirements such as proper 

format and facility information. These 

internal validation checks are 

automated and occur during the 

provider submission process, and help 

ensure the integrity of the data 

submitted by providers by rejecting 

submissions or issuing warnings when 

provider data contain logical 

inconsistencies. These edit checks are 

further outlined in the Inpatient 

Rehabilitation Facility-Patient 

Assessment Instrument Data 

Submission Specifications, which are 

available for download at http://

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

InpatientRehabFacPPS/Software.html. 

Validation is intended to provide 

added assurance of the accuracy of the 

data that will be reported to the public 

as required by section 1886(j)(7)(E) of 

the Act. In the FY 2015 IRF PPS 

proposed rule (79 FR 26343 through 

26344), we proposed, for the FY 2016 

adjustments to the IRF PPS annual 

increase factor and subsequent years, to 

validate the data submitted for quality 

purposes. Initially, for FY 2016 this data 

accuracy validation will apply only to 

the quality indicator items on the IRF– 

PAI that inform the measure Percent of 

Patients or Residents with Pressure 

Ulcers That Are New or Worsened (NQF 

#0678), including those mandatory data 

elements that inform the measure 

calculation, as well as those that inform 

internal consistency checks for logical 

inaccuracies. We proposed that as the 

IRF QRP expands, and as IRFs begin to 

submit additional data using the quality 

indicator section of the IRF–PAI, to 

include those additional data elements 

in this validation process. We will 

inform any such expansion of this 

validation process prior to its 

occurrence through our routine 

channels of communication including, 

but not limited to the IRF QRP Web site, 

CMS open door forums, national IRF 

provider trainings, and the Medicare 

Learning Network Newsletter. 

We proposed to validate the data 

elements submitted to CMS for Percent 

of Residents or Patients with Pressure 

Ulcers That Are New or Have Worsened 

(Short-Stay) (NQF #0678) under the IRF 

QRP by requesting the minimum chart 

data necessary to confirm a statistically 

valid random sample of 260 providers. 

From each of those 260 providers, 5 

IRF–PAI assessments submitted through 

National Assessment Collection 

Database will be randomly selected. In 

accordance with § 164.512(d)(1)(iii) of 

the HIPAA Privacy Rule, we will 

request from these providers the 

specified portions of the 5 Medicare 

patient charts that correspond to the 

randomly selected assessments, which 

will need to be copied and submitted 

via traceable mail to a CMS contractor 

for validation. We proposed that the 

specific portions of the 5 beneficiary 

charts will be identified in the written 

request, but may include: Admission 

and discharge assessments, relevant 

nursing notes following the admission, 

relevant nursing notes preceding the 

discharge, physician admission 

summary and discharge summary, and 

any Assessment of Pressure Ulcer Form 

the facility may utilize. We proposed 

that the CMS contractor would utilize 

the portions of the patient charts to 

compare that information with the 

quality data submitted to CMS. 

Differences that would affect measure 

outcomes or measure rates would be 

identified and reported to CMS. These 

differences could include, but are not 

limited to, unreported worsened 

pressure ulcers. 

We proposed that all data that has 

been submitted to the National 

Assessment Collection Database under 

the IRF QRP would be subject to the 

data validation process. Specifically, we 

proposed that the contractor will 

request copies of the randomly selected 

medical charts from each facility via 

certified mail (or other traceable 

methods that require a facility 

representative to sign for CMS 

correspondence), and the facility will 

have 45 days from the date of the 

request (as documented on the request 

letter) to submit the requested records to 

the contractor. If the facility does not 

comply within 30 days, the contractor 

will send a second certified letter to the 

facility, reminding the facility that it 

must return copies of the requested 

medical records within 45 calendar days 

following the date of the initial 

contractor medical record request. If the 

facility still does not comply, then the 

contractor will assign a ‘‘zero’’ score to 

each measure in each missing record. If, 

however, the facility does comply, the 

contractor will review the data 

submitted by the facility using the IRF– 


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PAI for the mandatory data elements 

associated with the Pressure Ulcer 

measure, until such time that IRFs begin 

to submit additional quality measures 

that are collected using the quality 

indicator section of the IRF–PAI. 

Initially, this review will consist solely 

of those mandatory data elements that 

inform the pressure ulcer measure 

calculations, as well as those that 

inform checks for logical 

inconsistencies. We proposed that as 

IRFs begin to report additional finalized 

measures, we intend to propose 

expanding this validation process to 

other such measures at that time. The 

contractor will then calculate the 

percentage of matching data elements 

which will constitute a validation score. 

Because we would not be validating all 

records, we would need to calculate a 

confidence interval that incorporates a 

potential sampling error. 

To receive the full FY 2016 IRF 

annual increase factor, we proposed that 

IRFs in the random sample must attain 

at least a 75 percent validation score, 

based upon our validation process, 

which will use charts requested from 

patient assessments submitted for FY 

2014. We will calculate a 95 percent 

confidence interval associated with the 

observed validation score. If the upper 

bound of this confidence interval is 

below the 75 percent cutoff point, we 

will not consider a hospital’s data to be 

‘‘validated’’ for payment purposes. For 

example, for a provider who submits all 

5 of their charts, each with 9 elements, 

the provider’s score will be based on 45 

possible opportunities to report 

correctly or incorrectly. If the provider 

correctly scored on 40 of the 45 

elements, then their reliability would be 

89 percent (40/45). The upper bound of 

the confidence interval takes into 

account sampling error and would be 

higher than this estimated reliability, in 

this case 96 percent. This number is 

greater than or equal to 75 percent. 

Therefore the provider passes 

validation. We proposed that providers 

failing the validation requirements 

would be subject to a 2 percentage point 

reduction to their applicable annual 

increase factor. In addition, all 

providers validated would receive 

educational feedback, including specific 

case details. 

1. Application of the 2 Percentage Point 

Reduction for IRF Providers That Fail 

To Meet the Above-Proposed Data 

Accuracy Threshold 

In the FY 2015 IRF PPS proposed rule 

(79 FR 26344), we proposed that IRFs 

must meet a data accuracy threshold of 

75 percent to avoid receiving a 2 

percentage point reduction to their 

applicable FY annual increase factor. 

We additionally proposed that this data 

accuracy threshold of 75 percent must 

be met in addition to the above data 

completion thresholds (95 percent for 

data collected using the quality 

indicator items on the IRF–PAI and 

submitted using QIES, and 100 percent 

for data submitted using the CDC’s 

NHSN), to avoid receiving a 2 

percentage point reduction to their 

applicable FY annual increase factor. 

While we proposed that IRFs must meet 

both the proposed data accuracy and 

data completion thresholds, IRFs cannot 

have their applicable annual payment 

update reduced twice. That is, should 

an IRF provider fail to meet either one 

or both of the proposed thresholds (data 

completion and/or data accuracy), they 

will only receive one reduction of 2 

percentage points to their applicable FY 

annual increase factor. 

We invited public comment on these 

proposals and suggestions to improve 

the utility of the approach and/or 

reduce the burden on facilities. Our 

responses to comments we received on 

this proposal are discussed below. 

Comment: One commenter 

recommended inclusion of NHSN 

measures in its proposed validation for 

FY 2017, beginning with the CAUTI 

measure. Additionally, they suggested 

CMS explore a secure method of 

electronic submission of records for the 

validation process. 

Response: We thank the commenter 

for taking the time to express these 

views and suggestions regarding 

validation and will take them into 

consideration for future validation 

proposals. The HIPAA Security Rule 

and HHS policy require CMS to use 

secure methods of data transmission. 

We will consider adoption of electronic 

transmission of records in future 

rulemaking as a secure file transfer 

product becomes available to the IRF 

QRP. 

Comment: Several commenters 

believed that the proposed data 

validation process is a fundamental step 

to ensure the accuracy of the IRF quality 

reporting data. 

Response: We thank the commenters 

for their support of this process. 

Comment: One commenter 

recommended that CMS not move 

forward with its proposal to complete 

data validation for the Pressure Ulcer 

measure or that CMS should delay 

implementation until at least FY 2016 

and should consider the use of a 

different measure for validation 

purposes. Additionally the commenter 

expressed concern that inconsistencies 

in the medical record would not be the 

sole factor used to demonstrate a failure 

to comply. 

Response: We believe that data 

validation is necessary to ensure the 

integrity of the data we use in the IRF 

QRP. We are finalizing that the data 

validation process for FY 2016 is for the 

Pressure Ulcer measure. This process 

would validate those data elements 

submitted to the QRP that are found in 

the medical record. We will not be 

validating individual inconsistencies in 

each record. However, if we find that 

record to be non-compliant, yet a 

facility believed the documentation 

submitted for validation matches the 

data elements submitted for the Pressure 

Ulcer measure, the facility may seek 

reconsideration of our initial 

determination. 

Comment: One commenter expressed 

concern that the threshold compliance 

of 75 percent agreement was too high for 

this first attempt to validate the Pressure 

Ulcer data. They stated that there would 

be a great deal of variability in the 

reporting of the pressure ulcer measure 

and that this should be an opportunity 

for CMS to educate providers on 

appropriate documentation and 

reporting to improve the process. 

Instead, they offered a 60 percent 

compliance threshold as more 

appropriate for this initial round of 

validation. 

Response: We thank the commenter 

for taking time to express concern about 

possible variability in the pressure ulcer 

measure. We note that the 75 percent 

agreement is the single point estimate of 

the proportion in agreement; we are 

proposing that the upper bound of a 95 

percent confidence interval be the value 

that must exceed the 75 percent 

compliance threshold. We believe this 

takes into account the inherent 

variability to be found in the Pressure 

Ulcer measure data. In addition, the 75 

percent proportion agreement is 

consistent with the other data quality 

programs currently underway, for 

example, the Hospital Inpatient Quality 

Reporting Program, 42 CFR 

412.140(d)(2), and the Hospital 

Outpatient Quality Reporting Program, 

42 CFR 419.46(e)(2). We believe it is 

important, where feasible, to promulgate 

consistent standards when we deal with 

the various quality data we are 

collecting. 

