Rule2022-16225
Medicare Program; Inpatient Rehabilitation Facility Prospective Payment System for Federal Fiscal Year 2023 and Updates to the IRF Quality Reporting Program
Primary source
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Published
August 1, 2022
Effective
October 1, 2022
Issuing agencies
Health and Human Services DepartmentCenters for Medicare & Medicaid Services
Abstract
This final rule updates the prospective payment rates for inpatient rehabilitation facilities (IRFs) for Federal fiscal year (FY) 2023. As required by statute, this final rule includes the classification and weighting factors for the IRF prospective payment system's case-mix groups and a description of the methodologies and data used in computing the prospective payment rates for FY 2023. In addition, this final rule codifies CMS' existing teaching status adjustment policy through amendments to the regulation text and updates and clarifies the IRF teaching policy with respect to IRF hospital closures and displaced residents. This rule establishes a permanent cap policy to smooth the impact of year-to-year changes in IRF payments related to decreases in the IRF wage index. This final rule also includes updates for the IRF Quality Reporting Program (QRP).
Full Text
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[Federal Register Volume 87, Number 146 (Monday, August 1, 2022)]
[Rules and Regulations]
[Pages 47038-47092]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-16225]
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Vol. 87
Monday,
No. 146
August 1, 2022
Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Part 412
Medicare Program; Inpatient Rehabilitation Facility Prospective Payment
System for Federal Fiscal Year 2023 and Updates to the IRF Quality
Reporting Program; Final Rule
Federal Register / Vol. 87 , No. 146 / Monday, August 1, 2022 / Rules
and Regulations
[[Page 47038]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 412
[CMS-1767-F]
RIN 0938-AU78
Medicare Program; Inpatient Rehabilitation Facility Prospective
Payment System for Federal Fiscal Year 2023 and Updates to the IRF
Quality Reporting Program
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
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SUMMARY: This final rule updates the prospective payment rates for
inpatient rehabilitation facilities (IRFs) for Federal fiscal year (FY)
2023. As required by statute, this final rule includes the
classification and weighting factors for the IRF prospective payment
system's case-mix groups and a description of the methodologies and
data used in computing the prospective payment rates for FY 2023. In
addition, this final rule codifies CMS' existing teaching status
adjustment policy through amendments to the regulation text and updates
and clarifies the IRF teaching policy with respect to IRF hospital
closures and displaced residents. This rule establishes a permanent cap
policy to smooth the impact of year-to-year changes in IRF payments
related to decreases in the IRF wage index. This final rule also
includes updates for the IRF Quality Reporting Program (QRP).
DATES:
Effective date: These regulations are effective on October 1, 2022.
Applicability dates: The updated IRF prospective payment rates are
applicable for IRF discharges occurring on or after October 1, 2022,
and on or before September 30, 2023 (FY 2023).
FOR FURTHER INFORMATION CONTACT:
Gwendolyn Johnson, (410) 786-6954, for general information.
Catie Cooksey, (410) 786-0179, for information about the IRF
payment policies and payment rates.
Kim Schwartz, (410) 786-2571, and Gwendolyn Johnson, (410) 786-
6954, for information about the IRF coverage policies.
Ariel Cress, (410) 786-8571, for information about the IRF quality
reporting program.
SUPPLEMENTARY INFORMATION:
Availability of Certain Information Through the Internet on the CMS
Website
The IRF prospective payment system (IRF PPS) Addenda along with
other supporting documents and tables referenced in this final rule are
available through the internet on the CMS website at <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS</a>.
We note that prior to 2020, each rule or notice issued under the
IRF PPS has included a detailed reiteration of the various regulatory
provisions that have affected the IRF PPS over the years. That
discussion, along with detailed background information for various
other aspects of the IRF PPS, is now available on the CMS website at
<a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS</a>.
I. Executive Summary
A. Purpose
This final rule updates the prospective payment rates for IRFs for
FY 2023 (that is, for discharges occurring on or after October 1, 2022,
and on or before September 30, 2023) 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, this 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 2023. This final rule
codifies CMS' existing teaching status adjustment policy through
amendments to the regulation text and updates and clarifies the IRF
teaching policy with respect to IRF hospital closures and displaced
residents. We also establish a permanent cap policy to smooth the
impact of year-to-year changes in IRF payments related to decreases in
the IRF wage index. This rule also requires quality data reporting on
all IRF patients beginning with the FY 2026 IRF QRP and amends the
regulations consistent with the requirements. This final rule also
corrects an error in the regulations text at Sec. 412.614(d)(2).
B. Summary of Major Provisions
In this final rule, we use the methods described in the FY 2022 IRF
PPS final rule (86 FR 42362) to update the prospective payment rates
for FY 2023 using updated FY 2021 IRF claims and the most recent
available IRF cost report data, which is FY 2020 IRF cost report data.
This final rule codifies CMS' existing teaching status adjustment
policy through amendments to the regulation text and updates and
clarifies the IRF teaching status adjustment policy with respect to IRF
hospital closures and displaced residents.
We establish a permanent cap policy to smooth the impact of year-
to-year changes in IRF payments related to decreases in the IRF wage
index. This final rule also requires quality reporting data for all IRF
patients beginning with the FY 2026 IRF QRP and revises the regulations
accordingly.
C. Summary of Impact
[GRAPHIC] [TIFF OMITTED] TR01AU22.000
II. Background
A. Statutory Basis and Scope for IRF PPS Provisions
Section 1886(j) of 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
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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) and we provided a general description of the IRF PPS for FYs
2007 through 2019 in the FY 2020 IRF PPS final rule (84 FR 39055
through 39057). A general description of the IRF PPS for FYs 2020
through 2022, along with detailed background information for various
other aspects of the IRF PPS, is now available on the CMS website at
<a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS</a>.
Under the IRF PPS from FY 2002 through FY 2005, the prospective
payment rates were computed across 100 distinct CMGs, as described in
the FY 2002 IRF PPS final rule (66 FR 41316). We constructed 95 CMGs
using rehabilitation impairment categories (RICs), functional status
(both motor and cognitive), and age (in some cases, cognitive status
and age may not be a factor in defining a CMG). In addition, we
constructed five special CMGs to account for very short stays and for
patients who expire in the IRF.
For each of the CMGs, we developed relative weighting factors to
account for a patient's clinical characteristics and expected resource
needs. Thus, the weighting factors accounted for the relative
difference in resource use across all CMGs. Within each CMG, we created
tiers based on the estimated effects that certain comorbidities would
have on resource use.
We established the Federal PPS rates using a standardized payment
conversion factor (formerly referred to as the budget-neutral
conversion factor). For a detailed discussion of the budget-neutral
conversion factor, please refer to our FY 2004 IRF PPS final rule (68
FR 45684 through 45685). In the FY 2006 IRF PPS final rule (70 FR
47880), we discussed in detail the methodology for determining the
standard payment conversion factor.
We applied the relative weighting factors to the standard payment
conversion factor to compute the unadjusted prospective payment rates
under the IRF PPS from FYs 2002 through 2005. Within the structure of
the payment system, we then made adjustments to account for interrupted
stays, transfers, short stays, and deaths. Finally, we applied the
applicable adjustments to account for geographic variations in wages
(wage index), the percentage of low-income patients, location in a
rural area (if applicable), and outlier payments (if applicable) to the
IRFs' unadjusted prospective payment rates.
For cost reporting periods that began on or after January 1, 2002,
and before October 1, 2002, we determined the final prospective payment
amounts using the transition methodology prescribed in section
1886(j)(1) of the Act. Under this provision, IRFs transitioning into
the PPS were paid a blend of the Federal IRF PPS rate and the payment
that the IRFs would have received had the IRF PPS not been implemented.
This provision also allowed IRFs to elect to bypass this blended
payment and immediately be paid 100 percent of the Federal IRF PPS
rate. The transition methodology expired as of cost reporting periods
beginning on or after October 1, 2002 (FY 2003), and payments for all
IRFs now consist of 100 percent of the Federal IRF PPS rate.
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), 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's) Core-Based Statistical Area
(CBSA) market definitions; modifications to the CMGs, tier
comorbidities; and CMG relative weights, implementation of a new
teaching status adjustment for IRFs; rebasing and revising the market
basket index used to update IRF payments, and updates to the rural,
low-income percentage (LIP), and high-cost outlier adjustments.
Beginning with the FY 2006 IRF PPS final rule (70 FR 47908 through
47917), the market basket index used to update IRF payments was a
market basket reflecting the operating and capital cost structures for
freestanding IRFs, freestanding inpatient psychiatric facilities
(IPFs), and long-term care hospitals (LTCHs) (hereinafter referred to
as the rehabilitation, psychiatric, and long-term care (RPL) market
basket). Any reference to the FY 2006 IRF PPS final rule in this final
rule also includes the provisions effective in the correcting
amendments. For a detailed discussion of the final key policy changes
for FY 2006, please refer to the FY 2006 IRF PPS final rule.
The regulatory history previously included in each rule or notice
issued under the IRF PPS, including a general description of the IRF
PPS for FYs 2007 through 2020, is available on the CMS website at
<a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS</a>.
In late 2019,\1\ the United States began responding to an outbreak
of a virus named ``SARS-CoV-2'' and the disease it causes, which is
named ``coronavirus disease 2019'' (abbreviated ``COVID-19''). Due to
our prioritizing efforts in support of containing and combatting the
PHE for COVID-19, and devoting significant resources to that end, we
published two interim final rules with comment period affecting IRF
payment and conditions for participation. The interim final rule with
comment period (IFC) entitled, ``Medicare and Medicaid Programs; Policy
and Regulatory Revisions in Response to the COVID-19 Public Health
Emergency'', published on April 6, 2020 (85 FR 19230) (hereinafter
referred to as the April 6, 2020 IFC), included certain changes to the
IRF PPS medical supervision requirements at 42 CFR 412.622(a)(3)(iv)
and 412.29(e) during the PHE for COVID-19. In addition, in the April 6,
2020 IFC, we removed the post-admission physician evaluation
requirement at Sec. 412.622(a)(4)(ii) for all IRFs during the PHE for
COVID-19. In the FY 2021 IRF PPS final rule, to ease documentation and
administrative burden, we also removed the post-admission physician
evaluation documentation requirement at 42 CFR 412.622(a)(4)(ii)
permanently beginning in FY 2021.
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\1\ Patel A., Jernigan D.B. Initial Public Health Response and
Interim Clinical Guidance for the 2019 Novel Coronavirus Outbreak--
United States, December 31, 2019-February 4, 2020. MMWR Morb Mortal
Wkly Rep 2020;69:140-146. DOI <a href="http://dx.doi.org/10.15585/mmwr.mm6905e1">http://dx.doi.org/10.15585/mmwr.mm6905e1</a>.
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A second IFC entitled, ``Medicare and Medicaid Programs, Basic
Health Program, and Exchanges; Additional Policy and Regulatory
Revisions in Response to the COVID-19 Public Health Emergency and Delay
of Certain Reporting Requirements for the Skilled Nursing Facility
Quality Reporting Program'' was published on May 8, 2020 (85 FR 27550)
(hereinafter referred to as the May 8, 2020 IFC). Among other changes,
the May 8, 2020 IFC included a waiver of the ``3-hour rule'' at Sec.
412.622(a)(3)(ii) to reflect the waiver required by section 3711(a) of
the Coronavirus Aid, Relief, and Economic Security Act (CARES Act)
(Pub. L. 116-136, enacted on March 27, 2020). In the May 8, 2020 IFC,
we also modified certain IRF coverage and classification requirements
for freestanding IRF hospitals to relieve acute care hospital capacity
concerns in States (or regions, as applicable) experiencing a surge
during the PHE for COVID-19. In
[[Page 47040]]
addition to the policies adopted in our IFCs, we responded to the PHE
with numerous blanket waivers \2\ and other flexibilities,\3\ some of
which are applicable to the IRF PPS.
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\2\ CMS, ``COVID-19 Emergency Declaration Blanket Waivers for
Health Care Providers,'' (updated Feb. 19 2021) (available at
<a href="https://www.cms.gov/files/document/summary-covid-19-emergency-declaration-waivers.pdf">https://www.cms.gov/files/document/summary-covid-19-emergency-declaration-waivers.pdf</a>).
\3\ CMS, ``COVID-19 Frequently Asked Questions (FAQs) on
Medicare Fee-for-Service (FFS) Billing,'' (updated March 5, 2021)
(available at <a href="https://www.cms.gov/files/document/03092020-covid-19-faqs-508.pdf">https://www.cms.gov/files/document/03092020-covid-19-faqs-508.pdf</a>).
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B. Provisions of the PPACA and the Medicare Access and CHIP
Reauthorization Act of 2015 (MACRA) Affecting the IRF PPS in FY 2012
and Beyond
The Patient Protection and Affordable Care Act (PPACA) (Pub. L.
111-148) was enacted on March 23, 2010. The Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111-152), which amended and revised
several provisions of the PPACA, was enacted on March 30, 2010. In this
final rule, we refer to the two statutes collectively as the ``Patient
Protection and Affordable Care Act'' or ``PPACA''.
The PPACA included several provisions that affect the IRF PPS in
FYs 2012 and beyond. In addition to what was previously discussed,
section 3401(d) of the PPACA also added section 1886(j)(3)(C)(ii)(I) of
the Act (providing for a ``productivity adjustment'' for FY 2012 and
each subsequent FY). The productivity adjustment for FY 2023 is
discussed in section VI.B. of this final rule. Section
1886(j)(3)(C)(ii)(II) of the Act provides that the application of the
productivity adjustment to the market basket update may result in an
update that is less than 0.0 for a FY and in payment rates for a FY
being less than such payment rates for the preceding FY.
Sections 3004(b) of the PPACA and section 411(b) of the MACRA (Pub.
L. 114-10, enacted on April 16, 2015) also addressed the IRF PPS.
Section 3004(b) of PPACA reassigned the previously designated section
1886(j)(7) of the Act to section 1886(j)(8) of the Act and inserted a
new section 1886(j)(7) of the Act, which contains requirements for the
Secretary to establish a QRP for IRFs. Under that program, data must be
submitted in a form and manner and at a time specified by the
Secretary. Beginning in FY 2014, section 1886(j)(7)(A)(i) of the Act
requires the application of a 2-percentage point reduction to the
market basket increase factor otherwise applicable to an IRF (after
application of paragraphs (C)(iii) and (D) of section 1886(j)(3) of the
Act) for a FY if the IRF does not comply with the requirements of the
IRF QRP for that FY. Application of the 2-percentage point reduction
may result in an update that is less than 0.0 for a FY and in payment
rates for a FY being less than such payment rates for the preceding FY.
Reporting-based reductions to the market basket increase factor are not
cumulative; they only apply for the FY involved. Section 411(b) of the
MACRA amended section 1886(j)(3)(C) of the Act by adding paragraph
(iii), which required us to apply for FY 2018, after the application of
section 1886(j)(3)(C)(ii) of the Act, an increase factor of 1.0 percent
to update the IRF prospective payment rates.
C. Operational Overview of the Current IRF PPS
As described in the FY 2002 IRF PPS final rule (66 FR 41316), upon
the admission and discharge of a Medicare Part A fee-for-service (FFS)
patient, the IRF is required to complete the appropriate sections of a
Patient Assessment Instrument (PAI), designated as the IRF-PAI. In
addition, beginning with IRF discharges occurring on or after October
1, 2009, the IRF is also required to complete the appropriate sections
of the IRF-PAI upon the admission and discharge of each Medicare
Advantage (MA) patient, as described in the FY 2010 IRF PPS final rule
(74 FR 39762 and 74 FR 50712). All required data must be electronically
encoded into the IRF-PAI software product. Generally, the software
product includes patient classification programming called the Grouper
software. The Grouper software uses specific IRF-PAI data elements to
classify (or group) patients into distinct CMGs and account for the
existence of any relevant comorbidities.
The Grouper software produces a five-character CMG number. The
first character is an alphabetic character that indicates the
comorbidity tier. The last four characters are numeric characters that
represent the distinct CMG number. A free download of the Grouper
software is available on the CMS website at <a href="http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Software.html">http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Software.html</a>. The Grouper software is also embedded in the internet
Quality Improvement and Evaluation System (iQIES) User tool available
in iQIES at <a href="https://www.cms.gov/medicare/quality-safety-oversight-general-information/iqies">https://www.cms.gov/medicare/quality-safety-oversight-general-information/iqies</a>.
Once a Medicare Part A FFS patient is discharged, the IRF submits a
Medicare claim as a Health Insurance Portability and Accountability Act
of 1996 (HIPAA) (Pub. L. 104-191, enacted on August 21, 1996)-compliant
electronic claim or, if the Administrative Simplification Compliance
Act of 2002 (ASCA) (Pub. L. 107-105, enacted on December 27, 2002)
permits, a paper claim (a UB-04 or a CMS-1450 as appropriate) using the
five-character CMG number and sends it to the appropriate Medicare
Administrative Contractor (MAC). In addition, once a MA patient is
discharged, in accordance with the Medicare Claims Processing Manual,
chapter 3, section 20.3 (Pub. 100-04), hospitals (including IRFs) must
submit an informational-only bill (type of bill (TOB) 111), which
includes Condition Code 04 to their MAC. This will ensure that the MA
days are included in the hospital's Supplemental Security Income (SSI)
ratio (used in calculating the IRF LIP adjustment) for FY 2007 and
beyond. Claims submitted to Medicare must comply with both ASCA and
HIPAA.
Section 3 of the ASCA amended section 1862(a) of the Act by adding
paragraph (22), which requires the Medicare program, subject to section
1862(h) of the Act, to deny payment under Part A or Part B for any
expenses for items or services for which a claim is submitted other
than in an electronic form specified by the Secretary. Section 1862(h)
of the Act, in turn, provides that the Secretary shall waive such
denial in situations in which there is no method available for the
submission of claims in an electronic form or the entity submitting the
claim is a small provider. In addition, the Secretary also has the
authority to waive such denial in such unusual cases as the Secretary
finds appropriate. For more information, see the ``Medicare Program;
Electronic Submission of Medicare Claims'' final rule (70 FR 71008).
Our instructions for the limited number of Medicare claims submitted on
paper are available at <a href="http://www.cms.gov/manuals/downloads/clm104c25.pdf">http://www.cms.gov/manuals/downloads/clm104c25.pdf</a>.
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
part 160 and part 162, subparts A and I through R (generally known as
the Transactions Rule). The Transactions Rule requires covered
entities, including covered healthcare providers, to conduct covered
electronic transactions according to the applicable transaction
standards. (See the CMS program claim memoranda at <a href="http://www.cms.gov/ElectronicBillingEDITrans/">http://www.cms.gov/ElectronicBillingEDITrans/</a> and listed in the addenda to the Medicare
[[Page 47041]]
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 low-income patients,
rural location, and outlier payments. For discharges occurring on or
after October 1, 2005, the IRF PPS payment also reflects the teaching
status adjustment that became effective as of FY 2006, as discussed in
the FY 2006 IRF PPS final rule (70 FR 47880).
D. Advancing Health Information Exchange
The Department of Health and Human Services (HHS) has a number of
initiatives designed to encourage and support the adoption of
interoperable health information technology and to promote nationwide
health information exchange to improve health care and patient access
to their electronic health information.
