Att E3_Inpatient Rehabilitation Facilities

Att E3_Inpatient Rehabiliation Facilities - CAUTI, LabID, FLU.PDF

The National Healthcare Safety Network (NHSN)

Att E3_Inpatient Rehabilitation Facilities

OMB: 0920-0666

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Vol. 79

Wednesday,

No. 151

August 6, 2014

Part II

Department of Health and Human Services

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Center for Medicare & Medicaid Services
42 CFR Part 412
Medicare Program; Inpatient Rehabilitation Facility Prospective Payment
System for Federal Fiscal Year 2015; Final Rule

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Federal Register / Vol. 79, No. 151 / Wednesday, August 6, 2014 / Rules and Regulations

DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Centers for Medicare & Medicaid
Services
42 CFR Part 412
[CMS–1608–F]
RIN 0938–AS09

Medicare Program; Inpatient
Rehabilitation Facility Prospective
Payment System for Federal Fiscal
Year 2015
Centers for Medicare &
Medicaid Services (CMS), HHS.
ACTION: Final rule.
AGENCY:

This final rule updates the
prospective payment rates for inpatient
rehabilitation facilities (IRFs) for federal
fiscal year (FY) 2015 as required by the
statute. This final rule finalizes a policy
to collect data on the amount and mode
(that is, Individual, Concurrent, Group,
and Co-Treatment) of therapy provided
in the IRF setting according to therapy
discipline, revises the list of diagnosis
and impairment group codes that
presumptively meet the ‘‘60 percent
rule’’ compliance criteria, provides a
way for IRFs to indicate on the Inpatient
Rehabilitation Facility-Patient
Assessment Instrument (IRF–PAI) form
whether the prior treatment and severity
requirements have been met for arthritis
cases to presumptively meet the ‘‘60
percent rule’’ compliance criteria, and
revises and updates quality measures
and reporting requirements under the
IRF quality reporting program (QRP).
This rule also delays the effective date
for the revisions to the list of diagnosis
codes that are used to determine
presumptive compliance under the ‘‘60
percent rule’’ that were finalized in FY
2014 IRF PPS final rule and adopts the
revisions to the list of diagnosis codes
that are used to determine presumptive
compliance under the ‘‘60 percent rule’’
that are finalized in this rule. This final
rule also addresses the implementation
of the International Classification of
Diseases, 10th Revision, Clinical
Modification (ICD–10–CM), for the IRF
prospective payment system (PPS),
which will be effective when ICD–10–
CM becomes the required medical data
code set for use on Medicare claims and
IRF–PAI submissions.
DATES: The updated IRF prospective
payment rates are applicable for IRF

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SUMMARY:

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discharges occurring on or after October
1, 2014, and on or before September 30,
2015 (FY 2015). In addition, the
revisions to the list of diagnosis codes
that are used to determine presumptive
compliance under the ‘‘60 percent rule’’
that were finalized in FY 2014 IRF PPS
final rule (78 FR 47860) and the
revisions to the lists of diagnosis codes
and impairment group codes finalized
in this rule are applicable for
compliance review periods beginning
on or after October 1, 2015. The change
to the Inpatient Rehabilitation FacilityPatient Assessment Instrument (IRF–
PAI) form to indicate whether the prior
treatment and severity requirements
have been met for arthritis cases to
presumptively meet the ‘‘60 percent
rule’’ compliance criteria is applicable
October 1, 2015. The implementation of
the International Classification of
Diseases, 10th Revision, Clinical
Modification (ICD–10–CM), for the IRF
prospective payment system (PPS), is
applicable when ICD–10–CM becomes
the required medical data code set for
use on Medicare claims and IRF–PAI
submissions. The updated quality
measures and reporting requirements
under the IRF QRP are applicable for
IRF discharges occurring on or after
October 1, 2014. The two new IRF
quality measures will require data
submission beginning with admissions
and discharges occurring on or after
January 1, 2015: (1) National Healthcare
Safety Network (NHSN) Facility-Wide
Inpatient Hospital-Onset MethicillinResistant Staphylococcus aureus
(MRSA) Bacteremia Outcome Measure
(NQF #1716); and (2) National
Healthcare Safety Network (NHSN)
Facility-Wide Inpatient Hospital-Onset
Clostridium difficile Infection (CDI)
Outcome Measure (NQF #1717).
FOR FURTHER INFORMATION CONTACT:
Gwendolyn Johnson, (410) 786–6954,
for general information.
Charles Padgett, (410) 786–2811, for
information about the quality reporting
program.
Kadie Thomas, (410) 786–0468, or
Susanne Seagrave, (410) 786–0044, for
information about the payment policies
and the proposed payment rates.
SUPPLEMENTARY INFORMATION: The IRF
PPS Addenda along with other
supporting documents and tables
referenced in this final rule are available
through the Internet on the CMS Web
site at http://www.cms.hhs.gov/

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Medicare/Medicare-Fee-for-ServicePayment/InpatientRehabFacPPS/.
Executive Summary
A. Purpose
This final rule updates the payment
rates for IRFs for FY 2015 (that is, for
discharges occurring on or after October
1, 2014, and on or before September 30,
2015) as required under section
1886(j)(3)(C) of the Social Security Act
(the Act). Section 1886(j)(5) of the Act
requires the Secretary to publish in the
Federal Register on or before the August
1 that precedes the start of each fiscal
year, the classification and weighting
factors for the IRF PPS’s case-mix
groups and a description of the
methodology and data used in
computing the prospective payment
rates for that fiscal year. It also makes
policy changes to programs associated
with IRFs.
B. Summary of Major Provisions
In this final rule, we use the methods
described in the FY 2014 IRF PPS final
rule (78 FR 47860) to update the federal
prospective payment rates for FY 2015
using updated FY 2013 IRF claims and
the most recent available IRF cost report
data. We are also finalizing a policy to
collect data on the amount and mode
(that is, Individual, Concurrent, Group,
and Co-Treatment) of therapy provided
in the IRF setting according to therapy
discipline, revising the list of
impairment group codes that
presumptively meet the ‘‘60 percent
rule’’ compliance criteria, providing a
way for IRFs to indicate on the Inpatient
Rehabilitation Facility-Patient
Assessment Instrument (IRF–PAI) form
whether the prior treatment and severity
requirements have been met for arthritis
cases to presumptively meet the ‘‘60
percent rule’’ compliance criteria, and
revising and updating quality measures
and reporting requirements under the
IRF QRP. In this final rule, we also
address the implementation of the
International Classification of Diseases,
10th Revision, Clinical Modification
(ICD–10–CM), for the IRF prospective
payment system (PPS), effective when
ICD–10–CM becomes the required
medical data code set for use on
Medicare claims and IRF–PAI
submissions.
C. Summary of Impacts

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Federal Register / Vol. 79, No. 151 / Wednesday, August 6, 2014 / Rules and Regulations
Provision description

Transfers

FY 2015 IRF PPS payment rate update ............................

The overall economic impact of this final rule is an estimated $180 million in increased payments from the Federal government to IRFs during FY 2015.

Provision description

Costs

New quality reporting program requirements ....................

The total costs in FY 2015 for IRFs as a result of the new quality reporting requirements are estimated to be $852,238
The total costs in FY 2016 for IRFs as a result of the new Individual, Concurrent,
Group, and Co-Treatment reporting requirements are estimated to be $1.2 million.

New Individual, Concurrent, Group, and Co-Treatment
Therapy reporting requirements.

To assist readers in referencing
sections contained in this document, we
are providing the following Table of
Contents.
Table of Contents

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I. Background
A. Historical Overview of the Inpatient
Rehabilitation Facility Prospective
Payment System (IRF PPS)
B. Provisions of the Affordable Care Act
Affecting the IRF PPS in FY 2012 and
Beyond
C. Operational Overview of the Current IRF
PPS
II. Summary of Provisions of the Proposed
Rule
III. Analysis and Responses to Public
Comments
IV. Update to the Case-Mix Group (CMG)
Relative Weights and Average Length of
Stay Values for FY 2015
V. Freezing the Facility-Level Adjustment
Factors at FY 2014 Levels
A. Background on Facility-Level
Adjustments
B. Freezing the Facility-Level Adjustment
Factors at FY 2014 Levels
VI. FY 2015 IRF PPS Federal Prospective
Payment Rates
A. Market Basket Increase Factor,
Productivity Adjustment, and Other
Adjustment for FY 2015
B. Development of an IRF-Specific Market
Basket
C. Secretary’s Final Recommendation
D. Labor-Related Share for FY 2015
E. Wage Adjustment
F. Description of the IRF Standard
Conversion Factor and Payment Rates for
FY 2015
G. Example of the Methodology for
Adjusting the Federal Prospective
Payment Rates
VII. Update to Payments for High-Cost
Outliers Under the IRF PPS
A. Update to the Outlier Threshold
Amount for FY 2015
B. Update to the IRF Cost-to-Charge Ratio
Ceiling and Urban/Rural Averages
VIII. Refinements to the Presumptive
Compliance Methodology
A. Background on the Compliance
Percentage
B. Changes to the Diagnosis Codes That
Are Used To Determine Presumptive
Compliance
C. Changes to the Impairment Group Codes
That Meet Presumptive Compliance
Criteria
IX. Data Collection of the Amount and Mode
(Individual, Concurrent, Group, and Co-

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Treatment) of Therapy Provided in IRFs
According to Occupational, Speech, and
Physical Therapy Disciplines
X. Revision to the IRF–PAI for Arthritis
Conditions
XI. International Classification of Diseases,
10th Revision, Clinical Modification
(ICD–10–CM), Conversion
A. Background on the Use of Diagnosis
Information in the IRF PPS
B. Conversion of Diagnosis Information
from ICD–9–CM to ICD–10–CM for the
IRF PPS
XII. Revisions and Updates to the Quality
Reporting Program for IRFs
A. Background and Statutory Authority
B. Quality Measures Previously Finalized
for and Currently Used in the IRF
Quality Reporting Program
C. New IRF QRP Quality Measures
Affecting the FY 2017 Adjustments to
the IRF PPS Annual Increase Factor and
Beyond
D. IRF QRP Quality Measures and
Concepts Under Consideration for Future
Years
E. Timeline for Data Submission for New
IRF QRP Quality Measures Affecting the
FY 2017 Adjustments to the IRF PPS
Annual Increase Factor
F. Timing for New IRFs to Begin Reporting
Quality Data under the IRF QRP
Affecting the FY 2017 Adjustments to
the IRF PPS Annual Increase Factor and
Beyond
G. IRF QRP Reconsideration and Appeals
Procedures for the FY 2016 Adjustments
to the IRF PPS Annual Increase Factor
and Beyond
H. IRF QRP Data Submission Exception or
Extension Requirements for the FY 2017
Adjustments to the IRF PPS Annual
Increase Factor and Beyond
I. Public Display of Quality Measure Data
for the IRF QRP
J. IRF QRP Data Completion Thresholds for
the FY 2016 Adjustments to the IRF PPS
Annual Increase Factor and Beyond
K. Data Validation Process for the FY 2017
Adjustments to the IRF PPS Annual
Increase Factor and Beyond
L. Electronic Health Record and Health
Information Exchange
M. Method for Applying the Reduction to
the FY 2015 IRF Increase Factor for IRFs
That Fail to Meet the Quality Reporting
Requirements
XIII. Miscellaneous Comments
XIV. Provisions of the Final Regulations
XV. Collection of Information Requirements
A. ICRs Regarding the IRF QRP

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B. ICRs Regarding Individual, Concurrent,
Group, and Co-Treatment Therapy Data
on the IRF–PAI
XVI. Regulatory Impact Analysis
A. Statement of Need
B. Overall Impacts
C. Detailed Economic Analysis
D. Alternatives Considered
E. Accounting Statement
F. Conclusion

Acronyms, Abbreviations, and Short
Forms
Because of the many terms to which
we refer by acronym, abbreviation, or
short form in this final rule, we are
listing the acronyms, abbreviation, and
short forms used and their
corresponding terms in alphabetical
order below.
The Act The Social Security Act
ADC Average Daily Census
The Affordable Care Act Patient Protection
and Affordable Care Act (Pub. L. 111–148,
enacted on March 23, 2010)
AHIMA American Health Information
Management Association
ASCA Administrative Simplification
Compliance Act (Pub. L. 107–105, enacted
on December 27, 2002)
BBA Balanced Budget Act of 1997 (Pub. L.
105–33, enacted on August 5, 1997)
BLS U.S. Bureau of Labor Statistics
CAH Critical Access Hospitals
CAUTI Catheter-Associated Urinary Tract
Infection
CBSA Core-Based Statistical Area
CCR Cost-to-Charge Ratio
CDC The Centers for Disease Control and
Prevention
CDI Clostridium difficile Infection
CFR Code of Federal Regulations
CMG Case-Mix Group
CMS Centers for Medicare & Medicaid
Services
DRA Deficit Reduction Act of 2005 (Pub. L.
109–171, enacted February 8, 2006)
DSH Disproportionate Share Hospital
DSH PP Disproportionate Share Patient
Percentage
EHR Electronic Health Record
ESRD End-Stage Renal Disease
FR Federal Register
FY Federal Fiscal Year
GEMs General Equivalence Mappings
HAI Healthcare Associated Infection
HCP Health Care Personnel
HHS U.S. Department of Health & Human
Services
HIE Health Information Exchange

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Federal Register / Vol. 79, No. 151 / Wednesday, August 6, 2014 / Rules and Regulations

HIPAA Health Insurance Portability and
Accountability Act of 1996 (Pub. L. 104–
191, enacted on August 21, 1996)
ICD–9–CM The International Classification
of Diseases, 9th Revision, Clinical
Modification
ICD–10–CM The International
Classification of Diseases, 10th Revision,
Clinical Modification
ICRs Information Collection Requirements
IGC Impairment Group Code
IGI IHS Global Insight
IPF Inpatient Psychiatric Facility
IPPS Inpatient Prospective Payment System
IQR Inpatient Quality Reporting Program
IRF Inpatient Rehabilitation Facility
IRF–PAI Inpatient Rehabilitation FacilityPatient Assessment Instrument
IRF PPS Inpatient Rehabilitation Facility
Prospective Payment System
IRVEN Inpatient Rehabilitation Validation
and Entry
LIP Low-Income Percentage
LPN Licensed Practical Nurse
LTCH Long-Term Care Hospital
MAC Medicare Administrative Contractor
MAP Measure Applications Partnership
MA (Medicare Part C) Medicare Advantage
MedPAC Medicare Payment Advisory
Commission
MDS Minimum Data Set
MFP Multifactor Productivity
MMSEA Medicare, Medicaid, and SCHIP
Extension Act of 2007 (Pub. L. 110–173,
enacted on December 29, 2007)
MRSA Methicillin-Resistant
Staphylococcus aureus
MUC Measures under Consideration
NHSN National Healthcare Safety Network
NPP National Priorities Partnership
NQF National Quality Forum
OMB Office of Management and Budget
ONC Office of the National Coordinator for
Health Information Technology
PAI Patient Assessment Instrument
PPS Prospective Payment System
PRA Paperwork Reduction Act of 1995
(Pub. L. 104–13, enacted on May 22, 1995)
PRRB Provider Reimbursement Review
Board
QM Quality Measure
QRP Quality Reporting Program
RIA Regulatory Impact Analysis
RIC Rehabilitation Impairment Category
RFA Regulatory Flexibility Act (Pub. L. 96–
354, enacted on September 19, 1980)
RN Registered Nurse
RPL Rehabilitation, Psychiatric, and LongTerm Care market basket
SSI Supplemental Security Income

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I. Background
A. Historical Overview of the Inpatient
Rehabilitation Facility Prospective
Payment System (IRF PPS)
Section 1886(j) of the Act provides for
the implementation of a per-discharge
prospective payment system (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

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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. Although 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), we are providing below a
general description of the IRF PPS for
fiscal years (FYs) 2002 through 2013.
Under the IRF PPS from FY 2002
through FY 2005, as described in the FY
2002 IRF PPS final rule (66 FR 41316),
the federal prospective payment rates
were computed across 100 distinct casemix groups (CMGs). 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 budgetneutral 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 federal 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 federal prospective
payment rates.
For cost reporting periods that began
on or after January 1, 2002, and before

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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.
We established a CMS Web site as a
primary information resource for the
IRF PPS which is available at http://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/
InpatientRehabFacPPS/index.html. The
Web site may be accessed to download
or view publications, software, data
specifications, educational materials,
and other information pertinent to the
IRF PPS.
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) that we
published on September 30, 2005, 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) Core-Based Statistical Area
(CBSA) market definitions,
modifications to the CMGs, tier
comorbidities, and CMG relative
weights, implementation of a new
teaching status adjustment for IRFs,
revision and rebasing of the market
basket index used to update IRF
payments, and updates to the rural, lowincome percentage (LIP), and high-cost
outlier adjustments. Beginning with the
FY 2006 IRF PPS final rule (70 FR 47908
through 47917), the market basket index
used to update IRF payments is a market
basket reflecting the operating and
capital cost structures for freestanding
IRFs, freestanding inpatient psychiatric
facilities (IPFs), and long-term care
hospitals (LTCHs) (hereafter referred to
as the rehabilitation, psychiatric, and
long-term care (RPL) market basket).
Any reference to the FY 2006 IRF PPS
final rule in this final rule also includes
the provisions effective in the correcting

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Federal Register / Vol. 79, No. 151 / Wednesday, August 6, 2014 / Rules and Regulations
amendments. For a detailed discussion
of the final key policy changes for FY
2006, please refer to the FY 2006 IRF
PPS final rule (70 FR 47880 and 70 FR
57166).
In the FY 2007 IRF PPS final rule (71
FR 48354), we further refined the IRF
PPS case-mix classification system (the
CMG relative weights) and the caselevel adjustments, to ensure that IRF
PPS payments would continue to reflect
as accurately as possible the costs of
care. For a detailed discussion of the FY
2007 policy revisions, please refer to the
FY 2007 IRF PPS final rule (71 FR
48354).
In the FY 2008 IRF PPS final rule (72
FR 44284), we updated the federal
prospective payment rates and the
outlier threshold, revised the IRF wage
index policy, and clarified how we
determine high-cost outlier payments
for transfer cases. For more information
on the policy changes implemented for
FY 2008, please refer to the FY 2008 IRF
PPS final rule (72 FR 44284), in which
we published the final FY 2008 IRF
federal prospective payment rates.
After publication of the FY 2008 IRF
PPS final rule (72 FR 44284), section
115 of the Medicare, Medicaid, and
SCHIP Extension Act of 2007 (Pub. L.
110–173, enacted on December 29,
2007) (MMSEA), amended section
1886(j)(3)(C) of the Act to apply a zero
percent increase factor for FYs 2008 and
2009, effective for IRF discharges
occurring on or after April 1, 2008.
Section 1886(j)(3)(C) of the Act required
the Secretary to develop an increase
factor to update the IRF federal
prospective payment rates for each FY.
Based on the legislative change to the
increase factor, we revised the FY 2008
federal prospective payment rates for
IRF discharges occurring on or after
April 1, 2008. Thus, the final FY 2008
IRF federal prospective payment rates
that were published in the FY 2008 IRF
PPS final rule (72 FR 44284) were
effective for discharges occurring on or
after October 1, 2007, and on or before
March 31, 2008; and the revised FY
2008 IRF federal prospective payment
rates were effective for discharges
occurring on or after April 1, 2008, and
on or before September 30, 2008. The
revised FY 2008 federal prospective
payment rates are available on the CMS
Web site at: http://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/InpatientRehabFacPPS/DataFiles.html.
In the FY 2009 IRF PPS final rule (73
FR 46370), we updated the CMG relative
weights, the average length of stay
values, and the outlier threshold;
clarified IRF wage index policies
regarding the treatment of ‘‘New

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England deemed’’ counties and multicampus hospitals; and revised the
regulation text in response to section
115 of the MMSEA to set the IRF
compliance percentage at 60 percent
(the ‘‘60 percent rule’’) and continue the
practice of including comorbidities in
the calculation of compliance
percentages. We also applied a zero
percent market basket increase factor for
FY 2009 in accordance with section 115
of the MMSEA. For more information on
the policy changes implemented for FY
2009, please refer to the FY 2009 IRF
PPS final rule (73 FR 46370), in which
we published the final FY 2009 IRF
federal prospective payment rates.
In the FY 2010 IRF PPS final rule (74
FR 39762) and in correcting
amendments to the FY 2010 IRF PPS
final rule (74 FR 50712) that we
published on October 1, 2009, we
updated the federal prospective
payment rates, the CMG relative
weights, the average length of stay
values, the rural, LIP, teaching status
adjustment factors, and the outlier
threshold; implemented new IRF
coverage requirements for determining
whether an IRF claim is reasonable and
necessary; and revised the regulation
text to require IRFs to submit patient
assessments on Medicare Advantage
(MA) (Medicare Part C) patients for use
in the 60 percent rule calculations. Any
reference to the FY 2010 IRF PPS final
rule in this final rule also includes the
provisions effective in the correcting
amendments. For more information on
the policy changes implemented for FY
2010, please refer to the FY 2010 IRF
PPS final rule (74 FR 39762 and 74 FR
50712), in which we published the final
FY 2010 IRF federal prospective
payment rates.
After publication of the FY 2010 IRF
PPS final rule (74 FR 39762), section
3401(d) of the Patient Protection and
Affordable Care Act (Pub. L. 111–148,
enacted on March 23, 2010), as
amended by section 10319 of the same
Act and by section 1105 of the Health
Care and Education Reconciliation Act
of 2010 (Pub. L. 111–152, enacted on
March 30, 2010) (collectively, hereafter
referred to as ‘‘The Affordable Care
Act’’), amended section 1886(j)(3)(C) of
the Act and added section 1886(j)(3)(D)
of the Act. Section 1886(j)(3)(C) of the
Act requires the Secretary to estimate a
multi-factor productivity adjustment to
the market basket increase factor, and to
apply other adjustments as defined by
the Act. The productivity adjustment
applies to FYs from 2012 forward. The
other adjustments apply to FYs 2010 to
2019.
Sections 1886(j)(3)(C)(ii)(II) and
1886(j)(3)(D)(i) of the Act defined the

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45875

adjustments that were to be applied to
the market basket increase factors in
FYs 2010 and 2011. Under these
provisions, the Secretary was required
to reduce the market basket increase
factor in FY 2010 by a 0.25 percentage
point adjustment. Notwithstanding this
provision, in accordance with section
3401(p) of the Affordable Care Act, the
adjusted FY 2010 rate was only to be
applied to discharges occurring on or
after April 1, 2010. Based on the selfimplementing legislative changes to
section 1886(j)(3) of the Act, we
adjusted the FY 2010 federal
prospective payment rates as required,
and applied these rates to IRF
discharges occurring on or after April 1,
2010, and on or before September 30,
2010. Thus, the final FY 2010 IRF
federal prospective payment rates that
were published in the FY 2010 IRF PPS
final rule (74 FR 39762) were used for
discharges occurring on or after October
1, 2009, and on or before March 31,
2010, and the adjusted FY 2010 IRF
federal prospective payment rates
applied to discharges occurring on or
after April 1, 2010, and on or before
September 30, 2010. The adjusted FY
2010 federal prospective payment rates
are available on the CMS Web site at
http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
InpatientRehabFacPPS/Data-Files.html.
In addition, sections 1886(j)(3)(C) and
(D) of the Act also affected the FY 2010
IRF outlier threshold amount because
they required an adjustment to the FY
2010 RPL market basket increase factor,
which changed the standard payment
conversion factor for FY 2010.
Specifically, the original FY 2010 IRF
outlier threshold amount was
determined based on the original
estimated FY 2010 RPL market basket
increase factor of 2.5 percent and the
standard payment conversion factor of
$13,661. However, as adjusted, the IRF
prospective payments are based on the
adjusted RPL market basket increase
factor of 2.25 percent and the revised
standard payment conversion factor of
$13,627. To maintain estimated outlier
payments for FY 2010 equal to the
established standard of 3 percent of total
estimated IRF PPS payments for FY
2010, we revised the IRF outlier
threshold amount for FY 2010 for
discharges occurring on or after April 1,
2010, and on or before September 30,
2010. The revised IRF outlier threshold
amount for FY 2010 was $10,721.
Sections 1886(j)(3)(c)(ii)(II) and
1886(j)(3)(D)(i) of the Act also required
the Secretary to reduce the market
basket increase factor in FY 2011 by a
0.25 percentage point adjustment. The
FY 2011 IRF PPS notice (75 FR 42836)

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and the correcting amendments to the
FY 2011 IRF PPS notice (75 FR 70013)
described the required adjustments to
the FY 2011 and FY 2010 IRF PPS
federal prospective payment rates and
outlier threshold amount for IRF
discharges occurring on or after April 1,
2010, and on or before September 30,
2011. It also updated the FY 2011
federal prospective payment rates, the
CMG relative weights, and the average
length of stay values. Any reference to
the FY 2011 IRF PPS notice in this final
rule also includes the provisions
effective in the correcting amendments.
For more information on the FY 2010
and FY 2011 adjustments or the updates
for FY 2011, please refer to the FY 2011
IRF PPS notice (75 FR 42836 and 75 FR
70013).
In the FY 2012 IRF PPS final rule (76
FR 47836), we updated the IRF federal
prospective payment rates, rebased and
revised the RPL market basket, and
established a new quality reporting
program for IRFs in accordance with
section 1886(j)(7) of the Act. We also
revised regulation text for the purpose
of updating and providing greater
clarity. For more information on the
policy changes implemented for FY
2012, please refer to the FY 2012 IRF
PPS final rule (76 FR 47836), in which
we published the final FY 2012 IRF
federal prospective payment rates.
The FY 2013 IRF PPS notice (77 FR
44618) described the required
adjustments to the FY 2013 federal
prospective payment rates and outlier
threshold amount for IRF discharges
occurring on or after October 1, 2012,
and on or before September 30, 2013. It
also updated the FY 2013 federal
prospective payment rates, the CMG
relative weights, and the average length
of stay values. For more information on
the updates for FY 2013, please refer to
the FY 2013 IRF PPS notice (77 FR
44618).
In the FY 2014 IRF PPS final rule (78
FR 47860), we updated the federal
prospective payment rates, the CMG
relative weights, and the outlier
threshold amount. We also updated the
facility-level adjustment factors using an
enhanced estimation methodology,
revised the list of diagnosis codes that
count toward an IRF’s 60 percent rule
compliance calculation to determine
‘‘presumptive compliance,’’ revised
sections of the Inpatient Rehabilitation
Facility-Patient Assessment Instrument
(IRF–PAI), revised requirements for
acute care hospitals that have IRF units,
clarified the IRF regulation text
regarding limitation of review, updated
references to previously changed
sections in the regulations text, and
revised and updated quality measures

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and reporting requirements under the
IRF quality reporting program. For more
information on the policy changes
implemented for FY 2014, please refer
to the FY 2014 IRF PPS final rule (78 FR
47860), in which we published the final
FY 2014 IRF federal prospective
payment rates.
B. Provisions of the Affordable Care Act
Affecting the IRF PPS in FY 2012 and
Beyond
The Affordable Care Act included
several provisions that affect the IRF
PPS in FYs 2012 and beyond. In
addition to what was discussed above,
section 3401(d) of the Affordable Care
Act also added section
1886(j)(3)(C)(ii)(I) (providing for a
‘‘productivity adjustment’’ for fiscal
year 2012 and each subsequent fiscal
year). The productivity adjustment for
FY 2015 is discussed in section VI.A. of
this final rule. Section 3401(d) of the
Affordable Care Act requires an
additional 0.2 percentage point
adjustment to the IRF increase factor for
FY 2015, as discussed in section VI.A.
of this final rule. Section
1886(j)(3)(C)(ii)(II) of the Act notes that
the application of these adjustments to
the market basket update may result in
an update that is less than 0.0 for a fiscal
year and in payment rates for a fiscal
year being less than such payment rates
for the preceding fiscal year.
Section 3004(b) of the Affordable Care
Act also addressed the IRF PPS
program. It reassigned the previously
designated section 1886(j)(7) of the Act
to section 1886(j)(8) and inserted a new
section 1886(j)(7), which contains
requirements for the Secretary to
establish a quality reporting program 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 of the applicable market
basket increase factor for IRFs that fail
to comply with the quality data
submission requirements. Application
of the 2 percentage point reduction may
result in an update that is less than 0.0
for a fiscal year and in payment rates for
a fiscal year being less than such
payment rates for the preceding fiscal
year. Reporting-based reductions to the
market basket increase factor will not be
cumulative; they will only apply for the
FY involved.
Under section 1886(j)(7)(D)(i) and (ii)
of the Act, the Secretary is generally
required to select quality measures for
the IRF quality reporting program from
those that have been endorsed by the
consensus-based entity which holds a

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performance measurement contract
under section 1890(a) of the Act. This
contract is currently held by the
National Quality Forum (NQF). So long
as due consideration is given to
measures that have been endorsed or
adopted by a consensus-based
organization, section 1886(j)(7)(D)(ii) of
the Act authorizes the Secretary to
select non-endorsed measures for
specified areas or medical topics when
there are no feasible or practical
endorsed measure(s).
Section 1886(j)(7)(E) of the Act
requires the Secretary to establish
procedures for making the IRF PPS
quality reporting data available to the
public. In so doing, the Secretary must
ensure that IRFs have the opportunity to
review any such data prior to its release
to the public. Future rulemaking will
address these public reporting
obligations.
C. Operational Overview of the Current
IRF PPS
As described in the FY 2002 IRF PPS
final rule, upon the admission and
discharge of a Medicare Part A Fee-forService 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 Part C (Medicare
Advantage) patient, as described in the
FY 2010 IRF PPS final rule. All required
data must be electronically encoded into
the IRF–PAI software product.
Generally, the software product
includes patient classification
programming called the Grouper
software. The Grouper software uses
specific IRF–PAI data elements to
classify (or group) patients into distinct
CMGs and account for the existence of
any relevant comorbidities.
The Grouper software produces a 5character CMG number. The first
character is an alphabetic character that
indicates the comorbidity tier. The last
4 characters are numeric characters that
represent the distinct CMG number.
Free downloads of the Inpatient
Rehabilitation Validation and Entry
(IRVEN) software product, including the
Grouper software, are available on the
CMS Web site at http://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/InpatientRehabFacPPS/
Software.html.
Once a Medicare Fee-for-Service Part
A patient is discharged, the IRF submits
a Medicare claim as a Health Insurance
Portability and Accountability Act of

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Federal Register / Vol. 79, No. 151 / Wednesday, August 6, 2014 / Rules and Regulations
1996 (Pub. L. 104–191, enacted on
August 21, 1996) (HIPAA) compliant
electronic claim or, if the
Administrative Simplification
Compliance Act of 2002 (Pub. L. 107–
105, enacted on December 27, 2002)
(ASCA) 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 Medicare Advantage
patient is discharged, in accordance
with the Medicare Claims Processing
Manual, chapter 3, section 20.3 (Pub.
100–04), hospitals (including IRFs) must
submit an informational-only bill (TOB
111), which includes Condition Code 04
to their MAC. This will ensure that the
Medicare Advantage days are included
in the hospital’s Supplemental Security
Income (SSI) ratio (used in calculating
the IRF low-income percentage
adjustment) for Fiscal Year 2007 and
beyond. Claims submitted to Medicare
must comply with both ASCA and
HIPAA.
Section 3 of the ASCA amends 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
http://www.cms.gov/manuals/
downloads/clm104c25.pdf.
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, parts
160 and 162, subparts A and I through
R (generally known as the Transactions
Rule). The Transactions Rule requires
covered entities, including covered
health care providers, to conduct
covered electronic transactions
according to the applicable transaction
standards. (See the CMS program claim
memoranda at http://www.cms.gov/
ElectronicBillingEDITrans/ and listed in

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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 lowincome 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).
II. Summary of Provisions of the
Proposed Rule
In the FY 2015 IRF PPS proposed rule
(79 FR 26308), we proposed to update
the IRF Federal prospective payment
rates, to collect data on the amount and
mode (that is, Individual, Group, and
Co-Treatment) of therapies provided in
the IRF setting according to therapy
discipline, to revise the list of diagnosis
and impairment group codes that
presumptively meet the 60 percent rule
compliance criteria, provide for a new
item on the IRF–PAI form to indicate
whether the prior treatment and severity
requirements have been met for arthritis
cases to presumptively meet the 60
percent rule compliance criteria, and to
revise and update quality measures and
reporting requirements under the IRF
QRP. In the FY 2015 IRF PPS proposed
rule (79 FR 26308), we also addressed
the implementation of the International
Classification of Diseases, 10th
Revision, Clinical Modification (ICD–
10–CM), for the IRF prospective
payment system (PPS), effective when
ICD–10–CM becomes the required
medical data code set for use on
Medicare claims and IRF–PAI
submissions.
The proposed updates to the IRF
federal prospective payment rates for FY
2015 were as follows:
• Update the FY 2015 IRF PPS
relative weights and average length of
stay values using the most current and
complete Medicare claims and cost
report data in a budget-neutral manner,
as discussed in section III of the FY
2015 IRF PPS proposed rule (79 FR
26308, 26314 through 26318).
• Discuss our rationale for freezing
the IRF facility-level adjustment factors
at FY 2014 levels, as discussed in

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45877

section IV of the FY 2015 IRF PPS
proposed rule (79 FR 26308, 26318
through 26319).
• Update the FY 2015 IRF PPS
payment rates by the proposed market
basket increase factor, based upon the
most current data available, with a 0.2
percentage point reduction as required
by sections 1886(j)(3)(C)(ii)(II) and
1886(j)(3)(D)(iv) of the Act and a
proposed productivity adjustment
required by section 1886(j)(3)(C)(ii)(I) of
the Act, as described in section V of the
FY 2015 IRF PPS proposed rule (79 FR
26308, 26319 through 26321).
• Discuss the Secretary’s Proposed
Recommendation for updating IRF PPS
payments for FY 2015, in accordance
with the statutory requirements, as
described in section V of the FY 2015
IRF PPS proposed rule (79 FR 26308 at
26321).
• Update the FY 2015 IRF PPS
payment rates by the FY 2015 wage
index and the labor-related share in a
budget-neutral manner, as discussed in
section V of the FY 2015 IRF PPS
proposed rule (79 FR 26308, 26321
through 26322).
• Describe the calculation of the IRF
Standard Payment Conversion Factor for
FY 2015, as discussed in section V of
the FY 2015 IRF PPS proposed rule (79
FR 26308 at 26322).
• Update the outlier threshold
amount for FY 2015, as discussed in
section VI of the FY 2015 IRF PPS
proposed rule (79 FR 26308, 26324
through 26325).
• Update the cost-to-charge ratio
(CCR) ceiling and urban/rural average
CCRs for FY 2015, as discussed in
section VI of the FY 2015 IRF PPS
proposed rule (79 FR 26308 at 26325).
• Describe proposed revisions to the
list of eligible diagnosis codes that are
used to determine presumptive
compliance under the 60 percent rule in
section VII of the FY 2015 IRF PPS
proposed rule (79 FR 26308 at 26327).
• Describe proposed revisions to the
list of eligible impairment group codes
that presumptively meet the 60 percent
rule compliance criteria in section VII of
the FY 2015 IRF PPS proposed rule (79
FR 26308, 26328 through 26329).
• Describe proposed data collection
of the amount and mode (that is, of
Individual, Group, and Co-Treatment) of
therapies provided in IRFs according to
occupational, speech, and physical
therapy disciplines via the IRF–PAI in
section VIII of the FY 2015 IRF PPS
proposed rule (79 FR 26308, 26329
through 26330).
• Describe a proposed revision to the
IRF–PAI to add a new data item for
arthritis conditions in section IX of the

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FY 2015 IRF PPS proposed rule (79 FR
26308, 26330 through 26331).
• Describe the conversion of the IRF
PPS to ICD–10–CM, effective when ICD–
10–CM becomes the required medical
data code set for use on Medicare claims
and IRF–PAI submissions, in section X
of the FY 2015 IRF PPS proposed rule
(79 FR 26308, 26331 through 26333).
• Describe proposed revisions and
updates to quality measures and
reporting requirements under the
quality reporting program for IRFs in
accordance with section 1886(j)(7) of the
Act, as discussed in section XI of the FY
2015 IRF PPS proposed rule (79 FR
26308, 26333 through 26345).
III. Analysis and Responses to Public
Comments
We received 66 timely responses from
the public, many of which contained
multiple comments on the FY 2015 IRF
PPS proposed rule (79 FR 26308). We
received comments from various trade
associations, inpatient rehabilitation
facilities, individual physicians,
therapists, clinicians, health care
industry organizations, law firms and
health care consulting firms. The
following sections, arranged by subject
area, include a summary of the public
comments that we received, and our
responses.
IV. Update to the Case-Mix Group
(CMG) Relative Weights and Average
Length of Stay Values for FY 2015
As specified in § 412.620(b)(1), we
calculate a relative weight for each CMG
that is proportional to the resources
needed by an average inpatient
rehabilitation case in that CMG. For
example, cases in a CMG with a relative
weight of 2, on average, will cost twice
as much as cases in a CMG with a
relative weight of 1. Relative weights
account for the variance in cost per
discharge due to the variance in
resource utilization among the payment
groups, and their use helps to ensure
that IRF PPS payments support
beneficiary access to care, as well as
provider efficiency.

In the FY 2015 IRF PPS proposed rule
(79 FR 26308, 26314 through 26318), we
proposed to update the CMG relative
weights and average length of stay
values for FY 2015. As required by
statute, we always use the most recent
available data to update the CMG
relative weights and average lengths of
stay. For FY 2015, we proposed to use
the FY 2013 IRF claims and FY 2012
IRF cost report data. These data are the
most current and complete data
available at this time. Currently, only a
small portion of the FY 2013 IRF cost
report data are available for analysis, but
the majority of the FY 2013 IRF claims
data are available for analysis.
In the FY 2015 IRF PPS proposed rule
(79 FR 26308, 26314 through 26318), we
proposed to apply these data using the
same methodologies that we have used
to update the CMG relative weights and
average length of stay values each fiscal
year since we implemented an update to
the methodology to use the more
detailed cost-to-charge ratio (CCRs) data
from the cost reports of IRF subprovider
units of primary acute care hospitals,
instead of CCR data from the associated
primary care hospitals, to calculate
IRFs’ average costs per case, as
discussed in the FY 2009 IRF PPS final
rule (73 FR 46372). In calculating the
CMG relative weights, we use a
hospital-specific relative value method
to estimate operating (routine and
ancillary services) and capital costs of
IRFs. The process used 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 the first step.
Step 3. We use the adjusted costs from
the second step to calculate CMG
relative weights, using the hospitalspecific relative value method.
Step 4. We normalize the FY 2015
CMG relative weights to the same
average CMG relative weight from the
CMG relative weights implemented in

the FY 2014 IRF PPS final rule (78 FR
47860).
Consistent with the methodology that
we have used to update the IRF
classification system in each instance in
the past, we proposed to update the
CMG relative weights for FY 2015 in
such a way that total estimated
aggregate payments to IRFs for FY 2015
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 2015 CMG relative weights, we use
the following steps:
Step 1. Calculate the estimated total
amount of IRF PPS payments for FY
2015 (with no changes to the CMG
relative weights).
Step 2. Calculate the estimated total
amount of IRF PPS payments for FY
2015 by applying the changes to the
CMG relative weights (as discussed
above).
Step 3. Divide the amount calculated
in step 1 by the amount calculated in
step 2 to determine the budget
neutrality factor (1.0000) that would
maintain the same total estimated
aggregate payments in FY 2015 with and
without the changes to the CMG relative
weights.
Step 4. Apply the budget neutrality
factor (1.0000) to the FY 2014 IRF PPS
standard payment amount after the
application of the budget-neutral wage
adjustment factor.
In section VI.F. of this final rule, we
discuss the use of the existing
methodology to calculate the standard
payment conversion factor for FY 2015.
Table 1, ‘‘Relative Weights and
Average Length of Stay Values for CaseMix Groups,’’ presents the CMGs, the
comorbidity tiers, the corresponding
relative weights, and the average length
of stay values for each CMG and tier for
FY 2015. The average length of stay 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 1—RELATIVE WEIGHTS AND AVERAGE LENGTH OF STAY VALUES FOR CASE-MIX GROUPS

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CMG
0101 ............
0102 ............
0103 ............
0104
0105
0106
0107

............
............
............
............

VerDate Mar<15>2010

CMG description
(M=motor, C=cognitive,
A=age)
Stroke M>51.05
Stroke M>44.45
and C>18.5.
Stroke M>44.45
and C<18.5.
Stroke M>38.85
Stroke M>34.25
Stroke M>30.05
Stroke M>26.15

17:48 Aug 05, 2014

Relative weight
Tier 1

Tier 2

Tier 3

Average length of stay
None

Tier 1

Tier 2

Tier 3

None

......................
and M<51.05

0.7853
0.9836

0.7150
0.8955

0.6512
0.8155

0.6248
0.7826

9
11

10
11

8
10

and M<51.05

1.1636

1.0594

0.9648

0.9258

and
and
and
and

1.2121
1.4155
1.6135
1.8026

1.1036
1.2888
1.4691
1.6412

1.0050
1.1737
1.3379
1.4946

0.9644
1.1262
1.2838
1.4342

13
14
16
17

13
14
16
19

12
14
15
17

M<44.45
M<38.85
M<34.25
M<30.05

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TABLE 1—RELATIVE WEIGHTS AND AVERAGE LENGTH OF STAY VALUES FOR CASE-MIX GROUPS—Continued
CMG
0108 ............
0109 ............
0110 ............
0201 ............
0202 ............

0203 ............
0204 ............
0205 ............
0206 ............
0207 ............
0301 ............
0302 ............
0303 ............
0304 ............
0401 ............
0402 ............
0403 ............
0404 ............
0405 ............
0501 ............
0502 ............
0503 ............
0504 ............
0505 ............
0506 ............
0601 ............
0602 ............
0603 ............
0604 ............
0701 ............
0702 ............

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0703 ............
0704 ............
0801 ............
0802 ............

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CMG description
(M=motor, C=cognitive,
A=age)

Relative weight
Tier 1

Stroke M<26.15 and A>84.5 ..
Stroke M>22.35 and M<26.15
and A<84.5.
Stroke M<22.35 and A<84.5 ..
Traumatic brain injury
M>53.35 and C>23.5.
Traumatic brain injury
M>44.25 and M<53.35 and
C>23.5.
Traumatic brain injury
M>44.25 and C<23.5.
Traumatic brain injury
M>40.65 and M<44.25.
Traumatic brain injury
M>28.75 and M<40.65.
Traumatic brain injury
M>22.05 and M<28.75.
Traumatic brain injury
M<22.05.
Non-traumatic brain injury
M>41.05.
Non-traumatic brain injury
M>35.05 and M<41.05.
Non-traumatic brain injury
M>26.15 and M<35.05.
Non-traumatic brain injury
M<26.15.
Traumatic spinal cord injury
M>48.45.
Traumatic spinal cord injury
M>30.35 and M<48.45.
Traumatic spinal cord injury
M>16.05 and M<30.35.
Traumatic spinal cord injury
M<16.05 and A>63.5.
Traumatic spinal cord injury
M<16.05 and A<63.5.
Non-traumatic spinal cord injury M>51.35.
Non-traumatic spinal cord injury M>40.15 and M<51.35.
Non-traumatic spinal cord injury M>31.25 and M<40.15.
Non-traumatic spinal cord injury M>29.25 and M<31.25.
Non-traumatic spinal cord injury M>23.75 and M<29.25.
Non-traumatic spinal cord injury M<23.75.
Neurological M>47.75 ............
Neurological M>37.35 and
M<47.75.
Neurological M>25.85 and
M<37.35.
Neurological M<25.85 ............
Fracture of lower extremity
M>42.15.
Fracture of lower extremity
M>34.15 and M<42.15.
Fracture of lower extremity
M>28.15 and M<34.15.
Fracture of lower extremity
M<28.15.
Replacement of lower extremity joint M>49.55.
Replacement of lower extremity joint M>37.05 and
M<49.55.

17:48 Aug 05, 2014

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Tier 2

Tier 3

Average length of stay
None

Tier 1

Tier 2

Tier 3

None

2.2467
2.0570

2.0456
1.8728

1.8629
1.7055

1.7876
1.6366

22
19

24
20

21
19

2.6928
0.8145

2.4518
0.6636

2.2328
0.5954

2.1425
0.5680

28
10

27
9

24
8

1.0591

0.8629

0.7741

0.7385

1.2162

0.9909

0.8890

0.8481

1.3397

1.0915

0.9793

0.9342

1.5924

1.2974

1.1640

1.1104

1.9327

1.5747

1.4127

1.3477

2.5640

2.0890

1.8741

1.7880

1.1022

0.9324

0.8453

0.7798

1.3799

1.1673

1.0582

0.9762

1.6371

1.3849

1.2555

1.1583

2.1541

1.8222

1.6520

1.5240

1.0264

0.8790

0.8131

0.7251

1.4108

1.2081

1.1176

0.9966

2.3059

1.9747

1.8268

1.6289

4.0832

3.4967

3.2348

2.8845

3.3355

2.8564

2.6425

2.3563

0.8418

0.6804

0.6237

0.5643

1.1580

0.9359

0.8579

0.7763

1.4373

1.1616

1.0648

0.9635

1.6935

1.3687

1.2546

1.1352

1.9365

1.5651

1.4346

1.2981

2.7066

2.1875

2.0052

1.8144

1.0293
1.3283

0.8149
1.0516

0.7526
0.9713

0.6862
0.8856

9
12

10
12

9
11

1.6727

1.3243

1.2231

1.1152

2.1908
0.9700

1.7345
0.8060

1.6020
0.7727

1.4607
0.7036

21
10

19
9

17
10

17
9

1.2429

1.0327

0.9901

0.9016

1.5056

1.2511

1.1994

1.0922

1.9359

1.6086

1.5421

1.4044

0.7402

0.6068

0.5608

0.5172

0.9891

0.8109

0.7495

0.6912

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Federal Register / Vol. 79, No. 151 / Wednesday, August 6, 2014 / Rules and Regulations

TABLE 1—RELATIVE WEIGHTS AND AVERAGE LENGTH OF STAY VALUES FOR CASE-MIX GROUPS—Continued
CMG
0803 ............

0804 ............

0805 ............

0806 ............
0901 ............
0902 ............
0903 ............
0904 ............
1001 ............
1002 ............
1003 ............
1101 ............
1102 ............
1201 ............
1202 ............
1203 ............
1301 ............
1302 ............
1303 ............
1401 ............
1402 ............
1403 ............
1404 ............
1501 ............
1502 ............
1503 ............
1504 ............
1601 ............
1602 ............
1603 ............
1701 ............
1702 ............

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1703 ............
1704 ............
1801 ............

VerDate Mar<15>2010

CMG description
(M=motor, C=cognitive,
A=age)

Relative weight
Tier 1

Replacement of lower extremity joint M>28.65 and
M<37.05 and A>83.5.
Replacement of lower extremity joint M>28.65 and
M<37.05 and A<83.5.
Replacement of lower extremity joint M>22.05 and
M<28.65.
Replacement of lower extremity joint M<22.05.
Other orthopedic M>44.75 .....
Other orthopedic M>34.35
and M<44.75.
Other orthopedic M>24.15
and M<34.35.
Other orthopedic M<24.15 .....
Amputation, lower extremity
M>47.65.
Amputation, lower extremity
M>36.25 and M<47.65.
Amputation, lower extremity
M<36.25.
Amputation, non-lower extremity M>36.35.
Amputation, non-lower extremity M<36.35.
Osteoarthritis M>37.65 ...........
Osteoarthritis M>30.75 and
M<37.65.
Osteoarthritis M<30.75 ...........
Rheumatoid, other arthritis
M>36.35.
Rheumatoid, other arthritis
M>26.15 and M<36.35.
Rheumatoid, other arthritis
M<26.15.
Cardiac M>48.85 ....................
Cardiac M>38.55 and
M<48.85.
Cardiac M>31.15 and
M<38.55.
Cardiac M<31.15 ....................
Pulmonary M>49.25 ...............
Pulmonary M>39.05 and
M<49.25.
Pulmonary M>29.15 and
M<39.05.
Pulmonary M<29.15 ...............
Pain syndrome M>37.15 ........
Pain syndrome M>26.75 and
M<37.15.
Pain syndrome M<26.75 ........
Major multiple trauma without
brain or spinal cord injury
M>39.25.
Major multiple trauma without
brain or spinal cord injury
M>31.05 and M<39.25.
Major multiple trauma without
brain or spinal cord injury
M>25.55 and M<31.05.
Major multiple trauma without
brain or spinal cord injury
M<25.55.
Major multiple trauma with
brain or spinal cord injury
M>40.85.