Final Decision: Having carefully 

considered the comments we received 

on the proposed IRF QRP data 

validation process and data accuracy 

threshold, and for the reasons discussed 

above, we are finalizing the IRF data 

validation process and data accuracy 

threshold for the FY 2017 adjustments 


tkelley on DSK3SPTVN1PROD with RULES2
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29The Department of Health & Human Services 

August 2013 Statement, ‘‘Principles and Strategies 

for Accelerating Health Information Exchange. 30http://www.healthit.gov/sites/default/files/

generalcertexchangeguidance_final_9-9-13.pdf. 

to the IRF PPS annual increase factor 

and beyond, as proposed. 

L. Electronic Health Record and Health 

Information Exchange 

We believe that all patients, their 

families, and their health care providers 

should have consistent and timely 

access to their health information in a 

standardized format that can be securely 

exchanged between the patient, 

providers, and others involved in the 

patient’s care.29 We are committed to 

accelerating health information 

exchange (HIE) through the use of 

electronic health records (EHRs) and 

other types of health information 

technology (HIT) across the broader care 

continuum through a number of 

initiatives, including: (1) Alignment of 

incentives and payment adjustments to 

encourage provider adoption and 

optimization of HIT and HIE services 

through Medicare and Medicaid 

payment policies; (2) adoption of 

common standards and certification 

requirements for interoperable HIT; (3) 

support for privacy and security of 

patient information across all HIEfocused initiatives; and (4) governance 

of health information networks. These 

initiatives are designed to improve care 

delivery and coordination across the 

entire care continuum and encourage 

HIE among all health care providers, 

including professionals and hospitals 

eligible for the Medicare and Medicaid 

EHR Incentive Programs and those who 

are not eligible for the EHR Incentive 

Programs. The Office of the National 

Coordinator for Health Information 

Technology (ONC) is currently 

exploring regulatory ways to expand the 

ONC HIT Certificate Program to more 

easily accommodate HIT certification 

for technology used in other types of 

health care settings where individual or 

institutional health care providers are 

not typically eligible for incentive 

payments under the EHR Incentive 

Programs, such as long-term and postacute care and behavioral health 

settings. ONC has previously provided 

guidance for EHR technology developers 

serving providers ineligible for 

incentives under the EHR Incentive 

Programs titled ‘‘Certification Guidance 

for EHR Technology Developers Serving 

Health Care Providers Ineligible for 

Medicare and Medicaid EHR Incentive 

Payments.’’ 30

We believe that HIE and the use of 

certified EHR technology by IRFs (and 

other providers ineligible for the 

Medicare and Medicaid EHR Incentive 

Programs) can effectively and efficiently 

help providers improve internal care 

delivery practices, support management 

of patient care across the continuum, 

and enable the reporting of 

electronically specified clinical quality 

measures (eCQMs). More information on 

the identification of EHR certification 

criteria and development of standards 

applicable to IRFs can be found at: 

• http://healthit.gov/policy-researchersimplementers/standards-andcertification-regulations 

• http://www.healthit.gov/facas/

FACAS/health-it-policy-committee/

hitpc-workgroups/

certificationadoption 

• http://wiki.siframework.org/

LCC+LTPAC+Care+Transition+SWG 

• http://wiki.siframework.org/

Longitudinal+Coordination+of+Care 

In the FY 2015 IRF PPS proposed rule 

(79 FR 26344 through 26345), we 

solicited feedback on the feasibility and 

desirability of electronic health record 

adoption and use of HIE in IRFs. We 

also solicited public comment on the 

need to develop electronic clinical 

quality measures, and the benefits and 

limitations of implementing these 

measures for IRF providers. Our 

responses to the comments we received 

on this topic are discussed below. 

Comment: We received several 

comments in response to its solicitation 

for input related to EHR adoption and 

usage and HIE among IRFs. A 

commenter suggested that we consider a 

structural measure similar to the 

Inpatient Psychiatric Facility Quality 

Reporting Program to gain insight on the 

feasibility of EHR adoption and use of 

HIE in IRFs. Some commenters 

conveyed concerns related to current 

EHR/HIE adoption in IRFs, including 

burden associated with EHR use and 

time and burden associated with the 

implementation of the technical 

infrastructure needed to accommodate 

EHRs. Many commenters noted the lack 

of EHR incentive funding and 

integration of IRFs in activities such as 

those related to the design of the HIE 

exchanges, electronic health record 

interoperability standards, electronic 

health record incentive payment 

programs, electronic quality 

measurement development, as well as 

the Medicare EHR Incentive Programs, 

and therefore conveyed concerns about 

the feasibility and appropriateness of 

requiring electronic clinical quality 

measure use at this time in the absence 

of incentive funding for IRFs. Some 

commenters suggested collaboration 

with CMS and the IRF community to 

expand the reach of HIEs and the 

interoperability standards to include 

IRFs. Some commenters also requested 

that CMS extend incentive payments to 

IRFs, allowing HIEs to include IRFs in 

the development of clinically 

appropriate electronic quality measures 

for IRFs. A commenter recommended 

that CMS not apply the requirement of 

electronic clinical quality measures 

reporting at this time, and another 

commenter requested that CMS allow 

time for the process of data collection 

using electronic measures to mature 

before requiring them. 

Response: We thank the commenters 

for their recommendations and 

concerns. We believe that these 

recommendations, including 

interoperability standards which we 

interpret to mean those that would align 

with what has been adopted by the 

Secretary, and concerns are important 

considerations related to EHR adoption 

and HIE usage in the IRF setting. We 

thank the commenter for their 

suggestion for us to consider the 

implementation of a structural measure 

similar to the Inpatient Psychiatric 

Facility Report Program in the IRF QRP 

to gain insight on the feasibility of EHR 

adoption and use of HIE in IRFs, and we 

will take this suggestion under 

consideration. 

M. Method for Applying the Reduction 

to the FY 2015 IRF Increase Factor for 

IRFs That Fail To Meet the Quality 

Reporting Requirements 

As previously noted, section 

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

application of a 2-percentage point 

reduction of the applicable market 

basket increase factor for IRFs that fail 

to comply with the quality data 

submission requirements. In compliance 

with 1886(j)(7)(A)(i) of the Act, we will 

apply a 2-percentage point reduction to 

the applicable FY 2015 market basket 

increase factor (2.2 percent) in 

calculating an adjusted FY 2015 

standard payment conversion factor to 

apply to payments for only those IRFs 

that failed to comply with the data 

submission requirements. As previously 

noted, application of the 2-percentage 

point reduction may result in an update 

that is less than 0.0 for a fiscal year and 

in payment rates for a fiscal year being 

less than such payment rates for the 

preceding fiscal year. Also, reportingbased reductions to the market basket 

increase factor will not be cumulative; 

they will only apply for the FY 

involved. Table 12 shows the 

calculation of the adjusted FY 2015 

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 


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45926 Federal Register / Vol. 79, No. 151 / Wednesday, August 6, 2014 / Rules and Regulations 

for the period from January 1, 2013, 

through December 31, 2013. 

TABLE 12—CALCULATIONS TO DETERMINE THE ADJUSTED FY 2015 STANDARD PAYMENT CONVERSION FACTOR FOR

IRFS THAT FAILED TO MEET THE QUALITY REPORTING REQUIREMENT

Explanation for adjustment Calculations 

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

Market Basket Increase Factor for FY 2015 (2.9 percent), reduced by 0.5 percentage point reduction for the productivity adjustment as required by section 1886(j)(3)(C)(ii)(I) of the Act, reduced by 0.2 percentage point in accordance with sections 

1886(j)(3)(C) and (D) of the Act and further reduced by 2 percentage points for IRFs that failed to meet the quality reporting 

requirement ...................................................................................................................................................................................... × 1.0020 

Budget Neutrality Factor for the Wage Index and Labor-Related Share ............................................................................................ × 1.0017 

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

Final Adjusted FY 2015 Standard Payment Conversion Factor .................................................................................................. = $14,901 

We did not receive any comments on 

the proposed method for applying the 

reduction to the FY 2015 IRF increase 

factor for IRFs that fail to meet the 

quality reporting requirements. 

Final Decision: As we did not receive 

any comments on the proposed method 

for applying the reduction to the FY 

2015 IRF increase factor for IRFs that 

fail to meet the quality reporting 

requirements, we are finalizing the 

proposed methodology. 

XIII. Miscellaneous Comments 

Comment: Several commenters 

suggested that we consider imposing a 

cap on the amount of outlier payments 

an individual IRF can receive under the 

IRF PPS. 

Response: As we did not propose any 

limits on the amount of outlier 

payments an individual IRF can receive, 

this comment is outside the scope of the 

proposed rule. However, any future 

consideration given to imposing a limit 

on outlier payments would have to 

carefully analyze and take into 

consideration the effect on access to IRF 

care for certain high-cost patient 

populations. 

Comment: Several commenters 

requested that we allow IRFs access to 

the presumptive compliance reports that 

the MACs use to determine whether or 

not an IRF has met the 60 percent rule 

requirements under the presumptive 

methodology. These same commenters 

also requested that we provide IRFs 

with patient-level detail regarding 

which patients were counted as 

presumptively meeting the 60 percent 

rule requirements and which patients 

were not counted as meeting the 

requirements. Other commenters 

requested that we ensure that all MACs 

allow for a review process prior to an 

IRF declassification for the IRF to 

dispute a 60 percent rule determination. 

Response: As we did not propose any 

changes to these operational aspects of 

the 60 percent rule enforcement, these 

comments are outside the scope of the 

proposed rule. However, we will take 

these suggestions into consideration for 

future operational enhancements. 

Comment: Several commenters 

requested that we release the exact 

software specifications and algorithms 

for enforcement of the 60 percent rule 

policies. Other commenters expressed 

concerns that we are fundamentally 

altering the technical code 

specifications that are used in 

determining an IRF’s presumptive 

compliance with the 60 percent rule. 

Additionally, some commenters 

indicated that there is an inconsistency 

with the software specifications because 

they mark a record as failing the 

presumptive methodology test if the 

case has an IGC and one of the excluded 

Etiologic Diagnoses, even if the case has 

a comorbidity that would qualify the 

case as counting for the presumptive 

methodology. 

