[Federal Register Volume 78, Number 151 (Tuesday, August 6, 2013)]
[Rules and Regulations]
[Pages 47860-47934]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-18770]



[[Page 47859]]

Vol. 78

Tuesday,

No. 151

August 6, 2013

Part III





Department of Health and Human Services





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 Centers for Medicare & Medicaid Services





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42 CFR Part 412





Medicare Program; Inpatient Rehabilitation Facility Prospective Payment 
System for Federal Fiscal Year 2014; Rules

  Federal Register / Vol. 78 , No. 151 / Tuesday, August 6, 2013 / 
Rules and Regulations  

[[Page 47860]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 412

[CMS-1448-F]
RIN 0938-AR66


Medicare Program; Inpatient Rehabilitation Facility Prospective 
Payment System for Federal Fiscal Year 2014

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Final rule.

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SUMMARY: This final rule updates the prospective payment rates for 
inpatient rehabilitation facilities (IRFs) for federal fiscal year (FY) 
2014 (for discharges occurring on or after October 1, 2013 and on or 
before September 30, 2014) as required by the statute. This final rule 
also revised the list of diagnosis codes that may be counted toward an 
IRF's ``60 percent rule'' compliance calculation to determine 
``presumptive compliance,'' update the IRF facility-level adjustment 
factors using an enhanced estimation methodology, revise sections of 
the Inpatient Rehabilitation Facility-Patient Assessment Instrument, 
revise requirements for acute care hospitals that have IRF units, 
clarify the IRF regulation text regarding limitation of review, update 
references to previously changed sections in the regulations text, and 
revise and update quality measures and reporting requirements under the 
IRF quality reporting program.

DATES: Effective Dates: The regulatory amendments in this rule are 
effective October 1, 2013, except for the amendment to Sec.  412.25 
which is effective October 1, 2014.
    Applicability Dates: The revisions to the list of diagnosis codes 
that are used to determine presumptive compliance under the ``60 
percent rule'' are applicable for compliance review periods beginning 
on or after October 1, 2014. The updated IRF prospective payment rates 
are applicable for IRF discharges occurring on or after October 1, 2013 
and on or before September 30, 2014 (FY 2014). The changes to the 
Inpatient Rehabilitation Facility-Patient Assessment Instrument, the 
amendments to Sec.  412.25, and the revised and updated quality 
measures and reporting requirements under the IRF quality reporting 
program are applicable for IRF discharges occurring on or after October 
1, 2014.

FOR FURTHER INFORMATION CONTACT: Gwendolyn Johnson, (410) 786-6954, for 
general information.
    Caroline Gallaher, (410) 786-8705, for information about the 
quality reporting program.
    Susanne Seagrave, (410) 786-0044 or Kadie Thomas, (410) 786-0468, 
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/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/.

Executive Summary

A. Purpose

    This final rule updates the payment rates for inpatient 
rehabilitation facilities (IRFs) for federal fiscal year (FY) 2014 
(that is, for discharges occurring on or after October 1, 2013 and on 
or before September 30, 2014) 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 prospective payment 
system's (PPS) case-mix groups and a description of the methodology and 
data used in computing the prospective payment rates for that fiscal 
year.

B. Summary of Major Provisions

    In this final rule, we use the methods described in the July 30, 
2012 FY 2013 IRF PPS notice (77 FR 44618) to update the federal 
prospective payment rates for FY 2014 using updated FY 2012 IRF claims 
and the most recent available IRF cost report data. We are also 
revising the list of diagnosis codes that are used to determine 
presumptive compliance under the ``60 percent rule,'' updating the IRF 
facility-level adjustment factors using an enhanced estimation 
methodology, revising sections of the Inpatient Rehabilitation 
Facility-Patient Assessment Instrument, revising requirements for acute 
care hospitals that have IRF units, clarifying the IRF regulation text 
regarding limitation of review, updating references to previously 
changed sections in the regulations text, and revising and updating 
quality measures and reporting requirements under the IRF quality 
reporting program.

C. Summary of Costs, Benefits and Transfers

------------------------------------------------------------------------
    Provision description                      Transfers
------------------------------------------------------------------------
FY 2014 IRF PPS payment rate   The overall economic impact of this final
 update.                        rule is an estimated $170 million in
                                increased payments from the Federal
                                government to IRFs during FY 2014.
Refinements to the             The estimated FY 2015 impact of the
 presumptive compliance         refinements to the presumptive
 method under the `60 percent   compliance method reflects a decrease of
 rule'.                         payments between $0 to $520 million,
                                depending on the IRFs' behavioral
                                responses to the changes, with $520
                                million representing the upper bound.
------------------------------------------------------------------------
    Provision description                        Costs
------------------------------------------------------------------------
New quality reporting program  The total costs in FY 2015 for IRFs as a
 requirements.                  result of the new quality reporting
                                requirements are estimated to be $9.2
                                million.
------------------------------------------------------------------------

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

Table of Contents

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
    A. Proposed Updates to the IRF Federal Prospective Payment Rates 
for Federal Fiscal Year (FY) 2014
    B. Proposed Revisions to Existing Regulation Text