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Tier 2

Tier 3

Average length of stay
None

Tier 1

Tier 2

Tier 3

None

1.3374

1.0963

1.0133

0.9345

1.1821

0.9690

0.8956

0.8260

1.4702

1.2053

1.1140

1.0274

1.7663

1.4479

1.3383

1.2342

0.9386
1.2382

0.7581
1.0000

0.7069
0.9325

0.6392
0.8432

10
12

9
12

9
11

8
10

1.5552

1.2561

1.1713

1.0591

1.9772
1.0224

1.5968
0.9300

1.4890
0.8055

1.3464
0.7365

19
11

18
12

17
10

16
10

1.3168

1.1978

1.0374

0.9485

1.8778

1.7081

1.4794

1.3527

1.2643

1.0143

1.0050

0.8569

1.8936

1.5192

1.5052

1.2835

1.0034
1.1916

0.9522
1.1308

0.8881
1.0547

0.8256
0.9805

10
11

11
12

10
12

1.5133
1.2220

1.4360
0.9887

1.3393
0.8677

1.2452
0.8181

13
12

16
12

15
10

1.5913

1.2874

1.1299

1.0653

2.0302

1.6425

1.4416

1.3591

0.9032
1.1947

0.7324
0.9689

0.6671
0.8825

0.6051
0.8004

9
12

10
11

8
11

8
10

1.4699

1.1920

1.0857

0.9847

1.8493
0.9998
1.2986

1.4998
0.8150
1.0586

1.3660
0.7537
0.9791

1.2390
0.7283
0.9461

18
10
13

17
10
11

15
9
11

14
8
10

1.5918

1.2976

1.2001

1.1597

1.9688
0.9445
1.2509

1.6049
0.8763
1.1606

1.4843
0.8085
1.0708

1.4343
0.7620
1.0092

20
10
13

17
10
13

15
9
13

15
10
12

1.5845
1.0432

1.4703
0.9290

1.3565
0.8566

1.2784
0.7881

14
11

17
11

16
10

15
10

1.3109

1.1674

1.0764

0.9903

1.5378

1.3694

1.2627

1.1617

1.9856

1.7682

1.6303

1.5000

1.0662

0.9437

0.8082

0.7231

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TABLE 1—RELATIVE WEIGHTS AND AVERAGE LENGTH OF STAY VALUES FOR CASE-MIX GROUPS—Continued
CMG
1802 ............
1803 ............
1901 ............
1902 ............
1903 ............
2001 ............
2002 ............
2003 ............
2004 ............
2101 ............
5001 ............
5101 ............
5102 ............
5103 ............
5104 ............

CMG description
(M=motor, C=cognitive,
A=age)

Relative weight
Tier 1

Major multiple trauma with
brain or spinal cord injury
M>23.05 and M<40.85.
Major multiple trauma with
brain or spinal cord injury
M<23.05.
Guillain Barre M>35.95 ..........
Guillain Barre M>18.05 and
M<35.95.
Guillain Barre M<18.05 ..........
Miscellaneous M>49.15 .........
Miscellaneous M>38.75 and
M<49.15.
Miscellaneous M>27.85 and
M<38.75.
Miscellaneous M<27.85 .........
Burns M>0 ..............................
Short-stay cases, length of
stay is 3 days or fewer.
Expired, orthopedic, length of
stay is 13 days or fewer.
Expired, orthopedic, length of
stay is 14 days or more.
Expired, not orthopedic,
length of stay is 15 days or
fewer.
Expired, not orthopedic,
length of stay is 16 days or
more.

Generally, updates to the CMG
relative weights result in some increases
and some decreases to the CMG relative
weight values. Table 2 shows how we
estimate that the application of the
proposed revisions for FY 2015 would
affect particular CMG relative weight

Tier 2

Tier 3

Average length of stay
None

Tier 1

Tier 2

Tier 3

None

1.6884

1.4945

1.2798

1.1451

2.8097

2.4869

2.1297

1.9055

1.0421
1.8757

0.9341
1.6814

0.9263
1.6672

0.8837
1.5905

15
25

10
19

13
18

11
19

3.3752
0.8827
1.1872

3.0255
0.7250
0.9751

3.0000
0.6681
0.8986

2.8620
0.6098
0.8201

44
9
12

31
8
11

36
8
11

31
8
10

1.5061

1.2370

1.1400

1.0405

1.9507
1.8405
................

1.6021
1.6766
................

1.4765
1.5548
................

1.3475
1.3534
0.1549

20
27
................

18
18
................

16
17
................

15
16
2

................

0.6791

................

1.5539

................

0.7274

................

1.9477

................

values, which would affect the overall
distribution of payments within CMGs
and tiers. Note that, because we propose
to implement the CMG relative weight
revisions in a budget-neutral manner (as
described above), total estimated
aggregate payments to IRFs for FY 2015

would not be affected as a result of the
proposed CMG relative weight
revisions. However, the revisions will
affect the distribution of payments
within CMGs and tiers.

TABLE 2—DISTRIBUTIONAL EFFECTS OF THE CHANGES TO THE CMG RELATIVE WEIGHTS
[FY 2014 values compared with FY 2015 values]
Number of
cases
affected

Percentage change

tkelley on DSK3SPTVN1PROD with RULES2

Increased by 15% or more ......................................................................................................................................
Increased by between 5% and 15% .......................................................................................................................
Changed by less than 5% .......................................................................................................................................
Decreased by between 5% and 15% ......................................................................................................................
Decreased by 15% or more ....................................................................................................................................

As Table 2 shows, more than 99
percent of all IRF cases are in CMGs and
tiers that will experience less than a 5
percent change (either increase or
decrease) in the CMG relative weight
value as a result of the revisions for FY
2015. The largest estimated increase in
the proposed CMG relative weight
values that affects the largest number of
IRF discharges is a 1.2 percent increase
in the CMG relative weight value for
CMG 0704—Fracture of lower extremity,
with a motor score less than 28.15-in the

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17:48 Aug 05, 2014

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‘‘no comorbidity’’ tier. In the FY 2013
claims data, 20,017 IRF discharges (5.2
percent of all IRF discharges) were
classified into this CMG and tier.
The largest decrease in a CMG relative
weight value affecting the largest
number of IRF cases is a 0.8 percent
decrease in the CMG relative weight for
CMG 0604—Neurological, with a motor
score less than 25.85-in the ‘‘no
comorbidity’’ tier. In the FY 2013 IRF
claims data, this change would have

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0
1,023
382,960
1,288
25

Percentage of
cases
affected
0.0
0.3
99.4
0.3
0.0

affected 8,766 cases (2.3 percent of all
IRF cases).
The changes in the average length of
stay values for FY 2015, compared with
the FY 2014 average length of stay
values, are small and do not show any
particular trends in IRF length of stay
patterns.
We received 1 comment on the
proposed update to the CMG relative
weights and average length of stay
values for FY 2015, which is
summarized below.

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Federal Register / Vol. 79, No. 151 / Wednesday, August 6, 2014 / Rules and Regulations

Comment: The commenter requested
that we provide more detail about the
use of the CCR data in the CMG relative
weight calculations. Additionally, the
commenter requested that we outline
the methodology used to calculate the
average length of stay values in the IRF
PPS rule.
Response: A key variable used to
calculate the CMG relative weights is a
facility’s average cost per case, which is
obtained by averaging the estimated cost
per case for every patient discharged
from the facility in a given fiscal year.
To obtain the estimated cost per case for
a given IRF patient, we start by pulling
the appropriate charges from the
Medicare claim for that patient. Then,
we calculate the appropriate CCRs from
the Medicare cost report submitted by
the facility. The CCRs are then
multiplied by the charges from the
Medicare claim to obtain the estimated
IRF cost for the case. This variable is
used as the dependent variable in the
regression analysis to estimate the CMG
relative weights.
In conjunction with the publication of
the IRF PPS FY 2014 final rule, we
posted our methodology for calculating
the average length of stay values on the
IRF PPS Web site at http://
www.cms.gov/medicare/medicare-feefor-service-payment/inpatientrehab
facpps/research.html.
Final Decision: After careful
consideration of the public comments,
we are finalizing our proposal to update
the CMG relative weight and average
length of stay values for FY 2015. These
updates are effective October 1, 2014.
V. Freezing the Facility-Level
Adjustment Factors at FY 2014 Levels

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A. Background on Facility-Level
Adjustments
Section 1886(j)(3)(A)(v) of the Act
confers broad authority upon the
Secretary to adjust the per unit payment
rate ‘‘by such . . . factors as the Secretary
determines are necessary to properly
reflect variations in necessary costs of
treatment among rehabilitation
facilities.’’ For example, we adjust the
federal prospective payment amount
associated with a CMG to account for
facility-level characteristics such as an
IRF’s LIP, teaching status, and location
in a rural area, if applicable, as
described in § 412.624(e).
In the FY 2010 IRF PPS final rule (74
FR 39762), we updated the adjustment
factors for calculating the rural, LIP, and
teaching status adjustments based on
the most recent three consecutive years’
worth of IRF claims data (at that time,
FY 2006, FY 2007, and FY 2008) and the
most recent available corresponding IRF

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17:48 Aug 05, 2014

Jkt 232001

cost report data. As discussed in the FY
2010 IRF PPS proposed rule (74 FR
21060 through 21061), we observed
relatively large year-to-year fluctuations
in the underlying data used to compute
the adjustment factors, especially the
teaching status adjustment factor.
Therefore, we implemented a 3-year
moving average approach to updating
the facility-level adjustment factors in
the FY 2010 IRF PPS final rule (74 FR
39762) to provide greater stability and
predictability of Medicare payments for
IRFs.
Each year, we review the major
components of the IRF PPS to maintain
and enhance the accuracy of the
payment system. For FY 2010, we
implemented a change to our
methodology that was designed to
decrease the IRF PPS volatility by using
a 3-year moving average to calculate the
facility-level adjustment factors. For FY
2011, we issued a notice to update the
payment rates, which did not include
any policy changes or changes to the
IRF facility-level adjustments. As we
found that the implementation of the 3year moving average did not fully
address year-to-year fluctuations, in the
FY 2012 IRF PPS proposed rule (76 FR
24214, 24225 through 24226), we
analyzed the effects of having used a
weighting methodology. The
methodology assigned greater weight to
some facilities than to others in the
regression analysis used to estimate the
facility-level adjustment factors. As we
found that this weighting methodology
inappropriately exaggerated the cost
differences among different types of IRF
facilities, we proposed to remove the
weighting factor from our analysis and
update the IRF facility-level adjustment
factors for FY 2012 using an unweighted
regression analysis. However, after
carefully considering all of the
comments that we received on the
proposed FY 2012 updates to the
facility-level adjustment factors, we
decided to hold the facility-level
adjustment factors at FY 2011 levels for
FY 2012 to conduct further research on
the underlying data and the best
methodology for calculating the facilitylevel adjustment factors. We based this
decision, in part, on comments we
received about the financial hardships
that the proposed updates would create
for facilities with teaching programs and
a higher disproportionate share of lowincome patients.
B. Freezing the Facility-Level
Adjustment Factors at FY 2014 Levels
Since the FY 2012 final rule (76 FR
47836), we have conducted further
research into the best methodology to
use to estimate the IRF facility-level

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adjustment factors, to ensure that the
adjustment factors reflect as accurately
as possible the costs of providing IRF
care across the full spectrum of IRF
providers. Our recent research efforts
reflect the significant differences that
exist between the cost structures of
freestanding IRFs and the cost structures
of IRF units of acute care hospitals (and
critical access hospitals, otherwise
known as ‘‘CAHs’’). We have found that
these cost structure differences
substantially influence the estimates of
the adjustment factors. Therefore, we
believe that it is important to control for
these cost structure differences between
hospital-based and freestanding IRFs in
our regression analysis, so that these
differences do not inappropriately
influence the adjustment factor
estimates. In Medicare’s payment
system for the treatment of end-stage
renal disease (ESRD), we already control
for the cost structure differences
between hospital-based and
freestanding facilities in the regression
analyses that are used to set payment
rates. Also, we received comments from
an IRF industry association on the FY
2012 IRF PPS proposed rule suggesting
that the addition of this particular
control variable to the model could
improve the methodology for estimating
the IRF facility-level adjustment factors.
Thus, in the FY 2014 IRF PPS
proposed rule, we proposed to add an
indicator variable to our 3-year moving
average methodology for updating the
IRF facility-level adjustments that
would have an assigned value of ‘‘1’’ if
the facility is a freestanding IRF hospital
or would have an assigned value of ‘‘0’’
if the facility is an IRF unit of an acute
care hospital (or CAH). Adding this
variable to the regression analysis
enables us to control for the differences
in costs that are primarily due to the
differences in cost structures between
freestanding and hospital-based IRFs, so
that those differences do not become
inappropriately intertwined with our
estimates of the differences in costs
between rural and urban facilities, highLIP percentage and low-LIP percentage
facilities, and teaching and non-teaching
facilities. Further, by including this
variable in the regression analysis, we
greatly improve our ability to predict an
IRF’s average cost per case (that is, the
R-squared of the regression model
increases from about 11 percent to about
41 percent). In this way, it enhances the
precision with which we can estimate
the IRF facility-level adjustments.
In the FY 2014 IRF PPS final rule (78
FR 47860), we finalized our decision to
add an indicator variable for a facility’s
freestanding/hospital-based status to the
payment regression, and, with that

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Federal Register / Vol. 79, No. 151 / Wednesday, August 6, 2014 / Rules and Regulations
change, to update the IRF facility-level
adjustment factors for FY 2014 using the
same methodology, with the exception
of adding the indicator variable, that we
used in updating the FY 2010 IRF
facility-level adjustment factors,
including the 3-year moving average
approach. Thus, in the FY 2014 IRF PPS
final rule, we finalized a rural
adjustment of 14.9 percent, a LIP
adjustment factor of 0.3177, and a
teaching status adjustment factor of
1.0163 for FY 2014.
Based on the substantive changes to
the facility-level adjustment factors that
were adopted in the FY 2014 final rule,
we are freezing the facility-level
adjustment factors for FY 2015 and all
subsequent years at the FY 2014 levels
while we continue to monitor the most
current IRF claims data available and
evaluate the effects of the FY 2014
changes. Additionally, we want to allow
providers time to acclimate to the FY
2014 changes. At such future time as
our data analysis may indicate the need
for further updates to the facility-level
adjustment factors, we would propose to
update the adjustment factors through
notice and comment rulemaking.
We received 4 comments on our
proposal to freeze the facility-level
adjustment factors at FY 2014 levels for
FY 2015 and all subsequent years
(unless and until we propose to update
them again through future notice and
comment rulemaking), which are
summarized below.
Comment: The majority of
commenters support our proposal to
freeze the facility-level adjustment
factors. However, those same
commenters encourage CMS to continue
to analyze changes to the facility-level
adjustments and adjust all three factors
at a minimum of every three years.
Additionally, commenters
recommended that CMS make the
methodology and findings available to
the public.
Response: We appreciate the
commenters’ support with our decision
to freeze the facility-level adjustment
factors. As discussed in the proposed
rule, we believe that it is appropriate to
freeze the facility-level adjustment
factors at FY 2014 levels while we
continue to monitor the most current
IRF claims data available and evaluate
the effects of the FY 2014 changes.
Additionally, this will allow providers
time to acclimate to the FY 2014
changes that were implemented. We
will continue to monitor the data and
periodically update the adjustment
factors, as needed, to ensure the
accuracy of IRF PPS payment rates.
Rather than specify an exact period,
such as every 3 years, for updating the

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adjustment factors, we believe that it is
better for the overall efficiency of the
IRF PPS payment system to update the
adjustment factors whenever it appears
that the benefits of updating (in terms of
improved accuracy of payment rates)
outweigh the costs (in terms of less
stability in the annual payment rates).
At such time as we determine that the
data support updating the adjustment
factors or changes in the methodology,
we will make our findings available
through the rulemaking process.
Comment: One commenter suggested
that CMS be more transparent about the
criteria the agency is using to determine
when changes to the facility-level
adjustments occur. For example, the
commenter suggested CMS adopt a
minimum threshold of annual change
for the adjustment factors, such as 5 to
10 percent and examine unfreezing the
adjustment factors and issuing an
update if analysis finds that any of the
factors meet or exceed the suggested
threshold.
Response: While we agree with
transparency during this process, we do
not believe that setting a minimum
threshold of annual change would be
beneficial to the industry or to the
Medicare program. As stated in our
previous response, we believe that
monitoring the data and making
periodic changes when the benefits of
such changes outweigh the costs is the
most appropriate way to enhance both
the accuracy and the stability of the IRF
PPS payment system. In addition, we
disagree with the suggestion that we
should publicize the interim results that
we use in making these determinations
each time. We believe that this would
only serve to confuse the industry, as
the adjustment factors tend to fluctuate
significantly from one period to the next
and providers would potentially be
confused about which adjustment
factors were being proposed for
implementation and which ones were
not.
Comment: One commenter suggested
that depending on the magnitude of any
change in facility level adjustments,
CMS should also propose a transition to
phase in the implementation.
Response: Thank you for your
comment. We will certainly take this
recommendation into consideration for
the future.
Final Decision: After careful
consideration of the public comments,
we are finalizing our proposal to freeze
the facility-level adjustment factors for
FY 2015 and all subsequent years
(unless and until we propose to update
them again through future notice and
comment rulemaking).

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45883

VI. FY 2015 IRF PPS Federal
Prospective Payment Rates
A. Market Basket Increase Factor,
Productivity Adjustment, and Other
Adjustment for FY 2015
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 included in the
covered IRF services, which is referred
to as a market basket index. According
to section 1886(j)(3)(A)(i) of the Act, the
increase factor shall be used to update
the IRF federal prospective payment
rates for each FY. Sections
1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(iv)
of the Act required the application of a
0.2 percentage point reduction to the
market basket increase factor for FY
2015. In addition, section
1886(j)(3)(C)(ii)(I) of the Act requires the
application of a productivity
adjustment, as described below. Thus,
in the FY 2015 IRF PPS proposed rule,
we proposed to update the IRF PPS
payments for FY 2015 by a market
basket increase factor based upon the
most current data available, with a
productivity adjustment as required by
section 1886(j)(3)(C)(ii)(I) of the Act, as
described below and a 0.2 percentage
point reduction as required by sections
1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(iv)
of the Act.
For this final rule, we use the same
methodology described in the FY 2012
IRF PPS final rule (76 FR 47836 at
47848 through 47863) to compute the
FY 2015 market basket increase factor
and labor-related share. In that final
rule, we described the market basket
(referred to as the RPL market basket) as
reflecting a FY 2008 base year. Based on
IHS Global Insight’s second quarter
2014 forecast, the most recent estimate
of the 2008-based RPL market basket
increase factor for FY 2015 is 2.9
percent. IHS Global Insight (IGI) is an
economic and financial forecasting firm
that contracts with CMS to forecast the
components of providers’ market
baskets.
In accordance with section
1886(j)(3)(C)(ii)(I) of the Act, and using
the methodology described in the FY
2012 IRF PPS final rule (76 FR 47836,
47858 through 47859), we apply a
productivity adjustment to the FY 2015
RPL market basket increase factor. 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 (MFP) (as
projected by the Secretary for the 10year period ending with the applicable
FY cost reporting period, or other

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annual period) (the ‘‘MFP adjustment’’).
The Bureau of Labor Statistics (BLS) is
the agency that publishes the official
measure of private nonfarm business
MFP. We refer readers to the BLS Web
site at http://www.bls.gov/mfp to obtain
the historical BLS-published MFP data.
The projection of MFP is currently
produced by IGI, using the methodology
described in the FY 2012 IRF PPS final
rule (76 FR 47836, 47859). The most
recent estimate of the MFP adjustment
for FY 2015 (the 10-year moving average
of MFP for the period ending FY 2015)
is 0.5 percent, which was calculated
using the methodology described in the
FY 2012 IRF PPS final rule (76 FR
47836, 47858 through 47859) and is
based on IGI’s second quarter 2014
forecast.
Thus, in accordance with section
1886(j)(3)(C) of the Act, we base the FY
2015 market basket update, which is
used to determine the applicable
percentage increase for the IRF
payments, on the most recent estimate
of the FY 2008-based RPL market basket
(currently estimated to be 2.9 percent
based on IGI’s second quarter 2014
forecast). We then reduce this
percentage increase by the current
estimate of the MFP adjustment for FY
2015 of 0.5 percentage point (the 10year moving average of MFP for the
period ending FY 2015 based on IGI’s
second quarter 2014 forecast), which
was calculated as described in the FY
2012 IRF PPS final rule (76 FR 47836,
47859). Following application of the
MFP, we further reduce the applicable
percentage increase by 0.2 percentage
point, as required by sections
1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(iv)
of the Act. Therefore, the current
estimate of the FY 2015 IRF update is
2.2 percent (2.9 percent market basket
update, less 0.5 percentage point MFP
adjustment, less 0.2 percentage point
legislative adjustment).
We received 5 comments on the
proposed market basket increase factor,
which are summarized below.
Comment: While several commenters
supported the update to IRF payment
rates for FY 2015, one commenter stated
that the update to the IRF payment rates
is not warranted based on the review of
many factors—including indicators of
beneficiary access to rehabilitative
services, the supply of providers, and
Medicare margins. The commenter said
that Medicare’s current payment rates
for IRFs appear to be adequate and,
therefore, recommended no update to
IRF payment rates for FY 2015.
Response: We are finalizing the IRF
PPS payment update for FY 2015 of 2.2
percent (2.9 percent market basket
update, less 0.5 percentage point MFP

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adjustment, less 0.2 percentage point
legislative adjustment), as 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 2015.
Comment: Several commenters
expressed concern about the
applicability of the productivity
adjustment to the IRF setting. One
commenter suggested that we take into
consideration the unique needs of
rehabilitation patients and the highly
skilled professional teams who provide
their care. This commenter also stated
that CMS should be mindful that
increasing reimbursement financial
pressures without allowing IRFs to
improve their efficiency in ways that
best serve patients may result in barriers
to access for the most complex and
needy Medicare beneficiaries. Another
commenter noted that while CMS is
bound by the Affordable Care Act to
apply specific market basket reductions
to the full market basket update in FY
2015 and subsequent years, they believe
it is unlikely that productivity
improvements will be generated by
rehabilitation hospitals at a pace
matching the productivity of the
economy at large on an ongoing,
consistent basis. The commenter also
noted that services provided in
rehabilitation hospitals are very labor
intensive through the provision of
hands-on care by physical therapists,
occupational therapists, speech
therapists and rehabilitation nursing
staff, and that many of the treatment
plans do not lend themselves to
continual productivity improvements.
The commenter said that we should
carefully monitor the impact that the
productivity adjustments have on IRFs
and provide feedback to Congress as
appropriate.
Response: Section 1886(j)(3)(C)(ii)(I)
of the Act requires the application of a
productivity adjustment that must be
applied to the IRF PPS market basket
update. We will continue to monitor the
impact of the payment updates,
including the effects of the productivity
adjustment, on IRF provider margins as
well as beneficiary access to care.
Final Decision: Based on careful
consideration of the comments, we are
finalizing the FY 2015 market basket
update for IRF payments of 2.2 percent,
which is the most recent estimate of the
FY 2008-based RPL market basket
adjusted for productivity and the FY15
legislative reduction. Therefore, the
current estimate of the FY 2015 IRF
update is 2.2 percent (2.9 percent
market basket update, less 0.5
percentage point MFP adjustment, less

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0.2 percentage point legislative
adjustment).
B. Development of an IRF-Specific
Market Basket
In the FY 2010 IRF PPS proposed rule
(74 FR 21062), we expressed our interest
in exploring the possibility of creating a
stand-alone, or IRF-specific, market
basket that reflects the cost structures of
only IRF providers. We noted that, of
the available options, one would be to
join the Medicare cost report data from
freestanding IRF providers with data
from hospital-based IRF providers. We
indicated that an examination of the
Medicare cost report data comparing
freestanding and hospital-based IRFs
revealed considerable differences
between the two for cost levels and cost
structures. At that time, we stated that
we were unable to fully explain the
differences in costs between
freestanding and hospital-based IRFs
and solicited comments regarding our
findings. We summarized and
responded to several public comments
we received on the potential creation of
a stand-alone IRF market basket in the
FY 2010 IRF final rule (74 FR 39776
through 39778). At that time, we stated
the need for further research regarding
the differences in cost levels and cost
structures between freestanding IRFs
and hospital-based IRFs.
Since the FY 2010 IRF PPS final rule
was published, we have made
significant progress on the development
of a stand-alone, or IRF-specific, market
basket. Our research has focused on
addressing several concerns regarding
the use of the hospital-based IRF
Medicare cost report data in the
calculation of the major market basket
cost weights. As discussed above, one
concern is the cost level differences for
hospital-based IRFs relative to
freestanding IRFs that were not readily
explained by the specific characteristics
of the individual providers and the
patients that they serve (for example,
characteristics related to case mix,
urban/rural status, teaching status).
Furthermore, we are concerned about
the variability in the cost report data
among these hospital-based IRF
providers and the potential impact on
the market basket cost weights. These
concerns led us to consider whether it
is appropriate to use the universe of IRF
providers to derive an IRF-specific
market basket.
Recently, we have investigated the
use of regression analysis to evaluate the
effect of including hospital-based IRF
Medicare cost report data in the
calculation of cost distributions. We
created preliminary regression models
to try to explain variations in costs per

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discharge across both freestanding and
hospital-based IRFs. These models were
intended to capture the effects of
facility-level and patient-level
characteristics (for example, wage
index, urban/rural status, ownership
status, length-of-stay, occupancy rate,
case mix, and Medicare utilization) on
IRF costs per discharge. Using the
results from the preliminary regression
analyses, we identified smaller subsets
of hospital-based and freestanding IRF
providers where the predicted costs per
discharge using the regression model
closely matched the actual costs per
discharge for each IRF. We then derived
different sets of cost distributions using
(1) these subsets of IRF providers and
(2) the entire universe of freestanding
and hospital-based IRF providers
(including those IRFs for which the
variability in cost levels remains
unexplained). After comparing these
sets of cost distributions, the differences
were not substantial enough for us to
conclude that the inclusion of those IRF
providers with unexplained variability
in costs in the calculation of the cost
distributions is a major cause of
concern.
Another concern with incorporating
the hospital-based IRF data in the
derivation of an IRF-specific market
basket is the complexity of the Medicare
cost report data for these providers. The
freestanding IRFs independently submit
a Medicare cost report for their
facilities, making it relatively
straightforward to obtain the cost
categories necessary to determine the
major market basket cost weights.
However, cost report data submitted for
a hospital-based IRF are embedded in
the Medicare cost report submitted for
the entire hospital facility in which the
IRF is located. Therefore, adjustments
would have to be made to obtain cost
weights that represent just the hospitalbased IRF (as opposed to the hospital as
a whole). For example, ancillary costs
for services such as therapy, radiology,
and laboratory services for the entire
hospital would need to be appropriately
converted to a value that only represents
the hospital-based IRF unit’s costs. The
preliminary method we have developed
to allocate these costs is complex and
still needs to be fully evaluated before
we are ready to propose an IRF-specific
market basket that would reflect both
hospital-based and freestanding IRF
data.
In our ongoing research, we are also
evaluating the differences in salary costs
as a percent of total costs for both
hospital-based and freestanding IRFs.
Salary costs are historically the largest
component of the market baskets. Based
on our review of the data reported on

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the applicable Medicare cost reports,
our initial findings (using the
preliminary allocation method as
discussed above) have shown that the
hospital-based IRF salary costs as a
percent of total costs tend to be lower
than those of freestanding IRFs. We are
still evaluating the method for deriving
salary costs as a percent of total costs,
and one of the main issues is to further
investigate the percentage of ancillary
costs that should be appropriately
allocated to the IRF salary costs for the
hospital-based IRF, as discussed above.
Also, as stated in the FY 2012 IRF PPS
final rule (76 FR 47836, 47851), effective
for cost reports beginning on or after
May 1, 2010, we finalized a revised
Hospital and Hospital Health Care
Complex Cost Report, Form CMS 2552–
10 (74 FR 31738). The report is available
for download from the CMS Web site at
http://www.cms.gov/Research-StatisticsData-and-Systems/Files-for-Order/Cost
Reports/Hospital-2010-form.html. The
revised Hospital and Hospital Health
Care Complex Cost Report includes a
new worksheet (Worksheet S–3, part V)
that identifies the contract labor costs
and benefit costs for the hospital/
hospital care complex, is applicable to
sub-providers and units. As we gain
access to the data reported by IRFs on
this new form, we plan to evaluate the
appropriateness of using these data to
derive benefits and contract labor cost
weights for the market basket instead of
the data and methods currently used for
the RPL market basket. This includes
comparing these data with costs
submitted on the other forms composing
the Medicare cost report.
For the reasons discussed above,
while we believe we have made
significant progress on the development
of an IRF-specific market basket, we
believe that further research is required
at this time. As a result, we did not
propose an IRF-specific market basket
for FY 2015. We plan to complete our
research during the remainder of this
year and, provided that we are prepared
to draw conclusions from our research,
may propose an IRF-specific market
basket for the FY 2016 rulemaking
cycle.
We received 4 comments on the
development of an IRF-specific market
basket, which are summarized below.
Comment: One commenter agreed
with the continued use of the RPL
market basket instead of changing to a
rehabilitation-specific market basket.
The commenter noted that CMS has
utilized the RPL Market Basket for
several years and that CMS has not been
able to reconcile the cost structure
issues between freestanding and
hospital-based rehabilitation facilities.

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The commenter stated that CMS’s
description of attempts to adjust and
convert costs and data from the hospital
cost report for the hospital-based
rehabilitation units will not ultimately
reflect the true cost of that hospitalbased unit, as it will be artificially
derived based on assumptions and
comparisons to freestanding
rehabilitation facilities. Further, the
commenter stated, the hospital-based
rehabilitation unit is part of a higher
cost structure facility, and any future
rehabilitation market basket should
reflect that.
Response: We have made significant
progress in addressing our initial
concerns of the research that showed
substantial cost differences between
hospital-based and freestanding IRF
providers. Nonetheless, we concur with
the commenter’s concerns about the
difficulty of disentangling cost of
hospital-based IRFs from the overall
hospital. We note that our regression
analysis, detailed above, provides a start
at addressing these issues. However, we
disagree with the commenter’s claim
that data from hospital-based providers
will not reflect the true cost of the
hospital-based unit. We believe that the
approach described above, while more
complicated than only using
freestanding facility cost report data,
would directly reflect the costs of the
hospital-based unit and be a technical
improvement. As noted above, we will
continue to research and analyze the
development of an IRF-specific market
basket that uses the most appropriate
and reliable data sources and methods
and provide detailed explanations of the
proposed methodology most likely in
the FY 2016 proposed rule.
Comment: Several commenters
supported the proposal to have a standalone IRF market basket, but urged CMS
to share findings and materials in a
transparent manner in order to allow the
IRF community to validate and analyze
these research activities.
Response: As the commenters
suggested, we will continue to research
and analyze the development of an IRFspecific market basket that uses the
most appropriate and reliable data
sources and methods. We anticipate
proposing to use an IRF-specific market
basket in the FY 2016 IRF proposed
rule, and the public will have the
opportunity to comment on our market
basket methodology and data sources
during the 60-day comment period
following the publication of the
proposed rule.
Final Decision: After careful
consideration of the comments, we will
continue to research the possibility of
creating and proposing an IRF-specific

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market basket based on data from both
freestanding and hospital-based IRF
facilities in the future.
C. Secretary’s Final Recommendation
For FY 2015, the Medicare Payment
Advisory Commission (MedPAC)
recommends that a 0.0 percent update
be applied to IRF PPS payment rates. As
discussed above, and in accordance
with sections 1886(j)(3)(C) and
1886(j)(3)(D) of the Act, the Secretary
proposes to update IRF PPS payment
rates for FY 2015 by an adjusted market
basket increase factor of 2.2 percent, as
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 2015.
We did not receive any public
comments on the Secretary’s
recommendation.
D. Labor-Related Share for FY 2015
The labor-related share for FY 2015 is
updated using the methodology
described in the FY 2012 IRF PPS final
rule (76 FR 47836, 47860 through
47863). Using this method and IGI’s
second quarter 2014 forecast of the
2008-based RPL market basket, the
proposed IRF labor-related share for FY
2015 is the sum of the FY 2015 relative
importance of each labor-related cost
category. This figure reflects the
different rates of price change for these
cost categories between the base year
(FY 2008) and FY 2015. As shown in
Table 3, the FY 2015 labor-related share
is 69.294 percent.

TABLE 3—FY 2015 IRF RPL LABORRELATED SHARE RELATIVE IMPORTANCE

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FY 2015
Relative
importance
laborrelated share
Wages and Salaries .............
Employee Benefits ................
Professional Fees: Labor- ....
Related .................................
Administrative and Business
Support Services ..................
All Other: Labor-Related
Services ............................
Subtotal .................................
Labor-Related Portion of
Capital Costs (.46) ............
Total Labor-Related
Share .........................

48.271
12.963
2.058
0.415
2.061
65.741
3.553
69.294

Source: IHS Global Insight, Inc. Second
quarter 2014 forecast; Historical Data through
1st quarter 2014.

We received one comment on the
proposed IRF labor-related share for FY
2015, which is summarized below.

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Comment: One commenter supported
using the latest available data to update
the IRF PPS and noted that the current
methodology relies upon acute care
hospital data for certain items (that is,
employee benefits, contract labor) that
were not collected in RPL settings. The
commenter also noted that changes to
the Medicare cost report (Form 2552–
10) were implemented to gather
additional information on labor costs.
The commenter requested that CMS
continue to review the available data
and, if appropriate, implement changes
to allow the use of IRF-specific data for
all cost categories, weights and price
proxies.
Response: We appreciate the
commenter’s concerns with respect to
the data for the benefits and contract
labor categories. We have been
monitoring and analyzing the data that
is being reported based on the revised
cost report and instructions. We hope to
use this data in the future if it is
statistically representative and we have
a reliable response rate for these data.
Final Decision: After careful
consideration of the comments, we are
finalizing the FY 2015 labor-related
share of 69.294 percent.
E. Wage Adjustment
Section 1886(j)(6) of the Act requires
the Secretary to adjust the proportion of
rehabilitation facilities’ costs
attributable to wages and wage-related
costs (as estimated by the Secretary from
time to time) by a factor (established by
the Secretary) reflecting the relative
hospital wage level in the geographic
area of the rehabilitation facility
compared to the national average wage
level for those facilities. The Secretary
is required to update the IRF PPS wage
index on the basis of information
available to the Secretary on the wages
and wage-related costs to furnish
rehabilitation services. Any adjustment
or updates made under section
1886(j)(6) of the Act for a FY are made
in a budget-neutral manner.
For FY 2015, we are maintaining the
policies and methodologies described in
the FY 2012 IRF PPS final rule (76 FR
47836, at 47863 through 47865) related
to the labor market area definitions and
the wage index methodology for areas
with wage data. Thus, we are using the
CBSA labor market area definitions and
the FY 2014 pre-reclassification and
pre-floor hospital wage index data. In
accordance with section 1886(d)(3)(E) of
the Act, the FY 2014 pre-reclassification
and pre-floor hospital wage index is
based on data submitted for hospital
cost reporting periods beginning on or
after October 1, 2009, and before

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October 1, 2010 (that is, FY 2010 cost
report data).
The labor market designations made
by the OMB include some geographic
areas where there are no hospitals and,
thus, no hospital wage index data on
which to base the calculation of the IRF
PPS wage index. We will continue to
use the same methodology discussed in
the FY 2008 IRF PPS final rule (72 FR
44299) to address those geographic areas
where there are no hospitals and, thus,
no hospital wage index data on which
to base the calculation for the FY 2015
IRF PPS wage index.
In accordance with our established
methodology, we have historically
adopted any CBSA changes that are
published in the OMB bulletin that
corresponds with the hospital wage data
used to determine the IRF PPS wage
index. The OMB bulletins are available
at http://www.whitehouse.gov/omb/
bulletins/index.html.
In keeping with the established IRF
PPS wage index policy; we will use the
prior year’s (FY 2014) pre-floor, prereclassified hospital wage index data to
derive the FY 2015 applicable IRF PPS
wage index. We anticipate using the FY
2014 pre-floor, pre-reclassified hospital
wage index data to derive the applicable
IRF PPS wage index for FY 2015. We
note, however, that the FY 2014 prefloor, pre-reclassified hospital wage
index does not use OMB’s new 2010
Census-based area delineations, which
were outlined in the February 28, 2013,
OMB Bulletin 13–01, as we did not
receive these changes in time to
incorporate them into the FY 2014
hospital wage index. We therefore
intend to consider the incorporation of
these CBSA changes during the
development of the FY 2015 hospital
wage index. Assuming that we would
continue to follow our established
methodology for the IRF PPS wage
index, this means that the 2010 Censusbased CBSA changes would not be
considered for inclusion in the IRF PPS
wage index until FY 2016.
To calculate the wage-adjusted facility
payment for the payment rates set forth
in this final rule, we multiply the
unadjusted Federal payment rate for
IRFs by the FY 2015 labor-related share
based on the FY 2008-based RPL market
basket (69.294 percent) to determine the
labor-related portion of the standard
payment amount. We then multiply the
labor-related portion by the applicable
IRF wage index from the tables in the
addendum to this final rule. These
tables are available through the Internet
on the CMS Web site at http://
www.cms.hhs.gov/Medicare/MedicareFee-for-Service-Payment/
InpatientRehabFacPPS/. Table A is for

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urban areas, and Table B is for rural
areas.
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), codified at
§ 412.624(e)(1), as described in the steps
below. We use the listed steps to ensure
that the FY 2015 IRF standard payment
conversion factor reflects the update to
the wage indexes (based on the FY 2010
hospital cost report data) and the laborrelated share in a budget-neutral
manner:
Step 1. Determine the total amount of
the estimated FY 2014 IRF PPS rates,
using the FY 2014 standard payment
conversion factor and the labor-related
share and the wage indexes from FY
2014 (as published in the FY 2014 IRF
PPS final rule (78 FR 47860)).
Step 2. Calculate the total amount of
estimated IRF PPS payments using the
FY 2015 standard payment conversion
factor and the FY 2015 labor-related
share and CBSA urban and rural wage
indexes.
Step 3. Divide the amount calculated
in step 1 by the amount calculated in
step 2. The resulting quotient is the FY
2015 budget-neutral wage adjustment
factor of 1.0017.
Step 4. Apply the FY 2015 budgetneutral wage adjustment factor from
step 3 to the FY 2014 IRF PPS standard
payment conversion factor after the
application of the adjusted market
basket update to determine the FY 2015
standard payment conversion factor.
We discuss the calculation of the
standard payment conversion factor for
FY 2015 in section VI.F. of this final
rule.
We received 4 comments on the
proposed IRF wage adjustment for FY
2015, which are summarized below.
Comment: Several commenters
expressed concern regarding the
possible incorporation of the 2010
Census-based CBSA changes in the
calculation of the wage index and the
time frame over which the changes
would be implemented. More
specifically, these commenters urged
CMS to establish a two-year or four-year
phase-in for the wage index changes,
particularly for providers most
adversely affected by the new CBSA
delineations.
Response: We appreciate all of the
comments on this topic and support for
the proposed FY 2015 wage index
methodology. We will take these
comments into consideration during the
development of the FY 2016 IRF PPS
wage index.

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Comment: Commenters recommended
that we develop a new methodology for
area wage adjustment that eliminates
hospital wage index reclassifications for
all hospitals and reduces the problems
associated with annual fluctuations in
wage indices and across geographic
boundaries. These commenters also
recommended that we consider wage
index policies under the current IPPS
because IRFs compete in a similar labor
pool as acute care hospitals. The
commenters suggested that the IPPS
wage index policies would allow IRFs to
benefit from the IPPS reclassification
and/or floor policies. One commenter
further recommended that until a new
wage index system is implemented, we
institute a ‘‘smoothing’’ variable to the
current process to reduce the
fluctuations IRFs annually experience.
Response: Consistent with our
previous responses to these comments
(most recently published in our FY 2014
IRF PPS final rule (78 FR 47874)), we
note that the IRF PPS does not account
for geographic reclassification under
sections 1886(d)(8) and (d)(10) of the
Act, and does not apply the ‘‘rural
floor’’ under section 4410 of the BBA.
Furthermore, as we do not have an IRFspecific wage index, we are unable to
determine at this time the degree, if any,
to which a geographic reclassification
adjustment or a ‘‘rural floor’’ policy
under the IRF PPS would be
appropriate. The rationale for our
current wage index policies is fully
described in the FY 2006 IRF PPS final
rule (70 FR 47880, 47926 through
47928).
Additionally, while some commenters
recommended that we adopt IPPS
reclassification and/or floor policies, we
note the Medicare Payment Advisory
Commission (MedPAC’s) June 2007
report to the Congress, titled ‘‘Report to
Congress: Promoting Greater Efficiency
in Medicare,’’ (available at http://
www.medpac.gov/documents/Jun07_
EntireReport.pdf) recommends that
Congress ‘‘repeal the existing hospital
wage index statute, including
reclassification and exceptions, and give
the Secretary authority to establish new
wage index systems.’’ We continue to
believe it would not be prudent at this
time to adopt the IPPS wage index
policies, such as reclassification and/or
floor policies, and will, therefore,
continue to use the CBSA labor market
area definitions and the prereclassification and pre-floor hospital
wage index data based on 2010 cost
report data in this final rule.
With regard to issues mentioned
about ensuring that the wage index
minimizes fluctuations, matches the
costs of labor in the market, and

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provides for a single wage index policy,
section 3137(b) of the Affordable Care
Act required us to submit a report to the
Congress by December 31, 2011 that
includes a plan to reform the hospital
wage index system. The report that we
submitted is available online at http://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/Wage-Index-Reform.html.
However, we will continue to monitor
the IPPS wage index to identify any
policy changes that may be appropriate
for IRFs. This is consistent with our
previous responses to these recurring
comments.
Final Decision: After careful
consideration of the comments, we are
finalizing use of the FY 2014 pre-floor,
pre-reclassified hospital wage index
data to derive the applicable IRF PPS
wage index for FY 2015.
F. Description of the IRF Standard
Conversion Factor and Payment Rates
for FY 2015
To calculate the standard payment
conversion factor for FY 2015, as
illustrated in Table 4, we begin by
applying the adjusted market basket
increase factor for FY 2015 that was
adjusted in accordance with sections
1886(j)(3)(C) and (D) of the Act, to the
standard payment conversion factor for
FY 2014 ($14,846). Applying the 2.2
percent adjusted market basket increase
factor for FY 2015 to the standard
payment conversion factor for FY 2014
of $14,846 yields a standard payment
amount of $15,173. Then, we apply the
budget neutrality factor for the FY 2015
wage index and labor-related share of
1.0017, which results in a standard
payment amount of $15,198. We next
apply the budget neutrality factors for
the revised CMG relative weights of
1.0000, which results in the proposed
standard payment conversion factor of
$15,198 for FY 2015.

TABLE 4—CALCULATIONS TO DETERMINE THE FY 2015 STANDARD PAYMENT CONVERSION FACTOR
Explanation for adjustment
Standard Payment Conversion Factor for FY 2014 ....
Market Basket Increase Factor for FY 2015 (2.9 percent), reduced by a 0.5
percentage point reduction
for the productivity adjustment as required by section 1886(j)(3)(C)(ii)(I) of
the Act, and reduced by
0.2 percentage points in
accordance with paragraphs 1886(j)(3)(C) and
(D) of the Act ....................

E:\FR\FM\06AUR2.SGM

06AUR2

Calculations
$14,846

1.0220

45888

Federal Register / Vol. 79, No. 151 / Wednesday, August 6, 2014 / Rules and Regulations

TABLE 4—CALCULATIONS TO DETERMINE THE FY 2015 STANDARD PAYMENT CONVERSION FACTOR—Continued

Final Decision: As we did not receive
TABLE 4—CALCULATIONS TO DETERMINE THE FY 2015 STANDARD PAY- any comments on the proposed FY 2015
MENT CONVERSION FACTOR—Con- standard payment conversion factor, we
are finalizing the IRF standard payment
tinued

Explanation for adjustment

Budget Neutrality Factor for
the Wage Index and
Labor-Related Share .........
Budget Neutrality Factor for
the Revisions to the CMG
Relative Weights ...............

Calculations

FY 2015 Standard Payment
Conversion Factor .............
×

$15,198

1.0017

We did not receive any comments on
the proposed FY 2015 standard payment
× 1.0000 conversion factor.

conversion factor at $15,198 for FY
2015.
After the application of the CMG
relative weights described in section IV
of this final rule, to the FY 2015
standard payment conversion factor
($15,198), the resulting unadjusted IRF
prospective payment rates for FY 2015
are shown in Table 5.

TABLE 5—FY 2015 PAYMENT RATES
Payment rate
Tier 1

tkelley on DSK3SPTVN1PROD with RULES2

CMG
0101
0102
0103
0104
0105
0106
0107
0108
0109
0110
0201
0202
0203
0204
0205
0206
0207
0301
0302
0303
0304
0401
0402
0403
0404
0405
0501
0502
0503
0504
0505
0506
0601
0602
0603
0604
0701
0702
0703
0704
0801
0802
0803
0804
0805
0806
0901
0902
0903
0904
1001
1002
1003
1101
1102
1201

.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
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.................................................................................................................
.................................................................................................................
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.................................................................................................................
.................................................................................................................
.................................................................................................................
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.................................................................................................................
.................................................................................................................
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$11,934.99
14,948.75
17,684.39
18,421.50
21,512.77
24,521.97
27,395.91
34,145.35
31,262.29
40,925.17
12,378.77
16,096.20
18,483.81
20,360.76
24,201.30
29,373.17
38,967.67
16,751.24
20,971.72
24,880.65
32,738.01
15,599.23
21,441.34
35,045.07
62,056.47
50,692.93
12,793.68
17,599.28
21,844.09
25,737.81
29,430.93
41,134.91
15,643.30
20,187.50
25,421.69
33,295.78
14,742.06
18,889.59
22,882.11
29,421.81
11,249.56
15,032.34
20,325.81
17,965.56
22,344.10
26,844.23
14,264.84
18,818.16
23,635.93
30,049.49
15,538.44
20,012.73
28,538.80
19,214.83
28,778.93
15,249.67

Sfmt 4700

Payment rate
Tier 2
$10,866.57
13,609.81
16,100.76
16,772.51
19,587.18
22,327.38
24,942.96
31,089.03
28,462.81
37,262.46
10,085.39
13,114.35
15,059.70
16,588.62
19,717.89
23,932.29
31,748.62
14,170.62
17,740.63
21,047.71
27,693.80
13,359.04
18,360.70
30,011.49
53,142.85
43,411.57
10,340.72
14,223.81
17,654.00
20,801.50
23,786.39
33,245.63
12,384.85
15,982.22
20,126.71
26,360.93
12,249.59
15,694.97
19,014.22
24,447.50
9,222.15
12,324.06
16,661.57
14,726.86
18,318.15
22,005.18
11,521.60
15,198.00
19,090.21
24,268.17
14,134.14
18,204.16
25,959.70
15,415.33
23,088.80
14,471.54

E:\FR\FM\06AUR2.SGM

06AUR2

Payment rate
Tier 3
$9,896.94
12,393.97
14,663.03
15,273.99
17,837.89
20,333.40
22,714.93
28,312.35
25,920.19
33,934.09
9,048.89
11,764.77
13,511.02
14,883.40
17,690.47
21,470.21
28,482.57
12,846.87
16,082.52
19,081.09
25,107.10
12,357.49
16,985.28
27,763.71
49,162.49
40,160.72
9,478.99
13,038.36
16,182.83
19,067.41
21,803.05
30,475.03
11,438.01
14,761.82
18,588.67
24,347.20
11,743.49
15,047.54
18,228.48
23,436.84
8,523.04
11,390.90
15,400.13
13,611.33
16,930.57
20,339.48
10,743.47
14,172.14
17,801.42
22,629.82
12,241.99
15,766.41
22,483.92
15,273.99
22,876.03
13,497.34

Payment rate
no comorbidity
$9,495.71
11,893.95
14,070.31
14,656.95
17,115.99
19,511.19
21,796.97
27,167.94
24,873.05
32,561.72
8,632.46
11,223.72
12,889.42
14,197.97
16,875.86
20,482.34
27,174.02
11,851.40
14,836.29
17,603.84
23,161.75
11,020.07
15,146.33
24,756.02
43,838.63
35,811.05
8,576.23
11,798.21
14,643.27
17,252.77
19,728.52
27,575.25
10,428.87
13,459.35
16,948.81
22,199.72
10,693.31
13,702.52
16,599.26
21,344.07
7,860.41
10,504.86
14,202.53
12,553.55
15,614.43
18,757.37
9,714.56
12,814.95
16,096.20
20,462.59
11,193.33
14,415.30
20,558.33
13,023.17
19,506.63
12,547.47

Federal Register / Vol. 79, No. 151 / Wednesday, August 6, 2014 / Rules and Regulations

45889

TABLE 5—FY 2015 PAYMENT RATES—Continued
CMG
1202
1203
1301
1302
1303
1401
1402
1403
1404
1501
1502
1503
1504
1601
1602
1603
1701
1702
1703
1704
1801
1802
1803
1901
1902
1903
2001
2002
2003
2004
2101
5001
5101
5102
5103
5104

tkelley on DSK3SPTVN1PROD with RULES2

G. Example of the Methodology for
Adjusting the Federal Prospective
Payment Rates
Table 6 illustrates the methodology
for adjusting the federal prospective
payments (as described in sections VI.A.
through VI.F. of this final rule). The
following examples are based on two
hypothetical Medicare beneficiaries,
both classified into CMG 0110 (without
comorbidities). The unadjusted federal
prospective payment rate for CMG 0110
(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 0.8513, and
a rural adjustment of 14.9 percent.
Facility B, an urban teaching hospital,

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Payment rate
Tier 1

Payment rate
Tier 2

Payment rate
Tier 3

18,109.94
22,999.13
18,571.96
24,184.58
30,854.98
13,726.83
18,157.05
22,339.54
28,105.66
15,194.96
19,736.12
24,192.18
29,921.82
14,354.51
19,011.18
24,081.23
15,854.55
19,923.06
23,371.48
30,177.15
16,204.11
25,660.30
42,701.82
15,837.84
28,506.89
51,296.29
13,415.27
18,043.07
22,889.71
29,646.74
27,971.92
........................
........................
........................
........................
........................

