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Proposed Rule2025-06336

Medicare Program; Inpatient Rehabilitation Facility Prospective Payment System for Federal Fiscal Year 2026 and Updates to the IRF Quality Reporting Program

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Published

April 30, 2025

Issuing agencies

Health and Human Services DepartmentCenters for Medicare & Medicaid Services

Abstract

This proposed rule would update the prospective payment rates for inpatient rehabilitation facilities (IRFs) for Federal fiscal year (FY) 2026. As required by statute, this proposed rule includes the proposed 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 2026. It also continues the second year of the 3-year phaseout of the rural adjustment, which began in FY 2025. Additionally, the proposed rule includes updates to the IRF Quality Reporting Program (QRP).

Full Text

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<title>Federal Register, Volume 90 Issue 82 (Wednesday, April 30, 2025)</title>
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[Federal Register Volume 90, Number 82 (Wednesday, April 30, 2025)]
[Proposed Rules]
[Pages 18534-18565]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-06336]

[[Page 18533]]

Vol. 90

Wednesday,

No. 82

April 30, 2025

Part IV

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 2026 and Updates to the IRF Quality
Reporting Program; Proposed Rule

Federal Register / Vol. 90, No. 82 / Wednesday, April 30, 2025 /
Proposed Rules

[[Page 18534]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 412

[CMS-1829-P]
RIN 0938-AV48

Medicare Program; Inpatient Rehabilitation Facility Prospective
Payment System for Federal Fiscal Year 2026 and Updates to the IRF
Quality Reporting Program

AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).

ACTION: Proposed rule.

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SUMMARY: This proposed rule would update the prospective payment rates
for inpatient rehabilitation facilities (IRFs) for Federal fiscal year
(FY) 2026. As required by statute, this proposed rule includes the
proposed 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 2026.
It also continues the second year of the 3-year phaseout of the rural
adjustment, which began in FY 2025. Additionally, the proposed rule
includes updates to the IRF Quality Reporting Program (QRP).

DATES: To be assured consideration, comments must be received at one of
the addresses provided below by June 10, 2025.

ADDRESSES: In commenting, please refer to file code CMS-1829-P.
Comments, including mass comment submissions, must be submitted in
one of the following three ways (please choose only one of the ways
listed):
1. Electronically. You may submit electronic comments on this
regulation to <a href="https://www.regulations.gov">https://www.regulations.gov</a>. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-1829-P, P.O. Box 8016,
Baltimore, MD 21244-8016.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-1829-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT:
Patricia Taft, (410) 786-4561, for general information.
Kimberly 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.

SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following
website as soon as possible after they have been received: <a href="https://www.regulations.gov">https://www.regulations.gov</a>. Follow the search instructions on that website to
view public comments. CMS will not post on <a href="http://Regulations.gov">Regulations.gov</a> public
comments that make threats to individuals or institutions or suggest
that the commenter will take actions to harm an individual. CMS
continues to encourage individuals not to submit duplicative comments.
We will post acceptable comments from multiple unique commenters even
if the content is identical or nearly identical to other comments.
Plain Language Summary: In accordance with 5 U.S.C. 553(b)(4), a
plain language summary of this rule may be found at <a href="https://www.regulations.gov/">https://www.regulations.gov/</a>.
Deregulation Request for Information (RFI): On January 31, 2025,
President Trump issued Executive Order (E.O.) 14192 ``Unleashing
Prosperity Through Deregulation,'' which states the Administration
policy to significantly reduce the private expenditures required to
comply with Federal regulations to secure America's economic prosperity
and national security and the highest possible quality of life for each
citizen. We would like public input on approaches and opportunities to
streamline regulations and reduce administrative burdens on providers,
suppliers, beneficiaries, and other stakeholders participating in the
Medicare program. CMS has made available a Request for Information
(RFI) at: <a href="https://www.cms.gov/medicare-regulatory-relief-rfi">https://www.cms.gov/medicare-regulatory-relief-rfi</a>. Please
submit all comments in response to this request for information through
the provided weblink.

Availability of Certain Information Through the Internet on the CMS
Website

The IRF prospective payment system (IRF PPS) Addenda along with
other supporting documents and tables referenced in this proposed rule
are 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>.
We note that prior to 2020, each rule or notice issued under the
IRF PPS included a detailed reiteration of the various regulatory
provisions that have affected the IRF PPS over the years. That
discussion, which has been updated to reflect subsequent years, 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/files/document/irf-regulatory-and-legislative-history.pdf">https://www.cms.gov/files/document/irf-regulatory-and-legislative-history.pdf</a>.
Readers who experience any problems accessing any of these online
IRF PPS documents should contact Kia Burwell at (410) 786-7816.

I. Executive Summary

A. Purpose

This proposed rule proposes to update the prospective payment rates
for IRFs for FY 2026 (that is, for discharges occurring on or after
October 1, 2025, and on or before September 30, 2026) under section
1886(j)(3)(C) of the Social Security Act (the Act). As required by
section 1886(j)(5) of the Act, this proposed 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 2026.
For the IRF QRP, this rule proposes to remove two quality measures:
(1) the COVID-19 Vaccination Coverage among Healthcare Personnel (HCP)
measure, beginning with the FY 2026 IRF QRP, and (2) the COVID-19
Vaccine: Percent of Patients/Residents Who Are Up to Date measure,
beginning with the FY 2028 IRF QRP. Next, we propose to remove four
Standardized Patient Assessment Data Elements under the Social
Determinant of Health (SDOH) category with the FY2028 IRF QRP. We also
propose to amend our reconsideration policy as described in section
VII.D of this proposed rule. Finally, we include Requests for
Information (RFIs) on four separate considerations: (1) future measure
concepts for the IRF QRP in section

[[Page 18535]]

VII.E of this proposed rule; (2) potential revisions to the IRF-Patient
Assessment Instrument (PAI) as described in section VII.F of this
proposed rule; (3) potential revisions to the data submission deadlines
for assessment data collected for the IRF QRP as described in section
VII.G of this proposed rule; and (4) advancing digital quality
measurement in IRFs as described in section V11.H of this proposed
rule.

B. Summary of Major Provisions

In this proposed rule, we use the methods described in the FY 2025
IRF PPS final rule (89 FR 64276) to update the prospective payment
rates for FY 2026 using the most current and complete data available at
this time, which is FY 2024 IRF claims and FY 2023 IRF cost report
data, as discussed in section IV.
For the IRF QRP, this rule proposes to remove two quality measures,
remove four SDOH items and amend our reconsideration policy. We also
include Requests for Information (RFIs) on four separate
considerations.

C. Summary of Impact

Table 1--Cost and Transfers
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Provision description Transfers/costs
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FY 2026 IRF PPS payment rate The overall economic impact of this
update. proposed rule is an estimated $295
million increase in payments from the
Federal Government to IRFs during FY
2026.
FY 2026 IRF QRP changes...... The overall economic impact of this
proposed rule is an estimated decrease
in costs of $504,929.84 for IRFs for
proposed measure removal in VII.C.1. and
revisions to reconsiderations policy in
VII.E. beginning with the FY 2026 IRF
QRP.
FY 2028 IRF QRP changes...... The overall economic impact of this
proposed rule is an estimated decrease
in costs of $1,090,580.75 to IRFs for
proposed measure and item removals in
VII.C.2 and VII.D. 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 2025, 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/files/document/irf-regulatory-and-legislative-history.pdf">https://www.cms.gov/files/document/irf-regulatory-and-legislative-history.pdf</a>.
Under the IRF PPS from FY 2002 through FY 2005, the prospective
payment rates were computed across 100 distinct CMGs, as described in
the FY 2002 IRF PPS final rule (66 FR 41316). We constructed 95 CMGs
using rehabilitation impairment categories (RICs), functional status
(both motor and cognitive), and age (in some cases, cognitive status
and age may not be a factor in defining a CMG). In addition, we
constructed five special CMGs to account for very short stays and for
patients who expire in the IRF.
For each of the CMGs, we developed relative weighting factors to
account for a patient's clinical characteristics and expected resource
needs. Thus, the weighting factors accounted for the relative
difference in resource use across all CMGs. Within each CMG, we created
tiers based on the estimated effects that certain comorbidities would
have on resource use.
We established the Federal PPS rates using a standardized payment
conversion factor (formerly referred to as the budget-neutral
conversion factor). For a detailed discussion of the budget-neutral
conversion factor, please refer to our FY 2004 IRF PPS final rule (68
FR 45684 through 45685). In the FY 2006 IRF PPS final rule (70 FR
47880), we discussed in detail the methodology for determining the
standard payment conversion factor.
We applied the relative weighting factors to the standard payment
conversion factor to compute the unadjusted prospective payment rates
under the IRF PPS from FYs 2002 through 2005. Within the structure of
the payment system, we then made adjustments to account for interrupted
stays, transfers, short stays, and deaths. Finally, we applied the
applicable adjustments to account for geographic variations in wages
(wage index), the percentage of low-income patients, location in a
rural area (if applicable), and outlier payments (if applicable) to the
IRFs' unadjusted prospective payment rates.
For cost reporting periods that began on or after January 1, 2002,
and before October 1, 2002, we determined the final prospective payment
amounts using the transition methodology prescribed in section
1886(j)(1) of the Act. Under this provision, IRFs transitioning into
the PPS were paid a blend of the Federal IRF PPS rate and the payment
that the IRFs would have received had the IRF PPS not been implemented.
This provision also allowed IRFs to elect to bypass this blended
payment and immediately be paid 100 percent of the Federal IRF PPS
rate. The transition methodology expired as of cost reporting periods
beginning on or after October 1, 2002 (FY 2003), and payments for all
IRFs now consist of 100 percent of the Federal IRF PPS rate.
Section 1886(j) of the Act confers broad statutory authority upon
the Secretary to propose refinements to the IRF PPS. In the FY 2006 IRF
PPS final rule (70 FR 47880) and in correcting amendments to the FY
2006 IRF PPS final rule (70 FR 57166), we finalized a number of
refinements to the IRF PPS case-mix classification system (the CMGs and
the corresponding relative weights) and the case-level and facility-
level adjustments. These refinements included the adoption of the
Office of Management and Budget's (OMB's) Core-Based Statistical Area
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

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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 proposed 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 2025, is available on the CMS website at
<a href="https://www.cms.gov/files/document/irf-regulatory-and-legislative-history.pdf">https://www.cms.gov/files/document/irf-regulatory-and-legislative-history.pdf</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 proposed 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 2026 is discussed in
section V.B. of this proposed rule. Section 1886(j)(3)(C)(ii)(II) of
the Act provides that the application of the productivity adjustment to
the market basket percentage increase 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 IRF market basket
percentage increase 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 IRF market basket percentage increase 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

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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).

III. Summary of Provisions of the Proposed Rule

The proposed updates to the IRF prospective payment rates for FY
2026 are as follows:
<bullet> Update the CMG relative weights and average length of stay
values for FY 2026 in a budget neutral manner, as discussed in section
IV.
<bullet> Update the IRF PPS payment rates for FY 2026 by the IRF
market basket percentage increase, 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 2026 IRF PPS payment rates by the FY 2026
wage index, applying the second year of the phase-out of the rural
adjustment for IRFs transitioning 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 2026, as discussed in section V.
<bullet> Update the outlier threshold amount for FY 2026, as
discussed in section VI.
<bullet> Update the cost-to-charge ratio (CCR) ceiling and urban/
rural average CCRs for FY 2026, as discussed in section VI.
The proposed policy changes and updates to the IRF QRP for FY 2026
will be as follows:
<bullet> Remove the COVID-19 Vaccination Coverage among Healthcare
Personnel (HCP) measure.
<bullet> Amend the Reconsideration Policy.
The proposed policy changes and updates to the IRF QRP for FY 2028
will be as follows:
<bullet> Remove the COVID-19 Vaccine: Percent of Patients/Residents
Who Are Up to Date measure.
<bullet> Remove four SDOH standardized patient assessment data
elements items from the IRF-PAI.
<bullet> Request for information on future measure concepts for the
IRF QRP.
<bullet> Request for information on potential revisions to the IRF-
PAI.
<bullet> Request for information on potential revisions to the data
submission deadlines for assessment data collected for the IRF QRP.
<bullet> Request for information on advancing digital quality
measurement in IRFs.

IV. Proposed Updates to the Case-Mix Group (CMG) Relative Weights and
Average Length of Stay (ALOS) Values for FY 2026

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 proposed rule, we propose to update the CMG relative
weights and ALOS values for FY 2026. Typically, we use the most recent
available data to update the CMG relative weights and ALOS values. For
FY 2026, we are proposing to use the FY 2024 IRF claims

[[Page 18538]]

and FY 2023 IRF cost report data (CMS Form 2552-10, OMB No 0938-0050).
These are the most current and complete data available at this time.
Currently, only a small portion of the FY 2024 IRF cost report data is
available for analysis, but the majority of the FY 2024 IRF claims data
are available for analysis. We are also proposing that if more recent
data become available after the publication of the proposed rule and
before the publication of the final rule, we will use such data to
determine the FY 2026 CMG relative weights and ALOS values in the final
rule.
We are proposing 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 the
operating (routine and ancillary services) and capital costs of IRFs.
The process to calculate the CMG relative weights for this proposed
rule is as follows:
Step 1. We estimate the effects that comorbidities have on costs.
Step 2. We adjust the cost of each Medicare discharge (case) to
reflect the effects found in 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 2026 CMG relative weights using a
normalization factor that results in the average CMG relative weights
in FY 2026 being the same as the average CMG relative weights in the FY
2025 IRF PPS final rule (89 FR 64276).
Consistent with the methodology that we have used to update the IRF
classification system in each instance in the past, we are proposing to
update the CMG relative weights for FY 2026 in such a way that total
estimated aggregate payments to IRFs for FY 2026 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
2026 CMG relative weights, we use the following steps:
Step 1. Calculate the estimated total amount of IRF PPS payments
for FY 2026 (with no changes to the CMG relative weights).
Step 2. Calculate the estimated total amount of IRF PPS payments
for FY 2026 by applying the proposed changes to the CMG relative
weights (as discussed in this proposed rule).
Step 3. Divide the amount calculated in Step 1 by the amount
calculated in Step 2 to determine the budget neutrality factor of
0.9985 that would maintain the same total estimated aggregate payments
in FY 2026 with and without the proposed changes to the final CMG
relative weights.
Step 4. Apply the budget neutrality factor from Step 3 to the FY
2026 IRF PPS standard payment amount after the application of the
budget-neutral wage adjustment factor.
In section V of this proposed rule, we discuss the proposed use of
the existing methodology to calculate the proposed standard payment
conversion factor for FY 2026.
In Table 2, ``Proposed Relative Weights and Average Length of Stay
Values for Case-Mix Groups,'' we present the proposed CMGs, the
comorbidity tiers, the corresponding relative weights, and the ALOS
values for each CMG and tier for FY 2026. 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.