To further interoperability in post-acute care settings, CMS and
the Office of the National Coordinator for Health Information
Technology (ONC) participate in the Post-Acute Care Interoperability
Workgroup (PACIO) to facilitate collaboration with interested parties
from the industry to develop Fast Healthcare Interoperability
Resources[supreg] (FHIR) standards. These standards could support the
exchange and reuse of patient assessment data derived from the post-
acute care (PAC) setting assessment tools, such as the Minimum Data Set
(MDS), Inpatient Rehabilitation Facility-Patient Assessment Instrument
(IRF-PAI), Long Term Care Hospital (LTCH) Continuity Assessment Record
and Evaluation (CARE) Data Set (LCDS), Outcome and Assessment
Information Set (OASIS), and other sources.<SUP>4 5</SUP> The PACIO
Project has focused on HL7 FHIR implementation guides for functional
status, cognitive status and new use cases on advance directives, re-
assessment timepoints, and Speech, Language, Swallowing, Cognitive
communication and Hearing (SPLASCH) pathology.\6\ We encourage PAC
provider and health information technology (IT) vendor participation as
the efforts advance.
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\4\ HL7 FHIR Release 4. Available at <a href="https://www.hl7.org/fhir/">https://www.hl7.org/fhir/</a>.
\5\ HL7 FHIR. PACIO Functional Status Implementation Guide.
Available at <a href="https://paciowg.github.io/functional-status-ig/">https://paciowg.github.io/functional-status-ig/</a>.
\6\ The IMPACT Act (Pub. L. 113-185) requires the reporting of
standardized patient assessment data with regard to quality measures
and standardized patient assessment data elements. The Act also
requires the submission of data pertaining to measure domains of
resource use, and other domains. In addition, the IMPACT Act
requires assessment data to be standardized and interoperable to
allow for exchange of the data among post-acute providers and other
providers. The Act intends for standardized post-acute care data to
improve Medicare beneficiary outcomes through shared-decision
making, care coordination, and enhanced discharge planning.
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The CMS Data Element Library (DEL) continues to be updated and
serves as a resource for PAC assessment data elements and their
associated mappings to health IT standards, such as Logical Observation
Identifiers Names and Codes (LOINC) and Systematized Nomenclature of
Medicine Clinical Terms (SNOMED).\7\ The DEL furthers CMS' goal of data
standardization and interoperability. These interoperable data elements
can reduce provider burden by allowing the use and exchange of
healthcare data; supporting provider exchange of electronic health
information for care coordination, person-centered care; and supporting
real-time, data driven, clinical decision-making.<SUP>8 9</SUP>
Standards in the DEL can be referenced on the CMS website (<a href="https://del.cms.gov/DELWeb/pubHome">https://del.cms.gov/DELWeb/pubHome</a>) and in the ONC Interoperability Standards
Advisory (ISA). The 2022 ISA is available at <a href="https://www.healthit.gov/isa/sites/isa/files/inline-files/2022-ISA-Reference-Edition.pdf">https://www.healthit.gov/isa/sites/isa/files/inline-files/2022-ISA-Reference-Edition.pdf</a>.
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\7\ Centers for Medicare & Medicaid Services. Newsroom. Fact
sheet: CMS Data Element Library Fact Sheet. June 21, 2018. Available
at <a href="https://www.cms.gov/newsroom/fact-sheets/cms-data-element-library-fact-sheet">https://www.cms.gov/newsroom/fact-sheets/cms-data-element-library-fact-sheet</a>.
\8\ Centers for Medicare & Medicaid Services. Health Informatics
and Interoperability Group. Policies and Technology for
Interoperability and Burden Reduction. Available at <a href="https://www.cms.gov/Regulations-and-Guidance/Guidance/Interoperability/index">https://www.cms.gov/Regulations-and-Guidance/Guidance/Interoperability/index</a>.
\9\ Bates, David W, and Lipika Samal. ``Interoperability: What
Is It, How Can We Make It Work for Clinicians, and How Should We
Measure It in the Future?.'' Health services research vol. 53,5
(2018): 3270-3277. doi:10.1111/1475-6773.12852.
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The 21st Century Cures Act (Cures Act), (Pub L. 114-255, enacted
December 13, 2016) requires HHS to take new steps to enable the
electronic sharing of health information and to further
interoperability for providers and settings across the care continuum.
Section 4003 of the Cures Act required HHS to take steps to advance
interoperability through the development of a trusted exchange
framework and common agreement aimed at establishing full network-to-
network exchange of health information nationally. On January 18, 2022,
ONC announced a significant milestone by releasing the Trusted Exchange
Framework and Common Agreement Version 1. The Trusted Exchange
Framework is a set of non-binding principles for health information
exchange, and the Common Agreement is a contract that advances those
principles. The Common Agreement and the incorporated by reference
Qualified Health Information Network Technical Framework Version 1
establish the technical infrastructure model and governing approach for
different health information networks and their users to securely share
clinical information with each other, all under commonly agreed to
terms. The Common Agreement follows a network-of-networks structure,
which allows for connection at different levels and is inclusive of
many different types of entities, such as health information networks,
healthcare practices, hospitals, public health agencies, and Individual
Access Services (IAS) Providers.\10\ For more information, we refer
readers to <a href="https://www.healthit.gov/topic/interoperability/trusted-exchange-framework-and-common-agreement">https://www.healthit.gov/topic/interoperability/trusted-exchange-framework-and-common-agreement</a>.
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\10\ The Common Agreement defines Individual Access Services
(IAS) as ``with respect to the Exchange Purposes definition, the
services provided utilizing the Connectivity Services, to the extent
consistent with Applicable Law, to an Individual with whom the QHIN,
Participant, or Subparticipant has a Direct Relationship to satisfy
that Individual's ability to access, inspect, or obtain a copy of
that Individual's Required Information that is then maintained by or
for any QHIN, Participant, or Subparticipant.'' The Common Agreement
defines ``IAS Provider'' as: ``Each QHIN, Participant, and
Subparticipant that offers Individual Access Services.'' See Common
Agreement for Nationwide Health Information Interoperability Version
1, at 7 (Jan. 2022), <a href="https://www.healthit.gov/sites/default/files/page/2022-01/Common_Agreement_for_Nationwide_Health_Information_Interoperability_Version_1.pdf">https://www.healthit.gov/sites/default/files/page/2022-01/Common_Agreement_for_Nationwide_Health_Information_Interoperability_Version_1.pdf</a>.
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We invited providers to learn more about these important
developments and how they are likely to affect IRFs.
Comment: We received one comment on the information provided in
this section. The commenter expressed support for efforts across HHS to
advance health information technology exchange and encouraged use of a
standard set of data by providers and health IT vendors, including
efforts through the PACIO project. The commenter also noted a recent
National Academies report \11\ describing
[[Page 47042]]
technology barriers for post-acute care settings due to not being
eligible for previous incentives to purchase technology certified under
the ONC Health IT Certification Program. The commenter supported
recommendations in the report for HHS to pursue financial incentives
for post-acute care settings to adopt certified health IT in order to
enable health information exchange.
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\11\ The National Imperative to Improve Nursing Home Quality:
Honoring Our Commitment to Residents, Families & Staff, see <a href="https://nap.nationalacademies.org/catalog/26526/the-national-imperative-to-improve-nursing-home-quality-honoring-our">https://nap.nationalacademies.org/catalog/26526/the-national-imperative-to-improve-nursing-home-quality-honoring-our</a>.
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Response: We will take this comment into consideration as we
coordinate with Federal partners, including ONC, on interoperability
initiatives, and to inform future rulemaking.
III. Summary of Provisions of the Proposed Rule
In the FY 2023 IRF PPS proposed rule (the proposed rule), we
proposed to update the IRF PPS for FY 2023 and the IRF QRP for FY 2025.
The proposed policy changes and updates to the IRF prospective
payment rates for FY 2023 are as follows:
<bullet> Update the CMG relative weights and average length of stay
values for FY 2023, in a budget neutral manner, as discussed in section
IV. of the FY 2023 IRF PPS proposed rule (87 FR 20222 through 20227).
<bullet> Update the IRF PPS payment rates for FY 2023 by the market
basket increase factor, based upon the most current data available,
with a productivity adjustment required by section 1886(j)(3)(C)(ii)(I)
of the Act, as described in section V. of the FY 2023 IRF PPS proposed
rule (87 FR 20227 through 20228).
<bullet> Describe the establishment of a permanent cap policy in
order to smooth the impact of year-to-year changes in IRF payments
related to certain changes to the IRF wage index, as discussed in
section V. of the FY 2023 IRF PPS proposed rule (87 FR 20230 through
20231).
<bullet> Update the FY 2023 IRF PPS payment rates by the FY 2023
wage index and the labor-related share in a budget-neutral manner, as
discussed in section V. of the FY 2023 IRF PPS proposed rule (87 FR
20228 through 20229).
<bullet> Describe the calculation of the IRF standard payment
conversion factor for FY 2023, as discussed in section V. of the FY
2023 IRF PPS proposed rule (87 FR 20232).
<bullet> Update the outlier threshold amount for FY 2023, as
discussed in section VI. of the FY 2023 IRF PPS proposed rule (87 FR
20235 through 20236).
<bullet> Update the cost-to-charge ratio (CCR) ceiling and urban/
rural average CCRs for FY 2023, as discussed in section VI. of the FY
2023 IRF PPS proposed rule (87 FR 20236).
<bullet> Describe the proposed codification of CMS' existing
teaching status adjustment policy and proposed clarifications and
updates of the IRF teaching status adjustment policy with respect to
IRF hospital closures and displaced residents, as discussed in section
VII. of the FY 2023 IRF PPS proposed rule (87 FR 20236 through 20239).
<bullet> Solicit comments on the methodology used to update the
facility-level adjustment factors, as discussed in section VIII. of the
FY 2023 IRF PPS proposed rule.
<bullet> Solicit comments on the IRF transfer payment policy, as
discussed in section IX. of the FY 2023 IRF PPS proposed rule.
We also proposed updates to the IRF QRP and requested information
in section VII. of the proposed rule as follows:
<bullet> Update data reporting requirements under the IRF QRP
beginning with FY 2025.
<bullet> Request information on (1) future measure concepts under
consideration for the IRF QRP; (2) inclusion of a future dQM for the
IRF QRP; and (3) CMS' overarching principles for measuring healthcare
disparities across CMS Quality Programs, including the IRF QRP.
IV. Analysis of and Responses to Public Comments
We received 61 timely responses from the public, many of which
contained multiple comments on the FY 2023 IRF PPS proposed rule (87 FR
20218). We received comments from various trade associations, inpatient
rehabilitation facilities, individual physicians, therapists,
clinicians, health care industry organizations, and health care
consulting firms. The following sections, arranged by subject area,
include a summary of the public comments that we received, and our
responses.
A. Miscellaneous Comments
Comment: We received several additional comments that were outside
the scope of the FY 2023 IRF PPS proposed rule. Specifically, we
received comments regarding Medicare beneficiaries and vaccine status,
the inclusion of recreational therapy, and general patient access
issues in post-acute care settings.
Response: We thank the commenters for bringing these issues to our
attention, and will take these comments into consideration for
potential policy refinements.
V. Update to the Case-Mix Group (CMG) Relative Weights and Average
Length of Stay (ALOS) Values for FY 2023
As specified in Sec. 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.
We proposed to update the CMG relative weights and ALOS values for
FY 2023. Typically, we use the most recent available data to update the
CMG relative weights and average lengths of stay. For FY 2023, we
proposed to use the FY 2021 IRF claims and FY 2020 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 2021 IRF cost
report data are available for analysis, but the majority of the FY 2021
IRF claims data are available for analysis. We also proposed that if
more recent data became available after the publication of the proposed
rule and before the publication of the final rule, we would use such
data to determine the FY 2023 CMG relative weights and ALOS values in
the final rule.
We proposed to apply these data using the same methodologies that
we have used to update the CMG relative weights and ALOS values each FY
since we implemented an update to the methodology. The detailed CCR
data from the cost reports of IRF provider units of primary acute care
hospitals is used for this methodology, 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 to calculate the CMG
relative weights for this final rule is as follows:
Step 1. We estimate the effects that comorbidities have on costs.
Step 2. We adjust the cost of each Medicare discharge (case) to
reflect the effects found in the first step.
Step 3. We use the adjusted costs from the second step to calculate
CMG
[[Page 47043]]
relative weights, using the hospital-specific relative value method.
Step 4. We normalize the FY 2023 CMG relative weights to the same
average CMG relative weight from the CMG relative weights implemented
in the FY 2022 IRF PPS final rule (86 FR 42362).
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 2023 in such a way that total
estimated aggregate payments to IRFs for FY 2023 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. We note that,
as we typically do, we updated our data between the FY 2023 IRF PPS
proposed and final rules to ensure that we use the most recent
available data in calculating IRF PPS payments. This updated data
reflects a more complete set of claims for FY 2021 and additional cost
report data for FY 2020. To calculate the appropriate budget neutrality
factor for use in updating the FY 2023 CMG relative weights, we use the
following steps:
Step 1. Calculate the estimated total amount of IRF PPS payments
for FY 2023 (with no changes to the CMG relative weights).
Step 2. Calculate the estimated total amount of IRF PPS payments
for FY 2023 by applying the changes to the CMG relative weights (as
discussed in this final rule).
Step 3. Divide the amount calculated in step 1 by the amount
calculated in step 2 to determine the budget neutrality factor of
0.9979 that would maintain the same total estimated aggregate payments
in FY 2023 with and without the changes to the CMG relative weights.
Step 4. Apply the budget neutrality factor from step 3 to the FY
2023 IRF PPS standard payment amount after the application of the
budget-neutral wage adjustment factor.
In section VI.E. of this final rule, we discuss the use of the
existing methodology to calculate the standard payment conversion
factor for FY 2023.
In Table 2, ``Relative Weights and Average Length of Stay Values
for Case-Mix Groups,'' we present the CMGs, the comorbidity tiers, the
corresponding relative weights, and the ALOS values for each CMG and
tier for FY 2023. The ALOS 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.
BILLING CODE 4120-01-P
[[Page 47044]]
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[[Page 47045]]
[GRAPHIC] [TIFF OMITTED] TR01AU22.002
[[Page 47046]]
[GRAPHIC] [TIFF OMITTED] TR01AU22.003
[[Page 47047]]
[GRAPHIC] [TIFF OMITTED] TR01AU22.004
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 revisions for FY 2023
would affect particular CMG relative weight values, which would affect
the overall distribution of payments within CMGs and tiers. We note
that, because we implement the CMG relative weight revisions in a
budget-neutral manner (as previously described), total estimated
aggregate payments to IRFs for FY 2023 are not affected as a result of
the CMG relative weight revisions. However, the revisions affect the
distribution of payments within CMGs and tiers.
[GRAPHIC] [TIFF OMITTED] TR01AU22.005
BILLING CODE 4120-01-C
As shown in Table 3, 98.9 percent of all IRF cases are in CMGs and
tiers that would experience less than a 5 percent change (either
increase or decrease) in the CMG relative weight value as a result of
the revisions for FY 2023. The changes in the ALOS values for FY 2023,
compared with the FY 2022 ALOS values, are small and do not show any
particular trends in IRF length of stay patterns.
The comments we received on our proposed updates to the CMG
relative weights and ALOS values for FY 2023 and our responses are
summarized below.
Comment: Some commenters were supportive of our proposed updates to
the CMG relative weights and average length of stay values using the
most recent data available. A few commenters expressed concern
regarding reductions in the relative weight values associated with
stroke and traumatic spinal cord injury and suggested that this would
inappropriately reduce payments. One commenter requested that CMS not
reduce any CMG relative weight values or LOS values until after the
COVID-19 PHE has ended and urged CMS to ensure that adequate payment is
provided for all cases.
Response: We appreciate these commenters' support for the proposed
updates. The CMG relative weights are updated each year in a budget
neutral manner, thus leading to increases in some CMG relative weights
and corresponding decreases in other CMG relative weights. We note
that, as we typically do, we have updated our data between the FY 2023
IRF PPS proposed and this final rule to ensure that we use the most
recent available data in calculating IRF PPS payments. We have reviewed
the increases and decreases in the CMG relative weights for this final
rule and we believe that these changes accurately reflect our best
estimates of the relative costs of caring for different types of
patients in the IRF setting for FY 2023 and that it would not be
appropriate to prevent decreases in these values until after the PHE
has ended. The relative weights associated with these CMGs include both
increases and decreases, and the variation for FY 2023 is similar to
the typical year-to-year variation that we observe. The relative weight
values are updated each year to ensure that the IRF case mix system is
as reflective as possible of the current IRF population, thereby
ensuring that IRF payments appropriately reflect the relative costs of
caring for all types of IRF patients.
Comment: A commenter expressed concern that the CMG relative
weights do not address patient severity and are not aligned with recent
trends in coding practices. This commenter also recommended that CMS
revise the CMGs and the underlying data collection to account for new
populations of cases.
Response: We believe that these data accurately reflect the
severity of the IRF patient population and the associated costs of
caring for these patients in the IRF setting. The CMG relative weights
are updated each year based on the most recent available data for the
full population of IRF Medicare fee-for-service beneficiaries. This
ensures that the IRF case mix system is as reflective as possible of
changes in the IRF patient populations and the associated coding
practices.
After consideration of the comments we received, we are finalizing
our proposal to update the CMG relative weights and ALOS values for FY
2023, as shown in Table 2 of this final rule. These updates are
effective for FY 2023,
[[Page 47048]]
that is, for discharges occurring on or after October 1, 2022 and on or
before September 30, 2023.
VI. FY 2023 IRF PPS Payment Update
A. Background
Section 1886(j)(3)(C) of the Act requires the Secretary to
establish an increase factor that reflects changes over time in the
prices of an appropriate mix of goods and services for which payment is
made under the IRF PPS. According to section 1886(j)(3)(A)(i) of the
Act, the increase factor shall be used to update the IRF prospective
payment rates for each FY. Section 1886(j)(3)(C)(ii)(I) of the Act
requires the application of the productivity adjustment described in
section 1886(b)(3)(B)(xi)(II) of the Act. Thus, in the proposed rule,
we proposed to update the IRF PPS payments for FY 2023 by a market
basket increase factor as required by section 1886(j)(3)(C) of the Act
based upon the most current data available, with a productivity
adjustment as required by section 1886(j)(3)(C)(ii)(I) of the Act.
We have utilized various market baskets through the years in the
IRF PPS. For a discussion of these market baskets, we refer readers to
the FY 2016 IRF PPS final rule (80 FR 47046).
In FY 2016, we finalized the use of a 2012-based IRF market basket,
using Medicare cost report data for both freestanding and hospital-
based IRFs (80 FR 47049 through 47068). Beginning with FY 2020, we
finalized a rebased and revised IRF market basket to reflect a 2016
base year. The FY 2020 IRF PPS final rule (84 FR 39071 through 39086)
contains a complete discussion of the development of the 2016-based IRF
market basket.
B. FY 2023 Market Basket Update and Productivity Adjustment
For FY 2023 (that is, beginning October 1, 2022 and ending
September 30, 2023), we proposed to update the IRF PPS payments by a
market basket increase factor as required by section 1886(j)(3)(C) of
the Act, with a productivity adjustment as required by section
1886(j)(3)(C)(ii)(I) of the Act. For FY 2023, we proposed to use the
same methodology described in the FY 2022 IRF PPS final rule (86 FR
42373 through 42376).