17,185.90
21,824.33
15,026.26
19,565.91
24,962.72
11,131.02
14,725.34
18,116.02
22,793.96
12,386.37
16,088.60
19,720.92
24,391.27
13,318.01
17,638.80
22,345.62
14,118.94
17,742.15
20,812.14
26,873.10
14,342.35
22,713.41
37,795.91
14,196.45
25,553.92
45,981.55
11,018.55
14,819.57
18,799.93
24,348.72
25,480.97
........................
........................
........................
........................
........................

16,029.33
20,354.68
13,187.30
17,172.22
21,909.44
10,138.59
13,412.24
16,500.47
20,760.47
11,454.73
14,880.36
18,239.12
22,558.39
12,287.58
16,274.02
20,616.09
13,018.61
16,359.13
19,190.51
24,777.30
12,283.02
19,450.40
32,367.18
14,077.91
25,338.11
45,594.00
10,153.78
13,656.92
17,325.72
22,439.85
23,629.85
........................
........................
........................
........................
........................

has a DSH percentage of 15 percent
(which would result in a LIP adjustment
of 1.0454 percent), a wage index of
0.8852, and a teaching status adjustment
of 0.0784.
To calculate each IRF’s labor and nonlabor portion of the Federal prospective
payment, we begin by taking the
unadjusted Federal prospective
payment rate for CMG 0110 (without
comorbidities) from Table 5. Then, we
multiply the labor-related share for FY
2015 (69.294 percent) described in
section VI.D. of this final rule by the
unadjusted federal prospective payment
rate. To determine the non-labor portion
of the federal prospective payment rate,
we subtract the labor portion of the
federal payment from the unadjusted
federal prospective payment.
To compute the wage-adjusted federal
prospective payment, we multiply the
labor portion of the federal payment by
the appropriate wage index found in
tables A and B. These tables are
available through the Internet on the
CMS Web site at http://

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Payment rate
no comorbidity
14,901.64
18,924.55
12,433.48
16,190.43
20,655.60
9,196.31
12,164.48
14,965.47
18,830.32
11,068.70
14,378.83
17,625.12
21,798.49
11,580.88
15,337.82
19,429.12
11,977.54
15,050.58
17,655.52
22,797.00
10,989.67
17,403.23
28,959.79
13,430.47
24,172.42
43,496.68
9,267.74
12,463.88
15,813.52
20,479.31
20,568.97
2,354.17
10,320.96
23,616.17
11,055.03
29,601.14

www.cms.hhs.gov/Medicare/MedicareFee-for-Service-Payment/Inpatient
RehabFacPPS/. The resulting figure is
the wage-adjusted labor amount. Next,
we compute the wage-adjusted federal
payment by adding the wage-adjusted
labor amount to the non-labor portion.
Adjusting the wage-adjusted federal
payment by the facility-level
adjustments involves several steps.
First, we take the wage-adjusted Federal
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 wageadjusted and rural-adjusted amount (if
applicable). Finally, we add the
additional teaching status payments (if
applicable) to the wage, rural, and LIPadjusted federal prospective payment
rates. Table 6 illustrates the components
of the adjusted payment calculation.

E:\FR\FM\06AUR2.SGM

06AUR2

45890

Federal Register / Vol. 79, No. 151 / Wednesday, August 6, 2014 / Rules and Regulations
TABLE 6—EXAMPLE OF COMPUTING THE IRF FY 2015 FEDERAL PROSPECTIVE PAYMENT
Rural Facility A
(Spencer Co., IN)

Steps
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16

Unadjusted Federal Prospective Payment .........................................................
Labor Share ........................................................................................................
Labor Portion of Federal Payment .....................................................................
CBSA-Based Wage Index (shown in the Addendum, Tables 1 and 2) .............
Wage-Adjusted Amount ......................................................................................
Non-Labor Amount .............................................................................................
Wage-Adjusted Federal Payment ......................................................................
Rural Adjustment ................................................................................................
Wage- and Rural-Adjusted Federal Payment ....................................................
LIP Adjustment ...................................................................................................
FY 2015 Wage-, Rural- and LIP-Adjusted Federal Prospective Payment Rate
FY 2015 Wage- and Rural-Adjusted Federal Prospective Payment .................
Teaching Status Adjustment ..............................................................................
Teaching Status Adjustment Amount .................................................................
FY 2015 Wage-, Rural-, and LIP-Adjusted Federal Prospective Payment Rate
Total FY 2015 Adjusted Federal Prospective Payment .....................................

Thus, the adjusted payment for
Facility A would be $34,081.84, and the
adjusted payment for Facility B would
be $33,681.92.

tkelley on DSK3SPTVN1PROD with RULES2

VII. Update to Payments for High-Cost
Outliers Under the IRF PPS
A. Update to the Outlier Threshold
Amount for FY 2015
Section 1886(j)(4) of the Act provides
the Secretary with the authority to make
payments in addition to the basic IRF
prospective payments for cases
incurring extraordinarily high costs. A
case qualifies for an outlier payment if
the estimated cost of the case exceeds
the adjusted outlier threshold. We
calculate the adjusted outlier threshold
by adding the IRF PPS payment for the
case (that is, the CMG payment adjusted
by all of the relevant facility-level
adjustments) and the adjusted threshold
amount (also adjusted by all of the
relevant facility-level adjustments).
Then, we calculate the estimated cost of
a case by multiplying the IRF’s overall
CCR by the Medicare allowable covered
charge. If the estimated cost of the case
is higher than the adjusted outlier
threshold, we make an outlier payment
for the case equal to 80 percent of the
difference between the estimated cost of
the case and the outlier threshold.
In the FY 2002 IRF PPS final rule (66
FR 41362 through 41363), we discussed
our rationale for setting the outlier
threshold amount for the IRF PPS so
that estimated outlier payments would
equal 3 percent of total estimated
payments. For the 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

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of caring for high-cost patients, while
still providing for adequate payments
for all other (non-high cost outlier)
cases.
Subsequently, we updated the IRF
outlier threshold amount in the FYs
2006 through 2014 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, and
77 FR 44618, 78 FR 47860, 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 2015, we proposed to use
FY 2013 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 41316
and 41362 through 41363), which is also
the same methodology that we used to
update the outlier threshold amounts for
FYs 2006 through 2014. Based on an
analysis of this updated data, we
estimate that IRF outlier payments as a
percentage of total estimated payments
are approximately 2.8 percent in FY
2014. Therefore, we update the outlier
threshold amount to $8,848 to maintain
estimated outlier payments at
approximately 3 percent of total
estimated aggregate IRF payments for
FY 2015.
We received 3 comments on the
proposed update to the FY 2015 outlier
threshold amount to maintain estimated
outlier payments at approximately 3
percent of total estimated IRF payments,
which are summarized below.

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×
=
×
=
+
=
×
=
×
=
×
=
+
=

$32,561.72
0.69294
$22,563.32
0.8513
$19,208.15
$9,998.40
$29,206.55
1.149
$33,558.33
1.0156
$34,081.84
$33,558.33
0
$0.00
$34,081.84
$34,081.84

Urban Facility B
(Harrison Co., IN)
×
=
×
=
+
=
×
=
×
=
×
=
+
=

$32,561.72
0.69294
$22,563.32
0.8852
$19,973.05
$9,998.40
$29,971.45
1.000
$29,971.45
1.0454
$31,332.15
$29,971.45
0.0784
$2,349.76
$31,332.15
$33,691.92

Comment: Several commenters
expressed support for the proposed
update to the outlier threshold amount
to maintain estimated IRF outlier
payments for FY 2015 at 3 percent of
total IRF PPS payments. However, some
commenters expressed concerns that
actual IRF outlier payments in recent
years have tended to fall below 3
percent of total IRF PPS payments.
These commenters requested that we
revise the methodology used to set the
outlier threshold amount to ensure that
we pay out the full 3 percent in outlier
payments or incorporate any unused
outlier payments from years in which
aggregate outlier payments are below
the 3 percent target back into the IRF
PPS base payments for subsequent
years.
Response: We will continue to
monitor our IRF outlier policies to
ensure that they continue to compensate
IRFs for treating unusually high-cost
patients and, thereby, promote access to
care for patients who are likely to
require unusually high-cost care.
Although actual outlier payments in the
most recent 4-year period have tended
to be just slightly below the 3 percent
target, actual outlier payments ranged at
or above 3 percent for the 4-year period
from FY 2007 through FY 2010. In fact,
actual outlier payments in FY 2008 were
4.2 percent of total IRF PPS payments.
As we have indicated in previous IRF
PPS final rules, we do not make
adjustments to IRF PPS payment rates
for the sole purpose of accounting for
differences between projected and
actual outlier payments. We use the best
available data at the time to establish an
outlier threshold for IRF PPS payments
prior to the beginning of each fiscal year
so that estimated outlier payments for
that fiscal year will equal 3 percent of
total estimated IRF PPS payments. We

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Federal Register / Vol. 79, No. 151 / Wednesday, August 6, 2014 / Rules and Regulations

tkelley on DSK3SPTVN1PROD with RULES2

evaluate the status of our outlier
expenditures annually, and if there is a
difference from our projection, that
information is used to make a
prospective adjustment to lower or raise
the outlier threshold for the upcoming
fiscal year. We believe a retrospective
adjustment would not be appropriate.
This includes instances where we have
overestimated, as well as
underestimated, outlier payments. If
outlier payments for a given year turn
out to be greater than projected, we do
not recoup money from hospitals; if
outlier payments for a given year are
lower than projected, we do not make
an adjustment to account for the
difference. Payments for a given
discharge in a given fiscal year are
generally intended to reflect or address
the average costs of that discharge in
that year; that goal would be
undermined if we adjusted IRF PPS
payments to account for
‘‘underpayments’’ or ‘‘overpayments’’ in
IRF outliers in previous years.
Final Decision: Having carefully
considered the public comments
received and also taking into account
the most recent available data, we are
finalizing the outlier threshold amount
of $8,848 to maintain estimated outlier
payments at approximately 3 percent of
total estimated aggregate IRF payments
for FY 2015. This update is effective
October 1, 2014. We will continue to
monitor trends in IRF outlier payments
to ensure that they are working as
intended to compensate IRFs for treating
exceptionally high-cost IRF patients.
B. Update to the IRF Cost-to-Charge
Ratio Ceiling and Urban/Rural Averages
In accordance with the methodology
stated in the FY 2004 IRF PPS final rule
(68 FR 45674, 45692 through 45694), we
apply a ceiling to IRFs’ CCRs. Using the
methodology described in that final
rule, we update the national urban and
rural CCRs for IRFs, as well as the
national CCR ceiling for FY 2015, based
on analysis of the most recent data that
is available. We apply the national
urban and rural CCRs in the following
situations:
• New IRFs that have not yet
submitted their first Medicare cost
report.
• IRFs whose overall CCR is in excess
of the national CCR ceiling for FY 2015,
as discussed below.
• Other IRFs for which accurate data
to calculate an overall CCR are not
available.
Specifically, for FY 2015, we estimate
a national average CCR of 0.569 for rural
IRFs, which we calculated by taking an
average of the CCRs for all rural IRFs
using their most recently submitted cost

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report data. Similarly, we estimate a
national average CCR of 0.443 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 costs factor more heavily
into the averages than the CCRs of IRFs
with lower costs. For this final rule, we
have used the most recent available cost
report data (FY 2012). This includes all
IRFs whose cost reporting periods begin
on or after October 1, 2011, and before
October 1, 2012. If, for any IRF, the FY
2012 cost report was missing or had an
‘‘as submitted’’ status, we used data
from a previous fiscal year’s (that is, FY
2004 through FY 2011) 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.
In accordance with past practice, we
will set the national CCR ceiling at 3
standard deviations above the mean
CCR. Using this method, the national
CCR ceiling would be 1.37 for FY 2015.
This means that, if an individual IRF’s
CCR exceeds this proposed ceiling of
1.37 for FY 2015, we would replace the
IRF’s CCR with the appropriate national
average CCR (either rural or urban,
depending on the geographic location of
the IRF). We calculated the national
CCR ceiling by:
Step 1. Taking the national average
CCR (weighted by each IRF’s total costs,
as discussed above) 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 did not receive any comments on
the proposed updates to the IRF CCR
ceilings and urban/rural averages.
Final Decision: As we did not receive
any comments on the proposed updates
to the IRF CCR ceiling and the urban/
rural averages for FY 2015, we are
finalizing the national average urban
CCR at 0.443, the national average rural
CCR at 0.569, and the national CCR
ceiling at 1.37 percent for FY 2015.

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These updates are effective October 1,
2014.
VIII. Refinements to the Presumptive
Compliance Methodology
A. Background on the Compliance
Percentage
The compliance percentage has been
part of the criteria for defining IRFs
since implementation of the Inpatient
Prospective Payment System (IPPS) in
1983. In the September 1, 1983, interim
final rule with comment period (48 FR
39752), which allowed IRFs to be paid
separately from the IPPS, the initial
compliance percentage was set at 75
percent. The 1983 interim rule
stipulated that in accordance with
sections 1886(d)(1)(B) and
1886(d)(1)(B)(ii) of the Act, a
rehabilitation hospital and a
rehabilitation unit were excluded from
the IPPS. Sections 1886(d)(1)(B) and
1886(d)(1)(B)(ii) of the Act also give the
Secretary the discretion to define a
rehabilitation hospital and unit.
A hospital or unit deemed excluded
from the IPPS and paid under the IRF
PPS must meet the general requirements
in subpart B and subpart P of part 412.
Subject to the special payment
provisions of § 412.22(c), a hospital or
unit must meet the general criteria set
forth in § 412.22 and in the regulations
at § 412.23(b), § 412.25, and § 412.29
that specify the criteria for a provider to
be classified as a rehabilitation hospital
or unit. Hospitals and units meeting
these criteria are eligible to be paid on
a prospective payment basis as an IRF
under the IRF PPS.
The 1983 interim final rule stipulated
that one of the criteria for being
classified as an IRF was that, during the
facility’s most recently completed 12month cost reporting period, the
hospital must be primarily engaged in
furnishing intensive rehabilitation
services, as demonstrated by patient
medical records, indicating that at least
75 percent of the IRF’s patient
population were treated for one or more
of the 10 medical conditions specified
in the regulation that typically required
the intensive inpatient rehabilitation
treatment provided in an IRF. These
criteria, along with other related criteria,
distinguished an inpatient rehabilitation
hospital or unit from a hospital that
furnished general medical or surgical
services, as well as rehabilitation
services. We believed then, as we do
now, that by examining the types of
conditions for which a hospital’s
inpatients are treated, and the
proportion of patients treated for
conditions that typically require
intensive inpatient rehabilitation, we

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would be able to distinguish those
hospitals in which the provision of
rehabilitation services was primary
rather than secondary. Thus, Medicare
pays for rehabilitation services at IRFs at
a higher rate than other hospitals
because IRFs are designed to offer
specialized inpatient rehabilitation care
to patients with intensive needs.
The original medical conditions
specified under the compliance
percentage, or ‘‘75 percent rule,’’ were
stroke, spinal cord injury, congenital
deformity, amputation, major multiple
trauma, fracture of femur (hip fracture),
brain injury, and polyarthritis
(including rheumatoid arthritis). In the
January 3, 1984, final rule (49 FR 234),
we expanded the list of eligible medical
conditions to include neurological
disorders (including multiple sclerosis,
motor neuron diseases, polyneuropathy,
muscular dystrophy, and Parkinson’s
disease) and burns. In the May 7, 2004
final rule (69 FR 25752), we modified
and expanded the list of eligible
medical conditions by removing
polyarthritis and substituting three more
clearly defined arthritis-related
conditions. The three conditions that
replaced polyarthritis included the
following:
• Active, polyarticular rheumatoid
arthritis, psoriatic arthritis, and
seronegative arthropathies resulting in
significant functional impairment of
ambulation and other activities of daily
living, which has not improved after an
appropriate, aggressive, and sustained
course of outpatient therapy services or
services in other less intensive
rehabilitation settings immediately
preceding the inpatient rehabilitation
admission, or which results from a
systemic disease activation immediately
before admission, but has the potential
to improve with more intensive
rehabilitation.
• Systemic vasculidities with joint
inflammation, resulting in significant
functional impairment of ambulation
and other activities of daily living,
which has not improved after an
appropriate, aggressive, and sustained
course of outpatient therapy services or
services in other less intensive
rehabilitation settings immediately
preceding the inpatient rehabilitation
admission, or which results from a
systemic disease activation immediately
before admission, but has the potential
to improve with more intensive
rehabilitation.
• Severe or advanced osteoarthritis
(osteoarthrosis or degenerative joint
disease) involving three or more major
joints (elbow, shoulders, hips, or knees)
with joint deformity and substantial loss
of range of motion, atrophy, significant

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functional impairment of ambulation
and other activities of daily living,
which has not improved after an
appropriate, aggressive, and sustained
course of outpatient therapy services or
services in other less intensive
rehabilitation settings immediately
preceding the inpatient rehabilitation
admission, but has the potential to
improve with more intensive
rehabilitation. (A joint replaced by a
prosthesis is no longer considered to
have osteoarthritis, or other arthritis,
even though this condition was the
reason for the joint replacement.)
In the May 7, 2004 final rule (69 FR
25752), a 13th condition was also added
to include patients who undergo knee
and/or hip joint replacement during an
acute hospitalization immediately
preceding the inpatient rehabilitation
stay and also meet at least one of the
following specific criteria:
• Underwent bilateral knee or hip
joint replacement surgery during the
acute hospitalization immediately
preceding the IRF admission.
• Are extremely obese patients as
measured by the patient’s Body Mass
Index (BMI) of at least 50, at the time
of admission to the IRF.
• Are patients considered to be ’’frail
elderly,’’ as determined by a patient’s
age of 85 or older, at the time of
admission to the IRF (the provision
currently states only that the patients be
age 85 or older at the time of admission
to the IRF).
In 2002, we surveyed Medicare fiscal
intermediaries to determine how they
were enforcing the 75 percent rule.
Although the 75 percent rule was one of
the criteria that were used to distinguish
an IRF from an acute care hospital from
1983 to 2004, we found evidence that
different fiscal intermediaries were
enforcing the rule differently. We found
fiscal intermediaries were using
inconsistent methods to determine
whether IRFs were in compliance with
the regulation, and that some IRFs were
not being reviewed for compliance at
all. This led to concerns that some IRFs
might have been out of compliance with
the regulation and inappropriately
classified as IRFs, while other IRFs may
have been held to overly high standards.
Because of these concerns we sought to
establish a more uniform enforcement of
the 75 percent rule.
In the May 16, 2003, IRF PPS
proposed rule (68 FR 26786), we
solicited comments on the regulatory
requirements of the 75 percent rule.
Though we did not, at that time,
propose amending the regulatory
requirements for the 75 percent rule
located in then § 412.23(b)(2), we did
propose to amend these requirements in

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the September 9, 2003, proposed rule
titled, ‘‘Medicare Program; Changes to
the Criteria for Being Classified as an
Inpatient Rehabilitation Facility’’ (68 FR
53266). In that rule, we proposed some
revisions to the 75 percent rule,
including lowering the compliance
percentage to 65 percent during a 3-year
transition period for cost reporting
periods between January 1, 2004, and
January 1, 2007. Also, in response to
comments on the September 9, 2003,
proposed rule and as stated above, the
May 7, 2004, final rule (69 FR 25752)
expanded the number of medical
conditions that would meet the
compliance percentage from 10 to 13
and provided that patient comorbidities
may also be included in determining an
IRF’s compliance with the requirements
during the transition period.
In the September 9, 2003, proposed
rule, we defined ‘‘comorbidity’’ as a
specific patient condition that is
secondary to the patient’s principal
diagnosis or impairment that is the
primary reason for the inpatient
rehabilitation stay. In the May 7, 2004,
rule, we adopted the provision to use a
patient with a comorbidity counting
towards the compliance threshold
during the transition period. In the
determination of the compliance
percentage, a patient comorbidity
counts toward the percentage if the
comorbidity falls in one of the
conditions specified at § 412.29(b)(2)
and has caused significant decline in
functional ability in the individual that
even in the absence of the admitting
condition, the individual would require
the intensive rehabilitation treatment
that is unique to IRFs.
Anticipating that IRFs needed some
time to adjust and adapt their processes
to the changes in the enforcement of the
75 percent rule, in the May 7, 2004 final
rule, we provided IRFs with a 3-year
phase-in period (cost reporting periods
beginning on or after July 1, 2004,
through July 1, 2007) to establish the
compliance threshold of 75 percent of
the IRF’s total patient population. The
3-year phase-in period was intended to
begin with cost reporting periods on or
after July 1, 2004, with the threshold at
50 percent of the IRF’s population and
gradually increase to 60 percent, then to
65 percent, and then to expire with cost
reporting periods beginning on or after
July 1, 2007, when the compliance
percentage would once again be at 75
percent.
Section 5005 of the Deficit Reduction
Act of 2005 (DRA) (Pub. L. 109–171,
enacted February 8, 2006) and section
1886(d)(1)(B) of the Act modified the
provisions of the 75 percent rule
originally specified in the May 7, 2004,

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final rule. To reflect these statutory
changes, in the August 7, 2007, final
rule (72 FR 44284), we revised the
regulations to prolong the overall
duration of the phased transition to the
full 75 percent threshold by stipulating
that an IRF must meet the full 75
percent compliance threshold as of its
first cost reporting period that starts on
or after July 1, 2008. We also extended
the policy of using a patient’s
comorbidities to the extent they met the
conditions as outlined in the regulations
to determine compliance with the
classification criteria at then
§ 412.23(b)(2)(1) to the first cost
reporting period that starts on or after
July 1, 2008.
Subsequently, section 115 of the
MMSEA amended section 5005 of the
DRA to revise elements of the 75
percent rule that are used to classify
IRFs. In accordance with the statute, in
the August 8, 2008, final rule (73 FR
46370), we revised the compliance rate
that IRFs must meet to be excluded from
the IPPS and be paid under the IRF PPS
to 60 percent for cost reporting periods
beginning in or after July 1, 2006. Also,
in accordance with the statute, we
required that patient comorbidities that
satisfy the criteria as specified at then
§ 412.23(b)(2)(i) [now located at
§ 412.29(b)(1) and § 412.29(b)(2)] be
included in calculations used to
determine whether an IRF meets the 60
percent compliance percentage for cost
reporting periods beginning on or after
July 1, 2007. As a result of these
changes, the requirements started being
referred to as the ‘‘60 percent rule,’’
instead of the ‘‘75 percent rule.’’ The
regulations finalized in the FY 2009 IRF
PPS final rule (73 FR 46370) continue to
be in effect.
Though an IRF must serve an
inpatient population of whom at least
60 percent meet the compliance
percentage criteria specified at
§ 412.29(b), the existing regulation
allows for 40 percent of reasonable and
necessary admissions to an IRF to fall
outside of the 13 qualifying medical
conditions. Still, the 60 percent rule is
one of the primary ways we distinguish
an IRF from an acute care hospital. As
Medicare payments for IRF services are
generally significantly higher than
Medicare payments for similar services
provided in acute care hospital settings,
we believe that it is important to
maintain and enforce the criteria for
medical conditions that may be counted
toward an IRF’s compliance calculation
for the 60 percent rule to ensure that the
higher Medicare payments are
appropriately allocated to those
providers that are providing IRF-level
services.

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B. Changes to the Diagnosis Codes That
Are Used To Determine Presumptive
Compliance
In the FY 2014 IRF PPS final rule (78
FR 47860, 47881 through 47895), we
revised the list of ICD–9–CM diagnosis
codes that are used to determine
presumptive compliance, effective for
compliance review periods beginning
on or after October 1, 2014. These
revisions were based on an analysis of
the ICD–9–CM code list that determined
the clinical appropriateness of each
individual ICD–9–CM code’s inclusion
on the list. As a result of this analysis,
we also intended to remove all of the
status post-amputation diagnoses codes,
but these codes were inadvertently
omitted from the FY 2014 IRF PPS
proposed and final rules. These codes,
listed in Table 7, are used to indicate
that a patient has the sequela or residual
effect of a condition.
As we stated in the FY 2014 IRF PPS
final rule (78 FR 47860, 47881), the
ICD–9–CM diagnosis codes included on
the ‘‘ICD–9–CM Codes That Meet
Presumptive Compliance Criteria’’ list
are ones that demonstrate that the
patient meets criteria for the medical
conditions that may be counted toward
an IRF’s compliance percentage under
the presumptive compliance
methodology. Further, we stated that the
underlying premise of the presumptive
compliance methodology list is that it
represents particular diagnosis codes
that, if applicable to a given patient,
would more than likely mean that the
patient required intensive rehabilitation
services in an IRF for treatment of one
or more of the conditions specified at
§ 412.29(b)(2) or that they had a
comorbidity that caused significant
decline in functional ability such that,
even in the absence of the admitting
condition, the patient would require the
intensive rehabilitation treatment that is
unique to IRFs and cannot be
appropriately treated in another care
setting. For the reasons described below,
we do not believe that the ICD–9–CM
diagnosis codes listed in Table 7 meet
either of these criteria. We believe it is
impossible to determine, from the
presence of such diagnosis codes alone,
whether a patient with an amputation
status or prosthetic fitting and
adjustment needs has a condition for
which he or she would qualify for
treatment in an IRF. Some patients with
an amputation status or prosthetic
fitting and adjustment needs will not
require close medical supervision by a
physician or weekly interdisciplinary
team conferences to achieve their goals,
while others may require these services.
We believe that rehabilitation associated

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45893

with an amputation status or prosthetic
fitting and adjustment needs does not
necessarily need to be accompanied by
the close medical management provided
in IRFs, as long as the patient does not
have any additional comorbidities that
have caused significant decline in his or
her functional ability that, in the
absence of an amputation status or
prosthetic fitting and adjustment needs,
would necessitate treatment in an IRF.
That is to say, a patient’s need for
intensive rehabilitation services
provided in an IRF may depend on
other conditions which cannot be solely
identified through the presence of an
amputation status or prosthetic fitting
and adjustment diagnosis code. If a
patient with one of the diagnosis codes
listed in Table 7 has additional
comorbidities that would necessitate
treatment in an IRF, then those
additional comorbidities would qualify
the patient for inclusion in the
calculation of the IRF’s compliance
percentage under the presumptive
compliance methodology. Thus, we are
removing the status post-amputation
diagnosis codes listed in Table 7 from
the list of ‘‘ICD–9–CM Codes That Meet
Presumptive Compliance Criteria.’’ The
removal of these codes will be effective
for compliance review periods
beginning on or after October 1, 2015,
and the changes will be incorporated
into the ICD–10 lists (discussed below)
when ICD–10–CM becomes the required
medical data code set for use on
Medicare claims and IRF–PAI
submissions.

TABLE 7—ICD–9–CM CODES REMOVED FROM ‘‘ICD–9–CM CODES
THAT MEET PRESUMPTIVE COMPLIANCE CRITERIA’’
ICD–9–CM
Code

Diagnosis

V49.65 .........

Below elbow amputation status.
Above elbow amputation status.
Shoulder amputation status.
Foot amputation status.
Ankle amputation status.
Below knee amputation status.
Above knee amputation status.
Hip amputation status.
Fitting and adjustment of artificial arm (complete) (partial).
Fitting and adjustment of artificial leg (complete) (partial).

V49.66 .........
V49.67
V49.73
V49.74
V49.75

.........
.........
.........
.........

V49.76 .........
V49.77 .........
V52.0 ...........
V52.1 ...........

We received 44 comments on the
proposed changes to the diagnosis codes
that are used to determine presumptive

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compliance, which are summarized
below.
Comment: Citing studies, several
commenters emphasized that research
indicates that amputees receive
substantial benefits from care in the IRF
setting compared to other post-acute
care settings. Another commenter stated
that proper fitting and training for the
use of a prosthesis is a complex clinical
exercise that requires the intensive
multidisciplinary services provided in
IRFs.
Response: We agree that some
patients that present with an
amputation status or prosthetic fitting or
adjustment may require the close
medical supervision by a rehabilitation
physician and weekly interdisciplinary
team conferences uniquely provided in
IRFs to achieve their therapeutic goals.
However, we believe that it cannot be
determined from the amputation status
or prosthetic fitting or adjustment
diagnosis codes alone whether a patient
presents with the clinical complexity
that would require an IRF level of care.
Indeed, we believe that many patients
who are appropriately coded with these
diagnosis codes can be effectively cared
for in other care settings. As we stated
in the FY 2015 IRF PPS proposed rule
(79 FR 26308, 26327) and the FY 2014
IRF PPS final rule (78 FR 47860, 47881),
the underlying premise of the
presumptive compliance methodology
list is that it represents particular
diagnosis codes that, if applicable to a
given patient, would more than likely
mean that the patient required intensive
rehabilitation services in an IRF for
treatment of one or more of the
conditions specified at § 412.29(b)(2) or
that they had a comorbidity that caused
significant decline in functional ability
such that, even in the absence of the
admitting condition, the patient would
require the intensive rehabilitation
treatment that is unique to IRFs and
cannot be appropriately treated in
another care setting. Therefore, we
believe that the mere presence of an
amputation status or prosthetic fitting or
adjustment code alone does not provide
us with enough information to
determine whether the patient meets all
of the requirements necessary to count
for the 60 percent rule in § 412.29(b)(2).
Comment: One commenter suggested
that the rationale provided by CMS for
the removal of the amputation status
codes confuses the concepts of medical
necessity with IRF classification. The
commenter stated that an amputee
would only be admitted to a
rehabilitation hospital by a
rehabilitation physician if he or she
needed intensive rehabilitation services.
The commenter further stated that even

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though many amputees may not need
intensive inpatient rehabilitation
services, the mere referral and
subsequent admission to an IRF would
mean that the patient needs the
intensive services provided by the IRF.
Response: We disagree with this
comment. The regulatory requirements
at § 412.29(b) specify that at least 60
percent of an IRF’s patient population
must require intensive rehabilitation
services in an IRF for treatment of one
or more of the conditions specified at
§ 412.29(b)(2) or that they have a
comorbidity that caused significant
decline in functional ability such that,
even in the absence of the admitting
condition, the patient would require the
intensive rehabilitation treatment that is
unique to IRFs and cannot be
appropriately treated in another care
setting. For a patient to require intensive
rehabilitation services in an IRF for
treatment of a particular condition, that
patient must require the close medical
supervision and interdisciplinary
approach to care that are unique to care
in an IRF. This is not based on the IRF
coverage requirements, but rather it is
based directly on the regulatory
language in § 412.29(b) that details the
requirements that IRFs must meet to
adhere to the 60 percent rule and
thereby be classified for payment under
the IRF PPS.
Comment: Several commenters stated
that the proposed removal of the status
post amputation diagnoses codes from
‘‘ICD–9–CM Codes That Meet
Presumptive Compliance Criteria’’ list
would limit access to patients that
would meet admission criteria as
specified in § 412.29(b)(2). One
commenter stated that the effect of the
proposed removal of the amputation
status post diagnosis codes would be to
cause more IRFs to have to undergo
medical review, and the IRFs would
respond by restricting admission for
certain types of patients in order to
avoid having to go through medical
review.
Response: We do not believe that the
proposed removal of these diagnosis
codes will have a significant effect on
access to care for these patients, as we
estimate that only about 2 percent of all
IRF patients are currently coded with
these diagnoses, and these diagnosis
codes are only used to meet the 60
percent rule requirements 0.3 percent of
the time. In addition, the proposed
removal of these codes from the
presumptive compliance method does
not necessarily mean that a patient with
one of these diagnosis codes cannot be
included in the IRF’s population that
meets the 60 percent rule. As we
described in the FY 2014 IRF PPS final

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rule, we use a bifurcated sub-regulatory
approach to determining compliance
with the rule, in which an IRF’s data is
first evaluated to determine whether or
not the IRF is presumptively compliant
with the 60 percent rule requirements.
If so, then the IRF is presumed to meet
the regulatory requirements. If not, then
the IRF is evaluated using the more
intensive medical review compliance
method. If a patient with one of these
diagnosis codes presents with the
clinical complexity that would require
an IRF level of care, then this
information can be determined by the
medical review, and the patient can
then be included in the IRF’s patient
population that meets the 60 percent
rule requirements. We will closely
monitor the data to ensure that there are
no unintended consequences of these
policies on access to care.
Comment: One commenter stated that
amputations in older adult populations
are often the byproduct of multiple
comorbid conditions (for example,
diabetes or peripheral vascular disease)
that make this population more at risk
for post-surgical complications, such as
risk of non-healing surgical incision.
Response: We agree that a patient
with multiple comorbid conditions,
such as diabetes or peripheral vascular
disease affecting the surgical stump
incision, may present with a need for
intensive rehabilitation services
provided in an IRF that could not be
solely identified through the presence of
an amputation status or prosthetic
fitting or adjustment diagnosis code.
These patients may meet the 60 percent
rule requirements based on the presence
of one of their other comorbid
conditions, or the patients’ clinical
complexity may be determined on
medical review, and the patient can
then be included in the IRF’s patient
population that meets the 60 percent
rule requirements.
Comment: One commenter requested
that we apply any changes to the
presumptive compliance methodology
to an IRF’s full 12-month compliance
review period, instead of applying them
to only part of an IRF’s compliance
review period.
Response: As the commenter
suggested, all of the proposed changes
to the presumptive compliance
methodology are being applied effective
for full 12-month compliance review
periods, and will not be applied to only
part of an IRF’s compliance review
period.
Comment: Several commenters
suggested that we delay implementation
of the proposed removal of the
amputation status diagnosis codes and
the other changes to the presumptive

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compliance methodology. For example,
one commenter specifically
recommended that we delay
implementation of changes to the
presumptive compliance methodology
until changes to the IRF–PAI and the
associated limited medical review
process are implemented. Another
commenter recommended that we delay
implementation of any further changes
to the presumptive compliance method
until at least October 1, 2015, and one
commenter recommended that we delay
implementation of any changes to the
‘‘non-specific ICD codes,’’ which we
finalized in the FY 2014 IRF PPS final
rule (78 FR 47884 through 47887), for at
least one year following the
implementation of the ICD–10–CM
medical code data set, to give providers
more time to adapt to the added
specificity of the coding provided for
under ICD–10–CM. Another commenter
suggested that we delay implementation
of the changes to the presumptive
compliance method to give us more
time to thoroughly evaluate the policies,
since the changes to the presumptive
compliance method that we finalized in
the FY 2014 IRF PPS final rule and the
changes to the presumptive compliance
method that we proposed in the FY
2015 IRF PPS proposed rule, taken
together, would cause as many as 15
percent of IRF Medicare cases to fail the
presumptive compliance method.
Finally, several commenters
recommended that we keep the ICD–9–
CM codes used in the presumptive
compliance method as they are now—as
of the date of this final rule, neither the
changes finalized in the FY 2014 IRF
PPS nor the changes proposed in the FY
2015 IRF PPS proposed rule have taken
effect—or delay implementation of
additional IGC exclusions until we
transition to ICD–10–CM.
Response: We agree with these
commenters that delaying the effective
date of the changes to the presumptive
compliance method would give CMS
more time to put processes in place to
mitigate some of the additional burden
of increased medical reviews, and
would allow providers more time to
adapt to these changes. Though several
of the commenters explicitly
recommended that we delay the changes
to the presumptive compliance method
that were proposed in the FY 2015 IRF
PPS proposed rule, none of the
commenters explicitly stated that we
should delay implementation of the
changes to the presumptive compliance
method that we finalized in the FY 2014
IRF PPS final rule. However, we
interpret several of the comments to
mean that we should delay both sets of

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changes, so as to effectuate all of the
related policies at the same time. For
example, several of the commenters
suggested delaying implementation of
the ‘‘presumptive compliance’’ changes,
without distinguishing between the
changes that we finalized in the FY
2014 IRF PPS final rule and the changes
that we proposed in the FY 2015 IRF
PPS proposed rule. In addition, one
commenter referred specifically to the
impetus for recommending a delay
being the significant impact that the
changes would have on ‘‘15 percent’’ of
IRF cases that would no longer meet the
presumptive compliance criteria. Other
commenters referenced this ‘‘15
percent’’ figure as the percentage of IRF
cases that would be affected if we were
to change from using the current
presumptive compliance method to
using the revised presumptive
compliance method that would result
from both the changes that we finalized
in the FY 2014 IRF PPS final rule and
the changes that were proposed in the
FY 2015 IRF PPS proposed rule. Thus,
we believe that the commenter was
recommending a delay of both sets of
presumptive compliance method
changes, so as to effectuate all of the
related policies at the same time.
Therefore, based on our review of
these comments, and to allow for the
revisions to the IRF–PAI and the
associated limited medical review
process discussed in section X. of this
final rule to take effect prior to
implementation of the changes to the
presumptive compliance method, we
are implementing all of the changes to
the presumptive compliance method for
compliance review periods beginning
on or after October 1, 2015. That is, we
are delaying the effective date of the
changes to the presumptive compliance
method that we finalized in the FY 2014
IRF PPS final rule until compliance
review periods beginning on or after
October 1, 2015, and we are also
delaying the changes to the presumptive
compliance method that we are
finalizing in this final rule so that they
also take effect for compliance review
periods beginning on or after October 1,
2015. This represents a one-year
delayed effective date for all of these
changes. We believe that it will be much
less confusing for providers to have all
of the changes to the presumptive
compliance method take effect at the
same time.
We do not believe that it is necessary
to delay implementation of these
changes for an additional year after
ICD–10–CM becomes the required
medical code data set for use on IRF
claims and on the IRF–PAI. Given that
the effective date of the use of ICD–10–

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CM has been delayed twice, and given
that the ICD–10–CM code lists, which
will be used when ICD–10–CM becomes
the required medical code data set with
respect to IRF claims and the IRF–PAI,
are available for download on the CMS
Web site at http://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/InpatientRehabFacPPS/DataFiles.html in conjunction with the
publication of this final rule, we believe
that IRFs will have sufficient
opportunity to become familiar with the
added specificity of the coding offered
in ICD–10–CM.
Comment: Several commenters
suggested that CMS continue to count
amputation status codes toward an IRF’s
compliance percentage, but do so in
conjunction with other related
information provided in the IRF–PAI.
The commenters stated that the
amputation status codes could be used
in combination with the Etiologic
Diagnosis, which would reflect recent
injury. One commenter suggested that
an indicator could be added that could
be ‘‘paired up’’ with the codes in order
to maintain automation and avoid the
burden of increased medical review.
Another commenter stated that
comorbid conditions listed on the IRF–
PAI could also provide an appropriate
clinical picture that would
‘‘presumptively’’ indicate that the
patient meets conditions outlined at
§ 412.29(b)(2). Moreover, one
commenter suggested that the added
specificity of coding provided for in the
ICD–10–CM coding may supply
additional information that may help
support the amputation status diagnosis
as a ‘‘presumptively’’ qualifying
condition.
Response: We thank the commenters
for their suggestions. However, we
continue to believe that it cannot be
determined from the amputation status
or prosthetic fitting or adjustment
diagnosis codes alone whether a patient
presents with the clinical complexity
that would require an IRF level of care,
and, for this reason, we do not believe
that it is appropriate to continue to
include these codes on the ‘‘ICD–9–CM
Codes That Meet Presumptive
Compliance’’ list. However, as we
indicated above, these patients can
continue to be counted under the
medical review methodology if their
clinical complexity is shown in the
medical record to require an IRF level
of care. In fact, as the one commenter
mentioned, the patient’s comorbid
conditions as listed on the IRF–PAI and
described in the patient’s medical
record do contribute to an overall
‘‘picture’’ of the patient’s condition, but
at this time, this information cannot be

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determined using a computer program
and can only be determined through a
medical review of the patient’s clinical
record.
While we agree that ICD–10–CM
coding will likely provide more
specificity and more information, we
continue to believe that these
amputation status or prosthetic fitting or
adjustment diagnosis codes, even under
ICD–10–CM, do not provide enough
information about the clinical
complexity of the case to warrant
continued inclusion on the list of
diagnosis codes that meets the
presumptive compliance criteria. We
will consider the commenters
suggestions for future refinements to the
IRF–PAI and to the presumptive
compliance methodology.
Comment: One commenter
recommended that CMS ensure that
MACs understand the importance of IRF
care to patients with amputations
(especially those with other
comorbidities) since there could be an
increase in medical review for
amputation cases.
Response: We appreciate the
commenter’s suggestion, and we plan to
carry out training and outreach with
MACs to review policy changes to the
presumptive compliance methodology.
Final Decision: After carefully
considering the comments that we
received on the proposed removal of the
status post-amputation diagnoses codes
from the ‘‘ICD–9–CM Codes That Meet
Presumptive Compliance Criteria’’ list,
we are finalizing these proposed
changes to the list. The changes to the
list of diagnosis codes that are used to
determine presumptive compliance
under the 60 percent rule are effective
for compliance review periods
beginning on or after October 1, 2015.
C. Changes to the Impairment Group
Codes That Meet Presumptive
Compliance Criteria
An ‘‘impairment group code’’ is not
an ICD diagnosis code, but part of a
separate unique set of codes specifically
developed for the IRF PPS for assigning
the primary reason for admission to an
IRF. These codes are listed in the IRF–
PAI Training Manual (see section II,
item #21, and Appendix A). The IRF–
PAI Training Manual is available
through the Internet on the CMS Web
site at http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
InpatientRehabFacPPS/IRFPAI.html.
If an IRF is eligible to use the
presumptive methodology to evaluate
its compliance with the 60 percent rule,
all of its IRF–PAI assessments from the
most recently completed 12-month
compliance review period are examined

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(with the use of a computer program) to
determine whether they contain any of
the codes listed on the presumptive
methodology lists (that is, ‘‘ICD–9–CM
Codes That Meet Presumptive
Compliance Criteria’’ and ‘‘Impairment
Groups That Meet Presumptive
Compliance Criteria’’). Each selected
assessment is presumptively categorized
as either meeting or not meeting the IRF
60 percent rule requirements based
upon the primary reason for the patient
to be treated in the IRF (the impairment
group) and the ICD diagnosis codes
listed as either the etiologic diagnosis
(the etiologic problem that led to the
condition for which the patient is
receiving rehabilitation) or one of 25
comorbidities on the assessment.
Not all impairment group codes
(IGCs) meet the presumptive
compliance criteria. The underlying
premise of the list of eligible IGCs that
are used to determine presumptive
compliance (similar to the diagnosis
codes listed in ‘‘ICD–9–CM Codes That
Meet Presumptive Compliance
Criteria’’) includes particular IGCs that,
if applicable to a given patient, would
more than likely mean that the patient
required intensive rehabilitation
services for treatment of one or more of
the conditions specified at
§ 412.29(b)(2). The current list of
eligible IGCs that meet presumptive
compliance criteria, Appendix B:
Impairment Group Codes That Meet
Presumptive Compliance Criteria, can
be downloaded from the October 1,
2007, IRF Compliance Rule
Specification Files on the Medicare IRF
PPS Web site at http://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/InpatientRehabFacPPS/
Criteria.html. Again, this list contains
only those IGCs that meet the
presumptive compliance criteria.
1. Removal of IGCs for Unilateral Upper
Extremity Amputations and Arthritis
From Appendix B: Impairment Group
Codes That Meet Presumptive
Compliance Criteria
In the FY 2014 IRF PPS final rule (78
FR 47889 through 47895), we finalized
(applicable for compliance review
periods beginning on or after October 1,
2014) the removal of certain ICD–9–CM
codes for unilateral upper extremity
amputations from the list of ‘‘ICD–9–CM
Codes That Meet Presumptive
Compliance Criteria’’ because we
believed that it is impossible to
determine, from the presence of such
ICD–9–CM codes alone, whether a
patient with such a unilateral upper
extremity amputation has a condition
for which he or she would need
intensive rehabilitation services for

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treatment of one or more of the
conditions specified in § 412.29(b)(2).
Further, we stated that a patient’s need
for intensive inpatient rehabilitative
services for the treatment of one or more
of these conditions would depend on
the presence of additional comorbidities
that caused significant decline in his or
her functional ability to an extent that
would necessitate treatment in an IRF.
If the patient has one or more of the
comorbidities on the list of ‘‘ICD–9–CM
Codes That Meet Presumptive
Compliance Criteria,’’ then the patient
would already qualify as meeting the
presumptive compliance criteria. We
concluded that if the diagnosis codes for
such a patient’s comorbidities do not
appear on the list of ‘‘ICD–9–CM Codes
That Meet Presumptive Compliance
Criteria,’’ then the patient could still be
considered for inclusion in the IRF’s
compliance percentage following
medical review and confirmation that
the case meets the criteria for one or
more of the medical conditions in the
regulations.
In the FY 2014 IRF PPS final rule (78
FR 47887 through 47895), we also
finalized (applicable for compliance
review periods beginning on or after
October 1, 2014) the removal of ICD–9–
CM diagnosis codes for arthritis
conditions from the list of ‘‘ICD–9–CM
Codes That Meet Presumptive
Compliance Criteria’’ because the
inclusion of patients with these medical
conditions in the presumptive
compliance calculation of the IRF’s
compliance percentage is conditioned
on those patients meeting the described
severity and prior treatment
requirements. However, the ICD–9–CM
diagnosis codes that reflect these
arthritis and arthropathy conditions do
not provide any information about the
severity of the condition or whether the
prior treatment requirements were met.
Therefore, we stated in the FY 2014 IRF
PPS final rule that we believe that
additional information beyond the
presence of the code is necessary to
determine if the medical record would
support inclusion of individuals with
the arthritis and arthropathy conditions
outlined in our regulations under
§ 412.29(b)(2)(x) through
§ 412.29(b)(2)(xii) in the presumptive
compliance calculation of the facility’s
compliance percentage. For this reason,
we finalized the removal of the ICD–9–
CM diagnosis codes associated with the
medical conditions outlined in our
regulations under § 412.29(b)(2)(x)
through § 412.29(b)(2)(xii) from the list
of ‘‘ICD–9–CM Codes That Meet
Presumptive Compliance Criteria.’’
However, we also stated that we expect

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that the MACs will be able, upon
medical review, to include those
patients in a facility’s compliance
percentage upon confirmation that the
severity and prior treatment
requirements were met.
Consistent with our rationale in the
FY 2014 IRF PPS final rule for removing
the ICD–9–CM diagnoses codes for
unilateral upper extremity amputations
and the arthritis and arthropathy
conditions, we are making conforming
changes to the IGCs in this final rule by
removing four IGCs from Appendix B:
Impairment Group Codes That Meet
Presumptive Compliance Criteria. Thus,
we will remove the following codes
from Appendix B: Impairment Group
Codes That Meet Presumptive
Compliance Criteria:
• IGC 0005.1—Unilateral Upper Limb
Above the Elbow (AE),
• IGC 0005.2—Unilateral Upper Limb
Below the Elbow (BE),
• IGC 0006.1—Rheumatoid Arthritis,
and
• IGC 0006.9—Other Arthritis.
2. Other Changes to Appendix B:
Impairment Group Codes That Meet
Presumptive Compliance Criteria
We will revise Appendix B:
Impairment Group Codes That Meet
Presumptive Compliance Criteria by
revising the diagnosis codes listed as
exclusions on the table and by revising
the title of the table.
In the FY 2014 IRF PPS final rule (78
FR 47860, 47881 through 47895), we
finalized (applicable for compliance
review periods beginning on or after
October 1, 2014) the removal of certain
ICD–9–CM codes from the list of ‘‘ICD–
9–CM Codes That Meet Presumptive
Compliance Criteria.’’ Accordingly, we
exclude these diagnosis codes from
counting if they are the patient’s
Etiologic Diagnosis (that is, the etiologic
problem that led to the condition for
which the patient is receiving
rehabilitation). That is, a given IGC that
would otherwise meet the presumptive
compliance criteria will not meet such
criteria if the patient has one of the
‘‘excluded’’ Etiologic Diagnoses for that
IGC.
In addition, in the FY 2014 IRF PPS
final rule (78 FR 47860, 47883), we
implemented a change in the titles of
some tables used in the presumptive
compliance methodology to no longer
use alphabet characters or the
‘‘Appendix’’ labels to identify these
tables. Consistent with the intent to
reduce confusion among tables, and
effective October 1, 2014, we will
identify Appendix B: Impairment Group
Codes That Meet Presumptive
Compliance Criteria as ‘‘Impairment