Response: As we did not propose 

changes to the technical specifications, 

these comments are outside the scope of 

the proposed rule. The technical 

specifications for the presumptive 

methodology determination are 

available for download from the CMS 

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

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

Criteria.html. As we are continually 

looking to improve the technical 

specifications and the accuracy with 

which we evaluate providers’ 

compliance with the 60 percent rule 

requirements, we will take these 

commenters’ suggestions and concerns 

into consideration for future updates to 

the technical specifications. 

Comment: Several commenters 

suggested that we re-examine the 

conditions that are included on the list 

of tier comorbidities (otherwise known 

in this final rule as the ‘‘List of 

Comorbidities’’) using the most recent 3 

years of data, and revise this list for FY 

2016. In addition, one commenter 

suggested that we allow for multiple tier 

payments if a patient has multiple 

comorbidities that qualify for tier 

payments, instead of only recognizing 

the one comorbidity that qualifies for 

the highest payment. 

Response: As we did not propose any 

changes to the methodology or policy 

regarding the determination of the tier 

comorbidities, these comments are 

outside the scope of the proposed rule. 

We appreciate the commenters’ 

suggestions, and will consider these 

suggestions for future analyses. 

Comment: One commenter suggested 

that we continue to explore ways to 

ensure comparability of payments 

across Medicare’s post-acute care 

settings. 

Response: We appreciate the 

commenter’s suggestion. Although the 

comment is beyond the scope of this 

rule and reaches beyond the IRF PPS, 

we appreciate the forward thinking 

nature of this comment and will try to 

consider ways in which this suggestion 

may be considered for future analysis. 

Comment: Several commenters 

expressed concern about the proposal 

that was included in the most recent 

President’s Budget Proposal to increase 

the compliance threshold for the 60 

percent rule to 75 percent. 

Response: Since the Secretary does 

not have the authority to make this 

change, this comment is outside the 

scope of the proposed rule. 

XIV. Provisions of the Final Regulations 

In this final rule, we are adopting the 

provisions set forth in the FY 2015 IRF 

proposed rule (79 FR 26308), except as 

noted elsewhere in the preamble. 

Specifically: 

• We will update the FY 2015 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, 


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as discussed in section IV of this final 

rule. 

• We will freeze the IRF facility-level 

adjustment factors at FY 2014 levels, as 

discussed in section V of this final rule. 

• We will update the FY 2015 IRF 

PPS payment rates by the market basket 

increase factor, based upon the most 

current data available, with a 0.2 

percentage point reduction as required 

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

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

productivity adjustment required by 

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

described in section VI of this final rule. 

• We will indicate the Secretary’s 

Final Recommendation for updating IRF 

PPS payments for FY 2015, in 

accordance with the statutory 

requirements, as described in section VI 

of this final rule. 

• We will update the FY 2015 IRF 

PPS payment rates by the FY 2015 wage 

index and the labor-related share in a 

budget-neutral manner, as discussed in 

section VI of this final rule. 

• We will calculate the final IRF 

Standard Payment Conversion Factor for 

FY 2015, as discussed in section VI of 

this final rule. 

• We will update the outlier 

threshold amount for FY 2015, as 

discussed in section VII of this final 

rule. 

• We will update the cost-to-charge 

ratio (CCR) ceiling and urban/rural 

average CCRs for FY 2015, as discussed 

in section VII of this final rule. 

• We will adopt revisions to the list 

of eligible diagnosis codes that are used 

to determine presumptive compliance 

under the 60 percent rule in section VIII 

of this final rule. 

• We will adopt revisions to the list 

of eligible impairment group codes that 

presumptively meet the 60 percent rule 

compliance criteria in section VIII of 

this final rule. 

• We will collect data on the amount 

and mode (that is, of Individual, 

Concurrent, Group, and Co-Treatment) 

of therapies provided in IRFs according 

to occupational, speech, and physical 

therapy disciplines via the IRF–PAI in 

section IX of this final rule. 

• We will adopt a revision to the IRF– 

PAI to indicate whether the case meets 

the regulatory requirements for arthritis 

cases in section X of this final rule. 

• We will adopt the conversion of the 

IRF PPS to ICD–10–CM, effective when 

ICD–10–CM becomes the required 

medical data code set for use on 

Medicare claims and IRF–PAI 

submissions, in section XI of this final 

rule. 

• We will adopt revisions and 

updates to quality measures and 

reporting requirements under the 

quality reporting program for IRFs in 

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

Act, as discussed in section XII of this 

final rule. 

XV. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

of 1995, we are required to provide 30 

days’ notice in the Federal Register and 

solicit public comment before a 

collection of information requirement is 

submitted to the Office of Management 

and Budget (OMB) for review and 

approval. To fairly evaluate whether an 

information collection should be 

approved by OMB, section 3506(c)(2)(A) 

of the Paperwork Reduction Act of 1995 

requires that we solicit comment on the 

following issues: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 

This final rule does not impose any 

new information collection 

requirements as outlined in the 

regulation text. However, this final rule 

does make reference to associated 

information collections that are not 

discussed in the regulation text 

contained in this document. The 

following is a discussion of these 

information collections, some of which 

have already received OMB approval. 

A. ICRs Regarding the IRF QRP 

Updates to IRF QRP 

As stated in section XI of this final 

rule, we have finalized 2 new measures 

for use in the IRF QRP that will affect 

the increase factor for FY 2017. These 

quality measures are: National 

Healthcare Safety Network (NHSN) 

Facility-Wide Inpatient Hospital-Onset 

Methicillin-Resistant Staphylococcus 

aureus (MRSA) Bacteremia Outcome 

Measure (NQF #1716) and National 

Healthcare Safety Network (NHSN) 

Facility-Wide Inpatient Hospital-Onset 

Clostridium difficile Infection (CDI) 

Outcome Measure (NQF #1717). We 

proposed that these measures would be 

collected via the CDC’s NHSN data 

submission system (http://www.cdc.gov/ 

nhsn/). The NHSN is a secure, Internetbased healthcare-associated infection 

tracking system that is maintained and 

managed by the CDC. 

There are currently approximately 

1,140 IRFs in the United States paid 

under the IRF PPS that are already 

required to submit CAUTI data to the 

CDC’s NHSN. We believe that any 

burden increase related to complying 

with the IRF QRP requirements for 

submission of the MRSA and CDI 

measures will be minimal for those IRFs 

that are already familiar with the NHSN 

submission process, for several reasons. 

First, these IRFs have already completed 

the initial setup and have become 

familiar with reporting data in the 

NHSN system due to the requirement to 

report the CAUTI measure. Second, due 

to their participation in a wide range of 

mandatory reporting and quality 

improvement programs, there are at 

least 15 states that require IRFs to report 

MRSA bacteremia data and CDI data to 

the NHSN. The most significant burden 

associated with these quality measures 

is the time and effort associated with 

collecting and submitting the data on 

the MRSA and CDI measures for IRFs 

that are not currently reporting any 

measures beyond the current CAUTI 

data requirement into the CDC’s NHSN 

system. 

Based on submissions to the NHSN, 

we now estimate that each IRF will 

execute approximately 5 NHSN 

submissions per month: 1 MRSA 

bacteremia event, 1 C. difficile event 

and 3 CAUTI events (60 events per IRF 

annually). This equates to a total of 

approximately 68,400 submissions of 

events to the NHSN from all IRFs per 

year. The CDC estimated the public 

reporting burden of the collection of 

information for each measure to include 

the time for reviewing instructions, 

searching existing data sources, 

gathering and maintaining the data 

needed, and completing and reviewing 

the collection of information. MRSA 

and C. difficile are estimated to be an 

average of 15 minutes per response (10 

minutes of clinical (registered nurse) 

time, and 5 minutes of clerical (Medical 

Records or Health Information 

Technician); CAUTI is estimated to be 

an average of 29 minutes per response. 

Each IRF must also complete a Patient 

Safety Monthly Reporting Plan 

estimated at 35 minutes and a 

Denominator for Specialty Care Area, 

which is estimated at 5 hours per 

month. Based on this estimate, we 

expect each IRF would expend 7.53 

hours per month reporting to the NHSN. 

Additionally, each IRF must submit the 

Healthcare Personnel Vaccination 

measure, which the CDC estimates will 

take 10 minutes of clerical time. Based 

on this estimate, we expect each IRF 

would expend 78.97 clinical hours per 

year reporting to the NHSN, or 90,026 

hours for all IRFs. According to the U.S. 


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Bureau of Labor and Statistics, the mean 

hourly wage for a registered nurse (RN) 

is $33.13; the mean hourly wage for a 

medical records and health information 

technician is $16.81. However, to 

account for overhead and fringe 

benefits, we have doubled the mean 

hourly wage, making it $66.26 for an RN 

and $33.62 for a Medical Record or 

Health Information Technician. We 

estimate that the annual cost per each 

IRF would be $5,162.09 and that the 

total yearly cost to all IRFs for the 

submission of data to NHSN would be 

$5,882,782.60. While the quality 

measures previously discussed are 

subject to the PRA, we believe that the 

associated burden is approved under 

OMB control number 0920–0666, with 

an expiration date of November, 31, 

2016. 

In the FY 2014 IRF PPS rule (78 FR 

47923 through 47925), we provided 

burden estimates for measures adopted 

in that rule. Updated Collection of 

Information Requirements for each of 

those measures is described below: 

a. All-Cause Unplanned Readmission 

Measure for 30 Days Post Discharge 

From Inpatient Rehabilitation Facilities 

As stated in the FY 2014 IRF PPS rule 

(78 FR 47923 through 47925), data for 

this measure will be derived from 

Medicare claims, and therefore, will not 

add any additional reporting burden for 

IRFs. 

b. Percent of Residents or Patients With 

Pressure Ulcers That Are New or Have 

Worsened (Short-Stay) (NQF #0678) 

In the FY 2015 IRF PPS proposed rule 

(79 FR 26346), we stated that 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 estimated 

that it will take approximately 10 

minutes of time by the RN to perform 

the admission pressure ulcer 

assessment. We further estimated that it 

will take an additional 15 minutes of 

time to complete the discharge pressure 

ulcer assessment. 