[[Page 47861]]

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 2014
V. Updates to the Facility-Level Adjustment Factors for FY 2014
    A. Background on Facility-Level Adjustments
    B. Updates to the IRF Facility-Level Adjustment Factors
    C. Budget Neutrality Methodology for the Updates to the IRF 
Facility-Level Adjustment Factors
VI. FY 2014 IRF PPS Federal Prospective Payment Rates
    A. Market Basket Increase Factor, Productivity Adjustment, and 
Other Adjustment for FY 2014
    B. Secretary's Final Recommendation
    C. Labor-Related Share for FY 2014
    D. Wage Adjustment
    E. Description of the IRF Standard Conversion Factor and Payment 
Rates for FY 2014
    F. 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 2014
    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 ICD-9-CM Codes That Are Used To Determine 
Presumptive Compliance
IX. Non-Quality Related Revisions to IRF-PAI Sections
    A. Updates
    B. Additions
    C. Deletions
    D. Changes
X. Technical Corrections to the Regulations at Sec.  412.130
XI. Revisions to the Conditions of Payment for IRF Units Under the 
IRF PPS
XII. Clarification of the Regulations at Sec.  412.630
XIII. Revision to the Regulations at Sec.  412.29
XIV. Revisions and Updates to the Quality Reporting Program for IRFs
    A. Background and Statutory Authority
    B. Quality Measures Previously Finalized and Currently in Use 
for the IRF Quality Reporting Program
    C. New IRF QRP Quality Measures Affecting the FY 2016 and FY 
2017 IRF PPS Annual Increase Factor, and Subsequent Year Increase 
Factors
    D. Changes to the IRF-PAI That Are Related to the IRF Quality 
Reporting Program
    E. Change in Data Collection and Submission Periods for Future 
Program Years
    F. Reconsideration and Appeals Process
    G. Policy for Granting of a Waiver of the IRF QRP Data 
Submission Requirements in Case of Disaster or Extraordinary 
Circumstances
    H. Public Display of Data Quality Measures for the IRF QRP 
Program
    I. Method for Applying the Reduction to the FY 2014 IRF Increase 
Factor for IRFs That Fail To Meet the Quality Reporting Requirements
XV. Miscellaneous Comments
XVI. Provisions of the Final Regulations
    A. Payment Provision Changes
    B. Revisions to Existing Regulation Text
XVII. Collection of Information Requirements
    A. ICRs Regarding IRF QRP
    B. ICRs Regarding Non-Quality Related Changes to the IRF-PAI
XVIII. Regulatory Impact Analysis
    A. Statement of Need
    B. Overall Impacts
    C. Detailed Economic Analysis
    D. Alternatives Considered
    E. Accounting Statement
    F. Conclusion
Regulation Text

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 (hereinafter referred to as IRFs).
    Payments under the IRF PPS encompass inpatient operating and 
capital costs of furnishing covered rehabilitation services (that is, 
routine, ancillary, and capital costs), but not direct graduate medical 
education costs, costs of approved nursing and allied health education 
activities, bad debts, and other services or items outside the scope of 
the IRF PPS. 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 case-mix 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 budget-neutral 
conversion factor, please refer to our FY 2004 IRF PPS final rule (68 
FR 45684 through 45685). In the FY 2006 IRF PPS final rule (70 FR 
47880), we discussed in detail the methodology for determining the 
standard payment conversion factor.
    We applied the relative weighting factors to the standard payment 
conversion factor to compute the unadjusted 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 IRF's unadjusted federal prospective payment rates.
    For cost reporting periods that began on or after January 1, 2002 
and before October 1, 2002, we determined the final prospective payment 
amounts using the transition methodology prescribed in section 
1886(j)(1) of the Act. Under this provision, IRFs transitioning into 
the PPS were paid a blend of the federal IRF PPS rate and the payment 
that the IRF 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. The Web site is: http://www.cms.gov/Medicare/Medicare-Fee-for-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

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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, low-income 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 
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 case-level 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-Service-Payment/InpatientRehabFacPPS/Data-Files.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 England deemed'' counties and multi-campus 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, and 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 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 self-implementing 
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.

[[Page 47863]]

    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) and the correcting amendments to the FY 2011 IRF 
PPS notice (75 FR 70013, November 16, 2010) 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 July 30, 2012 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 July 30, 2012 FY 2013 IRF 
PPS notice (77 FR 44618).

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 2014 is discussed in section VI.A. of this final 
rule. Section 3401(d) of the Affordable Care Act requires an additional 
0.3 percentage point adjustment to the IRF increase factor for FY 2014, 
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 new 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 
will require 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 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). Under section 1886(j)(7)(D)(iii) of the Act, the Secretary 
is required to publish the measures that will be used in FY 2014 no 
later than October 1, 2012.
    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-for-Service patient, the IRF is 
required to complete the appropriate sections of a patient assessment 
instrument (PAI), designated as the Inpatient Rehabilitation Facility-
Patient Assessment Instrument (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 5-digit CMG number. The first digit 
is an alpha-character that indicates the comorbidity tier. The last 4 
digits

[[Page 47864]]