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Group Codes That Meet Presumptive
Compliance Criteria.’’
In addition, we provided an
additional new table, ‘‘Impairment
Group Codes That Meet Presumptive
Compliance Criteria,’’ that lists Etiologic
Diagnosis codes that are excluded from
counting under related IGCs in ICD–10–
CM code format. For example, ICD–10–
CM code G72.3, ‘‘Periodic Paralysis’’ is
an excluded Etiologic Diagnosis code
under IGC 0003.8, ‘‘Neuromuscular
Disorders.’’ Further, to accommodate
the Etiologic Diagnosis code exclusions,
we have reformatted this table. A
revised table containing the
‘‘Impairment Group Codes That Meet
Presumptive Compliance Criteria,’’ with
the ICD–10–CM Etiologic Diagnosis
exclusions, can be viewed on the
Medicare IRF PPS Web site at http://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/InpatientRehab
FacPPS/Data-Files.html. The changes to
the table, ‘‘Impairment Group Codes
That Meet Presumptive Compliance
Criteria,’’ will be effective for
compliance review periods beginning
on or after October 1, 2015.
We received 49 comments on the
proposed changes to the impairment
group codes that meet presumptive
compliance criteria, which are
summarized below.
Comment: Several commenters
expressed concerns that a potential
unintended consequence of excluding
the proposed arthritis diagnosis codes
under IGCs 0008.51, 0008.52, 0008.61,
0008.62, 0008.71, and 0008.72 would be
that most lower extremity joint
replacement cases that currently satisfy
the 60 percent rule, that is, bilateral
joint replacement cases and unilateral
joint replacement cases involving
patients 85 years of age or older and/or
who have a BMI of 50 or greater, would
no longer be included in an IRF’s
presumptive compliance percentage.
Response: We appreciate the
commenters’ careful review of the
proposed Etiologic Diagnosis exclusions
for IGCs 0008.51, 0008.52, 0008.61,
0008.62, 0008.71, and 0008.72, and we
agree with these commenters that there
would have been unintended
consequences of excluding the proposed
arthritis diagnosis codes from these
IGCs. As we intend to continue to count
bilateral lower-extremity joint
replacement cases and unilateral lowerextremity joint replacement cases
involving patients 85 years of age or
older and/or who have a BMI of 50 or
greater as meeting the 60 percent rule
criteria under the presumptive
compliance method, we will remove the
proposed Etiologic Diagnosis exclusions

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from IGCs 0008.51, 0008.52, 0008.61,
0008.62, 0008.71, and 0008.72.
Comment: Several commenters
expressed concern that the impact of the
proposed changes to the presumptive
compliance criteria, the changes
proposed in the FY 2015 proposed rule
and the changes finalized in the FY
2014, will be to increase the number of
IRFs that will fail to meet presumptive
compliance.
Response: We agree with commenters
that one of the likely consequences of
the changes to the presumptive
compliance method will be an increase
in the number of IRFs that will fail the
presumptive compliance method and
will have to be evaluated using the
medical review method. However, we
believe that the proposed changes to the
IGCs That Meet Presumptive
Compliance Criteria are necessary to
continue appropriate enforcement of the
regulations in § 412.29(b). We believe
that it is impossible to determine from
the presence of one of the IGCs or
Etiologic Diagnoses alone whether the
patient’s clinical complexity requires an
IRF level of care, or, in the case of an
arthritis code, whether the patient meets
the severity and prior treatment
requirements in regulation at
§ 412.29(b)(2). This information can
only be obtained through a review of the
patient’s medical record.
However, to mitigate some of the
added burden on providers of the
additional medical reviews, we discuss
a new policy in section X of this final
rule that will allow some arthritis cases
to count toward the presumptive
compliance method based on a limited
medical review of these cases. We
believe that this new policy will
alleviate some of the burden associated
with additional medical reviews.
Comment: One commenter expressed
concern about the removal of IGC
0005.1—Unilateral upper limb above
the elbow (AE) and IGC 0005.2—
Unilateral upper limb below the elbow
(BE), as the commenter said that these
patients have impairments related to the
ability to conduct activities of daily
living that are most appropriately
treated using the intensive rehabilitation
therapy provided in an IRF.
Response: As we indicated in the FY
2014 IRF PPS final rule (78 FR 47860,
at 47890), we believe that some patients
with upper extremity amputations
might require treatment in an IRF,
depending on the clinical complexity of
the particular case or the presence of
any other complicating factors or
comorbidities. However, we expect that
many patients with these upper
extremity amputations will not require
close medical supervision by a

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physician or weekly interdisciplinary
team conferences to achieve their goals,
and can be treated effectively in other
care settings. If the patient has
additional comorbidities causing
significant decline in his or her
functional ability which, in the absence
of the unilateral upper extremity
amputation, would require treatment in
an IRF, then the patient will still be able
to be counted towards meeting the 60
percent rule criteria. Additionally, the
patient can still be counted towards
meeting the 60 percent rule criteria on
medical review, if appropriate.
However, we continue to believe that a
patient’s need for the intensive
rehabilitation services provided in an
IRF depends on other factors which
cannot be adequately determined
through the mere presence of IGC
0005.1—Unilateral upper limb above
the elbow (AE) and IGC 0005.2—
Unilateral upper limb below the elbow
(BE). Thus, we are removing these IGCs
from the IGCs That Meet the
Presumptive Compliance Criteria.
Comment: One commenter expressed
concern about the proposed addition of
non-specific diagnosis codes to the
Etiologic Diagnosis exclusions for some
of the IGCs because this commenter said
that it is often ‘‘administratively
unrealistic’’ to obtain detailed medical
information from a transferring facility,
especially in cases where the IRF
admission is not directly from an acute
care hospital. The commenter said that
non-specific codes should not be
viewed as reflecting poor
documentation or poor coding.
Response: As we stated in the FY
2014 IRF PPS final rule (78 FR 47860,
47884), we believe that highly
descriptive coding provides the best and
clearest way to document the
appropriateness of a given patient’s
admission, and would improve our
ability to use the presumptive
compliance method of calculating a
facility’s 60 percent rule compliance
percentage. Therefore, whenever
possible, we believe that the most
specific code that describes a medical
disease, condition, or injury should be
used to document diagnoses on the IRF–
PAI. We also stated in the FY 2014 IRF
PPS final rule (78 FR 47860, 47884) that
we believe imprecise codes would
inappropriately categorize an overly
broad segment of the patient population
as having the conditions required for
inclusion in a facility’s presumptive
compliance calculation, which would
result in an inflated compliance
percentage. In the FY 2014 IRF PPS final
rule (78 FR 47860, 47885), we also
stated that if the IRF does not have
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condition to code the more specific
codes on the IRF–PAI, we would expect
the IRF to seek out additional
information from the patient’s acute
care hospital medical record to
determine the appropriate, more
specific code to use. The ICD–9–CM
diagnosis codes that are listed as
exclusions on ‘‘Impairment Group
Codes That Meet Presumptive
Compliance Criteria’’ are consistent
with the list of diagnosis codes we
removed from ‘‘ICD–9–CM Codes That
Meet Presumptive Compliance Criteria.’’
Comment: Several commenters
expressed concerns about possible
inconsistencies in the specific IGC
exclusions that we proposed in the FY
2015 IRF PPS proposed rule. For
example, one commenter pointed out
that we were proposing to exclude the
Etiologic Diagnosis of ICD–9–CM code
850.5—Concussion with loss of
consciousness of unspecified duration
for IGC 0002.22—Brain dysfunction,
Traumatic, Closed Injury. However, we
were not proposing to exclude, ICD–9–
CM code 850.0—Concussion with no
loss of consciousness from this same
IGC.
Response: We thank the commenter
for their careful review and analysis of
the IGCs That Meet Presumptive
Compliance Criteria. We have reviewed
the IGCs That Meet Presumptive
Compliance Criteria in light of these
comments, and we agree with the
commenter’s suggestion that this
represents an inadvertent inconsistency.
Thus, we are adding ICD–9–CM code
850.0—Concussion with no loss of
consciousness as an Etiologic Diagnosis
exclusion to the list of Etiologic
Diagnosis exclusions under IGC
0002.22—Brain dysfunction, Traumatic,
Closed Injury.
Comment: One commenter stated that
we excluded ICD–9–CM diagnosis code
438.20—Late effects of cerebrovascular
disease, hemiplegia affecting
unspecified side from IGC 0001.9—
Other Stroke, but did not list this
diagnosis code as an exclusion for other
stroke IGCs.
Response: ICD–9–CM diagnosis code
438.20 is not listed as an exclusion for
the other stroke IGCs because the other
stroke IGCs either specify side of body
involvement or no paresis.
Comment: One commenter suggested
that as many as 10 percent of IRF cases
will no longer qualify toward an IRF’s
presumptive compliance percentage
should the proposed removal of IGC
0005.1, IGC 0005.2, IGC 0006.1, and IGC
0006.9 and the exclusion of Rheumatoid
and Osteoarthritis diagnosis codes from
hip and knee joint replacement be
finalized.

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Response: As discussed above, the
commenters led us to discover that there
would have been unintended
consequences of excluding the proposed
arthritis Etiologic Diagnosis codes from
IGCs0008.51, 0008.52, 0008.61, 0008.62,
0008.71, and 0008.72. As we intend to
continue to count bilateral lowerextremity joint replacement cases and
unilateral lower-extremity joint
replacement cases involving patients 85
years of age or older and/or who have
a BMI of 50 or greater as meeting the 60
percent rule criteria under the
presumptive compliance method, we
are removing the proposed Etiologic
Diagnosis exclusions from these IGCs.
We believe that this change
substantially reduces the estimated
percentage of IRF cases that will no
longer qualify toward an IRF’s
presumptive compliance percentage.
However, with respect to the remaining
IRF cases that will no longer qualify
toward an IRF’s presumptive
compliance percentage, we continue to
believe that this is appropriate because
the case’s compliance with the 60
percent rule criteria cannot be
adequately determined through the
mere presence of the IGC or ICD–9–CM
diagnosis code alone.
Comment: Several commenters
indicated that the proposed changes to
‘‘Impairment Group Codes That Meet
Presumptive Compliance Criteria’’ (and
the above discussed removal of the
amputation status diagnosis codes)
would likely lead to reduced access to
IRF care. The commenters noted that for
certain types of patients, IRFs would be
in the position of choosing between
admitting these patients and facing
‘‘additional risk’’ associated with
medical reviews, or not admitting these
types of patients. Many of these
commenters said that such changes are
unnecessary in light of past regulatory
actions, such as the regulatory
refinements of the 60 percent rule that
were implemented in 2004 and the more
stringent IRF coverage requirements that
were implemented in 2010, that have
already reduced the number of IRF
admissions and increased the average
IRF case mix.
Response: We acknowledge that some
IRFs may seek to avoid the possibility
of medical review by limiting admission
of patients with certain conditions, such
as arthritis or unilateral upper-extremity
amputations. However, this is not our
intent in implementing this policy. The
intent of these changes to the
presumptive compliance method is
obtain enough information to ensure
that patients who are counted as
meeting the 60 percent rule in
§ 412.29(b) are appropriately meeting

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the regulatory requirements. Although
previous regulatory refinements have
improved the IRF payment system, we
believe that the proposed updates to the
presumptive compliance method serve
to further enhance the accuracy and
appropriateness of the payment system.
As discussed in section X. of this final
rule, we are concurrently implementing
policies designed to minimize the
burden created by the operational
aspects of this policy.
Comment: One commenter suggested
that the removal of IGC 0006.1—
Rheumatoid Arthritis and IGC 0006.9—
Other Arthritis should coincide with the
implementation of the proposed new
IRF–PAI item, so that these IGCs could
still be used to presumptively determine
an IRF’s compliance with the 60 percent
rule. The commenter also suggested that
the new IRF–PAI item and associated
limited medical review should replace
the current policy of requiring a full
medical review if an IRF fails the
presumptive compliance method.
Response: We agree with the
commenter’s suggestion that the
effective date of the removal of IGC
0006.1—Rheumatoid Arthritis and IGC
0006.9—Other Arthritis should coincide
with the implementation of the new
proposed IRF–PAI item. Additionally,
we believe that it makes the most sense
to implement the changes to the
presumptive methodology, both those
that were finalized in the FY 2014 IRF
PPS final rule and those that we are
finalizing in this section of this final
rule, for compliance review periods
beginning on or after October 1, 2015, to
aid in mitigating the potential burden
for additional medical review as a result
of the finalized policy changes. As
discussed in more detail in section X. of
this final rule, the new IRF–PAI item for
arthritis conditions will allow IRFs to
indicate whether there are any arthritis
codes (either IGC or ICD–9–CM
diagnosis codes) on a patient’s IRF–PAI
that meet all of the regulatory
requirements specified in
§ 412.29(b)(2)(x), (xi), or (xii). If so, then
we will perform a limited medical
review on these cases to ensure that the
requirements are met. If we find that all
of the requirements are met, those
arthritis cases will be allowed to count
toward the IRF’s presumptive
compliance percentage. As the new
IRF–PAI item is being added for IRF
discharges occurring on or after October
1, 2015, we believe it makes sense to
delay the effective dates of the changes
to the presumptive methodology
finalized in the FY 2014 IRF PPS final
rule and those changes to the
presumptive methodology being
finalized in this section of this final

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rule. Therefore, we are delaying the
effective date of the presumptive
methodology changes finalized in the
FY 2014 IRF PPS final rule and the
additional presumptive methodology
changes that we are finalizing in this
section of this final rule, so that they
will become effective for compliance
review periods beginning on or after
October 1, 2015.
However, we do not agree with the
suggestion that the limited medical
review should replace the full medical
review entirely. The medical review
method has been the more detailed and
comprehensive method for enforcing the
60 percent rule since the rule was first
implemented in the mid-1980s, and
continues to be an important way of
accurately determining whether IRFs
meet the criteria in § 412.29(b) to be
excluded from the IPPS and be paid
instead under the IRF PPS.
Comment: One commenter expressed
concern that the changes to the
presumptive compliance methodology
finalized in the FY 2014 IRF PPS final
rule and the changes proposed in the FY
2015 IRF PPS proposed rule constitute
an ‘‘end run’’ around the statutory limit
on the compliance threshold of 60
percent established by Congress.
Response: We disagree with the
commenter’s assertion that we are
changing the 60 percent compliance
threshold. We do not believe that the
changes finalized in the FY 2014 IRF
PPS final rule or the changes proposed
in the FY 2015 IRF PPS proposed rule
erode the underlying principle of the 60
percent rule that requires an IRF to
demonstrate that it ‘‘served an inpatient
population of whom at least 60 percent
required intensive rehabilitation
services for treatment of one or more of
the conditions specified at paragraph
(b)(2).’’ We are not revising the criteria
that govern the 13 medical conditions
that may be counted toward an IRF’s 60
percent rule compliance percentage. As
we have stated in the FY 2014 IRF PPS
final rule and the FY 2015 IRF PPS
proposed rule, we are refining the lists
used for the presumptive compliance
methodology because we believe that
certain ICD diagnosis codes on the lists
do not necessarily demonstrate a
patient’s meeting the medical condition
(including severity and prior treatment)
requirements for inclusion in a facility’s
60 percent compliance calculation
under the presumptive methodology
method. Thus, we are removing these
codes so that the presumptive
methodology lists better reflect the
regulations. Furthermore, the criteria
under which a case may count under
medical review have not changed.

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Comment: Several commenters stated
that ICD–9–CM codes 820.8—Closed
fracture of unspecified part of neck of
femur and 820.9—Open fracture of
unspecified part of neck of femur
should not be exclusions under IGC
0008.11—Status Post Unilateral Hip
Fracture and IGC 0008.12—Status Post
Bilateral Hip Fractures. The commenters
said that the ICD–9–CM codes 820.8 and
820.9 are often used as Etiologic
Diagnoses in combination with IGCs
0008.11 and 0008.12. One commenter
said that the diagnosis codes 820.8 and
820.9 still represent a hip fracture and
that the more specific information
regarding where on the neck of the
femur the fracture occurred would not
be readily available to the IRF and
would in any case not meaningfully
impact care.
Response: The use of an ICD–9–CM
code beginning with 820, by definition,
indicates that the patient has
experienced a fracture of the neck of the
femur. However, this code requires that
decimal points be used following the
number to ensure specificity. Diagnosis
codes 820.00 through 820.32, by
differentiating between an intracapsular
and an extracapsular fracture of the
proximal femur, provide a degree of
specificity not offered by diagnosis
codes 820.8 and 820.9. Therefore, as we
proposed, we will exclude ICD–9–CM
codes 820.8 and 820.9 as Etiologic
Diagnosis codes under IGC 0008.11—
Status Post Unilateral Hip Fracture and
IGC 0008.12—Status Post Bilateral Hip
Fractures. IGC 0008.11 and IGC 0008.12
will continue to count toward 60
percent compliance under the
presumptive compliance method if
coded with Etiologic Diagnosis codes
820.00 through 820.32.
Final Decision: After carefully
considering the comments that we
received on the proposed changes to the
IGCs That Meet Presumptive
Compliance Criteria, we are revising the
list of excluded ICD–9–CM diagnosis
codes for some IGCs from ‘‘Impairment
Group Codes That Meet Presumptive
Compliance Criteria’’ as follows: We are
removing the ICD–9–CM diagnosis code
exclusions under IGC 0008.51 through
IGC 0008.72. We are also excluding
ICD–9–CM diagnosis code 850.0 under
IGC 0002.22. The final ‘‘Impairment
Group Codes That Meet Presumptive
Compliance Criteria’’ list that reflects
specific changes to the proposed
policies listed above, is available for
download from the CMS Web site at
http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
InpatientRehabFacPPS/Data-Files.html.
The presumptive methodology changes
that we had finalized in the FY 2014 IRF

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PPS final rule and the additional
presumptive methodology changes that
we are finalizing in this section of this
final rule will become effective for
compliance review periods beginning
on or after October 1, 2015.
IX. Data Collection of the Amount and
Mode (Individual, Concurrent, Group,
and Co-Treatment) of Therapy Provided
in IRFs According to Occupational,
Speech, and Physical Therapy
Disciplines
Prior to the implementation of the IRF
PPS in January 2002, Medicare payment
for IRF services under section 101(a) of
the Tax Equity and Fiscal Responsibility
Act of 1982 (Pub. L. 97–248, enacted
September 3, 1982) was based on the
reasonable costs incurred in furnishing
services to Medicare beneficiaries,
subject to a limit on allowable costs per
discharge. Thus, for therapy services,
Medicare reimbursed IRFs based on the
reasonable costs incurred in furnishing
appropriate levels of Individual Therapy
or Group Therapy, which meant that
IRFs had limited financial incentives to
provide more of one mode of therapy
than another. We presumed that
decisions about the mode of therapy
delivery were likely to be based on the
needs of the patient and on the best way
to assist patients in meeting their
individualized rehabilitation goals.
With the advent of the IRF PPS
beginning in January 2002, Medicare
began reimbursing IRFs using a set
prospective payment amount that was
intended to cover the costs of all
treatment and services, including
therapy services, provided to patients in
the IRF. This increased the financial
incentives for IRFs to give patients more
Group Therapy and less Individual
Therapy, because Individual Therapy is
more costly to provide. Although we
know that the financial incentives for
the provision of Individual Therapy and
Group Therapy changed, we do not
know whether IRFs provided different
modes of therapy in response to the new
incentives or how much Individual
Therapy and Group Therapy IRFs
currently provide. Medicare does not
currently collect data from IRFs on the
amount of Individual, Concurrent,
Group, and Co-Treatment Therapies
provided by therapy discipline. We
believe that it is important to begin
collecting these data to determine what
services Medicare is paying for under
the IRF prospective payment system,
which would allow us to analyze
whether we are paying appropriately for
services currently rendered by IRFs.
Medicare administrative data (such as
the IRF claims data) do not currently
provide the level of detailed information

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about the mode and type of therapy
provided to IRF patients that we need to
perform these analyses. Thus, this
proposed new data collection will assist
us in the development of appropriate
coverage and payment criteria for the
provision of Group Therapy in the IRF
setting. We believe that these coverage
and payment criteria are important to
balance the beneficial aspects of Group
Therapy for certain patients in certain
instances with the IRF requirements for
an intensive rehabilitation therapy
program.
In the FY 2010 IRF PPS proposed rule
(74 FR 21070, 21071), in which we
proposed a revised set of Medicare
coverage requirements for IRF services,
we discussed the relative value of
Individual Therapy versus Group
Therapy in the IRF setting. To improve
our understanding of when Group
Therapy is most appropriate in IRFs, we
solicited comments in that proposed
rule on the types of patients for whom
Group Therapy is appropriate, and the
specific amount of Group Therapy that
may be beneficial for these types of
patients. Subsequently, we discussed
the comments in the FY 2010 IRF PPS
final rule (74 FR 39796, 39797).
Although the comments on the FY 2010
IRF PPS proposed rule did not offer any
clinical study results or any data that
would be helpful to us in developing
coverage and payment criteria for the
provision of Group Therapy in IRFs, the
comments did suggest an important role
for Group Therapy in the provision of
therapies in IRFs. However, the majority
of commenters remarked that Group
Therapy should be limited in some way.
Many commenters agreed that Group
Therapy is a good adjunct to Individual
Therapy, but should not be the primary
source of therapy services provided in
IRFs. Several commenters
recommended that we limit the amount
of Group Therapies provided in IRFs,
and that we also limit the number of
patients who can participate in a Group
Therapy session. Commenters also
suggested that Group Therapy sessions
should be comprised of patients with
similar diagnoses. We agreed with the
commenters that Group Therapy should
not be the primary source of therapy
given to patients in IRFs. Group
Therapy should be used in IRFs
primarily as an adjunct to Individual
Therapy services, which is the standard
of care in IRFs, as Group Therapy may
not uniformly represent the level of
intensive rehabilitation therapy required
and paid for in the IRF setting. In the
final rule, we also stated that we would
consider adopting specific coverage and
payment criteria for Group Therapy

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practice in IRFs through future
rulemaking.
When an authorized clinician deems
it to be necessary, we continue to
believe that Group Therapy can serve as
an appropriate mode of therapy delivery
that can be beneficial to the particular
needs of IRF patients as an adjunct to
Individual Therapy. Anecdotally, we
understand that Group Therapy remains
a widely used mode of therapy in the
IRF setting. But as we stated in the FY
2010 IRF PPS final rule, we believe that
it would be inappropriate for IRFs to
provide essentially all therapy in the
form of Group Therapy because we do
not believe that this is in the best
interest of the patients, or that it reflects
the services for which the IRF
prospective payment system was
established to pay. Therefore, to better
understand the ways in which therapy
services are currently being provided in
IRFs, we are adding a new Therapy
Information Section to the IRF–PAI to
record the amount and mode of therapy
(that is, Individual, Concurrent, Group,
and Co-Treatment) patients receive in
each therapy discipline (that is, physical
therapy, occupational therapy, and
speech-language pathology).
For purposes of recording therapy
services in IRFs, we proposed to define
Individual Therapy as the provision of
therapy services by one licensed or
certified therapist (or licensed therapy
assistant, under the appropriate
direction of a licensed or certified
therapist) to one patient at a time (this
is sometimes referred to as ‘‘one-onone’’ therapy). In the proposed rule, we
defined Group Therapy as the provision
of therapy services by one licensed or
certified therapist (or licensed therapy
assistant, under the appropriate
direction of a licensed or certified
therapist) to between 2 and 6 IRF
patients at one time, regardless of
whether those 2 to 6 IRF patients are
performing the same activity or different
activities. As discussed in our responses
to comments below, we will instead
define Group Therapy as one licensed or
certified therapist (or licensed therapy
assistant, under the appropriate
direction of a licensed therapist) treating
2 to 6 patients at the same time who are
performing the same or similar
activities. We proposed to define CoTreatment as the provision of therapy
services by more than one licensed or
certified therapist (or licensed therapy
assistant, under the appropriate
direction of a licensed therapist) from
different therapy disciplines to one
patient at the same time. For example,
Co-Treatment could involve one
physical therapist and one occupational
therapist working with one patient at

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the same time to achieve the patient’s
goals. Because Co-Treatment is
appropriate for specific clinical
circumstances and is not suitable for all
patients, its use should be limited. As
discussed in our responses to comments
below, we will define Concurrent
Therapy as one licensed or certified
therapist treating 2 patients at the same
time who are performing different
activities.
We will collect this information in a
new Therapy Information Section on the
IRF–PAI, which will be effective for IRF
discharges beginning on or after October
1, 2015. The new Therapy Information
section will be completed as part of the
patient’s discharge assessment. In this
new section, the IRF will record how
many minutes of Individual,
Concurrent, Group, and Co-Treatment
Therapies the patient received,
according to each therapy discipline
(that is, physical therapy, occupational
therapy, and speech-language
pathology), during the first week (7
calendar day period) of the IRF stay;
how many minutes of Individual,
Concurrent, Group, and Co-Treatment
Therapies the patient received,
according to each therapy discipline,
during the second week (7 calendar day
period) of the IRF stay. In the proposed
rule, we proposed that IRFs would also
collect the average number of minutes of
Individual, Group, and Co-Treatment
therapies the patient received, according
to each therapy discipline, during all
subsequent weeks (7 calendar day
periods) of the IRF stay, beginning with
the third week. For Co-Treatment, each
therapist will record the amount of time
spent with the patient. That is, if a
physical therapist and an occupational
therapist both worked with the patient
from 9:00 a.m. to 9:30 a.m., then each
therapist would record 30 minutes with
the patient in the Co-Treatment section
of the IRF–PAI. The draft of the IRF–PAI
for FY 2016 that includes this new
Therapy Information section is available
for download from the IRF PPS Web site
at http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
InpatientRehabFacPPS/IRFPAI.html in
conjunction with the publication of this
final rule. We will use these data for the
following purposes:
• To analyze the types of therapy
services Medicare is currently paying
for under the IRF prospective payment
system; and
• To monitor the amount of therapy
given and the use of different therapy
modes in IRFs to support future
rulemaking in this area.
For example, we are considering
using these data to propose limits on the
amount of Group Therapy that may be

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provided in IRFs through future
rulemaking. One such limit that we are
currently considering is that an IRF
patient may receive no more than 25
percent of his or her total therapy
treatment time in Group Therapy,
similar to the limit that currently exists
in the skilled nursing facility (SNF)
setting, as discussed in the FY 2000 SNF
PPS and Consolidated Billing final rule
(64 FR 41644, 41662). We specifically
solicited public comment on all of these
proposals, including whether 25 percent
is the most appropriate limit to establish
for the IRF setting.
We received 43 comments on the data
collection regarding the amount and
mode (Individual, Concurrent, Group,
and Co-Treatment) of therapy provided
in IRFs according to Occupational,
Speech, and Physical Therapy
Disciplines, which are summarized
below.
Comment: Overall, several
commenters supported CMS’s proposed
therapy collection item on the IRF–PAI,
with one commenter indicating that
collection of these data could lead to
significant improvements in quality of
care and accuracy of payments in the
IRF PPS.
Response: We appreciate the support
from the commenters regarding the new
therapy item on the IRF–PAI. To date,
we have been unable to track changes in
the provision of therapy to patients
because Medicare does not collect data
on therapy modalities (Individual,
Concurrent, Group, and Co-Treatment)
by each therapy discipline (that is,
physical therapy, occupational therapy,
and speech-language pathology). We
believe that by adding this item to the
IRF–PAI, we will be able to determine
the current services for which Medicare
is paying and whether limits on the
amount of group therapy that may be
provided to IRF patients are needed.
Comment: Several commenters
expressed concern that the proposed
collection method changes the
collection criteria for the weeks
subsequent to the second week.
Commenters suggested that this change
introduces the potential for confusion
and error because facilities will have to
monitor every patient on the unit to
determine when the third week of the
stay will begin. Additionally, these
commenters suggested that we should
collect data on the total number of
minutes of therapy provided to patients,
by mode and type of therapy, only once
at discharge based on the total number
of minutes provided to the patient
throughout the IRF stay, as it would
lessen the burden of the data collection.
Response: After careful consideration
of these comments, we agree that

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collecting average number of minutes of
therapy, by mode and type of therapy,
for weeks 3 and beyond may have the
potential to create confusion for
providers. For this reason and in order
to minimize provider burden, we are
choosing not to finalize this proposal,
and will instead only collect total
number of minutes of therapy by mode
and discipline for weeks 1 and 2. We
believe that it would greatly improve
our understanding of the provision of
therapy in IRFs to collect data on the
amount of therapy provided, by mode
and type of therapy, for week 1 of the
IRF stay (that is, the first 7 consecutive
calendar days starting with the day of
admission) and for week 2 of the IRF
stay (that is, the second 7 consecutive
calendar days of the IRF stay). Since the
average length of stay in an IRF is 13
days, and to minimize the burden of this
data collection effort, we will not
require data to be reported beyond week
2 of the IRF stay. We believe that
collecting total number of minutes of
therapy, by mode and type of therapy,
only for weeks 1 and 2 of the IRF stay
is sufficient to help us to be able to
develop future policy and improve the
quality of care and accuracy of
payments in the IRF PPS. Additionally,
since our intent is to collect the most
specific information regarding therapy
data that we can, we recognize that
collecting the average amount of therapy
for weeks 3 and on, will perhaps not
provide us with the specificity that we
are seeking at this time. However, we
may propose to require data collection
on weeks 3 and beyond of the IRF stay
through future notice and comment
rulemaking if we later determine that
such data is needed to better inform
future policymaking.
While we recognize that the
commenters believe that collecting the
number of minutes of therapy, by mode
and type of therapy, for the whole IRF
stay only at the time of the patient’s
discharge from the IRF would lessen the
burden of this data collection, we do not
believe that this would provide us with
level of detail that we believe we would
need to develop future policy in this
area or to understand what services we
are paying for with the IRF benefit.
Comment: Several commenters
suggested that CMS should seek to
achieve its objective of better
understanding therapy usage and
outcomes within IRFs, by funding a
study on the utilization of various
therapy modes in IRFs.
Response: Unfortunately, we are not
able to fund a study of therapy usage
and outcomes, but we would welcome
learning from such studies conducted
by others. Clinical evidence linking

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therapy usage with patient outcomes
would greatly improve our
understanding of these issues, and
would not only enhance future
policymaking in this area, but we
believe would also inform and enhance
the quality of care provided in IRFs and
other post-acute care settings.
Comment: Several commenters
expressed concern regarding CMS’s
definition of each therapy mode, most
specifically, Group Therapy. One
commenter suggested that we should be
more consistent in our definitions of the
different modes of therapy across
Medicare payment settings. Many of the
commenters indicated that studies
regarding the benefits of one mode of
therapy over another are very limited,
and wanted to know what clinical basis
we used when deciding that a group
should be comprised of 2–6 patients.
Other commenters urged CMS to
recognize Concurrent Therapy as a
distinct mode of therapy and not
include it in the Group Therapy
definition.
Response: After carefully reviewing
the comments regarding the definitions
of the different modes of therapy, we
agree with commenters that Concurrent
Therapy should be removed from the
definition of Group Therapy and
recognized as a distinct mode of
therapy. We initially included
Concurrent Therapy with Group
Therapy because we wanted to lessen
the burden on providers. However, we
understand from the comments that
separating out Concurrent Therapy from
Group Therapy may actually make it
easier for providers to report the data, as
they already record data separately
according to Concurrent Therapy and
Group Therapy in the medical record.
We also understand from the comments
that it would make it easier for
providers if we were to use the same
definitions for the different modes of
therapy, to the extent feasible, across
Medicare’s post-acute care settings. We
believe that such consistency across
settings will serve to improve the
accuracy and reliability of the data we
receive. As we also believe that it would
be useful for us to better understand the
provision of Concurrent Therapy in
IRFs, separate from the provision of
Group Therapy, we are revising our
proposal, and will collect data instead
on Individual, Concurrent, Group, and
Co-Treatment Therapies.
Furthermore, in response to
comments, we will generally define
these terms using the same definitions
for Individual, Concurrent, and CoTreatment, that we currently use in the
SNF PPS (see Chapter 3 Sec. O of the
Minimum Data Set (MDS) Manual,

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version 3.0 located at, http://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/NursingHomeQualityInits/
MDS30RAIManual.html). We generally
concur that, when appropriate, it is
important to apply definitions
consistently across Medicare’s postacute care settings. Thus, we are
defining Individual Therapy as the
provision of therapy services by one
licensed or certified therapist (or
licensed therapy assistant, under the
appropriate direction of a licensed or
certified therapist) to one patient at a
time (this is sometimes referred to as
‘‘one-on-one’’ therapy), Co-Treatment as
the provision of therapy services by
more than one licensed or certified
therapist (or licensed therapy assistant,
under the appropriate direction of a
licensed therapist) from different
therapy disciplines to 1 patient at the
same time, and Concurrent Therapy as
one licensed or certified therapist
treating 2 patients at the same time who
are performing different activities.
However, we have decided not to use
the exact SNF definition for Group
Therapy in IRFs. Based on our review of
the public comments, we believe it is
appropriate to broaden the SNF
definition for the purposes of this IRF
data collection effort. We may still
consider changes to the definition of
Group Therapy for the IRF setting in the
future, based on our review of the data
we receive and based on any additional
feedback from providers. In the SNF
setting, the data collection regarding
Group Therapy is used to allocate a
therapist’s time for the purpose of
classifying a particular patient into the
appropriate case-mix group for
payment. Since the purpose of the data
collection in the IRF setting differs, we
believe that the same interpretation is
not needed. Additionally, since we have
decided to separate Concurrent Therapy
from the definition of Group Therapy,
we have changed the definition of
Group Therapy to ensure patients are
performing the same or similar
activities. Two patients performing
different activities would now be
defined as Concurrent Therapy. We will
define Group Therapy as the provision
of therapy services by one licensed or
certified therapist (or licensed therapy
assistant, under the appropriate
direction of a licensed or certified
therapist) treating 2 to 6 patients at the
same time who are performing the same
or similar activities.
We plan to update the IRF–PAI
Training Manual to inform providers, in
more detail, regarding completion of the
Therapy Data Collection Section.

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We agree with many of the
commenters that evidence regarding the
clinical efficacy of the various modes of
therapy for different patient populations
is lacking. In the FY 2010 IRF PPS
proposed rule (74 FR 21052, 21070), we
specifically asked for this type of
information, and the commenters told
us that such information is largely
unavailable. We would welcome any
information that might be available to
better understand this issue. However,
we believe that the absence of such
clinical evidence makes it all the more
imperative that we start by collecting
data on the amounts, types, and modes
of therapy provided in IRFs to inform
future policymaking.
We do not specifically know of the
existence of any clinical evidence on the
optimal number of patients for Group
Therapy. We would be interested in any
studies that developed such clinical
evidence. In the absence of such
evidence and solely for the purposes of
collecting the data, we proposed to
define Group Therapy as one therapist
working with 2 to 6 patients at the same
time. We proposed 6 patients as the
upper limit for group therapy in IRFs
because we believe that more than 6
patients in a group would likely make
the group more difficult for a therapist
to supervise and manage, and might
decrease the benefits to patients of the
group interaction. We did not receive
any comments suggesting that a Group
Therapy session in an IRF should
include more than 6 patients, and in fact
received several comments in support of
using 6 as an upper limit on the number
of patients. Thus, we will use the
definition of Group Therapy as one
therapist working with 2 to 6 patients
who are all performing the same or
similar activities solely for the purposes
of this data collection effort. We may
consider revising this definition for the
IRF setting through future rulemaking
based on the availability of new
evidence or further feedback on this
issue.
Comment: While a few commenters
were supportive of our consideration of
25 percent as the most appropriate limit
to establish for the provision of Group
Therapy in the IRF setting, the majority
of commenters urged CMS not to by
impose a 25 percent threshold limiting
the amount of Group Therapy an IRF
patient can receive. Many commenters
said that a potential cap on the
provision of Group Therapy in IRFs was
premature in the absence of data and
studies to support an appropriate limit.
These commenters also indicated that
such a limit would not sufficiently
recognize the professional judgment of
the treating clinicians who, they believe,

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are best equipped to determine the
modality and duration of therapy a
patient needs. Additionally, several
commenters suggested that IRF patients
should not be held to the same therapy
standards and assignment of minutes as
SNF patients since the two populations
are very different.
Response: While we appreciate the
positive feedback from the commenters
who supported the idea of a potential
threshold, after careful review of the
comments, the majority of commenters
suggested placing a cap on the amount
of Group Therapy that IRF patients
should receive would be premature at
this time. We appreciate the concerns
raised by these commenters and believe
that it would be prudent to give more
consideration to setting a cap, and the
appropriate threshold for such a cap,
regarding the provision of Group
Therapy. We believe that collecting and
analyzing the current delivery of
therapy services will help inform any
future policymaking. At such time that
we believe a threshold is needed on the
amount of Group Therapy provided, we
will consider policy development
through notice and comment
rulemaking.
If, through future rulemaking, we do
decide to impose a Group Therapy
threshold, we do not believe that this
would limit the professional judgment
of the treating clinicians. We know that
clinicians are best equipped to
determine the modality and duration of
therapy that any particular patient
needs. With that being said, we believe
that the preponderance of therapy given
in an IRF should be Individual, since
that is the only way that we believe that
an IRF patient is truly receiving the
intensive rehabilitation therapy program
typically provided in an IRF, and we
want to be sure that continues to be the
standard. A potential threshold for the
provision of group therapy in IRFs
would serve to further clarify what we
mean by ‘‘preponderance.’’
Comment: One commenter expressed
concern that we might believe that all
IRF patients should receive 100 percent
individual therapy. Another commenter
suggested that we explicitly recognize
the clinical value that Group Therapy
provides over other therapy modes for
certain patients.
Response: We do not believe that all
IRF patients should only receive
individualized therapy. We understand
that different types of patients need
different motivation and various forms
of therapy in order to achieve their
therapy goals. As we indicated in the
proposed rule (79 FR 26329), when an
authorized clinician deems it to be
necessary, we continue to believe that

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Group Therapy can serve as an
appropriate mode of therapy delivery
that can be beneficial to the particular
needs of IRF patients as an adjunct to
Individual Therapy. An important goal
of rehabilitation is community
reintegration and groups are important
to that process. The interaction with
other patients provides tremendous
psychosocial benefits, providing
encouragement and confidence in skills
learned. However, we believe that the
preponderance of therapy provided to
patients in IRFs should be individual
therapy in order to reflect the intensity
of therapy provided in IRFs.
Comment: Several commenters
suggested that we provide additional
information about how IRFs should
allocate or attribute minutes among
patients participating in a Concurrent
Therapy or Group Therapy session on
the IRF–PAI.
Response: We will include more
detailed information regarding
completion of the Therapy Data
Collection Section of the IRF–PAI in an
update to the IRF–PAI Training Manual
that we will post on the IRF PPS Web
site at http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
InpatientRehabFacPPS prior to October
1, 2015.
Final Decision: After careful
consideration of the comments we
received on the proposed therapy data
collection on the IRF–PAI, we are
finalizing our collection of data on the
amount and mode (that is, Individual,
Concurrent, Group, and Co-Treatment)
of therapy provided in the IRF setting
according to therapy discipline (that is,
physical therapy, occupational therapy,
and speech-language pathology). These
data will be collected on a revised IRF–
PAI form which is available for
download from the CMS Web site
[http://cms.gov/Medicare/Medicare-Feefor-Service-Payment/InpatientRehab
FacPPS/index.html] in conjunction with
this final rule. This requirement will
become effective for IRF discharges
occurring on or after October 1, 2015.
X. Revision to the IRF–PAI for Arthritis
Conditions
In the FY 2014 IRF PPS final rule (78
FR 47860, 47881 through 47895), we
revised the list of ICD–9–CM diagnosis
codes used to determine presumptive
compliance, effective for compliance
review periods beginning on or after
October 1, 2014. As part of these
revisions, we removed all of the ICD–9–
CM codes for arthritis conditions
because we found that such codes did
not provide any information as to
whether the patients met the severity
and prior treatment requirement

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portions of the criteria for the medical
conditions that may be counted toward
an IRF’s compliance percentage under
the presumptive compliance method. As
we said in the FY 2014 IRF PPS final
rule, we did not adopt any and all
arthritis conditions in the May 7, 2004,
final rule (69 FR 25752). Rather, we only
included certain kinds of arthritic
conditions which met defined severity
and prior treatment requirements. We
anticipated that less severe arthritic
conditions could be satisfactorily
managed outside of IRFs, as these cases
would not require the intensive therapy
provided in the inpatient rehabilitation
setting.
We received a number of comments
on the FY 2014 IRF PPS proposed rule
(78 FR 26880) regarding the proposed
removal of the ICD–9–CM codes for
arthritis. The majority of commenters
suggested that removing ICD–9–CM
codes for arthritis would increase the
use of the medical review method,
which is more burdensome for both
CMS and for IRFs. Several commenters
suggested that IRFs should not be
required to undergo a ‘‘full medical
review’’ if they fail to meet the required
compliance percentage using the
presumptive compliance method.
Instead, commenters suggested use of a
‘‘limited medical review’’ in which only
arthritis and systemic vasculidities
cases would be reviewed. We said in the
FY 2014 IRF PPS final rule (78 FR 47860
at 47888 through 47889) that we would
use the time afforded by the 1-year
delayed implementation to consider the
feasibility of minimizing any burdens
created by the operational aspects of
this policy.
In keeping with what we stated in the
FY 2014 IRF PPS final rule, in the FY
2015 IRF PPS proposed rule (79 FR
26308 at 26330 through 26331), we
proposed to add an item to the IRF–PAI
form for an IRF to record the specific
arthritis diagnosis code(s) for each
patient that meets the severity and prior
treatment requirements outlined in the
regulation. By coding arthritis diagnosis
codes in this section, the IRF would
indicate that the patient’s arthritis
conditions met all of the severity and
prior treatment requirements (as
outlined in regulation at
§ 412.29(b)(2)(x) through
§ 412.29(b)(2)(xii)) to be counted toward
an IRF’s compliance percentage under
the presumptive compliance method.
The purpose of the proposed new
item is to provide us with the additional
severity and prior treatment information
necessary for us to identify the arthritis
diagnoses that are appropriate to count
toward an IRF’s compliance percentage
under the presumptive compliance

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method, thus reducing the medical
review burden. If an IRF’s presumptive
compliance percentage is below the
compliance threshold (currently, 60
percent), but inclusion of the arthritis
codes reported in the new proposed
data item would result in the IRF’s
presumptive compliance percentage
meeting or exceeding the compliance
threshold, then we proposed to perform
a ‘‘limited’’ medical review on a
statistically valid random sample of the
cases documented under this new
proposed item to ensure that the
severity and prior treatment
requirements were actually met. The
number of cases from the statistically
valid random sample found to meet the
severity and prior treatment
requirements would be extrapolated to
the total number of cases documented
under the new proposed item (that is, if
70 percent of the cases in the
statistically valid random sample meet
the severity and prior treatment
requirements, we would presume that
70 percent of all of the cases
documented in the new proposed item
met the severity and prior treatment
requirements). If the IRF’s presumptive
compliance percentage meets or exceeds
the compliance threshold (currently, 60
percent) with the addition of the
compliant cases documented under the
new proposed item, then the IRF will be
presumed to meet the 60 percent rule
requirements using the presumptive
compliance method. However, if the
number of compliant cases documented
under the new proposed item does not
result in the IRF’s presumptive
compliance percentage meeting or
exceeding the compliance threshold
(currently 60 percent), then the normal
medical review procedures for IRFs not
meeting the compliance threshold
(currently 60 percent) under the
presumptive compliance method would
apply. A draft of the proposed new IRF–
PAI for FY 2016, with the new proposed
item, was made available for download
on the IRF PPS Web site at http://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/
InpatientRehabFacPPS/IRFPAI.html in
conjunction with the release of the
proposed rule.
The purpose of the proposal is to
reduce the medical review burden
associated with the removal of the ICD–
9–CM codes for arthritis conditions
from the presumptive methodology,
while still allowing us to ensure that the
arthritis diagnosis codes included in the
calculation of an IRF’s compliance
percentage under the presumptive
compliance method meet the severity

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and prior treatment regulatory
requirements.
We received 21 comments on our
proposed revision to the IRF–PAI to add
a data item for arthritis conditions,
which are summarized below.
Comment: Several commenters
supported the proposed revision to the
IRF–PAI to allow providers to indicate
whether the case coded with the
arthritis condition met the prior
treatment and severity requirements.
Commenters especially supported the
associated limited medical review
process as described in the proposed
rule. However, many commenters said
that asking IRFs to code the arthritis
diagnosis codes twice would create
confusion, increase provider burden,
and possibly lead to duplicative coding.
Several commenters suggested that we
instead provide for a simplified yes/no
field on the IRF–PAI to indicate whether
the case meets the prior treatment and
severity regulatory requirements.
Response: We appreciate the
commenters’ suggestions. Based on our
review of the suggestions offered by the
commenters, we believe that a much
simpler approach than what we had
proposed would be to provide an item
on the IRF–PAI allowing the IRF to
indicate whether or not the IRF–PAI
contains any arthritis codes which meet
the severity and prior treatment
regulatory requirements at
§ 412.29(b)(2)(x) through
§ 412.29(b)(2)(xii). This approach would
also be easier to administer. Thus, we
are adopting this change to item #24A
of the IRF–PAI form, instead of the
additional IRF–PAI item that had been
proposed for that item. The new item
#24A would instead ask the IRF to mark
the box if there are any arthritis codes
listed in items #21, 22, or 24 that meet
the severity and prior treatment
regulatory requirements at
§ 412.29(b)(2)(x) through
§ 412.29(b)(2)(xii).
Comment: Several commenters
indicated that IRFs are sometimes
unable to obtain the necessary
information about a patient’s course of
treatment prior to the IRF admission.
These commenters suggested that the
prior treatment requirements should be
removed from the regulation.
Response: The requirement that
patients with arthritis conditions
admitted to IRFs must not have shown
adequate improvement following an
appropriate, aggressive, and sustained
course of outpatient therapy services or
services in other less intensive
rehabilitation settings has been in
regulation since this requirement was
finalized in the May 7, 2004 final rule
(69 FR 25752). As stated in that final

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rule, the rehabilitation prescriptions for
many types of arthritis conditions,
especially osteoarthritis, typically
involve outpatient therapy several times
a week for 4 weeks or more. Although
we recognized in that final rule that
some very unusual cases may require
intensive therapies and the
interdisciplinary approach to care
typically provided in IRFs, we believe
that patients should have participated in
a required course of appropriate,
sustained, and aggressive outpatient
treatment (or treatment in a lessintensive setting) which failed to
improve the patient’s condition in order
to demonstrate that the IRF admission is
reasonable and necessary. This
requirement allows us to be able to
count toward the 60 percent rule those
‘‘exceptional’’ cases that the IRF is able
to demonstrate truly require the
intensive and interdisciplinary level of
care provided in an IRF, without
counting the majority of cases we
believe do not represent the type of
patient requiring intensive
rehabilitation in an IRF.
These requirements have been in
regulation for almost a decade. Until
now, IRFs have not expressed any
concerns to us regarding their inability
to obtain the required prior treatment
information, and many IRFs treat a
significant number of these patients. We
do not believe difficulties obtaining
prior treatment information are a
widespread problem among IRFs.
Further, we believe that a patient’s prior
course of treatment is useful and
important clinical information for the
treating physicians and therapists in the
IRF to design the most effective
treatment plan for the patient. Thus, we
believe that the prior treatment
information is necessary and important
information for the IRF to obtain, both
to meet the regulatory requirements and
to provide the most effective care to the
patient, and we disagree with the
commenter’s suggestion that this
requirement should be removed from
the regulation.
Final Decision: After carefully
considering the comments we received
on the proposed new item on the IRF–
PAI to indicate the arthritis codes that
meet the prior treatment and severity
regulatory requirements, we are
modifying our proposal, based on the
commenters’ suggestions, to simplify it.
Instead of the new item we had
proposed for item #24A on the IRF–PAI,
we will instead ask IRFs to mark the box
in item #24A if there are any arthritis
codes listed in items #21, 22, or 24 that
meet the severity and prior treatment
regulatory requirements at
§ 412.29(b)(2)(x) through

