Rule2024-16911
Medicare Program; Inpatient Rehabilitation Facility Prospective Payment System for Federal Fiscal Year 2025 and Updates to the IRF Quality Reporting Program
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
August 6, 2024
Effective
October 1, 2024
Issuing agencies
Health and Human Services DepartmentCenters for Medicare & Medicaid Services
Abstract
This final action updates the prospective payment rates for inpatient rehabilitation facilities (IRFs) for Federal fiscal year (FY) 2025. As required by statute, this final action 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 2025. We are updating the Office of Management and Budget (OMB) market area delineations for the IRF prospective payment system (PPS) wage index and applying a 3-year phase-out of the rural adjustment. This rule also includes updates for the IRF Quality Reporting Program (QRP).
Full Text
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<title>Federal Register, Volume 89 Issue 151 (Tuesday, August 6, 2024)</title>
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[Federal Register Volume 89, Number 151 (Tuesday, August 6, 2024)]
[Rules and Regulations]
[Pages 64276-64340]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-16911]
[[Page 64275]]
Vol. 89
Tuesday,
No. 151
August 6, 2024
Part V
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 2025 and Updates to the IRF Quality
Reporting Program; Final Rule
Federal Register / Vol. 89 , No. 151 / Tuesday, August 6, 2024 /
Rules and Regulations
[[Page 64276]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 412
[CMS-1804-F]
RIN 0938-AV31
Medicare Program; Inpatient Rehabilitation Facility Prospective
Payment System for Federal Fiscal Year 2025 and Updates to the IRF
Quality Reporting Program
AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).
ACTION: Final action.
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SUMMARY: This final action updates the prospective payment rates for
inpatient rehabilitation facilities (IRFs) for Federal fiscal year (FY)
2025. As required by statute, this final action 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 2025. We
are updating the Office of Management and Budget (OMB) market area
delineations for the IRF prospective payment system (PPS) wage index
and applying a 3-year phase-out of the rural adjustment. This rule also
includes updates for the IRF Quality Reporting Program (QRP).
DATES: This final action is effective on October 1, 2024.
Applicability dates: The updated IRF prospective payment rates are
applicable for IRF discharges occurring on or after October 1, 2024,
and on or before September 30, 2025 (FY 2025).
FOR FURTHER INFORMATION CONTACT:
Patricia Taft, (410)-786-4561, for general information.
Kim Schwartz, (410) 786-2571, for information about the IRF payment
policies, payment rates and coverage policies.
Ariel Cress, (410) 786-8571, for information about the IRF quality
reporting program.
I. Executive Summary
A. Purpose
This final rule updates the prospective payment rates for IRFs for
FY 2025 (that is, for discharges occurring on or after October 1, 2024,
and on or before September 30, 2025) 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), a description of the methodologies and data used in computing
the prospective payment rates for FY 2025, and revised OMB core-based
statistical area delineations from the July 21, 2023, OMB Bulletin (No.
23-01) for the IRF PPS wage index.
For the IRF QRP, this rule finalizes the collection of four new
items as standardized patient assessment data elements and the
modification of one item collected as a standardized patient assessment
data element, in the IRF-Patient Assessment Instrument (IRF-PAI)
beginning with the FY 2028 IRF QRP. This final rule also finalizes a
proposal with modification to remove one assessment item from the IRF-
PAI. In addition, this final rule provides a summary of the information
received on our Request for Information on quality measure concepts for
the IRF QRP in future years and an IRF star rating system.
B. Summary of Major Provisions
In this final rule, we use the methods described in the FY 2024 IRF
PPS final rule (88 FR 50956) to update the prospective payment rates
for FY 2025 using updated FY 2023 IRF claims and the most recent
available IRF cost report data, which is FY 2022 IRF cost report data.
We also use the revised OMB market area delineations from the July 21,
2023, OMB Bulletin (No. 23-01) for the IRF PPS wage index, and apply a
3-year phase-out of the rural adjustment for those IRFs changing from
rural to urban.
For the IRF QRP, we are finalizing four new items as standardized
patient assessment data elements that IRFs must collect and submit
using the IRF-PAI beginning with the FY 2028 IRF QRP: one item for
Living Situation, two items for Food, and one item for Utilities. We
are also finalizing our proposal to modify the current Transportation
item beginning with the FY 2028 IRF QRP. Additionally, we are
finalizing with modification our proposal to remove Item 14. Admission
Class from the IRF-PAI. Finally, in the proposed rule, we sought input
from interested parties on future IRF QRP quality measure concepts and
an IRF star rating system and are providing a summary of the comment we
received.
C. Summary of Impact
TABLE 1--Cost and Benefit
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Provision description Transfers/costs
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FY 2025 IRF PPS payment rate update....... The overall economic impact
of this final rule is an
estimated $280 million in
increased payments from the
Federal Government to IRFs
during FY 2025.
FY 2028 IRF QRP changes................... The overall economic impact
of this final rule is an
estimated increase in cost
to IRFs of $392,113.40
beginning with the FY 2028
IRF QRP.
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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 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 2024, 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
[[Page 64277]]
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 are finalizing 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
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 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 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).
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.
In response to COVID-19 Public Health Emergency (PHE), 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 permanently removed the post-admission
physician evaluation documentation requirement at Sec.
412.622(a)(4)(ii) beginning in FY 2021.
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 addition to the policies adopted in our
IFCs, we responded to the PHE with numerous blanket waivers \1\ and
other flexibilities,\2\ some of which are applicable to the IRF PPS.
CMS finalized these policies in the Calendar Year 2023 Hospital
Outpatient Prospective Payment and Ambulatory Surgical Center Payment
Systems final rule with comment period (87 FR 71748). Subsequently, on
May 11, 2023, the U.S. Department of Health and Human Services
(``HHS'') declared the expiration of the COVID-19 public health
emergency. (See <a href="https://www.hhs.gov/about/news/2023/02/09/fact-sheet-covid-19-public-health-emergency-transition-roadmap.html">https://www.hhs.gov/about/news/2023/02/09/fact-sheet-covid-19-public-health-emergency-transition-roadmap.html</a>.) As a result,
the ``3-hour rule'' waiver at Sec. 412.622(a)(3)(ii), and other IRF
flexibilities were terminated.
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\1\ 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>).
\2\ 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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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 2024, 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>.
B. Provisions of the Affordable Care Act 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 (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 Patient Protection and Affordable Care Act,
was enacted on March 30, 2010. In this final
[[Page 64278]]
rule, we refer to the two statutes collectively as the ``Affordable
Care Act'' or ``ACA''.
The ACA 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 ACA 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 2025 is discussed in
section V.D. 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.
Section 3004(b) of the ACA 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 ACA 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 lower than 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 the FY 2010 IRF PPS correction notice (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="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Software.html">https://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 to their MAC an informational-only bill (type of bill (TOB) 111)
that includes Condition Code 04. 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="https://www.cms.gov/manuals/downloads/clm104c25.pdf">https://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="https://www.cms.gov/ElectronicBillingEDITrans/">https://www.cms.gov/ElectronicBillingEDITrans/</a> and listed in the addenda to the Medicare
Intermediary Manual, Part 3, section 3600.)
The MAC processes the claim through its software system. This
software system includes pricing programming called the ``Pricer''
software. The Pricer software uses the CMG number, along with other
specific claim data elements and provider-specific data, to adjust the
IRF's prospective payment for interrupted stays, transfers, short
stays, and deaths, and then applies the applicable adjustments to
account for the IRF's wage index, percentage of 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).
[[Page 64279]]
III. Summary of Provisions of the Final Rule
In this FY 2025 IRF PPS final rule, we are finalizing our proposal
to update the IRF PPS for FY 2025 and the IRF QRP for FY 2028.
The finalized policy changes and updates to the IRF prospective
payment rates for FY 2025 will be as follows:
<bullet> Update the CMG relative weights and average length of stay
values for FY 2025, in a budget neutral manner, as discussed in section
IV.
<bullet> Update the IRF PPS payment rates for FY 2025 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.
<bullet> Update the FY 2025 IRF PPS payment rates by the FY 2025
wage index, describe the adoption of the revised OMB market area
delineations, the phase-out of the rural adjustment for those IRFs
changing from rural to urban, and the labor related share in a budget-
neutral manner, as discussed in section V.
<bullet> Describe the calculation of the IRF standard payment
conversion factor for FY 2025, as discussed in section V.
<bullet> Update the outlier threshold amount for FY 2025, as
discussed in section VI.
<bullet> Update the cost-to-charge ratio (CCR) ceiling and urban/
rural average CCRs for FY 2025, as discussed in section VI.
The finalized policy changes and updates to the IRF QRP for FY 2028
will be as follows:
<bullet> Adoption of four items as standardized patient assessment
data elements and modification of one item currently collected as a
standardized patient assessment data element in the IRF-PAI.
<bullet> Remove Item 14. Admission Class item from the IRF-PAI.
<bullet> Summarize comments received on the request for information
on IRF QRP quality measure and concepts.
<bullet> Summarize comments received on the request for information
on an IRF QRP star rating system.
IV. Analysis of and Responses to Public Comments
We received 44 timely responses from the public, many of which
contained multiple comments on the FY 2025 IRF PPS proposed rule (89 FR
22246). 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. General Comments on the FY 2025 IRF PPS Proposed Rule
In addition to the comments we received on specific proposals
contained within the proposed rule (which we address later in this
final rule), commenters also submitted more general observations on the
IRF PPS and IRF care generally.
Comment: We received several comments that were outside the scope
of the FY 2025 IRF PPS proposed rule. Specifically, we received
comments regarding updates to the facility-level adjustments (for
example, teaching, LIP, and rural); the removal of physician-centric
language from regulatory text; the inclusion of recreational therapy in
the IRF intensity of therapy requirement; the consequences of increased
Medicare Advantage participation for IRFs and Medicare Advantage (MA)
payment adjustments; disclosures of ownership and additional
disclosable parties' information in the skilled nursing facility
setting; and applicability of the IPPS low wage index policy for the
IRF PPS wage index.
Response: We thank the commenters for bringing these issues to our
attention, and we will take these comments into consideration for
potential policy refinements or direct the comments to the appropriate
subject matter experts.
V. Updates to the Case-Mix Group (CMG) Relative Weights and Average
Length of Stay (ALOS) Values for FY 2025
As specified in Sec. 412.620(b)(1), we calculate a relative weight
for each CMG that is proportional to the resources needed for an
average inpatient rehabilitation case in that CMG. For example, cases
in a CMG with a relative weight of 2, on average, will cost twice as
much as cases in a CMG with a relative weight of 1. Relative weights
account for the variance in cost per discharge due to the variance in
resource utilization among the payment groups, and their use helps to
ensure that IRF PPS payments support beneficiary access to care, as
well as provider efficiency.
In this final rule, we update the CMG relative weights and ALOS
values for FY2025. Typically, we use the most recent available data to
update the CMG relative weights and ALOS values. For FY 2025, we are
using the FY 2023 IRF claims and FY 2022 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 2023 IRF cost report data is
available for analysis, but the majority of the FY 2023 IRF claims data
are available for analysis.
In the FY 2025 IRF PPS proposed rule, we 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 2025 CMG relative weights and ALOS values in this
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 cost to
charge ratio (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 Step 1.
Step 3. We use the adjusted costs from Step 2 to calculate CMG
relative weights, using the hospital-specific relative value method.
Step 4. We normalize the FY 2025 CMG relative weights using a
normalization factor that results in the average CMG relative weights
in FY 2025 being the same as the average CMG relative weights in the FY
2024 IRF PPS final rule (88 FR 50956).
Consistent with the methodology that we have used to update the IRF
classification system in each instance in the past, we are updating the
CMG relative weights for FY 2025 in such a way that total estimated
aggregate payments to IRFs for FY 2025 are the same with or without the
changes (that is, in a budget-neutral manner) by applying a budget
neutrality factor to the standard payment amount. To calculate the
appropriate budget neutrality factor for use in updating the FY 2025
CMG relative weights, we use the following steps:
Step 1. Calculate the estimated total amount of IRF PPS payments
for FY
[[Page 64280]]
2025 (with no changes to the CMG relative weights).
Step 2. Calculate the estimated total amount of IRF PPS payments
for FY 2025 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
0.9976 that would maintain the same total estimated aggregate payments
in FY 2025 with and without the changes to the final CMG relative
weights.
Step 4. Apply the budget neutrality factor from Step 3 to the FY
2025 IRF PPS standard payment amount after the application of the
budget-neutral wage adjustment factor.
In section V. of this final rule, we discuss the use of the
existing methodology to calculate the standard payment conversion
factor for FY 2025.
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 2025. 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.
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[GRAPHIC] [TIFF OMITTED] TR06AU24.094
[[Page 64282]]
[GRAPHIC] [TIFF OMITTED] TR06AU24.095
[[Page 64283]]
[GRAPHIC] [TIFF OMITTED] TR06AU24.096
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 2025
would affect
[[Page 64284]]
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 2025 would not be affected as a result of the proposed CMG
relative weight revisions. However, the revisions would affect the
distribution of payments within CMGs and tiers.
TABLE 3--Distributional Effects of the Changes to the CMG Relative
Weights
------------------------------------------------------------------------
Percentage of
Percentage change in CMG relative Number of cases affected
weights cases affected (%)
------------------------------------------------------------------------
Increased by 15% or more................ 6 0.0
Increased by between 5% and 15%......... 1,875 0.5
Changed by less than 5%................. 406,808 99.2
Decreased by between 5% and 15%......... 1,468 0.4
Decreased by 15% or more................ 28 0.0
------------------------------------------------------------------------
As shown in Table 3, 99.2 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 2025. The changes in the ALOS values for FY 2025,
compared with the FY 2024 ALOS values, are small and do not show any
particular trends in IRF length of stay patterns.
We invited public comment on our proposed updates to the CMG
relative weights and ALOS values for FY 2025.
The following is a summary of the public comments received on the
proposed revisions to update the CMG relative weights and ALOS values
for FY 2025 and our responses:
Comment: Public comments generally supported CMS' update to the CMG
relative weights and average length of stay values and encouraged CMS
to use the latest available data to update these values in the final
rule. However, one commenter advocated for meaningful increases to the
CMG weights for cases that include the 13 conditions used to identify
qualifying facilities under the 60 percent rule in order to help
payment increases match the cost of care. Another commenter recommended
that CMS consider using an average-cost weighting method, rather than
the current hospital-specific relative value method (HSRV), for
calculating the CMG relative weights, to improve the relationship
between costs and payments and increase the uniformity of profitability
across IRF cases.
Response: We appreciate these commenters' support for updating the
relative weights and ALOS values for FY 2025. We have updated our data
between the FY 2025 IRF PPS proposed and this final rule to ensure that
we use the most recent available data in calculating IRF PPS payments.
The methodology that we use to update the CMG relative weights uses
the most recent cost data reported by IRFs to compute relative weights
that reflect the relative costliness of different IRF cases. We
increase or decrease relative weights of the CMGs annually, including
for those CMGs associated with the 13 conditions that qualify for the
60 percent rule, under 42 CFR 412.29(b)(2), based only on the cost data
reported to us by IRFs each year.
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 and ensures
that IRF payments appropriately reflect the relative costs of caring
for all types of IRF patients.
We appreciate commenters' feedback and suggestions for refinements
to current methodologies. We recognize commenters' desire for increased
weights for cases that include the 13 qualifying conditions. However,
the 13 qualifying conditions reflect those conditions that were treated
in IRFs when IRFs were first excluded from payment under the IPPS in
1983. These conditions have been used to define IRFs as distinct from
IPPS hospitals in terms of the types of patients treated and the types
of services provided to these patients. They are not necessarily
supposed to be more costly in the IRF to treat than other conditions,
just more likely to make up the bulk of patients in the IRF setting.