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-Service-Payment/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 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-digit 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 Medicare contractor. 
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, 
November 25, 2005). 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 healthcare 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 the addenda to the Medicare 
Intermediary Manual, Part 3, section 3600).
    The MAC processes the claim through its software system. This 
software system includes pricing programming called the ``PRICER'' 
software. The PRICER software uses the CMG number, along with other 
specific claim data elements and provider-specific data, to adjust the 
IRF's prospective payment for interrupted stays, transfers, short 
stays, and deaths, and then applies the applicable adjustments to 
account for the IRF's wage index, percentage of low-income patients, 
rural location, and outlier payments. For discharges occurring on or 
after October 1, 2005, the IRF PPS payment also reflects the teaching 
status adjustment that became effective as of FY 2006, as discussed in 
the FY 2006 IRF PPS final rule (70 FR 47880).

II. Summary of Provisions of the Proposed Rule

    In the FY 2014 IRF PPS proposed rule (78 FR 26880), we proposed to 
update the IRF Federal prospective payment rates, to revise the list of 
eligible International Classification of Diseases, Ninth Revision, 
Clinical Modification (ICD-9-CM) diagnosis codes that are used to 
determine presumptive compliance under the ``60 percent rule,'' to 
update the IRF facility-level adjustment factors, to revise the 
Inpatient Rehabilitation Facility-Patient Assessment Instrument (IRF-
PAI), to revise requirements for acute care hospitals that have IRF 
units, clarify the IRF regulation text regarding limitation of review, 
and to revise and update quality measures and reporting requirements 
under the quality reporting program for IRFs. We also proposed to 
revise existing regulations text for the purpose of updating and 
providing greater clarity. These proposals were as follows:

A. Proposed Updates to the IRF Federal Prospective Payment Rates for 
Federal Fiscal Year (FY) 2014

    The proposed updates to the IRF federal prospective payment rates 
for FY 2014 were as follows:
     Update the FY 2014 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 2014 IRF PPS proposed rule (78 FR 26880, 26885 
through 26888).
     Update the FY 2014 IRF PPS facility-level adjustment 
factors, using the most current and complete Medicare claims and cost 
report data with an enhanced estimation methodology, in a budget-
neutral manner, as discussed in section IV of the FY 2014 IRF PPS 
proposed rule (78 FR 26880, 26888 through 26890).
     Update the FY 2014 IRF PPS payment rates by the proposed 
market basket increase factor, based upon the most current data 
available, with a 0.3 percentage point reduction as required by 
sections 1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(iii) 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 
2014 IRF PPS proposed rule (78 FR 26880, 26890 through 26891).
     Discuss the Secretary's Proposed Recommendation for 
updating IRF PPS payments for FY 2014, in accordance with the statutory 
requirements, as described in section V of the FY 2014 IRF PPS proposed 
rule (78 FR 26880 at 26891).
     Update the FY 2014 IRF PPS payment rates by the FY 2014 
wage index and the labor-related share in a budget-neutral manner, as 
discussed in section V of the FY 2014 IRF PPS proposed rule (78 FR 
26880, 26891 through 26892).
     Describe the calculation of the IRF Standard Payment 
Conversion Factor for FY 2014, as discussed in section V of the FY 2014 
IRF PPS proposed rule (78 FR 26880 at 26892).
     Update the outlier threshold amount for FY 2014, as 
discussed in section VI of the FY 2014 IRF PPS proposed rule (78 FR 
26880 at 26895).
     Update the cost-to-charge ratio (CCR) ceiling and urban/
rural average CCRs for FY 2014, as discussed in section VI of the FY 
2014 IRF PPS proposed rule (78 FR 26880 at 26895).
     Describe proposed revisions to the list of eligible ICD-9-
CM diagnosis codes that are used to determine presumptive compliance 
under the 60 percent rule in section VII of the FY

[[Page 47865]]

2014 IRF PPS proposed rule (78 FR 26880, 26895 through 26906).
     Describe proposed non-quality-related revisions to IRF-PAI 
sections in section VIII of the FY 2014 IRF PPS proposed rule (78 FR 
26880, 26906 through 26907).
     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 XIII of the FY 2014 IRF PPS proposed rule (78 FR 26880, 
26909 through 26922).

B. Proposed Revisions to Existing Regulation Text

    In the FY 2014 IRF PPS proposed rule (78 FR 26880), we also 
proposed the following revisions to the existing regulations:
     Revisions to Sec.  412.25(a)(1)(iii) to specify a minimum 
required number of beds that are not excluded from the inpatient 
prospective payment system (IPPS) for a hospital that has an IRF unit, 
as described in section X of the FY 2014 IRF PPS proposed rule (78 FR 
26880 at 26908).
     Technical corrections to Sec.  412.130, to reflect prior 
changes to the regulations at Sec.  412.29 and Sec.  412.30 that we 
made in the FY 2012 IRF PPS final rule (76 FR 47836), as described in 
section IX of the FY 2014 IRF PPS proposed rule (78 FR 26880, 26907 
through 26908).
     Clarifications to Sec.  412.630, to reflect the scope of 
section 1886(j)(8) of the Act, as described in section XI. of the FY 
2014 IRF PPS proposed rule (78 FR 26880 at 26908).
     Revision to Sec.  412.29(d), to clarify that Medicare 
requires the rehabilitation physician's review and concurrence on the 
preadmission screening for Medicare Part A Fee-for-Service patients 
only, as described in section XII of the FY 2014 IRF PPS proposed rule 
(78 FR 26880, 26908 through 26909).