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§ 412.29(b)(2)(xii). If an IRF’s
presumptive compliance percentage is
below the compliance threshold
(currently, 60 percent), but inclusion of
the cases that have been marked in the
affirmative in the new item #24A in the
IRF’s presumptive compliance
percentage would cause the IRF’s
presumptive compliance percentage to
exceed 60 percent, then we will perform
a ‘‘limited’’ medical review on a
statistically valid random sample of
such cases. The number of cases from
the statistically valid random sample
that are found to meet the severity and
prior treatment requirements would be
extrapolated to the total number of cases
that have been marked in the affirmative
by the IRF in the new item #24A. For
example, if 70 percent of the IRF’s cases
in the statistically valid random sample
are found to meet the severity and prior
treatment requirements, we would
presume that 70 percent of all of the
IRF’s cases marked in the affirmative by
the IRF in the new item #24A met the
severity and prior treatment
requirements. If the IRF’s presumptive
compliance percentage meets or exceeds
the compliance threshold (currently, 60
percent) with the addition of the
compliant cases that are found to meet
the severity and prior treatment
requirements by this method, then the
IRF will be presumed to meet the 60
percent rule requirements using the
presumptive compliance method.
However, if the number of compliant
cases that are found to meet the severity
and prior treatment requirements by this
method do not result in the IRF’s
presumptive compliance percentage
meeting or exceeding the compliance
threshold (currently 60 percent),
medical review procedures for IRFs not
meeting the compliance threshold
(currently 60 percent) under the
presumptive compliance method would
apply. A draft of the proposed new IRF–
PAI for FY 2016, with the simpler item
#24A, is available for download on the
IRF PPS Web site at http://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/
InpatientRehabFacPPS/IRFPAI.html in
conjunction with this final rule.
Because item #24A is specifically
intended to mitigate some of the burden
of additional medical reviews that
would be required as a result of the
refinements to the presumptive
compliance method that are finalized in
section VIII of this final rule, we believe
that this change to the IRF–PAI should
have an effective date that is as close as
possible to the effective date of the
refinements to the presumptive
compliance method. However, as noted

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in section VIII of this final rule, the
refinements to the presumptive
compliance method are effective for
compliance review periods beginning
on or after October 1, 2015, but changes
to the IRF–PAI must instead be
implemented for all IRF discharges
occurring on or after a specific date and
cannot be done on a compliance review
period basis. Thus, an effective date for
new IRF–PAI item #24A of October 1,
2015, will enable this change to take
effect on or before any IRFs are subject
to the new presumptive compliance
method. This change to the IRF–PAI is
effective for IRF discharges on or after
October 1, 2015.
XI. International Classification of
Diseases, 10th Revision, Clinical
Modification (ICD–10–CM), Conversion
A. Background on the Use of Diagnosis
Information in the IRF PPS
As described in section I.C. of this
final rule, IRFs are required to complete
the appropriate sections of a PAI,
designated as the IRF–PAI, upon the
admission and discharge of a Medicare
Part A Fee-for-Service patient. 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 Part C (Medicare
Advantage) patient, as described in the
FY 2010 IRF PPS final rule (74 FR
39762, 39798 through 39800). Several
sections of the IRF–PAI (currently, items
#22, 24, 46, and 47) require IRFs to
report diagnosis information for
patients. Until ICD–10–CM becomes the
required medical data code set for use
on Medicare claims and IRF–PAI
submissions, we will continue to use
the ICD–9–CM medical data code set.
Medicare uses the diagnosis information
recorded on the IRF–PAI for the
following purposes:
(1) To case-mix adjust the IRF PPS
payment for a patient by assigning the
patient to an appropriate payment tier
based on the patient’s comorbidities.
(2) To determine, using the
presumptive compliance method,
whether an IRF presumptively meets the
60 percent rule requirements in
§ 412.29(b).
As described in more detail in the FY
2002 IRF PPS final rule (66 FR 41316),
we developed a list of diagnosis codes
(previously, ICD–9–CM codes) that, if
coded as a comorbidity in item #22 on
a patient’s IRF–PAI, would result in that
patient being assigned to one of three
higher-paying payment tiers under the
IRF PPS. In the FY 2006 IRF PPS final
rule (70 FR 57166), we updated and

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revised the list of diagnosis codes (at
that time, ICD–9–CM codes). We refer to
the current list of diagnosis codes that,
if present on a patient’s IRF–PAI, result
in the patient being assigned to a higherpaying tier as the ‘‘List of
Comorbidities’’ in this final rule.
In addition to determining the
appropriate tier assignment for case-mix
adjusting IRF PPS payments, the
diagnosis coding on the IRF–PAI is also
used within the presumptive
compliance method that typically serves
as the first step in determining an IRF’s
compliance with the 60 percent rule. As
discussed in more detail in section VII.
of this final rule, the presumptive
compliance method is one of two ways
that MACs may evaluate an IRF’s
compliance with the 60 percent rule
(the other method being the medical
review method). The diagnosis coding
on the IRF–PAI assessments from an
IRF’s most recently completed 12-month
compliance review period are examined
(with the use of a computer program) to
determine whether they contain any of
the diagnosis codes that are listed in the
‘‘ICD–9–CM Codes That Meet
Presumptive Compliance Criteria’’
(which is also known as the
presumptive methodology list).
Additionally, the computer program
examines the impairment group codes,
which are not ICD–9–CM or ICD–10–CM
codes, but are instead part of a separate
unique set of codes specifically
developed for the IRF PPS for assigning
the primary reason for admission to an
IRF. The computer program compares
the impairment group codes listed in
item #21 to the list of ‘‘Impairment
Group Codes That Meet Presumptive
Compliance Criteria’’ to determine
whether the patient’s impairment group
code presumptively meets the 60
percent rule requirements. In certain
cases, the list of ‘‘Impairment Group
Codes That Meet Presumptive
Compliance Criteria’’ contains Etiologic
Diagnosis exclusions. For example,
impairment group code 0005.4, which
represents a unilateral lower limb
amputation below the knee is included
on the list of ‘‘Impairment Group Codes
that Meet Presumptive Compliance
Criteria,’’ unless the associated Etiologic
Diagnosis recorded on the patient’s IRF–
PAI in item #22 is 895.0 (under ICD–9–
CM), which indicates a traumatic
amputation of the toe or toes. Therefore,
the list of ‘‘Impairment Group Codes
That Meet Presumptive Compliance
Criteria’’ contains diagnosis code
information (currently ICD–9–CM
codes) in addition to impairment group
codes.
These lists contain diagnosis code
information (currently in the form of

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ICD–9–CM diagnosis codes) which is
used to case-mix adjust payments,
determine an IRF’s presumptive
compliance with the 60 percent rule,
and to assist IRFs in accurately
completing the impairment group code
information on the IRF–PAI. As such,
these lists must all be converted to ICD–
10–CM for the IRF PPS to assign
payments and classify IRF facilities
appropriately when ICD–10–CM
becomes the required medical data code
set for use on Medicare claims and IRF–
PAI submissions.
B. Conversion of Diagnosis Information
From ICD–9–CM to ICD–10–CM for the
IRF PPS
In the September 5, 2012, final rule,
‘‘Administrative Simplification:
Adoption of a Standard for a Unique
Health Plan Identifier; Addition to the
National Provider Identifier
Requirements; and a Change to the
Compliance Date for the International
Classification of Diseases, 10th Edition
(ICD–10–CM and ICD–10–PCS) Medical
Data Code Sets’’ (77 FR 54664), the
Department of Health and Human
Services announced a delay in the
implementation of the ICD–10–CM and
ICD–10–PCS code sets from October 1,
2013, to October 1, 2014. The transition
to the ICD–10 code sets is required for
entities covered by the Health Insurance
Portability and Accountability Act of
1996 (HIPAA). On April 1, 2014, the
Protecting Access to Medicare Act of
2014 (Pub. L. No. 113–93) (PAMA) was
enacted. Section 212 of PAMA, titled
‘‘Delay in Transition from ICD–9 to
ICD–10 Code Sets,’’ provides that ‘‘[t]he
Secretary of Health and Human Services
may not, prior to October 1, 2015, adopt
ICD–10 code sets as the standard for
code sets under section 1173(c) of the
Social Security Act (42 U.S.C. 1320d–
2(c)) and section 162.1002 of title 45,
Code of Federal Regulations.’’ As of
now, the Secretary has not implemented
this provision under HIPAA.
We are addressing the conversion of
ICD–9–CM to ICD–10–CM codes for the
IRF PPS in this final rule, but in light
of PAMA, the effective date of those
changes would be the date when ICD–
10–CM becomes the required medical
data code set for use on Medicare claims
and IRF–PAI submissions. Until that
time, we will continue to require use of
the ICD–9–CM codes for the IRF PPS.
CMS, along with our support
contractor 3M, has spent several years
implementing a process for the
transition from the use of ICD–9–CM
diagnosis codes to ICD–10–CM codes
within both the IRF PPS Grouper and
the software for evaluating IRFs’
compliance with the 60 percent rule. As

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this will be the first time that ICD–10–
CM codes have been used for the IRF
PPS, we invited public comment in the
proposed rule on our translation of the
diagnosis code lists into ICD–10–CM.
To ensure a smooth transition from
the use of ICD–9–CM diagnosis codes to
ICD–10–CM codes for the IRF PPS and
to allow for public comment on these
lists, we proposed ICD–10–CM lists that
were available for download from the
CMS Web site at http://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/InpatientRehabFacPPS/DataFiles.html. The proposed ICD–10–CM
code lists were intended to be used
when ICD–10–CM becomes the required
medical data code set for use on
Medicare claims and IRF–PAI
submissions. To convert these lists from
ICD–9–CM to ICD–10–CM, we used the
General Equivalence Mappings (GEMs)
that were developed as a tool to assist
in converting ICD–9–CM-based
applications to ICD–10–CM. The GEMs
tool is a comprehensive translation
dictionary that was developed over a 3year period by CMS and the Centers for
Disease Control and Prevention (CDC),
with input from both the American
Hospital Association and the American
Health Information Management
Association (AHIMA). They can be used
to translate any ICD–9–CM-based data
into ICD–10–CM. For more information
on GEMs, please refer to the General
Equivalence Mappings Frequently
Asked Questions Booklet, which is
available for download from the CMS
Web site at http://www.cms.gov/
Medicare/Coding/ICD10/ICD-10-MSDRG-Conversion-Project.html. Like a
translation dictionary, the GEMs tool is
based on the complete meaning of a
given code, where ‘‘meaning’’ refers to
the correspondence between the official
documents (tabular and index) that
define each code set. The GEMs tool
contains a complete and comprehensive
bidirectional set of mappings between
ICD–9–CM and ICD–10–CM.
Our intention in converting the ICD–
9–CM diagnosis codes to ICD–10–CM
diagnosis codes within the IRF PPS was
for the converted codes to reflect the
same ‘‘meaning’’ as the original codes.
That is, except for the specific changes
to the ‘‘Impairment Group Codes That
Meet Presumptive Compliance Criteria’’
list and to the ‘‘ICD–9–CM Codes That
Meet Presumptive Compliance Criteria’’
list described in section VIII of this final
rule, we did not intend to add
conditions to, or delete conditions from,
the ICD–9–CM codes used in the IRF
PPS. Thus, for all IRF lists containing an
ICD–9–CM code, we used the 2014
GEMs, which can be downloaded from
the CMS Web site at http://

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www.cms.gov/Medicare/Coding/ICD10/
2014-ICD-10-CM-and-GEMs.html to
create a translation list, and then we
reviewed and revised that translation
list to ensure that all of the codes on the
new ICD–10–CM list reflect as closely as
possible the same ‘‘meaning’’ as the
codes that were present on the old ICD–
9–CM list.
The majority of ICD–9–CM codes have
straightforward translation alternative(s)
in ICD–10–CM, where the diagnoses
classified to a given ICD–9–CM code are
replaced by one or more ICD–10–CM
codes. Wherever possible, we erred on
the side of including a given ICD–10–
CM code if we believed that a patient
coded with that ICD–10–CM code
would have been correctly coded with
the associated ICD–9–CM prior to the
transition from ICD–9–CM to ICD–10–
CM. Our intent is that the meaning of
the diagnosis codes is thereby
unchanged because all of the patient
records that would have been correctly
coded using the ICD–9–CM codes are
correctly coded using one or more of the
specific ICD–10–CM codes. For
example, the ICD–9–CM code 582.1,
‘‘Human herpesvirus 6 encephalitis,’’
translates directly to the ICD–10–CM
code B1001, ‘‘Human herpesvirus 6
encephalitis.’’
Below, we note two issues within
ICD–10–CM coding that differ from
ICD–9–CM coding, and therefore,
require special attention to ensure
correct coding of patient diagnoses
under ICD–10–CM.
• Combination Diagnosis Codes in
ICD–9–CM and ICD–10–CM—Both ICD–
9–CM and ICD–10–CM contain
diagnosis codes called combination
codes, meaning that one code contains
two or more diagnoses. Typically, one
diagnosis in the combination code is a
chronic disease, such as diabetes, and
the other diagnosis is an associated
manifestation or complication of the
disease, such as diabetic nephropathy.
ICD–10–CM contains many new
combination codes that are not
contained in ICD–9–CM. In terms of a
coded record, this means that the same
diagnoses coded with one ICD–10–CM
combination code may require two or
more ICD–9–CM codes to capture a
comparable level of detail. In addition,
ICD–9–CM contains combination codes
with diagnosis terminology that was
revised or deleted from ICD–10–CM,
with the result that the same diagnoses
coded with one ICD–9–CM code may
require two or more ICD–10–CM codes
to capture a comparable level of detail.
For example, ICD–9–CM code 115.11,
‘‘Infection by Histoplasma duboisii,
meningitis’’ translates to a pair of ICD–
10–CM codes, ‘‘B39.5—Histoplasmosis

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duboisii’’ and code ‘‘G02—Meningitis in
other infectious and parasitic diseases
classified elsewhere.’’ In such instances,
the intent of our policy is unchanged
because the patient records that would
have been correctly coded using the
single ICD–9–CM code will now be
correctly coded using a combination of
ICD–10–CM codes. Furthermore, to
maintain the same meaning and reflect
the same diagnoses as the ICD–9–CM
code in such instances, we require the
patient’s IRF–PAI record to have all of
the relevant combination of ICD–10–CM
codes present to reflect the condition on
the list. If only one of the ICD–10–CM
codes required to reflect the condition
on the list is included on the IRF–PAI,
the record will not accurately reflect the
same diagnoses as the ICD–9–CM code.
We note that, in some cases, IRFs may
need to use a combination of ICD–10–
CM codes to represent an Etiologic
Diagnosis on the IRF–PAI form. For this
reason, we will add additional spaces to
the Etiologic Diagnosis field (Item #22)
on the IRF–PAI, effective October 1,
2015. The new draft IRF–PAI form for
IRF discharges occurring on or after
October 1, 2015, is available for
download from the CMS Web site at
http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
InpatientRehabFacPPS/IRFPAI.html.
• Seventh Character Extensions in
ICD–10–CM—Certain codes in ICD–10–
CM require the use of a seventh
character in the code, where each
seventh character of the code has one of
the following meanings:
++ The seventh character ‘‘A’’ in the
code indicates that the diagnosis is an
initial encounter.
++ The seventh character ‘‘D’’ in the
code indicates that the patient is
receiving aftercare for the injury or
illness.
++ The seventh character ‘‘S’’ in the
code indicates that the patient no longer
requires care for any aspect of the initial
injury or illness itself, but that the
patient is receiving care for a late effect
of the injury or illness.
In the IRF PPS context, these seventh
character extensions only apply to ICD–
10–CM diagnosis codes related to
certain types of injuries. The
corresponding ICD–9–CM diagnosis
codes currently listed on the ‘‘List of
Comorbidities,’’ ‘‘ICD–9–CM Codes That
Meet Presumptive Compliance Criteria,’’
and ‘‘Impairment Group Codes That
Meet Presumptive Compliance Criteria’’
only map to the seventh character
extensions of ‘‘A’’ and ‘‘S,’’ but not to
the seventh character extension of ‘‘D,’’
using the GEMs tool. Thus, including
codes under ICD–10–CM with the
seventh character extension of ‘‘D’’

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would mean adding conditions to the
lists that were not included on the lists
under ICD–9–CM. As we indicated
previously, we did not intend to add,
delete, or alter the conditions included
on these lists in transitioning from ICD–
9–CM to ICD–10–CM. Thus, we are not
including ICD–10–CM codes with the
seventh character extension of ‘‘D’’ on
the ICD–10–CM versions of the ‘‘List of
Comorbidities,’’ ‘‘ICD–9–CM Codes That
Meet Presumptive Compliance Criteria,’’
or ‘‘Impairment Group Codes That Meet
Presumptive Compliance Criteria.’’ In
the IRF context, we define the patient as
having a current diagnosis requiring the
use of the seventh character extension of
‘‘A’’ if the patient requires current
treatment for the injury and if the
diagnosis has a direct effect on the
patient’s rehabilitation therapy program
in the IRF.
In addition, ICD–10–CM injury codes
specify that traumatic fractures are
coded using the appropriate seventh
character extension for an initial
encounter, where each seventh
character of the code has one of the
following meanings:
• The seventh character ‘‘A’’ in the
code indicates that the diagnosis is an
initial encounter for closed fracture.
• The seventh character ‘‘B’’ in the
code indicates that the diagnosis is an
initial encounter for open fracture.
• The seventh character ‘‘C’’ in the
code indicates that the diagnosis is an
initial encounter for open fracture type
IIIA, IIIB, or IIIC.
We used the GEMs tool and the
guiding rationales described above to
translate the following lists of ICD–9–
CM diagnosis codes for the IRF PPS into
lists of ICD–10–CM diagnosis codes:
• List of Comorbidities—This file
contains the list of comorbidities (ICD–
9–CM codes) that are used to determine
placement in tiers within the IRF
Grouper software. Placement in one of
the higher-paying tiers, which is
triggered by the presence of one of the
comorbidities on this list, results in a
higher prospective payment amount for
the IRF.
• ICD–9–CM Codes That Meet
Presumptive Compliance Criteria—This
file contains the list of diagnoses (ICD–
9–CM codes) that are used for
determining presumptive compliance
with the IRF 60 percent rule.
• Impairment Group Codes That Meet
Presumptive Compliance Criteria—This
file contains the list of IGCs that meet
presumptive compliance criteria for the
60 percent rule. While the IGC codes
themselves are not ICD–9–CM diagnosis
codes, the file contains a list of Etiologic
Diagnosis codes (ICD–9–CM codes) that
are excluded from particular IGCs. That

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is, a given IGC that would otherwise
meet the presumptive compliance
criteria will not meet such criteria if the
patient has one of the ‘‘excluded’’
Etiologic Diagnoses for that IGC.
The converted ICD–10–CM code
tables associated with each of these lists
are available for download from the
CMS Web site at http://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/InpatientRehabFacPPS/DataFiles.html in conjunction with this final
rule.
We received 3 comments on our
proposed translation of the lists into
ICD–10–CM, effective when ICD–10–CM
becomes the required medical data code
set for use on Medicare claims and IRF–
PAI submissions, which are
summarized below.
Comment: One commenter expressed
concern about using the GEMs tool as
the only means of converting the
diagnosis codes from ICD–9–CM to ICD–
10–CM, as this commenter said that the
GEMs tool is limited in its ability to
capture all of the clinical nuances of the
coding conversion. This commenter
suggested some enhanced conversions
related to specific codes.
Response: As we described in the
proposed rule, we used the GEMs tool
as our starting point in converting the
ICD–9–CM codes to ICD–10–CM, but we
also reviewed and revised the resulting
translation list from GEMs to ensure that
all of the codes on the new ICD–10–CM
list reflect as closely as possible the
same ‘‘meaning’’ as the codes that were
present on the old ICD–9–CM list. Thus,
we did not use the GEMs tool as the sole
method of converting the codes, but
instead started with the GEMs tool
translation and then reviewed and
revised the translated lists from a
clinical perspective to ensure that we
were appropriately capturing the
clinical nuances of the ICD–9–CM to
ICD–10–CM conversions. We appreciate
the commenter’s specific suggestions
regarding particular code translations,
and we will carefully consider the
suggestions in finalizing the ICD–10–
CM lists for implementation when ICD–
10–CM becomes the required medical
data code set for use on Medicare claims
and IRF–PAI submissions.
Comment: One commenter requested
that we provide a crosswalk from ICD–
9–CM to ICD–10–CM to assist IRFs in
better understanding the specific
diagnosis codes that will be used for the
IRF PPS when ICD–10–CM becomes the
required medical data code set for use
on Medicare claims and IRF–PAI
submissions.
Response: The GEMs tool already
provides a crosswalk from ICD–9–CM to
ICD–10–CM, and it is readily available

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for download from the CMS Web site at
http://www.cms.gov/Medicare/Coding/
ICD10/2014-ICD-10-CM-and-GEMs.html
for use by all providers. We believe that
providing a crosswalk ourselves apart
from the GEMs tool that already exists
would potentially create added
confusion.
Comment: One commenter expressed
support for our proposal to use the
GEMs tool to convert diagnosis codes
from ICD–9–CM to ICD–10–CM, but
indicated some specific ICD–10–CM
codes that the commenter believed
should be added to the various ICD–10–
CM lists. The specific ICD–10–CM codes
that this commenter suggested for
inclusion on the lists are divided into 3
categories. The first category includes
those ICD–10–CM codes that the
commenter said they believe may
represent inconsistencies between the
GEMs tool conversion of ICD–9–CM
codes and our proposed translation of
those codes in the proposed ICD–10–CM
code lists. The second and third
categories contain ICD–10–CM
diagnosis codes that represent clinical
conditions that the commenter said they
believe should be added to the ICD–10–
CM Codes That Meet Presumptive
Compliance Criteria and the List of
Comorbidities, respectively, and that are
not currently reflected on these same
lists in ICD–9–CM.
Response: We appreciate the
commenter’s detailed analysis of the
converted ICD–10–CM lists that were
published on the CMS Web site in
conjunction with the proposed rule, and
the specific suggestions this commenter
provided regarding codes that we may
have inadvertently omitted from the
lists. We will carefully consider all of
the specific ICD–10–CM codes that the
commenter noted to ensure that we do
not inadvertently omit any ICD–10–CM
codes that should be included based on
the use of the GEMs tool and our
subsequent review and revision of these
ICD–10–CM codes to ensure that they
reflect the same clinical meaning as the
ICD–9–CM codes that are currently on
the respective lists. However, as we
indicated in the proposed rule, we do
not intend to add conditions to, or
delete conditions from, the ICD–10–CM
Codes That Meet Presumptive
Compliance Criteria or the List of
Comorbidities in translating the codes
from ICD–9–CM to ICD–10–CM. Thus,
at this time, we will not add the ICD–
10–CM codes that would add additional
clinical conditions to the lists. However,
we will take the commenter’s
suggestions into consideration for future
rulemaking.
Final Decision: After carefully
considering the comments that we

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received on our proposed translation of
the ICD–9–CM code lists into ICD–10–
CM using the GEMs tool, we are
finalizing the ICD–10–CM lists that are
available for download from the CMS
Web site at http://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/InpatientRehabFacPPS/DataFiles.html for use when ICD–10–CM
becomes the required medical data code
set for use on Medicare claims and IRF–
PAI submissions.
XII. Revisions and Updates to the
Quality Reporting Program for IRFs
A. Background and Statutory Authority
Section 3004(b) of the Affordable Care
Act added section 1886(j)(7) to the Act,
which requires the Secretary to
implement a quality reporting program
(QRP) for IRFs. This program applies to
freestanding IRFs, as well as IRF units
that are affiliated with acute care
facilities, which includes critical access
hospitals (CAHs).
Beginning in FY 2014, section
1886(j)(7)(A)(i) of the Act requires the
reduction of the applicable IRF PPS
annual increase factor, as previously
modified under section 1886(j)(3)(D) of
the Act, by 2 percentage points for any
IRF that fails to submit data to the
Secretary in accordance with
requirements established by the
Secretary for that fiscal year. Section
1886(j)(7)(A)(ii) of the Act notes that
this reduction may result in the increase
factor being less than 0.0 for a fiscal
year, and in payment rates under
subsection (j) for a fiscal year being less
than such payment rates for the
preceding fiscal year. Any reduction
based on failure to comply with the
reporting requirements is, in accordance
with section 1886(j)(7)(B) of the Act,
limited to the particular fiscal year
involved. The reductions are not to be
cumulative and will not be taken into
account in computing the payment
amount under subsection (j) for a
subsequent fiscal year.
Section 1886(j)(7)(C) of the Act
requires that each IRF submit data to the
Secretary for quality measures specified
by the Secretary. The required quality
measure data must be submitted to the
Secretary in a form, manner, and time
specified by the Secretary.
The Secretary is generally required to
specify measures that have been
endorsed by the entity with a contract
under section 1890(a) of the Act. This
contract is currently held by the
National Quality Forum (NQF), which is
a voluntary consensus standard-setting
organization. The NQF was established
to standardize health care quality
measurement and reporting through its

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consensus development process.
Additional information regarding NQF
and its consensus development process
is available at http://www.
qualityforum.org/Measuring_
Performance/Measuring_Performance.
aspx.
We have adopted NQF-endorsed
measures in our reporting programs.
However, section 1886(j)(7)(D)(ii) of the
Act provides that ‘‘[i]n the case of a
specified area or medical topic
determined appropriate by the Secretary
for which a feasible and practical
measure has not been endorsed by the
entity with a contract under section
1890(a) [of the Act], the Secretary may
specify a measure that is not so
endorsed as long as due consideration is
given to measures that have been
endorsed or adopted by a consensus
organization identified by the
Secretary.’’
Section 1886(j)(7)(E) of the Act
requires the Secretary to establish
procedures for making data submitted
under the IRF QRP available to the
public. The Secretary must ensure that
each IRF is given the opportunity to
review the data that is to be made public
prior to the publication or posting of
this data.
We seek to promote higher quality
and more efficient health care for all
patients who receive care in acute and
post-acute care settings. Our efforts are,
in part, effectuated by quality reporting
programs coupled with the public
reporting of data collected under those
programs. The initial framework of the
IRF QRP was established in the FY 2012
IRF PPS final rule (76 FR 47873).
B. Quality Measures Previously
Finalized for and Currently Used in the
IRF Quality Reporting Program
1. Measures Finalized in the FY 2012
IRF PPS Final Rule
In the FY 2012 IRF PPS final rule (76
FR 47874 through 47878), we adopted
applications of 2 quality measures for
use in the first data reporting cycle of
the IRF QRP: (1) An application of
Catheter-Associated Urinary Tract
Infection (CAUTI) for Intensive Care
Unit Patients (NQF#0138); and (2) an
application of Percent of Residents with
Pressure Ulcers That Are New or
Worsened (Short-Stay) (NQF #0678). We
adopted applications of these 2
measures because neither of them, at the
time, was endorsed by the NQF for the
IRF setting. We also discussed our plans
to propose a 30-Day All-Cause RiskStandardized Post-IRF Discharge
Hospital Readmission Measure.

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In the CY 2013 OPPS/ASC final rule
(77 FR 68500 through 68507), we
adopted:
• Updates to the CAUTI measure to
reflect the NQF’s expansion of this
quality measure to the IRF setting,
replacing our previous adoption of an
application of the quality measure for
the IRF QRP;
• A policy that would allow any
quality measure adopted for use in the
IRF QRP to remain in effect until the
measure was actively removed,
suspended, or replaced (and specifically
applied this policy to the CAUTI and
Pressure Ulcer measures that had
already been adopted for use in the IRF
QRP); and
• A subregulatory process to
incorporate NQF updates to IRF quality
measure specifications that do not
substantively change the nature of the
measure.
At the time of the CY 2013 OPPS/ASC
final rule, the NQF had endorsed the
Pressure Ulcer measure for the IRF
setting, and retitled it to cover both
residents and patients within LongTerm Care Hospitals (LTCH) and IRF
settings, in addition to the Nursing
Home/Skilled Nursing Facility setting.
Although the quality measure had been
expanded to the IRF setting, we
concluded that it was not possible to
adopt the NQF-endorsed measure
Percent of Residents or Patients with
Pressure Ulcers That Are New or
Worsened (Short-Stay) (NQF #0678)
because it is a risk-adjusted measure,
and the ‘‘Quality Indicator’’ section of
the IRF–PAI did not contain the data
elements that would be needed to
calculate a risk-adjusted quality
measure. As a result, we decided to: (1)
Adopt an application of the Pressure
Ulcer measure that was a non-riskadjusted Pressure Ulcer measure
(numerator and denominator data only);
(2) collect the data required for the
numerator and the denominator using
the then-current version of the IRF–PAI;
(3) delay public reporting of Pressure
Ulcer measure results until we could
amend the IRF–PAI to add the data
elements necessary for risk-adjusting the
Pressure Ulcer measure, and then (4)
adopt the NQF-endorsed version of the
measure covering the IRF setting
through rulemaking (77 FR 68507).
a. National Healthcare Safety Network
(NHSN) Catheter-Associated Urinary
Tract Infection (CAUTI) Outcome
Measure (NQF #0138)
In the CY 2013 OPPS/ASC final rule,
we adopted the current version of

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NHSN CAUTI Outcome Measure (NQF
#0138) (replacing an application of this
measure that we initially adopted in the
FY 2012 IRF PPS (76 FR 47874 through
47886)). The NQF-endorsed measure
applies to the FY 2015 adjustments to
the IRF PPS annual increase factor and
all subsequent annual increase factors
(77 FR 68504 through 68505).
Since the publication of the CY 2013
OPPS/ASC final rule, the NHSN CAUTI
quality measure has not changed, and it
remains an active part of the IRF QRP.
Additional information about this
measure can be found at http://
www.qualityforum.org/QPS/0138. Our
procedures for data submission for this
measure have also remained the same.
IRFs should continue to submit their
CAUTI measure data to the Centers for
Disease Control and Prevention (CDC)
NHSN. Details regarding submission of
IRF CAUTI data to the NHSN can be
found at the NHSN Web site at http://
www.cdc.gov/nhsn/inpatient-rehab/
index.html.
b. Application of Percent of Residents or
Patients With Pressure Ulcers That Are
New or Worsened (Short-Stay) (NQF
#0678)
In the CY 2013 OPPS/ASC final rule
(77 FR 68500 through 68507), we
adopted a non-risk-adjusted application
of this measure using the 2012 version
of the IRF–PAI.
3. Measures Finalized in the FY 2014
IRF/PPS Final Rule
For the FY 2016 adjustments to the
IRF PPS annual increase factor, in
addition to retaining the previously
discussed CAUTI and Pressure Ulcer
measures, we finalized the adoption of
one new measure: Influenza Vaccination
Coverage among Healthcare Personnel
(NQF #0431) (78 FR 47902 through
47921). In addition, for the FY 2017
adjustments to the IRF PPS annual
increase factor, we adopted 3 quality
measures: (1) All-Cause Unplanned
Readmission Measure for 30 Days PostDischarge from Inpatient Rehabilitation
Facilities; (2) Percent of Residents or
Patients Who Were Assessed and
Appropriately Given the Seasonal
Influenza Vaccine (Short-Stay) (NQF
#0680); and (3) the NQF-endorsed
version of Percent of Residents or
Patients with Pressure Ulcers That Are
New or Worsened (Short-Stay) (NQF
#0678).
a. Influenza Vaccination Coverage
Among Healthcare Personnel (NQF
#0431)
In the FY 2014 IRF PPS final rule (78
FR 47905 through 47906), we adopted
the CDC developed Influenza

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Vaccination Coverage among Healthcare
Personnel (NQF #0431) quality measure
that is currently collected by the CDC
via the NHSN. This measure reports on
the percentage of IRF health care
personnel (HCP) who receive the
influenza vaccination.
In the FY 2014 IRF PPS final rule, we
finalized that the Influenza Vaccination
Coverage among Healthcare Personnel
(NQF #0431) measure have its own
reporting period to align with the
influenza vaccination season, which is
defined by the CDC as October 1 (or
when the vaccine becomes available)
through March 31. We further finalized
that IRFs will submit their data for this
measure to the NHSN (http://
www.cdc.gov/nhsn/). The NHSN is a
secure Internet-based healthcareassociated infection tracking system
maintained by the CDC and can be
utilized by all types of health care
facilities in the United States, including
IRFs. The NHSN collects data via a webbased tool hosted by the CDC.
Information on the NHSN system,
including protocols, report forms, and
guidance documents, can be found at
http://www.cdc.gov/nhsn/. NHSN will
submit the HCP influenza vaccination
adherence percentage data to CMS on
behalf of the facility. We also finalized
that for the FY 2016 adjustments to the
IRF PPS annual increase factor, data
collection will cover the period from
October 1, 2014 (or when the vaccine
becomes available), through March 31,
2015.
Details related to the use of the NHSN
for data submission and information on
definitions, numerator data,
denominator data, data analyses, and
measure specifications for the Influenza
Vaccination Coverage among Healthcare
Personnel (NQF #0431) measure can be
found at http://www.cdc.gov/nhsn/
inpatient-rehab/hcp-vacc/index.html.
Because IRFs are already using the
NHSN for the submission of CAUTI
measure data, the additional
administrative burden related to data
collection and submission for this
measure under the IRF QRP should be
minimal.
While IRFs can enter information in
NHSN at any point during the influenza
vaccination season for the Influenza
Vaccination Coverage among Healthcare
Personnel (NQF #0431) measure, data
submission is only required once per
influenza vaccination season, unlike the
CAUTI measure, which is the other
quality measure finalized for the IRF
QRP that utilizes the CDC NHSN. We
finalized that the final deadline for data
submission associated with this quality
measure will be May 15th of each year.

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Also, the data collection period for
this quality measure is not 12 months,
as with other measures, but is
approximately 6 months (that is,
October 1, or when the vaccine becomes
available, through March 31 of the
following year). This data collection
period is applicable only to Influenza
Vaccination Coverage among Healthcare
Personnel (NQF #0431), and is not
applicable to any other IRF QRP
measures, proposed or adopted, unless
explicitly stated. The measure
specifications for this measure can be
found at http://www.cdc.gov/nhsn/
inpatient-rehab/hcp-vacc/index.html
and at http://www.qualityforum.org/
QPS/0431.
b. All-Cause Unplanned Readmission
Measure for 30 Days Post-Discharge
From Inpatient Rehabilitation Facilities
(NQF #2502, Under Review at NQF; see
http://www.qualityforum.org/All-Cause_
Admissions_and_Readmissions_
Measures.aspx)
In the FY 2014 IRF PPS final rule (78
FR 47906 through 47910), we adopted
an All-Cause Unplanned Readmission
Measure for 30 Days Post-Discharge
from Inpatient Rehabilitation Facilities.
This quality measure estimates the riskstandardized rate of unplanned, allcause hospital readmissions for cases
discharged from an IRF who were
readmitted to a short-stay acute care
hospital or LTCH, within 30 days of an
IRF discharge. We noted that this is a
claims-based measure that will not
require reporting of new data by IRFs
and thus will not be used to determine
IRF reporting compliance for the IRF
QRP. Please note that this measure is
not NQF-endorsed, but it was submitted
by CMS to the NQF for review on
February 5, 2014 (http://www.quality
forum.org/All-Cause_Admissions_and_
Readmissions_Measures.aspx).
c. Percent of Residents or Patients Who
Were Assessed and Appropriately Given
the Seasonal Influenza Vaccine (ShortStay) (NQF #0680)
In the FY 2014 IRF PPS final rule (78
FR 47906 through 47911), we adopted

the Percent of Residents or Patients Who
Were Assessed and Appropriately Given
the Seasonal Influenza Vaccine (ShortStay) (NQF #0680) measure for the IRF
QRP, and we will collect the data for
this measure through the addition of
data items to the ‘‘Quality Indicator’’
section of the IRF–PAI.
We also added the data elements
needed for this measure, as an influenza
data item set, to the ‘‘Quality Indicator’’
section of the IRF–PAI, and data for this
measure will be collected using this
revised version of the IRF–PAI. The
revised IRF–PAI will become effective
on October 1, 2014. These data elements
are harmonized with data elements
(O0250: Influenza Vaccination Status)
from the Minimum Data Set (MDS) 3.0
and the LTCH CARE Data Set Version
2.01, and the specifications and data
elements for this measure are available
at http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
InpatientRehabFacPPS/IRFPAI.html.
For purposes of this quality measure,
the influenza vaccination season takes
place from October 1 (or when the
vaccine becomes available) through
March 31 each year. The measure
calculation and public reporting of this
measure (once public reporting is
implemented) will also be based on the
influenza vaccination season, starting
on October 1 (or when the vaccine
becomes available) and ending on
March 31 of the subsequent year.
The IRF–PAI Training Manual
indicates how providers should
complete these items during the time
period outside of the vaccination season
(that is, prior to October 1, or when the
vaccine becomes available, and after
March 31 of the following year). The
measure specifications for this measure,
Percent of Residents or Patients Who
Were Assessed and Appropriately Given
the Seasonal Influenza Vaccine (ShortStay) (NQF #0680), can be found on the
CMS Web site at http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/
NursingHomeQualityInits/
NHQIQualityMeasures.html. Additional

information on this measure can also be
found at http://www.qualityforum.org/
QPS/0680.
d. Percent of Residents or Patients With
Pressure Ulcers That Are New or
Worsened (Short-Stay) (NQF #0678)—
Adoption of the NQF-Endorsed Version
of This Measure
In the FY 2014 IRF PPS final rule (78
FR 47911 through 47912), we adopted
the NQF-endorsed version of the
Percent of Residents or Patients With
Pressure Ulcers That Are New or
Worsened (Short-Stay) (NQF #0678),
with data collection beginning October
1, 2014, using the revised version of the
IRF–PAI, for quality reporting affecting
the FY 2017 adjustments to the IRF PPS
annual increase factor and subsequent
year annual increase factors. We noted
in the rule that, until September 30,
2014, IRFs should continue to submit
pressure ulcer data using the version of
the IRF–PAI released on October 1,
2012, for the purposes of data
submission requirements for the FY
2015 and FY 2016 adjustments to the
annual IRF PPS increase factor.
In the FY 2014 IRF PPS final rule (78
FR 47912 through 47916), we also
adopted a revised version of the IRF–
PAI starting October 1, 2014, for the FY
2017 adjustments to the IRF PPS annual
increase factor and subsequent year
annual increase factors.
We received several comments and
questions related to previously finalized
measures and our current policies.
While we greatly appreciate the
commenters’ views on such previously
finalized measures and policies, we did
not make any proposals relating to them
in the FY 2015 IRF PPS proposed rule.
As such, we will not address these
comments in this final rule. However,
we will consider all of these comments
in future rulemaking and program
development.

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TABLE 8—QUALITY MEASURES FINALIZED IN THE FY 2014 IRF PPS FINAL RULE AFFECTING THE FY 2016 AND 2017
ADJUSTMENTS TO THE IRF ANNUAL INCREASE FACTORS AND SUBSEQUENT YEAR INCREASE FACTORS
NQF measure ID

Measure title

NQF #0431+ .........
NQF #0680 * .........
NQF #0678 * .........

Influenza Vaccination Coverage among Healthcare Personnel.
Percent of Residents or Patients Who Were Assessed and Appropriately Given the Seasonal Influenza Vaccine (Short-Stay).
Percent of Residents or Patients with Pressure Ulcers That Are New or Worsened (Short-Stay)—Adoption of the NQF-Endorsed Version of this
Measure.
All-Cause Unplanned Readmission Measure for 30 Days Post-Discharge from Inpatient Rehabilitation Facilities.

NQF #2502 ** .......
+ Using

the CDC NHSN.
* Using the IRF–PAI Version 1.2 that is effective on October 1, 2014; available at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Downloads/IRFPAI-FINAL-for-Use-Oct2014-updated-v4.pdf.
** Not NQF-endorsed, currently under review by NQF. (See http://www.qualityforum.org/All-Cause_Admissions_and_Readmissions_Measures.aspx).

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Federal Register / Vol. 79, No. 151 / Wednesday, August 6, 2014 / Rules and Regulations
C. New IRF QRP Quality Measures
Affecting the FY 2017 Adjustments to
the IRF PPS Annual Increase Factor and
Beyond

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1. General Considerations Used for
Selection of Quality Measures for the
IRF QRP
In the FY 2014 IRF PPS final rule (78
FR 47094), we noted that the successful
development of an IRF quality reporting
program that promotes the delivery of
high-quality health care services in IRFs
is our paramount concern. We discussed
several of the factors we had taken into
account in selecting measures to
propose and finalize. We do wish to
note here that, in our measure selection
activities for the IRF QRP, we must take
into consideration input we receive
from a multi-stakeholder group, the
Measure Applications Partnership
(MAP), which is convened by the NQF
as part of a pre-rulemaking process that
we have established and are required to
follow under section 1890A of the Act.
The MAP is a public-private partnership
comprised of multi-stakeholder groups
convened by the NQF for the primary
purpose of providing input to CMS on
the selection of certain categories of
quality and efficiency measures, as
required by section 1890A(a)(3) of the
Act. By February 1 of each year, the
NQF must provide MAP input to CMS.
We have taken the MAP’s input into
consideration in selecting measures for
this rule. Input from the MAP is located
at https://www.qualityforum.org/
Publications/2014/01/MAP_PreRulemaking_Report__2014_
Recommendations_on_Measures_for_
More_than_20_Federal_Programs.aspx.
We also take into account national
priorities, such as those established by
the National Priorities Partnership
(NPP) at http://www.qualityforum.org/
Setting_Priorities/NPP/National_
Priorities_Partnership.aspx, the HHS
Strategic Plan at http://www.hhs.gov/
secretary/about/priorities/
priorities.html, the National Strategy for
Quality Improvement in Health Care at
http://www.ahrq.gov/workingforquality/
nqs/nqs2012annlrpt.pdf, and the CMS
Quality Strategy at http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/
QualityInitiativesGenInfo/CMS-QualityStrategy.html.
To the extent practicable, we have
sought to adopt measures that have been
endorsed by a national consensus
organization, recommended by multistakeholder organizations, and
developed with the input of providers,
purchasers/payers, and other
stakeholders.

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For the FY 2017 adjustments to the
IRF PPS annual increase factor, in
addition to retaining the previously
discussed CAUTI (NQF #0138), Pressure
Ulcer, Patient Influenza Vaccination
(NQF #0680), Healthcare Personnel
Influenza Vaccination (NQF #0431), and
Hospital Readmission (NQF #2502)
quality measures, we proposed in the
FY 2015 IRF PPS proposed rule (79 FR
26336 through 26338) to adopt two new
quality measures: (1) National
Healthcare Safety Network (NHSN)
Facility-Wide Inpatient Hospital-Onset
Methicillin-Resistant Staphylococcus
aureus (MRSA) Bacteremia Outcome
Measure (NQF #1716), and (2) National
Healthcare Safety Network (NHSN)
Facility-Wide Inpatient Hospital-Onset
Clostridium difficile Infection (CDI)
Outcome Measure (NQF #1717). These
quality measures are discussed in more
detail below.
a. National Healthcare Safety Network
(NHSN) Facility-Wide Inpatient
Hospital-Onset Methicillin-Resistant
Staphylococcus aureus (MRSA)
Bacteremia Outcome Measure (NQF
#1716).
In the FY 2015 IRF PPS proposed rule
(79 FR 26336 through 26337), we
proposed to adopt the CDC-developed
National Healthcare Safety Network
(NHSN) Facility-Wide Inpatient
Hospital-Onset Methicillin-Resistant
Staphylococcus aureus (MRSA)
Bacteremia Outcome Measure (NQF
#1716). The MRSA measure is a
measure of hospital-onset unique blood
source MRSA laboratory-identified
events among all inpatients in the
facility. This measure was adopted by
the Hospital Inpatient Quality Reporting
(IQR) Program in the FY 2012 IPPS/
LTCH PPS final rule (76 FR 51630,
51645) for the FY 2015 payment
determination, with data collection
beginning on January 1, 2013. It was
also adopted by the LTCH Quality
Reporting (LTCHQR) Program in the FY
2014 IPPS/LTCH PPS final rule (78 FR
50712 through 50717) for the FY 2017
payment determination, with data
collection beginning on January 1, 2015.
This measure is NQF-endorsed. We
included the MRSA measure in the
December 1, 2013 Measures under
Consideration (MUC) list. The MAP
conditionally supported the direction of
this quality measure, noting that the
measure is not ready for implementation
and suggesting that we harmonize this
measure with other infection measures.
We respectfully disagree with the
position of the MAP, as the MRSA
measure is fully endorsed by the NQF
for various settings, including the IRF
setting, which speaks to its suitability

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for use in that setting. Methicillinresistant Staphylococcus aureus (S.
aureus) infections are caused by a strain
of S. aureus bacteria that has become
resistant to antibiotics commonly used
to treat S. aureus infections. Between
2003 and 2004, an estimated 4.1 million
persons in the United States had nasal
colonization with MRSA.1 In addition,
in 2005 there were an estimated 94,000
invasive MRSA infections in the United
States, which were associated with an
estimated 18,000 deaths.2 Healthcareassociated MRSA infections occur
frequently in patients whose treatment
involves the use of invasive devices,
such as catheters or ventilators.
Currently, there are 22 States that
have implemented a MRSA Prevention
Collaborative, and at least 15 states that
have reporting mandates for MRSA
bacteremia in NHSN.3 For Medicare
populations, MRSA infection is
associated with increased cost, hospital
length of stay, morbidity, and mortality.
MRSA infections can be a consequence
of poor quality of care.4 5 Older adults
and patients in health care settings are
most vulnerable to MRSA infections, as
these patients may have weakened
immune systems. A recent study
reported that 9.2 percent of patients
without a history of MRSA tested
positive for MRSA at the time of the IRF
admission.6 We also recently analyzed
IRF claims submitted to Medicare
during CY 2009. According to our
analysis, IRFs reported a total of 3,464
cases of MRSA in 2009, including cases
either present on admission or acquired
during the IRF stay (‘‘present on
admission’’ indicators for ICD–9 codes
are not available on the IRF claims).7
1 Gorwitz RJ, Kruszon-Moran D, McAllister SK, et
al. Changes in the prevalence of nasal colonization
with Staphylococcus aureus in the United States,
2001–2004. J Infect Dis 2008; 197: 1226–34.
2 Department of Health and Human Services.
National Action Plan to Prevent HealthcareAssociated Infections: Roadmap to Elimination.
Available at http://www.hhs.gov/ash/initiatives/hai/
infection.html.
3 Centers for Disease Control and Prevention.
State Has Implemented a MRSA Prevention
Collaborative. Available at http://www.cdc.gov/hai/
stateplans/states-w-MRSA-collaborative.html.
4 Centers for Disease Control and Prevention.
People at Risk of Acquiring MRSA Infections.
Available at http://www.cdc.gov/mrsa/index.html.
5 Centers for Disease Control and Prevention.
Management of Multidrug-Resistant Organisms in
Healthcare Settings, 2006. Available at http://
www.cdc.gov/hicpac/pdf/guidelines/
MDROGuideline2006.pdf.
6 Rabinowitz RP, Kufera JA, Makely MJ. A Hidden
Reservoir of Methicillin-resistant Staphylococcus
aureus and Vancomyvin-resistant Enterococcus in
Patients Newly Admitted to an Acute Rehabilitation
Hospital. Physical Medicine & Rehabilitation 2012
(4):18–22.
7 Bernard SL, Dalton K, Lenfestey N F, Jarrett NM,
Nguyen KH, Sorensen AV, Thaker S, West ND.

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We believe it is important to collect data
on MRSA infections acquired during the
IRF stay, because MRSA infection is
associated with increased cost, hospital
length of stay, morbidity, and mortality.
In the FY 2015 IRF PPS proposed rule
(79 FR 26336 through 26337), we
proposed to use the CDC/NHSN data
collection and submission framework
for reporting of the MRSA measure. This
is the same framework currently used
for reporting the CAUTI (NQF #0138)
and Influenza Vaccination Coverage
among Healthcare Personnel (NQF
#0431) quality measures. Details related
to the procedures for using the NHSN
for data submission and information on
definitions, numerator data,
denominator data, data analyses, and
measure specifications for the MRSA
measure can be found at http://
www.qualityforum.org/QPS/1716 and
http://www.cdc.gov/nhsn/inpatientrehab/mdro-cdi/index.html. For January
2012 through January 2013, an
estimated 15 IRFs reported laboratoryidentified MRSA event data into NHSN.
We refer readers to section XI.B.3.a. of
this final rule for more information on
data collection and submission. We
sought public comments on the National
Healthcare Safety Network (NHSN)
Facility-Wide Inpatient Hospital-Onset
Methicillin-Resistant Staphylococcus
aureus (MRSA) Bacteremia Outcome
Measure (NQF #1716) for the FY 2017
IRF PPS annual increase factor and
subsequent years. Our responses to
public comments on this measure are
discussed in this section of the final
rule.
Comment: Several commenters
expressed support of our proposal to
adopt the MRSA measure, citing the
importance of focusing on outcomes,
such as healthcare-associated infections,
because they are meaningful to patients
and because of their impact on provider
behavior. One commenter noted, as
stated above, that the measure is NQFendorsed for the IRF setting. A few
commenters expressed support for
CMS’s effort to align IRF QRP quality
measures with measures in other quality
reporting initiatives.
Response: We appreciate the
commenters’ support for this outcome
measure and recognition of our efforts to
adopt measures for the IRF QRP that
emphasize high-priority patient safety
concerns and harmonize measures
across settings, when applicable.
Study to support a CMS Report to Congress: Assess
feasibility of extending the hospital-acquired
conditions—present on admission IPPS payment
policy to non-IPPS payment environments.
Prepared for the Centers for Medicare & Medicaid
Services (CMS Contract No. HHSM–500–T00007).
2011.