Consistent with historical practice, we proposed to estimate the
market basket update for the IRF PPS for FY 2023 based on IHS Global
Inc.'s (IGI's) forecast using the most recent available data. Based on
IGI's fourth quarter 2021 forecast with historical data through the
third quarter of 2021, the proposed 2016-based IRF market basket
increase factor for FY 2023 was projected to be 3.2 percent. We also
proposed that if more recent data became available after the
publication of the proposed rule and before the publication of the
final rule (for example, a more recent estimate of the market basket
update or productivity adjustment), we would use such data, if
appropriate, to determine the FY 2023 market basket update in this
final rule.
According to section 1886(j)(3)(C)(i) of the Act, the Secretary
shall establish an increase factor based on an appropriate percentage
increase in a market basket of goods and services. Section
1886(j)(3)(C)(ii) of the Act then requires that, after establishing the
increase factor for a FY, the Secretary shall reduce such increase
factor for FY 2012 and each subsequent FY, by the productivity
adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act.
Section 1886(b)(3)(B)(xi)(II) of the Act sets forth the definition of
this productivity adjustment. The statute defines the productivity
adjustment to be equal to the 10-year moving average of changes in
annual economy-wide, private nonfarm business multifactor productivity
(as projected by the Secretary for the 10-year period ending with the
applicable FY, year, cost reporting period, or other annual period)
(the ``productivity adjustment''). The U.S. Department of Labor's
Bureau of Labor Statistics (BLS) publishes the official measures of
productivity for the U.S. economy. We note that previously the
productivity measure referenced in section 1886(b)(3)(B)(xi)(II) of the
Act, was published by BLS as private nonfarm business multifactor
productivity. Beginning with the November 18, 2021 release of
productivity data, BLS replaced the term multifactor productivity (MFP)
with total factor productivity (TFP). BLS noted that this is a change
in terminology only and will not affect the data or methodology. As a
result of the BLS name change, the productivity measure referenced in
section 1886(b)(3)(B)(xi)(II) is now published by BLS as private
nonfarm business total factor productivity. However, as mentioned
above, the data and methods are unchanged. Please see <a href="http://www.bls.gov">www.bls.gov</a> for
the BLS historical published TFP data. A complete description of IGI's
TFP projection methodology is available on the CMS website at <a href="https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch">https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch</a>. In addition, in
the FY 2022 IRF final rule (86 FR 42374), we noted that effective with
FY 2022 and forward, CMS changed the name of this adjustment to refer
to it as the productivity adjustment rather than the MFP adjustment.
Using IGI's fourth quarter 2021 forecast, the 10-year moving
average growth of TFP for FY 2023 was projected to be 0.4 percent.
Thus, in accordance with section 1886(j)(3)(C) of the Act, we proposed
to base the FY 2023 market basket update, which is used to determine
the applicable percentage increase for the IRF payments, on IGI's
fourth quarter 2021 forecast of the 2016-based IRF market basket. We
proposed to then reduce this percentage increase by the estimated
productivity adjustment for FY 2023 of 0.4 percentage point (the 10-
year moving average growth of TFP for the period ending FY 2023 based
on IGI's fourth quarter 2021 forecast). Therefore, the proposed FY 2023
IRF update was equal to 2.8 percent (3.2 percent market basket update
reduced by the 0.4 percentage point productivity adjustment).
Furthermore, we proposed that if more recent data became available
after the publication of the proposed rule and before the publication
of this final rule (for example, a more recent estimate of the market
basket and/or productivity adjustment), we would use such data, if
appropriate, to determine the FY 2023 market basket update and
productivity adjustment in this final rule.
Based on the more recent data available for this FY 2023 IRF final
rule (that is, IGI's second quarter 2022 forecast of the 2016-based IRF
market basket with historical data through the first quarter of 2022),
we estimate that the IRF FY 2023 market basket update is 4.2 percent.
Based on the more recent data available from IGI's second quarter 2022
forecast, the current estimate of the productivity adjustment for FY
2023 is 0.3 percentage point. Therefore, the current estimate of the FY
2023 IRF productivity-adjusted market basket increase factor is equal
to 3.9 percent (4.2 percent market basket update reduced by 0.3
percentage point productivity adjustment).
For FY 2023, the Medicare Payment Advisory Commission (MedPAC)
recommends that we reduce IRF PPS payment rates by 5 percent.\12\ As
discussed, and in accordance with sections 1886(j)(3)(C) and
1886(j)(3)(D) of the Act, the Secretary proposed to update the IRF PPS
payment rates for FY 2023 by a productivity-adjusted IRF
[[Page 47049]]
market basket increase factor of 2.8 percent. Based on more recent
data, the current estimate of the productivity-adjusted IRF market
basket increase factor for FY 2023 is 3.9 percent. 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 2023.
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\12\ <a href="https://www.medpac.gov/wp-content/uploads/2022/03/Mar22_MedPAC_ReportToCongress_SEC.pdf">https://www.medpac.gov/wp-content/uploads/2022/03/Mar22_MedPAC_ReportToCongress_SEC.pdf</a>.
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We invited public comment on our proposals for the FY 2023 market
basket update and productivity adjustment. The following is a summary
of the public comments received on the proposed FY 2023 market basket
update and productivity adjustment and our responses:
Comment: Several commenters expressed concern that the proposed
market basket update is inadequate relative to input price inflation
experienced by IRFs, particularly as a result of COVID-19. These
commenters stated the PHE, along with inflation, has significantly
driven up operating costs. The commenters expressed concern that these
increased costs are not reflected in the market basket update and
requested that CMS discuss in the final rule how the agency will
account for these increased costs. Specifically, some commenters noted
changes to the labor market, such as increased reliance on contract
nurses and staff due to shortages. Several commenters also mentioned a
report by the American Hospital Association, which stated there has
been significant growth in hospital expenses across labor, drugs, and
supplies due to recent high inflation.
One commenter had concerns that the proposed market basket forecast
is neither accurately nor adequately capturing the unique factors
influencing the hospital and health care market today in general, and
the market in which IRFs compete specifically. In particular, the
commenter was concerned that the methods used to estimate inflation in
IRF spending are not capturing the pandemic-initiated shocks to the
health care market that are significantly driving up costs, especially
labor, across the spectrum of hospital inputs. One commenter noted that
other payment systems (such as for Medicare Advantage plans) have
higher increases. Several commenters supported and appreciated that CMS
would use a more recent projection of the market basket but remained
concerned that the impacts of the PHE would not be adequately factored
into the payment rate update.
Commenters had several different suggestions for addressing these
concerns. One commenter requested that CMS consider an alternative
approach that would better align market basket increases with increases
in cost to treat patients. A few commenters requested that CMS consider
other methods and data sources to calculate the final rule market
basket update that would better reflect the rapidly increasing input
prices facing IRFs. A few commenters requested that CMS deviate from
its typical methodology to update payments in a manner that addresses
rising costs and reductions in reimbursement to ensure there are not
disruptions to IRF services for Medicare beneficiaries. One commenter
urged CMS to consider the pandemic triggers that do not seem to be
reflected in the market basket forecast and make a PHE-related
exception to further increase IRF rates to better adjust FY 2023
payments to IRFs to account for inflation. Finally, another commenter
requested that CMS provide a one-time payment adjustment to supplement
the cost of care.
Response: We are required to update IRF PPS payments by the market
basket update adjusted for productivity, as directed by section
1886(j)(3)(C) of the Act. Specifically, section 1886(j)(3)(C)(i) states
that the increase factor shall be based on an appropriate percentage
increase in a market basket of goods and services comprising services
for which payment is made. We believe the 2016-based IRF market basket
increase adequately reflects the average change in the price of goods
and services hospitals purchase in order to provide IRF medical
services, and is technically appropriate to use as the IRF payment
update factor. As described in the FY 2020 IRF final rule (84 FR 39072
through 39089), the IRF market basket is a fixed-weight, Laspeyres-type
index that measures price changes over time and would not reflect
increases in costs associated with changes in the volume or intensity
of input goods and services. As such, the IRF market basket update
would reflect the prospective price pressures described by the
commenters as increasing during a high inflation period (such as faster
wage growth or higher energy prices), but would inherently not reflect
other factors that might increase the level of costs, such as the
quantity of labor used or any shifts between contract and staff nurses.
We note that cost changes (that is, the product of price and
quantities) would only be reflected when a market basket is rebased and
the base year weights are updated to a more recent time period.
We agree with the commenters that recent higher inflationary trends
have impacted the outlook for price growth over the next several
quarters. At the time of the FY 2023 IRF proposed rule, based on the
IHS Global Inc. fourth quarter 2021 forecast with historical data
through third quarter 2021, IHS Global Inc. forecasted the 2016-based
IRF market basket update of 3.2 percent for FY 2023 reflecting
forecasted compensation price growth of 3.8 percent (by comparison,
compensation price growth in the IRF market basket averaged 2.1 percent
from 2012-2021). In the FY 2023 IRF PPS proposed rule, we proposed that
if more recent data became available, we would use such data, if
appropriate, to derive the final FY 2023 IRF market basket update for
the final rule. For this final rule, we now have an updated forecast of
the price proxies underlying the market basket that incorporates more
recent historical data and reflects a revised outlook regarding the
U.S. economy and expected price inflation for FY 2023 for IRFs. Based
on IHS Global Inc.'s second quarter 2022 forecast with historical data
through the first quarter of 2022, we are projecting a FY 2023 IRF
market basket update of 4.2 percent (reflecting forecasted compensation
price growth of 4.8 percent) and a productivity adjustment of 0.3
percentage point. Therefore, for FY 2023 a final IRF productivity-
adjusted market basket update of 3.9 percent (4.2 percent less 0.3
percentage point) will be applicable, compared to the 2.8 percent that
was proposed. We note that the final FY 2023 IRF market basket growth
rate of 4.2 percent would be the highest market basket update
implemented in a final rule since the beginning of the IRF PPS.
Regarding commenters' request that CMS consider other methods and
data sources to calculate the final rule market basket update,
including the authority under section 1886(j) of the Act, while we
generally agree that the Secretary has broad authority under the
statute to establish the methodology for updating the IRF PPS payments,
we note that our longstanding policy since the inception of the IRF PPS
has been to update IRF PPS payments based on an appropriate market
basket. As discussed earlier in this section of this final rule, the
market basket used to update IRF PPS payments has been rebased and
revised over the history of the IRF PPS to reflect more recent data on
IRF cost structures. The IRF market basket was last rebased in the FY
2020 IRF final rule using 2016 Medicare cost reports (84 FR 39072
through 39084), the most recent year of complete data available at the
time of the rebasing. We note that we did review the most recent
Medicare cost report data available for IRFs submitted as of March
2022, which includes data through 2020. The compensation cost weight
(wages and salaries, employee benefits, and contract labor) estimated
[[Page 47050]]
for 2020 was similar to the cost weight in the 2016-based IRF market
basket (59 percent). Data through 2021 are incomplete at this time.
Based on this preliminary analysis, the impact on the cost weights
through 2020 appear minimal and it is unclear whether any trends
through 2020 are reflective of sustained shifts in the cost structure
for IRFs or whether they were temporary as a result of the PHE.
Therefore, we believe the current 2016-based IRF market basket
continues to appropriately reflect IRF cost structures. We will
continue to monitor these data and any changes to the IRF market basket
will be proposed in future rulemaking. We also note that we did not
propose to use other methods or data sources to calculate the final
market basket update for FY 2023, and therefore, we are not finalizing
such an approach for this final rule.
Finally, consistent with our proposal, we have used more recent
data to calculate a final IRF productivity-adjusted market basket
update of 3.9 percent for FY 2023.
Lastly, regarding commenters' concerns about payment adequacy under
the IRF PPS, MedPAC did a full analysis of payment adequacy for IRF
providers in its March 2022 Report to Congress (<a href="https://www.medpac.gov/document/march-2022-report-to-the-congress-medicare-payment-policy/">https://www.medpac.gov/document/march-2022-report-to-the-congress-medicare-payment-policy/</a>)
and determined that, even considering the cost increases that have
occurred as a result of the PHE associated with the COVID-19 pandemic,
payments to IRFs continue to be more than adequate. Although they
acknowledged that providers' costs have increased significantly under
the pandemic, they expect these costs to normalize in subsequent years
and do not anticipate any long-term effects that warrant inclusion in
the annual update to IRF payments in FY 2023. In fact, MedPAC
recommended a 5 percent reduction to IRF PPS payments for FY 2023.
Given MedPAC's analysis, we believe that payments to IRFs continue to
be more than adequate and do not believe that adjustments to the FY
2023 IRF market basket update are needed at this time.
Comment: One commenter stated that the rising labor costs over the
last several years mean that IRFs may be particularly undercompensated
given that the IHS Global Inc. market basket forecast uses more
generalized hospital goods and services, and fails to account for the
specialized training and experience IRFs require of their therapists,
nurses, and other clinicians, who in turn require a higher salary than
those in a more generalized hospital setting. The commenter also stated
that services that IRFs provide, such as advanced rehabilitation
technologies and specialized drugs, may also be outpacing other
hospital-level settings of care and not properly captured in the market
basket. The commenter also stated that hospitals have had to increase
quantities of materials such as PPE, which the commenter stated is not
captured in the market basket forecasts.
Response: As described previously, the IRF market basket measures
price changes (including changes in the prices for wages and salaries)
over time and would not reflect increases in costs associated with
changes in the volume or intensity of input goods and services until
the market basket is rebased. As stated previously, we believe the
2016-based IRF market basket continues to appropriately reflect IRF
cost structures. To measure price growth for IRF wages and salaries
costs, the IRF market basket uses the Employment Cost Index for wages
and salaries for civilian hospital workers. We believe that this ECI is
the best available price proxy to account for the occupational skill
mix within IRFs. We note that we reviewed the Bureau of Labor
Statistics Occupational Employment Statistics (OES) data for NAICS
622100 (General Medical and Surgical Hospitals). The OES data are one
of the primary data sources used to derive the weights for the ECI. In
2016, the base year of the IRF market basket, a little over 50 percent
of total estimated salaries (total employment multiplied by mean annual
wage) for NAICS 622100 was attributed to Health Professional and
Technical occupations, and approximately 20 percent was attributed to
Health Service occupations. Therefore, in the absence of IRF-specific
data, we believe that the highly skilled hospital workforce captured by
the ECI for hospital workers (inclusive of therapists, nurses, other
clinicians, etc.) is a reasonable proxy for the compensation component
of the IRF market basket.
With regard to additional costs incurred by IRFs for PPE, we
acknowledge the commenters' concern that the market basket update may
not reflect certain additional costs incurred during the COVID-19 PHE.
As stated previously, due to the fixed-weight nature of the index, any
changes to the quantity of inputs purchased (such as increased PPE as
stated by the commenter) would not be reflected in the IRF market
basket update for FY 2023. However, as stated in the FY 2022 IRF PPS
final rule, Medicare providers may have been eligible for additional
payments to cover health-care related expenses and lost revenues
attributed to COVID-19, which were intended to help healthcare
providers respond to the productivity losses and extra expenses caused
by the PHE. In accordance with statutory requirements, the Provider
Relief Fund and American Rescue Plan Act (ARPA) (Pub. L. 117-2, March
11, 2021) rural payments may not be used to reimburse expenses or
losses that have been reimbursed from other sources or that other
sources are obligated to reimburse. Likewise, we do not believe that it
is appropriate to account for PHE-related costs in our IRF rate setting
to the extent that such costs were reimbursed by the Provider Relief
Fund or may be reimbursed by the ARPA Rural Distribution program (86 FR
42375).
Comment: Several commenters had concerns with the application of
the productivity adjustment to the market basket update. A couple of
commenters expressed concern that the continued application of the
productivity adjustment further undercuts reimbursement for providers.
The commenters stated that with higher rates of inflation, the
currently used TFP measure will prove especially harmful to hospitals.
A few commenters requested that CMS elaborate on the specific
productivity gains that are the basis of this proposed reduction to the
market basket as it does not align with actual hospital experience or
ongoing losses from the pandemic and a nationwide labor shortage.
One commenter stated that the assumptions underpinning the
productivity adjustment are fundamentally flawed and strongly disagrees
with the continuation of this policy--particularly during the PHE.
Another commenter referenced CMS Office of the Actuary analysis that
compares the private non-farm multifactor productivity growth measure
and a hospital-specific measure (<a href="https://www.cms.gov/files/document/productivity-memo.pdf">https://www.cms.gov/files/document/productivity-memo.pdf</a>). The commenter urged CMS to consider the
appropriateness of this reduction in context of payment adequacy for
IRFs. One commenter requested that CMS monitor the impact productivity
adjustments have on rehabilitation hospitals and requested that CMS
provide feedback to Congress (as these were statutorily required under
the Affordable Care Act), and reduce the productivity adjustment.
One commenter urged CMS to consider its regulatory authority to
modify the productivity adjustment or make a PHE related exception in
its application for the FY 2023 update. Another commenter requested
that CMS work with Congress to permanently eliminate the reduction to
hospital
[[Page 47051]]
payments from the productivity adjustment and further requested that
CMS use its section 1135 waiver authority to remove the productivity
adjustment for any fiscal year that was covered under public health
emergency determination (for example, 2020, 2021, and 2022) from the
calculation of market basket for FY 2023 and any year thereafter that
the PHE continues.
Response: Section 1886(j)(3)(C)(ii)(I) of the Act requires the
application of the productivity adjustment described in section
1886(b)(3)(xi)(II) of the Act to the IRF PPS market basket increase
factor. As required by statute, the FY 2023 productivity adjustment is
derived based on the 10-year moving average growth in economy-wide
productivity for the period ending FY 2023. We recognize the concerns
of the commenters regarding the appropriateness of the productivity
adjustment; however, we are required pursuant to section
1886(j)(3)(C)(ii)(I) of the Act to apply the specific productivity
adjustment described here. In addition, with respect to providing
feedback to Congress, we note that MedPAC annually monitors various
factors for Medicare providers in terms of profitability and
beneficiary access to care and reports the findings to Congress on an
annual basis. As stated previously, based on these findings, CMS
believes payments to IRFs continue to be more than adequate.
Regarding the suggestion that CMS consider section 1135 waiver
authority to remove the productivity adjustment, we do not believe that
section 1135 authority is available in this circumstance. Section 1135
of the Act authorizes the Secretary to waive or modify only statutory
provisions and regulations that pertain to the specific types of
requirements that are enumerated under section 1135(b) of the Act.
However, payment requirements, such as the application of the
productivity adjustment under the IRF PPS, are not one of the types
enumerated under section 1135(b) of the Act. Therefore, we do not
believe that section 1135 of the Act would authorize the Secretary to
waive the application of the productivity adjustment.
Comment: A commenter stated that given there is no provision to
correct for forecast error in the market basket update in the IRF PPS,
CMS should do more to account for the unique inflationary challenges
currently facing the field. Another commenter stated that the forecast
error adjustment proposed in the FY 2023 SNF PPS proposed rule is
indicative of the complexity in accurately accounting for the
unprecedented challenges driving up costs. The commenter requested CMS
make an additional increase to the IRF PPS market basket factor to more
closely match payment rates with the cost of IRF operations. One
commenter provided a table showing the current estimates of the FY 2021
and FY 2022 IRF market basket increases (2.7 percent and 3.8 percent,
respectively) relative to the FY 2021 and FY 2022 IRF market basket
increases implemented in the final rules (2.4 percent and 2.6 percent,
respectively). The commenter stated that the FY 2021 and the FY 2022
market basket increases were underestimated, which suggests the base
rate for IRF PPS payments for FY 2023 is 1.5 percent too low. The
commenter stated that this further compounds what the commenter
characterized to be an inadequate increase for FY 2023.