Table 2--Proposed Relative Weights and Average Length of Stay Values for the Case-Mix-Groups
--------------------------------------------------------------------------------------------------------------------------------------------------------
Relative weight Average length of stay
CMG description (M = -------------------------------------------------------------------------------------------------------
CMG motor, A = age) No comorbidity No comorbidity
Tier 1 Tier 2 Tier 3 tier Tier 1 Tier 2 Tier 3 tier
--------------------------------------------------------------------------------------------------------------------------------------------------------
0101.................. Stroke M >=72.50........ 0.9697 0.8587 0.7788 0.7385 8 10 9 8
0102.................. Stroke M >=63.50 and M 1.2343 1.0930 0.9913 0.9400 11 11 11 10
<72.50.
0103.................. Stroke M >=50.50 and M 1.5845 1.4032 1.2726 1.2067 14 15 13 13
<63.50.
0104.................. Stroke M >=41.50 and M 2.0235 1.7919 1.6252 1.5410 16 17 16 16
<50.50.
0105.................. Stroke M <41.50 and A 2.5170 2.2288 2.0214 1.9168 23 21 20 19
>=84.50.
0106.................. Stroke M <41.50 and A 2.8396 2.5145 2.2805 2.1625 24 24 22 22
<84.50.
0201.................. Traumatic brain injury M 1.0683 0.8491 0.7764 0.7290 10 9 8 9
>=73.50.
0202.................. Traumatic brain injury M 1.3868 1.1023 1.0080 0.9464 12 11 11 10
>=61.50 and M <73.50.
0203.................. Traumatic brain injury M 1.7260 1.3718 1.2544 1.1778 14 14 13 12
>=49.50 and M <61.50.
0204.................. Traumatic brain injury M 2.1262 1.6899 1.5453 1.4510 17 17 15 15
>=35.50 and M <49.50.
0205.................. Traumatic brain injury M 2.7176 2.1599 1.9751 1.8545 28 22 19 18
<35.50.
0301.................. Non-traumatic brain 1.1966 0.9469 0.8820 0.8266 10 10 9 9
injury M >=65.50.
0302.................. Non-traumatic brain 1.5479 1.2249 1.1409 1.0693 12 12 11 11
injury M >=52.50 and M
<65.50.
0303.................. Non-traumatic brain 1.8292 1.4474 1.3482 1.2637 14 14 13 13
injury M >=42.50 and M
<52.50.
0304.................. Non-traumatic brain 2.1701 1.7172 1.5995 1.4992 18 17 16 15
injury M <42.50 and A
>=78.50.
0305.................. Non-traumatic brain 2.3748 1.8791 1.7503 1.6405 19 19 17 16
injury M <42.50 and A
<78.50.
0401.................. Traumatic spinal cord 1.3893 1.1118 1.0829 0.9772 12 12 11 11
injury M >=56.50.
0402.................. Traumatic spinal cord 1.7371 1.3901 1.3540 1.2219 15 14 14 13
injury M >=47.50 and M
<56.50.
0403.................. Traumatic spinal cord 1.9959 1.5972 1.5558 1.4039 17 15 16 15
injury M >=41.50 and M
<47.50.
0404.................. Traumatic spinal cord 3.2642 2.6122 2.5444 2.2960 23 33 25 21
injury M <31.50 and A
<61.50.

[[Page 18539]]

0405.................. Traumatic spinal cord 2.5786 2.0635 2.0100 1.8138 20 20 21 19
injury M >=31.50 and M
<41.50.
0406.................. Traumatic spinal cord 3.3730 2.6993 2.6292 2.3726 24 28 26 24
injury M >=24.50 and M
<31.50 and A >=61.50.
0407.................. Traumatic spinal cord 4.6155 3.6936 3.5977 3.2466 42 36 33 33
injury M <24.50 and A
>=61.50.
0501.................. Non-traumatic spinal 1.3013 1.0014 0.9327 0.8596 11 10 10 10
cord injury M >=60.50.
0502.................. Non-traumatic spinal 1.6192 1.2460 1.1605 1.0696 14 13 12 12
cord injury M >=53.50
and M <60.50.
0503.................. Non-traumatic spinal 1.8350 1.4121 1.3152 1.2122 16 14 14 13
cord injury M >=48.50
and M <53.50.
0504.................. Non-traumatic spinal 2.1952 1.6893 1.5734 1.4501 18 16 16 15
cord injury M >=39.50
and M <48.50.
0505.................. Non-traumatic spinal 3.1079 2.3916 2.2276 2.0530 26 23 22 20
cord injury M <39.50.
0601.................. Neurological M >=64.50.. 1.3092 0.9912 0.9334 0.8387 10 10 9 9
0602.................. Neurological M >=52.50 1.6292 1.2335 1.1617 1.0437 13 12 11 11
and M <64.50.
0603.................. Neurological M >=43.50 1.9373 1.4668 1.3813 1.2411 15 14 13 13
and M <52.50.
0604.................. Neurological M <43.50... 2.4500 1.8549 1.7469 1.5695 20 17 16 16
0701.................. Fracture of lower 1.2309 0.9798 0.9312 0.8505 11 11 10 9
extremity M >=61.50.
0702.................. Fracture of lower 1.5228 1.2122 1.1520 1.0521 13 13 12 11
extremity M >=52.50 and
M <61.50.
0703.................. Fracture of lower 1.8663 1.4856 1.4119 1.2894 16 15 14 14
extremity M >=41.50 and
M <52.50.
0704.................. Fracture of lower 2.3035 1.8336 1.7426 1.5915 18 18 17 16
extremity M <41.50.
0801.................. Replacement of lower- 1.1814 0.9934 0.8854 0.8298 10 10 9 9
extremity joint M
>=63.50.
0802.................. Replacement of lower- 1.3501 1.1352 1.0118 0.9483 10 10 10 10
extremity joint M
>=57.50 and M <63.50.
0803.................. Replacement of lower- 1.4822 1.2462 1.1107 1.0410 13 12 11 11
extremity joint M
>=51.50 and M <57.50.
0804.................. Replacement of lower- 1.6840 1.4159 1.2620 1.1828 14 14 12 12
extremity joint M
>=42.50 and M <51.50.
0805.................. Replacement of lower- 2.0966 1.7629 1.5712 1.4726 17 17 15 15
extremity joint M
<42.50.
0901.................. Other orthopedic M 1.2391 0.9373 0.8841 0.8068 11 10 9 9
>=63.50.
0902.................. Other orthopedic M 1.5778 1.1935 1.1257 1.0273 13 12 12 11
>=51.50 and M <63.50.
0903.................. Other orthopedic M 1.8712 1.4154 1.3350 1.2183 15 14 13 13
>=44.50 and M <51.50.
0904.................. Other orthopedic M <44.5 2.2545 1.7053 1.6085 1.4679 18 17 16 15
1001.................. Amputation lower 1.2283 1.0151 0.9237 0.8570 11 10 10 9
extremity M >=64.50.
1002.................. Amputation lower 1.4982 1.2381 1.1266 1.0453 13 13 12 11
extremity M >=55.50 and
M <64.50.
1003.................. Amputation lower 1.7827 1.4733 1.3406 1.2438 15 17 14 13
extremity M >=47.50 and
M <55.50.
1004.................. Amputation lower 2.3697 1.9584 1.7821 1.6534 19 19 17 17
extremity M <47.50.
1101.................. Amputation non-lower 1.3293 1.2612 1.0830 0.9374 12 12 11 10
extremity M >=58.50.
1102.................. Amputation non-lower 1.5509 1.4714 1.2635 1.0937 13 13 13 11
extremity M >=52.50 and
M <58.50.
1103.................. Amputation non-lower 1.9297 1.8308 1.5721 1.3608 16 17 15 13
extremity M <52.50.
1201.................. Osteoarthritis M >=61.50 1.3393 1.0444 0.9380 0.8731 11 10 9 10
1202.................. Osteoarthritis M >=49.50 1.5730 1.2267 1.1018 1.0255 13 12 12 11
and M <61.50.
1203.................. Osteoarthritis M <49.50 2.1102 1.6457 1.4780 1.3758 16 16 15 14
and A >=74.50.
1204.................. Osteoarthritis M <49.50 2.1650 1.6884 1.5164 1.4115 16 16 15 15
and A <74.50.
1301.................. Rheumatoid other 1.2479 1.0037 0.9191 0.8373 10 10 10 9
arthritis M >=62.50.
1302.................. Rheumatoid other 1.5219 1.2241 1.1210 1.0212 12 12 11 10
arthritis M >=51.50 and
M <62.50.
1303.................. Rheumatoid other 1.7556 1.4121 1.2931 1.1780 13 14 13 12
arthritis M >=44.50 and
M <51.50 and A >=64.50.

[[Page 18540]]

1304.................. Rheumatoid other 2.2654 1.8222 1.6686 1.5201 16 17 16 15
arthritis M <44.50 and
A >=64.50.
1305.................. Rheumatoid other 2.2620 1.8194 1.6661 1.5178 17 18 16 14
arthritis M <51.50 and
A <64.50.
1401.................. Cardiac M >=68.50....... 1.1169 0.8993 0.8304 0.7637 10 9 9 8
1402.................. Cardiac M >=55.50 and M 1.4255 1.1478 1.0599 0.9747 12 12 11 10
<68.50.
1403.................. Cardiac M >=45.50 and M 1.7248 1.3888 1.2824 1.1793 14 14 13 12
<55.50.
1404.................. Cardiac M <45.50........ 2.1509 1.7319 1.5992 1.4706 18 17 15 15
1501.................. Pulmonary M >=68.50..... 1.3026 1.0482 0.9827 0.9427 10 10 9 9
1502.................. Pulmonary M >=56.50 and 1.5938 1.2826 1.2024 1.1534 12 12 11 11
M <68.50.
1503.................. Pulmonary M >=45.50 and 1.8650 1.5008 1.4070 1.3497 15 14 13 13
M <56.50.
1504.................. Pulmonary M <45.50...... 2.3356 1.8795 1.7620 1.6903 20 16 16 15
1601.................. Pain syndrome M >=65.50. 1.0664 0.9423 0.8581 0.7820 9 10 9 9
1602.................. Pain syndrome M >=58.50 1.2816 1.1325 1.0313 0.9398 11 12 11 10
and M <65.50.
1603.................. Pain syndrome M >=43.50 1.5549 1.3739 1.2511 1.1401 13 14 13 12
and M <58.50.
1604.................. Pain syndrome M <43.50.. 2.0297 1.7935 1.6332 1.4883 14 19 16 15
1701.................. Major multiple trauma 1.3155 1.0444 0.9710 0.8933 12 10 10 10
without brain or spinal
cord injury M >=57.50.
1702.................. Major multiple trauma 1.6171 1.2839 1.1937 1.0982 13 13 12 12
without brain or spinal
cord injury M >=50.50
and M <57.50.
1703.................. Major multiple trauma 1.9018 1.5099 1.4039 1.2915 15 15 14 13
without brain or spinal
cord injury M >=41.50
and M <50.50.
1704.................. Major multiple trauma 2.1914 1.7398 1.6177 1.4882 18 17 16 15
without brain or spinal
cord injury M >=36.50
and M <41.50.
1705.................. Major multiple trauma 2.5452 2.0207 1.8788 1.7284 19 19 18 17
without brain or spinal
cord injury M <36.50.
1801.................. Major multiple trauma 1.1158 0.9175 0.8393 0.7885 11 10 9 9
with brain or spinal
cord injury M >=67.50.
1802.................. Major multiple trauma 1.4226 1.1697 1.0701 1.0053 14 13 11 11
with brain or spinal
cord injury M >=55.50
and M <67.50.
1803.................. Major multiple trauma 1.7727 1.4576 1.3333 1.2526 17 15 14 13
with brain or spinal
cord injury M >=45.50
and M <55.50.
1804.................. Major multiple trauma 2.0721 1.7037 1.5585 1.4642 19 17 15 16
with brain or spinal
cord injury M >=40.50
and M <45.50.
1805.................. Major multiple trauma 2.4800 2.0391 1.8654 1.7524 23 20 18 18
with brain or spinal
cord injury M >=30.50
and M <40.50.
1806.................. Major multiple trauma 3.5400 2.9107 2.6627 2.5014 35 28 27 24
with brain or spinal
cord injury M <30.50.
1901.................. Guillain-Barr[eacute] M 1.3483 0.9457 0.8276 0.8220 11 10 9 9
>=66.50.
1902.................. Guillain-Barr[eacute] M 1.9581 1.3734 1.2018 1.1937 15 14 13 13
>=51.50 and M <66.50.
1903.................. Guillain-Barr[eacute] M 2.7789 1.9491 1.7057 1.6942 20 18 17 18
>=38.50 and M <51.50.
1904.................. Guillain-Barr[eacute] M 4.2665 2.9925 2.6187 2.6010 37 30 26 25
<38.50.
2001.................. Miscellaneous M >=66.50. 1.1903 0.9543 0.8870 0.8121 10 10 9 9
2002.................. Miscellaneous M >=55.50 1.4763 1.1836 1.1001 1.0073 12 12 11 11
and M <66.50.
2003.................. Miscellaneous M >=46.50 1.7355 1.3914 1.2933 1.1841 14 13 13 12
and M <55.50.
2004.................. Miscellaneous M <46.50 2.1138 1.6947 1.5752 1.4423 17 16 15 15
and A >=77.50.
2005.................. Miscellaneous M <46.50 2.2095 1.7714 1.6465 1.5075 18 17 16 15
and A <77.50.
2101.................. Burns M >=52.50......... 1.5477 1.3171 1.0109 0.9722 14 13 10 11
2102.................. Burns M <52.50.......... 2.4762 2.1072 1.6173 1.5554 19 18 16 16
5001.................. Short-stay cases, length 0.0000 0.0000 0.0000 0.1756 0 0 0 3
of stay is 3 days or
fewer.
5101.................. Expired, orthopedic, 0.0000 0.0000 0.0000 0.8544 0 0 0 8
length of stay is 13
days or fewer.
5102.................. Expired, orthopedic, 0.0000 0.0000 0.0000 2.0471 0 0 0 20
length of stay is 14
days or more.
5103.................. Expired, not orthopedic, 0.0000 0.0000 0.0000 0.9085 0 0 0 8
length of stay is 15
days or fewer.
5104.................. Expired, not orthopedic, 0.0000 0.0000 0.0000 2.1866 0 0 0 20
length of stay is 16
days or more.
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 18541]]

Generally, updates to the CMG relative weights result in some
increases and some decreases to the CMG relative weight values. Table 3
shows how we estimate that the application of the proposed revisions
for FY 2026 would affect particular CMG relative weight values, which
would affect the overall distribution of payments within CMGs and
tiers. We note that, because we propose to implement the CMG relative
weight revisions in a budget-neutral manner (as previously described),
total estimated aggregate payments to IRFs for FY 2026 would not be
affected as a result of the proposed CMG relative weight revisions.
However, the proposed revisions would affect the distribution of
payments within CMGs and tiers.