Also, as stated in section V. of this final rule, the weight
calculated for each CMG is proportional to the resources needed for an
average case in that CMG. These weights are relative to one another,
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.
The weights are empirically derived, based entirely on the data that
IRFs report to us on their claims and cost reports, and we do not
believe it would be appropriate for us to manipulate these data to
increase certain relative weights.
Furthermore, we did not propose any changes to the current HSRV
method used to assign payment weights for FY 2025 and believe that a
careful evaluation of the advantages and disadvantages of moving to an
average-cost weighting method is essential, given the major
distributional shifts that would be associated with such a change. The
purpose of the HSRV method is, in part, to place a greater emphasis on
more efficient IRF providers (that treat complex IRF patients at lower
costs). Moving to an average-cost weighting method places more emphasis
on high cost IRF providers, which could have higher costs because they
are operating less efficiently. We will continue evaluating the effects
of changing from HSRV weighting to average-cost weighting. The results
of this analysis will inform future rulemaking.
After consideration of the comments we received, we are finalizing
our proposal to update the CMG relative weights and ALOS values for FY
2025 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 in FY 2009, as shown in Table 2 of this final rule.
These updates are effective for FY 2025, that is, for discharges
occurring on or after October 1, 2024, and on or before September 30,
2025.
VI. FY 2025 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
[[Page 64285]]
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 this final rule, we are updating the IRF PPS payments
for FY 2025 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). In 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. Beginning with FY 2024, we finalized a rebased and revised IRF
market basket to reflect a 2021 base year. The FY 2024 IRF PPS final
rule (88 FR 50966 through 50988) contains a complete discussion of the
development of the 2021-based IRF market basket.
B. FY 2025 Market Basket Update and Productivity Adjustment
1. FY 2025 Market Basket Update
For FY 2025 (that is, beginning October 1, 2024, and ending
September 30, 2025), 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 2025, we proposed to use the
same methodology described in the FY 2024 IRF PPS final rule (88 FR
50982 through 50984).
Consistent with historical practice, we proposed to estimate the
market basket update for the IRF PPS for FY 2025 based on IHS Global
Inc.'s (IGI's) forecast using the most recent available data. Based on
IGI's fourth quarter 2023 forecast with historical data through the
third quarter of 2023, the proposed 2021-based IRF market basket
increase factor for FY 2025 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
percentage increase or productivity adjustment), we would use such
data, if appropriate, to determine the FY 2025 market basket update in
this final rule.
Based on IGI's second quarter 2024 forecast with historical data
through the first quarter of 2024, the 2021-based IRF market basket
percentage increase for FY 2025 is 3.5 percent.
2. FY 2025 Productivity Adjustment
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 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 referred to 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 this 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/data-research/statistics-trends-and-reports/medicare-program-rates-statistics/market-basket-research-and-information">https://www.cms.gov/data-research/statistics-trends-and-reports/medicare-program-rates-statistics/market-basket-research-and-information</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 2023 forecast, the 10-year moving
average growth of TFP for FY 2025 was projected to be 0.4 percent. In
accordance with section 1886(j)(3)(C) of the Act, we proposed to base
the FY 2025 market basket update, which is used to determine the
applicable percentage increase for the IRF payments, on IGI's fourth
quarter 2023 forecast of the 2021-based IRF market basket. We proposed
to then reduce the market basket percentage increase by the estimated
productivity adjustment for FY 2025 of 0.4 percentage point (the 10-
year moving average growth of TFP for the period ending FY 2025 based
on IGI's fourth quarter 2023 forecast). Therefore, the proposed FY 2025
IRF update was equal to 2.8 percent (3.2 percent market basket
percentage increase 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 the final rule (for example, a more recent estimate of
the market basket percentage increase and/or productivity adjustment),
we would use such data, if appropriate, to determine the FY 2025 market
basket percentage increase and productivity adjustment in the final
rule.
Using IGI's second quarter 2024 forecast, the 10-year moving
average growth of TFP for FY 2025 is projected to be 0.5 percent. Thus,
in accordance with section 1886(j)(3)(C) of the Act, the FY 2025 market
basket percentage increase, which is used to determine the applicable
percentage increase for the IRF payments, is equal to 3.5 percent using
IGI's second quarter 2024 forecast of the 2021-based IRF market basket.
We then reduce this percentage increase by the estimated productivity
adjustment for FY 2025 of 0.5 percentage point (the 10-year moving
average growth of TFP for the period ending FY 2025 based on IGI's
second quarter 2024 forecast). Therefore, the FY 2025 IRF update is
equal to 3.0 percent (3.5 percent market basket percentage increase
reduced by the 0.5 percentage point productivity adjustment).
CMS recognizes that the Medicare Payment Advisory Commission
(MedPAC) recommends that we reduce IRF PPS payment rates by 5 percent
for
[[Page 64286]]
FY 2025.\3\ 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 2025 by the proposed productivity-adjusted IRF
market basket increase factor of 2.8 percent.
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\3\ <a href="https://www.medpac.gov/wp-content/uploads/2025/03/Mar25_MedPAC_ReportToCongress_SEC.pdf">https://www.medpac.gov/wp-content/uploads/2025/03/Mar25_MedPAC_ReportToCongress_SEC.pdf</a>.
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Based on more recent data, the current estimate of the
productivity-adjusted IRF market basket increase factor for FY 2025 is
3.0 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 2025.
We invited public comment on the proposed FY 2025 market basket
percentage increase and productivity adjustment. The following is a
summary of the public comments received and our responses:
Comment: Several commenters agreed with the general approach of
increasing the standard payment conversion factor, but many commenters
stated concerns that the proposed increase is inadequate. Commenters
cited that the proposed payment increase does not keep pace with the
higher increases in costs faced by IRFs such as labor, drug, medical
supplies, personal protective equipment, and capital investment costs.
Commenters also stated other challenges that could impact costs such as
staffing shortages, supply chain disruptions, rising need for
cybersecurity investment, higher administrative costs due to MA and
commercial plan practices, high patient volumes and rising acuity, and
unprecedented high inflation.
Some commenters argued that the increased discrepancy between
payment inflation and cost inflation is causing a material financial
hardship on hospitals and that increases in hospital costs have
dramatically decreased hospital profit margins. One commenter stated
that in calendar year 2022, half of U.S. hospitals reported negative
profit margins and through the first 10 months of 2023, IRF operating
margins were down by 12 percent compared to 2022 and down by 25 percent
compared to 2021.
Several commenters stated that labor shortages and higher than
typical cost inflation are expected to continue and must be met with
correspondingly higher payment rates, especially as some public health
emergency resources have concluded. Other commenters stated that the
proposed increase factor was too small and called on CMS to increase
its proposed market basket percentage in the final rule, with some
stating that this increase should be higher than the increase in FY
2024. Some commenters requested that CMS account for the effects of the
true inflationary cost using the latest available data in the final
rule and other commenters requested that CMS recalculate the market
basket update using data that more accurately reflects the growth in
input prices. In the absence of such data, some commenters urged CMS to
consider an alternative approach to better align the market basket
increases with the rising cost of treating patients.
Several commenters expressed concern that CMS' market basket
forecast process relies on generalized hospital goods and services,
which would not recognize the specialized training and experience IRFs
require of their therapists, nurses, and other clinicians. The
commenter also noted that IRFs typically pay higher costs for advanced
rehabilitation technologies and specialized drugs that are likely not
properly captured in the market basket.
Many commenters requested that CMS reexamine the current
forecasting approach for determining the IRF PPS market basket update
as well as the underlying construction of the market basket. Some
commenters urged CMS to consider whether adjustments are necessary in
its approach to annual market basket updates. Specifically, the
commenters claimed that since the COVID-19 public health emergency,
IGI's forecasted growth for the IRF market basket has shown a
consistent trend of under-forecasting actual market basket growth. The
commenters noted that while they are cognizant of the fact that
forecasts will always be imperfect, in the past, they have been more
balanced. However, the commenters argued that with four straight years
of under-forecasts, they were concerned that there is a more systemic
issue with IGI's forecasting. Therefore, the commenters stated that
absent action from CMS, these missed forecasts are permanently
established in the standard payment rate for IRFs and will continue to
compound. In addition, the commenters claimed that these underpayments
also influence other payments, including the growing Medicare Advantage
patient population, as well as commercial insurer payment rates. The
commenters further stated that in addition to inaccurate forecasts, the
underlying market basket itself may have shortcomings that fail to
properly capture growth. The commenters stated that it is confounding
how hospitals, and especially labor-intensive IRFs, could have a change
in the market basket that is significantly below general inflation. The
commenters provided an example of one such factor may be CMS' use of
the Employment Cost Index (ECI) to measure changes in labor
compensation in the market basket. The commenters stated that the ECI
may not be adequately capturing growth in the costs of employment and
labor. However, the commenters claimed that this is just one example of
a potential issue and encouraged CMS to thoroughly reexamine the market
basket and its recent shortcomings to identify other potential areas
for refinement. The commenters stated their support to work with CMS to
assist with such an endeavor.
Response: We acknowledge and appreciate commenters' concerns
regarding recent trends in inflation. 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. In the FY 2024
IRF PPS final rule, we rebased the IRF market basket to reflect a 2021
base year (88 FR 50966 through 50982). We believe the increase in the
2021-based IRF market basket 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.
The IRF market basket is a fixed-weight, Laspeyres-type index that
measures the change in price over time of the same mix of goods and
services purchased by IRFs in the base period. As we discussed in
response to similar comments in the FY 2024 IRF PPS final rule (88 FR
50983), the IRF market basket update would reflect the prospective
price pressures described by the commenters as increasing during a high
inflation period but would inherently not reflect other factors that
might increase the level of costs, such as the quantity of labor used.
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.
Therefore, we believe the 2021-based IRF market basket appropriately
reflects IRF cost structures.
To reflect expected price growth for each of the cost categories in
the IRF market basket, we rely on impartial economic forecasts of the
price proxies
[[Page 64287]]
used in the market basket from IGI. We have consistently used the IGI
economic price proxy forecasts in the market baskets used to update the
IRF PPS payments since the implementation of the IRF PPS. For example,
to measure price growth for IRF wages and salaries costs in the IRF
market basket, since IRF-specific information is unavailable, we use
the ECI for Wages and Salaries for All Civilian workers in Hospitals.
As stated in the FY 2024 IRF final rule (88 FR 50978), we believe that
this ECI is the best available price proxy to account for the
occupational skill mix within IRFs and in the absence of an IRF-
specific ECI, we believe that the highly skilled hospital workforce
captured by the ECI for Wages and Salaries for All Civilian workers in
Hospitals (inclusive of therapists, nurses, other clinicians, etc.) is
a reasonable proxy for the compensation component of the IRF market
basket.
IGI is a nationally recognized economic and financial forecasting
firm with which CMS contracts to forecast the components of the market
baskets. At the time of the FY 2025 IRF PPS proposed rule, based on
IGI's fourth quarter 2023 forecast with historical data through the
third quarter of 2023, the 2021-based IRF market basket update was
forecasted to be 3.2 percent for FY 2025, reflecting forecasted
compensation price growth of 3.7 percent (by comparison, compensation
price growth in the IRF market basket averaged 2.8 percent from 2014
through 2023). We also note that when developing its forecast for labor
prices, IHS Global Inc. considers overall labor market conditions
(including rise in contract labor employment due to tight labor market
conditions) as well as trends in contract labor wages, which both have
an impact on wage pressures for workers employed directly by the
hospital.
As is our general practice, in the FY 2025 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 2025 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 2025.
Based on IGI's second quarter 2024 forecast with historical data
through the first quarter of 2024, we are projecting a FY 2025 IRF
market basket update of 3.5 percent (reflecting forecasted compensation
price growth of 4.0 percent) and a productivity adjustment of 0.5
percentage point. Therefore, for FY 2025 a final IRF productivity-
adjusted market basket update of 3.0 percent (3.5 percent less 0.5
percentage point) will be applicable, compared to the 2.8 percent
market basket update that was proposed.
Furthermore, we acknowledge that while the projected IRF hospital
market basket updates for FY 2021 through FY 2023 were under forecast
(actual increases less forecasted increases were positive), this was
largely due to unanticipated inflationary and labor market pressures as
the economy emerged from the COVID-19 PHE. In addition, forecast errors
have been both positive and negative. Only considering the forecast
error for years when the IRF market basket update was lower than the
actual market basket update does not consider the full experience and
impact of forecast error.
Finally, we acknowledge the commenter's recommendation that we
thoroughly reexamine the market basket to identify other potential
areas for refinement. We continue to monitor any recent data on IRF
cost structures, historical price growth, as well as updated forecasts
of price pressures faced by IRFs. Any changes to the IRF market basket
would be proposed in future rulemaking.
Comment: Many commenters expressed concern about the continued
application of the productivity adjustment to IRFs. Commenters
requested that CMS temporarily suspend the productivity adjustment to
the IRF market basket due to recent declines in hospital productivity.
One commenter urged CMS to use its ``special exceptions and
adjustments'' authority to eliminate the productivity cut for FY 2025
and another commenter urged CMS to consider its regulatory authority to
modify the productivity adjustment or make a PHE and inflation related
exception in its application for the FY 2025 update. One commenter
stated that due to the imbalance between the economy-wide productivity
measure and IRFs, they encouraged CMS to explore all available avenues
to provide additional financial relief for IRFs, working within the
agency's existing authority under the statute. Other commenters
respectfully requested CMS to carefully monitor the impact that these
productivity adjustments will have on the rehabilitation hospital
sector, provide feedback to Congress as appropriate, and reduce the
productivity adjustment.
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 2025 productivity adjustment is
derived based on the 10-year moving average growth in economy-wide
productivity for the period ending FY 2025. 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.
Comment: Many commenters urged CMS to explore all available options
to update IRF PPS payments to ensure there are no disruptions in access
to IRF services for Medicare beneficiaries. One commenter encouraged
CMS to consider additional funding opportunities in the final rule
either through an updated market basket or other allowable means.
One commenter requested CMS consider other methods and data sources
to calculate the final rule ``base'' (before additional adjustments)
market basket update that better reflects the rapidly increasing input
prices facing IRFs. Specifically, the commenter requested that CMS
consider using the average growth rate in allowable Medicare costs per
risk adjusted discharge for IRF hospitals from IRF cost reports (both
freestanding and sub-providers of an acute care hospital) for FY 2022
to calculate the FY 2025 final rule market basket update. The commenter
stated that this growth rate will capture the increased cost of
contract labor, unlike the proxy for labor cost growth currently used
in the proposed market basket update. Based on their analysis, the
commenter claimed that this would yield an unadjusted market basket
update of 4.08 percent. The commenter stated that a net market basket
update of 3.68 percent for FY 2025 better reflects the actual input
price inflation hospitals anticipate facing in the coming year, rather
than the 2.8 percent net market basket update proposed by CMS.
Another commenter requested that CMS apply a retrospective payment
adjustment to account for the differences between the FY 2022 through
2024 market basket updates and the actual market basket. They stated
that CMS is not required to use IHS Global Inc. data, or solely such
data, as the basis for the IRF PPS increase factor and stated that CMS
has the discretion to adjust the market basket update in order to
account for any increased labor costs incurred by providers not
currently reflected in a market basket data source(s). The commenter
stated that CMS incorrectly dismissed the option of applying a special
payment
[[Page 64288]]
adjustment for IRFs in the FY 2023 IRF PPS Final Rule and the FY 2024
IRF PPS Final Rule. The commenter claimed that CMS' position is
essentially that because the forecast was relatively accurate prior to
the COVID-19 pandemic, it is acceptable to penalize IRFs with a less
accurate payment update for the periods during and after the pandemic.