Response: Section 1886(j)(3) of the Act requires that the Secretary
shall determine a prospective payment rate for IRFs and establish an
increase factor based on an appropriate percentage increase in a market
basket of goods and services, which means that the update relies on a
mix of both historical data for part of the period for which the update
is calculated and forecasted data for the remainder. For instance, the
FY 2023 market basket update in this final rule reflects historical
data through the first quarter of CY 2022 and forecasted data through
the third quarter of CY 2023. While there is currently no mechanism to
adjust for market basket forecast error in the IRF payment update, the
forecast error for a market basket update is calculated as the actual
market basket increase for a given year less the forecasted market
basket increase. Due to the uncertainty regarding future price trends,
forecast errors can be both positive and negative. This was the case
for the FY 2020 IRF forecast error, which was -0.8 percentage point,
and the FY 2021 IRF forecast error, which was +0.3 percentage point; FY
2022 historical data is not yet available to calculate a forecast error
for FY 2022. As noted above, forecast errors reflect both upward and
downward adjustments, as appropriate. For this final rule, we have
incorporated more recent historical data and forecasts to capture the
price and wage pressures facing IRFs and believe it is the best
available projection of inflation to determine the applicable
percentage increase for the IRF payments in FY 2023. We disagree with
the suggestion that the FY 2023 base rates are too low based solely on
the calculation of a forecast error over a short period of time
(instead of considering forecast errors over longer periods).
After consideration of the comments we received, we are finalizing
a FY 2023 IRF productivity-adjusted market basket increase of 3.9
percent based on the most recent data available.
C. Labor-Related Share for FY 2023
Section 1886(j)(6) of the Act specifies that the Secretary is to
adjust the proportion (as estimated by the Secretary from time to time)
of IRFs' costs that are attributable to wages and wage-related costs,
of the prospective payment rates computed under section 1886(j)(3) of
the Act, for area differences in wage levels by a factor (established
by the Secretary) reflecting the relative hospital wage level in the
geographic area of the rehabilitation facility compared to the national
average wage level for such facilities. The labor-related share is
determined by identifying the national average proportion of total
costs that are related to, influenced by, or vary with the local labor
market. We proposed to continue to classify a cost category as labor-
related if the costs are labor-intensive and vary with the local labor
market.
Based on our definition of the labor-related share and the cost
categories in the 2016-based IRF market basket, we proposed to
calculate the labor-related share for FY 2023 as the sum of the FY 2023
relative importance of Wages and Salaries, Employee Benefits,
Professional Fees: Labor-related, Administrative and Facilities Support
Services, Installation, Maintenance, and Repair Services, All Other:
Labor-related Services, and a portion of the Capital-Related relative
importance from the 2016-based IRF market basket. For more details
regarding the methodology for determining specific cost categories for
inclusion in the 2016-based IRF labor-related share, see the FY 2020
IRF PPS final rule (84 FR 39087 through 39089).
The relative importance reflects the different rates of price
change for these cost categories between the base year (2016) and FY
2023. Based on IGI's fourth quarter 2021 forecast of the 2016-based IRF
market basket, the sum of the FY 2023 relative importance for Wages and
Salaries, Employee Benefits, Professional Fees: Labor-related,
Administrative and Facilities Support Services, Installation
Maintenance & Repair Services, and All Other: Labor-related Services
was 69.4 percent. We proposed that the portion of Capital-Related costs
that are influenced by the local labor market is 46 percent. Since the
relative importance for Capital-Related costs was 8.2 percent of the
2016-based IRF market basket for FY 2023, we proposed to take 46
percent of 8.2 percent to determine the labor-
[[Page 47052]]
related share of Capital-Related costs for FY 2023 of 3.8 percent.
Therefore, we proposed a total labor-related share for FY 2023 of 73.2
percent (the sum of 69.4 percent for the labor-related share of
operating costs and 3.8 percent for the labor-related share of Capital-
Related costs). We proposed that if more recent data became available
after publication of the proposed rule and before the publication of
this final rule (for example, a more recent estimate of the labor-
related share), we would use such data, if appropriate, to determine
the FY 2023 IRF labor-related share in the final rule.
Based on IGI's second quarter 2022 forecast of the 2016-based IRF
market basket, the sum of the FY 2023 relative importance for Wages and
Salaries, Employee Benefits, Professional Fees: Labor-related,
Administrative and Facilities Support Services, Installation
Maintenance & Repair Services, and All Other: Labor-related Services is
69.2 percent. Since the relative importance for Capital-Related costs
is 8.1 percent of the 2016-based IRF market basket for FY 2023, we take
46 percent of 8.1 percent to determine the labor-related share of
Capital-Related costs for FY 2023 of 3.7 percent. Therefore, the
current estimate of the total labor-related share for FY 2023 is equal
to 72.9 percent (the sum of 69.2 percent for the labor-related share of
operating costs and 3.7 percent for the labor-related share of Capital-
Related costs).
Table 4 shows the FY 2023 final labor-related share and the FY 2022
final labor-related share using the 2016-based IRF market basket
relative importance.
[GRAPHIC] [TIFF OMITTED] TR01AU22.006
We invited public comments on the proposed labor related share for
FY 2023. The following is a summary of the public comments received on
the proposed FY 2023 labor-related share and our responses:
Comment: One commenter suggested that CMS should consider excluding
the labor portion of capital costs from the calculation of the labor-
related share for FY 2023 and going forward. The commenter noted that
each increase to the labor related share percentage penalizes any
facility that has a wage index less than 1.0 and stated that, across
this country there is a growing disparity between high-wage and low-
wage States and that limiting the increase in the labor-related share
helps mitigate the growing disparity.
Response: We proposed to use the FY 2023 relative importance values
for the labor-related cost categories from the 2016-based IRF market
basket because it accounts for more recent data regarding price
pressures and cost structure of IRFs. This methodology is consistent
with the determination of the labor-related share since the
implementation of the IRF PPS. The labor-related cost categories
reflect IRF costs that are related to, influenced by, or vary with the
local labor market, which would include a portion of the capital-
related costs. Therefore, we disagree with the commenter's suggestion
to exclude the labor portion of capital-related costs for FY 2023 and
going forward. As stated in the FY 2023 IRF proposed rule, we also
proposed that if more recent data became available, we would use such
data, if appropriate, to determine the FY 2023 labor-related share for
the final rule. Based on IHS Global Inc.'s second quarter 2022 forecast
with historical data through the first quarter of 2022, the FY 2023
labor-related share for the final rule is 72.9 percent, unchanged from
the FY 2022 labor-related share.
D. Wage Adjustment for FY 2023
1. Background
Section 1886(j)(6) of the Act requires the Secretary to adjust the
proportion of rehabilitation facilities' costs attributable to wages
and wage-related costs (as estimated by the Secretary from time to
time) by a factor (established by the Secretary) reflecting the
relative hospital wage level in the geographic area of the
rehabilitation facility compared to the national average wage level for
those facilities. The Secretary is required to update the IRF PPS wage
index on the basis of information available to the Secretary on the
wages and wage-related costs to furnish rehabilitation services. Any
adjustment or updates made under section 1886(j)(6) of the Act for a FY
are made in a budget-neutral manner.
For FY 2023, we proposed to maintain the policies and methodologies
described in the FY 2022 IRF PPS final rule (86 FR 42377) related to
the labor market area definitions and the wage index methodology for
areas with wage data. Thus, we proposed to use the core based
statistical areas (CBSAs) labor market area definitions and the FY 2023
pre-reclassification and pre-floor hospital wage index data. In
accordance with section 1886(d)(3)(E) of the Act, the FY 2023 pre-
reclassification and pre-floor hospital wage index is based on data
submitted for hospital cost reporting periods beginning on or after
October 1, 2018, and before October 1, 2019 (that is, FY 2019 cost
report data).
[[Page 47053]]
The labor market designations made by the OMB include some
geographic areas where there are no hospitals and, thus, no hospital
wage index data on which to base the calculation of the IRF PPS wage
index. We proposed to continue to use the same methodology discussed in
the FY 2008 IRF PPS final rule (72 FR 44299) to address those
geographic areas where there are no hospitals and, thus, no hospital
wage index data on which to base the calculation for the FY 2023 IRF
PPS wage index.
We invited public comment on our proposals regarding the Wage
Adjustment for FY 2023.
The following is a summary of the public comments received on the
proposed revisions to Wage Adjustment for FY 2023 and our responses:
Comment: Several commenters suggested that CMS revise the IRF wage
index to adopt the same geographic reclassification and rural floor
polices that apply to the IPPS wage index. Additionally, commenters
stated that the IPPS implemented a policy to address disparities
between high and low wage index hospitals beginning in FY 2020 and
requested that CMS adopt a similar adjustment to address wage index
disparities under the IRF PPS. One commenter also reiterated language
from the FY 2021 IRF PPS final rule where we previously responded to
similar comments related to the IRF wage index, noting it was unclear.
The commenter also requested that CMS release data that would allow
IRFs to crosswalk the IPPS wage index values after the application of
the low wage index hospital policy to the IRF PPS wage indices.
Response: We appreciate the commenters' suggestion to adopt the
IPPS reclassification and rural floor policies for the IRF wage index.
As we do not have an IRF-specific wage index, we are unable to
determine 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 was most
recently published in the FY 2022 IRF PPS final rule (86 FR 42377
through 42378) and fully described in the FY 2006 IRF PPS final rule
(70 FR 47880, 47926 through 47928).
We appreciate the commenters' suggestion to adopt an adjustment to
address wage disparities between high and low wage index areas under
the IRF PPS. As most recently discussed in the FY 2021 IRF PPS final
rule (85 FR 48424), we would like to note that the IRF wage index is
derived from IPPS wage data, that is, the pre-reclassification and pre-
floor inpatient PPS (IPPS) wage index discussed above in section D.
Thus, to the extent that increasing wage index values under the IPPS
for low wage index hospitals results in those hospitals increasing
employee compensation, this increase would be reflected in the IPPS
wage data that the IRF wage index is derived from and likely would
result in higher wage indices for these areas under the IRF PPS. We
note that IPPS wage index values are based on historical data and
typically lag by four years. The hospital cost report data would
reflect any changes in employee compensation, and as this data would
become the basis for the IRF wage index in future years, any effects of
these changes would be extended to the IRF setting.
Further, we are unable to provide crosswalk tables related to IPPS
wage index policies. Data pertaining to the FY 2023 IPPS proposed rule
are available at <a href="https://www.cms.gov/medicare/medicare-fee-for-service-payment/acuteinpatientpps">https://www.cms.gov/medicare/medicare-fee-for-service-payment/acuteinpatientpps</a>. We do not have any additional data on this
for the IRF PPS.
After consideration of the comments we received, we are finalizing
our proposal to continue to use the updated pre-reclassification and
pre-floor IPPS wage index data develop the FY 2023 IRF PPS wage index.
2. Core-Based Statistical Areas (CBSAs) for the FY 2023 IRF Wage Index
The wage index used for the IRF PPS is calculated using the pre-
reclassification and pre-floor inpatient PPS (IPPS) wage index data and
is assigned to the IRF on the basis of the labor market area in which
the IRF is geographically located. IRF labor market areas are
delineated based on the CBSAs established by the OMB. The CBSA
delineations (which were implemented for the IRF PPS beginning with FY
2016) are based on revised OMB delineations issued on February 28,
2013, in OMB Bulletin No. 13-01. OMB Bulletin No. 13-01 established
revised delineations for Metropolitan Statistical Areas, Micropolitan
Statistical Areas, and Combined Statistical Areas in the United States
and Puerto Rico based on the 2010 Census, and provided guidance on the
use of the delineations of these statistical areas using standards
published in the June 28, 2010 Federal Register (75 FR 37246 through
37252). We refer readers to the FY 2016 IRF PPS final rule (80 FR 47068
through 47076) for a full discussion of our implementation of the OMB
labor market area delineations beginning with the FY 2016 wage index.
Generally, OMB issues major revisions to statistical areas every 10
years, based on the results of the decennial census. Additionally, OMB
occasionally issues updates and revisions to the statistical areas in
between decennial censuses to reflect the recognition of new areas or
the addition of counties to existing areas. In some instances, these
updates merge formerly separate areas, transfer components of an area
from one area to another, or drop components from an area. On July 15,
2015, OMB issued OMB Bulletin No. 15-01, which provides minor updates
to and supersedes OMB Bulletin No. 13-01 that was issued on February
28, 2013. The attachment to OMB Bulletin No. 15-01 provides detailed
information on the update to statistical areas since February 28, 2013.
The updates provided in OMB Bulletin No. 15-01 are based on the
application of the 2010 Standards for Delineating Metropolitan and
Micropolitan Statistical Areas to Census Bureau population estimates
for July 1, 2012 and July 1, 2013.
In the FY 2018 IRF PPS final rule (82 FR 36250 through 36251), we
adopted the updates set forth in OMB Bulletin No. 15-01 effective
October 1, 2017, beginning with the FY 2018 IRF wage index. For a
complete discussion of the adoption of the updates set forth in OMB
Bulletin No. 15-01, we refer readers to the FY 2018 IRF PPS final rule.
In the FY 2019 IRF PPS final rule (83 FR 38527), we continued to use
the OMB delineations that were adopted beginning with FY 2016 to
calculate the area wage indexes, with updates set forth in OMB Bulletin
No. 15-01 that we adopted beginning with the FY 2018 wage index.
On August 15, 2017, OMB issued OMB Bulletin No. 17-01, which
provided updates to and superseded OMB Bulletin No. 15-01 that was
issued on July 15, 2015. The attachments to OMB Bulletin No. 17-01
provide detailed information on the update to statistical areas since
July 15, 2015, and are based on the application of the 2010 Standards
for Delineating Metropolitan and Micropolitan Statistical Areas to
Census Bureau population estimates for July 1, 2014 and July 1, 2015.
In the FY 2020 IRF PPS final rule (84 FR 39090 through 39091), we
adopted the updates set forth in OMB Bulletin No. 17-01 effective
October 1, 2019, beginning with the FY 2020 IRF wage index.
On April 10, 2018, OMB issued OMB Bulletin No. 18-03, which
superseded the August 15, 2017 OMB Bulletin No. 17-01, and on September
14, 2018, OMB issued OMB Bulletin No. 18-04, which superseded the April
10, 2018 OMB Bulletin No. 18-03. These bulletins established revised
[[Page 47054]]
delineations for Metropolitan Statistical Areas, Micropolitan
Statistical Areas, and Combined Statistical Areas, and provided
guidance on the use of the delineations of these statistical areas. A
copy of this bulletin may be obtained at <a href="https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf">https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf</a>.
To this end, as discussed in the FY 2021 IRF PPS proposed (85 FR
22075 through 22079) and final (85 FR 48434 through 48440) rules, we
adopted the revised OMB delineations identified in OMB Bulletin No. 18-
04 (available at <a href="https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf">https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf</a>) beginning October 1, 2020, including a 1-year
transition for FY 2021 under which we applied a 5 percent cap on any
decrease in an IRF's wage index compared to its wage index for the
prior fiscal year (FY 2020). The updated OMB delineations more
accurately reflect the contemporary urban and rural nature of areas
across the country, and the use of such delineations allows us to
determine more accurately the appropriate wage index and rate tables to
apply under the IRF PPS. OMB issued further revised CBSA delineations
in OMB Bulletin No. 20-01, on March 6, 2020 (available on the web at
<a href="https://www.whitehouse.gov/wp-content/uploads/2020/03/Bulletin-20-01.pdf">https://www.whitehouse.gov/wp-content/uploads/2020/03/Bulletin-20-01.pdf</a>). However, we determined that the changes in OMB Bulletin No.
20-01 do not impact the CBSA-based labor market area delineations
adopted in FY 2021. Therefore, CMS did not propose to adopt the revised
OMB delineations identified in OMB Bulletin No. 20-01 for FY 2022, and
for these reasons CMS is likewise not making such a proposal for FY
2023.
3. Permanent Cap on Wage Index Decreases
As discussed previously in this section of the rule, we have
proposed and finalized temporary transition policies in the past to
mitigate significant changes to payments due to changes to the IRF PPS
wage index. Specifically, for FY 2016 (80 FR 47068), we implemented a
50/50 blend for all geographic areas consisting of the wage index
values computed using the then-current OMB area delineations and the
wage index values computed using new area delineations based on OMB
Bulletin No. 13-01. In FY 2021 (85 FR 48434), we implemented a 1-year
transition to mitigate any negative effects of wage index changes by
applying a 5 percent cap on any decrease in an IRF's wage index from
the final wage index from FY 2020. We explained that we believed the 5-
percent cap would provide greater transparency and would be
administratively less complex than the prior methodology of applying a
50/50 blended wage index. We indicated that no cap would be applied to
the reduction in the wage index for FY 2022, and that this transition
approach struck an appropriate balance by providing a transition period
to mitigate the resulting short-term instability and negative impacts
on providers and time for them to adjust to their new labor market area
delineations and wage index values.
In the FY 2022 final rule (86 FR 42378), commenters recommended CMS
extend the transition period adopted in the FY 2021 IRF PPS final rule
so that wage index values do not change by more than 5 percent from
year-to-year to protect IRFs from large payment volatility. Although we
acknowledged at the time that certain changes to wage index policy may
significantly affect Medicare payments, we reiterated that our policy
principles with regard to the wage index include generally using the
most current data and information available and providing that data and
information, as well as any approaches to addressing any significant
effects on Medicare payments resulting from these potential scenarios,
in notice and comment rulemaking. We did not propose to modify the
transition policy that was finalized in the FY 2021 IRF PPS final rule,
and therefore did not extend the transition period for FY 2022. With
these policy principles in mind, for the FY 2023 proposed rule, we
considered how best to address the potential scenarios about which
commenters raised concerns in the FY 2022 final rule around IRF payment
volatility; that is, scenarios in which changes to wage index policy
may significantly affect Medicare payments.
In the past, we have established transition policies of limited
duration to phase in significant changes to labor market areas. In
taking this approach in the past, we sought to mitigate short-term
instability and fluctuations that can negatively impact providers due
to wage index changes. In accordance with the requirements of the IRF
PPS wage index regulations at Sec. 412.624(a)(2), we use an
appropriate wage index based on the best available data, including the
best available labor market area delineations, to adjust IRF PPS
payments for wage differences. We have previously stated that, because
the wage index is a relative measure of the value of labor in
prescribed labor market areas, we believe it is important to implement
new labor market area delineations with as minimal a transition as is
reasonably possible. However, we recognize that changes to the wage
index have the potential to create instability and significant negative
impacts on certain providers even when labor market areas do not
change. In addition, year-to-year fluctuations in an area's wage index
can occur due to external factors beyond a provider's control, such as
the COVID-19 PHE. For an individual provider, these fluctuations can be
difficult to predict. So, we also recognize that predictability in
Medicare payments is important to enable providers to budget and plan
their operations.
In light of these considerations, we proposed a permanent approach
to smooth year-to-year changes in providers' wage indexes. We proposed
a policy that we believe increases the predictability of IRF PPS
payments for providers, and mitigates instability and significant
negative impacts to providers resulting from changes to the wage index.
As previously discussed, we believed applying a 5-percent cap on
wage index decreases for FY 2021 provided greater transparency and was
administratively less complex than prior transition methodologies. In
addition, we believed this methodology mitigated short-term instability
and fluctuations that can negatively impact providers due to wage index
changes. Lastly, we believed the 5-percent cap applied to all wage
index decreases for FY 2021 provided an adequate safeguard against
significant payment reductions related to the adoption of the revised
CBSAs. However, as discussed in the FY 2023 proposed rule (87 FR
20230), we recognize there are circumstances that a 1-year mitigation
policy, like the one adopted for FY 2021, would not effectively address
future years in which providers continue to be negatively affected by
significant wage index decreases.