We estimated that there are 359,000 

IRF–PAI submissions per year 3 and that 

there are 1,140 IRFs in the U.S. 

reporting quality data to CMS. Based on 

these figures, we estimated that each 

IRF will submit approximately 315 IRF– 

PAIs per year. Assuming that each IRF– 

PAI submission requires 25 minutes of 

time by an RN at an average hourly 

wage of $66.26 (including fringe 

benefits and overhead), to complete the 

‘‘Quality Indicator’’ section, the yearly 

cost to each IRF would be $8,696.63 and 

the annualized cost across all IRFs 

would be $9,914,158.20. 

In the FY 2015 IRF PPS proposed rule 

(79 FR 26346), we also stated we 

expected 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. We estimated that this data entry 

task will take no more than 3 minutes 

for the ‘‘Quality Indicator’’ section of 

each IRF–PAI record or 15.75 hours for 

each IRF annually. The average hourly 

wage for a Medical Records & Health 

Information Technician is $33.62 

(including fringe benefits and 

overhead). Again, as we noted above, 

there are approximately 359,000 IRF– 

PAI submissions per year and 1,140 

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 by a medical record or health 

information technician (including fringe 

benefits and overhead) is $603,652.80. 

We further estimated the average yearly 

cost to each individual IRF to be 

$529.52. 

We estimated 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 147 hours 

for each individual IRF and 167,580 

hours across all IRFs. The total 

estimated annualized cost for collection 

and submission of pressure ulcer data is 

$9,226.15 for each IRF and $10,517,811 

across all IRFs. We estimated the cost 

for each pressure ulcer submission to be 

$29.29. 

c. Percent of Residents or Patients Who 

Were Assessed and Appropriately Given 

the Seasonal Influenza Vaccine (ShortStay) (NQF #0680) 

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. In the FY 2015 IRF PPS 

proposed rule (79 FR 26347), we 

estimated that completion of the Patient 

Influenza measure data items will take 

approximately 5 minutes to complete. 

The Patient Influenza item set consists 

of three data items (for example, 

questions). Each item is straightforward 

and does not require physical 

assessment of the patient for 

completion. We estimated that it will 

take approximately 0.7 minutes to 

complete each item, or 2.1 minutes to 

complete all items related to the Patient 

Influenza measure. 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 an 

additional 1.66 minutes per item, for a 

total of 7.1 minutes to complete the 

Patient Influenza measure data items. 

In the FY 2015 IRF PPS proposed rule 

(79 FR 26347), we noted that there are 

approximately 359,000 IRF–PAIs 

completed annually across all 1,140 

IRFs that report IRF quality data to 

CMS. This breaks down to 

approximately 315 IRF–PAIs completed 

by each IRF yearly. We additionally 

estimated that the annual time burden 

for reporting the Patient Influenza 

measure data is 42,481 hours across all 

IRFs in the U.S. and 37.26 hours for 

each individual IRF. Again, we have 

estimated the mean hourly wage for an 

RN (including fringe benefits and 

overhead) to be $66.26. 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 

$2,814,791.06. We further estimated the 

cost for each individual IRF to be 

$2,469.11. 

Lastly, in the FY 2015 IRF PPS 

proposed rule (79 FR 26347), we 

proposed to validate data submitted to 

CMS by requesting portions of patient’s 

charts be copied and mailed to a CMS 

validation contractor. We estimated the 

size of each section we proposed to 

request as follows: We stated that we 

anticipate that the first 3 days of nurses 

notes will be approximately 15 pages; 

the last 3 days of nurses notes will be 

approximately 10 pages; the physician 

or physician’s assistant’s admission 

history and physical will be 

approximately 30 pages; the physician 

or physician’s assistant’s discharge 

summary will be approximately 15 

pages; nurses admission database is 

approximately 40 pages; pressure ulcer 

assessment assessments will be 

approximately 30 pages; physicians 

progress notes will be approximately 30 

pages; physicians orders will be 

approximately 30 pages and lab reports 

to be approximately 70 pages. We 

estimated the total submission to be 

approximately 270 pages in length. The 

FY 2013 IPPS/LTCH PPS final rule (77 

FR 53745) estimates the appropriate cost 

for chart submission to be 12 cents per 

page and $4.00 shipping. Two hundred 

seventy pages at a rate of $0.12 per page 

with a $4.00 shipping cost would be 

$36.40 per chart. We proposed that 260 

providers will be randomly selected for 

validation, and we proposed to request 

5 charts from each selected provider for 

a total cost of $47,320 for all IRF 


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providers, or $182.00 for any randomly 

selected IRF provider. 

We did not receive any public 

comments on the above IRF QRP 

Information Collection Request section 

of the FY 2015 IRF PPS proposed rule. 

Additionally, in section XI of this final 

rule, we have finalized the adoption of 

the following two measures: NHSN 

Facility-wide Inpatient Hospital-onset 

Methicillin-resistant Staphylococcus 

aureus (MRSA) Bacteremia Outcome 

Measure (NQF #1716); and NHSN 

Facility-wide Inpatient Hospital-onset 

Clostridium difficile Infection (CDI) 

Outcome Measure (NQF #1717). We 

further confirmed that the previously 

finalized measures discussed in section 

XII.B. will continue to be required for 

the IRF QRP. 

B. ICRs Regarding Individual, 

Concurrent, Group, and Co-Treatment 

Therapy Data on the IRF–PAI 

As stated in section IX. of this final 

rule, we are including a new Therapy 

Information Section in the IRF–PAI that 

will require IRF providers to submit 

data regarding the amount and mode 

(that is, Individual, Concurrent, Group, 

and Co-Treatment) of therapy that 

patients are receiving and in which 

therapy discipline (PT, OT, speech/

language) beginning on October 1, 2015. 

Under Medicare’s conditions of 

participation for hospitals that provide 

rehabilitation, physical therapy, 

occupational therapy, audiology, or 

speech pathology services at § 482.56, 

the provision of care and the personnel 

qualifications must be in accordance 

with national acceptable standards of 

practice and must also meet the 

requirements at § 409.17, according to 

which IRFs are required to furnish 

physical therapy, occupational therapy 

or speech-language pathology services 

under a plan that, among other things, 

‘‘[p]rescribes the type, amount, 

frequency, and duration of the physical 

therapy, occupational therapy, or 

speech-language pathology services to 

be furnished to the individual.’’ (Such 

services may also be furnished under 

plan requirements specific to the 

payment policy under which the 

services are rendered, if applicable.) In 

addition, the IRF coverage requirements 

at § 412.622(a)(3)(ii), (4), require the IRF 

to document that the patient 

‘‘[g]enerally requires and can reasonably 

be expected to actively participate in, 

and benefit from, an intensive 

rehabilitation therapy program.’’ As 

Medicare already requires extensive 

documentation of the type, amount, 

frequency, and duration of physical 

therapy, occupational therapy, or 

speech-language pathology services 

furnished to individuals in the IRF 

setting, we do not believe that IRFs will 

incur any additional burden related to 

the collection of the data for the 

proposed new Therapy Information 

Section. In accordance with 5 CFR 

1320.3(b)(2), we believe the burden 

associated with this requirement is 

exempt from the PRA as it is a usual and 

customary business practice. The time, 

effort, and financial resources necessary 

to comply with this requirement would 

be incurred in the course of each IRF 

conducting its normal business 

activities. 

We anticipate that it will take 

approximately 4 minutes to retrieve the 

therapy data from the patient’s medical 

record and transfer the required data to 

the IRF–PAI for submission. We believe 

this task can be completed by any 

clinician in the IRF. To calculate the 

burden, we obtained hourly wage rates 

for social worker assistants, licensed 

practical nurses (LPN), recreational 

therapists, social workers, dietitians and 

nutritionists, RN, speech language 

pathologists, audiologists, occupational 

therapists, and physical therapists, all of 

whom may complete the IRF–PAI, from 

the Bureau of Labor Statistics (http://

www.bls.gov/ooh/healthcare/

home.htm). The $26.52 rate is a blend 

of all of these categories, and reflects the 

fact that IRF providers have historically 

used all of these clinicians for 

preparation and coding of the IRF–PAI. 

However, to account for overhead and 

fringe benefits, we double the average 

rate, making it $53.04. On average, an 

IRF submits approximately 300 IRF– 

PAIs annually and when multiplied by 

4 minutes to complete the proposed 

new Therapy Information Section, the 

total estimated annual hour burden per 

each IRF is 20 hours. We estimate the 

total cost burden to each IRF for 

reporting the proposed therapy data will 

be $1,060 annually. Since there are a 

total of 1,140 IRFs, we estimate the total 

burden cost across all IRFs for 

submitting therapy data is $1.2 million. 

We received 40 comments on the 

information collection requirements 

regarding the Individual, Concurrent, 

Group, and Co-Treatment Therapy data 

on the IRF–PAI, which are summarized 

below. 

Comment: Many commenters 

suggested that the therapy collection 

item would be excessively burdensome 

and should be removed. The 

commenters suggested that CMS has 

underestimated the cost and time it 

would take providers to implement this 

proposed policy, implying that 

additional IRF staff would need to be 

employed to fulfill the data collection 

requirement. A few commenters even 

suggested that the therapy data CMS is 

proposing to collect is redundant since 

the data could be found on IRF patient 

claims. Additionally, commenters 

suggested that the proposed therapy 

data collection requirement does not 

seem to provide any value to the patient 

and would ultimately divert clinical 

resources from patient care to 

administrative functions compromising 

patients’ health outcomes instead of 

increasing quality of care. Ultimately, 

the commenters urged CMS to focus on 

the outcomes of rehabilitative care 

rather than regulatory mandates. 