Table 3--Distributional Effects of the Changes to the CMG Relative Weights
----------------------------------------------------------------------------------------------------------------
Percentage change in CMG relative weights Number of cases affected Percentage of cases affected
----------------------------------------------------------------------------------------------------------------
Increased by 15% or more......................... 85 0.0
Increased by between 5% and 15%.................. 2,490 0.6
Changed by less than 5%.......................... 434,616 99.2
Decreased by between 5% and 15%.................. 791 0.2
Decreased by 15% or more......................... 9 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 proposed revisions for FY 2026. The proposed changes in the ALOS
values for FY 2026, compared with the FY 2025 ALOS values, are small
and do not show any particular trends in IRF length of stay patterns.
We invite public comment on our proposed updates to the CMG
relative weights and ALOS values for FY 2026.

V. Proposed FY 2026 IRF PPS Payment Update

A. Background

Section 1886(j)(3)(C) of the Act requires the Secretary to
establish an increase factor that reflects changes over time in the
prices of an appropriate mix of goods and services for which payment is
made under the IRF PPS. According to section 1886(j)(3)(A)(i) of the
Act, the increase factor shall be used to update the IRF prospective
payment rates for each FY. Section 1886(j)(3)(C)(ii)(I) of the Act
requires the application of the productivity adjustment described in
section 1886(b)(3)(B)(xi)(II) of the Act. Thus, in this proposed rule,
we are updating the IRF PPS payments for FY 2026 by a market basket
percentage increase 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. Proposed FY 2026 Market Basket Update and Productivity Adjustment

1. Proposed FY 2026 Market Basket Update
For FY 2026 (that is, beginning October 1, 2025, and ending
September 30, 2026), we are proposing to update the IRF PPS payments by
a market basket percentage increase 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 2026, we are proposing
to use the same methodology described in the FY 2025 IRF PPS final rule
(89 FR 64285 through 64286).
Consistent with historical practice, we are proposing to estimate
the market basket update for the IRF PPS for FY 2026 based on IHS
Global Inc.'s (IGI's) forecast using the most recent available data at
the time of rulemaking. IGI is a nationally recognized economic and
financial forecasting firm with which CMS contracts to forecast the
components of the market baskets. Based on IGI's fourth quarter 2024
forecast with historical data through the third quarter of 2024, the
proposed 2021-based IRF market basket percentage increase for FY 2026
is projected to be 3.4 percent. We are also proposing that if more
recent data become 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 will use such data, if appropriate, to
determine the FY 2026 IRF market basket update in the final rule.
2. Proposed FY 2026 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

[[Page 18542]]

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 2024 forecast, the 10-year moving
average growth of TFP for FY 2026 is projected to be 0.8 percent. In
accordance with section 1886(j)(3)(C) of the Act, we are proposing to
base the FY 2026 IRF market basket percentage increase, on IGI's fourth
quarter 2024 forecast of the 2021-based IRF market basket. We are
proposing to then reduce the market basket percentage increase by the
proposed productivity adjustment for FY 2026 of 0.8 percentage point
(the 10-year moving average growth of TFP for the period ending FY 2026
based on IGI's fourth quarter 2024 forecast). Therefore, the proposed
FY 2026 IRF market basket update is 2.6 percent (3.4 percent market
basket percentage increase reduced by the 0.8 percentage point
productivity adjustment). Furthermore, we are proposing that if more
recent data subsequently become 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 productivity adjustment), we would use such data, if
appropriate, to determine the FY 2026 IRF market basket percentage
increase and productivity adjustment in the final rule.
For FY 2026, the Medicare Payment Advisory Commission (MedPAC)
recommends that we reduce IRF PPS payment rates by 7 percent.\3\ As
discussed, and in accordance with sections 1886(j)(3)(C) and
1886(j)(3)(D) of the Act, the Secretary is proposing to update the IRF
PPS payment rates for FY 2026 by the proposed IRF market basket update
of 2.6 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 2026.
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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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We invite public comment on our proposals for the FY 2026 market
basket percentage increase and productivity adjustment.

C. Proposed Labor-Related Share for FY 2026

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 are proposing 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 are proposing to
calculate the labor-related share for FY 2026 as the sum of the FY 2026
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
2026. We 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 2026. 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 2024 forecast of the 2021-based
IRF market basket, the sum of the FY 2026 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
70.8 percent. We are proposing 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 2026, we are proposing to
take 46 percent of 8.1 percent to determine the labor-related share of
Capital-Related costs for FY 2026 of 3.7 percent. Therefore, we are
proposing a total labor-related share for FY 2026 of 74.5 percent (the
sum of 70.8 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 are proposing that if more recent data subsequently
become 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 will use such data, if appropriate, to
determine the FY 2026 IRF labor-related share in the final rule.
Table 4 shows the current estimate of the proposed FY 2026 labor-
related share and the FY 2025 final labor-related share using the 2021-
based IRF market basket relative importance.

[[Page 18543]]

Table 4--FY 2026 Proposed IRF Labor-Related Share and FY 2025 IRF Labor-Related Share
----------------------------------------------------------------------------------------------------------------
FY 2026 proposed labor- FY 2025 final labor-related
related share \1\ share \2\
----------------------------------------------------------------------------------------------------------------
Wages and Salaries.................................. 49.5 49.4
Employee Benefits................................... 11.8 11.8
Professional Fees: Labor-Related \3\................ 5.5 5.5
Administrative and Facilities Support Services...... 0.7 0.7
Installation, Maintenance, and Repair Services...... 1.5 1.5
All Other: Labor-Related Services................... 1.8 1.8
-----------------------------------------------------------
Subtotal........................................ 70.8 70.7
Labor-related portion of Capital-Related (46%)...... 3.7 3.7
-----------------------------------------------------------
Total Labor-Related Share....................... 74.5 74.4
----------------------------------------------------------------------------------------------------------------
\1\ Based on the 2021-based IRF market basket relative importance, IGI's 4th quarter 2024 forecast.
\2\ Based on the 2021-based IRF market basket relative importance as published in the Federal Register (89 FR
64276).
\3\ Includes all contract advertising and marketing costs and a portion of accounting, architectural,
engineering, legal, management consulting, and home office contract labor costs.

We invite public comment on the proposed labor-related share for FY
2026.

D. Proposed Wage Adjustment for FY 2026

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
adjustments 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 2026, we propose to maintain the policies and methodologies
described in the FY 2025 IRF PPS final rule (89 FR 64276) related to
the labor market area definitions and the wage index methodology for
areas with wage data. Thus, we propose to use the core based
statistical areas (CBSAs) labor market area definitions and the FY 2026
pre-reclassification and pre-floor hospital wage index data. In
accordance with section 1886(d)(3)(E) of the Act, the FY 2026 pre-
reclassification and pre-floor hospital wage index is based on data
submitted for hospital cost reporting periods beginning on or after
October 1, 2021, and before October 1, 2022 (that is, FY 2022 cost
report data).
In addition, we will continue to use the same methodology discussed
in the FY 2008 IRF PPS final rule (72 FR 44299) to address those
geographic areas in which there are no hospitals and, thus, no hospital
wage index data on which to base the calculation for the FY 2026 IRF
PPS wage index. For FY 2026, the only rural area without wage index
data available is in North Dakota. 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 2026, the only urban area without wage
index data available is CBSA 25980, Hinesville Fort Stewart, GA.
We invite public comment on our proposals regarding the Wage
Adjustment for FY 2026.
2. Core-Based Statistical Areas (CBSAs) for the FY 2026 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. 1301 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

[[Page 18544]]

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.
1804 (available at <a href="https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf">https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf</a>) beginning October 1, 2020, including a 1-year
transition for FY 2021 under which we applied a 5-percent cap on any
decrease in an IRF's wage index compared to its wage index for the
prior fiscal year (FY 2020). The updated OMB delineations more
accurately reflect the contemporary urban and rural nature of areas
across the country, and the use of such delineations allows us to
determine more accurately the appropriate wage index and rate tables to
apply under the IRF PPS. OMB issued further revised CBSA delineations
in OMB Bulletin No. 20-01, on March 6, 2020 (available on the web at
<a href="https://www.whitehouse.gov/wp-content/uploads/2020/03/Bulletin-20-01.pdf">https://www.whitehouse.gov/wp-content/uploads/2020/03/Bulletin-20-01.pdf</a>). However, we determined that the changes in OMB Bulletin No.
20-01 do not impact the CBSA-based labor market area delineations
adopted in FY 2021. Therefore, we did not propose to adopt the revised
OMB delineations identified in OMB Bulletin No. 2001 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). As discussed in
the FY 2025 IRF PPS final rule (89 FR 64291 through 64304), we adopted
the revised OMB delineations identified in OMB Bulletin No. 23-01.
3. Second Year of the Three-Year Phase Out of the Rural Adjustment
For FY 2026, CMS is continuing the three-year budget-neutral phase-
out of the rural adjustment for FY 2024 IRFs transitioning from rural
to urban status in FY 2025 under the revised CBSA delineations. As
stated in the FY 2025 IRF PPS final rule (89 FR 64276), the purpose of
this gradual phase-out of the rural adjustment for these facilities is
to reduce the potential negative financial impacts associated with this
reclassification. In FY 2026, the second year of this phase-out,
affected IRFs will receive the full FY 2026 wage index along with one-
third of the FY 2024 rural adjustment. This step is part of a gradual
reduction of the 14.9 percent rural adjustment over three fiscal years
FYs 2025, 2026, and 2027. Furthermore, this policy does not apply to
urban IRFs transitioning to rural status, as they will receive the full
rural adjustment.
4. IRF Budget-Neutral Wage Adjustment Factor Methodology
To calculate the wage-adjusted facility payment for the proposed
payment rates set forth in this proposed rule, we multiply the
unadjusted Federal payment rate for IRFs by the proposed FY 2026 labor-
related share based on the 2021-based IRF market basket relative
importance (74.5 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 V.C. of this proposed 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 2026 IRF standard payment conversion factor
reflects the update to the wage indexes (based on the FY 2022 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 2025 (as
published in the FY 2025 IRF PPS final rule (89 FR 64276)).
Step 2. Calculate the total amount of estimated IRF PPS payments
using the FY 2026 wage index values (based on updated hospital wage
data and taking into account the permanent 5-percent cap on wage index
decreases when applicable) and the FY 2026 proposed labor-related share
of 74.5 percent.
Step 3. Divide the amount calculated in Step 1 by the amount
calculated in Step 2. The resulting quotient is the proposed FY 2026
budget-neutral wage adjustment factor of 0.9997.
Step 4. Apply the budget neutrality factor from Step 3 to the FY
2026 IRF PPS standard payment amount after the application of the
market basket percentage increase to determine the proposed FY 2026
standard payment conversion factor.
We discuss the calculation of the standard payment conversion
factor for FY 2026 in section V.E. of this proposed rule.

[[Page 18545]]

We invite public comments on our proposals regarding the Wage
Adjustment for FY 2026.

E. Description of the IRF Standard Payment Conversion Factor and
Payment Rates for FY 2026

To calculate the proposed IRF standard payment conversion factor
for FY 2026, as illustrated in Table 5, we begin by applying the
proposed IRF market basket update for FY 2026, as adjusted in
accordance with sections 1886(j)(3)(C) of the Act, to the standard
payment conversion factor for FY 2025 ($18,907). Applying the proposed
2.6 percent IRF market basket update for FY 2026 to the standard
payment conversion factor for FY 2025 of $18,907 yields a proposed FY
2026 standard payment amount of $19,399. Then, we apply the proposed
budget neutrality factor for the FY 2026 wage index (taking into
account the policy placing a permanent 5-percent cap on decreases to a
provider's wage index), and labor-related share of 0.9997, which
results in a proposed IRF standard payment amount of $19,393. We next
apply the proposed budget neutrality factor for the CMG relative
weights of 0.9985, which results in the proposed IRF standard payment
conversion factor of $19,364 for FY 2026.
We invite public comment on the proposed FY 2026 IRF standard
payment conversion factor.

Table 5--Calculations To Determine the Proposed FY 2026 IRF Standard
Payment Conversion Factor
------------------------------------------------------------------------
Explanation for adjustment Calculations
------------------------------------------------------------------------
FY 2025 IRF Standard Payment Conversion Factor.......... $18,907
Proposed Market Basket Update for FY 2026 of 2.6 percent x 1.026
*......................................................
Proposed Budget Neutrality Factor for the Updates to the x 0.9997
Wage Index and Labor-Related Share.....................
Proposed Budget Neutrality Factor for the Revisions to x 0.9985
the CMG Relative Weights...............................
---------------
Proposed FY 2026 Standard Payment Conversion Factor. = $19,364
------------------------------------------------------------------------
* Reflects a FY 2026 3.4 percent IRF market basket percentage increase
reduced by 0.8 percentage point for the proposed productivity
adjustment as required by section 1886(j)(3)(C)(ii)(I) of the Act.

We then apply the proposed CMG relative weights described in
section V.E of this proposed rule to the FY 2026 proposed standard
payment conversion factor ($19,364), to determine the proposed
unadjusted IRF prospective payment rates for FY 2026. The proposed
unadjusted IRF prospective payment rates for FY 2026 are shown in Table
6.