However, the commenter claimed that the FY 2024 IRF final rule did not
discuss the difference between the forecast and actual market basket
update for periods after FY 2020, when the forecasted market basket
update used for rate setting has consistently fallen far short of the
actual market basket update.
A few commenters stated that considering this once-in-a-generation
convergence of inflationary pressures and pandemic forces, they
respectfully urged CMS to consider a one-time adjustment to the market
basket update to account for forecast errors made during and after the
PHE to ensure that the FY 2025 annual rate update is applied to a base
rate that more accurately reflects the cost of IRF care and actual
inflation experienced since the beginning of the pandemic.
Specifically, a few commenters requested CMS adopt a one-time forecast
error adjustment of 3.7 percentage point to the FY 2025 update based on
the difference in the IRF PPS market basket percentage increase in FYs
2021, 2022, and 2023. Another commenter requested that CMS make a one-
time 3.5 percentage points adjustment to the IRF market basket
percentage increase in FY 2025 to account for the underpayments that
occurred in FYs 2022 through 2024. One commenter requested an
adjustment similar to the forecast error adjustments proposed in the FY
2025 SNF and IPPS Capital Input Price Index rules and requested that
CMS apply this adjustment to a proposed FY 2025 IRF market basket
update of 4.08 percent to result in a 7.78 percent update, prior to
application of the 0.4 percent ACA productivity adjustment. The
commenter claimed that nothing in Section 1886(j)(3) of the Act, that
specifically precludes the use of a forecast error adjustment and that
the word ``prospective'' is not used in Section 1886(j)(3)(C)(i) of the
Act, to describe or modify the IRF ``increase factor'', just that it is
noted that the section requires that the factor be based on an
``appropriate percentage increase.'' One commenter also urged CMS to
increase the market basket percentage increase when CMS determines
actual market basket exceeds the forecasted market basket.
Response: As most recently discussed in the FY 2024 IRF PPS final
rule, the IRF PPS market basket updates are set prospectively, which
means that the market basket 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 2025 market
basket update in this final rule reflects historical data through the
first quarter of CY 2024 and forecasted data through the third quarter
of CY 2025. While there is no precedent to adjust for market basket
forecast error in the IRF payment update, a forecast error can be
calculated by comparing 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. The cumulative forecast error since IRF PPS inception (FY
2003 to FY 2023) for the years where the payment update was not
mandated by statute is 0.5 percent (cumulative forecasted increase was
slightly lower than actual increase) and over the last ten years the
cumulative forecast error is -0.1 percent (cumulative forecasted
increase was slightly higher than actual increase). Though it is still
too soon to know what the final IRF market basket forecast error is for
FY 2024, so far it is 0.3 percent. Only considering the forecast error
for years when the IRF market basket update was lower than the actual
market basket update does not consider the full experience and impact
of forecast error.
After careful consideration of public comments, we are finalizing a
FY 2025 IRF productivity-adjusted market basket increase of 3.0 percent
based on the most recent data available.
C. Labor-Related Share for FY 2025
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 2021-based IRF market basket, we proposed to
calculate the labor-related share for FY 2025 as the sum of the FY 2025
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 2021-based IRF market basket. For more details
regarding the methodology for determining specific cost categories for
inclusion in the 2021-based IRF labor-related share, see the FY 2024
IRF PPS final rule (88 FR 50985 through 50988).
The relative importance reflects the different rates of price
change for these cost categories between the base year (2021) and FY
2025. We proposed to calculate the labor-related relative importance
from the IRF market basket, and it approximates the labor-related
portion of the total costs after taking into account historical and
projected price changes between the base year and FY 2025. The price
proxies that move the different cost categories in the market basket do
not necessarily change at the same rate, and the relative importance
captures these changes. Based on IGI's fourth quarter 2023 forecast of
the 2021-based IRF market basket, the sum of the FY 2025 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 70.5 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
8.1 percent of the 2021-based IRF market basket for FY 2025, we
proposed to take 46 percent of 8.1 percent to determine the labor-
related share of Capital-Related costs for FY 2025 of 3.7 percent.
Therefore, we proposed a total labor-related share for FY 2025 of 74.2
percent (the sum of 70.5 percent for the proposed labor-related share
of operating costs and 3.7 percent for the proposed labor-related share
of Capital-Related costs). We also proposed that if more recent data
became available after publication of the proposed rule and before the
publication of the final rule (for example, a more recent estimate of
the labor-related share), we would use such
[[Page 64289]]
data, if appropriate, to determine the FY 2025 IRF labor-related share
in the final rule.
Based on IGI's second quarter 2024 forecast for the 2021-based IRF
market basket, the sum of the FY 2025 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
70.7 percent. The portion of Capital-Related costs that is influenced
by the local labor market is estimated to be 46 percent, which is the
same percentage applied to the 2016-based IRF market basket (84 FR
39088 through 39089). Since the relative importance for Capital is 8.1
percent of the 2021-based IRF market basket in FY 2025, we took 46
percent of 8.1 percent to determine the labor-related share of Capital-
Related costs for FY 2025 of 3.7 percent. Therefore, the total labor-
related share for FY 2025 based on more recent data is 74.4 percent
(the sum of 70.7 percent for the operating costs and 3.7 percent for
the labor-related share of Capital-Related costs).
We invited public comment on the proposed labor-related share for
FY 2025. The following is a summary of the public comments received and
our responses:
Comment: One commenter appreciated that CMS only proposed to
increase the labor-related share from 74.1 percent in FY 2024 to 74.2
percent in FY 2025. The commenter stated that although there is not a
material increase in the wage percentage each increase to the labor-
related share percentage penalizes any facility that has a wage index
less than 1.0. The commenter stated that across the country, there is a
growing disparity between high-wage and low-wage States that harms
hospitals in many rural and underserved communities; limiting the
increase in the labor-related share helps mitigate that growing
disparity. However, another commenter believed that the 0.1 percentage
point increase in the labor-related share update is inadequate and does
not reflect the many challenges faced by health care facilities.
Response: We proposed to use the FY 2025 relative importance values
for the labor-related cost categories from the 2021-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. As stated in the FY 2025 IRF proposed
rule, we also proposed that if more recent data became available, we
would use such data, if appropriate, to determine the FY 2025 labor-
related share for the final rule. Based on IHS Global Inc.'s second
quarter 2024 forecast with historical data through the first quarter of
2024, the FY 2025 labor-related share for the final rule is 74.4
percent.
After consideration of the public comments, we are finalizing a FY
2025 labor-related share of 74.4 percent. Table 4 shows the current
estimate of the FY 2025 labor-related share and the FY 2024 final
labor-related share using the 2021-based IRF market basket relative
importance.
TABLE 4--FY 2025 IRF Labor-Related Share and FY 2024 IRF Labor-Related
Share
------------------------------------------------------------------------
FY 2024 Final
FY 2025 Labor- labor-related
related share \1\ share \2\
------------------------------------------------------------------------
Wages and Salaries................ 49.4 49.0
Employee Benefits................. 11.8 11.8
Professional Fees: Labor-Related 5.5 5.5
\3\..............................
Administrative and Facilities 0.7 0.7
Support Services.................
Installation, Maintenance, and 1.5 1.5
Repair Services..................
All Other: Labor-Related Services. 1.8 1.8
-------------------------------------
Subtotal...................... 70.7 70.3
------------------------------------------------------------------------
Labor-related portion of Capital- 3.7 3.8
Related (46%)....................
-------------------------------------
Total Labor-Related Share..... 74.4 74.1
------------------------------------------------------------------------
\1\ Based on the 2021-based IRF market basket relative importance, IGI
2nd quarter 2024 forecast.
\2\ Based on the 2021-based IRF market basket relative importance as
published in the Federal Register (88 FR 50987).
\3\ Includes all contract advertising and marketing costs and a portion
of accounting, architectural, engineering, legal, management
consulting, and home office contract labor costs.
D. Wage Adjustment for FY 2025
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.
In the FY 2023 IRF PPS final rule (87 FR 47054 through 47056) we
finalized a policy 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. We amended IRF PPS
regulations at Sec. 412.624(e)(1)(ii) to reflect this permanent cap on
wage index decreases. Additionally, we finalized a policy 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.
A full discussion of the adoption of this policy is found in the FY
2023 IRF PPS final rule.
For FY 2025, we maintained the policies and methodologies described
in the FY 2024 IRF PPS final rule (88 FR 50956) related to the labor
market area definitions and the wage index methodology for areas with
wage data. Thus, we use the core based statistical
[[Page 64290]]
areas (CBSAs) labor market area definitions and the FY 2025 pre-
reclassification and pre-floor hospital wage index data. In accordance
with section 1886(d)(3)(E) of the Act, the FY 2025 pre-reclassification
and pre-floor hospital wage index is based on data submitted for
hospital cost reporting periods beginning on or after October 1, 2020,
and before October 1, 2021 (that is, FY 2021 cost report data).
The labor market designations made by the Office of Management and
Budget (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 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
2025 IRF PPS wage index. For FY 2025, the only rural area without wage
index data available is in North Dakota. We have determined that the
borders of 18 rural counties are local and contiguous with 8 urban
counties. Therefore, under this methodology, the wage indexes for the
counties of Burleigh/Morton/Oliver (CBSA 13900: 0.9020), Cass (CBSA
22020: 0.8763), Grand Forks (CBSA 24220: 0.7865), and McHenry/Renville/
Ward (CBSA 33500: 0.7686) are averaged, resulting in an imputed rural
wage index of 0.8334 for rural North Dakota for FY 2025. In past years
for rural Puerto Rico, we did not apply this methodology due to the
distinct economic circumstances there; due to the proximity of almost
all of Puerto Rico's various urban and nonurban areas, this methodology
would produce a wage index for rural Puerto Rico that is higher than
that in half of its urban areas. However, because rural Puerto Rico now
has hospital wage index data on which to base an area wage adjustment,
we will not apply this policy for FY 2025. For urban areas without
specific hospital wage index data, we will continue using the average
wage indexes of all urban areas within the State to serve as a
reasonable proxy for the wage index of that urban CBSA as proposed and
finalized in FY 2006 (70 FR 47927). For FY 2025, the only urban area
without wage index data available is CBSA 25980, Hinesville Fort
Stewart, GA.
We invited public comment on the proposed Wage Adjustment for FY
2025. The following is a summary of the public comments received on the
proposed revisions to the Wage Adjustment for FY 2025:
Comment: Several commenters suggested changes to the wage index
methodology. Generally, commenters recommended that CMS use the same
wage index adjustments for providers paid under the IPPS and under the
IRF PPS in the same area. These recommendations were aimed at
increasing parity between IPPS and IRF PPS hospitals. Most comments on
this topic expressed concern over comparisons of shared labor markets.
One commenter also voiced concerns that IPPS hospitals that have
benefited from IPPS-specific geographic reclassification or other wage
adjustments no longer put the same resources into the completion of
Occupational Mix Surveys.
Several commenters specifically expressed support for the IPPS low
wage index hospital policy, wherein wage index values are increased for
the lowest quartile of the wage index values across all hospitals.
These commenters urged CMS to develop and apply a corresponding low
wage index hospital policy for IRFs. Commentors expressed concerns that
the disparity in policy puts IRFs at a competitive disadvantage within
shared labor markets and believed that extending the low wage index
policy to IRFs would help maintain parity and ensure that low wage
index and rural IRFs would have adequate resources to continue to
provide access to care. Several commentors argued that this low wage
index hospital policy to IRFs should be implemented without applying a
budget neutrality adjustment.
Additionally, several commenters found the continued use of the
pre-reclassification and pre-floor IPPS wage index unreasonable and
urged CMS to revise its policy and apply the post-classification and
post-floor hospital IPPS wage index to all IRFs, but especially the
hospital-based distinct part units (DPUs). Like others, these
commentors expressed concerns related to shared labor markets.
Commenters believed that the current policy places inpatient hospital-
based IRFs and other DPUs at a disadvantage in the labor markets in
which they must compete with acute-care hospitals for staff.
Additionally, several commenters suggested that CMS could leverage
existing data to evaluate the policy change using the CMS Form 2552-96,
Worksheet S-3, which captures ``excluded area'' salaries and wage-
related costs.
Response: We appreciate the commenters' suggestion to adopt the
IPPS low wage index hospital policy, post-classification and post-floor
hospital IPPS wage index, and other IPPS wage index adjustments for the
IRF wage index. We also acknowledge and appreciate the commenters'
concerns regarding competition for labor resulting from different
applicable wage index policies across different settings of care. While
CMS and other interested parties have explored potential alternatives
to the current wage index system in the past, no consensus has been
achieved regarding how best to implement a replacement system that is
evidence-based and data-driven. These concerns will be taken into
consideration while we continue to explore potential wage index reforms
and monitor IRF wage index policies.
As most recently discussed in the FY 2024 IRF PPS final rule (88 FR
50956), 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 in section D. of this final
rule. 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. As
such, any effects of this policy on the wage data of IPPS hospitals
would be extended to the IRF setting, as this data would be used to
establish the wage index for IRFs in the future. We note that IPPS wage
index values are based on historical data and typically lag by four
years.
As stated in prior years, as we do not have an IRF-specific wage
index, we are unable to determine the degree, if any, to which these
IPPS policies under the IRF PPS would be appropriate. However, CMS
acknowledges that commenters have suggested that such data may be
available in CMS Form 2552-96, Worksheet S-3 and will take this under
consideration. Data pertaining to any IPPS policies that are applied to
the pre-reclassification/pre-floor wage index is available in the FY
2024 IPPS proposed rule 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>. 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).
Comment: Several commenters voiced specific concerns about rising
reliance on contract labor. The commenters stated that, as contract
labor is generally not tied to the local economy, the local
[[Page 64291]]
wage index is less and less reflective of the actual costs incurred by
hospitals as the use of contract labor grows. Concerns about the rising
use of contract labor were tied to concerns about workforce shortages,
increasingly competitive labor markets, and the lack of parity between
IRFs and IPPS hospitals in shared labor markets.
To address these challenges, several commentors encouraged CMS to
explore how geographic differences in market wide labor costs and the
increased use of contract labor impacts costs, and to make
corresponding adjustments in policy.
Response: CMS acknowledges commenters' concerns that the current
wage index policies may not capture or keep up with actual costs of
care as well as specific concerns related to the cost of contract
labor. As noted in the FY 2024 IRF PPS final rule (42 CFR 412), an
analysis of Medicare cost report data for IPPS hospitals shows that
contract labor hours accounted for about 4 percent of total
compensation hours (reflecting employed and contract labor staff) in
2021. We will continue to monitor the trends in the increased use of
contract labor.
Comment: Many commenters supported the existing 5 percent wage
index cap and expressed appreciation of having a policy to cap and
phase in the wage index changes that a provider can experience in a
given year. However, at least one commenter remarked that, while they
appreciate the cap policy, they believe that it does not do enough to
correct the widening range in wage index amounts. Another commenter
expressed frustration that the wage index values of the hospitals
subject to the cap differ from the currently published tables and urged
CMS to release wage index tables in the final rule that incorporate the
cap on CBSAs that meet the 5 percent decrease criteria.
Response: We appreciate the commenters' support of the permanent
cap on wage index decreases. We realize that the 5-percent cap on
annual decreases in the wage index values does not entirely eliminate
the effects of annual changes in the wage index, but we believe that it
does substantially reduce the financial impact on IRFs of these annual
changes. The wage index tables for IRF PPS are provided at the CBSA
level. The 5-percent cap policy is applied at the provider level.
Hence, when the 5-percent cap is applicable, each IRF should work
directly with its MAC to understand how the 5-percent cap is applied.