Response: We recognize and have 

taken into account that the addition of 

the therapy collection item will increase 

the time it takes for providers to 

complete the IRF–PAI. However, IRF 

clinicians are currently required to 

thoroughly document all treatment 

information in the patients’ medical 

record. We believe that in order to fulfill 

this requirement, IRFs are already 

required to document in detail the 

amount and mode of therapy that a 

patient receives. We do not believe that 

it would take an excessive amount of 

additional time and/or training to 

transfer that information from the 

medical record to the IRF–PAI. We 

certainly do not believe that IRFs would 

need to employ additional staff to meet 

this data collection requirement. The 

additional cost that a facility would 

incur in making updates to its electronic 

systems is considered the cost of doing 

business, and that is not something that 

we believe should be taken into account 

when preparing our burden estimates. 

In response to the commenters’ 

suggestions to minimize the burden 

associated with the therapy data 

collection, we are choosing not to adopt 

the proposed requirement to record the 

average number of minutes by mode and 

type of therapy for weeks 3 and beyond 

of a patient’s IRF stay. Instead, we will 

require IRFs to report only the total 

number of minutes of therapy provided 

to a patient, by mode and type of 

therapy, for week 1 and week 2 of the 

IRF stay. Additionally, we are adding 

Concurrent Therapy and revising the 

Group Therapy definition so that both 

types of therapy are clearly 

differentiated. Providers indicated that 

this change would be helpful to reduce 

burden, as this is more consistent with 

the way they currently keep their 

records. We believe that these changes 

will substantially lower the amount of 

burden associated with this data 

collection. 

We respectfully disagree with the 

commenters’ assertion that this 

information is included on the IRF 

claim. The therapy data on the IRF 


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claim is not reported in a consistent 

manner, and we do not believe that it 

would be as beneficial as the proposed 

data collection when developing future 

policy regarding IRF therapy. We 

believe it is important to collect the 

most accurate and reliable information 

in order to develop future policy to 

increase the quality of care for IRF 

patients. Ultimately, we believe that by 

requiring providers to report each 

patient’s therapy information, in an 

effort to develop future policies and 

procedures regarding the amount and 

mode of therapy given, we are in fact 

focusing on improving the outcomes of 

the intensive rehabilitation that patients 

receive. 

We will be submitting a revision of 

the IRF–PAI information collection 

request currently approved under OMB 

control number 0938–0842. 

If you comment on these information 

collection and recordkeeping 

requirements, please submit your 

comments to the Office of Information 

and Regulatory Affairs, Office of 

Management and Budget, Attention: 

CMS Desk Officer, [CMS–1608–F], Fax: 

(202) 395–6974; or Email: OIRA_

submission@omb.eop.gov. 

XVI. Regulatory Impact Analysis 

A. Statement of Need 

This final rule updates the IRF 

prospective payment rates for FY 2015 

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

of the Act. It responds to section 

1886(j)(5) of the Act, which requires the 

Secretary to publish in the Federal 

Register on or before the August 1 that 

precedes the start of each fiscal year, the 

classification and weighting factors for 

the IRF PPS’s case-mix groups and a 

description of the methodology and data 

used in computing the prospective 

payment rates for that fiscal year. 

This rule implements sections 

1886(j)(3)(C) and (D) of the Act. Section 

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

Secretary to apply a multi-factor 

productivity adjustment to the market 

basket increase factor, and to apply 

other adjustments as defined by the Act. 

The productivity adjustment applies to 

FYs from 2012 forward. The other 

adjustments apply to FYs 2010 through 

2019. 

This rule also adopts some policy 

changes within the statutory discretion 

afforded to the Secretary under section 

1886(j) of the Act. We will collect data 

on the amount and mode (that is, 

Individual, Concurrent, Group, and CoTreatment) of therapy provided in the 

IRF setting according to therapy 

discipline, revise the list of impairment 

group codes that presumptively meet 

the 60 percent rule compliance criteria, 

provide a way for IRFs to indicate on 

the IRF–PAI form whether the prior 

treatment and severity requirements 

have been met for arthritis cases to 

presumptively meet the 60 percent rule 

compliance criteria, and revise and 

update quality measures and reporting 

requirements under the IRF quality 

reporting program. In this final rule, we 

also address the implementation of the 

International Classification of Diseases, 

10th Revision, Clinical Modification 

(ICD–10–CM) for the IRF prospective 

payment system (PPS), effective when 

ICD–10–CM becomes the required 

medical data code set for use on 

Medicare claims and IRF–PAI 

submissions. 

B. Overall Impacts 

We have examined the impacts of this 

final rule as required by Executive 

Order 12866 (September 30, 1993, 

Regulatory Planning and Review), 

Executive Order 13563 on Improving 

Regulation and Regulatory Review 

(January 18, 2011), the Regulatory 

Flexibility Act (September 19, 1980, 

Pub. L. 96–354) (RFA), section 1102(b) 

of the Act, section 202 of the Unfunded 

Mandates Reform Act of 1995 (Pub. L. 

104–4), Executive Order 13132 on 

Federalism (August 4, 1999), and the 

Congressional Review Act (5 U.S.C. 

804(2)). 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. A 

regulatory impact analysis (RIA) must 

be prepared for a major final rule with 

economically significant effects ($100 

million or more in any 1 year). We 

estimate the total impact of the policy 

updates described in this final rule by 

comparing the estimated payments in 

FY 2015 with those in FY 2014. This 

analysis results in an estimated $180 

million increase for FY 2015 IRF PPS 

payments. As a result, this final rule is 

designated as economically 

‘‘significant’’ under section 3(f)(1) of 

Executive Order 12866, and hence a 

major rule under the Congressional 

Review Act. Also, the rule has been 

reviewed by OMB. 

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 $35.5 million or less in any 

1 year depending on industry 

classification, or by being nonprofit 

organizations that are not dominant in 

their markets. (For details, see the Small 

Business Administration’s final rule that 

set forth size standards for health care 

industries, at 65 FR 69432 at http://

www.sba.gov/sites/default/files/files/

Size_Standards_Table.pdf, effective 

March 26, 2012.) Because we lack data 

on individual hospital receipts, we 

cannot determine the number of small 

proprietary IRFs or the proportion of 

IRFs’ revenue that is derived from 

Medicare payments. Therefore, we 

assume that all IRFs (an approximate 

total of 1,100 IRFs, of which 

approximately 60 percent are nonprofit 

facilities) are considered small entities 

and that Medicare payment constitutes 

the majority of their revenues. The 

Department of Health and Human 

Services generally uses a revenue 

impact of 3 to 5 percent as a significance 

threshold under the RFA. As shown in 

Table 13, we estimate that the net 

revenue impact of this final rule on all 

IRFs is to increase estimated payments 

by approximately 2.4 percent. However, 

we find that certain categories of IRF 

providers would be expected to 

experience revenue impacts in the 3 

percent range. We estimate a 3.1 percent 

overall impact for 141 urban IRFs and 

15 rural IRFs in the Middle Atlantic 

region, a 3.2 increase for 101 urban IRFs 

in the Pacific region, a 3.3 increase for 

27 rural IRFs in the West North Central 

region, and a 4.4 increase for four rural 

IRFs in the Pacific region. As a result, 

we anticipate this final rule will have a 

net positive impact on a substantial 

number of small entities. Medicare 

Administrative Contractors are not 

considered to be small entities. 

Individuals and states are not included 

in the definition of a small entity. 

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis if a rule may have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. This analysis must conform to 

the provisions of section 604 of the 

RFA. For purposes of section 1102(b) of 

the Act, we define a small rural hospital 

as a hospital that is located outside of 

a Metropolitan Statistical Area and has 


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fewer than 100 beds. As discussed in 

detail below, the rates and policies set 

forth in this final rule will not have a 

significant impact (not greater than 3 

percent) on rural hospitals based on the 

data of the 165 rural units and 17 rural 

hospitals in our database of 1,142 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 1 year of $100 

million in 1995 dollars, updated 

annually for inflation. In 2014, that 

threshold level is approximately $141 

million. This final rule will not impose 

spending costs on state, local, or tribal 

governments, in the aggregate, or by the 

private sector, of greater than $141 

million. 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a final 

rule that imposes substantial direct 

requirement costs on state and local 

governments, preempts state law, or 

otherwise has federalism implications. 

As stated above, this final rule will not 

have a substantial effect on state and 

local governments, preempt state law, or 

otherwise have a federalism 

implication. 

C. Detailed Economic Analysis 

1. Basis and Methodology of Estimates 

This final rule sets forth policy 

changes and updates to the IRF PPS 

rates contained in the FY 2014 IRF PPS 

final rule (78 FR 47860). Specifically, 

this final rule updates the CMG relative 

weights and average length of stay 

values, the wage index, and the outlier 

threshold for high-cost cases. This final 

rule also applies a MFP adjustment to 

the FY 2015 RPL market basket increase 

factor in accordance with section 

1886(j)(3)(C)(ii)(I) of the Act, and a 0.2 

percentage point reduction to the FY 

2015 RPL market basket increase factor 

in accordance with sections 

1886(j)(3)(C)(ii)(II) and –(D)(iv) of the 

Act. Further, this final rule contains 

additional changes to the presumptive 

methodology and additional therapy 

and quality data collection that are 

expected to result in some additional 

financial effects on IRFs. In addition, 

section XII of this rule discusses the 

implementation of the required 2 

percentage point reduction of the 

market basket increase factor for any IRF 

that fails to meet the IRF quality 

reporting requirements, in accordance 

with section 1886(j)(7) of the Act. 

We estimate that the impact of the 

changes and updates described in this 

final rule will be a net estimated 

increase of $180 million in payments to 

IRF providers. This estimate does not 

include the estimated impacts of the 

additional changes to the presumptive 

compliance method and the additional 

therapy and quality data collection, as 

discussed in section 8 of this Economic 

Analysis. In addition, it does not 

include the implementation of the 

required 2 percentage point reduction of 

the market basket increase factor for any 

IRF that fails to meet the IRF quality 

reporting requirements (as discussed in 

section 9 of this Economic Analysis). 