Table 6--FY 2026 IRF PPS Proposed Payment Rates
--------------------------------------------------------------------------------------------------------------------------------------------------------
Payment rate no
CMG Payment rate tier 1 Payment rate tier 2 Payment rate tier 3 comorbidity
--------------------------------------------------------------------------------------------------------------------------------------------------------
0101...................................................... $18,777.27 $16,627.87 $15,080.68 $14,300.31
0102...................................................... 23,900.99 21,164.85 19,195.53 18,202.16
0103...................................................... 30,682.26 27,171.56 24,642.63 23,366.54
0104...................................................... 39,183.05 34,698.35 31,470.37 29,839.92
0105...................................................... 48,739.19 43,158.48 39,142.39 37,116.92
0106...................................................... 54,986.01 48,690.78 44,159.60 41,874.65
0201...................................................... 20,686.56 16,441.97 15,034.21 14,116.36
0202...................................................... 26,854.00 21,344.94 19,518.91 18,326.09
0203...................................................... 33,422.26 26,563.54 24,290.20 22,806.92
0204...................................................... 41,171.74 32,723.22 29,923.19 28,097.16
0205...................................................... 52,623.61 41,824.30 38,245.84 35,910.54
0301...................................................... 23,170.96 18,335.77 17,079.05 16,006.28
0302...................................................... 29,973.54 23,718.96 22,092.39 20,705.93
0303...................................................... 35,420.63 28,027.45 26,106.54 24,470.29
0304...................................................... 42,021.82 33,251.86 30,972.72 29,030.51
0305...................................................... 45,985.63 36,386.89 33,892.81 31,766.64
0401...................................................... 26,902.41 21,528.90 20,969.28 18,922.50
0402...................................................... 33,637.20 26,917.90 26,218.86 23,660.87
0403...................................................... 38,648.61 30,928.18 30,126.51 27,185.12
0404...................................................... 63,207.97 50,582.64 49,269.76 44,459.74
0405...................................................... 49,932.01 39,957.61 38,921.64 35,122.42
0406...................................................... 65,314.77 52,269.25 50,911.83 45,943.03
0407...................................................... 89,374.54 71,522.87 69,665.86 62,867.16
0501...................................................... 25,198.37 19,391.11 18,060.80 16,645.29
0502...................................................... 31,354.19 24,127.54 22,471.92 20,711.73
0503...................................................... 35,532.94 27,343.90 25,467.53 23,473.04
0504...................................................... 42,507.85 32,711.61 30,467.32 28,079.74
0505...................................................... 60,181.38 46,310.94 43,135.25 39,754.29
0601...................................................... 25,351.35 19,193.60 18,074.36 16,240.59
0602...................................................... 31,547.83 23,885.49 22,495.16 20,210.21
0603...................................................... 37,513.88 28,403.12 26,747.49 24,032.66
0604...................................................... 47,441.80 35,918.28 33,826.97 30,391.80
0701...................................................... 23,835.15 18,972.85 18,031.76 16,469.08
0702...................................................... 29,487.50 23,473.04 22,307.33 20,372.86
0703...................................................... 36,139.03 28,767.16 27,340.03 24,967.94
0704...................................................... 44,604.97 35,505.83 33,743.71 30,817.81

[[Page 18546]]

0801...................................................... 22,876.63 19,236.20 17,144.89 16,068.25
0802...................................................... 26,143.34 21,982.01 19,592.50 18,362.88
0803...................................................... 28,701.32 24,131.42 21,507.59 20,157.92
0804...................................................... 32,608.98 27,417.49 24,437.37 22,903.74
0805...................................................... 40,598.56 34,136.80 30,424.72 28,515.43
0901...................................................... 23,993.93 18,149.88 17,119.71 15,622.88
0902...................................................... 30,552.52 23,110.93 21,798.05 19,892.64
0903...................................................... 36,233.92 27,407.81 25,850.94 23,591.16
0904...................................................... 43,656.14 33,021.43 31,146.99 28,424.42
1001...................................................... 23,784.80 19,656.40 17,886.53 16,594.95
1002...................................................... 29,011.14 23,974.57 21,815.48 20,241.19
1003...................................................... 34,520.20 28,528.98 25,959.38 24,084.94
1004...................................................... 45,886.87 37,922.46 34,508.58 32,016.44
1101...................................................... 25,740.57 24,421.88 20,971.21 18,151.81
1102...................................................... 30,031.63 28,492.19 24,466.41 21,178.41
1103...................................................... 37,366.71 35,451.61 30,442.14 26,350.53
1201...................................................... 25,934.21 20,223.76 18,163.43 16,906.71
1202...................................................... 30,459.57 23,753.82 21,335.26 19,857.78
1203...................................................... 40,861.91 31,867.33 28,619.99 26,640.99
1204...................................................... 41,923.06 32,694.18 29,363.57 27,332.29
1301...................................................... 24,164.34 19,435.65 17,797.45 16,213.48
1302...................................................... 29,470.07 23,703.47 21,707.04 19,774.52
1303...................................................... 33,995.44 27,343.90 25,039.59 22,810.79
1304...................................................... 43,867.21 35,285.08 32,310.77 29,435.22
1305...................................................... 43,801.37 35,230.86 32,262.36 29,390.68
1401...................................................... 21,627.65 17,414.05 16,079.87 14,788.29
1402...................................................... 27,603.38 22,226.00 20,523.90 18,874.09
1403...................................................... 33,399.03 26,892.72 24,832.39 22,835.97
1404...................................................... 41,650.03 33,536.51 30,966.91 28,476.70
1501...................................................... 25,223.55 20,297.34 19,029.00 18,254.44
1502...................................................... 30,862.34 24,836.27 23,283.27 22,334.44
1503...................................................... 36,113.86 29,061.49 27,245.15 26,135.59
1504...................................................... 45,226.56 36,394.64 34,119.37 32,730.97
1601...................................................... 20,649.77 18,246.70 16,616.25 15,142.65
1602...................................................... 24,816.90 21,929.73 19,970.09 18,198.29
1603...................................................... 30,109.08 26,604.20 24,226.30 22,076.90
1604...................................................... 39,303.11 34,729.33 31,625.28 28,819.44
1701...................................................... 25,473.34 20,223.76 18,802.44 17,297.86
1702...................................................... 31,313.52 24,861.44 23,114.81 21,265.54
1703...................................................... 36,826.46 29,237.70 27,185.12 25,008.61
1704...................................................... 42,434.27 33,689.49 31,325.14 28,817.50
1705...................................................... 49,285.25 39,128.83 36,381.08 33,468.74
1801...................................................... 21,606.35 17,766.47 16,252.21 15,268.51
1802...................................................... 27,547.23 22,650.07 20,721.42 19,466.63
1803...................................................... 34,326.56 28,224.97 25,818.02 24,255.35
1804...................................................... 40,124.14 32,990.45 30,178.79 28,352.77
1805...................................................... 48,022.72 39,485.13 36,121.61 33,933.47
1806...................................................... 68,548.56 56,362.79 51,560.52 48,437.11
1901...................................................... 26,108.48 18,312.53 16,025.65 15,917.21
1902...................................................... 37,916.65 26,594.52 23,271.66 23,114.81
1903...................................................... 53,810.62 37,742.37 33,029.17 32,806.49
1904...................................................... 82,616.51 57,946.77 50,708.51 50,365.76
2001...................................................... 23,048.97 18,479.07 17,175.87 15,725.50
2002...................................................... 28,587.07 22,919.23 21,302.34 19,505.36
2003...................................................... 33,606.22 26,943.07 25,043.46 22,928.91
2004...................................................... 40,931.62 32,816.17 30,502.17 27,928.70
2005...................................................... 42,784.76 34,301.39 31,882.83 29,191.23
2101...................................................... 29,969.66 25,504.32 19,575.07 18,825.68
2102...................................................... 47,949.14 40,803.82 31,317.40 30,118.77
5001...................................................... ....................... ....................... ....................... 3,400.32
5101...................................................... ....................... ....................... ....................... 16,544.60
5102...................................................... ....................... ....................... ....................... 39,640.04
5103...................................................... ....................... ....................... ....................... 17,592.19
5104...................................................... ....................... ....................... ....................... 42,341.32
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 18547]]

F. Example of the Methodology for Adjusting the Proposed Prospective
Payment Rates

Table 7 illustrates the methodology for adjusting the proposed
prospective payments (as described in section V of this proposed rule).
The following examples are based on two hypothetical Medicare
beneficiaries, both classified as CMG 0104 (without comorbidities). The
proposed unadjusted prospective payment rate for CMG 0104 (without
comorbidities) appears in Table 6.
Example: One beneficiary is in Facility A, an IRF located in rural
Spencer County, Indiana, and another beneficiary is in Facility B, an
IRF located in urban Harrison County, Indiana. Facility A, a rural non-
teaching hospital has a Disproportionate Share Hospital (DSH)
percentage of 5 percent (which would result in a LIP adjustment of
1.0156), a wage index of 0.8568 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), a wage
index of 0.9, and a teaching status adjustment of 0.0784.
To calculate each IRF's labor and non-labor portion of the proposed
prospective payment, we begin by taking the proposed FY 2026 unadjusted
prospective payment rate for CMG 0104 (without comorbidities) from
Table 6. Then, we multiply the proposed labor-related share for FY 2026
(74.5 percent) described in section V of this proposed rule by the
unadjusted prospective payment rate. To determine the non-labor portion
of the proposed prospective payment rate, we subtract the labor portion
of the Federal payment from the proposed unadjusted prospective
payment.
To compute the proposed wage-adjusted prospective payment, we
multiply the labor portion of the proposed 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 proposed wage-adjusted Federal payment by adding the wage-
adjusted labor amount to the non-labor portion of the proposed Federal
payment.
Adjusting the proposed wage-adjusted Federal payment by the
facility-level adjustments involves several steps. First, we take the
wage-adjusted prospective payment and multiply it by the appropriate
rural and LIP adjustments (if applicable). Second, to determine the
appropriate amount of additional payment for the teaching status
adjustment (if applicable), we multiply the teaching status adjustment
(0.0784, in this example) by the wage-adjusted and rural-adjusted
amount (if applicable). Finally, we add the additional teaching status
payments (if applicable) to the wage, rural, and LIP-adjusted
prospective payment rates. Table 7 illustrates the components of the
adjusted payment calculation.

Table 7--Example of Computing the Proposed FY 2026 IRF Prospective Payment
----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------
Steps Rural Facility A
(Spencer Co., IN)
Urban Facility B (Harrison Co., IN)
----------------------------------------------------------------------------------------------------------------
1................................... Unadjusted Payment................ $29,839.92 $29,839.92
2................................... Labor-Related Share............... x 0.745 x 0.745
3................................... Labor Portion of Payment.......... = $22,230.74 = $22,230.74
4................................... CBSA-Based Wage Index............. x 0.8568 x 0.9000
5................................... Wage-Adjusted Amount.............. = $19,047.30 = $20,007.666
6................................... Non-Labor Amount.................. + $7,609.18 + $7,609.18
7................................... Wage-Adjusted Payment............. = $26,656.48 = $27,616.85
8................................... Rural Adjustment.................. x 1.149 x 1.000
9................................... Wage- and Rural-Adjusted Payment.. = $30,628.29 = $27,616.85
10.................................. LIP Adjustment.................... x 1.0156 x 1.0454
11.................................. Wage-, Rural- and LIP-Adjusted = $31,106.09 = $28,870.65
Payment.
12.................................. Wage- and Rural-Adjusted Payment.. $30,628.29 $27,616.85
13.................................. Teaching Status Adjustment........ x 0 x 0.0784
14.................................. Teaching Status Adjustment Amount. = $0.00 = $2,165.16
15.................................. Wage-, Rural-, and LIP-Adjusted + $31,106.09 + $28,870.65
Payment.
16.................................. Total Adjusted Payment............ = $31,106.09 = $31,035.81
----------------------------------------------------------------------------------------------------------------

Thus, the proposed adjusted payment for Facility A would be
$31,106.09 and the proposed adjusted payment for Facility B would be
$31,035.81.

VI. Proposed Update to Payments for High-Cost Outliers Under the IRF
PPS for FY 2026

A. Proposed Update to the Outlier Threshold Amount for FY 2026

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.

[[Page 18548]]

Subsequently, we updated the IRF outlier threshold amount in the
FYs 2006 through 2025 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, 88 FR 50956, and 89 FR
64276 respectively) to maintain estimated outlier payments at 3 percent
of total estimated payments. We also stated in the FY 2009 final rule
(73 FR 46370 at 46385) that we would continue to analyze the estimated
outlier payments for subsequent years and adjust the outlier threshold
amount as appropriate to maintain the 3 percent target.
To update the IRF outlier threshold amount for FY 2026, we propose
to use FY 2024 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 2025.
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 2026, we
estimated the amount of FY 2026 IRF PPS aggregate and outlier payments
using the most recent claims available (FY 2024) and the proposed FY
2026 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 2.8
percent in FY 2025. Therefore, we propose to update the outlier
threshold amount from $12,043 for FY 2025 to $11,971 for FY 2026 to
maintain estimated outlier payments at approximately 3 percent of total
estimated aggregate IRF payments for FY 2026.
We note that, as we typically do, we will update our data between
the FY 2026 IRF PPS proposed and final rules to ensure that we use the
most recent available data in calculating IRF PPS payments.
We invite public comment on the proposed update to the IRF outlier
threshold for FY 2026.

B. Proposed Update to the IRF Cost-to-Charge Ratio (CCR) Ceiling and
Urban/Rural Averages for FY 2026

CCRs are used to adjust charges from Medicare claims to costs and
are computed annually from facility-specific data obtained from
Medicare Cost Reports (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
described in the FY 2004 IRF PPS final rule (68 FR 45692 through
45694), we propose to apply a ceiling to IRFs' CCRs. Using that
methodology, we propose to update the national urban and rural CCRs for
IRFs, as well as the national CCR ceiling for FY 2026, 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 2026, as discussed below in this section.
<bullet> Other IRFs for which accurate data to calculate an overall
CCR are not available.
Specifically, for FY 2026, we propose to estimate a national
average CCR of 0.467 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 propose to estimate a
national average CCR of 0.398 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 proposed rule, we have
used the most recent available cost report data (FY 2023). This
includes all IRFs whose cost reporting periods begin on or after
October 1, 2022, and before October 1, 2023. If, for any IRF, the FY
2023 cost report was missing or had an ``as submitted'' status, we used
data from a previous FY's (that is, FY 2004 through FY 2022) 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 2023 cost report data for this proposed
rule, we estimate a national average CCR of 0.467 for rural IRFs, and a
national average CCR of 0.398 for urban IRFs.
In accordance with past practice, we propose to set the national
CCR ceiling at 3 standard deviations above the mean CCR. Using this
method, we propose a national CCR ceiling of 1.54 for FY 2026. This
means that, if an individual IRF's CCR were to exceed this ceiling of
1.54 for FY 2026, we will replace the IRF's CCR with the appropriate
proposed national average CCR (either rural or urban, depending on the
geographic location of the IRF). We calculated the proposed national
CCR ceiling by:
Step 1. Taking the national average CCR (weighted by each IRF's
total costs, as previously discussed) of all IRFs for which we have
sufficient cost report data (both rural and urban IRFs combined).
Step 2. Estimating the standard deviation of the national average
CCR computed in Step 1.
Step 3. Multiplying the standard deviation of the national average
CCR computed in Step 2 by a factor of 3 to compute a statistically
significant reliable ceiling.
Step 4. Adding the result from Step 3 to the national average CCR
of all IRFs for which we have sufficient cost report data, from Step 1.
We also propose that if more recent data become available after the
publication of this proposed rule and before the publication of the
final rule, we would use such data to determine the FY 2026 national
average rural and urban CCRs and the national CCR ceiling in the
proposed rule. Using the FY 2023 cost report data for this proposed
rule, we estimate a national average CCR ceiling of 1.54, using the
same methodology.
We invite public comment on the proposed update to the IRF CCR
ceiling and the urban/rural averages for FY 2026.

II. 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

[[Page 18549]]

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.
In this proposed rule, we are proposing to remove two quality
measures: (1) the COVID-19 Vaccination Coverage among Healthcare
Personnel (HCP) measure, beginning with the FY 2026 IRF QRP, and (2)
the COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date
measure, beginning with the FY 2028 IRF QRP. We are also proposing to
remove four items previously adopted as standardized patient assessment
data elements under the social determinants of health (SDOH) category
beginning with the FY 2028 IRF QRP: one item for Living Situation, two
items for Food, and one item for Utilities. We also propose to amend
our reconsideration policy and process.
We are also seeking public comment on several Requests for
Information (RFIs), specifically on: (1) future measure concepts for
the IRF QRP in section VII.E of this proposed rule; (2) potential
revisions to the IRF-PAI as described in section VII.F of this proposed
rule; (3) potential revisions to the data submission deadlines for
assessment data collected for the IRF QRP as described in section VII.G
of this proposed rule; (4) advancing digital quality measurement in
IRFs as described in section VII.H of this proposed rule.