Typical year-to-year variation in the IRF PPS wage index has
historically been within 5 percent, and we expect this will continue to
be the case in future years. Because providers are usually experienced
with this level of wage index fluctuation, we believe applying a 5-
percent cap on all wage index decreases each year, regardless of the
reason for the decrease, would effectively mitigate instability in IRF
PPS payments due to any significant wage index decreases that may
affect providers in a year. We believe this approach would address
concerns about instability that commenters raised in the FY 2022 IRF
PPS rule. Additionally, we believe that applying a 5-percent cap on all
wage index decreases would support
[[Page 47055]]
increased predictability about IRF PPS payments for providers, enabling
them to more effectively budget and plan their operations. Lastly,
because applying a 5-percent cap on all wage index decreases would
represent a small overall impact on the labor market area wage index
system we believe it would ensure the wage index is a relative measure
of the value of labor in prescribed labor market areas. As discussed in
further detail in section XIII.C.2. of the proposed rule, we estimate
that applying a 5-percent cap on all wage index decreases will have a
very small effect on the wage index budget neutrality factor for FY
2023. Because the wage index is a measure of the value of labor (wage
and wage-related costs) in a prescribed labor market area relative to
the national average, we anticipate that in the absence of proposed
policy changes most providers will not experience year-to-year wage
index declines greater than 5 percent in any given year. We also
believe that when the 5-percent cap would be applied under this
proposal, it is likely that it would be applied similarly to all IRFs
in the same labor market area, as the hospital average hourly wage data
in the CBSA (and any relative decreases compared to the national
average hourly wage) would be similar. While this policy may result in
IRFs in a CBSA receiving a higher wage index than others in the same
area (such as situations when delineations change), we believe the
impact would be temporary. Therefore, we anticipate that the impact to
the wage index budget neutrality factor in future years would continue
to be minimal.
The Secretary has broad authority, pursuant to section 1886(j)(6)
of the Act, to establish appropriate payment adjustments under the IRF
PPS, including the wage index adjustment. As discussed earlier in this
section, the IRF PPS regulations require us to use an appropriate wage
index based on the best available data. Further, we believe that it
would be appropriate to use a 5-percent cap on wage index decreases for
purposes of the IRF PPS wage index adjustment for the reasons discussed
in this section and in the proposed rule. Therefore, for FY 2023 and
subsequent years, we proposed to apply a 5-percent cap on any decrease
to a provider's wage index from its wage index in the prior year,
regardless of the circumstances causing the decline. That is, we
proposed that an IRF's wage index for FY 2023 would not be less than 95
percent of its final wage index for FY 2022, regardless of whether the
IRF is part of an updated CBSA, and that for subsequent years, a
provider's wage index would not be less than 95 percent of its wage
index calculated in the prior FY. This also means that if an IRF's
prior FY wage index is calculated with the application of the 5-percent
cap, the following year's wage index would not be less than 95 percent
of the IRF's capped wage index in the prior FY. For example, if an
IRF's wage index for FY 2023 is calculated with the application of the
5-percent cap, then its wage index for FY 2024 would not be less than
95 percent of its capped wage index in FY 2023. Lastly, we proposed
that a new IRF would be paid the wage index for the area in which it is
geographically located for its first full or partial FY with no cap
applied, because a new IRF would not have a wage index in the prior FY.
As we have discussed in the proposed rule, we believe this methodology
would maintain the IRF PPS wage index as a relative measure of the
value of labor in prescribed labor market areas, increase the
predictability of IRF PPS payments for providers, and mitigate
instability and significant negative impacts to providers resulting
from significant changes to the wage index. In section XIII.C.2. of the
proposed rule, we estimated the impact to payments for providers in FY
2023 based on the proposed policy. We also noted that we would examine
the effects of this policy on an ongoing basis in the future in order
to assess its appropriateness.
Subject to the aforementioned proposal becoming final, we also
proposed to revise the regulation text at Sec. 412.624(e)(1) to
provide that starting October 1, 2022, CMS would apply a cap on
decreases to the wage index such that the wage index applied is not
less than 95 percent of the wage index applied to that IRF in the prior
year.
We invited public comment on the proposed permanent cap on IRF wage
index increase for FY 2023.
The following is a summary of the public comments received on the
proposed revisions to the IRF wage index increase for FY 2023 and our
responses:
Comment: MedPAC expressed support for the 5-percent permanent cap
on wage index decreases, but recommended that the 5-percent cap limit
should apply to both increases and decreases in the wage index because
they stated that no provider should have its wage index value increase
or decrease by more than 5 percent.
Response: We appreciate MedPAC's suggestion that the cap on wage
index changes of more than 5 percent should also be applied to
increases in the wage index. However, as we discussed in the FY 2023
IRF PPS proposed rule (87 FR 20230), one purpose of the proposed policy
is to help mitigate the significant negative impacts of certain wage
index changes. Likewise, we explained that we believe that applying a
5-percent cap on all wage index decreases would support increased
predictability about IRF PPS payments for providers, enabling them to
more effectively budget and plan their operations (87 FR 20231). That
is, we proposed to cap decreases because we believe that a provider
would be able to more effectively budget and plan when there is
predictability about its expected minimum level of IRF PPS payments in
the upcoming fiscal year. We did not propose to limit wage index
increases because we do not believe such a policy would enable IRFs to
more effectively budget and plan their operations. So, we believe it is
appropriate for providers that experience an increase in their wage
index value to receive the full benefit of their increased wage index
value.
Comment: A few commenters requested that CMS retroactively apply
the 5-percent cap policy to the FY 2022 wage index.
Response: In the FY 2021 IRF PPS rulemaking cycle, CMS proposed and
finalized a one-time, 1-year transition policy to mitigate the effects
of adopting OMB delineations updated in OMB Bulletin 18-04 by applying
a 5-percent cap on any wage index decreases compared to FY 2020 in a
budget neutral manner. In the FY 2023 proposed rule we did not propose
to modify the one-time transition policy that was finalized in the FY
2021 final rule, nor did we propose to extend the transition period for
FY 2022. We have historically implemented 1-year transitions, as
discussed in the FY 2006 (70 FR 47921) and FY 2016 (80 FR 47068) final
rules, to address CBSA changes due to substantial updates to OMB
delineations. Our policy principles, as noted in the FY 2022 final rule
(86 FR 42378), with regard to the wage index are to use the most
updated data and information available. Therefore, the FY 2023 IRF PPS
wage index policy proposal is prospective and is designed to mitigate
any significant decreases beginning in FY 2023, not retroactively.
Comment: A number of commenters suggested the 5-percent cap be
applied in a non-budget neutral manner.
Response: We do not believe that the permanent 5-percent cap policy
for the IRF wage index should be applied in a non-budget-neutral
manner. Any adjustment or updates made under section 1886(j)(6) of the
Act for a FY
[[Page 47056]]
must be made in a manner that assures that the aggregated payments
under this subsection in the fiscal year are not greater or less than
those that would have been made in the year without such adjustments.
In accordance with section 1186(j)(6) of the Act, our longstanding
historical practice has been to implement updates to the wage index
under the IRF PPS in a budget neutral manner.
After consideration of the comments we received, we are finalizing
the proposed permanent 5-percent cap on wage index decreases for the
IRF PPS, beginning in FY 2023 and are finalizing revisions to the
regulation text at Sec. 412.624(e)(1) to provide that starting October
1, 2022, CMS would apply a cap on decreases to the wage index such that
the wage index applied is not less than 95 percent of the wage index
applied to that IRF in the prior year.
4. IRF Budget-Neutral Wage Adjustment Factor Methodology
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 2023 labor-related share based on the
2016-based IRF market basket relative importance (72.9 percent) to
determine the labor-related portion of the standard payment amount. A
full discussion of the calculation of the labor-related share is
located in section VI.C. of this final rule. We then multiply the
labor-related portion by the applicable IRF wage index. The wage index
tables are available on the CMS website at <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/IRF-Rules-and-Related-Files.html">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/IRF-Rules-and-Related-Files.html</a>.
Adjustments or updates to the IRF wage index made under section
1886(j)(6) of the Act must be made in a budget-neutral manner. We
proposed to calculate a budget-neutral wage adjustment factor as
established in the FY 2004 IRF PPS final rule (68 FR 45689) and
codified at Sec. 412.624(e)(1), as described in the steps below. We
proposed to use the listed steps to ensure that the FY 2023 IRF
standard payment conversion factor reflects the proposed update to the
wage indexes (based on the FY 2019 hospital cost report data) and the
proposed update to the labor-related share, in a budget-neutral manner:
Step 1. Calculate the total amount of estimated IRF PPS payments
using the labor-related share and the wage indexes from FY 2022 (as
published in the FY 2022 IRF PPS final rule (86 FR 42362)).
Step 2. Calculate the total amount of estimated IRF PPS payments
using the FY 2023 wage index values (based on updated hospital wage
data and considering the permanent cap on wage index decreases policy)
and the FY 2023 labor-related share of 72.9 percent.
Step 3. Divide the amount calculated in step 1 by the amount
calculated in step 2. The resulting quotient is the FY 2023 budget-
neutral wage adjustment factor of 1.0002.
Step 4. Apply the budget neutrality factor from step 3 to the FY
2023 IRF PPS standard payment amount after the application of the
increase factor to determine the FY 2023 standard payment conversion
factor.
We discuss the calculation of the standard payment conversion
factor for FY 2023 in section VI.E. of this final rule.
We invited public comments on the proposed IRF wage adjustment for
FY 2023 (and the proposed permanent cap on wage index decreases
policy).
We did not receive any comments on the proposed IRF budget-neutral
wage adjustment factor methodology for FY 2023. Comments related to the
proposed budget neutral wage index cap policy are addressed in the
Permanent Cap on Wage Index Decreases section (VI.D.3) above. We are
finalizing the IRF budget-neutral wage adjustment factor methodology as
described in this final rule.
E. Description of the IRF Standard Payment Conversion Factor and
Payment Rates for FY 2023
To calculate the standard payment conversion factor for FY 2023, as
illustrated in Table 5, we begin by applying the increase factor for FY
2023, as adjusted in accordance with sections 1886(j)(3)(C) of the Act,
to the standard payment conversion factor for FY 2022 ($17,240).
Applying the 3.9 percent increase factor for FY 2023 to the standard
payment conversion factor for FY 2022 of $17,240 yields a standard
payment amount of $17,912. Then, we apply the budget neutrality factor
for the FY 2023 wage index (taking into account the permanent cap on
wage index decreases policy), and labor-related share of 1.0002, which
results in a standard payment amount of $17,916. We next apply the
budget neutrality factor for the CMG relative weights of 0.9979, which
results in the standard payment conversion factor of $17,878 for FY
2023.
We invited public comments on the proposed FY 2023 standard payment
conversion factor.
The following is a summary of the public comments received on the
proposed revisions to the FY 2023 standard payment conversion factor
and our responses:
Comment: One commenter recommended that CMS should increase the
standard payment conversion factor to account for increased costs
resulting from the implementation of version 4.0 of the IRF-PAI.
Response: We appreciate this commenter's concerns. However, we note
that the IRF PPS payment rates are updated annually 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, as
required by section 1886(j)(3)(C) of the Act. We do not have the
statutory authority to make changes to the standard payment conversion
factor outside of the annual market basket update and to ensure that
any adjustment or update to the IRF wage index made as specified under
section 1886(j)(6) of the Act will be made in a budget neutral manner
that assures that the estimated aggregated payments under this
subsection in the FY year are not greater or less than those that will
have been made in the year without such adjustment.
After consideration of the comments we received, we are finalizing
the standard payment conversion factor for FY 2023 as proposed.
[[Page 47057]]
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After the application of the CMG relative weights described in
section V. of this final rule to the FY 2023 standard payment
conversion factor ($17,878), the resulting unadjusted IRF prospective
payment rates for FY 2023 are shown in Table 6.
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F. Example of the Methodology for Adjusting the Prospective Payment
Rates
Table 7 illustrates the methodology for adjusting the prospective
payments (as described in section VI. of this final rule). The
following examples are based on two hypothetical Medicare
beneficiaries, both classified into CMG 0104 (without comorbidities).
The unadjusted prospective payment rate for CMG 0104 (without
comorbidities) appears in Table 7.
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 0.8380, 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 0.8600, and a teaching status adjustment of
0.0784.
To calculate each IRF's labor and non-labor portion of the
prospective payment, we begin by taking the unadjusted prospective
payment rate for CMG 0104 (without comorbidities) from Table 7. Then,
we multiply the labor-related share for FY 2023 (72.9 percent)
described in section VI.C. of this final rule by the unadjusted
prospective payment rate. To determine the non-labor portion of the
prospective payment rate, we subtract the labor portion of the Federal
payment from the unadjusted prospective payment.
To compute the wage-adjusted prospective payment, we multiply the
labor portion of the Federal payment by the appropriate wage index
located in the applicable wage index table. This table is available on
the CMS website at <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/IRF-Rules-and-Related-Files.html">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/IRF-Rules-and-Related-Files.html</a>.
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 of the Federal payment.
Adjusting the wage-adjusted Federal payment by the facility-level
adjustments involves several steps. First, we take the wage-adjusted
prospective payment and multiply it by the appropriate rural and LIP
adjustments (if applicable). Second, to determine the appropriate
amount of additional payment for the teaching status adjustment (if
applicable), we multiply the teaching status adjustment (0.0784, in
this example) by the wage-adjusted and rural-adjusted amount (if
applicable). Finally, we add the additional teaching status payments
(if applicable) to the wage, rural, and LIP-adjusted prospective
payment rates. Table 7 illustrates the components of the adjusted
payment calculation.
[GRAPHIC] [TIFF OMITTED] TR01AU22.010
BILLING CODE 4120-01-C
Thus, the adjusted payment for Facility A would be $28,817.54, and
the adjusted payment for Facility B would be $28,257.27.
VII. Update to Payments for High-Cost Outliers Under the IRF PPS for FY
2023
A. Update to the Outlier Threshold Amount for FY 2023
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 FY 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
[[Page 47061]]
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 2022 IRF PPS final rules and the FY 2011 and FY 2013
notices (70 FR 47880, 71 FR 48354, 72 FR 44284, 73 FR 46370, 74 FR
39762, 75 FR 42836, 76 FR 47836, 76 FR 59256, 77 FR 44618, 78 FR 47860,
79 FR 45872, 80 FR 47036, 81 FR 52056, 82 FR 36238, 83 FR 38514, 84 FR
39054, 85 FR 48444, and 86 FR 42362, 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 2023, we proposed
to use FY 2021 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 41362 through 41363), which is also the same methodology that we
used to update the outlier threshold amounts for FYs 2006 through 2022.
The outlier threshold is calculated by simulating aggregate payments
and using an iterative process to determine a threshold that results in
outlier payments being equal to 3 percent of total payments under the
simulation. To determine the outlier threshold for FY 2023, we
estimated the amount of FY 2023 IRF PPS aggregate and outlier payments
using the most recent claims available (FY 2021) and the proposed FY
2023 standard payment conversion factor, labor-related share, and wage
indexes, incorporating any applicable budget-neutrality adjustment
factors. The outlier threshold is adjusted either up or down in this
simulation until the estimated outlier payments equal 3 percent of the
estimated aggregate payments. Based on an analysis of the preliminary
data used for the proposed rule, we estimated that IRF outlier payments
as a percentage of total estimated payments would be approximately 3.8
percent in FY 2022. Therefore, we proposed to update the outlier
threshold amount from $9,491 for FY 2022 to $13,038 for FY 2023 to
maintain estimated outlier payments at approximately 3 percent of total
estimated aggregate IRF payments for FY 2023.
In the proposed rule we stated we believed that updating the
outlier threshold for FY 2023 would be appropriate to maintain IRF PPS
outlier payments at 3 percent of total estimated payments, and we
recognized that the proposed outlier threshold amount for FY 2023 would
result in a significant increase from the current outlier threshold
amount for FY 2022. As we continue to explore the underlying reasons
for the large change in the proposed outlier threshold amount, we
welcomed comments from commenters on any observations or information
related to the increase in the proposed update to outlier threshold
amount for FY 2023.
We note that, as we typically do, we updated our data between the
FY 2023 IRF PPS proposed and final rules to ensure that we use the most
recent available data in calculating IRF PPS payments. This updated
data includes a more complete set of claims for FY 2021. Based on our
analysis using this updated data, we estimate that IRF outlier payments
as a percentage of total estimated payments are approximately 3.6
percent in FY 2022. Therefore, we will update the outlier threshold
amount from $9,491 for FY 2022 to $12,526 for FY 2023 to account for
the increases in IRF PPS payments and estimated costs and to maintain
estimated outlier payments at approximately 3 percent of total
estimated aggregate IRF payments for FY 2023.
The following is a summary of the public comments received on the
proposed update to the FY 2023 outlier threshold amount and our
responses.
Comment: Some commenters expressed concerns with the proposed
outlier threshold amount and suggested that CMS consider making
temporary changes to the outlier threshold methodology to account for
changes in the data due to the COVID-19 PHE. Commenters suggested using
data from FY 2019, adjusting the data to account for changes in IRF
utilization associated with the pandemic, blending multiple years of
data or averaging the current 2022 threshold with the proposed
threshold, using a charge inflation factor from prior years, and
adjusting the CCRs used in the outlier calculation.
Response: We thank the commenters for the various suggested
revisions to the outlier threshold methodology. We appreciate the
suggestions to use FY 2019 data and not FY 2021 claims data in
determining the outlier threshold for FY 2023. However, we believe the
FY 2021 data reflect changes in IRF utilization related to the PHE and
will therefore be more likely to reflect IRF utilization in FY 2023, as
COVID-19 will continue to impact IRFs in the future.
We also do not believe the suggestions to blend multiple years of
data or determine an average of the current threshold and the proposed
threshold would be appropriate, as arbitrarily lowering the outlier
threshold would fail to address the fact that for FY 2022 we estimate
that we are overpaying by 0.6 percent the established outlier pool of 3
percent for the IRF PPS. Additionally, our simulations assume that
cost-to-charge ratios accurately reflect IRF costs and we do not
believe using inflation factors from prior years would reflect the best
available projection of inflation in FY 2023. We appreciate the
commenters' suggestions and will take them into consideration as we
continue to consider revisions to our outlier threshold methodology. We
will continue to monitor the IRF outlier payments to ensure that they
continue to compensate IRFs appropriately for treating unusually high-
cost patients.
Comment: Some commenters suggested that CMS should include
historical outlier reconciliation dollars in the outlier projections
consistent with IPPS to ensure a more accurate calibration of the
outlier payment amounts. These commenters requested that CMS conduct
further analysis of the increasing concentration of outlier payments
and provide that analysis for discussion with the field.
Response: We thank the commenters for their suggestion to include
historical outlier reconciliation dollars in the outlier projections.
We will continue to explore and analyze the outlier payments and will
consider these suggestions for revisions to payment policies in future
rulemaking, during which we will solicit public comment.
Comment: Commenters suggested that CMS consider policies that would
better target outlier payments, such as placing a 10 percent cap on the
amount of outlier payments any IRF could receive or lowering the 3
percent outlier pool. Additionally, commenters recommended that changes
in the outlier threshold should be limited to changes in the market
basket in a given year.