MACs have more detailed information about the location of each IRF and
the applicability of the 5-percent cap to each IRFs situation, and CMS
has provided careful instructions to the MACs on applying the 5-percent
cap policy (see publication 100-04 Medicare Claims Processing Manual,
Chapter 3).
After consideration of the comments we received, we are finalizing
our proposals regarding the wage adjustment for FY 2025.
2. Core-Based Statistical Areas (CBSAs) for the FY 2025 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 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
[[Page 64292]]
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, we did not propose to adopt the revised
OMB delineations identified in OMB Bulletin No. 20-01 for FY 2022
through FY 2024.
On July 21, 2023, OMB issued OMB Bulletin No. 23-01 (available at
<a href="https://www.whitehouse.gov/wp-content/uploads/2023/07/OMB-Bulletin-23-01.pdf">https://www.whitehouse.gov/wp-content/uploads/2023/07/OMB-Bulletin-23-01.pdf</a>) which updates and supersedes OMB Bulletin No. 20-01 based upon
the 2020 Standards for Delineating Core Based Statistical Areas (``the
2020 Standards'') published by OMB on July 16, 2021 (86 FR 37770). OMB
Bulletin No. 23-01 revised CBSA delineations which are comprised of
counties and equivalent entities (for example, boroughs, a city and
borough, and a municipality in Alaska, planning regions in Connecticut,
parishes in Louisiana, municipios in Puerto Rico, and independent
cities in Maryland, Missouri, Nevada, and Virginia). For FY 2025, we
proposed to adopt the revised OMB delineations identified in OMB
Bulletin No. 23-01.
a. Urban Counties Becoming Rural
As previously discussed, we are implementing the new OMB
statistical area delineations (based upon the 2020 decennial Census
data) beginning in FY 2025 for the IRF PPS wage index. Our analysis
shows that a total of 54 counties (and county equivalents) that are
currently considered part of an urban CBSA would be considered located
in a rural area, for IRF PPS payment beginning in FY 2025, if we adopt
the new OMB delineations. Table 5 lists the 54 urban counties that will
be rural now that we are finalizing our proposal to implement the new
OMB delineations.
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We are finalizing our proposal that the wage data for all hospitals
located in the counties listed in Table 5 now be considered rural when
their respective State's rural wage index value is calculated. This
rural wage index value would be used under the IRF PPS.
b. Rural Counties Becoming Urban
Analysis of the new OMB delineations (based upon the 2020 decennial
Census data) shows that a total of 54 counties (and county equivalents)
that are currently located in rural areas would be in urban areas based
on finalizing our proposal to implement the new OMB delineations. Table
6 lists the 54 rural counties that will be urban after we finalize this
proposal.
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[[Page 64296]]
[GRAPHIC] [TIFF OMITTED] TR06AU24.100
We proposed and are finalizing that when calculating the area wage
index, the wage data for hospitals located in these counties would be
included in their new respective urban CBSAs.
c. Urban Counties Moving to a Different Urban CBSA
In addition to rural counties becoming urban and urban counties
becoming rural, several urban counties would shift from one urban CBSA
to another urban CBSA after we adopt the new OMB delineations. In other
cases, if we adopt the new OMB delineations, counties would shift
between existing and new CBSAs, changing the constituent makeup of the
CBSAs.
In one type of change, an entire CBSA would be subsumed by another
CBSA. For example, CBSA 31460 (Madera, CA) currently is a single county
(Madera, CA) CBSA. Madera County would be a part of CBSA 23420 (Fresno,
CA) under the new OMB delineations.
In another type of change, some CBSAs have counties that would
split off to become part of, or to form, entirely new labor market
areas. For example, CBSA 29404 (Lake County-Kenosha County, IL-WI)
currently is comprised of two counties (Lake County, IL and Kenosha
County, WI). Under the new OMB delineations, Kenosha County would split
off and form the new CBSA 28450 (Kenosha, WI), while Lake County would
remain in CBSA 29404.
Finally, in some cases, a CBSA would lose counties to another
existing CBSA if we adopt the new OMB delineations. For example, Meade
County, KY, would move from CBSA 21060 (Elizabethtown-Fort Knox, KY) to
CBSA 31140 (Louisville/Jefferson County, KY-IN). CBSA 21060 would still
exist in the new labor market delineations with fewer constituent
counties. Table 7 lists the urban counties that would move from one
urban CBSA to another urban CBSA under the new OMB delineations.
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[GRAPHIC] [TIFF OMITTED] TR06AU24.111
[[Page 64299]]
If providers located in these counties move from one CBSA to
another under the new OMB delineations, there may be impacts, both
negative and positive, upon their specific wage index values.
In other cases, adopting the revised OMB delineations would involve
a change only in CBSA name and/or number, while the CBSA continues to
encompass the same constituent counties. For example, CBSA 19430
(Dayton-Kettering, OH) would experience a change to its name and become
CBSA 19430 (Dayton-Kettering-Beavercreek, OH), while all of its three
constituent counties would remain the same. We consider these changes
(where only the CBSA name and/or number would change) to be
inconsequential changes with respect to the IRF PPS wage index. Table 8
sets forth a list of such CBSAs where there would be a change in CBSA
name and/or number only if we adopt the revised OMB delineations.
[[Page 64300]]
[GRAPHIC] [TIFF OMITTED] TR06AU24.101
[[Page 64301]]
[GRAPHIC] [TIFF OMITTED] TR06AU24.102
[[Page 64302]]
[GRAPHIC] [TIFF OMITTED] TR06AU24.103
d. Change to County-Equivalents in the State of Connecticut
The June 6, 2022, Census Bureau Notice (87 FR 34235-34240), OMB
Bulletin No. 23-01 replaced the 8 counties in Connecticut with 9 new
``Planning Regions.'' Planning regions now serve as county-equivalents
within the CBSA system. We are adopting the planning regions as county
equivalents for wage index purposes. We believe it is necessary to
adopt this migration from counties to planning region county-
equivalents in order to maintain consistency with OMB updates. We are
providing the following crosswalk with the current and as finalized
FIPS county and county-equivalent codes and CBSA assignments.
TABLE 9--Connecticut Counties to Planning Regions
----------------------------------------------------------------------------------------------------------------
Proposed
planning region
FIPS Current County Current CBSA FIPS area (County CBSA
Equivalent)
----------------------------------------------------------------------------------------------------------------
9003......................... Hartford........ 25540 9110 Capitol........ 25540
9015......................... Windham......... 49340 9150 Northeastern 7
Connecticut.
9005......................... Litchfield...... 7 9160 Northwest Hills 7
9001......................... Fairfield....... 14860 9190 Western 14860
Connecticut.
9011......................... New London...... 35980 9180 Southeastern 35980
Connecticut.
9013......................... Tolland......... 25540 9110 Capitol........ 25540
9009......................... New Haven....... 35300 9170 South Central 35300
Connecticut.
9007......................... Middlesex....... 25540 9130 Lower 25540
Connecticut
River Valley.
----------------------------------------------------------------------------------------------------------------
3. Transition Policy for FY 2025 Wage Index Changes
Overall, we believe that implementing the new OMB delineations
would result in wage index values being more representative of the
actual costs of labor in a given area. We recognize that some providers
(10 percent) would have a higher wage index due to our implementation
of the new labor market area delineations. However, we also recognize
that more providers (16 percent) would experience decreases in wage
index values as a result of our implementation of the new labor market
area delineations. Our analysis for the FY 2025 final rule indicates
that 16 IRFs will experience a change in either rural or urban
designations. Of these, 8 facilities designated as rural in FY 2024
would be designated as urban in FY 2025. Based upon the CBSA
delineations, those rural IRFs that change from rural to urban would
lose the 14.9 percent rural adjustment. To mitigate the financial
impacts of this loss, we proposed a transition for these facilities, as
discussed further below.
CMS recognizes that IRFs in certain areas may experience reduced
payments due to the adoption of the revised OMB delineations and is
finalizing transition policies to mitigate negative financial impacts
and provide stability to year-to-year wage index variations. In the FY
2021 final rule (85 FR 48434), CMS finalized a wage index transition
policy to apply a 5-percent cap for IRFs that may experience decreases
in their final wage index from the prior fiscal year. In FY 2023, the
5-percent cap policy was made permanent. This 5-percent cap on
reductions policy is discussed in further detail in FY 2023 final rule
at 87 FR 47054 through 47056. It is CMS' long held opinion that revised
labor market delineations should be adopted as soon as is possible to
maintain the integrity of the wage index system. We believe the 5-
percent cap policy will sufficiently mitigate significant disruptive
financial impacts on hospitals negatively affected by the adoption of
the revised OMB delineations. Besides the rural adjustment transition
discussed immediately below, we do not believe any additional
transition is necessary considering that the current cap on wage index
decreases, which was not in place when implementing prior decennial
census updates in FY 2006 and FY 2015, ensures that an IRFs wage index
would not be less than 95 percent of its final wage index for the prior
year.
Consistent with the transition policy adopted in FY 2006 (70 FR
47923 \4\ through 47927 \5\), we considered the appropriateness of
applying a 3-year phase-out of the rural adjustment for IRFs located in
rural counties that would become urban under the new OMB delineations,
given the potentially significant payment impacts for these facilities.
We continue to believe, as discussed in the FY 2006 IRF final rule (70
FR 47880 \6\), that the phase-out of the rural adjustment transition
period for these facilities specifically is appropriate because, as a
group, we expect these IRFs would experience a steeper and more abrupt
reduction in their payments compared to other IRFs. Therefore, we are
finalizing a budget
[[Page 64303]]
neutral three-year phase-out of the rural adjustment for existing FY
2024 rural IRFs that will become urban in FY 2025 and that experience a
loss in payments due to changes from the new CBSA delineations.
Accordingly, the incremental steps needed to reduce the impact of the
loss of the FY 2024 rural adjustment of 14.9 percent will be phased out
over FYs 2025, 2026, and 2027. This policy will allow rural IRFs which
would be classified as urban in FY 2025 to receive two-thirds of the
2024 rural adjustment for FY 2025. For FY 2026, these IRFs will receive
the full FY 2026 wage index and one-third of the FY 2024 rural
adjustment. For FY 2027, these IRFs will receive the full FY 2027 wage
index without a rural adjustment. We believe a three-year budget-
neutral phase-out of the rural adjustment for IRFs that transition from
rural to urban status under the new CBSA delineations would best
accomplish the goals of mitigating the loss of the rural adjustment for
existing FY 2024 rural IRFs. The purpose of the gradual phase-out of
the rural adjustment for these facilities is to alleviate the
significant payment implications for existing rural IRFs that may need
time to adjust to the loss of their FY 2024 rural payment adjustment or
that experience a reduction in payments solely because of this
redesignation. As stated, this policy is specifically for rural IRFs
that become urban in FY 2025 and that experience a loss in payments due
to changes from the new CBSA delineations. Thus, we are not
implementing a transition policy for urban facilities that become rural
in FY 2025 because these IRFs will receive the full rural adjustment of
14.9 percent beginning October 1, 2024.
---------------------------------------------------------------------------
\4\ <a href="https://www.federalregister.gov/citation/70-FR-47923">https://www.federalregister.gov/citation/70-FR-47923</a>.
\5\ <a href="https://www.federalregister.gov/citation/70-FR-47927">https://www.federalregister.gov/citation/70-FR-47927</a>.
\6\ <a href="https://www.federalregister.gov/citation/70-FR-47880">https://www.federalregister.gov/citation/70-FR-47880</a>.
---------------------------------------------------------------------------
We invited public comment on the proposed implementation of revised
labor market area delineations and on the proposed transition policy
for rural IRFs that would be designated as urban under the new CBSA
delineations.
The following is a summary of the public comments received on the
proposed implementation of the revised labor market area delineations
and the proposed transition policy:
Comment: Overall, many commenters supported the adoption of OMB's
CBSA delineation revisions. Several others voiced appreciation for CMS'
inclusion of a transition policy to reduce the impact of the CBSA
delineation changes, without voicing any opposition to the adoption of
the new delineations. However, some commenters specifically opposed the
adoption of OMB's CBSA delineation revisions. The commenters stated
that both OMB guidance and the Metropolitan Areas Protection and
Standardization Act (MAPS) (Public Law 117-219) support that, if CMS
chooses to adopt new OMB delineations, CMS must fully explain why
reliance on the updated CBSAs as set forth by OMB is appropriate for
purposes of the FY 2025 wage index adjustments. The commenters stated
that CMS has not provided any rationale or explanation for why relying
on the updated CBSAs is appropriate. Rather than simply adopting the
OMB CBSAs by default, the commenters stated that CMS must make a fact-
specific determination of those CBSAs' suitability for Medicare
reimbursement purposes, including whether it would be appropriate to
use additional data to modify OMB's delineation to ensure that such
changes are appropriate for purposes of defining regional labor markets
for IRF workers.
Response: We appreciate the majority of commenters' support for the
adoption of OMB's CBSA delineation revisions and recognize others'
opposition. We do not agree with the commenters' assessment that CMS
has not provided a rationale for the proposed adoption of the revised
CBSA delineations for FY 2025. The MAPS Act specifically states that
``this act limits the automatic application of, and directs the Office
of Management and Budget (OMB) to provide information about, changes to
the standards for designating a core-based statistical area (CBSA) . .
.'' We believe that our proposed rule meets the requirements of the
MAPS Act because we have not automatically applied the revised CBSAs
outlined in OMB Bulletin 23-01. Rather, as we noted in the proposed
rule, we proposed the adoption of the revised CBSA delineations because
we believe it is important for the IRF PPS to use, as soon as is
reasonably possible, the latest available labor market area
delineations to maintain a more accurate and up-to-date payment system
that reflects the reality of population shifts and labor market
conditions. We also believe that using the most current delineations
increase the integrity of the IRF PPS wage index system by creating a
more accurate representation of geographic variations in wage levels.
With respect to the suggestion that CMS consider whether it would
be appropriate to use additional data to modify OMB's delineation to
ensure that such changes are appropriate for purposes of defining
regional labor markets for IRF workers, we do not believe that the use
of such additional data is appropriate. As we have previously discussed
in the FY 2016 final rule (80 FR 47069) and as we noted earlier in this
final rule, we believe that the labor market area in which the IRF is
geographically located is most appropriate for determining the wage
adjustment. Accordingly, we do not believe it would be appropriate to
use additional data to modify OMB's delineations, for the same reasons
we previously stated with regard to floors or reclassifications. For
example, using additional data to modify OMB's CBSA delineations would
significantly increase administrative burden, both for IRFs and for
CMS, associated with particular geographical areas or even individual
IRFs moving from one CBSA to another, and it would significantly
increase the complexity of the methodology.
Furthermore, because all CBSA delineation changes would be applied
budget-neutrally under the wage index, these policies would increase
the wage index for some IRFs while reducing IRF PPS payments for all
other IRFs, which would be a departure from our longstanding policies
that IRFs have relied on for many years. For these reasons, we continue
to believe it is important for the IRF PPS to use the latest available
labor market area delineations, based on the latest available CBSA
delineations established by OMB as soon as is reasonably possible in
order to maintain a more accurate and up-to-date payment system that
reflects the reality of population shifts and labor market conditions.
We further believe that using the delineations reflected in OMB
Bulletin No. 23-01 would increase the integrity of the IRF PPS wage
index system by creating a more accurate representation of geographic
variations in wage levels. Therefore, we believe that it is appropriate
to implement the new OMB delineations without delay.
Comment: Public comments generally all supported the phase-out
policy for IRFs being reclassified from rural to urban CBSAs.
Commenters expressed that this phase-out policy for loss of the rural
adjustment is a reasonable way to ensure that no IRF faces a dramatic
cut to its reimbursement as a result of the new CBSA delineation. A few
commentors specifically noted that while they appreciate the existing
permanent 5-percent cap policy, they do not believe that it is
sufficient to mitigate the impact of the CBSA change, and therefore
supported the implementation of a 3-year wage index transition period
to allow for a wage index transition consistent with prior updates to
the CBSA categorization.