B. General Considerations Used for the Selection of Measures for the
IRF QRP

For a detailed discussion of the considerations we use for the
selection of IRF QRP quality, resource use, or other measures, we refer
readers to the FY 2016 IRF PPS final rule (80 FR 47083 through 47084).
1. Quality Measures Currently Adopted for the IRF QRP
The IRF QRP currently has 17 adopted measures, which are listed in
Table 8.
For a discussion of the factors, we use to evaluate whether a
measure should be removed from the IRF QRP, we refer readers to our
regulations at Sec. 412.634(b)(2). We refer readers to the CY 2013
OPPS/ASC PPS final rule (77 FR 45194 and 45195) for discussion of our
policy that allows any quality measure adopted for use in the IRF QRP
to remain in effect until the measure is removed, suspended, or
replaced, the FY 2018 IRF PPS final rule (82 FR 36276) which applied
this policy to standardized patient assessment data we adopt for the
IRF QRP, and the FY 2019 IRF PPS final rule (83 FR 38556 and 38557) for
more information on the factors we consider for removing measures and
standardized patient assessment data.

Table 8--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.
------------------------------------------------------------------------

C. Overview of Quality Measure Proposals

In this proposed rule, we propose to remove two measures: (1) the
COVID-19 Vaccination Coverage among Healthcare Personnel (HCP) measure,
beginning with the FY 2026 IRF QRP and (2) the COVID-19 Vaccine:
Percent of Patients/Residents Who Are Up to Date measure, beginning
with the FY 2028 IRF QRP.
1. Proposed Removal of the COVID-19 Vaccination Coverage Among
Healthcare Personnel (HCP) Measure Beginning With the FY 2026 IRF QRP
We refer readers to the FY 2022 IRF PPS final rule where we adopted
the COVID-19 Vaccination Coverage among HCP measure (HCP COVID-19
measure) into the IRF QRP (86 FR 42385 through 42396) and the FY 2024
IRF PPS final rule where we modified the HCP COVID-19 measure to
account for updated vaccine guidance (88 FR 50999 through 51009). To
report this measure, an IRF must report data on COVID-19 vaccination
coverage among HCP for at least one week each month. This requires IRFs
to track current vaccination status for all employees, licensed
independent practitioners, adult students/trainers and volunteers

[[Page 18550]]

and other contract personnel and log in to the National Healthcare
Safety Network (NHSN) to report the data monthly either manually in the
NHSN or by uploading a CSV file (86 FR 42388). The estimated burden of
collecting this information annually across all 1,166 IRFs is 13,992
hours at a cost of $503,991.84. We refer readers to section VIII.A.1.
of this proposed rule for more details on this estimated burden
calculation.
We propose to remove the HCP COVID-19 measure beginning with the FY
2026 IRF QRP under removal Factor 8, the costs associated with a
measure outweigh the benefit of its continued use in the program (Sec.
412.634(b)(2)(viii)). When we first adopted the HCP COVID-19 measure,
the United States was in the midst of a Public Health Emergency (PHE)
with millions of cases and over 550,000 COVID-19 deaths (86 FR 42385
and 42386). While preventing the spread of COVID-19 remains a public
health goal, the PHE ended on May 11, 2023.\4\ In March 2021, when this
measure was being proposed, the United States was averaging over 5,000
deaths per week. In April 2023, the last full month of the PHE, weekly
number of deaths due to COVID-19 averaged around 1,300.\5\ With the end
of the PHE and the decrease in COVID-19 deaths, we expect the continued
costs and burden to providers of tracking and monthly reporting on this
measure to outweigh the benefit of continued information collection on
COVID-19 vaccination coverage among HCP in IRFs.
---------------------------------------------------------------------------

\4\ <a href="https://www.hhs.gov/coronavirus/covid-19-public-health-emergency/index.html">https://www.hhs.gov/coronavirus/covid-19-public-health-emergency/index.html</a>.
\5\ Provisional COVID-19 Deaths, by Week, in The United States,
Reported to CDC. Accessed on March 27, 2025 via <a href="https://covid.cdc.gov/covid-data-tracker/#trends_weeklydeaths_select_00">https://covid.cdc.gov/covid-data-tracker/#trends_weeklydeaths_select_00</a>.
---------------------------------------------------------------------------

If finalized, IRFs that did not report their CY 2024 reporting
period data for the HCP COVID-19 measure would still be considered
compliant with the IRF QRP for purposes of their FY 2026 payment
determination (that is, IRFs that do not report CY 2024 HCP COVID-19
vaccination data would not be penalized for FY 2026 payments). Any HCP
COVID-19 Vaccination measure data received by CMS would not be used for
payment determination.
We invite public comment on our proposal to remove the COVID-19
Vaccination Coverage among HCP measure from the IRF QRP beginning with
the FY 2026 IRF QRP.
2. Proposed Removal of the COVID-19 Vaccine: Percent of Patients/
Residents Who Are Up to Date Measure Beginning With the FY 2028 IRF QRP
We refer readers to the FY 2024 IRF PPS final rule where we adopted
the COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date
(Patient/Resident COVID-19 Vaccine) measure into the IRF QRP (88 FR
51026 through 51035). In this proposed rule, we propose to remove the
Patient/Resident COVID-19 Vaccine measure beginning with the FY 2028
IRF QRP under removal Factor 8, the costs associated with a measure
outweigh the benefit of its continued use in the program (Sec.
412.634(b)(2)(viii)). The estimated burden of collecting this
information annually across all 1,166 IRFs is 3,111.5 hours at a cost
of $218,116.15. We refer readers to section VII.A.2. of this proposed
rule for more details on this estimated burden reduction.
When we adopted the Patient/Resident COVID-19 Vaccine measure,
COVID-19 continued to be a major challenge for IRFs, with older adults
at a significantly higher risk of mortality, severe disease, and death
following infection (88 FR 51026).
IRFs have expressed concerns about data collection challenges and
increased provider burden in collecting patient immunization data.\6\
This is especially true considering the shorter length of stay for IRF
patients compared to other post-acute settings. While preventing the
spread of COVID-19 remains a public health goal, the number of COVID-19
cases and deaths \7\ is declining, and we believe the continued costs
and burden to providers of reporting this measure outweigh the benefit
of continued information collection on COVID-19 vaccination coverage
among patients in IRFs.
---------------------------------------------------------------------------

\6\ Standing Technical Expert Panel for the Development,
Evaluation, and Maintenance of Post-Acute Care (PAC) and Hospice
Quality Reporting Program (QRP) Measurement Sets Summary Report
December 15, 2023. <a href="https://www.cms.gov/files/document/december-2023-pac-and-hospice-cross-setting-tep-summary-report.pdf-1">https://www.cms.gov/files/document/december-2023-pac-and-hospice-cross-setting-tep-summary-report.pdf-1</a>.
\7\ Provisional COVID-19 Deaths, by Week, in The United States,
Reported to CDC. Accessed on March 18, 2025, via <a href="https://covid.cdc.gov/covid-data-tracker/#trends_weeklydeaths_select_00">https://covid.cdc.gov/covid-data-tracker/#trends_weeklydeaths_select_00</a>.
---------------------------------------------------------------------------

We propose that, beginning with patients discharged on or after
October 1, 2025, IRFs would not be required to collect and submit the
Patient/Resident COVID-19 Vaccine measure data to CMS. We propose to
remove the Patient/Resident COVID-19 Vaccine data item (O0350) from the
IRF-PAI effective October 1, 2026, since it is not technically feasible
to remove this item earlier. However, under our proposal, this item
will become voluntary and IRFs would not be required to collect and
submit Patient/Resident COVID-19 Vaccine data beginning with patients
discharged on or after October 1, 2025.
We invite public comment on our proposal to remove the COVID-19
Vaccine: Percent of Patients/Residents Who Are Up to Date measure from
the IRF QRP beginning with the FY 2028 IRF QRP.

D. Proposal To Remove Four Standardized Patient Assessment Data
Elements Beginning With the FY 2028 IRF QRP

We refer readers to the FY 2025 IRF PPS final rule (89 FR 64310
through 64322) where we finalized the adoption of four items as
standardized patient assessment data elements under the social
determinants of health (SDOH) category: one item for Living Situation
(R0310); two items for Food (R0320A and R0320B); and one item for
Utilities (R0330). As finalized in the FY 2025 IRF PPS final rule, IRFs
would be required to report these data elements using the IRF-PAI
beginning with patients discharged on or after October 1, 2026 through
December 31, 2026 for purposes of the FY 2028 IRF QRP and each program
year after (89 FR 64326 through 64327).
In this proposed rule, we are proposing to remove these four
standardized patient assessment data elements under the SDOH category
as we acknowledge the burden associated with these items at this time.
We continuously look for ways to balance the need for data collections
regarding quality care and the burden of data collection on health care
providers. CMS has a goal to facilitate improved health care delivery
by requiring different systems and software applications to communicate
and exchange data. Therefore, we would like to work towards the
workflow for these specific data elements being part of a low burden
interoperable electronic system. The focus will turn towards how these
data and associated recommendations exchanged can improve care
coordination, efficiency, reduction in errors and patient experience.
As health information technology (HIT) advances and interoperability of
data becomes more standardized, the burden to collect and share
clinical data on these and other relevant patient information will
become less burdensome allowing for better outcomes for IRF patients
and their families. The objectives of the IRF QRP continue to be the
improvement of care, quality and health outcomes for all patients
through transparency and

[[Page 18551]]

quality measurement, while not imposing undue burden on essential
health providers. Under our proposal, IRFs would not be required to
collect and submit Living Situation (R0310), Food (R0320A and R0320B),
and Utilities (R0330) beginning with the patients discharged on or
after October 1, 2026, as previously finalized. Under our proposal,
these items would not be required to meet the IRF QRP requirements
beginning with the FY 2028 IRF QRP. Removing these items from the data
collection for the FY 2028 IRF QRP would keep the 1,166 IRFs from
incurring 12,446 hours of administrative burden at a cost of
$872,464.60 (or $748.25 per IRF) at this time. We refer readers to
section VIII.A.3. of this proposed rule for more details on this
estimated burden reduction.
We invite public comment on our proposal to remove four
standardized patient assessment data elements collected under the SDOH
category from the IRF QRP beginning with the FY 2028 IRF QRP.

E. Proposals To Amend the Reconsideration Request Policy and Process

1. Background
In the FY 2014 IRF PPS final rule (78 FR 47919), we finalized the
IRF QRP Reconsideration policy and process whereby an IRF may request
reconsideration of an initial determination that the IRF did not comply
with the IRF QRP reporting requirements, warranting CMS reducing the
IRF's annual payment update by 2 percent for the applicable fiscal year
as required by section 1886(j)(7)(A)(i)of the Act. In that rule, we
stated that the IRF may file a request for reconsideration if they
believe that the finding of non-compliance is erroneous, or if they
were non-compliant, they have a valid and justifiable excuse for this
non-compliance (78 FR 47919). We further stated that, after we review
the request for reconsideration, we may reverse our initial finding of
non-compliance if: (1) the IRF provides proof of compliance with all
requirements during the reporting period; or (2) the IRF provides
adequate proof of a valid or justifiable excuse for non-compliance if
the IRF was not able to comply with requirements during the reporting
period (78 FR 47919). Finally, we stated that we will uphold an initial
finding of non-compliance if the IRF cannot show any justification for
non-compliance (78 FR 47919).
In the FY 2015 IRF PPS final rule (79 FR 45918 and 45919), we
finalized amendments to the IRF QRP reconsideration policy and process.
Specifically, we stated that each IRF would receive a notification of
noncompliance with IRF QRP requirements if we determine it had not
correctly submitted data with respect to the applicable fiscal year (79
FR 45919). Then, the IRF would have 30 days from the date of our
initial notification of noncompliance to submit a request for
reconsideration via email. We also provided that, in very limited
circumstances, we may grant a request by an IRF to extend the deadline
to submit its reconsideration request, so long as the IRF requested the
extension and demonstrated that extenuating circumstances existed that
prevented it filing a reconsideration request by the 30-day deadline
(79 FR 45919). Finally, we provided that, as part of its
reconsideration request, the IRF must submit all supporting
documentation and evidence demonstrating: (1) full compliance with all
IRF QRP reporting requirements during the reporting period; or (2)
extenuating circumstances that affected noncompliance if the IRF was
not able to comply with the requirements during the reporting period
(79 FR 45919). We stated that we would not review any reconsideration
request that fails to provide the necessary documentation and evidence
along with the request (79 FR 45919).
In the FY 2016 IRF PPS final rule (80 FR 47138), we codified the
reconsideration policy and process for the IRF QRP at Sec. 412.634(d).
In subsequent rulemakings, we have amended our reconsideration policy
and process at Sec. 412.634(d) for minor clarifications and technical
updates (FY 2019 IRF PPS final rule (83 FR 38561 and 62 and 83 FR
38573) and FY 2020 IRF PPS final rule (84 FR 39161 and 39172 through
73)). As codified, our regulation at Sec. 412.634(d) addresses how we
send our written notification of noncompliance to an IRF, the process
for an IRF to request reconsideration, what information an IRF must
include with its reconsideration request (for example, documentation
that demonstrates the IRF's compliance with IRF QRP requirements), and
how we notify the IRF of our final decision regarding its
reconsideration request.
We have become aware that there are inconsistencies in our preamble
and regulation text regarding IRF requests for reconsideration. On this
basis, in this proposed rule, we seek to clarify these areas.
2. Proposal To Allow IRFs To Request an Extension To File a Request for
Reconsideration
As noted previously, in the FY 2015 IRF PPS final rule (79 FR 45918
and 45919), we provided that, in very limited circumstances, we may
grant a request by an IRF to extend the deadline to submit its
reconsideration request, so long as the IRF requested the extension and
demonstrated that extenuating circumstances existed that prevented it
filing a reconsideration request by the 30-day deadline (79 FR 45919).
We did not codify this policy--permitting IRFs to request an extension
to file their reconsideration request--in our regulation text at Sec.
412.634(d). In implementing this finalized policy, we have noted two
areas where further clarity would be beneficial to IRFs.
First, we have not clearly defined or explained the term
``extenuating circumstances'' as used in our reconsideration policy. In
contrast, we use the term ``extraordinary circumstances'' in our
Extraordinary Circumstances Exception and Extension (ECE) policy, as
codified at Sec. 412.634(c). We did explain ``extraordinary
circumstances'' in detail when we originally finalized this ECE policy
in the FY 2014 IRF PPS final rule (78 FR 47920).
On this basis, we are proposing to remove the term ``extenuating
circumstances'' as used currently in our reconsideration policy and
replace it with ``extraordinary circumstances.'' Specifically, we
propose that an IRF may request, and CMS may grant, an extension to
file a reconsideration request if the IRF was affected by an
extraordinary circumstance beyond the control of the IRF (for example,
a natural or man-made disaster). By modifying the basis by which an IRF
may request an extension to file a reconsideration request in this
manner, we also propose to incorporate our prior explanation regarding
the meaning of extraordinary circumstances, as set forth in the FY 2014
IRF PPS final rule (78 FR 47920) as part of our Extraordinary
Circumstance Exception and Extension (ECE) policy. Second, we have
noted some areas in our policy where IRFs may benefit from clearly
demarcated deadlines. Although we believe an IRF would have an interest
in asking for an extension to file a reconsideration request prior to
the deadline, our policy currently does not specify a deadline for an
IRF to submit its request for such an extension (78 FR 47919). Our
policy also provides that, to support such request, the IRF must
demonstrate that extenuating circumstances existed that

