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Final Fiscal Year 2017 Payment and Policy Changes for Medicare Inpatient Rehabilitation Facilities (CMS-1647-F)

August 03, 2016

On July 29, 2016, the Centers for Medicare & Medicaid Services (CMS) issued a final rule outlining fiscal year (FY) 2017 Medicare payment policies and rates for the Inpatient Rehabilitation Facility Prospective Payment System (IRF PPS) and the IRF Quality Reporting Program (IRF QRP). The FY 2017 final policies are summarized below.

Updates to IRF payment rates

Updates to the payment rates under the IRF PPS. CMS is updating the IRF PPS payments for FY 2017 to reflect an estimated 1.65 percent increase factor (reflecting an IRF-specific market basket estimate of 2.7 percent, reduced by a 0.3 percentage point multi-factor productivity adjustment and a 0.75 percentage point reduction required by law). An additional approximate 0.3 percent increase to aggregate payments due to updating the outlier threshold results in an overall estimated update of approximately 1.9 percent (or $145 million), relative to payments in FY 2016.

No changes to the facility-level adjustments. For FY 2017, CMS will continue to maintain the facility-level adjustment factors at current levels as we continue to monitor the most current IRF claims data available to assess the effects of the FY 2014 changes.

Rural Adjustment Transition. Continue year two of the phase-out of the 14.9 percent rural adjustment for IRF providers in areas that were designated as rural and changed to urban under the new Office of Management and Budget (OMB) delineations.  In accordance with the policy finalized in the FY 2016 IRF PPS final rule, these IRFs will receive one-third of the rural adjustment for FY 2017, and no rural adjustment for FY 2018 and subsequent years.

Changes to the IRF Quality Reporting Program (QRP)

The Improving Medicare Post-Acute Care Transformation Act of 2014 (the IMPACT Act) added Section 1899B to the Social Security Act (the Act) to require that IRFs report data on measures that satisfy measure domains specified in the Act. Section 1899B also requires that these measures be aligned with measures implemented for Long-Term Care Hospitals (LTCHs), IRFs, Skilled Nursing Facilities (SNFs), and Home Health Agencies (HHAs). This final rule adopts three measures to meet the resource use and other measure domains and one measure to satisfy the domain of medication reconciliation. IRFs that fail to submit the required quality data to CMS will be subject to a 2 percentage point reduction to their applicable FY annual increase factor.

Finalized Changes:

The quality measures finalized for the FY 2018 payment determination and subsequent years to meet the resource use and other measure domains are as follows:

  • Medicare Spending Per Beneficiary - Post-Acute Care (PAC) IRF QRP
  • Discharge to Community – PAC IRF QRP
  • Potentially Preventable 30-Day Post-Discharge Readmission – IRF QRP.

The quality measure finalized for the FY 2020 payment determination and subsequent years to meet the medication reconciliation domain is:

  • Drug Regimen Review Conducted with Follow-Up for Identified Issues.

In addition to the measures listed above, we are adopting an additional measure “Potentially Preventable within Stay Readmission for IRFs” for FY 2018 payment determination and subsequent years.

Further, we will begin publically reporting IRF quality data in fall 2016. We finalized four measures for public display for calendar year 2017, pending final data analysis, and adopted procedures associated with public reporting, including the review and correction of data and provider confidential feedback reports.

Finally, we have adopted an extension of the time frame for submission of exception and extension requests for extraordinary circumstances from 30 days to 90 days from the date of the qualifying event.

For More Information

The final rule will be displayed on July 29, 2016, at the Federal Register’s Public Inspection Desk and will be available under “Special Filings,” at  

It will publish in the August 5, 2016 Federal Register.

For further information, please see:


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