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Comment: Several commenters
objected to the proposed MRSA
healthcare-associated infection measure
due to the low prevalence of MRSA in
IRFs, indicating that the measure would
not be a meaningful quality measure in
IRFs. Several comments noted the
MRSA measure received only
‘‘conditional support’’ from the MAP,
and several commenters noted that it
would add additional data collection
burden.
Response: The MRSA measure is
endorsed by the National Quality Forum
for use in several settings, including
IRFs. Because of the scope of the patient
safety problem posed by MRSA to the
IRF patient population, as discussed
earlier in this section of the final rule,
as well as its burden on the health care
system, we continue to believe it is in
the best interest of patients to adopt this
measure for the IRF QRP in order to
promote awareness and encourage
implementation of MRSA control
procedures in the IRF setting. The
measure is on the list of NQF-endorsed
measures and can be found on the NQF
Web site at http://
www.qualityforum.org/QPS/1716. We
note that we have taken the MAP’s
input into consideration in selecting
quality measures, as we are required to
do under section 1890(a)(4) of the Act.
However, we are not required to follow
the MAP’s recommendations, but to take
them into account when selecting
measures for proposal. In addition to
MAP input, we take a variety of other
factors into account in selecting
measures. In this instance, for example,
the MRSA measure is NQF-endorsed for
the IRF setting, an indication that it is
appropriate for IRF patients. In addition,
this measure is appropriate in light of
the fact that MRSA infection most
commonly affects older adults in
hospitals or in facilities with longer
lengths of stay and is associated with
increased costs, hospital length of stay,
morbidity, and mortality. For the
reasons listed above, we continue to
believe that this measure is appropriate
for IRF patients.
Comment: One commenter was
concerned that it may be difficult to
distinguish infections present on
admission from those that are
healthcare-associated infections. Several
commenters expressed concern that
adoption of this quality measure would
lead to additional and inappropriate
screening for these conditions when
patients are admitted to an IRF, and one
commenter noted a concern about
antibiotic resistance.
Response: The definition of MRSA
laboratory-identified (LabID) events—
used in the measure we proposed,

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National Healthcare Safety Network
(NHSN) Facility-Wide Inpatient
Hospital-Onset MRSA Bacteremia
Outcome Measure (NQF #1716)—is
provided in the measure specifications,
which are posted on the NQF Web site
at http://www.qualityforum.org/QPS/
1716, and it specifically addresses
attribution through categorization of
MRSA LabID events based on date
admitted to the facility and date
specimen collected, as well as by the
current date and prior dates of specimen
collection. As specified in the measure,
Community-Onset (CO) is a LabID event
collected as an outpatient or an
inpatient less than or equal to 3 days
after admission to the facility (that is,
days 1, 2, or 3 of admission), while
Healthcare Facility-Onset (HO) is
defined as a LabID event collected from
a patient greater than 3 days after
admission to the facility (that is, days 4
or later of admission). Data from
emergency department and outpatient
observation locations (that is, outpatient
encounters) are also included in this
reporting of CO and HO events, in order
to ensure that events are accurately
categorized and identified. The CO
definition accounts for infections
acquired outside the IRF setting, either
in the community or in other health care
settings.
Regarding the commenter’s concern
that adoption of this quality measure
would lead to additional and
inappropriate screening, per NHSN
protocol, LabID events are to be reported
only from specimens collected for
clinical decision-making and never from
screening or surveillance cultures.
Because these required LabID events are
to be reported only from MRSA blood
specimens, they represent actual and
serious infections that should be treated
appropriately and according to
physician decision, as MRSA bacteria
should never be found in blood.
Therefore, this reporting should not be
a driver of inappropriate antibiotic use.
Additionally, we believe it is imperative
that we close the gap with respect to
monitoring for this serious infection
within the continuum of care. Because
this measure has been finalized for
several other health care settings (see
the FY 2012 IPPS/LTCH PPS final rule
(76 FR 51630, 51645) for IQR Program;
FY 2014 IPPS/LTCH PPS final rule (78
FR 50712 through 50717) for the
LTCHQR Program), we believe that
requiring IRFs to monitor for MRSA
infections is necessary and will help
further improve the quality of care
provided to patients receiving services
across the continuum of care.
Comment: One commenter suggested
collecting MRSA data for one year in

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Federal Register / Vol. 79, No. 151 / Wednesday, August 6, 2014 / Rules and Regulations
order to determine if the measure is
valuable.
Response: We believe that this is
unnecessary because quality measures
already undergo maintenance review at
regular intervals in order to evaluate the
value of ongoing use of these measures.
As noted above, it is important to collect
data on MRSA infections acquired
during the IRF stay because MRSA
infections are associated with increased
cost, hospital length of stay, morbidity,
and mortality.
Final Decision: Having carefully
considered the comments we received
on the National Healthcare Safety
Network (NHSN) Facility-Wide
Inpatient Hospital-Onset MRSA
Bacteremia Outcome Measure (NQF
#1716), we are finalizing the adoption of
this measure as proposed for use in the
IRF QRP.

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b. National Healthcare Safety Network
(NHSN) Facility-Wide Inpatient
Hospital-Onset Clostridium difficile
Infection (CDI) Outcome Measure (NQF
#1717)
In the FY 2015 IRF PPS proposed rule
(79 FR 26337 through 26338), we
proposed to adopt the CDC-developed
National Healthcare Safety Network
(NHSN) Facility-Wide Inpatient
Hospital-Onset Clostridium difficile
Infection (CDI) Outcome Measure (NQF
#1717) that is currently collected by the
CDC via the NHSN. The CDI measure is
a measure of hospital-onset CDI
laboratory-identified events among all
inpatients in the facility. This measure
was adopted by the Hospital IQR
Program in the FY 2012 IPPS/LTCH PPS
final rule (76 FR 51630 through 51631)
for the FY 2015 payment determination,
with data collection having begun on
January 1, 2013. It was also adopted by
the LTCHQR program in the FY 2014
IPPS/LTCH PPS final rule (78 FR 50712
through 50717) for the FY 2017 payment
determination, with data collection
beginning on January 1, 2015. This
measure is NQF-endorsed. We included
the CDI measure in the December 1,
2013 MUC list. The MAP supported this
measure.8 CDI can cause a range of
serious symptoms, including diarrhea,
serious intestinal conditions, sepsis, and
death.9 In the United States, CDI is
8 National Quality Forum. Measure Applications
Partnership Pre-Rulemaking Report: 2014
Recommendations of Measures Under
Consideration by HHS: February 2014. Available at:
https://www.qualityforum.org/Publications/2014/
01/MAP_Pre-Rulemaking_Report_2014_
Recommendations_on_Measures_for_More_than_
20_Federal_Programs.aspx.
9 McDonald LC, Coignard B, Dubberke E, et al.
Recommendations for surveillance of Clostridium
difficile-associated disease. Infect Control Hosp
Epidemiol 2007;28:140–145. Available at: http://

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responsible for an estimated 337,000
infections and 14,000 deaths annually.10
According to the HHS National Action
Plan to Prevent Health Care-Associated
Infections, CDI rates have increased in
recent years.11 The CDC estimates that
CDIs cost more than $1 billion in
additional health care costs each year.12
In recent years, CDIs have become more
frequent, more severe, and more
difficult to treat. Mortality rates for CDIs
are highest in elderly patients.13 Rates of
CDI among hospitalized patients aged
65 years and older increased 200
percent between 1996 and 2009, while
deaths related to CDIs increased 400
percent between 2000 and 2007, partly
attributed to a stronger germ strain.14 15
Further, the emergence and continued
rise of CDI as a leading cause of
gastroenteritis hospitalizations and
deaths, particularly in the elderly, has
been documented.16 CDI is associated
with increased patient care costs,
hospital lengths of stay, morbidity, and
mortality. CDI can be a consequence of
poor quality of care for Medicare
patients.17
Illness from CDI most commonly
affects older adults in hospitals or in
facilities with longer lengths of stay,
where germs spread more easily,
www.jstor.org/stable/pdfplus/10.1086/511798.pdf?
acceptTC=true.
10 Centers for Disease Control and Prevention.
Investigating Clostridium difficile Infections Across
the U.S. Available at http://www.cdc.gov/hai/eip/
pdf/Cdiff-factsheet.pdf.
11 Department of Health and Human Services.
National Action Plan to Prevent Health CareAssociated Infections: Roadmap to Elimination.
Available at http://www.hhs.gov/ash/initiatives/hai/
infection.html.
12 Centers for Disease Control and Prevention.
Making Health Care Safer: Stopping C. difficile
Infections. Available at: http://www.cdc.gov/
VitalSigns/HAI/index.html.
13 Centers for Disease Control and Prevention.
Investigating Clostridium difficile Infections Across
the U.S. Available at: http://www.cdc.gov/hai/eip/
pdf/Cdiff-factsheet.pdf.
14 Centers for Disease Control and Prevention.
QuickStats: Rates of Clostridium difficile Infection
Among Hospitalized Patients Aged ≥65 Years,* by
Age Group—National Hospital Discharge Survey,
United States, 1996–2009. MMWR, 60(34); 1171.
Available at: http://www.cdc.gov/mmwr/preview/
mmwrhtml/mm6034a7.htm.
15 Centers for Disease Control and Prevention.
Making Health Care Safer: Stopping C. difficile
Infections. Available at: http://www.cdc.gov/
VitalSigns/HAI/index.html.
16 Aron J. Hall, Aaron T. Curns, L. Clifford
McDonald, Umesh D. Parashar, and Ben A.
Lopman. The Roles of Clostridium difficile and
Norovirus Among Gastroenteritis-Associated Deaths
in the United States, 1999–2007. Clinical Infectious
Diseases 2012;55(2):216–23. Published by Oxford
University Press on behalf of the Infectious Diseases
Society of America 2012. DOI: 10.1093/cid/cis386.
17 Dubberke ER, Reske KA, Olsen MA, McDonald
LC, Fraser VJ. Short- and long-term attributable
costs of Clostridium difficile-associated disease in
nonsurgical inpatients. Clin Infect Dis 2008;
46:497–504. Available at: http://
cid.oxfordjournals.org/content/46/4/497.long.

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antibiotic use is more common, and
people are especially vulnerable to
infection.18 Considering CDIs are
increasing in all health care facilities,
and the IRF population is highly
vulnerable to CDI, it is important to
measure these rates in IRFs.19 According
to an analysis of ICD–9 codes reported
on Medicare claims, IRFs reported 7,720
cases of CDI-associated disease in
2009.20 Currently, the ‘‘present on
admission’’ indicators for ICD–9 codes
are not available on IRF claims.
Therefore, we are unable to determine
whether the 7,720 reported cases of CDI
were present on admission or acquired
during the IRF stay. There is evidence
that CDIs are preventable, and therefore,
surveillance and measuring infection
rates is important to reducing infections
and improving patient safety. Thirtyseven states have implemented a C.
difficile Prevention Collaborative, and at
least 15 states have reporting mandates
for CDI LabID events in NHSN.21 The
goal for the CDI measure is to collect
and publicly report IRF data on CDIs so
that IRFs will be better informed about
the incidence of this condition and
better equipped to prevent it.
In the FY 2015 IRF PPS proposed rule
(79 FR 26337 through 26338), we
proposed to use the CDC/NHSN data
collection and submission framework
for reporting of the NHSN Facility-Wide
Inpatient Hospital-Onset CDI Outcome
Measure (NQF #1717). This framework
is currently used for reporting the
CAUTI (NQF #0138) and Influenza
Vaccination Coverage among Healthcare
Personnel (NQF #0431) measures.
Details related to the procedures for
using the NHSN for data submission
and information on definitions,
numerator data, denominator data, data
analyses, and measure specifications for
the NHSN Facility-Wide Inpatient
Hospital-Onset CDI Outcome Measure
(NQF #1717) can be found at http://
www.qualityforum.org/QPS/1717 and
18 Centers for Disease Control and Prevention.
Frequently Asked Questions about Clostridium
difficile for Healthcare Providers. Available at:
http://www.cdc.gov/HAI/organisms/cdiff/Cdiff_
faqs_HCP.html.
19 Marciniak C, Chen D, Stein A, et al. Prevalence
of Clostridium Difficile Colonization at Admission
to Rehabilitation. Archives of Physical Medicine
and Rehabilitation 2006; 87(8):1086–1090.
20 Bernard SL, Dalton K, Lenfestey N F, Jarrett
NM, Nguyen KH, Sorensen AV, Thaker S, West ND.
Study to support a CMS Report to Congress: Assess
feasibility of extending the hospital-acquired
conditions—present on admission IPPS payment
policy to non-IPPS payment environments.
Prepared for the Centers for Medicare & Medicaid
Services (CMS Contract No. HHSM–500–T00007).
2011.
21 Centers for Disease Control and Prevention.
State Has Implemented a C. diff Prevention
Collaborative. Available at: http://www.cdc.gov/hai/
stateplans/states-w-CDI-collaborative.html.

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http://www.cdc.gov/nhsn/inpatientrehab/mdro-cdi/index.html.
We sought public comments on the
National Healthcare Safety Network
(NHSN) Facility-Wide Inpatient
Hospital-Onset CDI Outcome Measure
(NQF #1717) for the FY 2017 IRF PPS
annual increase factor and subsequent
years. The responses to public
comments on this measure are
discussed below in this section of the
final rule.
Comment: Several commenters
supported the CMS proposal to adopt
the CDI measure, citing the importance
of focusing on outcomes, such as
healthcare-associated infections,
because they are meaningful to patients
and because it can impact provider
behavior. One commenter supported the
measure because it encourages hospitals
to focus on prevention and appropriate
treatment and has important
implications for patient outcomes,
society, and reduced health care
expenditures. One commenter noted the
measure is NQF-endorsed for the IRF
setting, and two commenters expressed
support for CMS’s effort to align IRF
QRP quality measures with measures in
other quality reporting initiatives. A
commenter who supports the measure
suggested the significance of reporting
CDIs is increased due to a higher than
expected number of cases.
Response: We appreciate the
commenters’ support and recognition of
the importance of the expansion of the
IRF QRP to include this measure. C.
difficile is a pathogen of serious
concern, causing morbidity and
mortality throughout the continuum of
care. Transmission can only be
controlled and infection prevented if
monitoring occurs across the health care
settings.
Comment: Several commenters
objected to the proposed CDI measure
due to the low prevalence of CDIs in
IRFs, indicating that the measure would
not be a meaningful quality measure in
IRFs. One commenter noted that it adds
additional data collection burden.
Response: The CDI measure is
endorsed by the NQF for use in several
settings, including the IRF setting. As
with MRSA, because of the scope of the
patient safety problem posed by CDI to
the very vulnerable IRF population, as
well as its burden on the health care
system, we believe it is in the best
interest of patients to adopt this
measure to promote awareness and

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encourage immediate implementation of
CDI control procedures within the IRF
setting. The measure is on the list of
NQF-endorsed measures and can be
found on the NQF Web site at http://
www.qualityforum.org/QPS/1717. In
addition, the MAP supported this
quality measure for the IRF setting. This
measure is appropriate in light of the
fact that illness from CDI most
commonly affects older adults in
hospitals or in facilities with longer
lengths of stay and is associated with
increased costs, hospital length of stay,
and those who have been treated with
antibiotics. C. difficile is a pathogen of
serious concern that causes patient
morbidity and mortality throughout all
health care settings. Furthermore, lack
of monitoring for this serious infection
in the IRF setting creates a monitoring
gap within the continuum of care.
Because this measure has been proposed
and finalized for several other hospital
settings, we believe that requiring IRFs
to monitor for CDI is necessary and will
help further improve the quality of care
provided to Medicare beneficiaries. For
all of the reasons we have discussed, we
continue to believe this measure is
appropriate for IRF patients.
Comment: One commenter was
concerned that it may be difficult to
distinguish infections present on
admission from those that are hospitalacquired infections. The commenter
expressed concern about inappropriate
screening for these conditions if the
quality measure was adopted.
Response: The definition of CDI LabID
events, as provided in the measure
specifications, which are posted on the
NQF Web site at http://
www.qualityforum.org/QPS/1717,
specifically addresses attribution
through categorization of CDI LabID
events based on date admitted to the
facility and date specimen collected, as
well as by the current date and prior
dates of specimen collection. As
specified in the measure, CommunityOnset (CO) is a LabID event collected as
an outpatient or an inpatient less than
or equal to 3 days after admission to the
facility (that is, days 1, 2, or 3 of
admission), while Community-Onset
Healthcare Facility-Associated (CO–
HCFA) is defined as a CO LabID event
collected from a patient who was
discharged from the facility within 4
weeks prior to current date of stool
specimen collection. Data from
emergency department and outpatient

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observation locations (that is, outpatient
encounters) are also included in this
reporting of CO and HO events, in order
to ensure that events are accurately
categorized and identified. A Healthcare
Facility-Onset (HO) is a LabID event
collected more than 3 days after
admission to the facility (that is, on or
after day 4). The CDI measure is already
in use in the hospital inpatient setting,
where similar concerns have been raised
and successfully addressed (see the FY
2012 IPPS/LTCH PPS final rule (76 FR
51630 through 51631) for the IQR
program). We also note that the
definition of CDI LabID events (as
required by this measure) is based on
laboratory testing and admission date
data, and not clinical evaluation of the
patient, allowing for a much less laborintensive method to track CDIs. This
provides an infection measure of CDI
health care acquisition, exposure
burden, and infection burden based
almost exclusively on laboratory data
and limited admission date data,
including patient care location. LabID
events use NHSN forms to collect all
required data, using the definitions of
each data field. Per NHSN protocol,
LabID events are to be reported only
from specimens collected for clinical
decision-making (that is, collected from
patients with greater than or equal to 3
unformed stools within 24 hours) and
never from screening or surveillance
cultures.
Final Decision: Having carefully
considered the comments we received
on the National Healthcare Safety
Network (NHSN) Facility-Wide
Inpatient Hospital-Onset Clostridium
difficile Infection (CDI) Outcome
Measure (NQF #1717), we are finalizing
the adoption of this measure as
proposed for use in the IRF QRP.
D. IRF QRP Quality Measures and
Concepts Under Consideration for
Future Years
We are considering whether to
propose one or more of the quality
measures and quality measure topics
listed in Table 9 for future years in the
IRF QRP. We invited public comment
on these quality measures and quality
measure topics, specifically the clinical
importance of reported measure data,
the feasibility of measure data collection
and implementation, current use of
reported measure data, and usefulness
of the reported measure data to inform
quality of care delivered to IRF patients.

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TABLE 9—FUTURE MEASURES AND MEASURE TOPICS UNDER CONSIDERATION FOR PROPOSAL FOR THE IRF QUALITY
REPORTING PROGRAM

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National Quality Strategy Priority: Patient Safety:
Application of Percent of Residents Experiencing One or More Falls with Major Injury (Long-Stay) (NQF #0674).
National Quality Strategy Priority: Patient and Caregiver-Centered Care:
Application of Percent of Residents Who Self-Report Moderate to Severe Pain (Short-Stay) (NQF #0676).
Not Endorsed/Under Development—IRF Functional Outcome Measure: Change in Mobility Score for Medical Rehabilitation Patients.
Not Endorsed/Under Development—IRF Functional Outcome Measure: Change in Self-Care Score for Medical Rehabilitation Patients.
Not Endorsed/Under Development—IRF Functional Outcome Measure: Discharge Mobility Score for Medical Rehabilitation Patients.
Not Endorsed/Under Development—IRF Functional Outcome Measure: Discharge Self-Care Score for Medical Rehabilitation Patients.

In particular, we are considering
whether to propose one or more of the
following measures for future year IRP
PPS increase factors: (1) IRF Functional
Outcome Measure: Change in Mobility
Score for Medical Rehabilitation
Patients; (2) IRF Functional Outcome
Measure: Change in Self-Care Score for
Medical Rehabilitation Patients; (3) IRF
Functional Outcome Measure: Discharge
Mobility Score for Medical
Rehabilitation Patients; (4) IRF
Functional Outcome Measure: Discharge
Self-Care Score for Medical
Rehabilitation Patients; (5) Application
of the Percent of Residents Experiencing
One or More Falls with Major Injury
(Long-Stay) (NQF #0674); and (6)
Application of Percent of Residents
Who Self-Report Moderate to Severe
Pain (Short-Stay) (NQF #0676).
IRFs are designed to provide intensive
rehabilitation services to patients.
Patients seeking care in IRFs are those
whose illness, injury, or condition has
resulted in a loss of function, and for
whom rehabilitative care is expected to
help regain that function. Examples of
conditions treated in IRFs include
stroke, spinal cord injury, hip fracture,
brain injury, neurological disorders, and
other diagnoses characterized by loss of
function.
Given that the primary goal of
rehabilitation is improvement in
functional status, IRF clinicians have
traditionally assessed and documented
patients’ functional statuses at
admission and discharge to evaluate the
effectiveness of the rehabilitation care
provided to individual patients, as well
as the effectiveness of the rehabilitation
unit or hospital overall. In addition,
research results have found differences
in IRF patients’ functional outcomes,
thus we believe there is an opportunity
for improvement in this area.
Differences in IRF patients’ functional
outcomes have been found by
geographic region, insurance type, and
race/ethnicity after adjusting for key
patient demographic characteristics and
admission clinical status. This supports
the need to monitor IRF patients’
functional outcomes. For example,

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Reistetter 22 examined discharge motor
function and functional gain among IRF
patients with stroke and found
statistically significant differences in
functional outcomes by U.S. geographic
region, insurance type, and race/
ethnicity group after risk adjustment.
O’Brien and colleagues 23 found
differences in functional outcomes
across race/ethnicity groups in their
analysis of Medicare assessment data for
patients with stroke after risk
adjustment. O’Brien and colleagues 24
also noted that the overall IRF length of
stay decreased 1.8 days between 2002
and 2007 and that shorter IRF stays
were significantly associated with lower
functioning at discharge.
We are currently developing 4
functional status quality measures for
the IRF setting:
(1) Quality Measure: IRF Functional
Outcome Measure: Change in Mobility
Score for Medical Rehabilitation
Patients for Medical Rehabilitation
Patients;
(2) Quality Measure: IRF Functional
Outcome Measure: Change in Self-Care
Score for Medical Rehabilitation
Patients for Medical Rehabilitation
Patients;
(3) Quality Measure: IRF Functional
Outcome Measure: Discharge Mobility
Score for Medical Rehabilitation
Patients for Medical Rehabilitation
Patients; and
(4) Quality Measure: IRF Functional
Outcome Measure: Discharge Self-Care
Score for Medical Rehabilitation
Patients for Medical Rehabilitation
Patients.
We invited public comment on our
intent to propose these measures for the
FY 2019 adjustments to the IRF PPS
annual increase factor and subsequent
22 Reistetter TA, Karmarkar AM, Graham JE, et al.
Regional variation in stroke rehabilitation
outcomes. Arch Phys Med Rehabil.95(1):29–38, Jan.
2014.
23 O’Brien SR, Xue Y, Ingersoll G, et al. Shorter
length of stay is associated with worse functional
outcomes for medicare beneficiaries with stroke.
Physical Therapy. 93(12):1592–1602, Dec. 2013.
24 O’Brien SR, Xue Y, Ingersoll G, et al. Shorter
length of stay is associated with worse functional
outcomes for medicare beneficiaries with stroke.
Physical Therapy. 93(12):1592–1602, Dec. 2013.

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year increase factors. The draft measure
specifications for these measures are
posted at http://www.cms.gov/Medicare/
Quality-Initiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/IRFQuality-Reporting-ProgramDetails.html. The development of these
measures is expected to be completed in
2014, at which time they will be
submitted to the NQF, the entity with a
contract under section 1890(a) of the
Act, for review. Our responses to public
comments on these quality measures are
discussed in this section of the final
rule.
Comment: Several comments were
received about the quality measure
Application of the Percent of Residents
Experiencing One or More Falls with
Major Injury (Long-Stay) (NQF #0674).
One commenter supported this measure.
Several commenters opposed the
measure, citing that the measure is not
appropriate for the IRF setting and that
it is unclear how a major fall is defined
and what tool will be used to collect
this data.
Response: We thank the commenters
for their input and will take these
comments into consideration to inform
our ongoing measure development
efforts for this measure and our ongoing
consideration of the potential to adopt
this measure in the IRF QRP through
future rulemaking. For the purpose of
this measure, ‘‘major injury’’ is defined
as including bone fractures, joint
dislocations, closed head injuries with
altered consciousness, or subdural
hematoma. If selected for proposal, and
finalized through the future rulemaking
process, for data collection purposes, we
would revise the IRF PAI to include the
items used for this quality measure,
which are found in the Minimum Data
Set version 3.0. We believe that this
measure is appropriate for the IRF
setting. Fall-related injuries are the most
common cause of accidental death in
people aged 65 years and older,
resulting in approximately 41 fallrelated deaths per 100,000 people per

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year.25 26 In 2010, the total direct
medical costs of fall injuries for people
aged 65 years and older was $30 billion.
The annual direct and indirect cost of
fall injuries is expected to reach $54.9
billion by 2020.27 Falls thus represent a
significant cost burden to the entire
health care system, with injurious falls
accounting for 6 percent of medical
expenses among those aged 65 years and
older.28 This measure was developed by
CMS and is currently NQF-endorsed for
the Nursing Home/Skilled Nursing
Facility setting. Further, we adopted
this measure for the LTCH Quality
Reporting Program in the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50874
through 50877). We included the Falls
with Major Injury quality measure in the
December 1, 2013 Measures Under
Consideration (MUC) list, and the MAP
conditionally supported this quality
measure for the IRF setting. Additional
information regarding NQF #0674, on
which our application of the measure
will be based, if proposed and adopted
through future rulemaking process, is
available at http://
www.qualityforum.org/QPS/0674.
Comment: Several comments were
received about the quality measure
Application of Percent of Residents
Who Self-Report Moderate to Severe
Pain (Short-Stay) (NQF #0676). One
commenter supported this measure.
Several commenters opposed the
measure, indicating that it is not
appropriate for the IRF setting and does
not take into account pain that may be
a healthy part of a treatment protocol.
One commenter opposed the measure
because it was unclear when the
assessment would be completed, noting
that patients whose pain was
inadequately assessed at a previous
facility would be admitted to the IRF
experiencing pain, and the commenter
did not want pain present at the time of
admission to be attributed to the IRF.
This commenter also noted that it is not
addressed how the self-report of pain
would be conducted for cognitively
impaired patients.
25 L. Currie, Chapter 10: Fall and Injury
Prevention. In: Patient Safety and Quality: An
Evidence-Based Handbook for Nurses (Rockville:
Agency for Healthcare Research and Quality, 2008).
26 U.S. Department of Health & Human Services,
‘‘Implementation Guide to Prevention of Falls with
Injury,’’ http://www.dcha.org/wp-content/uploads/
falls_change-package_508.pdf.
27 Centers for Disease Control and Prevention,
‘‘Costs of Falls Among Older Adults,’’ http://
www.cdc.gov/homeandrecreationalsafety/falls/
fallcost.html.
28 L. Z. Rubenstein, C. M. Powers, and C. H.
MacLean, ‘‘Quality indicators for the management
and prevention of falls and mobility problems in
vulnerable elders,’’ Ann Intern Med 135, no. 8 Pt
2 (2001).

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Response: We thank the commenters
for their input and will take these
comments into consideration to inform
our ongoing measure development
efforts and our ongoing consideration of
including this measure in the future.
Comment: Several commenters
expressed strong support for functional
status quality measures because
functional improvement is a key focus
of IRF care. The commenters noted
several issues that CMS should consider
in the development of these functional
status quality measures, including NQF
endorsement as well as the importance
of adequate risk adjustment and
specified exclusion criteria. Several
commenters requested that CMS
consider using the FIM® instrument as
part of the quality measure. One
commenter suggested expediting the
development of the functional status
quality measures.
Response: We appreciate the strong
support for functional status measures
in the IRF setting. The functional status
quality measures are in development
and will be submitted to NQF for
consideration of endorsement in the fall.
The draft quality measure specifications
(version 2), including the inclusion and
exclusion criteria, the risk adjustment
variables and risk adjustment approach
can be found on the CMS Web site at
http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/
Downloads/Draft-Specifications-for-theFunctional-Status-Quality-Measures-forInpatient-Rehabilitation-FacilitiesVersion-2.pdf. We appreciate the
commenters for their input on the
quality measures and will take this
feedback under consideration as we
finalize the development of the IRF
functional status quality measures.
Comment: Several commenters
questioned CMS’s future proposal of the
self-care and mobility functional status
quality measures due to their concern
that the measures are not yet fully
developed nor adequately risk adjusted.
Response: The functional status
quality measures have been under
development for more than 3 years. The
steps in measure development have
included analysis, technical expert
panel review, and public posting of
specifications with public input.
Nearing their completion, we anticipate
submission of the quality measures to
the NQF for its review this fall. The
current specifications for the self-care
quality measure lists 41 risk adjustors,
and the mobility quality measure list 43
risk adjustors. The risk adjustors were
selected based on our review of the
literature, input from the function

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expert panel and feedback from public
comments.
Comment: One commenter conveyed
their concern regarding the use of the
Continuity Assessment Record and
Evaluation Tool (CARE Tool) as
currently proposed, because the CARE
Tool is not appropriate for data
collection for the IRF setting.
Response: We interpret the
commenter’s comment to mean that
they were concerned that we would use
the CARE Tool as the data source for the
functional status quality measures. We
further interpret the commenter to mean
that we would use the CARE Tool in its
entirety for the collection of these
measures because they believe that the
use of the CARE Tool in its entirety
would be inappropriate in an IRF. We
would like to clarify that the functional
status quality measures do not require
data collection of the entire CARE Tool.
The functional status measures were
developed using a subset of the CARE
Tool items (and their response codes),
not the CARE Tool in its entirety. These
particular assessment items (and
response codes) used for the functional
status measures, were derived from a
subset of items within the CARE Tool
which had been tested for reliability and
validity in the IRF setting as part of the
Post-Acute Payment Reform
Demonstration (PAC PRD). A summary
of the reliability and validity results are
provided in the draft measure
specifications posted at http://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/IRFQuality-Reporting-ProgramDetails.html.
Comment: Several commenters
conveyed concern related to undue
burden associated with ‘‘double
documentation’’ for the functional
status quality measures.
Response: We interpret the comment
to refer to the collection of both existing
data elements and additional similar or
redundant data elements. We appreciate
the concerns related to any undue
burden, including collection of both
existing data elements and additional
similar data elements, and take such
concerns under consideration.
Comment: One commenter was
concerned about relying on data from a
demonstration that had flaws in data
collection and testing, and wondered
whether these quality measures will
perform as intended.
Response: We interpreted the
commenter’s concern to be a concern
about the validity of the CARE items
tested as part of the PAC PRD. We
further interpret their concern being
related to the measures performing ‘‘as

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Federal Register / Vol. 79, No. 151 / Wednesday, August 6, 2014 / Rules and Regulations
intended’’ to imply that they wonder if
the measures would be able to depict
quality. We have described the
development and the assessment of the
CARE items and examined the validity
and reliability of these CARE items in
reports that summarize this work and
these reports are posted on the CMS
Web site at http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/Post-AcuteCare-Quality-Initiatives/Downloads/
The-Development-and-Testing-of-theContinuity-Assessment-Record-andEvaluation-CARE-Item-Set-Final-Reporton-the-Development-of-the-CARE-ItemSet-and-Current-AssessmentComparisons-Volume-3-of-3.pdf and
http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/Post-Acute-Care-QualityInitiatives/Downloads/TheDevelopment-and-Testing-of-theContinuity-Assessment-Record-andEvaluation-CARE-Item-Set-Final-Reporton-the-Development-of-the-CARE-ItemSet-Volume-1-of-3.pdf. We anticipate
that the quality measures will perform
as intended and that they will provide
information pertaining to quality due to
the rigor applied in the development of
the measures, including the risk
adjustment variables used in measure
calculation. In addition, we intend to
perform ongoing analysis of the
performance of the measures as part of
our obligation as a quality measure
steward.
Comment: We received several
comments pertaining to concerns
surrounding the ability of the quality
measures to capture small, but
important levels of functional change,
specifically concerns related to ‘‘floor
and ceiling effects.’’
Response: We interpret the
commenter to mean that ‘‘floor and
ceiling effects’’ pertain to the
assessment items used in the measure
not being able to capture change for
patients who would fall at the lower or
upper ends of the measurement scale.
We appreciate concerns related to any
instrument that would have limitations
such as these floor and ceiling effects.
In the development of these quality
measures this major concern was taken
under consideration, and there was a
focus on including items that would
cover a wide range of functioning, thus
minimizing limitations in measuring
change for patients who are low
functioning and patients who are high
functioning. Details about the
development of the CARE items can be

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found on the CMS Web site at http://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/
Downloads/Draft-Specifications-for-theFunctional-Status-Quality-Measures-forInpatient-Rehabilitation-FacilitiesVersion-2.pdf.
Comment: Several commenters
indicated concerns about the need for
standardized training to ensure interrater reliability for the CARE function
items and noted that this training would
add additional burden to facilities.
Response: We appreciate the
commenters’ concerns related to data
collection and the requirements that
accompany the implementation of new
quality measures and have addressed
this in the past with public outreach
including training sessions, webinars,
open door forums, and help desk
support.
E. Timeline for Data Submission for
New IRF QRP Quality Measures
Affecting the FY 2017 Adjustments to
the IRF PPS Annual Increase Factor
In the FY 2015 IRF PPS proposed rule
(79 FR 26339), we proposed the
following data submission timeline for
the quality measures for the FY 2017
adjustments to the IRF PPS annual
increase factor. We proposed that IRFs
would be required to submit data on
admissions and discharges occurring
between January 1, 2015, and December
31, 2015 (CY 2015), for the FY 2017
adjustments to the IRF PPS annual
increase factor. We proposed this time
frame because we believe this will
provide sufficient time for IRFs and
CMS to put processes and procedures in
place to meet the additional quality
reporting requirements. Given these
measures are collected through the
CDC’s NHSN, and IRFs are already
familiar with the NHSN reporting
system, as they currently report the
CAUTI measure, we believe this time
frame will allow IRFs ample
opportunity to begin reporting the
MRSA and CDI measures. We also
proposed the quarterly data submission
deadlines for the FY 2017 adjustments
to the IRF PPS annual increase factor to
occur approximately 135 days after the
end of each quarter, as outlined in the
Table 10. Each quarterly deadline would
be the date by which all data collected
during the preceding quarter would be
required to be submitted to us for
measures using the IRF–PAI and to the
CDC for measures using the NHSN. We
invited public comment on these
proposed timelines for data submission

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for the proposed IRF QRP quality
measures for the FY 2017 adjustments to
the IRF PPS annual increase factor.
Comment: Several commenters
recommended that CMS delay the
adoption of the National Healthcare
Safety Network (NHSN) Facility-Wide
Inpatient Hospital-Onset MethicillinResistant Staphylococcus aureus
(MRSA) Bacteremia Outcome Measure
(NQF #1716), because it is not ready for
implementation. They recommended
additional education and training as
well as additional testing should be
conducted before implementation.
Response: As the MRSA quality
measure is already NQF-endorsed for
the IRF setting, we do not believe that
additional testing is required before
implementation. By utilizing CDC’s
NHSN for MRSA reporting, we are
building upon IRFs’ ongoing experience
with data reporting via the NHSN.
Quality measures undergo maintenance
review at regular intervals in order to
evaluate the value of ongoing use of
these measures.
Comment: Several commenters
recommended that CMS delay the
adoption of the National Healthcare
Safety Network (NHSN) Facility-Wide
Inpatient Hospital-Onset Clostridium
difficile Infection (CDI) Outcome
Measure (NQF #1717), because it is not
ready for implementation. They
recommended additional testing should
be conducted before implementation.
Response: As the CDI quality measure
is NQF-endorsed for the IRF setting, we
do not believe that additional testing is
required before implementation. By
utilizing CDC’s NHSN for CDI reporting,
we are building upon IRFs’ ongoing
experience with data reporting via the
NHSN, but recognize that additional
education and training would be
helpful.
Final Decision: After careful
consideration of the comments we
received, we are finalizing our proposal
to begin to submit data for the MRSA
and CDI measures on admissions and
discharges starting January 1, 2015,
including the quarterly submission
deadlines. While we have taken into
consideration comments suggesting that
we delay implementation of these
measures, we do not believe we can
delay closing the monitoring gap that
would continue to exist if we delayed
implementation of these important
measures. Adjustments to the IRF PPS
annual increase factor for the MRSA and
CDI measures will begin with FY 2017.

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TABLE 10—TIMELINES FOR SUBMISSION OF IRF QRP QUALITY DATA USING CDC/NSHN FOR FY 2017 ADJUSTMENTS TO
THE IRF PPS ANNUAL INCREASE FACTOR: NATIONAL HEALTH SAFETY NETWORK (NHSN) FACILITY-WIDE INPATIENT
HOSPITAL-ONSET METHICILLIN-RESISTANT STAPHYLOCOCCUS AUREUS (MRSA) BACTEREMIA OUTCOME MEASURE
(NQF #1716) AND NATIONAL HEALTHCARE SAFETY NETWORK (NHSN) FACILITY-WIDE INPATIENT HOSPITAL-ONSET
CLOSTRIDIUM DIFFICILE INFECTION (CDI) OUTCOME MEASURE (NQF #1717) *
Quarter

CDC/NHSN data collection period

CDC/NHSN data
submission deadline

FY 2017 Increase Factor
Quarter
Quarter
Quarter
Quarter

1
2
3
4

January 1, 2015–March 31, 2015 ........................................
April 1, 2015–June 30, 2015 ................................................
July 1, 2015–September 30, 2015 .......................................
October 1, 2015–December 31, 2015 .................................

August 15, 2015.
November 15, 2015.
February 15, 2016.
May 15, 2016.

* The quarterly deadlines provided in this table apply to the CDC/NHSN data only. Timelines for submission of IRF–PAI data for the IRF PPS
and Quality Indicator items are provided separately.

TABLE 11—SUMMARY OF IRF QRP MEASURES AFFECTING THE FY 2017 ADJUSTMENTS TO THE IRF PPS ANNUAL
INCREASE FACTOR AND SUBSEQUENT YEAR INCREASE FACTORS
Continued IRF QRP Measure Affecting the FY 2015 Adjustments to the IRF PPS Annual Increase Factor and Subsequent Year Increase Factors:
• NQF #0138: National Health Safety Network (NHSN) Catheter-Associated Urinary Tract Infection (CAUTI) Outcome Measure.+
Continued IRF QRP Measure Affecting the FY 2016 Adjustments to the IRF PPS Annual Increase Factor and Subsequent Year Increase Factors:
• NQF #0431: Influenza Vaccination Coverage among Healthcare Personnel.+
Continued IRF QRP Measures Affecting the FY 2017 Adjustments to the IRF PPS Annual Increase Factor and Subsequent Year Increase Factors:
• NQF #2502: All-Cause Unplanned Readmission Measure for 30 Days Post-Discharge from Inpatient Rehabilitation Facilities.∧**
• NQF #0680: Percent of Residents or Patients Who Were Assessed and Appropriately Given the Seasonal Influenza Vaccine (ShortStay).*
• NQF #0678: Percent of Residents or Patients with Pressure Ulcers That Are New or Worsened (Short-Stay).*
New IRF QRP Measures Affecting the FY 2017 Adjustments to the IRF PPS Annual Increase Factor and Subsequent Year Increase Factors:
• NQF #1716: National Healthcare Safety Network (NHSN) Facility-Wide Inpatient Hospital-Onset Methicillin-Resistant Staphylococcus
aureus (MRSA) Bacteremia Outcome Measure.
• NQF #1717: National Healthcare Safety Network (NHSN) Facility-Wide Inpatient Hospital-Onset Clostridium difficile Infection (CDI) Outcome Measure.
+ Using CDC/NHSN.
* Using the IRF–PAI effective October 1, 2014.
∧ Medicare Fee-for-Service claims data.
** This measure is under review at NQF (http://www.qualityforum.org/All-Cause_Admissions_and_Readmissions_Measures.aspx).

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F. Timing for New IRFs To Begin
Reporting Quality Data Under the IRF
QRP Affecting the FY 2017 Adjustments
to the IRF PPS Annual Increase Factor
and Beyond
In the FY 2015 IRF PPS proposed rule
(79 FR 26340 through 26341), we
proposed that for the FY 2017
adjustments to the IRF PPS annual
increase factor and subsequent year
increase factors, that new IRFs be
required to begin reporting quality data
under the IRF QRP by no later than the
first day of the calendar quarter
subsequent to the quarter in which they
have been designated as operating in the
CASPER system. We invited public
comment on this proposed timing for
new IRFs to begin reporting quality data
under the IRF QRP.
Comment: We did not receive any
comments on the above proposal.
Final Decision: We are finalizing our
policy regarding the timing for new IRFs
to begin reporting quality data under the
IRF QRP affecting the FY 2017

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adjustments to the IRF PPS annual
increase factor and beyond, as proposed.
G. IRF QRP Reconsideration and
Appeals Procedures for the FY 2016
Adjustments to the IRF PPS Annual
Increase Factor and Beyond
1. IRF QRP Reconsideration and
Appeals for the FY 2014 and FY 2015
Adjustments to the IRF PPS Annual
Increase Factor
In the FY 2014 IRF PPS final rule (78
FR 47919), we finalized a voluntary
process that allowed IRF providers the
opportunity to seek reconsideration of
our initial noncompliance decision for
the FY 2014 and FY 2015 adjustments
to the IRF PPS annual increase factor.
We stated that we would notify IRFs
found to be noncompliant with the IRF
QRP reporting requirements that they
may be subject to the 2-percentage point
reduction to their IRF PPS annual
increase factor. The purpose of this
notification is to put the IRF on notice
of the following: (1) That the IRF has

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been identified as being noncompliant
with the IRF QRP reporting
requirements for a given reporting
period; (2) that the IRF will be
scheduled to receive a 2-percentage
point reduction to its IRF PPS annual
increase factor for the applicable fiscal
year; (3) that the IRF may file a request
for reconsideration if it believes that the
finding of noncompliance is erroneous,
or that if it was noncompliant, it had a
valid and justifiable excuse for this
noncompliance; and (4) that, to receive
reconsideration, the IRF must follow a
defined process on how to file a request
for reconsideration, which will be
described in the notification. This
defined process for filing a request for
reconsideration was described on the
CMS Web site at http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/IRF-QualityReporting/Reconsideration-andDisaster-Waiver-Requests.html.
We further stated that upon the
conclusion of our review of each request

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for reconsideration, we would render a
decision. We may reverse our initial
finding of noncompliance if: (1) The IRF
provides adequate proof of full
compliance with all IRF QRP reporting
requirements during the reporting
period; or (2) the IRF provides adequate
proof of a valid or justifiable excuse for
noncompliance if the IRF was not able
to comply with the requirements during
the reporting period. We will uphold
our initial finding of noncompliance if
the IRF cannot show any justification
for noncompliance.
If an IRF is dissatisfied with either our
initial finding of noncompliance or a
CMS decision rendered at the
reconsideration level, it can appeal the
decision with the Provider
Reimbursement Review Board (PRRB)
under 42 CFR part 405, subpart R. We
recommended, however, that IRF
providers submit requests for
reconsideration to us before submitting
appeals to the PRRB. We noted that this
order of appeals has had good success
under other established quality
reporting programs and, from an IRF
perspective, it allows for the
opportunity to resolve issues earlier in
the process, when we have dedicated
resources to consider all reconsideration
requests before payment changes are
applied to the IRF’s annual payment.
2. IRF QRP Program Reconsideration
and Appeals Procedures for the FY 2016
Adjustments to the IRF PPS Annual
Increase Factor and Beyond
In the FY 2015 IRF PPS proposed rule
(79 FR 26340 through 26341), we
proposed, for the FY 2016 adjustments
to the IRF PPS annual increase factor
and subsequent year increase factors, to
adopt an updated process, as described
below, that will enable an IRF to request
a reconsideration of our initial
noncompliance decision in the event
that an IRF believes that it was
incorrectly identified as being subject to
the 2-percentage point reduction to its
IRF PPS annual increase factor due to
noncompliance with the IRF QRP
reporting requirements for a given
reporting period.
For the FY 2016 adjustments to the
IRF PPS annual increase factor and
subsequent year increase factors, we
proposed that an IRF would receive a
notification of noncompliance if we
determine that the IRF did not submit
data in accordance with section
1886(j)(7)(C) of the Act for the
applicable fiscal year, and therefore,
that the IRF is subject to a 2-percentage
point reduction in the applicable IRF
PPS annual increase factor as required
by section 1886(j)(7)(A)(i) of the Act. We
will only consider requests for

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reconsideration once a provider has
been found to be noncompliant and not
before. IRFs will have 30 days from the
date of the initial notification of
noncompliance to review the CMS
determination and submit to us a
request for reconsideration. This
proposed time frame allows us to
balance our desire to ensure that IRFs
have the opportunity to request
reconsideration with our need to
complete the reconsideration process
and provide IRFs with our decision in
a timely manner. Notifications of
noncompliance and any subsequent
notifications from CMS will be sent via
a traceable delivery method such as
certified U.S. mail or registered U.S.
mail. We will not accept any requests
for reconsideration that are submitted
after the 30-day deadline.
We further proposed that as part of
the IRF’s request for reconsideration, the
IRF will be required to submit all
supporting documentation and evidence
demonstrating (1) full compliance with
all IRF QRP reporting requirements
during the reporting period or (2) a valid
or justifiable excuse for noncompliance
if the IRF was not able to comply with
the requirements during the reporting
period. We will be unable to review any
reconsideration request that fails to
provide the necessary documentation
and evidence along with the request.
The documentation and evidence may
include copies of any communications
that demonstrate its compliance with all
IRF QRP reporting requirements, as well
as any other records that support the
IRF’s rationale for seeking
reconsideration. A sample list of the
proposed acceptable supporting
documentation and evidence, as well as
instructions for IRF providers to retrieve
copies of the data submitted to CMS for
the appropriate program year, can be
found on the CMS Web site at http://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/
Reconsideration-and-Disaster-WaiverRequests.html.
We proposed that providers may
withdraw reconsideration requests at
any time and may file new requests
within the proposed 30-day deadline.
We also proposed that, in very limited
circumstances, we may extend the
proposed deadline for submitting
reconsideration requests. It will be the
responsibility of a provider to request an
extension and demonstrate that
extenuating circumstances existed that
prevented the filing of the
reconsideration request by the proposed
deadline. We will not respond to any
other types of requests, such as requests
for administrative review of the

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methodology and standards that
determine the quality reporting
requirements.
We proposed that an IRF provider
wishing to request a reconsideration of
our initial noncompliance
determination will be required to do so
by submitting an email to the following
email address:
[email protected].
Any request for reconsideration
submitted to us by an IRF will be
required to follow the guidelines
outlined on the CMS Web site at http://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/
Reconsideration-and-Disaster-WaiverRequests.html. Following receipt of a
request for reconsideration, we will
provide—
• An email acknowledgment, using
the contact information provided in the
reconsideration request, to the CEO or
CEO-designated representative that the
request has been received; and
• Once we have reached a decision
regarding the reconsideration request,
an email to the IRF CEO or CEOdesignated representative, using the
contact information provided in the
reconsideration request, regarding our
decision.
We proposed to require any IRF that
believes it was incorrectly identified as
being subject to the 2-percentage point
reduction to its IRF PPS annual increase
factor to submit a request for
reconsideration and receive a decision
on that request before the IRF can file
an appeal with the PRRB, as authorized
by the Administrative Procedure Act. If
the IRF is dissatisfied with the decision
rendered at the reconsideration level,
the IRF can appeal the decision with the
PRRB under § 405.1835. We believe this
proposed process is more efficient and
less costly for us and for IRFs because
it decreases the number of PRRB
appeals by resolving issues earlier in the
process. Additional information about
the reconsideration process including
requirements for submitting
reconsideration request is posted on the
CMS Web site at http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/IRF-QualityReporting/Reconsideration-andDisaster-Waiver-Requests.html. We
invited public comment on the
proposed procedures for reconsideration
and appeals. The responses to the
public comments we received on this
proposal are discussed below.
Comment: Several commenters
supported the proposal to continue the
reconsideration process for FY 2016.