[[Page 18552]]

prevented filing the reconsideration request by the 30-day deadline (78
FR 47919). However, we have not specified a temporal relationship
between when the extenuating circumstances occurred and the
reconsideration request deadline. We believe IRFs may benefit from
further specificity regarding these requirements for submitting a
request to extend the deadline to file a reconsideration request.
On this basis, we propose to amend our reconsideration policy as
codified at Sec. 412.634(d) to permit a IRF to request, and CMS to
grant, an extension to file a request for reconsideration of a
noncompliance determination if, during the period to request a
reconsideration as set forth in Sec. 412.634(d), the IRF was affected
by an extraordinary circumstance beyond the control of the IRF (for
example, a natural or man-made disaster). We propose that the IRF must
submit its request for an extension to file a reconsideration request
to CMS via email no later than 30 calendar days from the date of the
written notification of noncompliance. We propose that the IRF's
extension request, submitted to CMS, must contain all of the following
information: (1) the CCN for the IRF; (2) the business name of the IRF;
(3) the business address of the IRF; (4) certain contact information
for the IRF's chief executive officer or designated personnel; (5) a
statement of the reason for the request for the extension; and (6)
evidence of the impact of the extraordinary circumstances, including,
for example, photographs, newspaper articles, and other media. We
propose to codify this process at Sec. 412.634(d)(6).
We further propose that CMS will notify the IRF in writing of its
final decision regarding its request for an extension to file a
reconsideration of noncompliance request via an email from CMS. We
propose to notify the IRF in writing via email because this will allow
for more expedient correspondence with the IRF, given the 30-day
reconsideration timeframe. We propose to codify this process at Sec.
412.634(d)(7).
We note that we are considering proposing similar modifications
across all post-acute care setting quality reporting programs to more
closely align the reconsideration processes.
We invite comment on these proposals to amend the IRF QRP
Reconsideration policy to permit IRFs to request an extension to file a
reconsideration request and to codify this proposed policy and process
at Sec. 412.634(d)(6) and (d)(7).
3. Proposal To Update the Bases on Which CMS Can Grant a
Reconsideration Request
As discussed previously, in the FY 2014 IRF PPS final rule, we
stated that, after we review an IRF request for reconsideration, we may
reverse our initial finding of non-compliance if: (1) the IRF provides
proof of compliance with all requirements during the reporting period;
or (2) the IRF provides adequate proof of a valid or justifiable excuse
for non-compliance if the IRF was not able to comply with requirements
during the reporting period (78 FR 47919). We also stated that we will
uphold an initial finding of non-compliance if the IRF cannot show any
justification for non-compliance (78 FR 47919).
In the FY 2015 IRF PPS final rule (79 FR 45918 and 45919), we
reiterated this position, and provided that, as part of its
reconsideration request, the IRF must submit all supporting
documentation and evidence demonstrating: (1) full compliance with all
IRF QRP reporting requirements during the reporting period; or (2)
extenuating circumstances that affected noncompliance if the IRF was
not able to comply with the requirements during the reporting period
(79 FR 45919). We stated that we would not review any reconsideration
request that fails to provide the necessary documentation and evidence
along with the request (79 FR 45919).
As previously discussed, we codified our reconsideration policy at
Sec. 412.634(d) in the FY 2014 IRF PPS final rule (78 FR 47919). Our
regulation at Sec. 412.634(d)(3) requires that an IRF's request for
reconsideration include accompanying documentation that demonstrates
the IRF's compliance with the IRF QRP requirements. Then, we will
notify the IRF in writing regarding our final decision on its
reconsideration request (Sec. 412.634(d)(5)).
We believe it would be beneficial for IRFs if we codify our
specific bases for granting a reconsideration request in our regulation
at Sec. 412.634(d).
On these bases, we propose to modify our reconsideration policy to
provide that we will grant a timely request for reconsideration, and
reverse an initial finding of non-compliance, only if CMS determines
that the IRF was in full compliance with the IRF QRP requirements for
the applicable program year. We would consider full compliance with the
IRF QRP requirements to include CMS granting an exception or extension
to IRF QRP reporting requirements under our ECE policy at Sec.
412.634(c). However, to demonstrate full compliance with our ECE
policy, the IRF would need to comply with our ECE policy's
requirements, including the specific scope of the exception or
extension as granted by CMS.
We propose to revise Sec. 412.634(d)(5) to codify this modified
policy in our regulation. The remainder of the text at Sec.
412.634(d)(5) would remain the same. We note that we are considering
proposing similar modifications across all post-acute care setting
quality reporting programs to more closely align the reconsideration
processes.
We invite comment on these proposals to amend the bases by which we
grant a reconsideration request under the IRF QRP Reconsideration
policy and to codify this proposed policy at Sec. 412.634(d)(5).

F. IRF QRP Measure Concepts Under Consideration for Future Years--
Request for Information (RFI): Interoperability, Well-Being, Nutrition
& Delirium

We are seeking input on the importance, relevance, appropriateness,
and applicability of each of the quality measure concepts under
consideration listed in Table 9 for future years in the IRF QRP. In the
FY 2024 IRF PPS proposed rule (88 FR 21000 through 21003), we included
a request for information (RFI) on a set of principles for selecting
and prioritizing IRF QRP measures, identifying measurement gaps and
suitable measures for filling these gaps. We refer readers to the FY
2024 IRF PPS final rule (88 FR 51036 and 51037) for a summary of the
public comments we received in response to the RFI.
We are seeking input on four concepts for future measures for the
IRF QRP.

Table 9--Future Measure Concepts Under Consideration for the IRF QRP
------------------------------------------------------------------------
Quality measure concepts
-------------------------------------------------------------------------
Interoperability.
Well-being.
Nutrition.
Delirium.
------------------------------------------------------------------------

1. Interoperability
We are seeking input on the quality measure concept of
interoperability, focusing on information technology systems' readiness
and capabilities in the IRF setting. Title XXX of the Public Health
Service Act defines ``interoperability'' in part, and with respect to
health information technology (IT), as health IT that enables the
secure exchange of electronic health information with, and use of
electronic

[[Page 18553]]

health information from, other health IT without requiring special
efforts by the user.\8\ The definition further states that
interoperability of health IT allows for complete, including by
providers and patients, access, exchange, and use of electronically
accessible health information for authorized uses under applicable
State or Federal Law.\9\ We request input and comment on approaches to
assessing interoperability in the IRF setting, for instance, measures
that address or evaluate the level of readiness for interoperable data
exchange, or measures that evaluate the ability of data systems to
securely share information across the spectrum of care. Please provide
input on the relevant aspects of interoperability for the IRF setting.
---------------------------------------------------------------------------

\8\ Public Health Service Act, 42 U.S.C. 3000(9) (2025).
\9\ Public Health Service Act, 42 U.S.C. 3000(9) (2025).
---------------------------------------------------------------------------

2. Well-Being
We are seeking input on a quality measure concept of well-being for
future quality measures. Well-being is a comprehensive approach to
disease prevention and health promotion as it integrates mental, and
physical health 10 11 while emphasizing preventative care to
proactively address potential health issues. This comprehensive
approach emphasizes person-centered care by promoting well-being of
patients and their family members. We request input and comment on
tools and measures that assess for overall health, happiness, and
satisfaction in life that could include aspects of emotional well-
being, social connections, purpose, fulfillment, and self-care work.
Please provide input on the relevant aspects of well-being for the IRF
setting.
---------------------------------------------------------------------------

\10\ Overall well-being. See more information at: <a href="https://odphp.health.gov/healthypeople/objectives-and-data/overall-health-and-well-being-measures/overall-well-being-ohm-01">https://odphp.health.gov/healthypeople/objectives-and-data/overall-health-and-well-being-measures/overall-well-being-ohm-01</a>.
\11\ Well-Being Measurement. See more information at: <a href="https://www.va.gov/WHOLEHEALTH/professional-resources/well-being-measurement.asp">https://www.va.gov/WHOLEHEALTH/professional-resources/well-being-measurement.asp</a>.
---------------------------------------------------------------------------

3. Nutrition
We are seeking input on a quality measure concept of nutrition for
future quality measures. Assessment of an individual's nutritional
status may include various strategies, guidelines, and practices
designed to promote healthy eating habits and ensure individuals
receive the necessary nutrients for maintaining health, growth, and
overall well-being. This also includes aspects of health that support
or mediate nutritional status, such as physical activity and sleep. In
this context, preventable care plays a vital role by proactively
addressing factors that may lead to poor nutritional status or related
health issues. These efforts not only support optimal nutrition but
also work to prevent conditions that could otherwise hinder an
individual's health and nutritional needs. We request input and comment
on tools and frameworks that promote healthy eating habits, exercise,
nutrition, or physical activity for optimal health, well-being, and
best care for all. Please provide input on the relevant aspects of
nutrition for the IRF setting.
4. Delirium
Finally, we are seeking input on a quality measure concept of
delirium for future quality measures. Delirium, often under-detected,
is a common complication of illness or injury that leads to negative
health outcomes like frailty, cognitive impairment, and functional
decline. Post-acute care patients experiencing delirium symptoms are
more likely to undergo rehospitalization, experience poor functional
recovery outcomes, and have a higher 6-month mortality rate compared to
patients without delirium.\12\ We request input and comment on the
applicability of measures that evaluate for the sudden, serious change
in a person's mental state or altered state of consciousness that may
be associated with underlying symptoms or conditions. Please provide
input on the relevant aspects of delirium for the IRF setting.
---------------------------------------------------------------------------

\12\ Marcantonio, E.R., Kiely, D.K., Simon, S.E., John Orav, E.,
Jones, R.N., Murphy, K.M., & Bergmann, M.A. (2005). Outcomes of
older people admitted to post-acute facilities with delirium.
Journal of the American Geriatrics Society, 53(6), 963-969. <a href="https://doi.org/10.1111/j.1532-5415.2005.53305.x">https://doi.org/10.1111/j.1532-5415.2005.53305.x</a>.
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As we review new measure concepts, CMS will prioritize outcome
measures that are evidenced-based.

G. Potential Future Revisions Under Consideration for the Inpatient
Rehabilitation Facility Patient Assessment Instrument (IRF-PAI)--
Request for Information (RFI)

1. Background
In the Fiscal Year (FY) 2002 IRF PPS final rule (66 FR 41324
through 41328), we finalized the use of the Inpatient Rehabilitation
Facility Patient Assessment Instrument (IRF-PAI), which IRFs must use
to assess Medicare Part A Fee-for-Service (FFS) patients admitted to or
discharged from an IRF. The FY 2010 IRF PPS final rule (74 FR 39762 and
39799) established the requirement to submit an IRF-PAI for each Part C
(Medicare Advantage) patient admitted to or discharged from an IRF on
or after October 1, 2009. In the FY 2023 IRF PPS final rule (87 FR
47074 through 47082), CMS finalized that IRFs are required to report
these data with respect to admission and discharge for all patients,
regardless of payer, discharged on and after October 1, 2024. For each
patient, an IRF must complete an IRF-PAI, as specified at Sec. Sec.
412.606 and 412.610(c), and must transmit both the admission patient
assessment and the discharge patient assessment at the same time to the
CMS patient data system as described at Sec. 412.614.
Unlike other Post Acute Care (PAC) settings, such as Skilled
Nursing Facilities (SNFs) and Long-Term Care Hospitals (LTCHs), the
IRF-PAI does not distinguish discharge types into unplanned, expired,
and planned. SNFs and LTCHs do not need to submit certain assessment
items depending on the type of discharge a patient has, decreasing the
overall assessment submission burden.
Additionally, the IRF-PAI is now collected on all IRF patients,
including pediatric patients. This RFI would seek feedback on the
potential development of a pediatric assessment that would better
measure the quality of care for that patient population.
2. Potential Future Revisions Under Consideration for the IRF-PAI To
Reduce Burden and Streamline Data Collection for IRFs
We are seeking feedback on potential revisions to the IRF-PAI to
reduce burden and streamline data collection for IRFs. Specifically, we
are seeking input on the following questions:
<bullet> How can CMS increase clarity around the definition of an
unplanned discharge and which items would be required for unplanned
discharges? How would IRFs recommend CMS implement skip patterns for
certain items depending on how an IRF patient is discharged?
<bullet> Should CMS consider a pediatric IRF-PAI assessment to
reduce burden, streamline the assessment process, and focus on age-
appropriate assessment items for the pediatric population?
<bullet> Are there other ways to revise the IRF-PAI to reduce
burden and streamline data collection in IRFs?
We intend to use this input to inform our future IRF-PAI
development efforts.