III. Analysis and Responses to Public Comments

    We received 47 timely responses from the public, many of which 
contained multiple comments on the FY 2014 IRF PPS proposed rule (78 FR 
26880). 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 2014

    As specified in Sec.  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 2014 IRF PPS proposed rule (78 FR 26880, 26885 through 
26888), we proposed to update the CMG relative weights and average 
length of stay values for FY 2014. 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 2014, we proposed to use the FY 
2012 IRF claims and FY 2011 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 2012 IRF cost report data are available for 
analysis, but the majority of the FY 2012 IRF claims data are available 
for analysis.
    In the FY 2014 IRF PPS proposed rule (78 FR 26880, 26885 through 
26888), 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 in the FY 2011 notice (75 FR 42836), the FY 2012 final 
rule (76 FR 47836), and the FY 2013 notice (77 FR 44618). 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 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 hospital-specific relative value 
method.
    Step 4. We normalize the FY 2014 CMG relative weights to the same 
average CMG relative weight from the CMG relative weights implemented 
in the July 30, 2012 FY 2013 IRF PPS notice (77 FR 44618).
    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 2014 in such a way that total 
estimated aggregate payments to IRFs for FY 2014 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 
2014 CMG relative weights, we use the following steps:
    Step 1. Calculate the estimated total amount of IRF PPS payments 
for FY 2014 (with no changes to the CMG relative weights).
    Step 2. Calculate the estimated total amount of IRF PPS payments 
for FY 2014 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 
2014 with and without the changes to the CMG relative weights.
    Step 4. Apply the budget neutrality factor (1.0000) to the FY 2013 
IRF PPS standard payment amount after the application of the budget-
neutral wage adjustment factor.
    In section VI.E. of this final rule, we discuss the use of the 
existing methodology to calculate the standard payment conversion 
factor for FY 2014.
    Table 1, ``Relative Weights and Average Length of Stay Values for 
Case-Mix 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 2014. 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.

[[Page 47866]]