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Response: We thank the commenters
for taking the time to express their
support.
Comment: One commenter supported
the reconsideration process, but
believed that it should be expanded to
include reconsideration of the results of
the data validation process described in
section XII.K. of this final rule.
Specifically, if two clinicians do not
document the patient’s condition in the
same way, but the rationale for the
difference can be explained through the
reconsideration and appeals process,
then the provider should be allowed to
use this process.
Response: We thank the commenter
for their support of the proposed
reconsideration process. We believe the
current reconsideration process could
be utilized for reconsideration of the
results of the validation process, as long
as all of the supporting documentation
necessary for the request for
reconsideration was previously
submitted at the time of validation (that
is, as long as the reconsideration request
was based on the same documentation
that was submitted for validation).
Final Decision: Having carefully
considered the comments we received
on the IRF QRP Reconsideration and
Appeals procedures for the FY 2016
adjustments to the IRF PPS annual
increase factor and beyond, we are
finalizing this policy as proposed.
H. IRF QRP Data Submission Exception
or Extension Requirements for the FY
2017 Adjustments to the IRF PPS
Annual Increase Factor and Beyond
In the FY 2015 IRF PPS proposed rule
(79 FR 26341 through 26342), for the
IRF QRP’s data submission exception or
extension requirements for the FY 2017
adjustments to the IRF PPS annual
increase factor and subsequent year
increase factors, we proposed to
continue using the IRF QRP’s disaster
waiver requirements that were adopted
in the FY 2014 IRF PPS final rule (78
FR 47920) for the FY 2015 adjustments
to the IRF PPS annual increase factor
and subsequent year increase factors,
which are outlined in this section, with
the exception that the phrase ‘‘exception
or extension’’ will be substituted for the
word ‘‘waiver.’’ We also proposed, for
the FY 2017 adjustments to the IRF PPS
annual increase factor and subsequent
year increase factors, that we may grant
an exception or extension to IRFs if we
determine that a systemic problem with
one of our data collection systems
directly affected the ability of the IRF to
submit data. Because we do not
anticipate that these types of systemic
errors will happen often, we do not
anticipate granting an exception or

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extension on this proposed basis
frequently. We proposed that if we make
the determination to grant an exception
or extension, we will communicate this
decision through routine
communication channels to IRFs and
vendors, including, but not limited to,
issuing memos, emails, and notices on
the CMS Web site at http://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/
index.html.
In the FY 2014 IRF PPS final rule (78
FR 47920), we finalized a process for
IRF providers to request and for us to
grant exceptions or extensions for the
quality data reporting requirements of
the IRF QRP for one or more quarters,
beginning with the FY 2015 adjustments
to the IRF PPS annual increase factor
and subsequent year increase factors,
when there are extraordinary
circumstances beyond the control of the
provider.
In the event that an IRF seeks to
request an exception or extension for
quality reporting purposes, the IRF must
request an exception or extension
within 30 days of the occurrence of an
extraordinary event by submitting a
written request to CMS via email to the
IRF QRP mailbox at
[email protected].
Exception or extension requests sent to
us through any other channel will not
be considered as a valid request for an
exception or extension from the IRF
QRP reporting requirements for any
adjustment to the IRF PPS annual
increase factor. The written request
must contain all of the finalized
requirements in the FY 2014 IRF PPS
final rule (78 FR 47920) and on the CMS
Web site at http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/IRF-QualityReporting/Reconsideration-andDisaster-Waiver-Requests.html. When
an exceptions or extension is granted,
an IRF will not incur payment reduction
penalties for failure to comply with the
requirements of the IRF QRP, for the
time frame specified by CMS. If an IRF
is granted an exception, we will not
require that the IRF submit any quality
data for a given period of time. If we
grant an extension to an IRF, the IRF
will still remain responsible for
submitting quality data collected during
the time frame in question, although we
will specify a revised deadline by which
the IRF must submit this quality data. It
is important to note that requesting an
exception or extension from the
requirements of the IRF QRP is separate
and distinct from the purpose and
requirements of § 412.614, which
outline the requirements to follow if an

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IRF is requesting a waiver regarding
consequences of failure to submit
complete and timely IRF–PAI payment
data specified in that regulation. IRFs
that have filed and were granted an IRF–
PAI waiver in accordance with
§ 412.614 may so indicate when
requesting an exception or extension
from the IRF QRP requirements, but the
submission of an IRF–PAI waiver
request pursuant to § 412.614 will not
be considered a valid request for an
exception or extension from the IRF
QRP requirements. To request an
exception or extension from the IRF
QRP requirements, the previously
discussed process must be followed.
Additionally, in the FY 2014 IRF PPS
final rule (78 FR 47920), we finalized a
policy that allowed us to grant waivers
(which we are now calling exceptions or
extensions) to IRFs that have not
requested them if we determine that an
extraordinary circumstance, such as an
act of nature, affects an entire region or
locale. We stated that if this
determination was made, we will
communicate this decision through
routine communication channels to
IRFs and vendors, including, but not
limited to, issuing memos, emails, and
notices on the CMS Web site at http://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/
index.html.
We invited public comment on these
proposals regarding the IRF QRP’s data
submission exception or extension
requirements for the FY 2017
adjustments to the IRF PPS annual
increase factor and subsequent year
increase factors. The responses to the
public comments we received on this
proposal are discussed below.
Comment: Several commenters
supported the proposed Exception/
Exemption waiver proposal.
Response: We thank the commenters
for taking time to express their support.
Final Decision: Having carefully
considered the comments we received
on the proposed IRF QRP data
submission exception or extension
requirements for the FY 2017
adjustments to the IRF PPS annual
increase factor and beyond, we are
finalizing these requirements, as
proposed.
I. Public Display of Quality Measure
Data for the IRF QRP
Under section 1886(j)(7)(E) of the Act,
the Secretary is required to establish
procedures for making data submitted
under the IRF QRP available to the
public. Section 1886(j)(7)(E) of the Act
also requires these procedures to ensure
that each IRF provider has the

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opportunity to review the data that is to
be made public for its facility, prior to
such data being made public. Section
1886(j)(7)(E) of the Act requires the
Secretary to report quality measures that
relate to services furnished in IRFs on
the CMS Web site at http://
www.cms.hhs.gov/Medicare/MedicareFee-for-Service-Payment/
InpatientRehabFacPPS/.
Currently, the Agency is developing
plans regarding the implementation of
these provisions. We appreciate the
need for transparency into the processes
and procedures that will be
implemented to allow for the public
reporting of the IRF QRP data and to
afford providers the opportunity to
preview that data before it is made
public. At this time, we have not
established procedures or timelines for
public reporting of data, but we intend
to make the public aware of our strategy
in the future. We invited public
comments on what we should consider
when developing future proposals
related to public reporting. Our
responses to the public comments we
received on this topic are discussed
below.
Comment: Several commenters
encouraged CMS to report IRF quality
data on Hospital Compare in the same
manner that it reports data for acute care
hospitals. One commenter encouraged
CMS to report on IRF quality data as
soon as possible.
Response: We thank the commenters
for taking the time to express these
views and suggestions regarding public
reporting and will take them into
consideration for future public reporting
development.
J. IRF QRP Data Completion Thresholds
for the FY 2016 Adjustments to the IRF
PPS Annual Increase Factor and Beyond
Beginning in FY 2014, section
1886(j)(7)(A)(i) of the Act requires the
reduction of the applicable IRF PPS
annual increase factor, as previously
modified under section 1886(j)(3)(D) of
the Act, by 2 percentage points for any
IRF that fails to submit data on quality
measures specified by the Secretary in
accordance with the form and manner
specified by the Secretary for that fiscal
year. To date, we have not established
a standard for compliance other than for
IRF providers to submit all applicable
required data for all finalized IRF QRP
quality measures, by the previously
finalized quarterly deadlines. We have
also specifically required monthly
submission of such quality data for the
healthcare-associated infection or
vaccination data, which is reported to
the CDC. In the FY 2015 IRF PPS
proposed rule (79 FR 26342 through

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26343), in reaction to the input received
from our stakeholders seeking
additional specificity related to required
IRF QRP compliance affecting FY
annual increase factor determinations
and, due to the importance of ensuring
the integrity of quality data submitted to
CMS, we proposed to set specific IRF
QRP thresholds for completeness of
provider quality data beginning with
data affecting the FY 2016 annual
increase factor determination and
beyond.
The IRF QRP, through the FY 2012
IRF PPS final rule, CY 2013 OPPS/ASC
final rule, and FY 2014 IRF PPS final
rule, requires providers to submit
quality data using 2 separate data
collection/submission mechanisms:
Measures collected using the quality
indicator section of the IRF–PAI are
submitted through the CMS Quality
Improvement Evaluation System (QIES);
and measures stewarded by the Centers
for Disease Control and Prevention
(CDC) (Healthcare-associated Infection
(HAI) measures and vaccination
measures) are submitted using the
CDC’s National Healthcare Safety
Network (NHSN). While we have
previously finalized a claims-based
measure (All-Cause Unplanned
Readmission Measure for 30 Days PostDischarge from Inpatient Rehabilitation
Facilities), such measures do not require
IRFs to actually submit quality data to
us, as they are calculated using claims
data submitted to us for payment
purposes. Thus, with claims-based
measures, there is no quality data to
which we could apply the proposed
data completion thresholds. To ensure
that IRF providers are meeting an
acceptable standard for completeness of
submitted data, we proposed that for the
FY 2016 annual increase factor and
beyond, IRF providers must meet or
exceed two separate program
thresholds: One threshold for quality
measures data collected using the
quality indicator section of the IRF–PAI
and submitted through QIES; and a
second threshold for quality measures
data collected and submitted using the
CDC’s NHSN. We proposed that IRFs
must meet or exceed both thresholds
discussed below to avoid receiving a 2
percentage point reduction to their IRF
PPS annual increase factor for a given
FY, beginning with FY 2016, which
considers quality data submitted during
CY 2014. We proposed to hold IRF
providers accountable for two different
data completion thresholds for each of
the 2 data submission mechanisms: A
95 percent data completion threshold
for data collected using the quality
indicator items on the IRF–PAI and

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submitted through QIES; and a 100
percent threshold for data collected and
submitted through the CDC’s NHSN. We
have chosen to hold providers to the
lower threshold of 95 percent for the
quality indicator items on the IRF–PAI,
as there has to be some margin for error
related to IRF patients that have been
discharged emergently or against
medical advice, as these situations make
it more difficult to collect and submit
the mandatory IRF–PAI quality
indicator items at discharge. We do not
believe the same impediments exist for
the infection, vaccination, or other
quality measures data that IRFs submit
to the CDC’s NHSN.
1. IRF QRP Completion Threshold for
the Required Quality Indicator Data
Items on the IRF–PAI
The quality indicator section of the
IRF–PAI is composed of data collection
items designed to inform quality
measure calculations, including riskadjustment calculations as well as
internal consistency checks for logical
inaccuracies. In the FY 2015 IRF PPS
proposed rule (79 FR 26342 through
26343), we proposed that beginning
with quality data affecting the FY 2016
IRF PPS annual increase factor (CY 2014
data) and beyond, IRF providers must
meet or exceed a proposed IRF–PAI
quality indicator data completion
threshold of 95 percent. We proposed to
assess the completeness of submitted
data by verifying that, for all IRF–PAI
Assessments submitted by any given
IRF, at least 95 percent of those IRF–PAI
Assessments must have 100 percent of
the mandatory quality indicator data
items completed where, for the
purposes of this proposed rule,
‘‘completed’’ is defined as having
provided actual patient data as opposed
to a non-informative response, such as
a dash (–), that indicates the IRF was
unable to provide patient data. The
proposed threshold of 95 percent is
based on the need for complete records,
which allows appropriate analysis of
quality measure data for the purposes of
updating quality measure specifications
as they undergo yearly and triennial
measure maintenance reviews with the
NQF. Additionally, complete data is
needed to understand the validity and
reliability of quality data items,
including risk-adjustment models.
Finally, we want to ensure complete
quality data from IRF providers, which
will ultimately be reported to the
public, allowing our beneficiaries to
gain an understanding of provider
performance related to these quality
metrics, and helping them to make
informed health care choices. Our data
suggests that the majority of current IRF

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providers are in compliance with, or
exceeding this proposed threshold
already. However, we take comment on
circumstances that might prevent IRFs
from meeting this level of compliance.
All items that we propose to require
under the IRF QRP are identified in
Chapter 4 of the IRF PAI Training
Manual, which is available for
download on the CMS Web site at
http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/IRF-Quality-Reporting/
index.html?redirect=/IRF-QualityReporting/. We additionally proposed
that any IRF that does not meet the
proposed requirement that 95 percent of
all IRF–PAI assessments submitted
contain 100 percent of all required
quality indicator data items, will be
subject to a reduction of 2 percentage
points to the applicable FY IRF PPS
annual increase factor beginning with
FY 2016. To establish this program
threshold, we analyzed IRF–PAI quality
indicator data item submissions from
January 2013 through September 2013,
and we believe that the majority of IRF
providers will be able to meet the
proposed 95 percent data completion
threshold. It is our intent to raise this
threshold over the next 2 years, through
the notice and comment rulemaking
process. We proposed that this
threshold will have to be met by IRFs,
in addition to the CDC NHSN threshold
discussed below, to avoid receiving a 2
percentage point reduction to the
applicable FY IRF PPS annual increase
factor.
2. IRF QRP Data Completion Threshold
for Measures Submitted Using the
Centers for Disease Control and
Prevention (CDC) National Healthcare
Safety Network (NHSN)
The IRF QRP, through the FY 2012
IRF PPS final rule, CY 2013 OPPS/ASC
final rule, and FY 2014 IRF PPS final
rule, requires that IRFs submit CDCstewarded quality measure data using
the CDC’s NHSH, including data for the
previously finalized CAUTI and
Influenza Vaccination Coverage Among
Healthcare Personnel (HCP) quality
measures. More specifically, we require
that IRFs follow CDC quality measure
protocols, which require them to
complete all data fields required for
both numerator and denominator data
within NHSN, including the ‘‘no
events’’ field for any month during
which no infection events were
identified. IRFs are required to submit
this data on a monthly basis (except for
the HCP measure, which is only
required to be reported once per year).
However, IRFs have until the associated
quarterly deadline (135 calendar days

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beyond the end of each CY quarter) by
which to report infection data to the
CDC for each of the 3 months within
any give quarter. For more information
on the IRF QRP quarterly deadlines, we
refer you to Table 10 in section XI.E of
this final rule. In the FY 2015 IRF PPS
proposed rule (79 FR 26343), we
proposed that, beginning with FY 2016
IRF PPS annual increase factor and
beyond, this previously finalized
requirement for monthly reporting must
be met, in addition to the proposed IRF–
PAI quality indicator data item
completion threshold discussed above,
to avoid a 2 percentage point reduction
to the applicable FY IRF PPS annual
increase factor. That is, we proposed
that IRFs must meet a threshold of 100
percent for measures submitted via the
NHSN, achieved by submitting relevant
infection or vaccination data for each
month of any given CY, in addition to
meeting the above proposed data item
completion threshold for required
quality indicator items on the IRF–PAI.
As the IRF QRP expands and IRFs begin
reporting measures that were previously
finalized, but not yet implemented, or
newly proposed and finalized measures,
we proposed to apply this same
threshold.
a. Application of the 2 Percentage Point
Reduction for IRF Providers That Fail
To Meet the Above-Proposed Data
Completion Thresholds
In the FY 2015 IRF PPS proposed rule
(79 FR 26343), we proposed that IRFs
must meet two separate data completion
thresholds to avoid a 2 percentage point
reduction to their applicable FY annual
increase factor: A data completion
threshold of 95 percent for those
mandatory data elements collected
using the quality indicator items on the
IRF–PAI and submitted through QIES;
and a second data completion threshold
of 100 percent for quality measure data
submitted through the CDC’s NHSN. We
also proposed that these data
completion thresholds must be met in
addition to the below proposed data
accuracy validation threshold of 75
percent, to avoid a 2 percentage point
reduction to their applicable FY annual
increase factor. While we proposed that
IRFs must meet both the data
completion and data accuracy
thresholds, IRFs cannot have their
applicable annual increase factor
reduced twice. That is, should an IRF
provider fail to meet either one or both
of the proposed thresholds, they will
only receive one reduction of 2
percentage points to their applicable FY
annual increase factor.
We invited comment on these
proposals. Our responses to the public

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comments we received on this proposal
are discussed below.
Comment: A few commenters
supported our proposal of data
completeness standards, stating that
these standards will facilitate more
accurate public reporting in the future.
Response: We thank the commenters
for taking the time to express their
support of our proposal.
Comment: Several commenters
believed we should delay the
implementation of our data completion
threshold. One commenter stated we
should not implement this threshold
until FY 2016, at the earliest. Other
commenters stated that we should apply
the standards no earlier than FY 2017.
Response: We would submit that we
proposed to begin applying this data
completion threshold, beginning with
the FY 2016 annual increase factor for
IRFs (based on CY 2014 data), and
interpret that the commenter stating that
we should not implement this proposal
until FY 2016, at the earliest, meant that
we should apply this threshold to data
collected during CY 2016, at the earliest.
We believe that it is important that we
begin evaluating the completeness of the
quality data submitted to CMS as early
as possible, in order to ensure the
integrity of the IRF QRP data. This data
may not only be used for public
reporting, but is also used to inform
important updates to quality measures
undergoing maintenance at the NQF,
that occurs on an annual or triennial
basis. Additionally, quality data being
submitted via the CDC’s NHSN during
CY 2014, will be used to calculate a
baseline ‘‘expected’’ ratio, as well as a
Standard Infection Ratio (SIR).
Incomplete quality data, including
missing monthly submissions of NHSN
data, will result in an incomplete, and
therefore potentially misleading, SIR.
We believe delaying implementation of
the application of these data completion
thresholds would be a disservice to
Medicare beneficiaries, who will
eventually use publically reported data
to make better informed health care
choices for themselves and their
families.
Comment: Several commenters stated
that CMS should delay implementation
and apply these standards no earlier
than FY 2017, and additionally
commented that it would be
inappropriate and unfair to apply the
data completeness standards to data
submitted before the standards were
proposed, and therefore, known to IRFs.
One commenter stated that in the
hospital IQR program, changes to data
submission standards are proposed in
advance of—not during or after—the
data collection period. One commenter

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stated that it would be impermissibly
retroactive to apply data completeness
thresholds to IRF data submitted prior
to October 1, 2014.
Response: We respectfully disagree
with the commenters, and believe that
we are within our authority to apply
these data completion standards to
quality data submitted to CMS prior to
the effective date of this final rule.
Currently, the compliance standard
applicable to each IRF is to timely
submit all required quality data to CMS,
and IRFs should already be ensuring
that the data they submit is complete
and accurate. Thus, applying a data
completion threshold to data submitted
during CY 2014 ensures that IRFs are
complying with applicable standards,
and that payments made to IRFs are
based on complete and accurate data.
Comment: One commenter stated that
it would be unfair for CMS to apply the
proposed data completion threshold to
data collected for the first 6 months
using the newly revised IRF–PAI that
will go into effect on October 1, 2014,
and that CMS should only consider the
second 6 months of data submitted
using the new IRF–PAI when making
compliance determinations. The
commenter further stated that CMS has,
in the past, used a partial year’s data to
make compliance determinations, and
should do so for the FY 2017
compliance determinations, as IRFs will
have a greater chance of submitting
inaccurate or incomplete data until they
are familiar with the updated IRF–PAI.
Response: We thank the commenter
for expressing their concern. However,
we respectfully disagree with the
commenter. While IRFs will be using a
new version of the IRF–PAI beginning
October 1, 2014, we do not believe that
the expanded quality indicator section
used for reporting quality data is so
substantially different that IRFs will
have difficulty submitting complete and
accurate data. The newly expanded
quality indicator section of the IRF–PAI
includes only 1 additional mandatory
item compared to the version that is in
use currently. Additionally, the data
completion threshold, initially, will
only look at the mandatory pressure
ulcer items, which remain the same; the
new mandatory item is related to the
Patient Influenza measure, and will not
be considered when applying the data
completion threshold for FY 2017
compliance determinations. Any
expansion of the application of this data
completion threshold to IRF quality data
will be addressed through notice-andcomment rulemaking.
Final Decision: Having carefully
considered the comments we received
on the proposed IRF QRP data

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completion threshold, and for the
reasons discussed above, we are
finalizing the IRF data completion
threshold for the FY 2016 adjustments
to the IRF PPS annual increase factor
and beyond, as proposed.
K. Data Validation Process for the FY
2017 Adjustments to the IRF PPS
Annual Increase Factor and Beyond
Historically, we have built
consistency and internal validation
checks into our data submission
specifications to ensure that the basic
elements of the IRF–PAI assessment
conform to requirements such as proper
format and facility information. These
internal validation checks are
automated and occur during the
provider submission process, and help
ensure the integrity of the data
submitted by providers by rejecting
submissions or issuing warnings when
provider data contain logical
inconsistencies. These edit checks are
further outlined in the Inpatient
Rehabilitation Facility-Patient
Assessment Instrument Data
Submission Specifications, which are
available for download at http://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/
InpatientRehabFacPPS/Software.html.
Validation is intended to provide
added assurance of the accuracy of the
data that will be reported to the public
as required by section 1886(j)(7)(E) of
the Act. In the FY 2015 IRF PPS
proposed rule (79 FR 26343 through
26344), we proposed, for the FY 2016
adjustments to the IRF PPS annual
increase factor and subsequent years, to
validate the data submitted for quality
purposes. Initially, for FY 2016 this data
accuracy validation will apply only to
the quality indicator items on the IRF–
PAI that inform the measure Percent of
Patients or Residents with Pressure
Ulcers That Are New or Worsened (NQF
#0678), including those mandatory data
elements that inform the measure
calculation, as well as those that inform
internal consistency checks for logical
inaccuracies. We proposed that as the
IRF QRP expands, and as IRFs begin to
submit additional data using the quality
indicator section of the IRF–PAI, to
include those additional data elements
in this validation process. We will
inform any such expansion of this
validation process prior to its
occurrence through our routine
channels of communication including,
but not limited to the IRF QRP Web site,
CMS open door forums, national IRF
provider trainings, and the Medicare
Learning Network Newsletter.
We proposed to validate the data
elements submitted to CMS for Percent

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45923

of Residents or Patients with Pressure
Ulcers That Are New or Have Worsened
(Short-Stay) (NQF #0678) under the IRF
QRP by requesting the minimum chart
data necessary to confirm a statistically
valid random sample of 260 providers.
From each of those 260 providers, 5
IRF–PAI assessments submitted through
National Assessment Collection
Database will be randomly selected. In
accordance with § 164.512(d)(1)(iii) of
the HIPAA Privacy Rule, we will
request from these providers the
specified portions of the 5 Medicare
patient charts that correspond to the
randomly selected assessments, which
will need to be copied and submitted
via traceable mail to a CMS contractor
for validation. We proposed that the
specific portions of the 5 beneficiary
charts will be identified in the written
request, but may include: Admission
and discharge assessments, relevant
nursing notes following the admission,
relevant nursing notes preceding the
discharge, physician admission
summary and discharge summary, and
any Assessment of Pressure Ulcer Form
the facility may utilize. We proposed
that the CMS contractor would utilize
the portions of the patient charts to
compare that information with the
quality data submitted to CMS.
Differences that would affect measure
outcomes or measure rates would be
identified and reported to CMS. These
differences could include, but are not
limited to, unreported worsened
pressure ulcers.
We proposed that all data that has
been submitted to the National
Assessment Collection Database under
the IRF QRP would be subject to the
data validation process. Specifically, we
proposed that the contractor will
request copies of the randomly selected
medical charts from each facility via
certified mail (or other traceable
methods that require a facility
representative to sign for CMS
correspondence), and the facility will
have 45 days from the date of the
request (as documented on the request
letter) to submit the requested records to
the contractor. If the facility does not
comply within 30 days, the contractor
will send a second certified letter to the
facility, reminding the facility that it
must return copies of the requested
medical records within 45 calendar days
following the date of the initial
contractor medical record request. If the
facility still does not comply, then the
contractor will assign a ‘‘zero’’ score to
each measure in each missing record. If,
however, the facility does comply, the
contractor will review the data
submitted by the facility using the IRF–

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PAI for the mandatory data elements
associated with the Pressure Ulcer
measure, until such time that IRFs begin
to submit additional quality measures
that are collected using the quality
indicator section of the IRF–PAI.
Initially, this review will consist solely
of those mandatory data elements that
inform the pressure ulcer measure
calculations, as well as those that
inform checks for logical
inconsistencies. We proposed that as
IRFs begin to report additional finalized
measures, we intend to propose
expanding this validation process to
other such measures at that time. The
contractor will then calculate the
percentage of matching data elements
which will constitute a validation score.
Because we would not be validating all
records, we would need to calculate a
confidence interval that incorporates a
potential sampling error.
To receive the full FY 2016 IRF
annual increase factor, we proposed that
IRFs in the random sample must attain
at least a 75 percent validation score,
based upon our validation process,
which will use charts requested from
patient assessments submitted for FY
2014. We will calculate a 95 percent
confidence interval associated with the
observed validation score. If the upper
bound of this confidence interval is
below the 75 percent cutoff point, we
will not consider a hospital’s data to be
‘‘validated’’ for payment purposes. For
example, for a provider who submits all
5 of their charts, each with 9 elements,
the provider’s score will be based on 45
possible opportunities to report
correctly or incorrectly. If the provider
correctly scored on 40 of the 45
elements, then their reliability would be
89 percent (40/45). The upper bound of
the confidence interval takes into
account sampling error and would be
higher than this estimated reliability, in
this case 96 percent. This number is
greater than or equal to 75 percent.
Therefore the provider passes
validation. We proposed that providers
failing the validation requirements
would be subject to a 2 percentage point
reduction to their applicable annual
increase factor. In addition, all
providers validated would receive
educational feedback, including specific
case details.
1. Application of the 2 Percentage Point
Reduction for IRF Providers That Fail
To Meet the Above-Proposed Data
Accuracy Threshold
In the FY 2015 IRF PPS proposed rule
(79 FR 26344), we proposed that IRFs
must meet a data accuracy threshold of
75 percent to avoid receiving a 2
percentage point reduction to their

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applicable FY annual increase factor.
We additionally proposed that this data
accuracy threshold of 75 percent must
be met in addition to the above data
completion thresholds (95 percent for
data collected using the quality
indicator items on the IRF–PAI and
submitted using QIES, and 100 percent
for data submitted using the CDC’s
NHSN), to avoid receiving a 2
percentage point reduction to their
applicable FY annual increase factor.
While we proposed that IRFs must meet
both the proposed data accuracy and
data completion thresholds, IRFs cannot
have their applicable annual payment
update reduced twice. That is, should
an IRF provider fail to meet either one
or both of the proposed thresholds (data
completion and/or data accuracy), they
will only receive one reduction of 2
percentage points to their applicable FY
annual increase factor.
We invited public comment on these
proposals and suggestions to improve
the utility of the approach and/or
reduce the burden on facilities. Our
responses to comments we received on
this proposal are discussed below.
Comment: One commenter
recommended inclusion of NHSN
measures in its proposed validation for
FY 2017, beginning with the CAUTI
measure. Additionally, they suggested
CMS explore a secure method of
electronic submission of records for the
validation process.
Response: We thank the commenter
for taking the time to express these
views and suggestions regarding
validation and will take them into
consideration for future validation
proposals. The HIPAA Security Rule
and HHS policy require CMS to use
secure methods of data transmission.
We will consider adoption of electronic
transmission of records in future
rulemaking as a secure file transfer
product becomes available to the IRF
QRP.
Comment: Several commenters
believed that the proposed data
validation process is a fundamental step
to ensure the accuracy of the IRF quality
reporting data.
Response: We thank the commenters
for their support of this process.
Comment: One commenter
recommended that CMS not move
forward with its proposal to complete
data validation for the Pressure Ulcer
measure or that CMS should delay
implementation until at least FY 2016
and should consider the use of a
different measure for validation
purposes. Additionally the commenter
expressed concern that inconsistencies
in the medical record would not be the

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sole factor used to demonstrate a failure
to comply.
Response: We believe that data
validation is necessary to ensure the
integrity of the data we use in the IRF
QRP. We are finalizing that the data
validation process for FY 2016 is for the
Pressure Ulcer measure. This process
would validate those data elements
submitted to the QRP that are found in
the medical record. We will not be
validating individual inconsistencies in
each record. However, if we find that
record to be non-compliant, yet a
facility believed the documentation
submitted for validation matches the
data elements submitted for the Pressure
Ulcer measure, the facility may seek
reconsideration of our initial
determination.
Comment: One commenter expressed
concern that the threshold compliance
of 75 percent agreement was too high for
this first attempt to validate the Pressure
Ulcer data. They stated that there would
be a great deal of variability in the
reporting of the pressure ulcer measure
and that this should be an opportunity
for CMS to educate providers on
appropriate documentation and
reporting to improve the process.
Instead, they offered a 60 percent
compliance threshold as more
appropriate for this initial round of
validation.
Response: We thank the commenter
for taking time to express concern about
possible variability in the pressure ulcer
measure. We note that the 75 percent
agreement is the single point estimate of
the proportion in agreement; we are
proposing that the upper bound of a 95
percent confidence interval be the value
that must exceed the 75 percent
compliance threshold. We believe this
takes into account the inherent
variability to be found in the Pressure
Ulcer measure data. In addition, the 75
percent proportion agreement is
consistent with the other data quality
programs currently underway, for
example, the Hospital Inpatient Quality
Reporting Program, 42 CFR
412.140(d)(2), and the Hospital
Outpatient Quality Reporting Program,
42 CFR 419.46(e)(2). We believe it is
important, where feasible, to promulgate
consistent standards when we deal with
the various quality data we are
collecting.
Final Decision: Having carefully
considered the comments we received
on the proposed IRF QRP data
validation process and data accuracy
threshold, and for the reasons discussed
above, we are finalizing the IRF data
validation process and data accuracy
threshold for the FY 2017 adjustments

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to the IRF PPS annual increase factor
and beyond, as proposed.
L. Electronic Health Record and Health
Information Exchange
We believe that all patients, their
families, and their health care providers
should have consistent and timely
access to their health information in a
standardized format that can be securely
exchanged between the patient,
providers, and others involved in the
patient’s care.29 We are committed to
accelerating health information
exchange (HIE) through the use of
electronic health records (EHRs) and
other types of health information
technology (HIT) across the broader care
continuum through a number of
initiatives, including: (1) Alignment of
incentives and payment adjustments to
encourage provider adoption and
optimization of HIT and HIE services
through Medicare and Medicaid
payment policies; (2) adoption of
common standards and certification
requirements for interoperable HIT; (3)
support for privacy and security of
patient information across all HIEfocused initiatives; and (4) governance
of health information networks. These
initiatives are designed to improve care
delivery and coordination across the
entire care continuum and encourage
HIE among all health care providers,
including professionals and hospitals
eligible for the Medicare and Medicaid
EHR Incentive Programs and those who
are not eligible for the EHR Incentive
Programs. The Office of the National
Coordinator for Health Information
Technology (ONC) is currently
exploring regulatory ways to expand the
ONC HIT Certificate Program to more
easily accommodate HIT certification
for technology used in other types of
health care settings where individual or
institutional health care providers are
not typically eligible for incentive
payments under the EHR Incentive
Programs, such as long-term and postacute care and behavioral health
settings. ONC has previously provided
guidance for EHR technology developers
serving providers ineligible for
incentives under the EHR Incentive
Programs titled ‘‘Certification Guidance
for EHR Technology Developers Serving
Health Care Providers Ineligible for
Medicare and Medicaid EHR Incentive
Payments.’’ 30
We believe that HIE and the use of
certified EHR technology by IRFs (and
other providers ineligible for the
29 The Department of Health & Human Services
August 2013 Statement, ‘‘Principles and Strategies
for Accelerating Health Information Exchange.
30 http://www.healthit.gov/sites/default/files/
generalcertexchangeguidance_final_9-9-13.pdf.

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Medicare and Medicaid EHR Incentive
Programs) can effectively and efficiently
help providers improve internal care
delivery practices, support management
of patient care across the continuum,
and enable the reporting of
electronically specified clinical quality
measures (eCQMs). More information on
the identification of EHR certification
criteria and development of standards
applicable to IRFs can be found at:
• http://healthit.gov/policy-researchersimplementers/standards-andcertification-regulations
• http://www.healthit.gov/facas/
FACAS/health-it-policy-committee/
hitpc-workgroups/
certificationadoption
• http://wiki.siframework.org/
LCC+LTPAC+Care+Transition+SWG
• http://wiki.siframework.org/
Longitudinal+Coordination+of+Care
In the FY 2015 IRF PPS proposed rule
(79 FR 26344 through 26345), we
solicited feedback on the feasibility and
desirability of electronic health record
adoption and use of HIE in IRFs. We
also solicited public comment on the
need to develop electronic clinical
quality measures, and the benefits and
limitations of implementing these
measures for IRF providers. Our
responses to the comments we received
on this topic are discussed below.
Comment: We received several
comments in response to its solicitation
for input related to EHR adoption and
usage and HIE among IRFs. A
commenter suggested that we consider a
structural measure similar to the
Inpatient Psychiatric Facility Quality
Reporting Program to gain insight on the
feasibility of EHR adoption and use of
HIE in IRFs. Some commenters
conveyed concerns related to current
EHR/HIE adoption in IRFs, including
burden associated with EHR use and
time and burden associated with the
implementation of the technical
infrastructure needed to accommodate
EHRs. Many commenters noted the lack
of EHR incentive funding and
integration of IRFs in activities such as
those related to the design of the HIE
exchanges, electronic health record
interoperability standards, electronic
health record incentive payment
programs, electronic quality
measurement development, as well as
the Medicare EHR Incentive Programs,
and therefore conveyed concerns about
the feasibility and appropriateness of
requiring electronic clinical quality
measure use at this time in the absence
of incentive funding for IRFs. Some
commenters suggested collaboration
with CMS and the IRF community to
expand the reach of HIEs and the

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interoperability standards to include
IRFs. Some commenters also requested
that CMS extend incentive payments to
IRFs, allowing HIEs to include IRFs in
the development of clinically
appropriate electronic quality measures
for IRFs. A commenter recommended
that CMS not apply the requirement of
electronic clinical quality measures
reporting at this time, and another
commenter requested that CMS allow
time for the process of data collection
using electronic measures to mature
before requiring them.
Response: We thank the commenters
for their recommendations and
concerns. We believe that these
recommendations, including
interoperability standards which we
interpret to mean those that would align
with what has been adopted by the
Secretary, and concerns are important
considerations related to EHR adoption
and HIE usage in the IRF setting. We
thank the commenter for their
suggestion for us to consider the
implementation of a structural measure
similar to the Inpatient Psychiatric
Facility Report Program in the IRF QRP
to gain insight on the feasibility of EHR
adoption and use of HIE in IRFs, and we
will take this suggestion under
consideration.
M. Method for Applying the Reduction
to the FY 2015 IRF Increase Factor for
IRFs That Fail To Meet the Quality
Reporting Requirements
As previously noted, section
1886(j)(7)(A)(i) of the Act requires the
application of a 2-percentage point
reduction of the applicable market
basket increase factor for IRFs that fail
to comply with the quality data
submission requirements. In compliance
with 1886(j)(7)(A)(i) of the Act, we will
apply a 2-percentage point reduction to
the applicable FY 2015 market basket
increase factor (2.2 percent) in
calculating an adjusted FY 2015
standard payment conversion factor to
apply to payments for only those IRFs
that failed to comply with the data
submission requirements. As previously
noted, application of the 2-percentage
point reduction may result in an update
that is less than 0.0 for a fiscal year and
in payment rates for a fiscal year being
less than such payment rates for the
preceding fiscal year. Also, reportingbased reductions to the market basket
increase factor will not be cumulative;
they will only apply for the FY
involved. Table 12 shows the
calculation of the adjusted FY 2015
standard payment conversion factor that
will be used to compute IRF PPS
payment rates for any IRF that failed to
meet the quality reporting requirements

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for the period from January 1, 2013,
through December 31, 2013.

TABLE 12—CALCULATIONS TO DETERMINE THE ADJUSTED FY 2015 STANDARD PAYMENT CONVERSION FACTOR FOR
IRFS THAT FAILED TO MEET THE QUALITY REPORTING REQUIREMENT
Explanation for adjustment
Standard Payment Conversion Factor for FY 2014 ............................................................................................................................
Market Basket Increase Factor for FY 2015 (2.9 percent), reduced by 0.5 percentage point reduction for the productivity adjustment as required by section 1886(j)(3)(C)(ii)(I) of the Act, reduced by 0.2 percentage point in accordance with sections
1886(j)(3)(C) and (D) of the Act and further reduced by 2 percentage points for IRFs that failed to meet the quality reporting
requirement ......................................................................................................................................................................................
Budget Neutrality Factor for the Wage Index and Labor-Related Share ............................................................................................
Budget Neutrality Factor for the Revisions to the CMG Relative Weights .........................................................................................

× 1.0020
× 1.0017
× 1.0000

Final Adjusted FY 2015 Standard Payment Conversion Factor ..................................................................................................

= $14,901

We did not receive any comments on
the proposed method for applying the
reduction to the FY 2015 IRF increase
factor for IRFs that fail to meet the
quality reporting requirements.
Final Decision: As we did not receive
any comments on the proposed method
for applying the reduction to the FY
2015 IRF increase factor for IRFs that
fail to meet the quality reporting
requirements, we are finalizing the
proposed methodology.

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Calculations

XIII. Miscellaneous Comments
Comment: Several commenters
suggested that we consider imposing a
cap on the amount of outlier payments
an individual IRF can receive under the
IRF PPS.
Response: As we did not propose any
limits on the amount of outlier
payments an individual IRF can receive,
this comment is outside the scope of the
proposed rule. However, any future
consideration given to imposing a limit
on outlier payments would have to
carefully analyze and take into
consideration the effect on access to IRF
care for certain high-cost patient
populations.
Comment: Several commenters
requested that we allow IRFs access to
the presumptive compliance reports that
the MACs use to determine whether or
not an IRF has met the 60 percent rule
requirements under the presumptive
methodology. These same commenters
also requested that we provide IRFs
with patient-level detail regarding
which patients were counted as
presumptively meeting the 60 percent
rule requirements and which patients
were not counted as meeting the
requirements. Other commenters
requested that we ensure that all MACs
allow for a review process prior to an
IRF declassification for the IRF to
dispute a 60 percent rule determination.
Response: As we did not propose any
changes to these operational aspects of
the 60 percent rule enforcement, these

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comments are outside the scope of the
proposed rule. However, we will take
these suggestions into consideration for
future operational enhancements.
Comment: Several commenters
requested that we release the exact
software specifications and algorithms
for enforcement of the 60 percent rule
policies. Other commenters expressed
concerns that we are fundamentally
altering the technical code
specifications that are used in
determining an IRF’s presumptive
compliance with the 60 percent rule.
Additionally, some commenters
indicated that there is an inconsistency
with the software specifications because
they mark a record as failing the
presumptive methodology test if the
case has an IGC and one of the excluded
Etiologic Diagnoses, even if the case has
a comorbidity that would qualify the
case as counting for the presumptive
methodology.
Response: As we did not propose
changes to the technical specifications,
these comments are outside the scope of
the proposed rule. The technical
specifications for the presumptive
methodology determination are
available for download from the CMS
Web site at http://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/InpatientRehabFacPPS/
Criteria.html. As we are continually
looking to improve the technical
specifications and the accuracy with
which we evaluate providers’
compliance with the 60 percent rule
requirements, we will take these
commenters’ suggestions and concerns
into consideration for future updates to
the technical specifications.
Comment: Several commenters
suggested that we re-examine the
conditions that are included on the list
of tier comorbidities (otherwise known
in this final rule as the ‘‘List of
Comorbidities’’) using the most recent 3
years of data, and revise this list for FY

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$14,846

2016. In addition, one commenter
suggested that we allow for multiple tier
payments if a patient has multiple
comorbidities that qualify for tier
payments, instead of only recognizing
the one comorbidity that qualifies for
the highest payment.
Response: As we did not propose any
changes to the methodology or policy
regarding the determination of the tier
comorbidities, these comments are
outside the scope of the proposed rule.
We appreciate the commenters’
suggestions, and will consider these
suggestions for future analyses.
Comment: One commenter suggested
that we continue to explore ways to
ensure comparability of payments
across Medicare’s post-acute care
settings.
Response: We appreciate the
commenter’s suggestion. Although the
comment is beyond the scope of this
rule and reaches beyond the IRF PPS,
we appreciate the forward thinking
nature of this comment and will try to
consider ways in which this suggestion
may be considered for future analysis.
Comment: Several commenters
expressed concern about the proposal
that was included in the most recent
President’s Budget Proposal to increase
the compliance threshold for the 60
percent rule to 75 percent.
Response: Since the Secretary does
not have the authority to make this
change, this comment is outside the
scope of the proposed rule.
XIV. Provisions of the Final Regulations
In this final rule, we are adopting the
provisions set forth in the FY 2015 IRF
proposed rule (79 FR 26308), except as
noted elsewhere in the preamble.
Specifically:
• We will update the FY 2015 IRF
PPS relative weights and average length
of stay values using the most current
and complete Medicare claims and cost
report data in a budget-neutral manner,

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as discussed in section IV of this final
rule.
• We will freeze the IRF facility-level
adjustment factors at FY 2014 levels, as
discussed in section V of this final rule.
• We will update the FY 2015 IRF
PPS payment rates by the market basket
increase factor, based upon the most
current data available, with a 0.2
percentage point reduction as required
by sections 1886(j)(3)(C)(ii)(II) and
1886(j)(3)(D)(iv) of the Act and a
productivity adjustment required by
section 1886(j)(3)(C)(ii)(I) of the Act, as
described in section VI of this final rule.
• We will indicate the Secretary’s
Final Recommendation for updating IRF
PPS payments for FY 2015, in
accordance with the statutory
requirements, as described in section VI
of this final rule.
• We will update the FY 2015 IRF
PPS payment rates by the FY 2015 wage
index and the labor-related share in a
budget-neutral manner, as discussed in
section VI of this final rule.
• We will calculate the final IRF
Standard Payment Conversion Factor for
FY 2015, as discussed in section VI of
this final rule.
• We will update the outlier
threshold amount for FY 2015, as
discussed in section VII of this final
rule.
• We will update the cost-to-charge
ratio (CCR) ceiling and urban/rural
average CCRs for FY 2015, as discussed
in section VII of this final rule.
• We will adopt revisions to the list
of eligible diagnosis codes that are used
to determine presumptive compliance
under the 60 percent rule in section VIII
of this final rule.
• We will adopt revisions to the list
of eligible impairment group codes that
presumptively meet the 60 percent rule
compliance criteria in section VIII of
this final rule.
• We will collect data on the amount
and mode (that is, of Individual,
Concurrent, Group, and Co-Treatment)
of therapies provided in IRFs according
to occupational, speech, and physical
therapy disciplines via the IRF–PAI in
section IX of this final rule.
• We will adopt a revision to the IRF–
PAI to indicate whether the case meets
the regulatory requirements for arthritis
cases in section X of this final rule.
• We will adopt the conversion of the
IRF PPS to ICD–10–CM, effective when
ICD–10–CM becomes the required
medical data code set for use on
Medicare claims and IRF–PAI
submissions, in section XI of this final
rule.
• We will adopt revisions and
updates to quality measures and
reporting requirements under the

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quality reporting program for IRFs in
accordance with section 1886(j)(7) of the
Act, as discussed in section XII of this
final rule.
XV. Collection of Information
Requirements
Under the Paperwork Reduction Act
of 1995, we are required to provide 30
days’ 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. To fairly evaluate whether an
information collection should be
approved by OMB, section 3506(c)(2)(A)
of the Paperwork Reduction Act of 1995
requires that we solicit comment on the
following issues:
• The need for the information
collection and its usefulness in carrying
out the proper functions of our agency.
• The accuracy of our estimate of the
information collection burden.
• The quality, utility, and clarity of
the information to be collected.
• Recommendations to minimize the
information collection burden on the
affected public, including automated
collection techniques.
This final rule does not impose any
new information collection
requirements as outlined in the
regulation text. However, this final rule
does make reference to associated
information collections that are not
discussed in the regulation text
contained in this document. The
following is a discussion of these
information collections, some of which
have already received OMB approval.
A. ICRs Regarding the IRF QRP
Updates to IRF QRP
As stated in section XI of this final
rule, we have finalized 2 new measures
for use in the IRF QRP that will affect
the increase factor for FY 2017. These
quality measures are: National
Healthcare Safety Network (NHSN)
Facility-Wide Inpatient Hospital-Onset
Methicillin-Resistant Staphylococcus
aureus (MRSA) Bacteremia Outcome
Measure (NQF #1716) and National
Healthcare Safety Network (NHSN)
Facility-Wide Inpatient Hospital-Onset
Clostridium difficile Infection (CDI)
Outcome Measure (NQF #1717). We
proposed that these measures would be
collected via the CDC’s NHSN data
submission system (http://www.cdc.gov/
nhsn/). The NHSN is a secure, Internetbased healthcare-associated infection
tracking system that is maintained and
managed by the CDC.
There are currently approximately
1,140 IRFs in the United States paid

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under the IRF PPS that are already
required to submit CAUTI data to the
CDC’s NHSN. We believe that any
burden increase related to complying
with the IRF QRP requirements for
submission of the MRSA and CDI
measures will be minimal for those IRFs
that are already familiar with the NHSN
submission process, for several reasons.
First, these IRFs have already completed
the initial setup and have become
familiar with reporting data in the
NHSN system due to the requirement to
report the CAUTI measure. Second, due
to their participation in a wide range of
mandatory reporting and quality
improvement programs, there are at
least 15 states that require IRFs to report
MRSA bacteremia data and CDI data to
the NHSN. The most significant burden
associated with these quality measures
is the time and effort associated with
collecting and submitting the data on
the MRSA and CDI measures for IRFs
that are not currently reporting any
measures beyond the current CAUTI
data requirement into the CDC’s NHSN
system.
Based on submissions to the NHSN,
we now estimate that each IRF will
execute approximately 5 NHSN
submissions per month: 1 MRSA
bacteremia event, 1 C. difficile event
and 3 CAUTI events (60 events per IRF
annually). This equates to a total of
approximately 68,400 submissions of
events to the NHSN from all IRFs per
year. The CDC estimated the public
reporting burden of the collection of
information for each measure to include
the time for reviewing instructions,
searching existing data sources,
gathering and maintaining the data
needed, and completing and reviewing
the collection of information. MRSA
and C. difficile are estimated to be an
average of 15 minutes per response (10
minutes of clinical (registered nurse)
time, and 5 minutes of clerical (Medical
Records or Health Information
Technician); CAUTI is estimated to be
an average of 29 minutes per response.
Each IRF must also complete a Patient
Safety Monthly Reporting Plan
estimated at 35 minutes and a
Denominator for Specialty Care Area,
which is estimated at 5 hours per
month. Based on this estimate, we
expect each IRF would expend 7.53
hours per month reporting to the NHSN.
Additionally, each IRF must submit the
Healthcare Personnel Vaccination
measure, which the CDC estimates will
take 10 minutes of clerical time. Based
on this estimate, we expect each IRF
would expend 78.97 clinical hours per
year reporting to the NHSN, or 90,026
hours for all IRFs. According to the U.S.