The impact analysis in Table 13 of this 

final rule represents the projected 

effects of the updates to IRF PPS 

payments for FY 2015 compared with 

the estimated IRF PPS payments in FY 

2014. We determine the effects by 

estimating payments while holding all 

other payment variables constant. We 

use the best data available, but we do 

not attempt to predict behavioral 

responses to these changes, and we do 

not make adjustments for future changes 

in such variables as number of 

discharges or case-mix. 

We note that certain events may 

combine to limit the scope or accuracy 

of our impact analysis, because such an 

analysis is future-oriented and, thus, 

susceptible to forecasting errors because 

of other changes in the forecasted 

impact time period. Some examples 

could be legislative changes made by 

the Congress to the Medicare program 

that would impact program funding, or 

changes specifically related to IRFs. 

Although some of these changes may 

not necessarily be specific to the IRF 

PPS, the nature of the Medicare program 

is such that the changes may interact, 

and the complexity of the interaction of 

these changes could make it difficult to 

predict accurately the full scope of the 

impact upon IRFs. 

In updating the rates for FY 2015, we 

are adopting standard annual revisions 

described in this final rule (for example, 

the update to the wage and market 

basket indexes used to adjust the federal 

rates). We are also implementing a 

productivity adjustment to the FY 2015 

RPL market basket increase factor in 

accordance with section 

1886(j)(3)(C)(ii)(I) of the Act, and a 0.2 

percentage point reduction to the FY 

2015 RPL market basket increase factor 

in accordance with sections 

1886(j)(3)(C)(ii)(II) and –(D)(iv) of the 

Act. We estimate the total increase in 

payments to IRFs in FY 2015, relative to 

FY 2014, will be approximately $180 

million. 

This estimate is derived from the 

application of the FY 2015 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 0.2 percentage point 

reduction in accordance with sections 

1886(j)(3)(C)(ii)(II) and –(D)(iv) of the 

Act, which yields an estimated increase 

in aggregate payments to IRFs of $165 

million. Furthermore, there is an 

additional estimated $15 million 

increase in aggregate payments to IRFs 

due to the update to the outlier 

threshold amount. Outlier payments are 

estimated to increase from 

approximately 2.8 percent in FY 2014 to 

3.0 percent in FY 2015. Therefore, 

summed together, we estimate that these 

updates will result in a net increase in 

estimated payments of $180 million 

from FY 2014 to FY 2015. 

The effects of the updates that impact 

IRF PPS payment rates are shown in 

Table 13. The following updates that 

affect the IRF PPS payment rates are 

discussed separately below: 

• The effects of the update to the 

outlier threshold amount, from 

approximately 2.8 percent to 3.0 percent 

of total estimated payments for FY 2015, 

consistent with section 1886(j)(4) of the 

Act. 

• The effects of the annual market 

basket update (using the RPL market 

basket) to IRF PPS payment rates, as 

required by section 1886(j)(3)(A)(i) and 

sections 1886(j)(3)(C) and –(D) of the 

Act, including a productivity 

adjustment in accordance with section 

1886(j)(3)(C)(i)(I) of the Act, and a 0.2 

percentage point reduction in 

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

and –(D) of the Act. 

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

index adjustment, as required under 

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

• The effects of the budget-neutral 

changes to the CMG relative weights 

and average length of stay values, under 

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

of the Act. 

• The total change in estimated 

payments based on the FY 2015 

payment changes relative to the 

estimated FY 2014 payments. 

2. Description of Table 13 

Table 13 categorizes IRFs by 

geographic location, including urban or 

rural location, and location for CMS’s 9 

census divisions (as defined on the cost 

report) of the country. In addition, the 

table divides IRFs into those that are 

separate rehabilitation hospitals 

(otherwise called freestanding hospitals 

in this section), those that are 

rehabilitation units of a hospital 


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(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 13 shows the overall 

impact on the 1,142 IRFs included in 

the analysis. 

The next 12 rows of Table 13 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 960 

IRFs located in urban areas included in 

our analysis. Among these, there are 732 

IRF units of hospitals located in urban 

areas and 228 freestanding IRF hospitals 

located in urban areas. There are 182 

IRFs located in rural areas included in 

our analysis. Among these, there are 165 

IRF units of hospitals located in rural 

areas and 17 freestanding IRF hospitals 

located in rural areas. There are 339 forprofit IRFs. Among these, there are 335 

IRFs in urban areas and 64 IRFs in rural 

areas. There are 673 non-profit IRFs. 

Among these, there are 567 urban IRFs 

and 106 rural IRFs. There are 70 

government-owned IRFs. Among these, 

there are 58 urban IRFs and 12 rural 

IRFs. 

The remaining four parts of Table 13 

show IRFs grouped by their geographic 

location within a region, by teaching 

status, and by DSH PP. First, IRFs 

located in urban areas are categorized 

for their location within a particular one 

of the nine Census geographic regions. 

Second, IRFs located in rural areas are 

categorized for their location within a 

particular one of the nine Census 

geographic regions. In some cases, 

especially for rural IRFs located in the 

New England, Mountain, and Pacific 

regions, the number of IRFs represented 

is small. IRFs are then grouped by 

teaching status, including non-teaching 

IRFs, IRFs with an intern and resident 

to average daily census (ADC) ratio less 

than 10 percent, IRFs with an intern and 

resident to ADC ratio greater than or 

equal to 10 percent and less than or 

equal to 19 percent, and IRFs with an 

intern and resident to ADC ratio greater 

than 19 percent. Finally, IRFs are 

grouped by DSH PP, including IRFs 

with zero DSH PP, IRFs with a DSH PP 

less than 5 percent, IRFs with a DSH PP 

between 5 and less than 10 percent, 

IRFs with a DSH PP between 10 and 20 

percent, and IRFs with a DSH PP greater 

than 20 percent. 

The estimated impacts of each policy 

described in this final rule to the facility 

categories listed above are shown in the 

columns of Table 13. 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 2013 

analysis file. 

• Column (3) shows the number of 

cases in each category in our FY 2013 

analysis file. 

• Column (4) shows the estimated 

effect of the adjustment to the outlier 

threshold amount. 

• Column (5) shows the estimated 

effect of the update to the IRF PPS 

payment rates, which includes a 

productivity adjustment in accordance 

with section 1886(j)(3)(C)(ii)(I) of the 

Act, and a 0.2 percentage point 

reduction in accordance with sections 

1886(j)(3)(C)(ii)(II) and –(D)(iv) of the 

Act. 

• Column (6) shows the estimated 

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

budget-neutral manner. 

• Column (7) shows the estimated 

effect of the update to the CMG relative 

weights and average length of stay 

values, in a budget-neutral manner. 

• Column (8) compares our estimates 

of the payments per discharge, 

incorporating all of the proposed 

policies reflected in this final rule for 

FY 2015 to our estimates of payments 

per discharge in FY 2014. 

The average estimated increase for all 

IRFs is approximately 2.4 percent. This 

estimated net increase includes the 

effects of the RPL market basket increase 

factor for FY 2015 of 2.9 percent, 

reduced by a productivity adjustment of 

0.5 percentage point in accordance with 

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

further reduced by 0.2 percentage point 

in accordance with sections 

1886(j)(3)(C)(ii)(II) and –(D)(iv) of the 

Act. It also includes the approximate 0.2 

percent overall increase in estimated 

IRF outlier payments from the update to 

the outlier threshold amount. Since we 

are making the updates to the IRF wage 

index and the CMG relative weights in 

a budget-neutral manner, they will not 

be expected to affect total estimated IRF 

payments in the aggregate. However, as 

described in more detail in each section, 

they will be expected to affect the 

estimated distribution of payments 

among providers. 

TABLE 13—IRF IMPACT TABLE FOR FY 2015 

[Columns 4–9 in %] 

Facility classification Number of 

IRFs 

Number of 

cases Outlier 

Adjusted 

market 

basket 

increase 

factor for 

FY 2015 1

FY 2015 

CBSA wage 

index 

and laborshare 

CMG 

Total 

percent 

change 

(1) (2) (3) (4) (5) (6) (7) (9) 

Total ......................................................... 1,142 389,157 0.2 2.2 0.0 0.0 2.4 

Urban unit ................................................ 732 179,336 0.3 2.2 0.0 0.0 2.6 

Rural unit .................................................. 165 26,444 0.3 2.2 0.0 0.1 2.6 

Urban hospital .......................................... 228 177,726 0.1 2.2 0.0 0.0 2.2 

Rural hospital ........................................... 17 5,651 0.1 2.2 ¥0.1 0.0 2.2 

Urban For-Profit ....................................... 335 165,971 0.1 2.2 ¥0.2 0.0 2.1 

Rural For-Profit ........................................ 64 12,484 0.2 2.2 ¥0.2 0.1 2.4 

Urban Non-Profit ...................................... 567 175,276 0.3 2.2 0.2 0.0 2.6 

Rural Non-Profit ....................................... 106 17,698 0.3 2.2 0.1 0.1 2.7 

Urban Government .................................. 58 15,815 0.3 2.2 ¥0.1 0.0 2.4 

Rural Government .................................... 12 1,913 0.4 2.2 ¥0.5 0.1 2.2 

Urban ....................................................... 960 357,062 0.2 2.2 0.0 0.0 2.4 


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TABLE 13—IRF IMPACT TABLE FOR FY 2015—Continued 

[Columns 4–9 in %] 

Facility classification Number of 

IRFs 

Number of 

cases Outlier 

Adjusted 

market 

basket 

increase 

factor for 

FY 2015 1

FY 2015 

CBSA wage 

index 

and laborshare 

CMG 

Total 

percent 

change 

(1) (2) (3) (4) (5) (6) (7) (9) 

Rural ......................................................... 182 32,095 0.3 2.2 –0.1 0.1 2.5 

Urban by Region 

Urban New England ................................. 30 16,946 0.1 2.2 0.4 ¥0.1 2.6 

Urban Middle Atlantic ............................... 141 58,438 0.2 2.2 0.8 0.0 3.1 

Urban South Atlantic ................................ 138 64,756 0.2 2.2 ¥0.1 ¥0.1 2.2 

Urban East North Central ........................ 180 53,400 0.2 2.2 ¥0.2 0.0 2.2 