                 Table 1--Relative Weights and Average Length of Stay Values for Case-Mix Groups
----------------------------------------------------------------------------------------------------------------
                 CMG Description              Relative weight                     Average length of stay
                (M = motor,  C = -------------------------------------------------------------------------------
      CMG        cognitive, A =
                      age)         Tier 1    Tier 2    Tier 3     None     Tier 1    Tier 2    Tier 3     None
----------------------------------------------------------------------------------------------------------------
0101..........  Stroke M > 51.05    0.7983    0.7151    0.6539    0.6239         9         9         9         8
0102..........  Stroke M > 44.45    0.9911    0.8878    0.8118    0.7745        11        12        10        10
                 and M < 51.05
                 and C > 18.5.
0103..........  Stroke M > 44.45    1.1608    1.0398    0.9508    0.9071        13        13        12        11
                 and M < 51.05
                 and C < 18.5.
0104..........  Stroke M > 38.85    1.2212    1.0939    1.0002    0.9543        13        12        12        12
                 and M < 44.45.
0105..........  Stroke M > 34.25    1.4275    1.2787    1.1692    1.1155        15        15        14        14
                 and M < 38.85.
0106..........  Stroke M > 30.05    1.6285    1.4588    1.3339    1.2726        16        17        16        15
                 and M < 34.25.
0107..........  Stroke M > 26.15    1.8385    1.6468    1.5059    1.4367        19        20        17        17
                 and M < 30.05.
0108..........  Stroke M < 26.15    2.3157    2.0743    1.8967    1.8096        22        24        22        21
                 and A > 84.5.
0109..........  Stroke M > 22.35    2.0990    1.8802    1.7192    1.6403        21        21        19        20
                 and M < 26.15
                 and A < 84.5.
0110..........  Stroke M < 22.35    2.7382    2.4527    2.2427    2.1398        29        28        25        25
                 and A < 84.5.
0201..........  Traumatic brain     0.8252    0.6953    0.6182    0.5757        10        10         8         8
                 injury M >
                 53.35 and C >
                 23.5.
0202..........  Traumatic brain     1.0549    0.8889    0.7904    0.7360        12        10        10        10
                 injury M >
                 44.25 and M <
                 53.35 and C >
                 23.5.
0203..........  Traumatic brain     1.2520    1.0550    0.9380    0.8735        15        13        12        11
                 injury M >
                 44.25 and C <
                 23.5.
0204..........  Traumatic brain     1.3077    1.1020    0.9798    0.9124        12        13        12        12
                 injury M >
                 40.65 and M <
                 44.25.
0205..........  Traumatic brain     1.5791    1.3307    1.1831    1.1017        17        16        14        14
                 injury M >
                 28.75 and M <
                 40.65.
0206..........  Traumatic brain     1.9472    1.6409    1.4589    1.3585        18        19        18        16
                 injury M >
                 22.05 and M <
                 28.75.
0207..........  Traumatic brain     2.5767    2.1713    1.9305    1.7977        33        26        21        20
                 injury M <
                 22.05.
0301..........  Non-traumatic       1.0984    0.9453    0.8469    0.7832        10        11        11        10
                 brain injury M
                 > 41.05.
0302..........  Non-traumatic       1.3755    1.1838    1.0606    0.9808        13        14        12        12
                 brain injury M
                 > 35.05 and M <
                 41.05.
0303..........  Non-traumatic       1.6219    1.3958    1.2506    1.1565        17        16        14        14
                 brain injury M
                 > 26.15 and M <
                 35.05.
0304..........  Non-traumatic       2.1792    1.8755    1.6803    1.5539        24        21        19        18
                 brain injury M
                 < 26.15.
0401..........  Traumatic spinal    1.1342    0.9427    0.8778    0.7849        12        12        11        10
                 cord injury M >
                 48.45.
0402..........  Traumatic spinal    1.4129    1.1744    1.0936    0.9778        18        14        15        12
                 cord injury M >
                 30.35 and M <
                 48.45.
0403..........  Traumatic spinal    2.3155    1.9246    1.7921    1.6024        26        24        20        20
                 cord injury M >
                 16.05 and M <
                 30.35.
0404..........  Traumatic spinal    4.2535    3.5355    3.2921    2.9436        47        41        36        35
                 cord injury M <
                 16.05 and A >
                 63.5.
0405..........  Traumatic spinal    3.4992    2.9086    2.7083    2.4216        37        32        33        27
                 cord injury M <
                 16.05 and A <
                 63.5.
0501..........  Non-traumatic       0.8384    0.6587    0.6208    0.5653         9         9         8         8
                 spinal cord
                 injury M >
                 51.35.
0502..........  Non-traumatic       1.1090    0.8712    0.8211    0.7477        12        11        10        10
                 spinal cord
                 injury M >
                 40.15 and M <
                 51.35.
0503..........  Non-traumatic       1.4334    1.1261    1.0613    0.9664        15        13        13        12
                 spinal cord
                 injury M >
                 31.25 and M <
                 40.15.
0504..........  Non-traumatic       1.6565    1.3014    1.2265    1.1168        14        16        14        14
                 spinal cord
                 injury M >
                 29.25 and M <
                 31.25.
0505..........  Non-traumatic       1.9708    1.5483    1.4592    1.3287        21        18        17        16
                 spinal cord
                 injury M >
                 23.75 and M <
                 29.25.
0506..........  Non-traumatic       2.7518    2.1619    2.0375    1.8553        30        25        23        22
                 spinal cord
                 injury M <
                 23.75.
0601..........  Neurological M >    0.9645    0.7830    0.7227    0.6551        10        10         9         9
                 47.75.
0602..........  Neurological M >    1.2974    1.0533    0.9721    0.8811        12        12        11        11
                 37.35 and M <
                 47.75.
0603..........  Neurological M >    1.6228    1.3174    1.2159    1.1021        15        15        14        13
                 25.85 and M <
                 37.35.
0604..........  Neurological M <    2.1683    1.7603    1.6246    1.4726        22        19        18        17
                 25.85.
0701..........  Fracture of         0.9369    0.7995    0.7648    0.6945        10        10        10         9
                 lower extremity
                 M > 42.15.
0702..........  Fracture of         1.2132    1.0353    0.9904    0.8993        12        12        12        11
                 lower extremity
                 M > 34.15 and M
                 < 42.15.
0703..........  Fracture of         1.4741    1.2579    1.2033    1.0927        15        15        14        13
                 lower extremity
                 M > 28.15 and M
                 < 34.15.
0704..........  Fracture of         1.8716    1.5971    1.5278    1.3874        18        18        18        17
                 lower extremity
                 M < 28.15.
0801..........  Replacement of      0.7037    0.6193    0.5667    0.5186         7         8         7         7
                 lower extremity
                 joint M > 49.55.
0802..........  Replacement of      0.9255    0.8145    0.7454    0.6821        10        10         9         9
                 lower extremity
                 joint M > 37.05
                 and M < 49.55.
0803..........  Replacement of      1.2589    1.1078    1.0138    0.9277        12        14        13        12
                 lower extremity
                 joint M > 28.65
                 and M < 37.05
                 and A > 83.5.
0804..........  Replacement of      1.1139    0.9803    0.8971    0.8209        11        12        11        10
                 lower extremity
                 joint M > 28.65
                 and M < 37.05
                 and A < 83.5.