Response: We thank the commenters for their suggestion to the
outlier threshold. Our outlier policy is intended to reimburse IRFs for
treating extraordinarily costly cases. As most recently discussed in
the FY 2020 IRF PPS Final Rule (84 FR 39054) 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
[[Page 47062]]
care for certain high-cost populations. We continue to believe that
maintaining the outlier pool at 3 percent of aggregate IRF payments
optimizes the extent to which we can reduce financial risk to IRFs of
caring for highest-cost patients, while still providing for adequate
payments for all other non-outlier cases as discussed in the FY 2002
IRF PPS final rule (66 FR 41362 through 41363). Additionally, we do not
believe it would be appropriate to limit changes in the outlier
threshold to changes in the market basket as constraining adjustments
to the outlier threshold may result in a threshold that generates
outlier payments above or below the 3 percent target.
After consideration of the comments received and considering the
most recent available data, we are finalizing the outlier threshold
amount of $12,526 to maintain estimated outlier payments at
approximately 3 percent of total estimated aggregate IRF payments for
FY 2023.
B. Update to the IRF Cost-to-Charge Ratio Ceiling and Urban/Rural
Averages for FY 2023
CCRs are used to adjust charges from Medicare claims to costs and
are computed annually from facility-specific data obtained from MCRs.
IRF specific CCRs are used in the development of the CMG relative
weights and the calculation of outlier payments under the IRF PPS. In
accordance with the methodology stated in the FY 2004 IRF PPS final
rule (68 FR45692 through 45694), we proposed to apply a ceiling to
IRFs' CCRs. Using the methodology described in that final rule, we
proposed to update the national urban and rural CCRs for IRFs, as well
as the national CCR ceiling for FY 2023, based on analysis of the most
recent data available. We apply the national urban and rural CCRs in
the following situations:
<bullet> New IRFs that have not yet submitted their first MCR.
<bullet> IRFs whose overall CCR is in excess of the national CCR
ceiling for FY 2023, as discussed below in this section.
<bullet> Other IRFs for which accurate data to calculate an overall
CCR are not available.
Specifically, for FY 2023, we proposed to estimate a national
average CCR of 0.463 for rural IRFs, which we calculated by taking an
average of the CCRs for all rural IRFs using their most recently
submitted cost report data. Similarly, we proposed to estimate a
national average CCR of 0.393 for urban IRFs, which we calculated by
taking an average of the CCRs for all urban IRFs using their most
recently submitted cost report data. We apply weights to both of these
averages using the IRFs' estimated costs, meaning that the CCRs of IRFs
with higher total costs factor more heavily into the averages than the
CCRs of IRFs with lower total costs. For this final rule, we have used
the most recent available cost report data (FY 2020). This includes all
IRFs whose cost reporting periods begin on or after October 1, 2019,
and before October 1, 2020. If, for any IRF, the FY 2020 cost report
was missing or had an ``as submitted'' status, we used data from a
previous FY's (that is, FY 2004 through FY 2019) settled cost report
for that IRF. We do not use cost report data from before FY 2004 for
any IRF because changes in IRF utilization since FY 2004 resulting from
the 60 percent rule and IRF medical review activities suggest that
these older data do not adequately reflect the current cost of care.
Using updated FY 2020 cost report data for this final rule, we estimate
a national average CCR of 0.466 for rural IRFs, and a national average
CCR of 0.392 for urban IRFs.
In accordance with past practice, we proposed to set the national
CCR ceiling at 3 standard deviations above the mean CCR. Using this
method, we proposed a national CCR ceiling of 1.40 for FY 2023. This
means that, if an individual IRF's CCR were to exceed this ceiling of
1.40 for FY 2023, we will replace the IRF's CCR with the appropriate
proposed national average CCR (either rural or urban, depending on the
geographic location of the IRF). We calculated the proposed national
CCR ceiling by:
Step 1. Taking the national average CCR (weighted by each IRF's
total costs, as previously discussed) of all IRFs for which we have
sufficient cost report data (both rural and urban IRFs combined).
Step 2. Estimating the standard deviation of the national average
CCR computed in step 1.
Step 3. Multiplying the standard deviation of the national average
CCR computed in step 2 by a factor of 3 to compute a statistically
significant reliable ceiling.
Step 4. Adding the result from step 3 to the national average CCR
of all IRFs for which we have sufficient cost report data, from step 1.
We also proposed that if more recent data became available after
the publication of the proposed rule and before the publication of this
final rule, we would use such data to determine the FY 2023 national
average rural and urban CCRs and the national CCR ceiling in the final
rule. Using the updated FY 2020 cost report data for this final rule,
we estimate a national average CCR ceiling of 1.41, using the same
methodology.
We invited public comment on the proposed update to the IRF CCR
ceiling and the urban/rural averages for FY 2023.
However, we did not receive any comments on the proposed revisions
to the IRF CCR ceiling and the urban/rural averages for FY 2023, and
therefore, we are finalizing a national average urban CCR at 0.392, the
national average rural CCR at 0.466, and the national average CCR
ceiling at 1.41 for FY 2023.
VIII. Codification and Clarifications of IRF Teaching Status Adjustment
Policy
In the FY 2006 IRF PPS final rule (70 FR 47928 through 47932), we
implemented Sec. 412.624(e)(4) to establish a facility level
adjustment for IRFs that are teaching hospitals or units of teaching
hospitals. The teaching status adjustment accounts for the higher
indirect operating costs experienced by IRFs that participate in
training residents in graduate medical education (GME) programs. The
teaching status payment adjustment is based on the ratio of the number
of full-time equivalent (FTE) interns and residents training in the IRF
divided by the IRF's average daily census. Section 1886(j)(3)(A)(v) of
the Act requires the Secretary to adjust the prospective payment rates
for the IRF PPS by such factors as the Secretary determines are
necessary to properly reflect the variations in necessary costs of
treatment among rehabilitation facilities.
We established the IRF teaching status adjustment in a manner that
limited the incentives for IRFs to add FTE interns and residents for
the purpose of increasing their teaching status adjustment, as has been
done in the payment systems for Inpatient Psychiatric Facilities (IPF)
and acute care hospitals. That is, we imposed a cap on the number of
FTE interns and residents that the IRF can count for the purpose of
calculating the teaching status adjustment. This cap is similar to the
cap established by the Balanced Budget Act of 1997 (Pub. L. 105-33,
enacted August 5, 1997) section 4621, that added section
1886(d)(5)(B)(v) of the Act (indirect medical education (IME) FTE cap
for IPPS hospitals. The cap limits the number of FTE interns and
residents that teaching IRFs may count for the purpose of calculating
the IRF PPS teaching status adjustment, not the number of interns and
residents that teaching institutions care hire or train. The cap is
equal to the number of FTE interns and residents that trained in the
[[Page 47063]]
IRF during a ``base year,'' that is based on the most recent final
settled cost report for a cost reporting period ending on or before
November 15, 2004. A complete discussion of how the IRF teaching status
adjustment was calculated appears in the FY 2006 IRF PPS final rule (70
FR 47928 through 47932).
In the FY 2012 IRF PPS final rule (76 FR 47846 through 47848)
published on August 5, 2011, we updated the IRF PPS teaching status
adjustment policy in order to maintain consistency, to the extent
feasible, with the indirect medical education (IME) teaching policies
that were finalized in the IPPS FY 1999 final rule (64 FR 41522), the
IPPS FY 2001 final rule (66 FR 39900), and the IPF PPS teaching
adjustment policies finalized in the 2012 IPF PPS final rule (76 FR
26454 through 26456). In that final rule, we adopted a policy which
permits a temporary increase in the FTE intern and resident cap when an
IRF increases the number of FTE residents it trains, in order to accept
displaced residents because another IRF closes or closes a medical
residency training program. We refer to a ``displaced'' resident or
intern as one that is training in an IRF and is unable to complete
training in that IRF, either because the IRF closes or closes a medical
residency training program.
The cap adjustment for IRFs, adopted in the FY 2012 IRF PPS final
rule, is considered temporary because it is resident-specific and will
only apply to the residents until they have completed their training in
the program in which they were training at the time of the IRF closure
or the closure of the program. Similar to the IPPS and IPF policy for
displaced residents, the IRF PPS temporary cap adjustment only applies
to residents that were still training at the IRF at the time the IRF
closed or at the time the IRF ceased training residents in the
residency training program(s). Residents who leave the IRF, for
whatever reason, before the closure of the IRF or the closure of the
medical residency training program are not considered displaced
residents for purposes of the IRF temporary cap adjustment policy.
In the FY 2012 IRF PPS final rule, we also adopted the IPPS
definition of ``closure of a hospital'' at Sec. 413.79(h)(1)(i) to
refer to circumstances in which the IRF terminates its Medicare
provider agreement, as specified in Sec. 489.52. In this instance, we
allow a temporary adjustment to an IRF's FTE cap to reflect residents
added to their medical residency training program because of an IRF's
closure. We allow an adjustment to an accepting IRF's FTE cap if the
IRF meets the criteria outlined in the FY 2012 IRF PPS final rule (76
FR 47847). After the displaced residents leave the accepting IRF's
training program or complete their medical residency training program,
the accepting IRF's cap will revert to its original level. As such, the
temporary adjustment to the FTE cap will be available to the IRF only
for the period of time necessary for the displaced residents to
complete their training.
Additionally, in the FY 2012 IRF PPS final rule, we adopted the
IPPS definition of ``closure of a hospital residency training
program,'' as specified in Sec. 413.79(h)(1)(ii), which means that the
hospital ceases to offer training for interns and residents in a
particular approved medical residency training program. In this
instance, if an IRF ceases training residents in a medical residency
training program(s) and agrees to temporarily reduce its FTE cap,
another IRF may receive a temporary adjustment to its FTE cap to
reflect the addition of the displaced residents. For more discussion
regarding the methodology for adjusting the caps for the ``receiving
IRF'' and the ``IRF that closed its program,'' refer to the FY 2012 IRF
PPS final rule (76 FR 47847).
A. Codification of Existing Teaching Status Adjustment Policies
In an effort to streamline the IRF PPS teaching status adjustment
policies that were finalized in the FY 2006 IRF PPS final rule (70 FR
47928 through 47932) and the FY 2012 IRF PPS final rule (76 FR 47846
through 47848), we are codifying the longstanding policy so that these
policies can be easily located by IRF providers and can also align, to
the extent feasible, with the IPPS IME and IPF teaching adjustment
policy regulations.
First, we are codifying the policy that was finalized in the FY
2006 IRF PPS final rule with respect to how CMS adjusts the Federal
prospective payment on a facility basis by a factor to account for
indirect teaching costs. When the teaching status adjustment policy was
finalized in the FY 2006 IRF PPS final rule (70 FR 47928 through
47932), the definition of this ``factor'' and explanations of how it is
computed were not included in the regulations. Rather, the more
detailed definition and the explanation of the teaching status payment
adjustment provided in the FY 2006 IRF PPS final rule, were published
in the Medicare Claims Processing Manual (100-04, chapter 3,
140.2.5.4). Currently, Sec. 412.624(e)(4) states that for discharges
on or after October 1, 2005, CMS adjusts the Federal prospective
payment on a facility basis by a factor as specified by CMS for
facilities that are teaching institutions or units of teaching
institutions. This adjustment is made on a claim basis as an interim
payment and the final payment in full for the claim is made during the
final settlement of the cost report.
Second, we are codifying the IRF policy that was adopted in the FY
2012 IRF PPS final rule (76 FR 47846 through 47848) allowing an IRF to
receive a temporary adjustment to its FTE cap to reflect residents
added to its teaching program because of another IRF's closure or an
IRF's medical residency training program closure. We believe that
codifying these longstanding policies would improve clarity and reduce
administrative burden on IRF providers and others trying to locate all
relevant information pertaining to the teaching hospital adjustment.
Thus, we are codifying CMS' existing IRF PPS' teaching hospital
adjustment policies through amendments to Sec. Sec. 412.602 and
412.624(e)(4) presented in this final rule; except as specifically
noted in this final rule, our intent is to codify the existing IRF PPS
teaching status adjustment policy.
We invited public comment on our proposal to amend Sec. Sec.
412.602 and 412.624(e)(4) to codify our longstanding policies regarding
the teaching status adjustment.
The following is a summary of the public comments received on the
proposed revisions to codify the existing IRF PPS teaching status
adjustment policy and our responses:
Comment: Most commenters were supportive of CMS codifying and
consolidating the definition of the teaching status adjustment factor
and how the adjustment is calculated in the regulation.
Response: We thank the commenters for their support to codify
current regulatory guidelines that were previously located in the
Medicare Claims Processing Manual, Chapter 3, Section 140 and were
established in the FY 2006 IRF PPS Final Rule (70 FR 47880) and
modified in the FY 2012 IRF PPS Final Rule (76 FR 47836). We continue
to believe that codifying the requirements will improve clarity and
reduce administrative burden for IRFs.
After consideration of the comments we received, we are codifying
the IRF PPS teaching status adjustment calculation in Sec. Sec.
412.602 and 412.624(e)(4), as proposed.
[[Page 47064]]
B. Update to the IRF Teaching Policy on IRF Program Closures and
Displaced Residents
For FY 2023, we proposed to change the IRF policy pertaining to
displaced residents resulting from IRF closures and closures of IRF
residency teaching programs. Specifically, we proposed to adopt
conforming changes to the IRF PPS teaching status adjustment policy to
align with the policy changes that the IPPS finalized in the FY 2021
IPPS final rule (85 FR 58432, 58865 through 58870) and that the IPF
finalized in the FY 2022 IPF PPS final rule (86 FR 42608, 42618 through
42621). We believe that the IRF teaching status adjustment policy
relating to hospital closure and displaced residents is susceptible to
the same vulnerabilities as the IPPS IME policy. Hence, if an IRF with
residents training in its residency program announces it is closing,
these residents will become displaced and will need to find alternative
positions at other IRFs or risk being unable to become board-certified.
We proposed to implement the policy discussed in this section to
remain consistent with the IPPS policy for calculating the temporary
IME resident cap adjustment in situations where the receiving hospital
assumes the training of displaced residents due to another hospital or
residency program's closure. We also proposed that, in the future, we
would deviate from the IPPS IME policy as it pertains to counting
displaced residents for the purposes of the IRF teaching status
adjustment only when it is necessary and appropriate for the IRF PPS.
The policy adopted in the FY 2012 IRF PPS final rule (76 FR 47846
through 47848), published August 5, 2011, permits an IRF to temporarily
adjust its FTE cap to reflect displaced residents added to their
residency program because of another IRF closure or IRF residency
program closure. In that final rule, we adopted the IPPS definition of
``closure of a hospital'' at Sec. 413.79(h)(1)(i) to also apply to
IRF, and to mean that the IRF terminates its Medicare provider
agreement as specified in Sec. 489.52. We also adopted the IPPS
definition of ``closure of a hospital residency training program'' as
it is currently defined at Sec. 413.79(h)(1)(ii) to also apply to IRF
residency training program closures, and to mean that the IRF ceases to
offer training for residents in a particular approved medical residency
training program. In this final rule, we are codifying both of these
definitions within the IRF PPS definitions section provided at Sec.
412.602 so that the IRF teaching policies are more centrally located
and more easily accessible.
Although not explicitly stated in the regulations, our current
policy is that a displaced resident is one that is physically present
at the hospital training on the day prior to or the day of hospital or
residency program closure. This longstanding policy derived from the
fact that there are requirements that the receiving IRF identifies the
residents ``who have come from the closed IRF'' or identifies the
residents ``who have come from another IRF's closed residency
program,'' and that the IRF that closed its program identifies ``the
residents who were in training at the time of the residency program's
closure.'' We considered the residents who were physically present at
the IRF to be those residents who were ``training at the time of the
program's closure,'' thereby granting them the status of ``displaced
residents.'' Although we did not want to limit the ``displaced
residents'' to only those physically present at the time of closure, it
becomes much more administratively challenging for the following groups
of residents at closing IRFs/residency programs to continue their
training:
(1) Residents who leave the program after the closure is publicly
announced to continue training at another IRF, but before the actual
closure;
(2) Residents assigned to and training at planned rotations at
other IRFs who will be unable to return to their rotations at the
closing IPF or program; and
(3) Individuals (such as medical students or would-be fellows) who
matched into resident programs at the closing IRF or residency program,
but have not yet started training at the closing IRF or residency
program.
Other groups of residents who, under current policy, are already
considered ``displaced residents'' include--
(1) Residents who are physically training in the IRF on the day
prior to or day of residency program or IRF closure; and
(2) Residents who would have been at the closing IRF or IRF
residency program on the day prior to or day of closure, but were on
approved leave at that time, and are unable to return to their training
at the closing IRF or IRF residency training program.
We proposed to amend our IRF policy with regard to closing teaching
IRFs and closing IRF medical residency training programs to address the
needs of interns and residents attempting to find alternative IRFs in
which to complete their training. Additionally, this proposal addresses
the incentives of originating and receiving IRFs with regard to
ensuring we appropriately account for their indirect teaching costs by
way of an appropriate IRF teaching adjustment based on each program's
FTE resident count. We proposed to make changes to the current IRF
teaching status adjustment policy related to displaced residents as
discussed below.
First, rather than link the status of displaced residents for the
purpose of the receiving IRF's request to increase their FTE cap to the
resident's presence at the closing IRF or program on the day prior to
or the day of the residency program or IRF closure, we proposed to link
the status of the displaced residents to the day that the closure was
publicly announced (for example, via a press release or a formal notice
to the Accreditation Council on Graduate Medical Education). This would
provide great flexibility for the interns and residents to transfer
while the IRF operations or teaching programs are winding down, rather
than waiting until the last day of IRF or IRF teaching program
operation. This would address the needs of the group of residents who
would leave the program after the closure was publicly announced to
continue training at another hospital, but before the day of actual
closure.
Second, by removing the link between the status of displaced
residents and their presence at the closing IRF or residency program on
the day prior to or the day of the IRF closure or program closure, we
proposed to also allow the residents assigned to and training at
planned rotations at other IRFs who will be unable to return to their
rotations at the closing IRF or program and individuals (such as
medical students or would-be fellows) who matched into resident
programs at the closing IRF or residency program, but have not yet
started training at the closing IRF or residency program, to be
considered a displaced resident.
Thus, we proposed to revise our teaching policy with regard to
which residents can be considered ``displaced'' for the purpose of the
receiving IRF's request to increase their IRF cap in the situation
where an IRF announces publicly that it is closing, and/or that it is
closing an IRF residency program. Specifically, we proposed to adopt
the FY 2021 IPPS final rule definition of ``displaced resident'' as
defined at Sec. 413.79(h)(1)(ii), for the purpose of calculating the
IRF's teaching status adjustment.
In addition, we proposed to change another detail of the policy
specific to the requirements for the receiving IRF. To apply for the
temporary increase in
[[Page 47065]]
the FTE resident cap, the receiving IRF would have to submit a letter
to its Medicare Administrative Contractor (MAC) within 60 days after
beginning to train the displaced interns and residents. As established
in the FY 2012 IRF PPS final rule, this letter must identify the
residents who have come from the closed IRF or closed residency program
and caused the receiving IRF to exceed its cap, and must specify the
length of time that the adjustment is needed. Furthermore, to maintain
consistency with the IPPS IME policy, we proposed that the letter must
also include:
(1) The name of each displaced resident;
(2) The last four digits of each displaced resident's social
security number; this will reduce the amount of personally identifiable
information (PII);
(3) The name of the IRF and the name of the residency program or
programs in which each resident was training at previously; and
(4) The amount of the cap increase needed for each resident (based
on how much the receiving IRF is in excess of its cap and the length of
time for which the adjustments are needed).