Response: We appreciate the commenters' support for a 3-year phase-
out of the rural adjustment for FY 2024 rural IRFs that will be
considered urban
[[Page 64304]]
in FY 2025 and for supporting the CBSA change in conjunction with
applying the existing permanent 5-percent cap policy. We believe that
the existing permanent 5-percent cap policy substantially mitigates the
financial impact on IRFs of the updated CBSA market area delineations,
and we believe that phasing in these new CBSA market area delineations
over 3 years would be overly complex to administer and is therefore not
the best approach. We will continue monitoring the effects of the wage
index updates to ensure that the permanent 5-percent cap policy is
adequately mitigating any substantial decreases in wage index values.
After consideration of the comments we received, we are finalizing
our proposal to adopt the revised OMB delineations contained in OMB
Bulletin No. 23-01 as well as our proposal to implement a budget
neutral three-year phase-out of the rural adjustment for existing FY
2024 rural IRFs that will become urban in FY 2025.
The proposed wage index applicable to FY 2025 is set forth in Table
A and Table B 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>.
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 2025 labor-related share based on the
2021-based IRF market basket relative importance (74.4 percent) to
determine the labor-related portion of the standard payment amount. (A
full discussion of the calculation of the labor-related share appears
in section VI.E. 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
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 use the listed steps
to ensure that the FY 2025 IRF standard payment conversion factor
reflects the update to the wage indexes (based on the FY 2021 hospital
cost report data) and the 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 2024 (as
published in the FY 2024 IRF PPS final rule (88 FR 50956)).
Step 2. Calculate the total amount of estimated IRF PPS payments
using the FY 2025 wage index values (based on updated hospital wage
data and considering the permanent cap on wage index decreases policy)
and the FY 2025 labor-related share of 74.4 percent.
Step 3. Divide the amount calculated in Step 1 by the amount
calculated in Step 2. The resulting quotient is the FY 2025 budget-
neutral wage adjustment factor of 0.9924.
Step 4. Apply the budget neutrality factor from Step 3 to the FY
2025 IRF PPS standard payment amount after the application of the
increase factor to determine the FY 2025 standard payment conversion
factor.
We discuss the calculation of the standard payment conversion
factor for FY 2025 in section VI.G. of this final rule.
We invited public comment on our proposals regarding the Wage
Adjustment for FY 2025.
Comment: Several commentors specified that the wage index cap
policy should be implemented without applying a budget neutrality
adjustment.
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. As a matter of fact, the statute at section 1886(j)(6) of the
Act requires that adjustments for geographic variations in labor costs
for a FY be made in a budget-neutral manner. We refer readers to the FY
2023 IRF PPS final rule (87 FR 47054 through 47056) for a detailed
discussion on the wage index cap policy.
As a result of the public comments, we are finalizing our proposals
regarding the IRF budget neutral wage adjustment factor methodology for
FY 2025.
G. Description of the IRF Standard Payment Conversion Factor and
Payment Rates for FY 2025
To calculate the standard payment conversion factor for FY 2025, as
illustrated in Table 10, we begin by applying the finalized increase
factor for FY 2025, as adjusted in accordance with sections
1886(j)(3)(C) of the Act, to the standard payment conversion factor for
FY 2024 ($18,541). Applying the 3.0 productivity-adjusted market basket
increase factor for FY 2025 to the standard payment conversion factor
for FY 2024 of $18,541 yields a standard payment amount of $19,097.
Then, we apply the budget neutrality factor for the FY 2025 wage index
(taking into account the policy placing a permanent cap on decreases in
the wage index), and labor-related share of 0.9924, which results in a
standard payment amount of $18,592. We next apply the budget neutrality
factor for the CMG relative weights of 0.9976, which results in the
standard payment conversion factor of $18,907 for FY 2025.
We invited public comment on the proposed FY 2025 standard payment
conversion factor.
We did not receive any comments on our proposed FY 2025 standard
payment conversion factor, and therefore, we are finalizing the
revisions as proposed.
TABLE 10--Calculations to Determine the FY 2025 Standard Payment
Conversion Factor
------------------------------------------------------------------------
Explanation for Adjustment Calculations
------------------------------------------------------------------------
FY 2024 Standard Payment Conversion Factor........... $18,541
Market Basket Increase Factor for FY 2025 (3.5%), x 1.030
reduced by 0.5 percentage point for the productivity
adjustment as required by section
1886(j)(3)(C)(ii)(I) of the Act.....................
Budget Neutrality Factor for the Updates to the Wage x 0.9924
Index and Labor-Related Share.......................
Budget Neutrality Factor for the Revisions to the CMG x 0.9976
Relative Weights....................................
FY 2025 Standard Payment Conversion Factor........... = $18,907
------------------------------------------------------------------------
We then apply the CMG relative weights described in section IV. of
this final rule to the FY 2025 standard payment conversion factor
($18,907), to determine the unadjusted IRF prospective payment rates
for FY 2025. The unadjusted prospective payment rates for FY 2025 are
shown in Table 11.
[[Page 64305]]
[GRAPHIC] [TIFF OMITTED] TR06AU24.104
[[Page 64306]]
[GRAPHIC] [TIFF OMITTED] TR06AU24.105
H. Example of the Methodology for Adjusting the Prospective Payment
Rates
Table 12 illustrates the methodology for adjusting the prospective
payments (as described in section V. 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 11.
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 0.8657, 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 0.9068, and a teaching status adjustment of
0.0784.
To calculate each IRF's labor and non-labor portion of the
prospective
[[Page 64307]]
payment, we begin by taking the FY 2025 unadjusted prospective payment
rate for CMG 0104 (without comorbidities) from Table 11. Then, we
multiply the labor-related share for FY 2025 (74.4 percent) described
in section VI. 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 12 illustrates the components of the adjusted
payment calculation.
[GRAPHIC] [TIFF OMITTED] TR06AU24.106
Thus, the adjusted payment for Facility A would be $30,649.63, and
the adjusted payment for Facility B would be $30,519.74.
VII. Update to Payments for High-Cost Outliers under the IRF PPS for FY
2025
A. Update to the Outlier Threshold Amount for FY 2025
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 Cost-to-
Charge Ratio (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 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 2024 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, 86 FR 42362, 87 FR 47038, and 88 FR 50956
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.
[[Page 64308]]
To update the IRF outlier threshold amount for FY 2025, we proposed
to use FY 2023 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 2024.
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 2025, we
estimated the amount of FY 2025 IRF PPS aggregate and outlier payments
using the most recent claims available (FY 2023) and the FY 2025
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 3.2
percent in FY 2024. Therefore, we proposed to update the outlier
threshold amount from $10,423 for FY 2024 to $12,158 for FY 2025 to
maintain estimated outlier payments at approximately 3 percent of total
estimated aggregate IRF payments for FY 2025.
We note that, as we typically do, we will update our data between
the FY 2025 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 2023. Based
on our analysis using this updated data, we estimate that IRF outlier
payments as a percentage of total estimated payments are approximately
3.2 percent in FY 2024. Therefore, we will update the outlier threshold
amount from $10,423 for FY 2024 to $12,043 for FY 2025 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 2025.
We invited public comment on the proposed update to the IRF outlier
threshold for FY 2025. The following is a summary of the public
comments received on our proposed update to the IRF outlier threshold:
Comment: Commenters were mixed in their support of the proposed
high-cost outlier threshold, although more commentors supported the
proposed threshold than opposed it. Those that supported the proposed
threshold indicated support of CMS' policy to keep the outlier payments
at 3 percent of total payments. However, these supporters also
expressed concern over the lack of stability and predictability in the
threshold, stating that the lack of stability makes it difficult for
facilities to budget and poses challenges to IRFs that treat a large
number of complex patients. One commenter expressed concern over the
reduction in outlier payments during a time when increasing costs are
outside of the hospital's control. Many suggested modifications to the
outlier threshold methodology.
Response: We appreciate the commenters' support of the current 3
percent outlier threshold policy and recognize the commenters' concern
regarding a reduction in outlier payments this year, and the
commenters' desire for increased stability and predictability in the
threshold from year-to-year. It has been our long-standing practice to
utilize the most recent full fiscal year of data to update the
prospective payment rates and determine the outlier threshold amount,
as this data is generally considered to be the best overall predictor
of experience in the upcoming fiscal year. Additionally, 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.
Although we recognize commenters' concerns about increasing IRF
costs, we do not believe that it would be appropriate to address these
concerns through the outlier payment policy. The outlier payment policy
is designed to compensate IRFs for treating unusually high-cost
patients, not for addressing overall inflationary pressures that
increase the costs of caring for all IRF patients.
We will continue to examine ways of enhancing the stability and
predictability of the outlier threshold from year to year. However,
since 3 percent was deducted from IRF payments in the beginning of the
IRF PPS to fund the outlier pool, we do not believe that it would be
appropriate to deliberately pay more than 3 percent in outlier payments
to IRFs in a given year, as that additional funding would increase
overall payments to IRFs. Thus, we believe that any changes to the
outlier threshold methodology to make it more stable and predictable
would still need to maintain the integrity of the outlier pool, which
is currently set at 3 percent. CMS will continue to monitor year-to-
year changes in the outlier threshold and the impact of these changes
on payment.
Comment: Several commenters expressed concerns that outlier
payments may not be consistently targeted towards patients who require
more intensive or complex services with related higher costs. Some of
the commenters believed that factors other than patient complexity and
case mix may be driving these payments. One commenter presented
analysis to support their claim that inefficient cost structures,
rather than highly complex patients, appear to be driving the
distribution of overall IRF outlier payments, potentially resulting in
patients at IRFs that warrant an outlier payment not receiving one.
Moreover, many commenters expressed concern that outlier payments are
being concentrated among an increasingly small number of providers.
Several of these comments urged CMS to analyze the increasing
concentration of outlier payments and make such analysis publicly
accessible.
Response: We acknowledge commenters' concerns that outlier payments
may be concentrated among a small subset of providers and may not be
consistently targeted towards patients with intensive or complex needs.
As most recently discussed in the FY 2024 IRF PPS Final Rule (88 FR
68494), our outlier policy is intended to reimburse IRFs for treating
extraordinarily costly cases. Any future consideration given to
imposing a limit on outlier payments or adjusting the outlier threshold
to account for historical outlier reconciliation dollars would need to
be carefully assessed and take into consideration the effect on access
to IRF 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 caring for highest-cost patients, while still providing for
adequate payments for all other non-outlier cases. We appreciate the
commenters' suggestions for additional analysis on our methodology and
will take them into consideration as we continue to assess our outlier
threshold.
Comment: Many commenters provided suggestions to improve the high-
cost outlier threshold methodology. By far the most frequent suggestion
was for CMS to consider
[[Page 64309]]
implementing a 3-year rolling average as a stabilizing factor for the
outlier threshold, similar to the method used for the facility-level
adjustments in the past. Commenters suggested that this methodology
could reduce the annual outlier changes and provide greater
predictability for the field. Several comments also suggested that CMS
consider developing and implementing an outlier reconciliation policy
for the IRF PPS, similar to the one used in IPPS. Other, less frequent
suggestions that commenters offered were the following: establishing an
outlier baseline and then increasing the outlier threshold each year by
the approved market basket percentage increase, capping the overall
outlier payments an IRF can receive, and reducing the overall 3 percent
outlier pool.
Response: We thank the commenters for their suggestions regarding
the outlier threshold. We appreciate the suggestion to modify the
outlier threshold methodology to use a 3-year average; however, it has
been our practice to utilize the most recent full fiscal year of data
to update the prospective payment rates and determine the outlier
threshold amount, as this data is generally considered to be the best
overall predictor of experience in the upcoming fiscal year.
Additionally, utilizing a 3-year rolling average approach would not be
setting outlier payments at the 3 percent target and could potentially
exceed or reduce the 3 percent outlier pool objective. We appreciate
the commenters' suggestions and will take them into consideration as we
continue to consider revisions to our outlier threshold methodology in
future rulemaking.
As most recently discussed in the FY 2023 IRF PPS final rule (87 FR
47038), our outlier policy is intended to reimburse IRFs for treating
extraordinarily costly cases. Any future consideration given to
adjusting the outlier threshold to account for historical outlier
reconciliation dollars or imposing a limit on outlier payments would
need to be carefully assessed and take into consideration the effect on
access to IRF 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.
Additionally, we do not believe it would be appropriate to limit
changes in the outlier threshold to changes in the market basket
percentage as constraining adjustments to the outlier threshold may
result in a threshold that generates outlier payments above or below
the 3 percent target.
We appreciate the commenters' suggestions for refinements to the
outlier methodology as well as the suggested areas of analysis and will
take them into consideration as we continue to assess our outlier
threshold methodology. We will continue to monitor our outlier policy
to ensure it continues to compensate IRFs appropriately.
After consideration of the comments received and considering the
most recent available data, we are finalizing the outlier threshold
amount of $12,043 to maintain estimated outlier payments at
approximately 3 percent of total estimated aggregate IRF payments for
FY 2025.
B. Update to the IRF Cost-to-Charge Ratio (CCR) Ceiling and Urban/Rural
Averages for FY 2025
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 2025, based on analysis of the most
recent data available. We apply the national urban and rural CCRs to:
<bullet> New IRFs that have not yet submitted their first MCR.
<bullet> IRFs with an overall CCR that exceeds the national CCR
ceiling for FY 2025, as discussed below in this section.
<bullet> Other IRFs for which accurate data to calculate an overall
CCR are not available.
Specifically, for FY 2025, we proposed to estimate a national
average CCR of 0.492 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 0.406 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 2022). This includes all
IRFs whose cost reporting periods begin on or after October 1, 2021,
and before October 1, 2022. If, for any IRF, the FY 2022 cost report
was missing or had an ``as submitted'' status, we used data from a
previous FY's (that is, FY 2004 through FY 2021) 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 2022 cost report data for this final rule, we estimate
a national average CCR of 0.485 for rural IRFs, and a national average
CCR of 0.405 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 1.52 for FY 2025. This
means that, if an individual IRF's CCR were to exceed this ceiling of
1.52 for FY 2025, we will replace the IRF's CCR with the appropriate
national average CCR (either rural or urban, depending on the
geographic location of the IRF). We calculated the national CCR ceiling
by:
Step 1. Taking the national average CCR (weighted by each IRF's
total costs, as 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 become 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 2025 national
average rural and urban CCRs and the national CCR ceiling in the final
rule. Using the FY 2022 cost report data for this final rule, we
estimate a national average CCR ceiling of 1.50, using the same
methodology.
We invited public comment on the proposed update to the IRF CCR
ceiling and the urban/rural averages for FY 2025.
[[Page 64310]]
We did not receive any comments on the proposed update to the IRF
CCR ceiling and the urban/rural averages for FY 2025. Consistent with
the methodology outlined in the proposed rule, and using the most
recent cost report data, we are finalizing a national average urban CCR
at 0.405, the national average rural CCR at 0.485, and the national
average CCR ceiling at 1.50 for FY 2025.
VIII. 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. Section 1886(j)(7)(A)(i) of the Act requires the Secretary
to reduce by 2 percentage points the annual increase factor for
discharges occurring during a FY for any IRF that does not submit data
in accordance with the IRF QRP requirements set forth in subparagraphs
(C) and (F) of section 1886(j)(7) of the Act. We have codified our
program requirements in our regulations at Sec. 412.634.