Urban East South Central ........................ 50 24,482 0.1 2.2 ¥0.5 ¥0.1 1.7 

Urban West North Central ....................... 73 18,700 0.2 2.2 ¥0.4 0.0 2.0 

Urban West South Central ....................... 173 71,028 0.2 2.2 ¥0.3 0.1 2.1 

Urban Mountain ....................................... 74 23,158 0.2 2.2 ¥0.7 0.0 1.7 

Urban Pacific ............................................ 101 26,154 0.4 2.2 0.6 0.0 3.2 

Rural by Region 

Rural New England .................................. 5 1,270 0.2 2.2 0.0 ¥0.1 2.3 

Rural Middle Atlantic ................................ 15 2,557 0.2 2.2 0.5 0.2 3.1 

Rural South Atlantic ................................. 24 6,028 0.1 2.2 ¥0.1 0.1 2.4 

Rural East North Central ......................... 31 5,244 0.3 2.2 ¥0.2 0.1 2.4 

Rural East South Central ......................... 21 3,497 0.3 2.2 ¥0.1 0.1 2.5 

Rural West North Central ........................ 27 3,460 0.5 2.2 0.5 0.1 3.3 

Rural West South Central ........................ 48 8,974 0.2 2.2 ¥0.4 0.2 2.2 

Rural Mountain ......................................... 7 683 0.7 2.2 ¥0.1 0.0 2.8 

Rural Pacific ............................................. 4 382 0.9 2.2 1.2 0.0 4.4 

Teaching Status 

Non-teaching ............................................ 1,033 343,078 0.2 2.2 0.0 0.0 2.4 

Resident to ADC less than 10% .............. 60 31,090 0.2 2.2 0.3 ¥0.1 2.6 

Resident to ADC 10%–19% .................... 39 13,981 0.3 2.2 ¥0.1 ¥0.1 2.4 

Resident to ADC greater than 19% ......... 10 1,008 0.2 2.2 0.2 0.0 2.5 

Disproportionate Share Patient Percentage (DSH PP) 

DSH PP = 0% .......................................... 37 6,323 0.5 2.2 0.0 0.0 2.8 

DSH PP less than 5% ............................. 185 65,137 0.2 2.2 0.1 0.1 2.6 

DSH PP 5%–10% .................................... 333 130,367 0.2 2.2 ¥0.1 0.0 2.3 

DSH PP 10%–20% .................................. 362 126,848 0.2 2.2 0.1 0.0 2.5 

DSH PP greater than 20% ...................... 225 60,482 0.3 2.2 ¥0.1 ¥0.1 2.3 

1This column reflects the impact of the RPL market basket increase factor for FY 2015 (2.9 percent), reduced by a 0.5 percentage point reduction for the productivity adjustment as required by section 1886(j)(3)(C)(ii)(I) of the Act, and reduced by 0.2 percentage points in accordance 

with paragraphs 1886(j)(3)(C) and (D) of the Act. 

3. Impact of the Update to the Outlier 

Threshold Amount 

The estimated effects of the update to 

the outlier threshold adjustment are 

presented in column 4 of Table 13. In 

the FY 2014 IRF PPS final rule (78 FR 

47860), we used FY 2012 IRF claims 

data (the best, most complete data 

available at that time) to set the outlier 

threshold amount for FY 2014 so that 

estimated outlier payments would equal 

3 percent of total estimated payments 

for FY 2014. 

For this final rule, we are updating 

our analysis using FY 2013 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 2014. Thus, we are adjusting the 

outlier threshold amount in this final 

rule to set total estimated outlier 

payments equal to 3 percent of total 

estimated payments in FY 2015. The 

estimated change in total IRF payments 

for FY 2015, 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 outlier adjustment 

update (as shown in column 4 of Table 

13) 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 0.9 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 Market Basket Update 

to the IRF PPS Payment Rates 

The estimated effects of the market 

basket update to the IRF PPS payment 

rates are presented in column 5 of Table 

13. In the aggregate the update would 

result in a net 2.2 percent increase in 


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45934 Federal Register / Vol. 79, No. 151 / Wednesday, August 6, 2014 / Rules and Regulations 

overall estimated payments to IRFs. 

This net increase reflects the estimated 

RPL market basket increase factor for FY 

2014 of 2.9 percent, reduced by the 0.2 

percentage point in accordance with 

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

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

reduced by a 0.5 percentage point 

productivity adjustment as required by 

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

5. Impact of the CBSA Wage Index and 

Labor-Related Share 

In column 6 of Table 13, we present 

the effects of the budget-neutral update 

of the wage index and labor-related 

share. The changes to the wage index 

and the labor-related share are 

discussed together because the wage 

index is applied to the labor-related 

share portion of payments, so the 

proposed changes in the two have a 

combined effect on payments to 

providers. As discussed in section VI.D. 

of this final rule, we will decrease the 

labor-related share from 69.494 percent 

in FY 2014 to 69.294 percent in FY 

2015. 

In the aggregate, since these updates 

to the wage index and the labor-related 

share are applied in a budget-neutral 

manner as required under section 

1886(j)(6) of the Act, we do not estimate 

that these updates will affect overall 

estimated payments to IRFs. However, 

we estimate that these updates will have 

small distributional effects. For 

example, we estimate the largest 

increase in payments from the update to 

the CBSA wage index and labor-related 

share of 1.2 percent for rural IRFs in the 

Pacific region. We estimate the largest 

decrease in payments from the update to 

the CBSA wage index and labor-related 

share to be a 0.7 percent decrease for 

urban IRFs in the Mountain region. 

6. Impact of the Update to the CMG 

Relative Weights and Average Length of 

Stay Values 

In column 7 of Table 13, we present 

the effects of the budget-neutral update 

of the CMG relative weights and average 

length of stay values. In the aggregate, 

we do not estimate that these updates 

will affect overall estimated payments of 

IRFs. However, we do expect these 

updates to have small distributional 

effects. The largest estimated increase in 

payments is a 0.2 percent increase in 

rural Middle Atlantic and rural West 

South Central IRFs. Urban areas in New 

England, South Atlantic, and East South 

Central and rural New England are 

estimated to experiences a 0.1 percent 

decrease in payments due to the CMG 

relative weights change. 

7. Effects of the Changes to the 

Presumptive Compliance Method for 

Compliance Review Periods Beginning 

on or After October 1, 2014 

As discussed in section VIII. of this 

final rule, we are making some 

additional changes to the presumptive 

compliance method for compliance 

review periods beginning on or after 

October 1, 2015. We do not estimate that 

the removal of the ‘‘amputation status’’ 

codes will have any significant financial 

effects on IRFs, as our data analysis 

indicates that IRFs are only using these 

codes for about 2 percent of cases and 

these codes are only being used to count 

patients towards the 60 percent rule in 

0.3 percent of cases. Similarly, we do 

not estimate that the proposed exclusion 

of the non-specific Etiologic Diagnosis 

codes from the IGCs will have any 

significant financial effects on IRFs, as 

we estimate that IRFs will be able to 

switch to using the more specific codes 

that are available for the Etiologic 

Diagnoses instead. 

We do, however, believe that there 

could be a financial effect on IRFs from 

the removal of the Unilateral Upper 

Extremity Amputations and Arthritis 

IGCs from the presumptive compliance 

method, as the removal of these IGCs 

from presumptively counting toward 

meeting the 60 percent rule compliance 

threshold could result in more IRFs 

failing to meet the requirements solely 

on the basis of the presumptive 

compliance method and being required 

to be evaluated using the medical 

review method. We estimate that these 

effects would be concentrated in 

approximately 10 percent of IRFs that 

admit a high number of patients with 

Unilateral Upper Extremity Amputation 

and Arthritis conditions, and that the 

effects would vary substantially among 

IRFs. As discussed in section X. of this 

final rule, we are providing IRFs with 

the ability to indicate on the IRF–PAI 

that a particular arthritis case meets the 

severity and prior treatment regulatory 

requirements, the purpose of which is to 

mitigate some of the financial effects for 

these IRFs while still allowing Medicare 

to ensure that the regulatory 

requirements are being met. 

Comment: One commenter disagreed 

with our statement that the removal of 

non-specific codes from the 

presumptive methodology 

determination will not have a financial 

effect on IRFs because they will be able 

to change their coding practices to use 

more specific diagnosis codes instead. 

This commenter said that the 

information needed to report more 

specific diagnosis codes is not always 

available to IRFs. 

Response: As we indicated in the FY 

2014 IRF PPS final rule (78 FR 47860, 

47887), we previously decided to allow 

some non-specific codes to count 

toward the presumptive methodology 

because we recognized that it would be 

extremely difficult for IRFs to gather the 

necessary information to code a more 

specific code in those particular cases. 

However, after careful analysis, we 

believe that the remaining non-specific 

codes that will not count toward an 

IRF’s presumptive compliance with the 

60 percent rule are ones that the IRF can 

and should make every effort to code 

more specifically. Even if the necessary 

information to code more specifically is 

not available in the acute care medical 

record, we believe that the IRF should 

make every effort to obtain the 

necessary information to code more 

specifically. This is consistent with 

reduction in the use of non-specific 

codes for other Medicare settings. 

8. Effects of New Therapy Information 

Section 

Because the type, amount, frequency, 

and duration of therapy provided in 

IRFs is documented in detail in the IRF 

medical records as part of the 

requirements for meeting Medicare’s 

conditions of participation and IRF 

coverage requirements, we estimate that 

the additional costs incurred by IRFs for 

FY 2016 for the new proposed Therapy 

Information Section of the IRF–PAI 

would be based on the 4 additional 

minutes per IRF–PAI form to transfer 

the information from the IRF medical 

record to the IRF–PAI form. We estimate 

that this would result in an additional 

cost of $1.2 million to all IRFs for FY 

2016. 