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Bureau of Labor and Statistics, the mean
hourly wage for a registered nurse (RN)
is $33.13; the mean hourly wage for a
medical records and health information
technician is $16.81. However, to
account for overhead and fringe
benefits, we have doubled the mean
hourly wage, making it $66.26 for an RN
and $33.62 for a Medical Record or
Health Information Technician. We
estimate that the annual cost per each
IRF would be $5,162.09 and that the
total yearly cost to all IRFs for the
submission of data to NHSN would be
$5,882,782.60. While the quality
measures previously discussed are
subject to the PRA, we believe that the
associated burden is approved under
OMB control number 0920–0666, with
an expiration date of November, 31,
2016.
In the FY 2014 IRF PPS rule (78 FR
47923 through 47925), we provided
burden estimates for measures adopted
in that rule. Updated Collection of
Information Requirements for each of
those measures is described below:

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a. All-Cause Unplanned Readmission
Measure for 30 Days Post Discharge
From Inpatient Rehabilitation Facilities
As stated in the FY 2014 IRF PPS rule
(78 FR 47923 through 47925), data for
this measure will be derived from
Medicare claims, and therefore, will not
add any additional reporting burden for
IRFs.
b. Percent of Residents or Patients With
Pressure Ulcers That Are New or Have
Worsened (Short-Stay) (NQF #0678)
In the FY 2015 IRF PPS proposed rule
(79 FR 26346), we stated that we expect
that the admission and discharge
pressure ulcer data will be collected by
a clinician such as an RN because the
assessment and staging of pressure
ulcers requires a high degree of clinical
judgment and experience. We estimated
that it will take approximately 10
minutes of time by the RN to perform
the admission pressure ulcer
assessment. We further estimated that it
will take an additional 15 minutes of
time to complete the discharge pressure
ulcer assessment.
We estimated that there are 359,000
IRF–PAI submissions per year 3 and that
there are 1,140 IRFs in the U.S.
reporting quality data to CMS. Based on
these figures, we estimated that each
IRF will submit approximately 315 IRF–
PAIs per year. Assuming that each IRF–
PAI submission requires 25 minutes of
time by an RN at an average hourly
wage of $66.26 (including fringe
benefits and overhead), to complete the
‘‘Quality Indicator’’ section, the yearly
cost to each IRF would be $8,696.63 and

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the annualized cost across all IRFs
would be $9,914,158.20.
In the FY 2015 IRF PPS proposed rule
(79 FR 26346), we also stated we
expected that most IRFs will use
administrative personnel, such as a
medical secretary or medical data entry
clerk, to perform the task of entering the
IRF–PAI pressure ulcer Assessment
data. We estimated that this data entry
task will take no more than 3 minutes
for the ‘‘Quality Indicator’’ section of
each IRF–PAI record or 15.75 hours for
each IRF annually. The average hourly
wage for a Medical Records & Health
Information Technician is $33.62
(including fringe benefits and
overhead). Again, as we noted above,
there are approximately 359,000 IRF–
PAI submissions per year and 1,140
IRFs reporting quality data to CMS.
Given this wage information, the
estimated total annual cost across all
reporting IRFs for the time required for
entry of pressure ulcer data into the
IRF–PAI by a medical record or health
information technician (including fringe
benefits and overhead) is $603,652.80.
We further estimated the average yearly
cost to each individual IRF to be
$529.52.
We estimated that the combined
annualized time burden related to the
pressure ulcer data item set for work
performed, by the both clinical and
administrative staff, will be 147 hours
for each individual IRF and 167,580
hours across all IRFs. The total
estimated annualized cost for collection
and submission of pressure ulcer data is
$9,226.15 for each IRF and $10,517,811
across all IRFs. We estimated the cost
for each pressure ulcer submission to be
$29.29.
c. Percent of Residents or Patients Who
Were Assessed and Appropriately Given
the Seasonal Influenza Vaccine (ShortStay) (NQF #0680)
IRFs are already required to complete
and transmit certain IRF–PAI data on all
Medicare Part A Fee-for-Service and
Medicare Part C (Medicare Advantage)
patients to receive payment from
Medicare. In the FY 2015 IRF PPS
proposed rule (79 FR 26347), we
estimated that completion of the Patient
Influenza measure data items will take
approximately 5 minutes to complete.
The Patient Influenza item set consists
of three data items (for example,
questions). Each item is straightforward
and does not require physical
assessment of the patient for
completion. We estimated that it will
take approximately 0.7 minutes to
complete each item, or 2.1 minutes to
complete all items related to the Patient
Influenza measure. However, in some

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cases, the person completing this item
set may need to consult the patient’s
medical record to obtain data about the
patient’s influenza vaccination.
Therefore, we have allotted an
additional 1.66 minutes per item, for a
total of 7.1 minutes to complete the
Patient Influenza measure data items.
In the FY 2015 IRF PPS proposed rule
(79 FR 26347), we noted that there are
approximately 359,000 IRF–PAIs
completed annually across all 1,140
IRFs that report IRF quality data to
CMS. This breaks down to
approximately 315 IRF–PAIs completed
by each IRF yearly. We additionally
estimated that the annual time burden
for reporting the Patient Influenza
measure data is 42,481 hours across all
IRFs in the U.S. and 37.26 hours for
each individual IRF. Again, we have
estimated the mean hourly wage for an
RN (including fringe benefits and
overhead) to be $66.26. Taking all of the
above information into consideration,
we estimate the annual cost across all
IRFs for the submission of the Patient
Influenza measure data to be
$2,814,791.06. We further estimated the
cost for each individual IRF to be
$2,469.11.
Lastly, in the FY 2015 IRF PPS
proposed rule (79 FR 26347), we
proposed to validate data submitted to
CMS by requesting portions of patient’s
charts be copied and mailed to a CMS
validation contractor. We estimated the
size of each section we proposed to
request as follows: We stated that we
anticipate that the first 3 days of nurses
notes will be approximately 15 pages;
the last 3 days of nurses notes will be
approximately 10 pages; the physician
or physician’s assistant’s admission
history and physical will be
approximately 30 pages; the physician
or physician’s assistant’s discharge
summary will be approximately 15
pages; nurses admission database is
approximately 40 pages; pressure ulcer
assessment assessments will be
approximately 30 pages; physicians
progress notes will be approximately 30
pages; physicians orders will be
approximately 30 pages and lab reports
to be approximately 70 pages. We
estimated the total submission to be
approximately 270 pages in length. The
FY 2013 IPPS/LTCH PPS final rule (77
FR 53745) estimates the appropriate cost
for chart submission to be 12 cents per
page and $4.00 shipping. Two hundred
seventy pages at a rate of $0.12 per page
with a $4.00 shipping cost would be
$36.40 per chart. We proposed that 260
providers will be randomly selected for
validation, and we proposed to request
5 charts from each selected provider for
a total cost of $47,320 for all IRF

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providers, or $182.00 for any randomly
selected IRF provider.
We did not receive any public
comments on the above IRF QRP
Information Collection Request section
of the FY 2015 IRF PPS proposed rule.
Additionally, in section XI of this final
rule, we have finalized the adoption of
the following two measures: NHSN
Facility-wide Inpatient Hospital-onset
Methicillin-resistant Staphylococcus
aureus (MRSA) Bacteremia Outcome
Measure (NQF #1716); and NHSN
Facility-wide Inpatient Hospital-onset
Clostridium difficile Infection (CDI)
Outcome Measure (NQF #1717). We
further confirmed that the previously
finalized measures discussed in section
XII.B. will continue to be required for
the IRF QRP.
B. ICRs Regarding Individual,
Concurrent, Group, and Co-Treatment
Therapy Data on the IRF–PAI
As stated in section IX. of this final
rule, we are including a new Therapy
Information Section in the IRF–PAI that
will require IRF providers to submit
data regarding the amount and mode
(that is, Individual, Concurrent, Group,
and Co-Treatment) of therapy that
patients are receiving and in which
therapy discipline (PT, OT, speech/
language) beginning on October 1, 2015.
Under Medicare’s conditions of
participation for hospitals that provide
rehabilitation, physical therapy,
occupational therapy, audiology, or
speech pathology services at § 482.56,
the provision of care and the personnel
qualifications must be in accordance
with national acceptable standards of
practice and must also meet the
requirements at § 409.17, according to
which IRFs are required to furnish
physical therapy, occupational therapy
or speech-language pathology services
under a plan that, among other things,
‘‘[p]rescribes the type, amount,
frequency, and duration of the physical
therapy, occupational therapy, or
speech-language pathology services to
be furnished to the individual.’’ (Such
services may also be furnished under
plan requirements specific to the
payment policy under which the
services are rendered, if applicable.) In
addition, the IRF coverage requirements
at § 412.622(a)(3)(ii), (4), require the IRF
to document that the patient
‘‘[g]enerally requires and can reasonably
be expected to actively participate in,
and benefit from, an intensive
rehabilitation therapy program.’’ As
Medicare already requires extensive
documentation of the type, amount,
frequency, and duration of physical
therapy, occupational therapy, or
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furnished to individuals in the IRF
setting, we do not believe that IRFs will
incur any additional burden related to
the collection of the data for the
proposed new Therapy Information
Section. In accordance with 5 CFR
1320.3(b)(2), we believe the burden
associated with this requirement is
exempt from the PRA as it is a usual and
customary business practice. The time,
effort, and financial resources necessary
to comply with this requirement would
be incurred in the course of each IRF
conducting its normal business
activities.
We anticipate that it will take
approximately 4 minutes to retrieve the
therapy data from the patient’s medical
record and transfer the required data to
the IRF–PAI for submission. We believe
this task can be completed by any
clinician in the IRF. To calculate the
burden, we obtained hourly wage rates
for social worker assistants, licensed
practical nurses (LPN), recreational
therapists, social workers, dietitians and
nutritionists, RN, speech language
pathologists, audiologists, occupational
therapists, and physical therapists, all of
whom may complete the IRF–PAI, from
the Bureau of Labor Statistics (http://
www.bls.gov/ooh/healthcare/
home.htm). The $26.52 rate is a blend
of all of these categories, and reflects the
fact that IRF providers have historically
used all of these clinicians for
preparation and coding of the IRF–PAI.
However, to account for overhead and
fringe benefits, we double the average
rate, making it $53.04. On average, an
IRF submits approximately 300 IRF–
PAIs annually and when multiplied by
4 minutes to complete the proposed
new Therapy Information Section, the
total estimated annual hour burden per
each IRF is 20 hours. We estimate the
total cost burden to each IRF for
reporting the proposed therapy data will
be $1,060 annually. Since there are a
total of 1,140 IRFs, we estimate the total
burden cost across all IRFs for
submitting therapy data is $1.2 million.
We received 40 comments on the
information collection requirements
regarding the Individual, Concurrent,
Group, and Co-Treatment Therapy data
on the IRF–PAI, which are summarized
below.
Comment: Many commenters
suggested that the therapy collection
item would be excessively burdensome
and should be removed. The
commenters suggested that CMS has
underestimated the cost and time it
would take providers to implement this
proposed policy, implying that
additional IRF staff would need to be
employed to fulfill the data collection
requirement. A few commenters even

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suggested that the therapy data CMS is
proposing to collect is redundant since
the data could be found on IRF patient
claims. Additionally, commenters
suggested that the proposed therapy
data collection requirement does not
seem to provide any value to the patient
and would ultimately divert clinical
resources from patient care to
administrative functions compromising
patients’ health outcomes instead of
increasing quality of care. Ultimately,
the commenters urged CMS to focus on
the outcomes of rehabilitative care
rather than regulatory mandates.
Response: We recognize and have
taken into account that the addition of
the therapy collection item will increase
the time it takes for providers to
complete the IRF–PAI. However, IRF
clinicians are currently required to
thoroughly document all treatment
information in the patients’ medical
record. We believe that in order to fulfill
this requirement, IRFs are already
required to document in detail the
amount and mode of therapy that a
patient receives. We do not believe that
it would take an excessive amount of
additional time and/or training to
transfer that information from the
medical record to the IRF–PAI. We
certainly do not believe that IRFs would
need to employ additional staff to meet
this data collection requirement. The
additional cost that a facility would
incur in making updates to its electronic
systems is considered the cost of doing
business, and that is not something that
we believe should be taken into account
when preparing our burden estimates.
In response to the commenters’
suggestions to minimize the burden
associated with the therapy data
collection, we are choosing not to adopt
the proposed requirement to record the
average number of minutes by mode and
type of therapy for weeks 3 and beyond
of a patient’s IRF stay. Instead, we will
require IRFs to report only the total
number of minutes of therapy provided
to a patient, by mode and type of
therapy, for week 1 and week 2 of the
IRF stay. Additionally, we are adding
Concurrent Therapy and revising the
Group Therapy definition so that both
types of therapy are clearly
differentiated. Providers indicated that
this change would be helpful to reduce
burden, as this is more consistent with
the way they currently keep their
records. We believe that these changes
will substantially lower the amount of
burden associated with this data
collection.
We respectfully disagree with the
commenters’ assertion that this
information is included on the IRF
claim. The therapy data on the IRF

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claim is not reported in a consistent
manner, and we do not believe that it
would be as beneficial as the proposed
data collection when developing future
policy regarding IRF therapy. We
believe it is important to collect the
most accurate and reliable information
in order to develop future policy to
increase the quality of care for IRF
patients. Ultimately, we believe that by
requiring providers to report each
patient’s therapy information, in an
effort to develop future policies and
procedures regarding the amount and
mode of therapy given, we are in fact
focusing on improving the outcomes of
the intensive rehabilitation that patients
receive.
We will be submitting a revision of
the IRF–PAI information collection
request currently approved under OMB
control number 0938–0842.
If you comment on these information
collection and recordkeeping
requirements, please submit your
comments to the Office of Information
and Regulatory Affairs, Office of
Management and Budget, Attention:
CMS Desk Officer, [CMS–1608–F], Fax:
(202) 395–6974; or Email: OIRA_
[email protected].
XVI. Regulatory Impact Analysis

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A. Statement of Need
This final rule updates the IRF
prospective payment rates for FY 2015
as required under section 1886(j)(3)(C)
of the Act. It responds to section
1886(j)(5) of the Act, which requires the
Secretary to publish in the Federal
Register on or before the August 1 that
precedes the start of each fiscal year, the
classification and weighting factors for
the IRF PPS’s case-mix groups and a
description of the methodology and data
used in computing the prospective
payment rates for that fiscal year.
This rule implements sections
1886(j)(3)(C) and (D) of the Act. Section
1886(j)(3)(C)(ii)(I) of the Act requires the
Secretary to apply a multi-factor
productivity adjustment to the market
basket increase factor, and to apply
other adjustments as defined by the Act.
The productivity adjustment applies to
FYs from 2012 forward. The other
adjustments apply to FYs 2010 through
2019.
This rule also adopts some policy
changes within the statutory discretion
afforded to the Secretary under section
1886(j) of the Act. We will collect data
on the amount and mode (that is,
Individual, Concurrent, Group, and CoTreatment) of therapy provided in the
IRF setting according to therapy
discipline, revise the list of impairment
group codes that presumptively meet

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the 60 percent rule compliance criteria,
provide a way for IRFs to indicate on
the IRF–PAI form whether the prior
treatment and severity requirements
have been met for arthritis cases to
presumptively meet the 60 percent rule
compliance criteria, and revise and
update quality measures and reporting
requirements under the IRF quality
reporting program. In this final rule, we
also address the implementation of the
International Classification of Diseases,
10th Revision, Clinical Modification
(ICD–10–CM) for the IRF prospective
payment system (PPS), effective when
ICD–10–CM becomes the required
medical data code set for use on
Medicare claims and IRF–PAI
submissions.
B. Overall Impacts
We have examined the impacts of this
final rule as required by Executive
Order 12866 (September 30, 1993,
Regulatory Planning and Review),
Executive Order 13563 on Improving
Regulation and Regulatory Review
(January 18, 2011), the Regulatory
Flexibility Act (September 19, 1980,
Pub. L. 96–354) (RFA), section 1102(b)
of the Act, section 202 of the Unfunded
Mandates Reform Act of 1995 (Pub. L.
104–4), Executive Order 13132 on
Federalism (August 4, 1999), and the
Congressional Review Act (5 U.S.C.
804(2)).
Executive Orders 12866 and 13563
direct agencies to assess all costs and
benefits of available regulatory
alternatives and, if regulation is
necessary, to select regulatory
approaches that maximize net benefits
(including potential economic,
environmental, public health and safety
effects, distributive impacts, and
equity). Executive Order 13563
emphasizes the importance of
quantifying both costs and benefits, of
reducing costs, of harmonizing rules,
and of promoting flexibility. A
regulatory impact analysis (RIA) must
be prepared for a major final rule with
economically significant effects ($100
million or more in any 1 year). We
estimate the total impact of the policy
updates described in this final rule by
comparing the estimated payments in
FY 2015 with those in FY 2014. This
analysis results in an estimated $180
million increase for FY 2015 IRF PPS
payments. As a result, this final rule is
designated as economically
‘‘significant’’ under section 3(f)(1) of
Executive Order 12866, and hence a
major rule under the Congressional
Review Act. Also, the rule has been
reviewed by OMB.
The Regulatory Flexibility Act (RFA)
requires agencies to analyze options for

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regulatory relief of small entities, if a
rule has a significant impact on a
substantial number of small entities. For
purposes of the RFA, small entities
include small businesses, nonprofit
organizations, and small governmental
jurisdictions. Most IRFs and most other
providers and suppliers are small
entities, either by having revenues of $7
million to $35.5 million or less in any
1 year depending on industry
classification, or by being nonprofit
organizations that are not dominant in
their markets. (For details, see the Small
Business Administration’s final rule that
set forth size standards for health care
industries, at 65 FR 69432 at http://
www.sba.gov/sites/default/files/files/
Size_Standards_Table.pdf, effective
March 26, 2012.) Because we lack data
on individual hospital receipts, we
cannot determine the number of small
proprietary IRFs or the proportion of
IRFs’ revenue that is derived from
Medicare payments. Therefore, we
assume that all IRFs (an approximate
total of 1,100 IRFs, of which
approximately 60 percent are nonprofit
facilities) are considered small entities
and that Medicare payment constitutes
the majority of their revenues. The
Department of Health and Human
Services generally uses a revenue
impact of 3 to 5 percent as a significance
threshold under the RFA. As shown in
Table 13, we estimate that the net
revenue impact of this final rule on all
IRFs is to increase estimated payments
by approximately 2.4 percent. However,
we find that certain categories of IRF
providers would be expected to
experience revenue impacts in the 3
percent range. We estimate a 3.1 percent
overall impact for 141 urban IRFs and
15 rural IRFs in the Middle Atlantic
region, a 3.2 increase for 101 urban IRFs
in the Pacific region, a 3.3 increase for
27 rural IRFs in the West North Central
region, and a 4.4 increase for four rural
IRFs in the Pacific region. As a result,
we anticipate this final rule will have a
net positive impact on a substantial
number of small entities. Medicare
Administrative Contractors are not
considered to be small entities.
Individuals and states are not included
in the definition of a small entity.
In addition, section 1102(b) of the Act
requires us to prepare a regulatory
impact analysis if a rule may have a
significant impact on the operations of
a substantial number of small rural
hospitals. This analysis must conform to
the provisions of section 604 of the
RFA. For purposes of section 1102(b) of
the Act, we define a small rural hospital
as a hospital that is located outside of
a Metropolitan Statistical Area and has

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fewer than 100 beds. As discussed in
detail below, the rates and policies set
forth in this final rule will not have a
significant impact (not greater than 3
percent) on rural hospitals based on the
data of the 165 rural units and 17 rural
hospitals in our database of 1,142 IRFs
for which data were available.
Section 202 of the Unfunded
Mandates Reform Act of 1995 (Pub. L.
104–04, enacted on March 22, 1995)
also requires that agencies assess
anticipated costs and benefits before
issuing any rule whose mandates
require spending in any 1 year of $100
million in 1995 dollars, updated
annually for inflation. In 2014, that
threshold level is approximately $141
million. This final rule will not impose
spending costs on state, local, or tribal
governments, in the aggregate, or by the
private sector, of greater than $141
million.
Executive Order 13132 establishes
certain requirements that an agency
must meet when it promulgates a final
rule that imposes substantial direct
requirement costs on state and local
governments, preempts state law, or
otherwise has federalism implications.
As stated above, this final rule will not
have a substantial effect on state and
local governments, preempt state law, or
otherwise have a federalism
implication.
C. Detailed Economic Analysis

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1. Basis and Methodology of Estimates
This final rule sets forth policy
changes and updates to the IRF PPS
rates contained in the FY 2014 IRF PPS
final rule (78 FR 47860). Specifically,
this final rule updates the CMG relative
weights and average length of stay
values, the wage index, and the outlier
threshold for high-cost cases. This final
rule also applies a MFP adjustment to
the FY 2015 RPL market basket increase
factor in accordance with section
1886(j)(3)(C)(ii)(I) of the Act, and a 0.2
percentage point reduction to the FY
2015 RPL market basket increase factor
in accordance with sections
1886(j)(3)(C)(ii)(II) and –(D)(iv) of the
Act. Further, this final rule contains
additional changes to the presumptive
methodology and additional therapy
and quality data collection that are
expected to result in some additional
financial effects on IRFs. In addition,
section XII of this rule discusses the
implementation of the required 2
percentage point reduction of the
market basket increase factor for any IRF
that fails to meet the IRF quality
reporting requirements, in accordance
with section 1886(j)(7) of the Act.

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We estimate that the impact of the
changes and updates described in this
final rule will be a net estimated
increase of $180 million in payments to
IRF providers. This estimate does not
include the estimated impacts of the
additional changes to the presumptive
compliance method and the additional
therapy and quality data collection, as
discussed in section 8 of this Economic
Analysis. In addition, it does not
include the implementation of the
required 2 percentage point reduction of
the market basket increase factor for any
IRF that fails to meet the IRF quality
reporting requirements (as discussed in
section 9 of this Economic Analysis).
The impact analysis in Table 13 of this
final rule represents the projected
effects of the updates to IRF PPS
payments for FY 2015 compared with
the estimated IRF PPS payments in FY
2014. We determine the effects by
estimating payments while holding all
other payment variables constant. We
use the best data available, but we do
not attempt to predict behavioral
responses to these changes, and we do
not make adjustments for future changes
in such variables as number of
discharges or case-mix.
We note that certain events may
combine to limit the scope or accuracy
of our impact analysis, because such an
analysis is future-oriented and, thus,
susceptible to forecasting errors because
of other changes in the forecasted
impact time period. Some examples
could be legislative changes made by
the Congress to the Medicare program
that would impact program funding, or
changes specifically related to IRFs.
Although some of these changes may
not necessarily be specific to the IRF
PPS, the nature of the Medicare program
is such that the changes may interact,
and the complexity of the interaction of
these changes could make it difficult to
predict accurately the full scope of the
impact upon IRFs.
In updating the rates for FY 2015, we
are adopting standard annual revisions
described in this final rule (for example,
the update to the wage and market
basket indexes used to adjust the federal
rates). We are also implementing a
productivity adjustment to the FY 2015
RPL market basket increase factor in
accordance with section
1886(j)(3)(C)(ii)(I) of the Act, and a 0.2
percentage point reduction to the FY
2015 RPL market basket increase factor
in accordance with sections
1886(j)(3)(C)(ii)(II) and –(D)(iv) of the
Act. We estimate the total increase in
payments to IRFs in FY 2015, relative to
FY 2014, will be approximately $180
million.

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45931

This estimate is derived from the
application of the FY 2015 RPL market
basket increase factor, as reduced by a
productivity adjustment in accordance
with section 1886(j)(3)(C)(ii)(I) of the
Act, and a 0.2 percentage point
reduction in accordance with sections
1886(j)(3)(C)(ii)(II) and –(D)(iv) of the
Act, which yields an estimated increase
in aggregate payments to IRFs of $165
million. Furthermore, there is an
additional estimated $15 million
increase in aggregate payments to IRFs
due to the update to the outlier
threshold amount. Outlier payments are
estimated to increase from
approximately 2.8 percent in FY 2014 to
3.0 percent in FY 2015. Therefore,
summed together, we estimate that these
updates will result in a net increase in
estimated payments of $180 million
from FY 2014 to FY 2015.
The effects of the updates that impact
IRF PPS payment rates are shown in
Table 13. The following updates that
affect the IRF PPS payment rates are
discussed separately below:
• The effects of the update to the
outlier threshold amount, from
approximately 2.8 percent to 3.0 percent
of total estimated payments for FY 2015,
consistent with section 1886(j)(4) of the
Act.
• The effects of the annual market
basket update (using the RPL market
basket) to IRF PPS payment rates, as
required by section 1886(j)(3)(A)(i) and
sections 1886(j)(3)(C) and –(D) of the
Act, including a productivity
adjustment in accordance with section
1886(j)(3)(C)(i)(I) of the Act, and a 0.2
percentage point reduction in
accordance with sections 1886(j)(3)(C)
and –(D) of the Act.
• The effects of applying the budgetneutral labor-related share and wage
index adjustment, as required under
section 1886(j)(6) of the Act.
• The effects of the budget-neutral
changes to the CMG relative weights
and average length of stay values, under
the authority of section 1886(j)(2)(C)(i)
of the Act.
• The total change in estimated
payments based on the FY 2015
payment changes relative to the
estimated FY 2014 payments.
2. Description of Table 13
Table 13 categorizes IRFs by
geographic location, including urban or
rural location, and location for CMS’s 9
census divisions (as defined on the cost
report) of the country. In addition, the
table divides IRFs into those that are
separate rehabilitation hospitals
(otherwise called freestanding hospitals
in this section), those that are
rehabilitation units of a hospital

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(otherwise called hospital units in this
section), rural or urban facilities,
ownership (otherwise called for-profit,
non-profit, and government), by
teaching status, and by disproportionate
share patient percentage (DSH PP). The
top row of Table 13 shows the overall
impact on the 1,142 IRFs included in
the analysis.
The next 12 rows of Table 13 contain
IRFs categorized according to their
geographic location, designation as
either a freestanding hospital or a unit
of a hospital, and by type of ownership;
all urban, which is further divided into
urban units of a hospital, urban
freestanding hospitals, and by type of
ownership; and all rural, which is
further divided into rural units of a
hospital, rural freestanding hospitals,
and by type of ownership. There are 960
IRFs located in urban areas included in
our analysis. Among these, there are 732
IRF units of hospitals located in urban
areas and 228 freestanding IRF hospitals
located in urban areas. There are 182
IRFs located in rural areas included in
our analysis. Among these, there are 165
IRF units of hospitals located in rural
areas and 17 freestanding IRF hospitals
located in rural areas. There are 339 forprofit IRFs. Among these, there are 335
IRFs in urban areas and 64 IRFs in rural
areas. There are 673 non-profit IRFs.
Among these, there are 567 urban IRFs
and 106 rural IRFs. There are 70
government-owned IRFs. Among these,
there are 58 urban IRFs and 12 rural
IRFs.
The remaining four parts of Table 13
show IRFs grouped by their geographic
location within a region, by teaching
status, and by DSH PP. First, IRFs
located in urban areas are categorized
for their location within a particular one

of the nine Census geographic regions.
Second, IRFs located in rural areas are
categorized for their location within a
particular one of the nine Census
geographic regions. In some cases,
especially for rural IRFs located in the
New England, Mountain, and Pacific
regions, the number of IRFs represented
is small. IRFs are then grouped by
teaching status, including non-teaching
IRFs, IRFs with an intern and resident
to average daily census (ADC) ratio less
than 10 percent, IRFs with an intern and
resident to ADC ratio greater than or
equal to 10 percent and less than or
equal to 19 percent, and IRFs with an
intern and resident to ADC ratio greater
than 19 percent. Finally, IRFs are
grouped by DSH PP, including IRFs
with zero DSH PP, IRFs with a DSH PP
less than 5 percent, IRFs with a DSH PP
between 5 and less than 10 percent,
IRFs with a DSH PP between 10 and 20
percent, and IRFs with a DSH PP greater
than 20 percent.
The estimated impacts of each policy
described in this final rule to the facility
categories listed above are shown in the
columns of Table 13. The description of
each column is as follows:
• Column (1) shows the facility
classification categories described
above.
• Column (2) shows the number of
IRFs in each category in our FY 2013
analysis file.
• Column (3) shows the number of
cases in each category in our FY 2013
analysis file.
• Column (4) shows the estimated
effect of the adjustment to the outlier
threshold amount.
• Column (5) shows the estimated
effect of the update to the IRF PPS
payment rates, which includes a

productivity adjustment in accordance
with section 1886(j)(3)(C)(ii)(I) of the
Act, and a 0.2 percentage point
reduction in accordance with sections
1886(j)(3)(C)(ii)(II) and –(D)(iv) of the
Act.
• Column (6) shows the estimated
effect of the update to the IRF laborrelated share and wage index, in a
budget-neutral manner.
• Column (7) shows the estimated
effect of the update to the CMG relative
weights and average length of stay
values, in a budget-neutral manner.
• Column (8) compares our estimates
of the payments per discharge,
incorporating all of the proposed
policies reflected in this final rule for
FY 2015 to our estimates of payments
per discharge in FY 2014.
The average estimated increase for all
IRFs is approximately 2.4 percent. This
estimated net increase includes the
effects of the RPL market basket increase
factor for FY 2015 of 2.9 percent,
reduced by a productivity adjustment of
0.5 percentage point in accordance with
section 1886(j)(3)(C)(ii)(I) of the Act, and
further reduced by 0.2 percentage point
in accordance with sections
1886(j)(3)(C)(ii)(II) and –(D)(iv) of the
Act. It also includes the approximate 0.2
percent overall increase in estimated
IRF outlier payments from the update to
the outlier threshold amount. Since we
are making the updates to the IRF wage
index and the CMG relative weights in
a budget-neutral manner, they will not
be expected to affect total estimated IRF
payments in the aggregate. However, as
described in more detail in each section,
they will be expected to affect the
estimated distribution of payments
among providers.

TABLE 13—IRF IMPACT TABLE FOR FY 2015

tkelley on DSK3SPTVN1PROD with RULES2

[Columns 4–9 in %]

Facility classification

Number of
IRFs

Number of
cases

Outlier

Adjusted
market
basket
increase
factor for
FY 2015 1

(1)

(2)

(3)

(4)

(5)

Total .........................................................
Urban unit ................................................
Rural unit ..................................................
Urban hospital ..........................................
Rural hospital ...........................................
Urban For-Profit .......................................
Rural For-Profit ........................................
Urban Non-Profit ......................................
Rural Non-Profit .......................................
Urban Government ..................................
Rural Government ....................................
Urban .......................................................

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1,142
732
165
228
17
335
64
567
106
58
12
960

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389,157
179,336
26,444
177,726
5,651
165,971
12,484
175,276
17,698
15,815
1,913
357,062

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0.2
0.3
0.3
0.1
0.1
0.1
0.2
0.3
0.3
0.3
0.4
0.2

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FY 2015
CBSA wage
index
and laborshare

CMG

Total
percent
change

(6)

(7)

(9)

2.2
2.2
2.2
2.2
2.2
2.2
2.2
2.2
2.2
2.2
2.2
2.2

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0.0
0.0
0.0
0.0
¥0.1
¥0.2
¥0.2
0.2
0.1
¥0.1
¥0.5
0.0

06AUR2

0.0
0.0
0.1
0.0
0.0
0.0
0.1
0.0
0.1
0.0
0.1
0.0

2.4
2.6
2.6
2.2
2.2
2.1
2.4
2.6
2.7
2.4
2.2
2.4

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45933

TABLE 13—IRF IMPACT TABLE FOR FY 2015—Continued
[Columns 4–9 in %]

Facility classification

Number of
IRFs

Number of
cases

Outlier

Adjusted
market
basket
increase
factor for
FY 2015 1

(1)

(2)

(3)

(4)

(5)

Rural .........................................................

182

32,095

FY 2015
CBSA wage
index
and laborshare

CMG

Total
percent
change

(6)

(7)

(9)

0.3

2.2

–0.1

0.1

2.5

0.1
0.2
0.2
0.2
0.1
0.2
0.2
0.2
0.4

2.2
2.2
2.2
2.2
2.2
2.2
2.2
2.2
2.2

0.4
0.8
¥0.1
¥0.2
¥0.5
¥0.4
¥0.3
¥0.7
0.6

¥0.1
0.0
¥0.1
0.0
¥0.1
0.0
0.1
0.0
0.0

2.6
3.1
2.2
2.2
1.7
2.0
2.1
1.7
3.2

0.2
0.2
0.1
0.3
0.3
0.5
0.2
0.7
0.9

2.2
2.2
2.2
2.2
2.2
2.2
2.2
2.2
2.2

0.0
0.5
¥0.1
¥0.2
¥0.1
0.5
¥0.4
¥0.1
1.2

¥0.1
0.2
0.1
0.1
0.1
0.1
0.2
0.0
0.0

2.3
3.1
2.4
2.4
2.5
3.3
2.2
2.8
4.4

0.2
0.2
0.3
0.2

2.2
2.2
2.2
2.2

0.0
0.3
¥0.1
0.2

0.0
¥0.1
¥0.1
0.0

2.4
2.6
2.4
2.5

0.0
0.1
¥0.1
0.1
¥0.1

0.0
0.1
0.0
0.0
¥0.1

2.8
2.6
2.3
2.5
2.3

Urban by Region
Urban
Urban
Urban
Urban
Urban
Urban
Urban
Urban
Urban

New England .................................
Middle Atlantic ...............................
South Atlantic ................................
East North Central ........................
East South Central ........................
West North Central .......................
West South Central .......................
Mountain .......................................
Pacific ............................................

30
141
138
180
50
73
173
74
101

16,946
58,438
64,756
53,400
24,482
18,700
71,028
23,158
26,154
Rural by Region

Rural
Rural
Rural
Rural
Rural
Rural
Rural
Rural
Rural

New England ..................................
Middle Atlantic ................................
South Atlantic .................................
East North Central .........................
East South Central .........................
West North Central ........................
West South Central ........................
Mountain .........................................
Pacific .............................................

5
15
24
31
21
27
48
7
4

1,270
2,557
6,028
5,244
3,497
3,460
8,974
683
382
Teaching Status

Non-teaching ............................................
Resident to ADC less than 10% ..............
Resident to ADC 10%–19% ....................
Resident to ADC greater than 19% .........

1,033
60
39
10

343,078
31,090
13,981
1,008

Disproportionate Share Patient Percentage (DSH PP)
DSH
DSH
DSH
DSH
DSH

PP
PP
PP
PP
PP

= 0% ..........................................
less than 5% .............................
5%–10% ....................................
10%–20% ..................................
greater than 20% ......................

37
185
333
362
225

6,323
65,137
130,367
126,848
60,482

0.5
0.2
0.2
0.2
0.3

2.2
2.2
2.2
2.2
2.2

1 This column reflects the impact of the RPL market basket increase factor for FY 2015 (2.9 percent), reduced by a 0.5 percentage point reduction for the productivity adjustment as required by section 1886(j)(3)(C)(ii)(I) of the Act, and reduced by 0.2 percentage points in accordance
with paragraphs 1886(j)(3)(C) and (D) of the Act.

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3. Impact of the Update to the Outlier
Threshold Amount
The estimated effects of the update to
the outlier threshold adjustment are
presented in column 4 of Table 13. In
the FY 2014 IRF PPS final rule (78 FR
47860), we used FY 2012 IRF claims
data (the best, most complete data
available at that time) to set the outlier
threshold amount for FY 2014 so that
estimated outlier payments would equal
3 percent of total estimated payments
for FY 2014.
For this final rule, we are updating
our analysis using FY 2013 IRF claims
data and, based on this updated

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analysis, we estimate that IRF outlier
payments as a percentage of total
estimated IRF payments are 2.8 percent
in FY 2014. Thus, we are adjusting the
outlier threshold amount in this final
rule to set total estimated outlier
payments equal to 3 percent of total
estimated payments in FY 2015. The
estimated change in total IRF payments
for FY 2015, therefore, includes an
approximate 0.2 percent increase in
payments because the estimated outlier
portion of total payments is estimated to
increase from approximately 2.8 percent
to 3 percent.
The impact of this outlier adjustment
update (as shown in column 4 of Table

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13) is to increase estimated overall
payments to IRFs by about 0.2 percent.
We estimate the largest increase in
payments from the update to the outlier
threshold amount to be 0.9 percent for
rural IRFs in the Pacific region. We do
not estimate that any group of IRFs
would experience a decrease in
payments from this proposed update.
4. Impact of the Market Basket Update
to the IRF PPS Payment Rates
The estimated effects of the market
basket update to the IRF PPS payment
rates are presented in column 5 of Table
13. In the aggregate the update would
result in a net 2.2 percent increase in

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overall estimated payments to IRFs.
This net increase reflects the estimated
RPL market basket increase factor for FY
2014 of 2.9 percent, reduced by the 0.2
percentage point in accordance with
sections 1886(j)(3)(C)(ii)(II) and
1886(j)(3)(D)(iv) of the Act, and further
reduced by a 0.5 percentage point
productivity adjustment as required by
section 1886(j)(3)(C)(ii)(I) of the Act.
5. Impact of the CBSA Wage Index and
Labor-Related Share
In column 6 of Table 13, we present
the effects of the budget-neutral update
of the wage index and labor-related
share. The changes to the wage index
and the labor-related share are
discussed together because the wage
index is applied to the labor-related
share portion of payments, so the
proposed changes in the two have a
combined effect on payments to
providers. As discussed in section VI.D.
of this final rule, we will decrease the
labor-related share from 69.494 percent
in FY 2014 to 69.294 percent in FY
2015.
In the aggregate, since these updates
to the wage index and the labor-related
share are applied in a budget-neutral
manner as required under section
1886(j)(6) of the Act, we do not estimate
that these updates will affect overall
estimated payments to IRFs. However,
we estimate that these updates will have
small distributional effects. For
example, we estimate the largest
increase in payments from the update to
the CBSA wage index and labor-related
share of 1.2 percent for rural IRFs in the
Pacific region. We estimate the largest
decrease in payments from the update to
the CBSA wage index and labor-related
share to be a 0.7 percent decrease for
urban IRFs in the Mountain region.

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6. Impact of the Update to the CMG
Relative Weights and Average Length of
Stay Values
In column 7 of Table 13, we present
the effects of the budget-neutral update
of the CMG relative weights and average
length of stay values. In the aggregate,
we do not estimate that these updates
will affect overall estimated payments of
IRFs. However, we do expect these
updates to have small distributional
effects. The largest estimated increase in
payments is a 0.2 percent increase in
rural Middle Atlantic and rural West
South Central IRFs. Urban areas in New
England, South Atlantic, and East South
Central and rural New England are
estimated to experiences a 0.1 percent
decrease in payments due to the CMG
relative weights change.

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7. Effects of the Changes to the
Presumptive Compliance Method for
Compliance Review Periods Beginning
on or After October 1, 2014
As discussed in section VIII. of this
final rule, we are making some
additional changes to the presumptive
compliance method for compliance
review periods beginning on or after
October 1, 2015. We do not estimate that
the removal of the ‘‘amputation status’’
codes will have any significant financial
effects on IRFs, as our data analysis
indicates that IRFs are only using these
codes for about 2 percent of cases and
these codes are only being used to count
patients towards the 60 percent rule in
0.3 percent of cases. Similarly, we do
not estimate that the proposed exclusion
of the non-specific Etiologic Diagnosis
codes from the IGCs will have any
significant financial effects on IRFs, as
we estimate that IRFs will be able to
switch to using the more specific codes
that are available for the Etiologic
Diagnoses instead.
We do, however, believe that there
could be a financial effect on IRFs from
the removal of the Unilateral Upper
Extremity Amputations and Arthritis
IGCs from the presumptive compliance
method, as the removal of these IGCs
from presumptively counting toward
meeting the 60 percent rule compliance
threshold could result in more IRFs
failing to meet the requirements solely
on the basis of the presumptive
compliance method and being required
to be evaluated using the medical
review method. We estimate that these
effects would be concentrated in
approximately 10 percent of IRFs that
admit a high number of patients with
Unilateral Upper Extremity Amputation
and Arthritis conditions, and that the
effects would vary substantially among
IRFs. As discussed in section X. of this
final rule, we are providing IRFs with
the ability to indicate on the IRF–PAI
that a particular arthritis case meets the
severity and prior treatment regulatory
requirements, the purpose of which is to
mitigate some of the financial effects for
these IRFs while still allowing Medicare
to ensure that the regulatory
requirements are being met.
Comment: One commenter disagreed
with our statement that the removal of
non-specific codes from the
presumptive methodology
determination will not have a financial
effect on IRFs because they will be able
to change their coding practices to use
more specific diagnosis codes instead.
This commenter said that the
information needed to report more
specific diagnosis codes is not always
available to IRFs.

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Response: As we indicated in the FY
2014 IRF PPS final rule (78 FR 47860,
47887), we previously decided to allow
some non-specific codes to count
toward the presumptive methodology
because we recognized that it would be
extremely difficult for IRFs to gather the
necessary information to code a more
specific code in those particular cases.
However, after careful analysis, we
believe that the remaining non-specific
codes that will not count toward an
IRF’s presumptive compliance with the
60 percent rule are ones that the IRF can
and should make every effort to code
more specifically. Even if the necessary
information to code more specifically is
not available in the acute care medical
record, we believe that the IRF should
make every effort to obtain the
necessary information to code more
specifically. This is consistent with
reduction in the use of non-specific
codes for other Medicare settings.
8. Effects of New Therapy Information
Section
Because the type, amount, frequency,
and duration of therapy provided in
IRFs is documented in detail in the IRF
medical records as part of the
requirements for meeting Medicare’s
conditions of participation and IRF
coverage requirements, we estimate that
the additional costs incurred by IRFs for
FY 2016 for the new proposed Therapy
Information Section of the IRF–PAI
would be based on the 4 additional
minutes per IRF–PAI form to transfer
the information from the IRF medical
record to the IRF–PAI form. We estimate
that this would result in an additional
cost of $1.2 million to all IRFs for FY
2016.
Comment: Many commenters said
that our estimates of the overall costs to
IRFs of the therapy data collection on
the IRF–PAI are too low. They said that
the costs of making the necessary
modifications to their medical record
systems and the training that will be
required for therapists, nurses, and
other clinical staff to ensure that they
can record the data in a form and
manner that will be compatible with the
new data collection requirements will
be substantial. In addition, there were
comments regarding the added burden
due to our original proposal to include
the average number of minutes by mode
and type of therapy for weeks 3 and
beyond of a patient’s IRF stay.
Response: We appreciate the detailed
comments that we received on this
issue, and we understand, based on
these comments, that the proposed
collection of average number of minutes
by mode and type of therapy for weeks
3 and beyond of a patient’s IRF stay

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would require additional resources from
the IRFs to operationalize. For this
reason, we have withdrawn the proposal
to collect the average number of minutes
for weeks 3 and beyond. Instead, we
will require IRFs to report on the IRF–
PAI the total number of minutes of
therapy provided to a patient, by mode
and therapy discipline, for only week 1
and week 2 of the IRF stay. As described
in section IX of this final rule, we
believe that this will give us the
minimum information that we need to
develop future policy and to understand
the nature of the services that Medicare
is paying for under the IRF PPS, while
also minimizing the costs to providers.
We carefully considered commenters’
suggestions that we add the collection of
Concurrent Therapy as a mode and
revise the definition of Group Therapy
so that new data collection items would
be consistent with the way in which
facilities were already recording the
information in the patient’s medical
record. We believe this will reduce the
need for training and help to minimize
burden. Finally, although we
understand that updating specific
software that IRFs use to collect this
information can include additional
costs, we view this as a provider
business decision. Providers may
always opt to use the IRVEN software
supplied by CMS for collecting and
submitting the IRF–PAI information.
Given the revisions to the data
collection described in section IX of this
final rule, we believe that the cost
estimate indicated for this data
collection in the proposed rule is
accurate.
9. Effects of Updates to the IRF QRP
As discussed in section XI.A. of this
final rule and in accordance with
section 1886(j)(7) of the Act, we will
implement a 2 percentage point
reduction in the FY 2015 increase factor
for IRFs that have failed to report the
required quality reporting data to us
during the most recent IRF quality
reporting period. In section XI.A of this
final rule, we discuss how the 2
percentage point reduction will be
applied. Only a few IRFs received the 2
percentage point reduction in the FY
2014 increase factor for failure to report
the required quality reporting data last
year, and we would anticipate that even
fewer IRFs will receive the reduction for
FY 2015 as they are now more familiar
with the IRF QRP reporting
requirements.
In sections XI.K and XI.L of this final
rule, we have finalized our proposal to
adopt a new data completion threshold
as well as a new data accuracy
validation policy. While we cannot

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estimate the increase in the number of
IRFs that will not meet our proposed
requirements at this time, we believe
that these finalized policies may
increase the number of IRFs that receive
a 2 percent point reduction to their FY
annual increase factor for FY 2016 and
beyond. Thus, we estimate that this
policy will increase impact on overall
IRF payments, by increasing the rate of
non-compliance by an estimated 5
percent, for FY 2016 and beyond,
decreasing the number of IRF providers
that will receive their full annual
increase factor for FY 2016 and beyond.
In this FY 2015 IRF PPS final rule, we
finalized our proposal to adopt two new
quality measures (MRSA and CDI), as
well as to adopt a new data accuracy
validation policy. Together, we estimate
that these proposals will increase the
cost to all IRF providers by $852,238
annually, for an average cost to IRF
providers of $747.57 annually. This is
an average increase of approximately
4.43 percent to all IRF providers over
the FY 2014 burden. While we also
proposed to adopt a data completion
threshold policy, this policy, if
finalized, will have no associated cost
burden beyond that discussed in the
first paragraph of this section (XI.C.9) of
this final rule.
We intend to closely monitor the
effects of this new quality reporting
program on IRF providers and help
perpetuate successful reporting
outcomes through ongoing stakeholder
education, national trainings, CMS
Open Door Forums, and general and
technical help desks. We did not receive
any public comments with regard to this
section of the proposed rule.
D. Alternatives Considered
The following is a discussion of the
alternatives considered for the IRF PPS
updates contained in this final rule.
Section 1886(j)(3)(C) of the Act
requires the Secretary to update the IRF
PPS payment rates by an increase factor
that reflects changes over time in the
prices of an appropriate mix of goods
and services included in the covered
IRF services. Thus, we did not consider
alternatives to updating payments using
the estimated RPL market basket
increase factor for FY 2015. However, as
noted previously in this final rule,
section 1886(j)(3)(C)(ii)(I) of the Act
requires the Secretary to apply a
productivity adjustment to the market
basket increase factor for FY 2015, and
sections 1886(j)(3)(C)(ii)(II) and
1886(j)(3)(D)(iv) of the Act require the
Secretary to apply a 0.2 percentage
point reduction to the market basket
increase factor for FY 2015. Thus, in
accordance with section 1886(j)(3)(C) of

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45935

the Act, we are updating the IRF federal
prospective payments in this final rule
by 2.2 percent (which equals the 2.9
percent estimated RPL market basket
increase factor for FY 2015 reduced by
0.2 percentage points, and further
reduced by a 0.5 percentage point
productivity adjustment as required by
section 1886(j)(3)(C)(ii)(I) of the Act).
We considered maintaining the
existing CMG relative weights and
average length of stay values for FY
2015. However, in light of recently
available data and our desire to ensure
that the CMG relative weights and
average length of stay values are as
reflective as possible of recent changes
in IRF utilization and case mix, we
believe that it is appropriate to update
the CMG relative weights and average
length of stay values at this time to
ensure that IRF PPS payments continue
to reflect as accurately as possible the
current costs of care in IRFs.
We considered updating facility-level
adjustment factors for FY 2015.
However, as discussed in more detail in
section V.B. of this final rule, we believe
that freezing the facility-level
adjustments at FY 2014 levels for FY
2015 and all subsequent years (unless
and until the data indicate that they
need to be further updated) will allow
us an opportunity to monitor the effects
of the substantial changes to the
adjustment factors for FY 2014, and will
allow IRFs time to adjust to last year’s
changes.
We considered maintaining the
existing outlier threshold amount for FY
2015. However, analysis of updated FY
2013 data indicates that estimated
outlier payments would be lower than 3
percent of total estimated payments for
FY 2015, by approximately 0.2 percent,
unless we updated the outlier threshold
amount. Consequently, we are adjusting
the outlier threshold amount in this
final rule to reflect a 0.2 percent
increase thereby setting the total outlier
payments equal to 3 percent, instead of
2.8 percent, of aggregate estimated
payments in FY 2015.
We considered making no further
changes to the presumptive compliance
method in this final rule. However, to be
consistent with the changes to the
presumptive compliance method that
we implemented in the FY 2014 IRF
PPS final rule, and to correct some
inadvertent omissions in last year’s final
rule, we believe it is important to make
further changes in this final rule.
However, to ensure that the IRF–PAI
item designed to mitigate some of the
burden of additional medical reviews
that could result from the changes to the
presumptive compliance method is
available on the IRF–PAI on the same

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date or prior to the effective date of
those changes, we are delaying the
effective date of the changes to the
presumptive compliance method. Both
the changes to the presumptive
compliance method that we finalized in
the FY 2014 IRF PPS final rule and the
additional changes to the presumptive
compliance method that are finalized in
this rule will become effective for
compliance review periods beginning
on or after October 1, 2015.
We considered not including the new
Therapy Information Section on the

IRF–PAI. However, we believe that it is
vitally important for Medicare to better
understand the ways in which therapy
services are currently being provided in
IRFs and, most importantly, what
services Medicare is paying for under
the IRF benefit.
E. Accounting Statement
As required by OMB Circular A–4
(available at http://
www.whitehouse.gov/sites/default/files/
omb/assets/omb/circulars/a004/a4.pdf), in Table 14, we have prepared an

accounting statement showing the
classification of the expenditures
associated with the provisions of this
final rule. Table 14 provides our best
estimate of the increase in Medicare
payments under the IRF PPS as a result
of the updates presented in this final
rule based on the data for 1,142 IRFs in
our database. In addition, Table 14
presents the costs associated with the
new IRF quality reporting program and
therapy reporting requirements for FY
2015.

TABLE 14—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED EXPENDITURES
Category

Transfers

Change in Estimated Transfers from FY 2014 IRF PPS to FY 2015 IRF PPS
Annualized Monetized Transfers ..............................................................
From Whom to Whom? ............................................................................

$180 million.
Federal Government to IRF Medicare Providers.

File Type	application/pdf
File Modified	2014-10-07
File Created	2014-10-07