We proposed to require IRFs to report four new items to the IRF-
Patient Assessment Instrument (PAI) and modify one item on the IRF-PAI
as described in section VII.C. of the proposed rule. We also proposed
to remove an item from the IRF-PAI as described in section VII.F.3 of
the proposed rule. Finally, we also sought information on future
measure concepts for the IRF QRP and on an IRF star rating system in
sections VII.D. and VII.E. of the proposed rule, respectively.
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 and 47084).
1. Quality Measures Currently Adopted for the IRF QRP
The IRF QRP currently has 18 adopted measures, which are listed in
Table 13. For a discussion of the factors used to evaluate whether a
measure should be removed from the IRF QRP, we refer readers to Sec.
412.634(b)(2).
Table 13--Quality Measures Currently Adopted for the IRF QRP
------------------------------------------------------------------------
Short name Measure name & data source
------------------------------------------------------------------------
Inpatient Rehabilitation Facility--Patient Assessment Instrument (IRF-
PAI) Assessment-Based Measures
------------------------------------------------------------------------
Pressure Ulcer/Injury........ Changes in Skin Integrity Post-Acute
Care: Pressure Ulcer/Injury.
Application of Falls......... Application of Percent of Residents
Experiencing One or More Falls with
Major Injury (Long Stay).
Discharge Mobility Score..... IRF Functional Outcome Measure: Discharge
Mobility Score for Medical
Rehabilitation Patients.
Discharge Self-Care Score.... IRF Functional Outcome Measure: Discharge
Self-Care Score for Medical
Rehabilitation Patients.
DRR.......................... Drug Regimen Review Conducted with Follow-
Up for Identified Issues--Post Acute
Care (PAC) Inpatient Rehabilitation
Facility (IRF) Quality Reporting Program
(QRP).
TOH-Provider................. Transfer of Health Information to the
Provider--Post-Acute Care (PAC).
TOH-Patient.................. Transfer of Health Information to the
Patient--Post-Acute Care (PAC).
DC Function.................. Discharge Function Score.
Patient/Resident COVID-19 COVID-19 Vaccine: Percent of Patients/
Vaccine. Residents Who Are Up to Date.
------------------------------------------------------------------------
National Healthcare Safety Network
------------------------------------------------------------------------
CAUTI........................ National Healthcare Safety Network (NHSN)
Catheter-Associated Urinary Tract
Infection Outcome Measure.
CDI.......................... National Healthcare Safety Network (NHSN)
Facility-wide Inpatient Hospital-onset
Clostridium difficile Infection (CDI)
Outcome Measure.
HCP Influenza Vaccine........ Influenza Vaccination Coverage among
Healthcare Personnel.
HCP COVID-19 Vaccine......... COVID-19 Vaccination Coverage among
Healthcare Personnel (HCP).
------------------------------------------------------------------------
Claims-Based
------------------------------------------------------------------------
MSPB IRF..................... Medicare Spending Per Beneficiary (MSPB)--
Post Acute Care (PAC) IRF QRP.
DTC.......................... Discharge to Community--PAC IRF QRP.
PPR 30 day................... Potentially Preventable 30-Day Post-
Discharge Readmission Measure for IRF
QRP.
PPR Within Stay.............. Potentially Preventable Within Stay
Readmission Measure for IRFs.
------------------------------------------------------------------------
We did not propose to adopt any new measures for the IRF QRP.
C. Collection of Four New Items as Standardized Patient Assessment Data
Elements and Modification of One Item Collected as a Standardized
Patient Assessment Data Element Beginning With the FY 2028 IRF QRP
In the proposed rule, we proposed to require IRFs to report the
following four new items \7\ as standardized patient assessment data
elements under the social determinants of health (SDOH) category: one
item for Living Situation; two items for Food; and one item for
Utilities. We also proposed to modify one of the current items
collected as standardized patient assessment data under the SDOH
category (the Transportation item), as described in section VII.C.5. of
the proposed rule.\8\
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\7\ Items may also be referred to as ``data elements.''
\8\ As noted in section VII.C of the proposed rule and section
VIII.C of this final rule, hospitals are required to report whether
they have screened patients for five standardized SDOH categories:
housing instability, food insecurity, utility difficulties,
transportation needs, and interpersonal safety.
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1. Definition of Standardized Patient Assessment Data
Section 1886(j)(7)(F)(ii) of the Act requires IRFs to submit
standardized patient assessment data required under section 1899B(b)(1)
of the Act. Section 1899B(b)(1)(A) of the Act requires post-acute care
(PAC) providers to submit standardized patient assessment data under
applicable reporting provisions (which, for IRFs, is the IRF QRP) with
[[Page 64311]]
respect to the admission and discharge of an individual (and more
frequently as the Secretary deems appropriate) using a standardized
patient assessment instrument. Section 1899B(a)(1)(C) of the Act
requires, in part, the Secretary to modify the PAC assessment
instruments in order for PAC providers, including IRFs, to submit
standardized patient assessment data under the Medicare program. IRFs
are currently required to report standardized patient assessment data
through the patient assessment instrument, referred to as the Inpatient
Rehabilitation Facility-Patient Assessment Instrument (IRF-PAI).
Section 1899B(b)(1)(B) of the Act describes standardized patient
assessment data as data required for at least the quality measures
described in section 1899B(c)(1) of the Act and that is with respect to
the following categories: (1) functional status, such as mobility and
self-care at admission to a PAC provider and before discharge from a
PAC provider; (2) cognitive function, such as ability to express ideas
and to understand, and mental status, such as depression and dementia;
(3) special services, treatments, and interventions, such as need for
ventilator use, dialysis, chemotherapy, central line placement, and
total parenteral nutrition; (4) medical conditions and comorbidities,
such as diabetes, congestive heart failure, and pressure ulcers; (5)
impairments, such as incontinence and an impaired ability to hear, see,
or swallow; and (6) other categories deemed necessary and appropriate
by the Secretary.
2. Social Determinants of Health Collected as Standardized Patient
Assessment Data Elements
Section 1899B(b)(1)(B)(vi) of the Act authorizes the Secretary to
collect standardized patient assessment data elements with respect to
other categories deemed necessary and appropriate. Accordingly, we
finalized the creation of the SDOH category of standardized patient
assessment data elements in the FY 2020 IRF PPS final rule (84 FR 39149
through 39161), and defined SDOH as the socioeconomic, cultural, and
environmental circumstances in which individuals live that impact their
health.\9\ According to the World Health Organization, research shows
that the SDOH can be more important than health care or lifestyle
choices in influencing health, accounting for between 30-55% of health
outcomes.\10\ This is a part of a growing body of research that
highlights the importance of SDOH on health outcomes. Subsequent to the
FY 2020 IRF PPS final rule, we expanded our definition of SDOH: SDOH
are the conditions in the environments where people are born, live,
learn, work, play, worship, and age that affect a wide range of health,
functioning, and quality-of-life outcomes and risks.<SUP>11 12 13</SUP>
This update will align our definition of SDOH with the definition used
by HHS agencies, including OASH, the Centers for Disease Control and
Prevention (CDC), and the White House Office of Science and Technology
Policy.<SUP>14 15</SUP> We currently collect seven items in this SDOH
category of standardized patient assessment data elements: ethnicity,
race, preferred language, interpreter services, health literacy,
transportation, and social isolation (84 FR 39149 through 39161).\16\
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\9\ Office of the Assistant Secretary for Planning and
Evaluation (ASPE). Second Report to Congress on Social Risk and
Medicare's Value-Based Purchasing Programs. June 28, 2020. Available
at: <a href="https://aspe.hhs.gov/reports/second-report-congress-social-risk-medicares-value-based-purchasing-programs">https://aspe.hhs.gov/reports/second-report-congress-social-risk-medicares-value-based-purchasing-programs</a>.
\10\ World Health Organization. Social determinants of health.
Available at: <a href="https://www.who.int/health-topics/social-determinants-of-health#tab=tab_1">https://www.who.int/health-topics/social-determinants-of-health#tab=tab_1</a>.
\11\ Using Z Codes: The Social Determinants of Health (SDOH).
Data Journey to Better Outcomes. <a href="https://www.cms.gov/files/document/zcodes-infographic.pdf">https://www.cms.gov/files/document/zcodes-infographic.pdf</a>.
\12\ Improving the Collection of Social Determinants of Health
(SDOH) Data with ICD-10-CM Z Codes. <a href="https://www.cms.gov/files/document/cms-2023-omh-z-code-resource.pdf">https://www.cms.gov/files/document/cms-2023-omh-z-code-resource.pdf</a>.
\13\ <a href="http://CMS.gov">CMS.gov</a>. Measures Management System (MMS). CMS Focus on
Health Equity. Health Equity Terminology and Quality Measures.
<a href="https://mmshub.cms.gov/about-quality/quality-at-CMS/goals/cms-focus-on-health-equity/health-equity-terminology">https://mmshub.cms.gov/about-quality/quality-at-CMS/goals/cms-focus-on-health-equity/health-equity-terminology</a>.
\14\ Centers for Disease Control and Prevention. Social
Determinants of Health (SDOH) and PLACES Data. <a href="https://www.cdc.gov/places/social-determinants-of-health-and-places-data/">https://www.cdc.gov/places/social-determinants-of-health-and-places-data/</a>.
\15\ ``U.S. Playbook To Address Social Determinants Of Health''
from the White House Office Of Science And Technology Policy
(November 2023).
\16\ These SDOH data are also collected for purposes outlined in
section 2(d)(2)(B) of the Improving Medicare Post-Acute Care
Transitions Act (IMPACT Act). For a detailed discussion on SDOH data
collection under section 2(d)(2)(B) of the IMPACT Act, see the FY
2020 IRF PPS final rule (84 FR 39149 through 39161).
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In accordance with our authority under section 1899B(b)(1)(B)(vi)
of the Act, we similarly finalized the creation of the SDOH category of
standardized patient assessment data elements for Skilled Nursing
Facilities (SNFs) in the FY 2020 SNF PPS final rule (84 FR 38805
through 38817), for Long-Term Care Hospitals (LTCHs) in the FY 2020
Inpatient Prospective Payment System (IPPS)/LTCH PPS final rule (84 FR
42577 through 42588), and for Home Health Agencies (HHAs) in the
Calendar Year (CY) 2020 HH PPS final rule (84 FR 60597 through 60608).
We also collect the same seven SDOH items in these PAC providers'
respective patient/resident assessment instruments (84 FR 38817, 84 FR
42590, and 84 FR 60610, respectively).
Access to standardized data relating to SDOH on a national level
permits us to conduct periodic analyses, and to assess their
appropriateness as risk adjustors or in future quality measures. Our
ability to perform these analyses and to make adjustments relies on
existing data collection of SDOH items from PAC settings. We adopted
these SDOH items using common standards and definitions across the four
PAC providers to promote interoperable exchange of longitudinal
information among these PAC providers, including IRFs, and other
providers. We believe this information may facilitate coordinated care,
continuity in care planning, and the discharge planning process from
PAC settings.
We noted in the FY 2020 IRF PPS final rule that each of the items
was identified in the 2016 National Academies of Sciences, Engineering,
and Medicine (NASEM) report as impacting care use, cost, and outcomes
for Medicare beneficiaries (84 FR 39150 through 39151). At that time,
we acknowledged that other items may also be useful to understand. The
SDOH items we proposed to adopt as standardized patient assessment data
elements under the SDOH category in this proposed rule were also
identified in the 2016 NASEM report \17\ or the 2020 NASEM report \18\
as impacting care use, cost, and outcomes for Medicare beneficiaries.
The items have the capacity to take into account treatment preferences
and care goals of patients and their caregivers, to inform our
understanding of patient complexity and SDOH that may affect care
outcomes and ensure that IRFs are in a position to impact through the
provision of services and supports, such as connecting patients and
their caregivers with identified needs with social support programs.
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\17\ Social Determinants of Health. Healthy People 2020. <a href="https://www.healthypeople.gov/2020/topics-objectives/topic/social-determinants-of-health">https://www.healthypeople.gov/2020/topics-objectives/topic/social-determinants-of-health</a>. (February 2019).
\18\ National Academies of Sciences, Engineering, and Medicine.
2020. Leading Health Indicators 2030: Advancing Health, Equity, and
Well-Being. Washington, DC: The National Academies Press. <a href="https://doi.org/10.17226/25682">https://doi.org/10.17226/25682</a>.
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Health-related social needs (HRSNs) are the resulting effects of
SDOH, which are individual-level, adverse social conditions that
negatively impact a person's health or health care.\19\
[[Page 64312]]
Examples of HRSNs include lack of access to food, housing, or
transportation, and have been associated with poorer health outcomes,
greater use of emergency departments and hospitals, and higher health
care costs.\20\ Certain HRSNs can lead to unmet social needs that
directly influence an individual's physical, psychosocial, and
functional status. This is particularly true for food security, housing
stability, utilities security, and access to transportation.\21\
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\19\ Centers for Medicare & Medicaid Services. ``A Guide to
Using the Accountable Health Communities Health-Related Social Needs
Screening Tool: Promising Practices and Key Insights.'' August 2022.
Available at: <a href="https://www.cms.gov/priorities/innovation/media/document/ahcm-screeningtool-companion">https://www.cms.gov/priorities/innovation/media/document/ahcm-screeningtool-companion</a>.
\20\ Berkowitz, S.A., T.P. Baggett, and S.T. Edwards,
``Addressing Health-Related Social Needs: Value-Based Care or
Values-Based Care?'' Journal of General Internal Medicine, vol. 34,
no. 9, 2019, pp. 1916-1918, <a href="https://doi.org/10.1007/s11606-019-05087-3">https://doi.org/10.1007/s11606-019-05087-3</a>.
\21\ Hugh Alderwick and Laura M. Gottlieb, ``Meanings and
Misunderstandings: A Social Determinants of Health Lexicon for
Health Care Systems: Milbank Quarterly,'' Milbank Memorial Fund,
November 18, 2019, <a href="https://www.milbank.org/quarterly/articles/meanings-and-misunderstandings-a-social-determinants-of-health-lexicon-for-health-care-systems/">https://www.milbank.org/quarterly/articles/meanings-and-misunderstandings-a-social-determinants-of-health-lexicon-for-health-care-systems/</a>.
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We proposed to require IRFs to collect and submit four new items in
the IRF-PAI as standardized patient assessment data elements under the
SDOH category because these items would collect information not already
captured by the current SDOH items. Specifically, we believe the
ongoing identification of SDOH would have three significant benefits.
First, promoting screening for SDOH could serve as evidence-based
building blocks for supporting healthcare providers in actualizing
their commitment to address disparities that disproportionately impact
underserved communities. Second, screening for SDOH improves health
equity through identifying potential social needs so the IRF may
address those with the patient, their caregivers, and community
partners during the discharge planning process, if indicated.\22\
Third, these SDOH items could support our ongoing IRF QRP initiatives
by providing data with which to stratify IRFs' performance on measures
and in future quality measures.
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\22\ American Hospital Association. (2020). Health Equity,
Diversity & Inclusion Measures for Hospitals and Health System
Dashboards. December 2020. Accessed: January 18, 2022. Available at:
<a href="https://ifdhe.aha.org/system/files/media/file/2020/12/ifdhe_inclusion_dashboard.pdf">https://ifdhe.aha.org/system/files/media/file/2020/12/ifdhe_inclusion_dashboard.pdf</a>.
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Collection of additional SDOH items would permit us to continue
developing the statistical tools necessary to maximize the value of
Medicare data and improve the quality of care for all beneficiaries.