Comment: Many commenters said 

that our estimates of the overall costs to 

IRFs of the therapy data collection on 

the IRF–PAI are too low. They said that 

the costs of making the necessary 

modifications to their medical record 

systems and the training that will be 

required for therapists, nurses, and 

other clinical staff to ensure that they 

can record the data in a form and 

manner that will be compatible with the 

new data collection requirements will 

be substantial. In addition, there were 

comments regarding the added burden 

due to our original proposal to include 

the average number of minutes by mode 

and type of therapy for weeks 3 and 

beyond of a patient’s IRF stay. 

Response: We appreciate the detailed 

comments that we received on this 

issue, and we understand, based on 

these comments, that the proposed 

collection of average number of minutes 

by mode and type of therapy for weeks 

3 and beyond of a patient’s IRF stay 


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Federal Register / Vol. 79, No. 151 / Wednesday, August 6, 2014 / Rules and Regulations 45935 

would require additional resources from 

the IRFs to operationalize. For this 

reason, we have withdrawn the proposal 

to collect the average number of minutes 

for weeks 3 and beyond. Instead, we 

will require IRFs to report on the IRF– 

PAI the total number of minutes of 

therapy provided to a patient, by mode 

and therapy discipline, for only week 1 

and week 2 of the IRF stay. As described 

in section IX of this final rule, we 

believe that this will give us the 

minimum information that we need to 

develop future policy and to understand 

the nature of the services that Medicare 

is paying for under the IRF PPS, while 

also minimizing the costs to providers. 

We carefully considered commenters’ 

suggestions that we add the collection of 

Concurrent Therapy as a mode and 

revise the definition of Group Therapy 

so that new data collection items would 

be consistent with the way in which 

facilities were already recording the 

information in the patient’s medical 

record. We believe this will reduce the 

need for training and help to minimize 

burden. Finally, although we 

understand that updating specific 

software that IRFs use to collect this 

information can include additional 

costs, we view this as a provider 

business decision. Providers may 

always opt to use the IRVEN software 

supplied by CMS for collecting and 

submitting the IRF–PAI information. 

Given the revisions to the data 

collection described in section IX of this 

final rule, we believe that the cost 

estimate indicated for this data 

collection in the proposed rule is 

accurate. 

9. Effects of Updates to the IRF QRP 

As discussed in section XI.A. of this 

final rule and in accordance with 

section 1886(j)(7) of the Act, we will 

implement a 2 percentage point 

reduction in the FY 2015 increase factor 

for IRFs that have failed to report the 

required quality reporting data to us 

during the most recent IRF quality 

reporting period. In section XI.A of this 

final rule, we discuss how the 2 

percentage point reduction will be 

applied. Only a few IRFs received the 2 

percentage point reduction in the FY 

2014 increase factor for failure to report 

the required quality reporting data last 

year, and we would anticipate that even 

fewer IRFs will receive the reduction for 

FY 2015 as they are now more familiar 

with the IRF QRP reporting 

requirements. 

In sections XI.K and XI.L of this final 

rule, we have finalized our proposal to 

adopt a new data completion threshold 

as well as a new data accuracy 

validation policy. While we cannot 

estimate the increase in the number of 

IRFs that will not meet our proposed 

requirements at this time, we believe 

that these finalized policies may 

increase the number of IRFs that receive 

a 2 percent point reduction to their FY 

annual increase factor for FY 2016 and 

beyond. Thus, we estimate that this 

policy will increase impact on overall 

IRF payments, by increasing the rate of 

non-compliance by an estimated 5 

percent, for FY 2016 and beyond, 

decreasing the number of IRF providers 

that will receive their full annual 

increase factor for FY 2016 and beyond. 

In this FY 2015 IRF PPS final rule, we 

finalized our proposal to adopt two new 

quality measures (MRSA and CDI), as 

well as to adopt a new data accuracy 

validation policy. Together, we estimate 

that these proposals will increase the 

cost to all IRF providers by $852,238 

annually, for an average cost to IRF 

providers of $747.57 annually. This is 

an average increase of approximately 

4.43 percent to all IRF providers over 

the FY 2014 burden. While we also 

proposed to adopt a data completion 

threshold policy, this policy, if 

finalized, will have no associated cost 

burden beyond that discussed in the 

first paragraph of this section (XI.C.9) of 

this final rule. 

We intend to closely monitor the 

effects of this new quality reporting 

program on IRF providers and help 

perpetuate successful reporting 

outcomes through ongoing stakeholder 

education, national trainings, CMS 

Open Door Forums, and general and 

technical help desks. We did not receive 

any public comments with regard to this 

section of the proposed rule. 

D. Alternatives Considered 

The following is a discussion of the 

alternatives considered for the IRF PPS 

updates contained in this final rule. 

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

requires the Secretary to update the IRF 

PPS payment rates by an increase factor 

that reflects changes over time in the 

prices of an appropriate mix of goods 

and services included in the covered 

IRF services. Thus, we did not consider 

alternatives to updating payments using 

the estimated RPL market basket 

increase factor for FY 2015. However, as 

noted previously in this final rule, 

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

requires the Secretary to apply a 

productivity adjustment to the market 

basket increase factor for FY 2015, and 

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

1886(j)(3)(D)(iv) of the Act require the 

Secretary to apply a 0.2 percentage 

point reduction to the market basket 

increase factor for FY 2015. Thus, in 

accordance with section 1886(j)(3)(C) of 

the Act, we are updating the IRF federal 

prospective payments in this final rule 

by 2.2 percent (which equals the 2.9 

percent estimated RPL market basket 

increase factor for FY 2015 reduced by 

0.2 percentage points, and further 

reduced by a 0.5 percentage point 

productivity adjustment as required by 

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

We considered maintaining the 

existing CMG relative weights and 

average length of stay values for FY 

2015. However, in light of recently 

available data and our desire to ensure 

that the CMG relative weights and 

average length of stay values are as 

reflective as possible of recent changes 

in IRF utilization and case mix, we 

believe that it is appropriate to update 

the CMG relative weights and average 

length of stay values at this time to 

ensure that IRF PPS payments continue 

to reflect as accurately as possible the 

current costs of care in IRFs. 

We considered updating facility-level 

adjustment factors for FY 2015. 

However, as discussed in more detail in 

section V.B. of this final rule, we believe 

that freezing the facility-level 

adjustments at FY 2014 levels for FY 

2015 and all subsequent years (unless 

and until the data indicate that they 

need to be further updated) will allow 

us an opportunity to monitor the effects 

of the substantial changes to the 

adjustment factors for FY 2014, and will 

allow IRFs time to adjust to last year’s 

changes. 

We considered maintaining the 

existing outlier threshold amount for FY 

2015. However, analysis of updated FY 

2013 data indicates that estimated 

outlier payments would be lower than 3 

percent of total estimated payments for 

FY 2015, by approximately 0.2 percent, 

unless we updated the outlier threshold 

amount. Consequently, we are adjusting 

the outlier threshold amount in this 

final 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 2015. 

We considered making no further 

changes to the presumptive compliance 

method in this final rule. However, to be 

consistent with the changes to the 

presumptive compliance method that 

we implemented in the FY 2014 IRF 

PPS final rule, and to correct some 

inadvertent omissions in last year’s final 

rule, we believe it is important to make 

further changes in this final rule. 

However, to ensure that the IRF–PAI 

item designed to mitigate some of the 

burden of additional medical reviews 

that could result from the changes to the 

presumptive compliance method is 

available on the IRF–PAI on the same 


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45936 Federal Register / Vol. 79, No. 151 / Wednesday, August 6, 2014 / Rules and Regulations 

date or prior to the effective date of 

those changes, we are delaying the 

effective date of the changes to the 

presumptive compliance method. Both 

the changes to the presumptive 

compliance method that we finalized in 

the FY 2014 IRF PPS final rule and the 

additional changes to the presumptive 

compliance method that are finalized in 

this rule will become effective for 

compliance review periods beginning 

on or after October 1, 2015. 

We considered not including the new 

Therapy Information Section on the 

IRF–PAI. However, we believe that it is 

vitally important for Medicare to better 

understand the ways in which therapy 

services are currently being provided in 

IRFs and, most importantly, what 

services Medicare is paying for under 

the IRF benefit. 

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 14, we have prepared an 

accounting statement showing the 

classification of the expenditures 

associated with the provisions of this 

final rule. Table 14 provides our best 

estimate of the increase in Medicare 

payments under the IRF PPS as a result 

of the updates presented in this final 

rule based on the data for 1,142 IRFs in 

our database. In addition, Table 14 

presents the costs associated with the 

new IRF quality reporting program and 

therapy reporting requirements for FY 

2015. 

TABLE 14—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED EXPENDITURES

Category Transfers 

Change in Estimated Transfers from FY 2014 IRF PPS to FY 2015 IRF PPS 

Annualized Monetized Transfers .............................................................. $180 million. 

From Whom to Whom? ............................................................................ Federal Government to IRF Medicare Providers. 

Category Costs 

FY 2015 Cost to Updating the Quality Reporting Program 

Cost for IRFs to Submit Data for the Quality Reporting Program ........... $852,238. 

FY 2016 Cost for Therapy Data Collection 

Cost for IRFs to Submit Therapy Data .................................................... $1.2 million. 

F. Conclusion 

Overall, the estimated payments per 

discharge for IRFs in FY 2015 are 

projected to increase by 2.4 percent, 

compared with the estimated payments 

in FY 2014, as reflected in column 9 of 

Table 13. IRF payments per discharge 

are estimated to increase by 2.4 percent 

in urban areas and by 2.5 percent in 

rural areas, compared with estimated FY 

2014 payments. Payments per discharge 

to rehabilitation units are estimated to 

increase 2.6 percent in urban and rural 

areas. Payments per discharge to 

freestanding rehabilitation hospitals are 

estimated to increase 2.2 percent in 

urban and rural areas. 

Overall, IRFs are estimated to 

experience a net increase in payments 

as a result of the policies in final rule. 

The largest payment increase is 

estimated to be a 4.4 percent increase 

for rural IRFs located in the Pacific 

region. 

Dated: July 24, 2014. 

Marilyn Tavenner, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Approved: July 30, 2014. 

Sylvia M. Burwell, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2014–18447 Filed 7–31–14; 4:15 pm] 

BILLING CODE 4120–01–P 


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