As we previously discussed in the FY 2012 IRF PPS final rule (76 FR
47846 through 47848), we are also clarifying that the maximum number of
FTE resident cap slots that could be transferred to all receiving IRFs
is the number of FTE resident cap slots belonging to the IRF that has
closed the resident training program, or that is closing. Therefore, if
the originating IRF is training residents in excess of its cap, then
being a displaced resident does not guarantee that a cap slot will be
transferred along with the resident. Therefore, we proposed that if
there are more IRF displaced residents than available cap slots, the
slots may be apportioned according to the closing IRF's discretion. The
decision to transfer a cap slot if one is available would be voluntary
and made at the sole discretion of the originating IRF. However, if the
originating IRF decides to do so, then it would be the originating
IRF's responsibility to determine how much of an available cap slot
would go with a particular resident (if any). We also note that, as we
previously discussed in the FY 2012 IRF PPS final rule (76 FR 47846
through 47848), only to the extent a receiving IRF would exceed its FTE
cap by training displaced residents would it be eligible for a
temporary adjustment to its resident FTE cap. As such, displaced
residents are factored into the receiving IRF's ratio of resident FTEs
to the facility's average daily census.
We invited public comment on the proposed updates to the IRF
teaching policy.
The following is a summary of the public comments received on the
proposed updates to the IRF teaching policy and our responses:
Comment: Commenters were generally supportive of our proposal to
amend Sec. Sec. 412.602 and 412.624(e)(4) to codify our longstanding
policies regarding the teaching status adjustment. These commenters
stated that they appreciated us clarifying the definition of a
displaced resident for the purpose of reallocating the FTE to a new
IRF, mitigating prior delayed transfer issues.
Response: We thank the commenters for their support to codify
longstanding policies regarding the teaching status adjustment.
Comment: While expressing support for the proposed codification of
the regulations, one commenter stated that the increases in the FTE
resident caps for IRFs should be made permanent, similar to what is
done for IPPS hospitals in accordance with Section 5506 of the Patient
Protection and Affordable Care Act (PPACA) (Pub. L. 111-148).
Response: We appreciate the commenter's concern, but Section 5506
of the PPACA does not apply to IRFs, and we do not believe that it
would be appropriate to permanently increase the number of FTE resident
cap slots available in the IRF PPS.
After consideration of the comments we received, we are finalizing
the proposed updates to the IRF teaching policies in Sec. Sec. 412.602
and 412.624(e)(4), as proposed.
IX. Solicitation of Comments Regarding the Facility-Level Adjustment
Factor Methodology
Section 1886(j)(3)(A)(v) of the Act confers broad authority upon
the Secretary to adjust the per unit payment rate ``by such other
factors as the Secretary determines are necessary to properly reflect
variations in necessary costs of treatment among rehabilitation
facilities.'' Under this authority, we currently adjust the prospective
payment amount associated with a CMG to account for facility-level
characteristics such as a facility's percentage of low-income patients
(LIP), teaching status, and location in a rural area, if applicable, as
described in Sec. 412.624(e).
The facility-level adjustment factors are intended to account for
differences in costs attributable to the different types of IRF
providers and to better align payments with the costs of providing IRF
care. The LIP and rural facility-level adjustment factors have been
utilized since the inception of the IRF PPS, while the teaching status
adjustment factor was finalized in the FY 2006 IRF PPS final rule (70
FR 47880) when our regression analysis indicated that it had become
statistically significant in predicting IRF costs. Each of the
facility-level adjustment factors were implemented using the same
statistical approach, that is, utilizing coefficients determined from
regression analysis.
Historically, we have observed relatively large fluctuations in
these factors from year-to-year which led us to explore a number of
options to provide greater stability and predictability between years
and increase the accuracy of Medicare payments for IRFs. In addition to
holding these factors constant over multiple years to mitigate
fluctuations in payments, we also implemented a number of refinements
to the methodology used to calculate the adjustment factors in efforts
to better align payments with the costs of care. For example, in FY
2010 (74 FR 39762) we implemented a 3-year moving average approach to
updating the facility-level adjustment factors to promote more
consistency in the adjustment factors over time. Additionally, in FY
2014 (78 FR 47859) we added an indicator variable for a facility's
freestanding or hospital-based status to the payment regression to
improve the accuracy of the IRF payment adjustments. This variable was
added to control for differences in cost structure between hospital-
based and freestanding IRFs in the regression analysis, so that these
differences would not inappropriately influence the adjustment factor
estimates. We refer readers to the FY 2015 IRF PPS final rule (79 FR
45882 through 45883) for a full discussion of the refinements that have
been made to the methodology used to determine the facility-level
adjustment factors and other analysis that has been considered over
time. Due to the revisions to the regression analysis and the
substantive changes to the facility-level adjustment factors that were
adopted in the FY 2014 IRF PPS final rule, we finalized a proposal in
the FY 2015 IRF PPS final rule (79 FR 45871) to freeze the facility-
level adjustment factors for FY 2015 and all subsequent years at the FY
2014 levels while we continued to monitor changes in the adjustment
factors over time. Table 8 shows how the IRF facility-level adjustment
factors have changed over time since the start of the IRF PPS:
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[[Page 47066]]
[GRAPHIC] [TIFF OMITTED] TR01AU22.011
We have continued monitoring the adjustment factors using the same
methodology described in the FY 2014 IRF PPS final rule (78 FR 47869).
That is, we have continued to calculate the facility-level adjustment
factors using the following the steps:
(Steps 1 and 2 are performed independently for each of three years
of IRF claims data)
Step 1. Calculate the average cost per case for each IRF in the
available IRF claims data.
Step 2. Perform a logarithmic regression analysis on the average
cost per case to compute the coefficients for the rural, LIP, and
teaching status adjustments. This regression analysis incorporates an
indicator variable to account for whether a facility is a freestanding
IRF hospital or a unit of an acute care hospital (or a CAH).
Step 3. Calculate a mean for each of the coefficients across the 3
years of data (using logarithms for the LIP and teaching status
adjustment coefficients (because they are continuous variables), but
not for the rural adjustment coefficient (because the rural variable is
either zero (if not rural) or 1 (if rural)). To compute the LIP and
teaching status adjustment factors, we convert these factors back out
of the logarithmic form.
Additional information on the regression analysis used to calculate
the facility-level adjustment factors can be found on the CMS website
at <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Research">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Research</a>. We have continued to monitor changes in
the facility-level adjustment factors for each FY since they were
frozen in FY 2015 at the FY 2014 levels. Table 9, contains the rural,
LIP, and teaching status adjustment factors for each FY since they were
frozen at their 2014 levels.
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[GRAPHIC] [TIFF OMITTED] TR01AU22.012
[[Page 47067]]
Table 10 shows the potential estimated impacts of updating the
facility-level adjustments for FY 2023.
[GRAPHIC] [TIFF OMITTED] TR01AU22.013
[[Page 47068]]
[GRAPHIC] [TIFF OMITTED] TR01AU22.014
Table 10 shows how we estimated that the application of the FY 2023
facility-level adjustment factors would affect particular groups if we
were to implement updates to these factors for FY 2023. Table 10
categorizes IRFs by geographic location, including urban or rural
location, and location for CMS' 9 Census divisions of the country. In
addition, Table 10 divides IRFs into those that are separate
rehabilitation hospitals (otherwise called freestanding hospitals in
this section), those that are rehabilitation units of a hospital
(otherwise called hospital units in this section), rural or urban
facilities, ownership (otherwise called for-profit, non-profit, and
government), by teaching status, and by disproportionate share patient
percentage (DSH PP).
Note that, because the facility-level adjustment factors are
implemented in a budget-neutral manner, total estimated aggregate
payments to IRFs would not be affected. However, these updates would
affect the distribution of payments across providers.
Typically, the facility-level adjustment factors have been updated
on an intermittent basis to reflect changes in the costs of caring for
patients. However, given the magnitude of the increases we are
consistently seeing in the teaching status adjustment we do not believe
that they are true reflections of the higher costs of teaching IRFs. In
addition, we are concerned with the negative effects that the
inordinately high teaching status adjustments would have on rural IRFs,
given that the updates would be implemented in a budget neutral manner.
Given the changes in the teaching status adjustment and the rural
adjustment from their 2014 levels and the potential payment impacts
associated with these adjustments, we solicited comments from
interested parties on the methodology used to determine the facility-
level adjustment factors and suggestions for possible updates and
refinements to this methodology. Additionally, we welcomed ideas and
suggestions as to what could be driving the changes observed in these
adjustment factors from year-to-year.
While we will not be responding to specific comments submitted in
response to the solicitation of comments regarding the facility-level
adjustment factor methodology in this final rule, we appreciate all of
the comments we received. We will take these comments and suggestions
into account in future development of payment policies.
X. Solicitation of Comments Regarding the IRF Transfer Payment Policy
In the Medicare Program; Prospective Payment System for Inpatient
Rehabilitation Facilities final rule that appeared in the August 7,
2001 Federal Register (66 FR 41353 through 41355), we finalized a
transfer payment policy under Sec. 412.624(f) to provide for payments
that more accurately reflect facility resources used and services
delivered. This reflected our belief that it is important to minimize
the inherent incentives specifically associated with the early transfer
of patients in a discharge-based payment system. Specifically, we were
concerned that incentives might exist for IRFs to discharge patients
prematurely, as well as to admit patients that may not be able to
endure intense inpatient therapy services. Even if patients were
transferred before receiving the typical, full course of inpatient
rehabilitation, the IRF could still be paid the full CMG payment rate
in the absence of a transfer payment policy. Length of stay has been
shown to be a good proxy measure of costs. Thus, in general, reducing
lengths of stay would be profitable under the IRF prospective payment
system. To address these concerns, we therefore implemented a transfer
payment policy, which took effect beginning January 1, 2002, that,
under certain circumstances, reduced the full CMG payment rate when a
Medicare beneficiary is transferred.
The IRF transfer payment policy applies to IRF stays that are less
than the average length of stay for the applicable CMG and tier and are
transferred directly to another institutional site, including another
IRF, an inpatient hospital, a nursing home that accepts payment under
Medicare and Medicaid, or a long-term care hospital. However, the IRF
transfer payment policy currently does not apply to IRF stays that are
less than the average length of stay for the applicable CMG and tier
and are transferred to home health care.
In the August 7, 2001 final rule (66 FR 41353 through 41355), we
stated that we did not propose to include early discharges to home
health care as part of the transfer payment policy because there were
analytical challenges as a result of the recent implementation of the
new home health prospective payment system. However, to date, the
analytical challenges would not present an issue as we believe the home
health payment system is well established with an adequate supply of
claims data.
[[Page 47069]]
A recent Office of Inspector General (OIG) report, ``Early
Discharges From Inpatient Rehabilitation Facilities to Home Health
Services'' \13\ recommends that CMS expand the IRF transfer payment
policy to apply to early discharges to home health. The OIG recommends
that the IRF PPS should update its transfer payment policy, similar to
the IPPS transfer payment policy, to include home health. The OIG
conducted an audit of calendar year 2017 and 2018 Medicare claims data
and determined that if CMS had expanded its IRF transfer payment policy
to include early discharges to home health it could have realized a
significant savings of approximately $993 million over the 2-year
period to Medicare.
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\13\ Office of the Inspector General. December 7, 2021 Early
Discharges From Inpatient Rehabilitation Facilities to Home Health
Services [Report No. A-01-20-00501] <a href="https://oig.hhs.gov">https://oig.hhs.gov</a>.
---------------------------------------------------------------------------
Initially, home health was not added to the IRF transfer policy due
to a lack of home health claims data under the newly-established
prospective payment system that we could analyze to determine the
impact of this policy change. However, given the findings from the
recent OIG report mentioned above, we plan to analyze home health
claims data to determine the appropriateness of including home health
in the IRF transfer policy:
<bullet> Beyond the existing Medicare claims data, under what
circumstances, and for what types of patients (in terms of clinical,
demographic, and geographic characteristics) do IRFs currently transfer
patients to home health?
<bullet> Should we consider a policy similar to the IPPS transfer
payment policy (see Sec. 412.4(a), (b) and (c))--such as including as
part of the IRF transfer payment policy a discharge from an IRF to home
health under a written plan for the provision of home health services
from a home health agency and those services to begin within 48 hours
of referral, or within 48 hours of the patient's return home (see Sec.
484.55(a)(1)), or on the provider's start of care date?
<bullet> What impact, if any, do interested parties believe this
proposed policy change could have on patient access to appropriate
post-acute care services?
While we will not be responding to specific comments submitted in
response to the solicitation of comments regarding the IRF transfer
payment policy in this final rule, we appreciate all of the comments we
received. We will use this information from public commenters in
conjunction with our future analysis for potential rulemaking.
XI. Inpatient Rehabilitation Facility (IRF) Quality Reporting Program
(QRP)
A. Background and Statutory Authority
The Inpatient Rehabilitation Facility Quality Reporting Program
(IRF QRP) is authorized by section 1886(j)(7) of the Act, and it
applies to freestanding IRFs, as well as inpatient rehabilitation units
of hospitals or Critical Access Hospitals (CAHs) paid by Medicare under
the IRF PPS. Under the IRF QRP, the Secretary must reduce by 2
percentage points the annual increase factor for discharges occurring
during a fiscal year for any IRF that does not submit data in
accordance with the IRF QRP requirements established by the Secretary.
For more information on the background and statutory authority for the
IRF QRP, we refer readers to the FY 2012 IRF PPS final rule (76 FR
47873 through 47874), the CY 2013 Hospital Outpatient Prospective
Payment System/Ambulatory Surgical Center (OPPS/ASC) Payment Systems
and Quality Reporting Programs final rule (77 FR 68500 through 68503),
the FY 2014 IRF PPS final rule (78 FR 47902), the FY 2015 IRF PPS final
rule (79 FR 45908), the FY 2016 IRF PPS final rule (80 FR 47080 through
47083), the FY 2017 IRF PPS final rule (81 FR 52080 through 52081), the
FY 2018 IRF PPS final rule (82 FR 36269 through 36270), the FY 2019 IRF
PPS final rule (83 FR 38555 through 38556), the FY 2020 IRF PPS final
rule (84 FR 39054 through 39165), and the FY 2022 IRF PPS final rule
(86 FR 42384 through 42408).
B. General Considerations Used for the Selection of Measures for the
IRF QRP
For a detailed discussion of the considerations we use for the
selection of IRF QRP quality, resource use, or other measures, we refer
readers to the FY 2016 IRF PPS final rule (80 FR 47083 through 47084).
1. Quality Measures Currently Adopted for the FY 2023 IRF QRP
The IRF QRP currently has 18 measures for the FY 2023 program year,
which are set out in Table 11.
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There were no proposals in the proposed rule for new measures for
the IRF QRP.
C. IRF QRP Quality Measure Concepts for Future Years: Request for
Information (RFI)
We sought input on the importance, relevance, and applicability of
each of the concepts under consideration listed in Table 12 for future
years in the IRF QRP. More specifically, we sought input on a cross-
setting functional measure that would incorporate the domains of self-
care and mobility. Our measure development contractor for the cross-
setting functional outcome measure convened a Technical Expert Panel
(TEP) on June 15 and June 16, 2021 to obtain expert input on the
development of a functional outcome measure for PAC. During this
meeting, the possibility of creating one measure to capture both self-
care and mobility was discussed. We also sought input on measures of
health equity, such as structural measures that assess an
organization's leadership in advancing equity goals or assess progress
toward achieving equity priorities. Finally, we sought input on the
value of a COVID-19 Vaccination Coverage measure that would assess
whether IRF patients were up to date on their COVID-19 vaccine.
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BILLING CODE 4120-01-C
We received several comments on this RFI, which are summarized
below:
Comment: A majority of commenters generally supported the inclusion
of a cross-setting function measure in the IRF QRP, while many
commenters requested additional information pertaining to data
collection and measure specifications. Several commenters urged CMS to
ensure the measure is meaningful and appropriately implemented for all
settings. One commenter stated they preferred separate quality measures
for self-care and mobility, but would support the initial use of a
composite measure reflecting both self-care and mobility function.
Commenters did not address the concept of a health equity measure
but cautioned CMS on additional provider burden for new measures and
encouraged CMS to leverage existing data elements.
Several commenters were generally supportive of the inclusion of
the PAC--COVID-19 Vaccination Coverage among Patients measure in the
IRF QRP. However, some caveated their support and requested further
details regarding measure specifications and NQF endorsement. Several
commenters raised concerns about the guidance around boosters, as well
as whether an IRF length of stay allows for meaningful distinctions
among facilities.
Response: We appreciate the input provided by commenters. While we
will not be responding to specific comments submitted in response to
this RFI in this final rule, we intend to use this input to inform our
future measure development efforts.
D. Inclusion of the National Healthcare Safety Network (NHSN)
Healthcare-Associated Clostridioides difficile Infection Outcome
Measure in the IRF QRP--Request for Information
1. Solicitation of Public Comment
In section XI.D. of the proposed rule, we requested stakeholder
input on the potential electronic submission of quality data from IRFs
via their electronic health records (EHRs) under the IRF QRP. We
specifically sought comment on the future inclusion of the NHSN
Healthcare-Associated Clostridioides difficile Infection Outcome
measure (HA-CDI) (MUC2021-098) as a digital quality measure in the IRF
QRP.
Specifically, we sought comment on the following:
<bullet> Would you support utilizing IRF EHRs as the mechanism of
data collection and submission for IRF QRP measures?
<bullet> Would your EHR support exposing data via HL7 FHIR to a
locally installed Measure Calculation Tool (MCT)? For IRFs using
certified health IT systems, how can existing certification criteria
under the Office of the National Coordinator (ONC) Health Information
Technology (IT) Certification Program support reporting of this data?
What updates, if any, to the Certification Program would be needed to
better support capture and submission of this data?
<bullet> Is a transition period between the current method of data
submission and an electronic submission method necessary? If so, how
long of a transition would be necessary and what specific factors are
relevant in determining the length of any transition?
<bullet> Would vendors, including those that service IRFs, be
interested in or willing to participate in pilots or voluntary
electronic submission of quality data?
<bullet> Do IRFs anticipate challenges, other than the adoption of
EHR to adopting the HA-CDI, and if so, what are potential solutions for
those challenges?
We received several comments on this RFI, which are summarized
below:
Comment: In response to the question of whether IRFs would support
utilizing EHRs as the mechanism of data collection and submission for
IRF QRP measures, we received several supportive comments, citing the
increased accuracy by relying ``on both microbiologic evidence of C.
diff in stool and evidence of antimicrobial treatment using data
derived from the electronic health record (EHR)'' and decreased
provider burden associated with a digital measure. One of these
commenters recommended CMS adopt the measure in larger acute care
hospitals where use of EHRs is already more prevalent, prior to
adopting it in IRFs.
However, commenters raised concerns about the cost associated with
IRFs adopting EHR systems that are equipped to collect and exchange
digital quality measure (dQM) data. They stated EHR adoption has been
slower and less uniform than it was in acute care hospitals, due to the
lack of incentive payments available to IRFs. They urged CMS to provide
incentive payments to IRFs as they did for acute care hospitals through
the Health Information Technology for Economic and Clinical Health
(HITECH) Act prior to requiring IRFs' transition to dQMs. One of these
commenters noted that IRFs could use those incentive payments to offset
implementation costs, such as additional staff, licensing fees and new
software and systems.
