CMS Releases Proposed Rule for IRFs

On March 27, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule for Inpatient Rehabilitation Facilities (IRFs) that would update payment policies for the 2025 fiscal year (FY) and add four new items as Standardized Patient Assessment Data elements, modify an additional item, and remove the Admission Class item from the IRF-PAI (Patient Assessment Instrument).

Additionally, CMS is proposing a three-year phaseout of the rural adjustment for IRFs changing from rural to urban, as a result of the proposed revised Office of Management and Budget (OMB) market area delineations.

The proposed rule, to be formally published in the Code of Federal Regulations (CFR) as of March 29, also requests information related to IRF QRP (Quality Reporting Program) quality measures and concepts, as well as the IRF QRP Star Rating system.

The major components are addressed below:

Updates to Payment Rates

The proposed policy changes, consistent with prior years, include:

• An update of the Case-Mix Group (CMG) relative weights and average length-of-stay values for FY 2025, in a budget-neutral manner;
• An update of the IRF PPS (Prospective Payment System) payment rates for FY 2025 by the market basket increase factor, based upon the most current data available;
• An update of the FY 2025 IRF PPS payment rates by the FY 2025 wage index, with the proposed adoption of the revised OMB market area delineations, the phaseout of the rural adjustment for those IRFs changing from rural to urban, and the labor-related share in a budget-neutral manner;
• An update of the outlier threshold amount for FY 2025; and
• An update of the cost-to-charge ratio (CCR) ceiling and urban/rural average CCRs.

Following standard methodology, CMS has recommended a $255 million increase in IRF payments over the last FY. CMS also proposes an update to IRF payment by 2.8 percent, based on the proposed IRF market basket update of 3.2 percent, less a proposed 0.4 percent productivity adjustment. The result is a proposed Standard Payment Rate for FY 2025 of $18,872.

Table 10 of the proposed rule illustrates the calculations:

Proposed Changes to Standardized Patient Assessment Data Elements: Added Items for FY 2028

CMS is also proposing to collect four new items as part of the Standardized Patient Assessment under the Social Determinants of Health (SDoH) category. These items would be added to FY 2028 IRF QRP and include one item related to living situations, two items related to food, and a final item related to utilities. 

The proposed Living Situation item asks:

“What is your living situation today?” The proposed response options are: (1) I have a steady place to live; (2) I have a place to live today, but I am worried about losing it in the future; (3) I do not have a steady place to live; (4) Patient declines to respond; and (5) Patient unable to respond.

The proposed Food items are:

“Within the past 12 months, were you worried that your food would run out before you got money to buy more?”

“Within the past 12 months, did the food you bought just not last, and you didn’t have money to get more?”

The proposed response options for both of these items are: (1) Often true; (2) Sometimes true; (3) Never True; (4) Patient declines to respond; and (5) Patient unable to respond.

The proposed Utilities item asks:

“In the past 12 months, has the electric, gas, oil, or water company threatened to shut off services in your home?” The proposed response options are: (1) Yes; (2) No; (3) Already shut off; (4) Patient declines to respond; and (5) Patient unable to respond.

Proposed Modifications to Standardized Patient Assessment Data Elements:  Revise Transportation Item

Additionally, CMS proposes to modify the Transportation Item to align it with the Accountable Health Communities (AHC) Health-Related Social Needs (HRSN) Screening Tool for SDoH. The current question in Item A1250, Transportation, currently collected in the IRF-PAI asks: “Has lack of transportation kept you from medical appointments, meetings, work, or from getting things needed for daily living?” This item would be modified to revise the lookback period to include “in the last 12 months” and would simplify the response options to (1) Yes; (2) No; (3) Patient declines to respond; and (4) Patient unable to respond.

This modification would also be added to the FY 2028 IRF QRP data.

Proposed Removal of the Admission Class from the IRF-PAI

As admission class is not currently used in any calculations of quality measures, so CMS proposes to remove the item from the IRF-PAI, effective Oct. 1, 2026.

Requests for Information

In the proposed rule, CMS also requests feedback on two areas:

• Future concepts for Quality Measures, including vaccination composite, pain management, and depression; and
• The development of a five-star methodology for assisting consumers in quickly identifying differences in quality when selecting an IRF.

Readers can access the associated CMS Fact Sheet here.