[[Page 47867]]

 
0805..........  Replacement of      1.3754    1.2104    1.1077    1.0136        15        15        13        12
                 lower extremity
                 joint M > 22.05
                 and M < 28.65.
0806..........  Replacement of      1.6683    1.4682    1.3435    1.2294        17        17        15        15
                 lower extremity
                 joint M < 22.05.
0901..........  Other orthopedic    0.9010    0.7452    0.6891    0.6241        10         9         9         8
                 M > 44.75.
0902..........  Other orthopedic    1.2081    0.9992    0.9241    0.8369        13        12        11        11
                 M > 34.35 and M
                 < 44.75.
0903..........  Other orthopedic    1.5080    1.2472    1.1534    1.0446        15        15        14        13
                 M > 24.15 and M
                 < 34.35.
0904..........  Other orthopedic    1.9669    1.6268    1.5045    1.3626        20        19        17        16
                 M < 24.15.
1001..........  Amputation,         1.0276    0.9345    0.8023    0.7417        12        11        10        10
                 lower extremity
                 M > 47.65.
1002..........  Amputation,         1.3077    1.1892    1.0210    0.9439        13        13        12        12
                 lower extremity
                 M > 36.25 and M
                 < 47.65.
1003..........  Amputation,         1.9362    1.7608    1.5117    1.3975        19        20        17        16
                 lower extremity
                 M < 36.25.
1101..........  Amputation, non-    1.2199    1.1157    1.0302    1.0056        13        13        12        12
                 lower extremity
                 M > 36.35.
1102..........  Amputation, non-    1.7115    1.5652    1.4454    1.4107        16        17        16        17
                 lower extremity
                 M < 36.35.
1201..........  Osteoarthritis M    0.9454    0.9411    0.8445    0.7724         9        11        10        10
                 > 37.65.
1202..........  Osteoarthritis M    1.1749    1.1695    1.0495    0.9599        14        14        13        12
                 > 30.75 and M <
                 37.65.
1203..........  Osteoarthritis M    1.4677    1.4609    1.3110    1.1991        13        18        15        14
                 < 30.75.
1301..........  Rheumatoid,         1.1678    0.9974    0.9062    0.8219        12        10        11        10
                 other arthritis
                 M > 36.35.
1302..........  Rheumatoid,         1.5025    1.2832    1.1659    1.0575        16        15        14        13
                 other arthritis
                 M > 26.15 and M
                 < 36.35.
1303..........  Rheumatoid,         1.9254    1.6444    1.4941    1.3551        18        18        17        16
                 other arthritis
                 M < 26.15.
1401..........  Cardiac M >         0.8869    0.7263    0.6555    0.5937         9         9         8         8
                 48.85.
1402..........  Cardiac M >         1.1928    0.9768    0.8816    0.7985        12        11        11        10
                 38.55 and M <
                 48.85.
1403..........  Cardiac M >         1.4581    1.1941    1.0777    0.9761        14        14        12        12
                 31.15 and M <
                 38.55.
1404..........  Cardiac M <         1.8587    1.5222    1.3738    1.2443        19        17        15        14
                 31.15.
1501..........  Pulmonary M >       1.0128    0.8635    0.7803    0.7474        10         9         9         9
                 49.25.
1502..........  Pulmonary M >       1.2651    1.0787    0.9747    0.9336        12        12        11        11
                 39.05 and M <
                 49.25.
1503..........  Pulmonary M >       1.5357    1.3094    1.1832    1.1333        15        14        13        13
                 29.15 and M <
                 39.05.
1504..........  Pulmonary M <       1.9057    1.6248    1.4683    1.4063        21        17        16        15
                 29.15.
1601..........  Pain syndrome M     1.0707    0.8883    0.8327    0.7639         9        10        10         9
                 > 37.15.
1602..........  Pain syndrome M     1.3889    1.1523    1.0802    0.9909        12        14        12        12
                 > 26.75 and M <
                 37.15.
1603..........  Pain syndrome M     1.7566    1.4573    1.3662    1.2533        18        17        15        15
                 < 26.75.
1701..........  Major multiple      1.1053    0.9551    0.8619    0.7769        11        12        11        10
                 trauma without
                 brain or spinal
                 cord injury M >
                 39.25.
1702..........  Major multiple      1.3905    1.2016    1.0843    0.9774        13        15        13        12
                 trauma without
                 brain or spinal
                 cord injury M >
                 31.05 and M <
                 39.25.
1703..........  Major multiple      1.6553    1.4304    1.2908    1.1635        17        16        15        14
                 trauma without
                 brain or spinal
                 cord injury M >
                 25.55 and M <
                 31.05.
1704..........  Major multiple      2.1005    1.8152    1.6380    1.4764        24        20        18        18
                 trauma without
                 brain or spinal
                 cord injury M <
                 25.55.
1801..........  Major multiple      1.1378    1.0183    0.9216    0.7648        13        12        12        10
                 trauma with
                 brain or spinal
                 cord injury M >
                 40.85.
1802..........  Major multiple      1.7508    1.5669    1.4182    1.1769        18        19        17        14
                 trauma with
                 brain or spinal
                 cord injury M >
                 23.05 and M <
                 40.85.
1803..........  Major multiple      2.7973    2.5035    2.2659    1.8804        33        28        24        22
                 trauma with
                 brain or spinal
                 cord injury M <
                 23.05.
1901..........  Guillain Barre M    1.0836    0.9288    0.8847    0.8716        14        10        11        11
                 > 35.95.
1902..........  Guillain Barre M    2.1258    1.8221    1.7355    1.7097        23        21        19        20
                 > 18.05 and M <
                 35.95.
1903..........  Guillain Barre M    3.5333    3.0287    2.8846    2.8418        56        32        31        30
                 < 18.05.
2001..........  Miscellaneous M     0.8877    0.7267    0.6691    0.6107         9         9         8         8
                 > 49.15.
2002..........  Miscellaneous M     1.1867    0.9714    0.8945    0.8164        12        11        11        10
                 > 38.75 and M <
                 49.15.
2003..........  Miscellaneous M     1.4947    1.2235    1.1266    1.0283        15        14        13        12
                 > 27.85 and M <
                 38.75.
2004..........  Miscellaneous M     1.9610    1.6051    1.4780    1.3490        20        18        17        15
                 < 27.85.
2101..........  Burns M > 0.....    2.1953    1.5624    1.5111    1.4146        24        21        17        17
5001..........  Short-stay        ........  ........  ........    0.1538  ........  ........  ........         3
                 cases, length
                 of stay is 3
                 days or fewer.
5101..........  Expired,          ........  ........  ........    0.6617  ........  ........  ........         8
                 orthopedic,
                 length of stay
                 is 13 days or
                 fewer.
5102..........  Expired,          ........  ........  ........    1.4346  ........  ........  ........        17
                 orthopedic,
                 length of stay
                 is 14 days or
                 more.
5103..........  Expired, not      ........  ........  ........    0.7653  ........  ........  ........         8
                 orthopedic,
                 length of stay
                 is 15 days or
                 fewer.
5104..........  Expired, not      ........  ........  ........    1.9685  ........  ........  ........        21
                 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 the application of the revisions for FY 2014 will affect 
particular CMG relative