Commenters also supported the idea of a transition period between
the current method of data submission and an electronic submission, and
several commenters suggested a 2-year transition period. One commenter
stated that some IRFs would need time to implement an EHR system while
IRFs that already use EHRs would still need to make refinements to
their system. Another commenter recommended that CMS launch a pilot for
this measure and/or establish a process for manual data submission as a
backup for a specified time before the digital measure is fully
implemented.
One commenter indicated their interest in participating in a pilot
or voluntary electronic submission of quality data. Other commenters
stated they would be willing to participate in a pilot prior to
implementation of a digital quality measure (dQM).
In response to the solicitation of comments about challenges IRFs
anticipate in the adoption of the NHSN HA-CDI measure, we received one
comment about the challenges posed by the adoption of new terminology
to end users as well as the challenges associated with implementing new
technology into IRF workflows. This commenters also pointed out that
the RFI in the proposed rule noted that the Centers for Disease Control
and Prevention (CDC) plans to enable reporting using the existing HL7
Clinical Document Architecture and potentially other formats, while
continuing to support the current CDI measure until sufficient
experience is achieved with the new measure, and
[[Page 47072]]
while they appreciate CDC's flexibility, they questioned the data
integrity across all facilities when so many technology options are in
use. Another commenter raised concerns about cyber security, and noted
the potential security risk might not outweigh the time involved in
manual submission.
Finally, several commenters did not support the idea of the NHSN
HA-CDI measure for the IRF QRP, citing a low incidence rate in IRFs,
and the lack of meaningful differences in provider performance.
Response: We appreciate the input provided by commenters. While we
will not be responding to specific comments submitted in response to
this RFI in this final rule, we intend to use this input to inform our
future measure development efforts. One commenter questioned whether it
would be worth the cost to IRFs to make the necessary changes to the
EHR when incidence is low in IRF patients.
E. Overarching Principles for Measuring Equity and Healthcare Quality
Disparities Across CMS Quality Programs--Request for Information
1. Solicitation of Public Comment
The goal of the request for information in section XI.E. of the
proposed rule was to describe key principles and approaches that we
would consider when advancing the use of quality measure development
and stratification to address healthcare disparities and advance health
equity across our programs.
We invited general comments on the principles and approaches
described previously in this section of the rule, as well as additional
thoughts about disparity measurement or stratification guidelines
suitable for overarching consideration across CMS' QRP programs.
Specifically, we invited comment on:
<bullet> Identification of Goals and Approaches for Measuring
Healthcare Disparities and Using Measure Stratification Across CMS
Quality Reporting Programs
++ The use of the within- and between-provider disparity methods in
IRFs to present stratified measure results.
++ The use of decomposition approaches to explain possible causes
of measure performance disparities.
++ Alternative methods to identify disparities and the drivers of
disparities.
<bullet> Guiding Principles for Selecting and Prioritizing Measures
for Disparity Reporting
++ Principles to consider for prioritization of health equity
measures and measures for disparity reporting, including prioritizing
stratification for validated clinical quality measures, those measures
with established disparities in care, measures that have adequate
sample size and representation among healthcare providers and outcomes,
and measures of appropriate access and care.
<bullet> Principles for Social Risk Factor and Demographic Data
Selection and Use
++ Principles to be considered for the selection of social risk
factors and demographic data for use in collecting disparity data
including the importance of expanding variables used in measure
stratification to consider a wide range of social risk factors,
demographic variables, and other markers of historic disadvantage. In
the absence of patient-reported data we will consider use of
administrative data, area-based indicators, and imputed variables as
appropriate.
<bullet> Identification of Meaningful Performance Differences
++ Ways that meaningful difference in disparity results should be
considered.
<bullet> Guiding Principles for Reporting Disparity Measures
++ Guiding principles for the use and application of the results of
disparity measurement.
<bullet> Measures Related to Health Equity
++ The usefulness of a Health Equity Summary Score (HESS) for IRFs,
both in terms of provider actionability to improve health equity, and
in terms of whether this information would support Care Compare website
users in making informed healthcare decisions.
++ The potential for a structural measure assessing an IRF's
commitment to health equity, the specific domains that should be
captured, and options for reporting this data in a manner that would
minimize burden.
++ Options to collect facility-level information that could be used
to support the calculation of a structural measure of health equity.
++ Other options for measures that address health equity.
We received several comments on the RFI for Overarching Principles
for Measuring Equity and Healthcare Quality Disparities Across CMS
Quality Programs. While we will not be responding to specific comments
submitted in response to this RFI, the following is a summary of some
comments received:
Comment: We received several comments on the structural measure for
health equity. One commenter supported the concept of a structural
quality measure of health equity and believed it would be a step that
could lead to more complex measures, and noted that the Leapfrog
Hospital Safety Grade program has an established framework that can be
used for this measure, including a standardized set of questions for
hospitals that capture demographic data elements. Other commenters
opposed the measure and expressed that it may not provide useful or
actionable data to differentiate IRFs on quality and equity for IRFs or
consumers. One commenter noted that larger facilities may have more
resources to invest in this area, and as such, perform better than
smaller facilities on this type of measure. Another commenter did not
support the measure, citing the Measure Application Partnership's
Hospital Workgroup observation that ``evidence for a linkage between
the measure and improved health outcomes had not been established'' and
that ``a performance gap among hospitals for the measure's five
structural elements (i.e., to which attestation would be required) had
not been demonstrated.'' Furthermore, they shared that many of the
priorities in this structural measure are often already addressed by
IRFs through initiatives to provide culturally competent and inclusive
care and to meet existing accreditation requirements. Finally, two
commenters did not support or oppose the measure and requested
additional information on the measure definition and how it can be used
to advance health equity.
We received three comments on performance disparity decomposition.
Two commenters supported the idea of performance disparity
decomposition and believed that it would provide valuable data for IRFs
while minimizing burden. However, one commenter added a caveat stating
that not all IRFs would have the statistical expertise or resources to
implement this approach. One commenter opposed the idea, specifically
the potential application of the Blinder-Oaxaca methodology.
We received several comments on the concept of the HESS. Some
commenters supported the concept of the HESS and noted it would provide
a comprehensive view of a patient's clinical, social, and behavioral
risks. Despite expressing their support, one commenter noted that the
development of the HESS presents several technical challenges, such as
the need for a comprehensive standardized set of demographic data
elements for each patient, an imputation method for missing data
elements, and a method for accounting for small sample sizes within an
IRF. A few commenters opposed the development of a HESS and stated that
an aggregated quality score would not provide actionable
[[Page 47073]]
insights for IRFs and confuse consumers. Commenters favored more
transparent and accessible methods to collect and measure health
equity. Finally, a few commenters requested additional information
before proceeding with the development of the HESS score, since the
current HESS metric in Medicare Advantage needs to be modified
significantly before being applicable to the IRF setting.
Commenters generally supported the combination of within- and
between-hospital disparity methods and believed that these
complementary approaches could provide comprehensive information to
facilities. Commenters in support of the provision requested that the
data remain confidential while IRFs become familiar with the data and
that CMS consider risk adjustment for IRF characteristics for between-
hospital results. One commenter recommended CMS evaluate whether this
approach is appropriate for all measures, and especially cautioned
against using between-hospital disparity methods for any potential
patient experience measures. The commenter stated that ``by
benchmarking subgroups and making comparisons of those subgroups in
patient experience data, it can lead to the expectation that it is
`normal' for certain subgroups to report less favorable patient
experiences.'' The commenter instead encouraged CMS to compute
benchmarks for the entire patient population and to introduce
incentives for reducing the gap in performance between groups.
Commenters generally supported the addition of data elements like
race, ethnicity, language preference, sexual orientation, gender,
stable housing, food insecurity, socioeconomic status, veteran status,
and other social determinants of health. One commenter encouraged CMS
to improve measures of patient social risk and prioritize identifying
social risk factors that should be accounted for in a quality payment
program using an evidence-based approach. A few commenters emphasized
the importance of disability status and recommended CMS define, collect
standardized data for, and measure disability status, particularly for
IRF care access and outcomes.
Commenters generally suggested prioritizing the development of
disparity analysis and reporting before determining the best approach
to identify meaningful differences in IRF performance. One commenter
suggested grouping IRFs with similar patients to determine rewards and
penalties based on comparison with an IRF's peers. Commenters generally
opposed a ranked ordering and percentile approach to order IRFs based
on their performance because they believed variations in patient
populations and IRFs would create challenges in accurately comparing
IRFs against each other.
Several commenters encouraged CMS to share stratified results of
existing measures in confidential feedback reports. Furthermore, one
commenter encouraged CMS to share these results for topped-out measures
that were previously removed from programs to determine if these data
reveal meaningful disparities in performance when stratified.
Commenters also encouraged CMS to establish high standards for
stratification and reliability. Relatedly, some suggested strategies
include establishing a minimum case count for IRFs or pooling data
across years. Other commenters proposed the inclusion of confidence
intervals, cut points based on standard deviations, or clustering
algorithms to help IRFs contextualize their performance.
Response: Public input is very valuable to the continuing
development of CMS' health equity quality measurement efforts and
broader commitment to health equity; a key pillar of our strategic
vision, as well as a core agency function. Thus, we will continue to
take all concerns, comments, and suggestions into account for future
development and expansion of policies to advance health equity across
the IRF QRP, including by supporting IRFs in their efforts to ensure
equity for all of their patients, and to identify opportunities for
improvements in health outcomes.
F. Proposals Relating to the Form, Manner, and Timing of Data
Submission Under the IRF QRP
1. Background
We refer readers to the regulatory text at Sec. 412.634(b) for
information regarding the current policies for reporting IRF QRP data.
2. Proposal To Require Quality Data Reporting on all IRF Patients
Beginning With the FY 2025 IRF QRP
a. Background
We have received public input for the past 10 years on the need to
standardize measurement data collection across all payers in the PAC
settings. For example, as part of their recommendations on Coordination
Strategy for Post-Acute Care and Long-term Care Performance
Measurement,\14\ the National Quality Forum (NQF)-convened Measures
Application Partnership (MAP) defined priorities and core measure
concepts for PAC, including IRFs, in order to improve care coordination
for patients. The MAP concluded that standardized measurement data
collection is needed to support the flow of information and data among
PAC providers and recommended CMS collect data across all payers. Since
the implementation of the Improving Medicare Post-Acute Care
Transformation Act of 2014 (IMPACT Act) and the development of the
statutorily required quality measures, we have also received public
input suggesting that the quality measures used in the IRF QRP should
be calculated using data collected from all IRF patients, regardless of
the patients' payer. This input has been provided to us through
different mechanisms, including comments requested about quality
measure development. Specifically, in response to the call for public
comment on quality measures to satisfy the IMPACT Act domain of
Transfer of Health Information and Care Preferences When an Individual
Transitions,\15\ the majority of comments expressed concern over the
non-standardized populations across the PAC setting and urged CMS to
standardize the patient populations. One commenter stated having an
all-payer policy in place in some, but not all PAC settings, limits the
ability of providers and consumers to interpret the information. In the
FY 2018 IRF PPS proposed rule (82 FR 20740), we sought input on
expanding the quality measures to include all patients regardless of
payer status. In response to the Request for Information (RFI), several
commenters supported expanding the IRF QRP to include all patients
regardless of payer. The Medicare Payment Advisory Commission (MedPAC)
was supportive of the effort to ensure quality care for all patients,
but sensitive to the issue of additional burden, while another
commenter questioned whether the use of additional data would outweigh
the burden of additional reporting. Other commenters were also
supportive, noting that it would not be overly burdensome since most of
their organizations' members already complete the IRF-PAI on all
patients, regardless of payer status. One
[[Page 47074]]
commenter supported the idea since collecting information on only a
subset of patients could be interpreted as having provided different
levels of care based on the payer.
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\14\ National Quality Forum. MAP Coordination Strategy for Post-
Acute Care and Long-Term Care Performance Measurement. February
2012. Available at <a href="https://www.qualityforum.org/Publications/2012/02/MAP_Coordination_Strategy_for_Post-Acute_Care_and_Long-Term_Care_Performance_Measurement.aspx">https://www.qualityforum.org/Publications/2012/02/MAP_Coordination_Strategy_for_Post-Acute_Care_and_Long-Term_Care_Performance_Measurement.aspx</a>. Accessed January 31, 2022.
\15\ <a href="https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/MMS-Blueprint">https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/MMS-Blueprint</a>. Accessed January 31, 2022.
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In the FY 2020 IRF PPS proposed rule (84 FR 17326 to 17327), CMS
proposed to expand IRF quality data reporting on all patients
regardless of payer for purposes of the IRF QRP. In the FY 2020 IRF PPS
final rule (84 FR 39161 through 39163), we decided not to finalize the
proposal at the time, but rather use the comments to help inform a
future all-payer proposal.
b. Support for Expanding Quality Reporting Data on all IRF Patients
Currently, IRF-PAI assessment data are collected on patients
admitted under the Medicare Part A fee-for-service (FFS) and Medicare
Part C benefits.\16\
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\16\ In the FY 2010 IRF PPS final rule (74 FR 39798 through
39800), CMS revised the regulation text in Sec. Sec. 412.604,
412.606, 412.610, 412.614, and 412.618 to require that all IRFs
submit IRF-PAI data on all of their Medicare Part C patients.
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The concept of requiring quality data reporting on all patients
regardless of payer is not new; as part of the Long-Term Care Hospital
(LTCH) quality reporting program, CMS currently collects quality data
on all patients regardless of payer. CMS also collects quality data on
all Hospice patients for the Hospice Quality Reporting Program (HQRP)
regardless of payer. Eligible clinicians participating in the Merit-
based Incentive Payment System (MIPS) who submit quality measure data
on Qualified Clinical Data Registry (QCDR) measures, MIPS clinical
quality measures (CQMs) or electronic clinical quality measures (eCQMs)
must submit such data on a specified percentage of patients regardless
of payer. Collecting such quality data on all patients in the IRF
setting would provide the most robust and accurate representation of
quality in the IRFs since CMS does not have access to other payer
claims. Additionally, the data would promote higher quality and more
efficient healthcare for Medicare beneficiaries and all patients
through the exchange of information and longitudinal analysis of that
data.
We believe that data reporting on standardized patient assessment
data elements using the IRF-PAI should include all IRF patients for the
same reasons we believe that collecting data on Medicare beneficiaries
for the IRF QRP's quality measures is important: to achieve equity in
healthcare outcomes for our beneficiaries by supporting providers in
quality improvement activities, enabling them to make more informed
decisions, and promoting provider accountability for healthcare
disparities.<SUP>17 18</SUP> We believe that we have authority to
collect all-payer data for the IRF QRP under section 1886(j)(7) of the
Act. We believe it is necessary to obtain admission and discharge
assessment information on all patients admitted to IRFs in order to
obtain full and complete data regarding the quality of care provided by
the IRF to the Medicare patients receiving care in that facility. We
note, however, that these data would not be used by CMS for purposes of
updating the IRF PPS payment rates annually. In addition, we note that
section 1886(j)(7) of the Act does not limit the Secretary to
collecting data only on individuals with Medicare, and therefore this
proposal is not inconsistent with CMS' statutory obligations.
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\17\ <a href="https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/Downloads/CMS-Quality-Strategy.pdf">https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/Downloads/CMS-Quality-Strategy.pdf</a>.
\18\ Report to Congress: Improving Medicare Post-Acute Care
Transformation (IMPACT) Act of 2014 Strategic Plan for Accessing
Race and Ethnicity Data. January 5, 2017. Available at <a href="https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/Research-Reports-2017-Report-to-Congress-IMPACT-ACT-of-2014.pdf">https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/Research-Reports-2017-Report-to-Congress-IMPACT-ACT-of-2014.pdf</a>.
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We take the appropriate access to care in IRFs very seriously, and
routinely monitor the QRP measures' performance, including performance
gaps across IRFs. We intend to monitor closely whether any proposed
change to the IRF QRP has unintended consequences on access to care for
high risk patients. Should we find any unintended consequences, we will
take appropriate steps to address these issues in future rulemaking. We
wish to clarify that although CMS stated as part of the proposed rule
that we believed that expanding the reporting of quality measures to
include all patients, regardless of payer, would ensure that the IRF
QRP makes publicly available information regarding the quality of
services furnished to the IRF population as a whole CMS did not make
any proposals for policies related to publicly reporting IRF QRP data
collected on non-Medicare patients as part of the proposed rule, and
therefore is not finalizing any such policies as part of this rule.
We also take the privacy and security of protected health
information (PHI) very seriously. Our systems conform to all applicable
Federal laws and regulations as well as Federal government, Department
of Health & Human Services (HHS), and CMS policies and standards as
they relate to information security and data privacy. The system limits
data access to authorized users and monitors such users to ensure
against unauthorized data access or disclosures.
While we appreciate that collecting quality data on all patients
regardless of payer may create additional burden, we also note that
this burden may be partially offset by eliminating the effort to
separate out Medicare beneficiaries from other patients, which is also
burdensome. We also acknowledge the concerns raised by some
stakeholders in the past with respect to the administrative challenges
of implementing all payer data collection and the need to account for
the burden related to the proposal. In section XII.B. of the proposed
rule, we provided an estimate of additional burden related to the
proposal.
c. Proposal To Require Quality Data Reporting on all IRF Patients
In order to facilitate and ensure that high-quality care is
delivered to all patients, including Medicare beneficiaries, in the IRF
setting, we proposed to require that the IRF-PAI assessment be
collected on each patient receiving care in an IRF, regardless of
payer, beginning with the FY 2025 IRF QRP. If finalized as proposed,
IRFs would be required to report these data with respect to admission
and discharge for all patients, regardless of payer, discharged between
October 1, 2023 and December 31, 2023. These data would be used (in
addition to the data collected January 1, 2023 through September 30,
2023) to calculate an IRF's data completion threshold for the FY 2025
IRF QRP.
In the proposed rule we noted that if finalized as proposed, we
would revise the IRF-PAI in order for IRFs to submit data pursuant to
the finalized policy. A new item would replace the current item
identifying payment source on the IRF-PAI admission assessment to
collect additional payer(s) information. The collection of this item
would align with the LTCH setting. A draft IRF PAI containing this new
item would be available at <a href="https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting">https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting</a>. We
would notify stakeholders when the draft IRF PAI is available.
We invited public comments on this proposal.
The following is a summary of the public comments received on the
proposal to collect IRF quality data on all patients regardless of
payer and our responses:
Comment: We received support from several commenters on our
proposal to require quality data reporting on all IRF patients,
regardless of payer, beginning
[[Page 47075]]
with the FY 2025 IRF QRP. Commenters expressed support for CMS's
intention to standardize data collection for all patients. Relatedly,
one commenter noted that collecting assessment data on subsets of
populations could be interpreted as providing different levels of care.
Other commenters appreciated that collecting all-payer data will allow
IRF QRP measures to include all patients regardless of payer status to
ensure representation of the quality of services provided on the
population as a whole, rather than a subset limited to Medicare, and
one commenter agreed with CMS that the inclusion of all-payer data will
more accurately reflect the quality of care provided to IRF patients.
Another commenter highlighted that by aligning data collection across
payer types, it will allow health equity issues to be examined
consistently for all patients, regardle
[…truncated; see source link]Indexed from Federal Register on August 1, 2022.
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