[[Page 18554]]

H. Potential Revision of the Final Data Submission Deadline Period From
4.5 Months to 45 Days--Request for Information (RFI)

Sections 1886(j)(7)(E), and 1899B(f) and (g) of the Act require CMS
to provide feedback to IRFs and to publicly report their performance on
IRF quality measures specified under section 1899B(c)(1) of the Act and
resource use and other measures specified under 1899B(d)(1) of the Act.
More specifically, section 1899B(f)(1) of the Act requires the
Secretary to provide confidential feedback reports to IRFs on their
performance on the quality, resource use, and other measures specified
under sections 1899B(c)(1) and (d)(1). Section 1899B(f)(2) provides
that, to the extent feasible, the Secretary must make these
confidential feedback reports available, not less frequently than on a
quarterly basis, except in the case of measures reported on an annual
basis, in which case confidential feedback reports may be made
available annually. Additionally, sections 1886(j)(7)(E) and
1899B(g)(1) of the Act requires the Secretary to provide for the public
reporting of each IRF's performance on the quality, resource use, and
other measures specified under section 1899B(c)(1) and (d)(1) of the
Act by establishing procedures for making the performance data
available to the public. Section 1899B(g)(2) of the Act specifically
requires that such procedures must ensure, through a process consistent
with the process applied under section 1886(b)(3)(B)(viii)(VII) of the
Act, that IRFs can review and submit corrections to the data and other
information before it is made public.
Although sections 1899B(f) and (g) of the Act require the provision
of confidential feedback reports and public reporting of IRF
performance on measures, section 1886(j)(7)(C) of the Act provides the
Secretary with discretion to prescribe the form and manner and the
timeframes for IRFs to submit data as specified for reporting for the
IRF QRP. Thus, in the FY 2016 IRF PPS final rule (80 FR 47122), we
finalized that IRFs will have approximately 4.5 months (135 days) after
each quarterly data collection period to complete their data
submissions and make corrections to such data where necessary. We did
not receive any comments on the 4.5-month data submission timeframe.
Public reporting of data collected under quality programs, such as
the IRF QRP, is designed to provide consumers and their families with
the most current information, so they can make quality-informed
decisions about where to receive their care. In the process of
implementing the public reporting for the quality reporting programs,
we have identified that the time between when data on measures is
collected and submitted to us and when that data are publicly reported
(that is, approximately 9 months) may be too long to provide the most
accurate and up to date information for the public. For example, we
have heard from interested parties that the IRF QRP measure results are
not useful for their quality improvement efforts due to the aged data
and the delay in when they receive these reports.\13\
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\13\ IRF Listening Session: Revising the Transmission Schedule
for the IRF-PAI. Available in the Downloads section on the IRF QRP
Measures Information web page: <a href="https://www.cms.gov/medicare/quality/inpatient-rehabilitation-facility/irf-quality-reporting-measures-information">https://www.cms.gov/medicare/quality/inpatient-rehabilitation-facility/irf-quality-reporting-measures-information</a>.
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Currently, the largest contributing factor to the nine-month lag
between the end of the data collection period and when measures are
publicly reported is the 4.5-month timeframe for data submission. If
the data submission timeframe was reduced from 4.5 months to 45 days,
then the lag time between the end of the data collection period and
public reporting of that data could be reduced by up to three months.
This revised timeframe would result in more timely public reporting of
data that may provide more value for consumers and families as they
make decisions about where they may want to receive their care.
Additionally, this timeframe provides IRFs with more recent data to use
in their quality improvement activities.
An important consideration in reducing the data submission
timeframe is the potential burden it may place on IRFs, which could
lead to fewer assessments submitted within the shorter 45-day data
submission timeframe. We conducted an analysis to evaluate the
potential impact of reducing the timeframe by determining how many
assessments are currently being submitted within 45 days. Using 2023
data, we identified that only 2.4 percent of all IRF-PAI assessments
were submitted after the 45-day timeframe. Of those submissions, only
two-thirds (or 1.6 percent of the total) were submitted between 45 days
and 4.5 months and hence have potential to be impacted.\14\ Because
assessments are tied to payment, providers are likely to submit
assessments close to the date of service and to close out medical
records once the patient is discharged from service. On these bases, we
believe reducing the IRF QRP data submission deadline from 4.5 months
to 45 days would improve the timeliness of public reporting by one
quarter, which could be beneficial to both consumers and IRFs with
limited change in burden to IRFs.
---------------------------------------------------------------------------

\14\ Internal CMS analysis of FY 2023 IRF-PAI assessment data.
---------------------------------------------------------------------------

We are requesting feedback on this potential future reduction of
the IRF QRP data submission deadline from 4.5 months to 45 days that is
under consideration. Specifically, we are requesting comment on:
<bullet> How this potential change could improve the timeliness and
actionability of IRF QRP quality measures;
<bullet> How this potential change could improve public display of
quality information; and
<bullet> How this potential change could impact IRF workflows or
require updates to systems.
We intend to use this input to inform our program improvement
efforts.

I. Advancing Digital Quality Measurement in the IRF QRP--Request for
Information

As part of our effort to advance the digital quality measurement
(dQM) transition, we are issuing this request for information (RFI) to
gather broad public input on the dQM transition in IRFs.
1. Background
We are committed to improving healthcare quality through
measurement, transparency, and public reporting of quality data, and to
enhancing healthcare data exchange by promoting the adoption of
interoperable health information technology (IT) that enables
information exchange using Fast Healthcare Interoperability
Resources[supreg] (FHIR [supreg]) standards. Proposing to require the
use of such technology within the IRF QRP in the future could
potentially enable greater care coordination and information sharing,
which is essential for delivering high-quality, efficient care and
better outcomes at a lower cost (86 FR 25615). In the fiscal years
2020, 2021, 2022, and 2023 IRF PPS proposed rules,\15\ we outlined
several Department of Health and Human Services (HHS) initiatives aimed
at promoting the adoption of interoperable health IT and facilitating
nationwide health information exchange. Further, to inform our digital
strategy, in the FY 2022 IRF PPS proposed rule (86 FR 25615), we shared
and sought feedback on the following:
---------------------------------------------------------------------------

\15\ ``Advancing Health Information Exchange'' in: FY 2020 IRF
PPS proposed rule (84 FR 19170), FY 2021 IRF PPS proposed rule (85
FR 32470), FY 2022 IRF PPS proposed rule (86 FR 25085), and FY 2023
IRF PPS proposed rule (87 FR 28122).

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[[Page 18555]]

<bullet> Our intent to explore the use of FHIR[supreg]-based
standards to exchange clinical information through application
programming interfaces (APIs).
<bullet> Enabling quality data submission to CMS through our
internet Quality Improvement and Evaluation System (iQIES).
<bullet> To work with healthcare standards organizations to ensure
their standards support our assessment tools.
We are considering opportunities to advance FHIR[supreg]-based
reporting of patient assessment data for the submission of the IRF-PAI
and other existing systems such as the Centers for Disease Control and
Prevention's (CDC) National Healthcare Safety Network (NHSN) for which
IRFs have current CMS reporting requirements. Our objective is to
explore how IRFs typically integrate technologies with varying
complexity into existing systems and how this affects IRF workflows. In
this RFI, we seek to identify the challenges and/or opportunities that
may arise during this integration, and determine the support needed to
complete and submit quality data in ways that protect and enhance care
delivery.
We are also seeking input on future measures under consideration
including applicability of interoperability as a future measure concept
in post-acute care settings, including the IRF QRP. Refer to section
VII.E. of this proposed rule for more information.
Any updates specific to the IRF QRP program requirements related to
quality measurement and reporting provisions would be addressed through
separate and future notice-and-comment rulemaking, as necessary.
2. Solicitation for Comment
We seek feedback on the current state of health IT use, including
electronic health records (EHRs), in IRF facilities:
<bullet> To what extent does your IRF use health IT systems to
maintain and exchange patient records? If your facility has
transitioned to using electronic records, in part or in whole, what
types of health IT does your IRF use to maintain patient records? Are
these health IT systems certified under the Office of the National
Coordinator for Health Information Technology (ONC Health IT)
Certification Program? If your facility uses health IT products or
systems that are not certified under the ONC Health IT Certification
Program, please specify. Does your facility use EHRs or other health IT
products or systems that are not certified under the ONC Health IT
Certification Program? If no, what is the reason for not doing so? Do
these other systems exchange data using standards and implementation
specifications adopted by HHS? Does your facility maintain any patient
records outside of these electronic systems? If so, are the data
organized in a structured format, using codes and recognized standards,
that can be exchanged with other systems and providers?
<bullet> Does your IRF submit patient assessment data to CMS
directly from your health IT system without the assistance of a third-
party intermediary? If a third-party intermediary is used to report
data, what type of intermediary service is used? How does your facility
currently exchange health information with other healthcare providers
or systems, specifically between IRFs and other provider types? What
about health information exchange with other entities, such as public
health agencies? What challenges do you face with electronic exchange
of health information?
<bullet> Are there any challenges with your current electronic
devices (for example, tablets, smartphones, computers) that hinder
ability to easily exchange information across systems? Please describe
any specific issues you encounter. Does limited internet or lack of
internet connectivity impact your ability to exchange data with other
healthcare providers, including community-based care services, or your
ability to submit patient assessment data to CMS? Please specify.
<bullet> What steps does your IRF take with respect to the
implementation of health IT systems to ensure compliance with security
and patient privacy requirements such as HIPAA?
<bullet> Does your IRF refer to the Safety Assurance Factors for
EHR Resilience (SAFER) Guides (see newly revised versions published in
January 2025 at <a href="https://www.healthit.gov/topic/safety/safer-guides">https://www.healthit.gov/topic/safety/safer-guides</a>) to
self-assess EHR safety practices?
<bullet> What challenges or barriers does your facility encounter
when submitting quality measure data to CMS as part of the IRF QRP?
What opportunities or factors could improve your facility's successful
data submission to CMS?
<bullet> What types of technical assistance guidance, workforce
trainings, and/or other resources would be most beneficial for the
implementation of FHIR[supreg]-based technology in your facility for
the submission of the IRF-PAI to CMS and other existing systems such as
CDC's National Healthcare Safety Network (NHSN) for which IRFs have
current CMS reporting requirements? What strategies can CMS, HHS, or
other Federal partners take to ensure that technical assistance is both
comprehensive and user-friendly? How could Quality Improvement
Organizations (QIOs) or other entities enhance this support?
<bullet> Is your facility using technology that utilizes APIs based
on the FHIR[supreg] standard to enable electronic data sharing? If so,
with whom are you sharing data using the FHIR[supreg] standard and for
what purpose(s)? For example, have you used FHIR[supreg] APIs to share
data with public health agencies? Does your facility use any
Substitutable Medical Applications and Reusable Technologies (SMART) on
FHIR[supreg] applications? If so, are the SMART on FHIR[supreg]
applications integrated with your EHR or other health IT?
<bullet> How do you anticipate the adoption of technology using
FHIR[supreg]-based APIs to facilitate the reporting of patient
assessment data could impact provider workflows? What impact, if any,
do you anticipate it will have on quality of care?
<bullet> What benefits or challenges have you experienced with
implementing technology that uses FHIR[supreg]-based APIs? How can
adopting technology that uses FHIR[supreg]-based APIs to facilitate the
reporting of patient assessment data impact provider workflows? What
impact, if any, does adopting this technology have on quality of care?
<bullet> Does your facility have any experience using technology
that shares electronic health information using one or more versions of
the United States Core Data for Interoperability (USCDI) standard? \16\
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\16\ For more information about USCDI see <a href="https://www.healthit.gov/isp/united-states-core-data-interoperability-uscdi">https://www.healthit.gov/isp/united-states-core-data-interoperability-uscdi</a>.
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<bullet> Would your IRF and/or vendors be interested in
participating in testing to explore options for transmission of
assessments, for example testing the transmission of a FHIR[supreg]-
based assessment to CMS?
<bullet> How could the Trusted Exchange Framework and Common
AgreementTM (TEFCATM) support CMS quality
programs' adoption of FHIR[supreg]-based assessment submissions
consistent with the FHIR[supreg] Roadmap (available here: <a href="https://rce.sequoiaproject.org/three-year-fhir-roadmap-for-tefca/">https://rce.sequoiaproject.org/three-year-fhir-roadmap-for-tefca/</a>)? How might
patient assessment data hold secondary uses for treatment or other
TEFCA exchange purposes?
<bullet> What other information should we consider to facilitate
successful adoption and integration of FHIR[supreg]-based technologies
and standardized data for patient assessment instruments like the IRF-
PAI? We invite any feedback, suggestions, best practices, or

[[Page 18556]]

success stories related to the implementation of these technologies.
We invite any feedback, suggestions, best practices, or success
stories related to the implementation of these technologies and will
use this input to inform our future dQM transition efforts.

J. Form, Manner, and Timing of Data Submission Under the IRF QRP

We are not proposing any new policies regarding Form, Manner, and
Timing of Data Submission Under the IRF QRP in this proposed rule.

K. Policies Regarding Public Display of Measure Data for the IRF QRP

1. Background
For a more detailed discussion about our policies regarding public
display of IRF QRP measure data and procedures for the opportunity to
review and correct data and information, we refer readers to the FY
2017 IRF PPS final rule (81 FR 52125 through 52131).
2. Proposal To End the Public Display of COVID-19 Vaccination Coverage
Among Healthcare Personnel (HCP) Measure
In the FY 2022 IRF PPS final rule (86 FR 42401), we finalized our
proposal to publicly report the COVID-19 Vaccination Coverage among
Healthcare Personnel (HCP) measure beginning with the September 2022
Care Compare refresh on <a href="http://Medicare.gov">Medicare.gov</a>. In section VII.C.1 of this
proposed rule, we are proposing to remove the COVID-19 Vaccination
Coverage Among Healthcare Personnel (HCP) Measure beginning with the FY
2026 IRF QRP. If finalized as proposed, an IRFs HCP COVID-19 rates will
be publicly reported for the last time with the September 2025 Care
Compare refresh on <a href="http://Medicare.gov">Medicare.gov</a>, based on data from Q4 of 2024.
Thereafter, we will no longer display IRFs' HCP COVID-19 rates on the
Care Compare tool at <a href="http://Medicare.gov">Medicare.gov</a>.
We invite comment on our proposal to end public display of the HCP
COVID-19 vaccination coverage rates after the September 2025 Care
Compare refresh on the Care Compare tool at <a href="http://Medicare.gov">Medicare.gov</a>.
3. Proposal To End the Public Display of Patient/Resident COVID-19
Measure
In the FY 2024 IRF PPS final rule (88 FR 51042 and 51042), we
finalized our proposal to begin publicly displaying data for the
Patient/Resident COVID-19 measure beginning with the September 2025
Care Compare refresh. In section VII.C.2, we are proposing to remove
the Patient/Resident COVID-19 Measure beginning with the FY 2028 IRF
QRP. However, the reporting of data for the Patient/Resident COVID-19
Vaccine data item will be voluntary effective October 1, 2025. If
finalized as proposed, we propose that the Patient/Resident COVID-19
measure rates would be publicly reported for the last time with the
September 2025 Care Compare refresh on <a href="http://Medicare.gov">Medicare.gov</a>, based on data from
Q4 of 2024.
We invite public comment on our proposal to end the public display
of Patient/Resident COVID-19 Measure data after the September 2025 Care
Compare refresh on <a href="http://Medicare.gov">Medicare.gov</a>.