For example, we recently developed and released the Health Equity
Confidential Feedback Reports, which provided data to IRFs on whether
differences in quality measure outcomes are present for their patients
by dual-enrollment status and race and ethnicity.\23\ We note that
advancing health equity by addressing the health disparities that
underlie the country's health system is one of our strategic pillars
\24\ and a Biden-Harris Administration priority.\25\
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\23\ In October 2023, we released two new annual Health Equity
Confidential Feedback Reports to IRFs: The Discharge to Community
(DTC) Health Equity Confidential Feedback Report and the Medicare
Spending Per Beneficiary (MSPB) Health Equity Confidential Feedback
Report. The PAC Health Equity Confidential Feedback Reports
stratified the DTC and MSPB measures by dual-enrollment status and
race/ethnicity. For more information on the Health Equity
Confidential Feedback Reports, please refer to the Education and
Outreach materials available on the IRF QRP Training web page at
<a href="https://www.cms.gov/medicare/quality-initiatives-patient-assessment-instruments/irf-quality-reporting/irf-quality-reporting-training">https://www.cms.gov/medicare/quality-initiatives-patient-assessment-instruments/irf-quality-reporting/irf-quality-reporting-training</a>.
\24\ Brooks-LaSure, C. (2021). My First 100 Days and Where We Go
from Here: A Strategic Vision for CMS. Centers for Medicare &
Medicaid. Available at: <a href="https://www.cms.gov/blog/my-first-100-days-and-where-we-go-here-strategic-vision-cms">https://www.cms.gov/blog/my-first-100-days-and-where-we-go-here-strategic-vision-cms</a>.
\25\ The Biden-Harris Administration's strategic approach to
addressing health related social needs can be found in The U.S.
Playbook to Address Social Determinants of Health (SDOH) (2023):
<a href="https://www.whitehouse.gov/wp-content/uploads/2023/11/SDOH-Playbook-3.pdf">https://www.whitehouse.gov/wp-content/uploads/2023/11/SDOH-Playbook-3.pdf</a>.
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3. Collection of Four New Items as Standardized Patient Assessment Data
Elements Beginning With the FY 2028 IRF QRP
We proposed to require IRFs to collect and submit four new items as
standardized patient assessment data elements under the SDOH category
using the IRF-PAI: one item for Living Situation, as described in
section VIII.3.(a) of this final rule; two items for Food, as described
in section VIII.3.(b) of this final rule; and one item for Utilities,
as described in VIII.3.(c) of this final rule.
We selected the SDOH items from the Accountable Health Communities
(AHC) Health-Related Social Needs (HRSN) Screening Tool developed for
the AHC Model.\26\ The AHC HRSN Screening Tool is a universal,
comprehensive screening for HRSNs that addresses five core domains as
follows: (1) housing instability (for example, homelessness, poor
housing quality), (2) food insecurity, (3) transportation difficulties,
(4) utility assistance needs, and (5) interpersonal safety concerns
(for example, intimate-partner violence, elder abuse, child
maltreatment).\27\
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\26\ The AHC Model was a five-year demonstration project run by
the Centers for Medicare & Medicaid Innovation between May 1, 2017
and April 30, 2023. For more information go to <a href="https://www.cms.gov/priorities/innovation/innovation-models/ahcm">https://www.cms.gov/priorities/innovation/innovation-models/ahcm</a>.
\27\ More information about the AHC HRSN Screening Tool is
available on the website at <a href="https://innovation.cms.gov/Files/worksheets/ahcm-screeningtool.pdf">https://innovation.cms.gov/Files/worksheets/ahcm-screeningtool.pdf</a>.
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We believe that requiring IRFs to report new items that are
included in the AHC HRSN Screening Tool will further standardize the
screening of SDOH across quality programs. For example, as outlined in
the proposed rule, our proposal will align, in part, with the
requirements of the Hospital Inpatient Quality Reporting (IQR) Program
and the Inpatient Psychiatric Facility Quality Reporting (IPFQR)
Program. As of January 2024, hospitals are required to report whether
they have screened patients for the standardized SDOH categories of
housing instability, food insecurity, utility difficulties,
transportation needs, and interpersonal safety to meet the Hospital IQR
Program requirements.\28\ Additionally, beginning January 2025, IPFs
will also be required to report whether they have screened patients for
the same set of SDOH categories.\29\ As we continue to standardize data
collection across settings, we believe using common standards and
definitions for new items is important to promote interoperable
exchange of longitudinal information between IRFs and other providers
to facilitate coordinated care, continuity in care planning, and the
discharge planning process.
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\28\ Centers for Medicare & Medicaid Services, FY2023 IPPS/LTCH
PPS final rule (87 FR 49191 through 49194).
\29\ Centers for Medicare & Medicaid Services, FY2024 Inpatient
Psychiatric Prospective Payment System--Rate Update (88 FR 51107
through 51121).
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Below we describe each of the four proposed items in more detail.
(a) Living Situation
Healthy People 2030 prioritizes economic stability as a key SDOH,
of which housing stability is a component.<SUP>30 31</SUP> Lack of
housing stability encompasses several challenges, such as having
trouble paying rent, overcrowding, moving frequently, or spending the
bulk of household income on housing.\32\ These experiences may
negatively affect one's physical health and access to health
[[Page 64313]]
care. Housing instability can also lead to homelessness, which is
housing deprivation in its most severe form.\33\ On a single night in
2023, roughly 653,100 people, or 20 out of every 10,000 people in the
United States, were experiencing homelessness.\34\ Studies also found
that people who are homeless have an increased risk of premature death
and experience chronic disease more often than among the general
population.\35\
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\30\ <a href="https://health.gov/healthypeople/priority-areas/social-determinants-health">https://health.gov/healthypeople/priority-areas/social-determinants-health</a>.
\31\ Healthy People 2030 is a long-term, evidence-based effort
led by the U.S. Department of Health and Human Services (HHS) that
aims to identify nationwide health improvement priorities and
improve the health of all Americans.
\32\ Kushel, M.B., Gupta, R., Gee, L., & Haas, J.S. (2006).
Housing instability and food insecurity as barriers to health care
among low-income Americans. Journal of General Internal Medicine,
21(1), 71-77. doi: <a href="https://doi.org/10.1111/j.1525-1497.2005.00278.x">https://doi.org/10.1111/j.1525-1497.2005.00278.x</a>.
\33\ Homelessness is defined as ``lacking a regular nighttime
residence or having a primary nighttime residence that is a
temporary shelter or other place not designed for sleeping.''
Crowley, S. (2003). The affordable housing crisis: Residential
mobility of poor families and school mobility of poor children.
Journal of Negro Education, 72(1), 22-38. doi: <a href="https://doi.org/10.2307/3211288">https://doi.org/10.2307/3211288</a>.
\34\ The 2023 Annual Homeless Assessment Report (AHAR) to
Congress. The U.S. Department of Housing and Urban Development 2023.
<a href="https://www.huduser.gov/portal/sites/default/files/pdf/2023-AHAR-Part-1.pdf">https://www.huduser.gov/portal/sites/default/files/pdf/2023-AHAR-Part-1.pdf</a>.
\35\ Baggett, T.P., Hwang, S.W., O'Connell, J.J., Porneala,
B.C., Stringfellow, E.J., Orav, E.J., Singer, D.E., & Rigotti, N.A.
(2013). Mortality among homeless adults in Boston: Shifts in causes
of death over a 15-year period. JAMA Internal Medicine, 173(3), 189-
195. doi: <a href="https://doi.org/10.1001/jamainternmed.2013.1604">https://doi.org/10.1001/jamainternmed.2013.1604</a>. Schanzer,
B., Dominguez, B., Shrout, P.E., & Caton, C.L. (2007). Homelessness,
health status, and health care use. American Journal of Public
Health, 97(3), 464-469. doi: <a href="https://doi.org/10.2105/ajph.2005.076190">https://doi.org/10.2105/ajph.2005.076190</a>.
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We believe that IRFs can use information obtained from the Living
Situation item during a patient's discharge planning. For example, IRFs
could work in partnership with community care hubs and community-based
organizations to establish new care transition workflows, including
referral pathways, contracting mechanisms, data sharing strategies, and
implementation training that can track HRSNs to ensure unmet needs,
such as housing, are successfully addressed through closed loop
referrals and follow-up.\36\ IRFs could also take action to help
alleviate a patient's other related costs of living, like food, by
referring the patient to community-based organizations that would allow
the patient's additional resources to be allocated towards housing
without sacrificing other needs.\37\ Finally, IRFs could use the
information obtained from the Living Situation item to better
coordinate with other healthcare providers, facilities, and agencies
during transitions of care, so that referrals to address a patient's
housing stability are not lost during vulnerable transition periods.
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\36\ U.S. Department of Health & Human Services (HHS), Call to
Action, ``Addressing Health Related Social Needs in Communities
Across the Nation.'' November 2023. <a href="https://aspe.hhs.gov/sites/default/files/documents/3e2f6140d0087435cc6832bf8cf32618/hhs-call-to-action-health-related-social-needs.pdf">https://aspe.hhs.gov/sites/default/files/documents/3e2f6140d0087435cc6832bf8cf32618/hhs-call-to-action-health-related-social-needs.pdf</a>.
\37\ Henderson, K.A., Manian, N., Rog, D.J., Robison, E., Jorge,
E., AlAbdulmunem, M. ``Addressing Homelessness Among Older Adults''
(Final Report). Washington, DC: Office of the Assistant Secretary
for Planning and Evaluation, U.S. Department of Health and Human
Services. October 26, 2023.
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Due to the potential negative impacts housing instability can have
on a patient's health, we proposed to adopt the Living Situation item
as a new standardized patient assessment data element under the SDOH
category. This proposed Living Situation item is based on the Living
Situation item collected in the AHC HRSN Screening
Tool,<SUP>38 39</SUP> and was adapted from the Protocol for Responding
to and Assessing Patients' Assets, Risks, and Experiences (PRAPARE)
tool.\40\ The proposed Living Situation item asks, ``What is your
living situation today?'' The proposed response options are: (1) I have
a steady place to live; (2) I have a place to live today, but I am
worried about losing it in the future; (3) I do not have a steady place
to live; (7) Patient declines to respond; and (8) Patient unable to
respond. A draft of the Living Situation item proposed to be adopted as
a standardized patient assessment data element under the SDOH category
can be found in the Downloads section of the IRF-PAI and IRF-PAI Manual
web page at <a href="https://www.cms.gov/medicare/quality/inpatient-rehabilitation-facility/irf-pai-and-irf-qrp-manual">https://www.cms.gov/medicare/quality/inpatient-rehabilitation-facility/irf-pai-and-irf-qrp-manual</a>.
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\38\ More information about the AHC HRSN Screening Tool is
available on the website at <a href="https://innovation.cms.gov/Files/worksheets/ahcm-screeningtool.pdf">https://innovation.cms.gov/Files/worksheets/ahcm-screeningtool.pdf</a>.
\39\ The AHC HRSN Screening Tool Living Situation item includes
two questions. In an effort to limit IRF burden, we are only
proposing the first question.
\40\ National Association of Community Health Centers and
Partners, National Association of Community Health Centers,
Association of Asian Pacific Community Health Organizations,
Association OPC, Institute for Alternative Futures. ``PRAPARE.''
2017. <a href="https://prapare.org/the-prapare-screening-tool/">https://prapare.org/the-prapare-screening-tool/</a>.
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(b) Food
The U.S. Department of Agriculture, Economic Research Service
defines a lack of food security as a household-level economic and
social condition of limited or uncertain access to adequate food.\41\
Adults who are food insecure may be at an increased risk for a variety
of negative health outcomes and health disparities. For example, a
study found that food-insecure adults may be at an increased risk for
obesity.\42\ Another study found that food-insecure adults have a
significantly higher probability of death from any cause or
cardiovascular disease in long-term follow-up care, in comparison to
adults that are food secure.\43\
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\41\ U.S. Department of Agriculture, Economic Research Service.
(n.d.). Definitions of food security. Retrieved March 10, 2022, from
<a href="https://www.ers.usda.gov/topics/food-nutrition-assistance/food-security-in-the-u-s/definitions-of-food-security/">https://www.ers.usda.gov/topics/food-nutrition-assistance/food-security-in-the-u-s/definitions-of-food-security/</a>.
\42\ Hernandez, D.C., Reesor, L.M., & Murillo, R. (2017). Food
insecurity and adult overweight/obesity: Gender and race/ethnic
disparities. Appetite, 117, 373-378.
\43\ Banerjee, S., Radak, T., Khubchandani, J., & Dunn, P.
(2021). Food Insecurity and Mortality in American Adults: Results
From the NHANES-Linked Mortality Study. Health promotion practice,
22(2), 204-214. <a href="https://doi.org/10.1177/1524839920945927">https://doi.org/10.1177/1524839920945927</a>.
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While having enough food is one of many predictors for health
outcomes, a diet low in nutritious foods is also a factor.\44\ The
United States Department of Agriculture (USDA) defines nutrition
security as ``consistent and equitable access to healthy, safe,
affordable foods essential to optimal health and well-being.'' \45\
Nutrition security builds on and complements long standing efforts to
advance food security. Studies have shown that older adults struggling
with food insecurity consume fewer calories and nutrients and have
lower overall dietary quality than those who are food secure, which can
put them at nutritional risk.\46\ Older adults are also at a higher
risk of developing malnutrition, which is considered a state of
deficit, excess, or imbalance in protein, energy, or other nutrients
that adversely impacts an individual's own body form, function, and
clinical outcomes.\47\ Up to 50 percent of older adults are affected by
or at risk for malnutrition, which is further aggravated by a lack of
food security and poverty.\48\ These facts highlight why the Biden-
Harris Administration launched the White House Challenge to End
[[Page 64314]]
Hunger and Build Healthy Communities.\49\
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\44\ National Center for Health Statistics. (2022, September 6).
Exercise or Physical Activity. Retrieved from Centers for Disease
Control and Prevention: <a href="https://www.cdc.gov/nchs/fastats/exercise.htm">https://www.cdc.gov/nchs/fastats/exercise.htm</a>.
\45\ Ziliak, J.P., & Gundersen, C. (2019). The State of Senior
Hunger in America 2017: An Annual Report. Prepared for Feeding
America. Available at <a href="https://www.feedingamerica.org/research/senior-hunger-research/senior">https://www.feedingamerica.org/research/senior-hunger-research/senior</a>.
\46\ Ziliak, J.P., & Gundersen, C. (2019). The State of Senior
Hunger in America 2017: An Annual Report. Prepared for Feeding
America. Available at: <a href="https://www.feedingamerica.org/research/senior-hunger-research/senior">https://www.feedingamerica.org/research/senior-hunger-research/senior</a>.
\47\ The Malnutrition Quality Collaborative. (2020). National
Blueprint: Achieving Quality Malnutrition Care for Older Adults,
2020 Update. Washington, DC: Avalere Health and Defeat Malnutrition
Today. Available at: <a href="https://defeatmalnutrition.today/advocacy/blueprint/">https://defeatmalnutrition.today/advocacy/blueprint/</a>.
\48\ Food Research & Action Center (FRAC). ``Hunger is a Health
Issue for Older Adults: Food Security, Health, and the Federal
Nutrition Programs.'' December 2019. <a href="https://frac.org/wp-content/uploads/hunger-is-a-health-issue-for-older-adults-1.pdf">https://frac.org/wp-content/uploads/hunger-is-a-health-issue-for-older-adults-1.pdf</a>.
\49\ The White House Challenge to End Hunger and Build Health
Communities (Challenge) was a nationwide call-to-action released on
March 24, 2023, to stakeholders across all of society to make
commitments to advance President Biden's goal to end hunger and
reduce diet-related diseases by 2030--all while reducing
disparities. More information on the White House Challenge to End
Hunger and Build Health Communities can be found: <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2023/03/24/fact-sheet-biden-harris-administration-launches-the-white-house-challenge-to-end-hunger-and-build-healthy-communities-announces-new-public-private-sector-actions-to-continue-momentum-from-hist/">https://www.whitehouse.gov/briefing-room/statements-releases/2023/03/24/fact-sheet-biden-harris-administration-launches-the-white-house-challenge-to-end-hunger-and-build-healthy-communities-announces-new-public-private-sector-actions-to-continue-momentum-from-hist/</a>.
