Health Law Daily CMS issues final rule on inpatient rehabilitation facility prospective payment system for fiscal year 2022
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Monday, August 2, 2021

CMS issues final rule on inpatient rehabilitation facility prospective payment system for fiscal year 2022

By Jeffrey H. Brochin, J.D.

Final rule updates the prospective payment rates for IRFs for federal fiscal year (FY) 2022 and includes the classification and weighting factors for the IRF PPS case-mix groups, as well as a description of the methodologies and data used in computing the PPS rates.

CMS has issued a final rule updating Medicare payment policies and rates for facilities under the inpatient rehabilitation facility (IRF) prospective payment system (PPS) and finalizing policies under the IRF Quality Reporting Program (QRP). In addition, CMS finalized the Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) payment provision adopted in an interim final rule issued on May 11, 2018.

Statutory Basis and Scope for IRF PPS Provisions. Section 1886(j) of the of the Social Security Act (the Act) provides for the implementation of a per-discharge 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. 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).

Updates to IRF payment rates. The final rule updates the prospective payment rates for IRFs for FY 2022 (that is, for discharges occurring on or after October 1, 2021, and on or before September 30, 2022) as required under section 1886(j)(3)(C) of the Social Security Act (the Act). As required by section 1886(j)(5) of the Act, the final rule includes the classification and weighting factors for the IRF PPS’s case-mix groups (CMGs) and a description of the methodologies and data used in computing the prospective payment rates for FY 2022. The final rule adds one new measure to the IRF QRP and modifies the denominator for another measure currently under the IRF QRP beginning with the FY 2023 IRF QRP. In addition, the final rule modifies the number of quarters used for publicly reporting certain IRF QRP measures due to the public health emergency (PHE).

Percentage increases for FY 2022. For FY 2022, CMS is updating the IRF PPS payment rates by 1.9% based on the IRF-specific market basket estimate of 2.6%, less a 0.7 percentage point productivity adjustment. In addition, the final rule contains an adjustment to the outlier threshold to maintain outlier payments at 3.0% of total payments. This adjustment will result in a 0.4 percentage point decrease in outlier payments. CMS estimates that the overall IRF payments for FY 2022 would increase 1.5% (or $130 million), relative to payments in FY 2021.

Inpatient Rehabilitation Facility Quality Reporting Program (IRF QRP). The IRF QRP is a pay-for-reporting program. IRFs that do not meet reporting requirements are subject to a two-percentage point (2.0%) reduction in their annual increase factor. CMS is adopting one measure and finalizing its proposal to update the specifications for another measure. In addition, CMS is finalizing its proposal to modify the number of quarters used for public reporting of IRF quality measures due to the public health emergency and sought comments for two Requests for Information (RFI).

Final rule affects DMEPOS. The final rule also finalized a Medicare provision adopted in an interim final rule published in May 11, 2018, titled ‘Medicare Program; Durable Medical Equipment Fee Schedule Adjustments to Resume the Transitional 50/50 Blended Rates to Provide Relief in Rural Areas and Non-Contiguous Areas’ (83 FR 21912).

That rule excluded the fee schedule amounts for wheelchair accessories (including seating systems) and seat and back cushions furnished in connection with group 3 or higher complex rehabilitative power wheelchairs from adjustments based on information from the Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program (CBP).

The FY 2022 IRF PPS payment rates and policies will be effective on October 1, 2021.

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