[[Page 47868]]

weight values, which affect the overall distribution of payments within 
CMGs and tiers. Note that, because we are implementing the CMG relative 
weight revisions in a budget-neutral manner (as described above), total 
estimated aggregate payments to IRFs for FY 2014 will not be affected 
as a result of the 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 2013 Values Compared With FY 2014 Values)
------------------------------------------------------------------------
                                       Number of cases    Percentage of
          Percentage change               affected       cases affected
------------------------------------------------------------------------
Increased by 15% or more............                 0               0.0
Increased by between 5% and 15%.....             2,492               0.7
Changed by less than 5%.............           363,629              98.7
Decreased by between 5% and 15%.....             2,118               0.6
Decreased by 15% or more............                97               0.0
------------------------------------------------------------------------

    As Table 2 shows, almost 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 2014. The largest increase in the CMG relative 
weight values that affects a particularly large number of IRF 
discharges is a 0.8 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 ``no comorbidity'' tier. In the FY 2012 data, 19,981 IRF 
discharges (5.4 percent of all IRF discharges) were classified into 
this CMG and tier.
    The largest decrease in a CMG relative weight value affecting the 
most cases is a 2.1 percent decrease in the CMG relative weight for CMG 
0903--Other Orthopedic with a motor score between 24.15 and 34.35--in 
the no comorbidity tier. In the FY 2012 IRF claims data, this change 
affects 7,047 cases (1.9 percent of all IRF cases).
    The changes in the average length of stay values for FY 2014, 
compared with the FY 2013 average length of stay values, are small and 
do not show any particular trends in IRF length of stay patterns.
    We received 3 comments on the proposed updates to the CMG relative 
weights and average length of stay values for FY 2014, which are 
summarized below.
    Comment: Several commenters supported the use of the same 
methodology that we used in the FY 2011 notice, the FY 2012 final rule, 
and the FY 2013 notice to update the CMG relative weights and average 
length of stay values for FY 2014, using the most recent available 
data. However, one commenter expressed concern about changes to some of 
the specific CMG relative weights, indicating that some of the changes 
were not necessary and that others might affect whether or not the CMGs 
would be adequately compensating providers for treating certain types 
of patients requiring unusually high-cost treatments.
    Response: We believe that updating the relative weights using the 
most recent available data ensures that the payments per case continue 
to accurately reflect the costs of care provided in IRFs. Although we 
acknowledge the commenter's concerns with some of the specific CMG 
relative weight changes, these changes are based on IRFs' reported 
costs of care for these types of cases, and we believe that it is 
essential to recognize these reported costs to ensure that the CMG 
relative weights reflect as closely as possible the relative costs of 
treating different types of patients in IRFs. Further, we note that the 
IRF PPS high-cost outlier policy is designed to compensate IRFs for 
providing care to patients whose costs greatly exceed the average cost 
of a case in a particular CMG and tier.
    Comment: A few commenters requested that we outline the methodology 
used to calculate the average length of stay values. These same 
commenters agreed that the average length of stay values should only be 
used to determine when an IRF discharge meets the definition of a 
short-stay transfer, which results in a per diem case level adjustment, 
and are not intended to be used as clinical guidelines for patients' 
lengths of stay in an IRF.
    Response: We will post our methodology for calculating the average 
length of stay values on the IRF PPS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Research.html in conjunction with the publication of this final rule.
    We continue to support the commenters' position that the average 
length of stay values in the rule are not intended as ``targets'' or as 
clinical guidelines for determining a patient's length of stay in the 
IRF. A patient's length of stay in the IRF should be determined by the 
patient's individual care needs.
    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 2014. These updates are effective 
October 1, 2013.

