CMS Publishes Proposed Rule for Fiscal Year 2023 Inpatient Rehabilitation Payments

On April 6, 2022, the Centers for Medicare & Medicaid Services (CMS) published the proposed rule for fiscal year (FY) 2023 Inpatient Rehabilitation Facility Prospective Payment System (IRF PPS) in the Federal Register. If finalized, the regulations will take effect October 1, 2022.

Each year, CMS publishes updates to the payment rates and regulations for inflation factors, wage adjustments, and other patient-care payment adjustments. An overview of the FY 2023 IRF PPS, including proposed changes and other relevant updates, follows below.

Proposed Changes to IRF Payments

CMS proposed the following updates to inpatient rehabilitation facility (IRF) rates.

Table for the updates to the inpatient rehabilitation facility rates compares final 2022 rate to proposed 2023 rate and shows percent change

Other Notable Updates

Core-Based Statistical Area Designation

The FY 2023 IRF PPS proposed rule doesn’t adopt the most recent Office of Management and Budget (OMB) Core-Based Statistical Area (CBSA) delineations, as was the case in FY 2022.

Wage Index Cap

CMS proposes to make permanent its FY 2021 temporary policy of limiting year-over-year wage index decreases to 5%.

As such, the FY 2023 wage index won’t be less than 95% of its final wage index for FY 2022. For subsequent years, a provider’s wage index won’t be less than 95% of its prior year wage index.

IRF Teaching Policy

CMS proposed to codify its existing teaching status adjustment policy through proposed amendments to the regulation text and is also proposing to update and clarify the IRF teaching policy with respect to IRF hospital closures and displaced residents.

Facility Level Adjustment Factors

CMS is soliciting comments on the methodology used to determine the facility-level adjustment factors including:

  • Rural adjustment factor
  • Low-income patient adjustment factor
  • Teaching status adjustment factor

IRF Transfer Policy

The Office of Inspector General’s recommendation has resulted in a rule that solicits comments regarding the expansion of the IRF transfer payment policy to apply to discharges to home health.

IRF Quality Reporting Program (QRP)

The rule proposes to require quality data reporting on all IRF patients beginning with the FY 2025 IRF QRP and to amend regulations to be consistent with the proposed requirements. This rule also proposes to correct an error in the regulations text at Section 412.614(d)(2).

CMS seeks comment on three issues:

  • Future measure concepts under consideration for the IRF QRP
  • Future digital quality measure for the IRF QRP
  • Overarching principles for measuring equity and health quality disparities across CMS quality programs, including the IRF QRP

Economic Impact

The overall economic impact of this rule is an estimated $170 million in increased payments from the US federal government to IRFs during FY 2023.

Public Comments

Public comments can be submitted no later than 5:00 p.m. EST on May 31, 2022. Reference CMS-1767-P in your comment submission.

Before submitting comments, consult with the rule’s submission instructions so you adhere to the proper method.

We’re Here to Help

For more information about the proposed rule and its implications, contact your Moss Adams professional.

You can also find more insights on our Provider Reimbursement Enterprise Services page.

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