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CMS issues proposed IRF payment rule for FY 2014

May 3, 2013

The Centers for Medicare & Medicaid Services yesterday issued a proposed rule increasing Medicare payments for inpatient rehabilitation facilities by 2% ($150 million) in fiscal year 2014. The net increase includes a marketbasket update of 2.5%, minus a 0.4% productivity adjustment and 0.3 percentage point reduction mandated by the Patient Protection and Affordable Care Act, plus a 0.2% increase due to proposed outlier payment changes. In addition, the regulation would modify the process used to assess IRF compliance with the “60% Rule,” which requires 60% of an IRF’s cases for the prior 12-month compliance period to fall within 13 qualifying conditions. The proposed rule would require new, more specific codes for the patient’s condition, severity of illness, and anatomical location of illness so CMS contractors can more accurately assess a facility’s compliance with the 60% Rule. Currently, the agency often estimates 60% Rule compliance since the policy does not fully align with IRF coding. CMS said it expects all facilities will be able to adapt to the new coding approach and that it does not expect the proposal to affect net Medicare payments to IRFs. The rule will be published in the May 8 Federal Register with comments accepted through July 1.