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We believe that adopting items to collect and analyze information
about a patient's food security at home could provide additional
insight to their health complexity and help facilitate coordination
with other healthcare providers, facilities, and agencies during
transitions of care, so that referrals to address a patient's food
security are not lost during vulnerable transition periods. For
example, an IRF's dietitian or other clinically qualified nutrition
professional could work with the patient and their caregiver to plan
healthy, affordable food choices prior to discharge.\50\ IRFs could
also refer a patient that indicates lack of food security to government
initiatives such as the Supplemental Nutrition Assistance Program
(SNAP) and food pharmacies (programs to increase access to healthful
foods by making them affordable), two initiatives that have been
associated with lower health care costs and reduced hospitalization and
emergency department visits.\51\
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\50\ Schroeder K, Smaldone A. Food Insecurity: A Concept
Analysis. Nurse Forum. 2015 Oct-Dec;50(4):274-84. doi: 10.1111/
nuf.12118. Epub 2015 Jan 21. PMID: 25612146; PMCID: PMC4510041.
\51\ Tsega M, Lewis C, McCarthy D, Shah T, Coutts K. Review of
Evidence for Health-Related Social Needs Interventions. July 2019.
The Commonwealth Fund. <a href="https://www.commonwealthfund.org/sites/default/files/2019-07/COMBINED_ROI_EVIDENCE_REVIEW_7.15.19.pdf">https://www.commonwealthfund.org/sites/default/files/2019-07/COMBINED_ROI_EVIDENCE_REVIEW_7.15.19.pdf</a>.
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We proposed to adopt two Food items as new standardized patient
assessment data elements under the SDOH Category. These proposed items
are based on the Food items collected in the AHC HRSN Screening Tool
and were adapted from the USDA 18-item Household Food Security Survey
(HFSS).\52\ The first proposed Food item states, ``Within the past 12
months, you worried that your food would run out before you got money
to buy more.'' The second proposed Food item states, ``Within the past
12 months, the food you bought just didn't last and you didn't have
money to get more.'' We proposed the same response options for both
items: (1) Often true; (2) Sometimes true; (3) Never True; (7) Patient
declines to respond; and (8) Patient unable to respond. A draft of the
proposed Food items proposed to be adopted as standardized patient
assessment data elements under the SDOH category can be found in the
Downloads section of the IRF-PAI and IRF-PAI Manual web page at <a href="https://www.cms.gov/medicare/quality/inpatient-rehabilitation-facility/irf-pai-and-irf-qrp-manual">https://www.cms.gov/medicare/quality/inpatient-rehabilitation-facility/irf-pai-and-irf-qrp-manual</a>.
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\52\ More information about the HFSS tool can be found at
<a href="https://www.ers.usda.gov/topics/food-nutrition-assistance/food-security-in-the-u-s/survey-tools/">https://www.ers.usda.gov/topics/food-nutrition-assistance/food-security-in-the-u-s/survey-tools/</a>.
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(c) Utilities
A lack of energy (utility) security can be defined as an inability
to adequately meet basic household energy needs.\53\ According to the
United States Department of Energy, one in three households in the U.S.
are unable to adequately meet basic household energy needs.\54\ The
consequences associated with a lack of utility security are represented
by three primary dimensions: economic, physical, and behavioral.
Patients with low incomes are disproportionately affected by high
energy costs, and they may be forced to prioritize paying for housing
and food over utilities.\55\ Some patients may face limited housing
options and therefore are at increased risk of living in lower-quality
physical conditions with malfunctioning heating and cooling systems,
poor lighting, and outdated plumbing and electrical systems.\56\
Patients with a lack of utility security may use negative behavioral
approaches to cope, such as using stoves and space heaters for
heat.\57\ In addition, data from the Department of Energy's U.S. Energy
Information Administration confirm that a lack of energy security
disproportionately affects certain populations, such as low-income and
African American households.\58\ The effects of a lack of utility
security include vulnerability to environmental exposures such as
dampness, mold, and thermal discomfort in the home, which have a direct
impact on a person's health.\59\ For example, research has shown
associations between a lack of energy security and respiratory
conditions as well as mental health-related disparities and poor sleep
quality in vulnerable populations such as the elderly, children, the
socioeconomically disadvantaged, and the medically vulnerable.\60\
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\53\ Hern[aacute]ndez D. Understanding `energy insecurity' and
why it matters to health. Soc Sci Med. 2016 Oct; 167:1-10. Doi:
10.1016/j.socscimed.2016.08.029. Epub 2016 Aug 21. PMID: 27592003;
PMCID: PMC5114037.
\54\ US Energy Information Administration. ``One in Three U.S.
Households Faced Challenges in Paying Energy Bills in 2015.'' 2017
Oct 13. <a href="https://www.eia.gov/consumption/residential/reports/2015/energybills/">https://www.eia.gov/consumption/residential/reports/2015/energybills/</a>.
\55\ Hern[aacute]ndez D. ``Understanding `energy insecurity' and
why it matters to health.'' Soc Sci Med. 2016; 167:1-10.
\56\ Hern[aacute]ndez D. Understanding `energy insecurity' and
why it matters to health. Soc Sci Med. 2016 Oct; 167:1-10. doi:
10.1016/j.socscimed.2016.08.029. Epub 2016 Aug 21. PMID: 27592003;
PMCID: PMC5114037.
\57\ Hern[aacute]ndez D. ``What `Merle' Taught Me About Energy
Insecurity and Health.'' Health Affairs, VOL.37, NO.3: Advancing
Health Equity Narrative Matters. March 2018. <a href="https://doi.org/10.1377/hlthaff.2017.1413">https://doi.org/10.1377/hlthaff.2017.1413</a>.
\58\ US Energy Information Administration. ``One in Three U.S.
Households Faced Challenges in Paying Energy Bills in 2015.'' 2017
Oct 13. <a href="https://www.eia.gov/consumption/residential/reports/2015/energybills/">https://www.eia.gov/consumption/residential/reports/2015/energybills/</a>.
\59\ Hern[aacute]ndez D. Understanding `energy insecurity' and
why it matters to health. Soc Sci Med. 2016 Oct; 167:1-10. doi:
10.1016/j.socscimed.2016.08.029. Epub 2016 Aug 21. PMID: 27592003;
PMCID: PMC5114037.
\60\ Hern[aacute]ndez D, Siegel E. Energy insecurity and its ill
health effects: A community perspective on the energy-health nexus
in New York City. Energy Res Soc Sci. 2019 Jan; 47:78-83. doi:
10.1016/j.erss.2018.08.011. Epub 2018 Sep 8. PMID: 32280598; PMCID:
PMC7147484.
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We believe adopting an item to collect information upon a patient's
admission to an IRF about their utility security would facilitate the
identification of patients who may not have utility security and who
may benefit from engagement efforts. For example, IRFs may be able to
use the information on utility security to help connect some patients
in need to programs that can help older adults pay for their home
energy (heating/cooling) costs, like the Low-Income Home Energy
Assistance Program (LIHEAP).\61\ IRFs may also be able to partner with
community care hubs and community-based organizations to assist the
patient in applying for these and other local utility assistance
programs, as well as helping them navigate the enrollment process.\62\
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\61\ <a href="https://www.fcc.gov/broadbandbenefit">https://www.fcc.gov/broadbandbenefit</a>.
\62\ National Council on Aging (NCOA). ``How to Make It Easier
for Older Adults to Get Energy and Utility Assistance.'' Promising
Practices Clearinghouse for Professionals. Jan 13, 2022. <a href="https://www.ncoa.org/article/how-to-make-it-easier-for-older-adults-to-get-energy-and-utility-assistance">https://www.ncoa.org/article/how-to-make-it-easier-for-older-adults-to-get-energy-and-utility-assistance</a>.
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We proposed to adopt a new item, Utilities, as a new standardized
patient assessment data element under the SDOH category. This proposed
item is based on the Utilities item collected in the AHC HRSN Screening
Tool and was adapted from the Children's Sentinel Nutrition Assessment
Program (C-SNAP) survey.\63\ The proposed Utilities
[[Page 64315]]
item asks, ``In the past 12 months, has the electric, gas, oil, or
water company threatened to shut off services in your home?'' The
proposed response options are: (1) Yes; (2) No; (3) Already shut off;
(7) Patient declines to respond; and (8) Patient unable to respond. A
draft of the proposed Utilities item to be adopted as a standardized
patient assessment data element under the SDOH category can be found in
the Downloads section of the IRF-PAI and IRF-PAI Manual web page at
<a href="https://www.cms.gov/medicare/quality/inpatient-rehabilitation-facility/irf-pai-and-irf-qrp-manual">https://www.cms.gov/medicare/quality/inpatient-rehabilitation-facility/irf-pai-and-irf-qrp-manual</a>.
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\63\ This validated survey was developed as a clinical indicator
of household energy security among pediatric caregivers. Cook, J.T.,
D.A. Frank., P.H. Casey, R. Rose-Jacobs, M.M. Black, M. Chilton, S.
Ettinger de Cuba, et al. ``A Brief Indicator of Household Energy
Security: Associations with Food Security, Child Health, and Child
Development in US Infants and Toddlers.'' Pediatrics, vol. 122, no.
4, 2008, pp. e874-e875. <a href="https://doi.org/10.1542/peds.2008-0286">https://doi.org/10.1542/peds.2008-0286</a>.
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4. Interested Party Input
We developed our updates to add these items after considering
feedback we received in response to our Health Equity Update in the FY
2024 IRF PPS final rule. While there were commenters who urged CMS to
balance reporting requirements so as not to create undue administrative
burden and avoid making generalizations about differences in health and
health care on certain data elements, it was also suggested CMS
incentivize collection of data on SDOH such as housing stability and
food security. Two commenters emphasized that any additional
stratification of quality measures, including social risk factors and
SDOH, would be of value to PAC providers, including IRFs. The FY 2024
IRF PPS final rule (88 FR 51037 through 51039) includes a summary of
the public comments that we received in response to the Health Equity
Update and our responses to those comments.
Additionally, we considered feedback we received when we proposed
the creation of the SDOH category of standardized patient assessment
data elements in the FY 2020 IRF PPS proposed rule (84 FR 17319 through
17326). Commenters were generally in favor of the concept of collecting
SDOH items and stated that if implemented appropriately the data could
be useful in identifying and addressing health care disparities, as
well as refining the risk adjustment of outcome measures. One commenter
specifically recommended CMS consider including data collection of
housing status, since unmet housing needs can put patients at higher
risk for readmission. The FY 2020 IRF PPS final rule (84 FR 39149
through 39161) includes a summary of the public comments that we
received and our responses to those comments. We incorporated this
input into the development of this proposal.
We solicited comment on the proposal to adopt four new items as
standardized patient assessment data elements in the IRF-PAI under the
SDOH category beginning with the FY 2028 IRF QRP: one Living Situation
item; two Food items; and one Utilities item (89 FR 22279).
The following is a summary of the public comments received on the
proposal and our responses:
Comment: Many commenters expressed support for the proposed new
SDOH assessment items, viewing this as an important step towards
identifying health disparities, improving health outcomes,
understanding diverse patient needs, improving discharge planning and
care coordination, and fostering continuous quality improvement. One of
these commenters also emphasized the importance of collecting SDOH data
in helping recognize areas of need and enhancing efforts to improve
patient outcomes across healthcare settings, and another commenter
emphasized the importance of identifying, documenting, and addressing
SDOH in order to provide equitable, high-quality, holistic, patient-
centered care.
Several commenters noted the importance of the proposed new SDOH
assessment items in facilitating discharge planning strategies that can
account for a person's housing, food, utilities, and transportation
needs. Three of these commenters noted that the information obtained
from these proposed new SDOH assessment items will provide data that
can be used to better address identified needs with the patient, their
caregivers, and community partners during the discharge planning
process. These commenters also mentioned that addressing non-medical
factors during patient visits can help connect patients to the
resources they need and lead to successful discharges to the community
or improved health outcomes. Another one of these commenters noted that
the direct value to providers in the inpatient rehabilitation space is
the insight into the home life and resources available to the patient
once discharged. Finally, one of these commenters noted that these
proposed SDOH assessment items support a culture of engaging with and
advancing equity in IRFs by reflecting a proactive approach towards
addressing the multifaceted determinants of health.
Response: We appreciate the support. We agree that the collection
of the proposed SDOH assessment items will support IRFs that wish to
understand the health disparities that affect their populations,
facilitate coordinated care, foster continuity in care planning, and
assist with the discharge planning process from the IRF setting.
Comment: Several commenters appreciated CMS' efforts at
standardizing collection of patient assessment data elements related to
SDOH by proposing to adopt the four new assessment items, Living
Situation, Food, and Utilities, in the IRF-PAI. One of these commenters
supported CMS' decision to align and standardize new SDOH data
collection in the IRF QRP with data already being collected in other
settings, such as the Hospital Inpatient Quality Reporting (IQR)
Program and the Inpatient Psychiatric Facility Quality Reporting
(IPFQR) Program. Another one of these commenters noted that the
utilization of the AHC HRSN Screening Tool will help fill the existing
gap of standardized SDOH data collection for CMS programs, which will
reduce the administrative burden with collecting SDOH data. In
addition, three commenters noted their support of the proposed new SDOH
assessment items because they are similar to questions many IRFs
already ask for discharge planning purposes, minimizing additional
burden.
Response: We thank the commenter for recognizing that our proposal
aligns, in part, with the requirements of the Hospital IQR Program and
the IPFQR Program. As we continue to standardize data collection across
settings, we believe using common standards and definitions for new
assessment items is important to promote interoperable exchange of
longitudinal information between IRFs and other providers. We heard
from many IRFs that they are already collecting similar information and
integrating it into their admission and discharge processes in order to
facilitate coordinated care and continuity in care planning. We believe
collecting this information in all IRFs may facilitate coordinated
care, continuity in care planning, and IRFs' discharge planning process
in accordance with our regulation at Sec. 482.43(a).
Comment: Several commenters agreed with the importance of
collecting SDOH assessment items through the IRF-PAI but also expressed
concerns about the additional administrative burden associated with
collecting the new SDOH data. Several of these commenters noted that
data collection is overburdening the workforce, and one noted that it
will take away resources from patient care while another commenter
urged CMS to ensure the additional burden on providers provides
[[Page 64316]]
meaningful benefit to rehab patients. One of these commenters requested
additional funding for the increased costs associated with what they
believe are tasks outside the normal day-to-day operations of the
facilities.
Response: Although the addition of four new SDOH assessment items
to the IRF-PAI will increase the burden associated with completing the
IRF-PAI, we carefully considered this increased burden of collecting
new assessment items against the benefits of adopting those assessment
items for the IRF-PAI. Collection of additional SDOH assessment items
will permit us to continue developing the statistical tools necessary
to maximize the value of Medicare data and improve the quality of care
for all beneficiaries. As noted in section VII.C.2 of the proposed rule
(89 FR 22276) and section VIII.C.2. of this final rule, we recently
developed and released the Health Equity Confidential Feedback Reports,
which provided data to IRFs on whether differences in quality measure
outcomes are present for their patients by dual-enrollment status and
race and ethnicity.\64\ In balancing the reporting burden for IRFs, we
prioritized our policy objective to collect additional SDOH
standardized patient assessment data elements that will inform care
planning and coordination and quality improvement across care settings.
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\64\ In October 2023, we released two new annual Health Equity
Confidential Feedback Reports to IRFs: The Discharge to Community
(DTC) Health Equity Confid
[…truncated; see source link]Indexed from Federal Register on August 6, 2024.
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