VIII. Collection of Information Requirements

Under the Paperwork Reduction Act of 1995, we are required to
provide 60-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act
of 1995 (PRA) requires that we solicit comment on the following issues:
<bullet> The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
<bullet> The accuracy of our estimate of the information collection
burden.
<bullet> The quality, utility, and clarity of the information to be
collected.
<bullet> Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
We are soliciting public comment on each of these issues for the
following sections of this document that contain information collection
requirements (ICRs):

A. ICRs for Proposed Updates Related to the IRF QRP

An IRF that does not meet the requirements of the IRF QRP for a
fiscal year will receive a 2-percentage point reduction to its
otherwise applicable annual increase factor for that fiscal year. We
estimate that the burden associated with the IRF QRP is the time and
effort associated with complying with the requirements of the IRF QRP.
In section VII.E of this proposed rule, we are proposing to amend the
IRF QRP reconsideration request policy and process. As we noted in the
FY2016 IRF PPS Final rule (80 FR 47131), we believe the reconsideration
requirements, and the associated burden would be incurred subsequent to
an administrative action. In accordance with the implementing
regulations for the PRA (5 CFR 1320.4(a)(2) and (c)), the burden
associated with any information collected subsequent to the
administrative action is exempt from the requirements of the PRA. We
have, however, provided detailed cost burden estimates in section IX.6b
of this proposed rule. We welcome public comments on the accuracy of
the cost estimate assigned to this administrative burden.
1. Requirements for Proposed Updates Related to the IRF QRP Beginning
With the FY 2026 IRF QRP
In section VII.C.I of the proposed rule, we propose to remove the
COVID-19 Vaccination Coverage among Healthcare Personnel (HCP) (HCP
COVID-19) measure, beginning with the FY 2026 IRF QRP.
We note that the CDC would account for the burden associated with
the HCP COVID-19 measure collection under OMB control number 0920-1317
(expiration 03/31/26). Currently, the CDC does not estimate burden for
COVID-19 vaccination reporting under the CDC PRA package currently
approved under OMB control number 0920-1317 because the agency has been
granted a waiver under section 321 of the National Childhood Vaccine
Injury Act of 1986 (Pub. L. 99-660, enacted on November 14, 1986
(NCVIA)).\17\ However, CMS is providing an estimate of reduction in
burden and cost for IRFs here. Consistent with the CDC's experience of
collecting data using the NHSN, we estimate the removal of this measure
will result in a reduction of 1 hour per month to collect data for the
HCP COVID-19 measure and enter it into NHSN. We believe that this data
would be entered by an administrative assistant. However, IRFs
determine the staffing resources necessary.
---------------------------------------------------------------------------

\17\ Section 321 of the NCVIA provides the PRA waiver for
activities that come under the NCVIA, including those in the NCVIA
at section 2102 of the Public Health Service Act (<a href="https://www.govinfo.gov/content/pkg/USCODE-2023-title42/pdf/USCODE-2023-title42-chap6A-subchapXIX-part1-sec300aa-2.pdf">https://www.govinfo.gov/content/pkg/USCODE-2023-title42/pdf/USCODE-2023-title42-chap6A-subchapXIX-part1-sec300aa-2.pdf</a>). Section 321 is not
codified in the U.S. Code but can be found in a note (<a href="https://www.govinfo.gov/content/pkg/USCODE-2023-title42/pdf/USCODE-2023-title42-chap6A-subchapXIX-part1-sec300aa-1.pdf">https://www.govinfo.gov/content/pkg/USCODE-2023-title42/pdf/USCODE-2023-title42-chap6A-subchapXIX-part1-sec300aa-1.pdf</a>).
\18\ U.S. Bureau of Labor Statistics' (BLS) May 2023 National
Occupational Employment and Wage Estimates. <a href="https://www.bls.gov/oes/current/oes_nat.htm">https://www.bls.gov/oes/current/oes_nat.htm</a>.
---------------------------------------------------------------------------

For the purposes of calculating the costs associated with the
collection of information requirements, we obtained median hourly wages
from the U.S. Bureau of Labor Statistics' (BLS) May 2023 National
Occupational Employment and Wage Estimates.\18\ To account for overhead
and fringe

[[Page 18557]]

benefits, we have doubled the hourly wage. These amounts are detailed
in Table 10.

Table 10--U.S. Bureau of Labor and Statistics' May 2023 National Occupational Employment and Wage Estimates
----------------------------------------------------------------------------------------------------------------
Other indirect Adjusted
Occupation title Occupation Median hourly costs and fringe hourly wage ($/
code wage ($/hr) benefit ($/hr) hr)
----------------------------------------------------------------------------------------------------------------
Administrative Assistants.................... 43-6013 $18.01 $18.01 $36.02
----------------------------------------------------------------------------------------------------------------

We estimate that the removal of this measure from the IRF QRP will
result in a reduction of 12 hours per IRF per year. Using FY 2024 data,
we estimate a total of 1,166 IRFs annually for a decrease of 13,992
hours (12 hours x 1,166 IRFs) for all IRFs. Given an estimated $36.02
hourly wage, we estimate a decrease of $432.24 per IRF (12 hours x
$36.02), or a decrease of $503,991.84 for all IRFs annually.
2. ICRs for Proposed Removal of the COVID-19 Vaccine: Percent of
Patients/Residents Who Are Up to Date Measure Beginning With the FY
2028 IRF QRP
In section VII.C.2 of this proposed rule, we propose to remove the
COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date
(Patient/Resident COVID-19 Vaccine) measure, beginning with the FY 2028
IRF QRP. We identified the staff type based on past IRF burden
calculations. We believe that the items would be completed equally by a
Registered Nurse (RN) and a Licensed Practical and Licensed Vocational
Nurse (LPN/LVN). However, IRFs determine the staffing resources
necessary.
For the purposes of calculating the costs associated with the
collection of information requirements, we obtained median hourly wages
for these staff from the U.S. Bureau of Labor Statistics' (BLS) May
2023 National Occupational Employment and Wage Estimates.\19\ To
account for other indirect costs and fringe benefits, we doubled the
hourly wage. These amounts are detailed in Table 11. We established a
composite cost estimate using our adjusted wage estimates. The
composite estimate of $70.10/hr was calculated by weighting each
adjusted hourly wage equally (that is, 50 percent) [($82.76/hr x 0.5) +
($57.44/hr x 0.5) = $70.10].
---------------------------------------------------------------------------

\19\ U.S. Bureau of Labor Statistics' (BLS) May 2023 National
Occupational Employment and Wage Estimates. <a href="https://www.bls.gov/oes/current/oes_nat.htm">https://www.bls.gov/oes/current/oes_nat.htm</a>.

TABLE 11--U.S. Bureau of Labor and Statistics' May 2023 National Occupational Employment and Wage Estimates
----------------------------------------------------------------------------------------------------------------
Other indirect
Occupation title Occupation Median hourly costs and fringe Adjusted hourly
code wage ($/hr) benefit ($/hr) wage ($/hr)
----------------------------------------------------------------------------------------------------------------
Registered Nurse (RN)......................... 29-1141 $41.38 $41.38 $82.76
Licensed Practical and Licensed Vocational 29-2061 28.72 28.72 57.44
Nurse (LPN/LVN)..............................
----------------------------------------------------------------------------------------------------------------

The net result of removing the related Patient/Resident COVID-19
Vaccine Status item (O0350) beginning with the FY 2028 IRF QRP is a
decrease of 0.3 minutes or 0.005 hour of clinical staff time at
discharge. We estimate that the burden and cost for IRFs for complying
with requirements of the FY 2028 IRF QRP would decrease under this
proposal. Using FY 2024 data, we estimate a total of 622,300 discharges
annually from 1,166 IRFs for a decrease of 3,111.5 hours (622,300 x
0.005 hour) for all IRFs, or 2.67 hours per IRF (3,111.5 hours/1,116
IRFs). Given 0.005 hours at $70.10 per hour to complete an average of
533.7 IRF-PAIs per IRF per year, we estimate the total cost will be
decreased by $187.06 per IRF annually, or $218,116.15 for all IRFs
annually.
3. ICRs for Proposed Removal of Four Standardized Patient Assessment
Data Elements Beginning With the FY 2028 IRF QRP
In section VII.D of this proposed rule, we propose to remove four
standardized patient assessment data elements under the SDOH category
previously adopted for collection and submission on admission beginning
October 1, 2026.
We identified the staff type based on past IRF burden calculations.
We believe that the items would be completed equally by a Registered
Nurse (RN) and a Licensed Practical and Licensed Vocational Nurse (LPN/
LVN). However, IRFs determine the staffing resources necessary.
For the purposes of calculating the costs associated with the
collection of information requirements, we obtained median hourly wages
for these staff from the U.S. Bureau of Labor Statistics' (BLS) May
2023 National Occupational Employment and Wage Estimates.\20\ To
account for other indirect costs and fringe benefits, we doubled the
hourly wage. These amounts are detailed in Table 12. We established a
composite cost estimate using our adjusted wage estimates. The
composite estimate of $70.10/hr was calculated by weighting each
adjusted hourly wage equally (that is, 50 percent) [($82.76/hr x 0.5) +
($57.44/hr x 0.5) = $70.10].
---------------------------------------------------------------------------

\20\ U.S. Bureau of Labor Statistics' (BLS) May 2023 National
Occupational Employment and Wage Estimates. <a href="https://www.bls.gov/oes/current/oes_nat.htm">https://www.bls.gov/oes/current/oes_nat.htm</a>.

[[Page 18558]]

Table 12--U.S. Bureau of Labor and Statistics' May 2023 National Occupational Employment and Wage Estimates
----------------------------------------------------------------------------------------------------------------
Other indirect
Occupation title Occupation Median hourly costs and fringe Adjusted hourly
code wage ($/hr) benefit ($/hr) wage ($/hr)
----------------------------------------------------------------------------------------------------------------
Registered Nurse (RN)......................... 29-1141 $41.38 $41.38 $82.76
Licensed Practical and Licensed Vocational 29-2061 28.72 28.72 57.44
Nurse (LPN/LVN)..............................
----------------------------------------------------------------------------------------------------------------

We estimate that the burden and cost for IRFs for complying with
requirements of the FY 2028 IRF QRP would decrease under this proposal.
We estimate that removing four SDOH items with respect to admission
will result in a reduction of 1.2 minutes, or 0.02 hour. Using FY 2024
data, we estimate a total of 622,300 assessments from 1,166 IRFs
annually for a decrease of 12,446 hours in burden for all IRFs (622,300
x 0.02 hour), or a decrease of 10.67 hours per IRF. Given 10.67 hours
at $70.10 per hour, to complete an average of 534 IRF-PAI assessments
per IRF per year, we estimate the total cost will be decreased by
$748.25 per IRF annually, or $872,464.60 for all IRFs annually, as
detailed in Table 13.
We invite public comments on the proposed information collection
requirements and whether our estimated burden reduction of 0.02 hours
per patient and an annual decrease of 10.67 hours in burden per IRF at
admission is an accurate estimate.

Table 13--Estimated Change in Burden Beginning With the FY 2028 IRF QRP
----------------------------------------------------------------------------------------------------------------
Estimated Estimated
change in Estimated change in Estimated change
Requirement annual burden change in annual burden in annual cost
hours annual cost hours
----------------------------------------------------------------------------------------------------------------
Proposed removal of the COVID-19 Vaccine: -2.67 -$187.06 -3,111.5 -$218,116.15
Percent of Patients/Residents Who Are Up to
Date item beginning with the FY 2028 IRF QRP
Proposed removal of four standardized patient -10.67 -748.25 -12,446 -872,464.60
assessment data elements beginning with the
FY 2028 IRF QRP.............................
------------------------------------------------------------------
Total change in burden for FY 2028 IRF -13.34 -935.32 -15,557.5 -1,090,580.75
QRP.....................................
----------------------------------------------------------------------------------------------------------------

4. Summary of Requirements for Proposed Updates Related to the IRF QRP
Beginning With the FY 2028 IRF QRP
The IRF-PAI, in its current form, has been approved under OMB
control number 0938-0842 (expiration 10/31/2027). The net result of
removing five items beginning with the FY 2028 IRF QRP, as described in
sections VII.A.2 and VII.A.3 of this proposed rule, is a decrease of
1.5 minutes or 0.025 hour of clinical staff time. We estimate that the
burden and cost for IRFs for complying with requirements of the FY 2028
IRF QRP would decrease under these proposals. In summary, we estimate
the total cost for the proposed requirements of the FY 2028 IRF QRP
will be decreased by $935.32 per IRF annually, or $1,089,642.75 for all
IRFs annually. These amounts are detailed in Table 14.

Table 14--Estimated Change in Burden Associated With OMB Control Number 0938-0842
----------------------------------------------------------------------------------------------------------------
Per IRF All IRFs
------------------------------------------------------------------
Estimated Estimated
Requirement change in Estimated change in Estimated change
annual burden change in annual burden in annual cost
hours annual cost hours
----------------------------------------------------------------------------------------------------------------
Proposed removal of the COVID-19 Vaccine: -2.67 -$187.06 -3,111.5 -$218,116.15
Percent of Patients/Residents Who Are Up to
Date item beginning with the FY 2028 IRF QRP
Proposed removal of four standardized patient -10.67 -748.25 -12,446.00 -872,464.60
assessment data elements beginning with the
FY 2028 IRF QRP.............................
----------------------------------------------------------------------------------------------------------------

We invite public comments on the proposed information collection
requirements.

IX. Regulatory Impact Analysis

A. Statement of Need

This proposed rule would update the IRF prospective payment rates
for FY 2026 as required under section 1886(j)(3)(C) of the Act and in
accordance with section 1886(j)(5) of the Act, which requires the
Secretary to publish in the Federal Register on or before August 1
before each FY, the classification and weighting factors for CMGs used
under the IRF PPS for such FY and a description of the methodology and
data used in computing the prospective payment rates under the IRF PPS
for that FY. This proposed rule would also implement section
1886(j)(3)(C) of the Act, which requires the Secretary to apply a
productivity adjustment to the market basket percentage increase for FY
2012 and subsequent years.
Furthermore, this proposed rule proposes to adopt policy changes to
the IRF QRP under the statutory discretion afforded to the Secretary
under section 1886(j)(7) of the Act.

[[Page 18559]]

B. Overall Impact

We have examined the impacts of this rule as required by Executive
Order 12866, ``Regulatory Planning and Review''; Executive Order 13132,
``Federalism''; Executive Order 13563, ``Improving Regulation and
Regulatory Review''; Executive Order 14192, ``Unleashing Prosperity
Through Deregulation''; the Regulatory Flexibility Act (RFA) (Pub. L.
96-354); section 1102(b) of the Social Security Act; section 202 of the
Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select those regulatory approaches that
maximize net benefits (including potential economic, environmental,
public health and safety, and other advantages; and distributive
impacts). Section 3(f) of Executive Order 12866 defines a ``significant
regulatory action'' as any regulatory action that is likely to result
in a rule that may: (1) have an annual effect on the economy of $100
million or more or adversely affect in a material way the economy, a
sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or State, local, or Tribal
governments or communities; (2) create a serious inconsistency or
otherwise interfere with an action taken or planned by another agency;
(3) materially alter the budgetary impact of entitlements, grants, user
fees, or loan programs or the rights and obligations of recipients
thereof; or (4) raise novel legal or policy issues arising out of legal
mandates, or the President's priorities.
A regulatory impact analysis (RIA) must be prepared for rules that
are significant as per section 3(f)(1) of E.O. 12866 (having an effect
on the economy $100 million or more in any 1 year). We estimate the
total impact of the policy updates described in this proposed rule by
comparing the estimated payments in FY 2026 with those in FY 2025. This
analysis results in an estimated $295 million increase for FY 2026 IRF
PPS payments. Additionally, we estimated that costs associated with
updating the reporting requirements under the IRF QRP result in an
estimated reduction of $504,929.84 in costs for IRFs for purposes of
meeting the FY 2026 IRF QRP, and an estimated reduction of
$1,090,580.75 in costs for IRFs for purposes of meeting the FY 2028 IRF
QRP. Based on our estimates, OMB's Office of Information and Regulatory
Affairs has determined this rulemaking is significant per section
3(f)(1) because it will have an effect on the economy $100 million or
more in any 1 year. Accordingly, we have prepared an RIA that, to the
best of our ability, presents the costs and benefits of the rulemaking.
This proposed rule,

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