V. Updates to the Facility-Level Adjustment Factors for FY 2014

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 Sec.  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 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.

[[Page 47869]]

    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 3-year moving average did not fully 
address year-to-year fluctuations, in the FY 2012 IRF PPS proposed rule 
(76 FR 24214 at 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 un-weighted 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 
facility-level 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 low-income patients.

B. Updates to the IRF Facility-Level Adjustment Factors

    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 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 have shown that significant differences 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 and 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, high LIP 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.
    Therefore, in the FY 2014 IRF PPS proposed rule, we proposed to use 
the same methodology used in the FY 2010 IRF PPS final rule (74 FR 
39762), including the 3-year moving average approach, with the addition 
of this new control variable, which equals ``1'' if the facility is a 
freestanding IRF hospital and ``0'' if it is an IRF unit of an acute 
care hospital (or a CAH). We proposed to update the adjustment factors 
using the most recent three years' worth of IRF claims data (FY 2010, 
FY 2011, and FY 2012) and the most recent available corresponding IRF 
cost report data. As we did in the FY 2010 IRF PPS final rule (74 FR 
39762), we also proposed to use the cost report data that corresponds 
with each IRF claim, when available. In the rare instances in which the 
corresponding year's cost report data are not available, we proposed to 
use the most recent available cost report data, as we also did in the 
FY 2010 IRF PPS final rule (74 FR 39762).
    To calculate the updates to the rural, LIP, and teaching status 
adjustment factors for FY 2014, we use the following steps:
    [Steps 1 and 2 are performed independently for each of three years 
of IRF claims data: FY 2010, FY 2011, and FY 2012.]
    Step 1. Calculate the average cost per case for each IRF in the IRF 
claims data.
    Step 2. Use logarithmic regression analysis on average cost per 
case to compute the coefficients for the rural, LIP, and teaching 
status adjustments. We proposed to incorporate an additional indicator 
variable to account for whether a facility is a freestanding IRF 
hospital or a unit of an acute care hospital (or a CAH).
    Step 3. Calculate a simple mean for each of the coefficients across 
the three years of data (using logarithms for the LIP and teaching 
status adjustment coefficients (because they are continuous variables), 
but not for the rural adjustment coefficient (because the rural 
variable is either zero (if not rural) or 1 (if rural)). To compute the 
LIP and teaching status adjustment factors, we convert these factors 
back out of the logarithmic form.
    Based on this methodology, we proposed to update the rural 
adjustment factor for FY 2014 from 18.4 percent to 14.9 percent. We 
proposed to update the LIP adjustment factor for FY 2014 from 0.4613 to 
0.3177 and the teaching status adjustment factor for FY 2014 from 
0.6876 to 1.0163.

C. Budget Neutrality Methodology for the Updates to the IRF Facility-
Level Adjustment Factors

    Consistent with the way that we implemented changes to the IRF 
facility-level adjustment factors (the rural, LIP, and teaching status 
adjustments factors) in the FY 2006 IRF PPS final rule (70 FR 47880 and 
70 FR 57166), which was the only year in which we updated these 
adjustment factors, we proposed to make changes to the rural, LIP, and 
teaching status adjustment factors for FY 2014 in such a way that total 
estimated aggregate payments to IRFs for FY 2014 would be the same with 
or without the proposed changes (that is, in a budget-neutral manner) 
by applying budget neutrality factors for each of these three changes 
to the standard payment amount. To calculate the budget neutrality 
factors used to update the rural, LIP, and teaching status

[[Page 47870]]

adjustment factors, we use the following steps:
    Step 1. Using the most recent available data (currently FY 2012), 
calculate the estimated total amount of IRF PPS payments that would be 
made in FY 2014 (without applying the changes to the rural, LIP, or 
teaching status adjustment factors).
    Step 2. Calculate the estimated total amount of IRF PPS payments 
that will be made in FY 2014 if the update to the rural adjustment 
factor were applied.
    Step 3. Divide the amount calculated in step 1 by the amount 
calculated in step 2 to determine the budget neutrality factor (1.0025) 
that will maintain the same total estimated aggregate payments in FY 
2014 with and without the change to the rural adjustment factor.
    Step 4. Calculate the estimated total amount of IRF PPS payments 
that will be made in FY 2014 if the update to the LIP adjustment factor 
were applied.
    Step 5. Divide the amount calculated in step 1 by the amount 
calculated in step 4 to determine the budget neutrality factor (1.0171) 
that will maintain the same total estimated aggregate payments in FY 
2014 with and without the change to the LIP adjustment factor.
    Step 6. Calculate the estimated total amount of IRF PPS payments 
that will be made in FY 2014 if the update to the teaching status 
adjustment factor were applied.
    Step 7. Divide the amount calculated in step 1 by the amount 
calculated in step 6 to determine the budget neutrality factor (0.9962) 
that will maintain the same total estimated aggregate payments in FY 
2014 with and without the change to the teaching status adjustment 
factor.
    Step 8. Apply the budget neutrality factors for the updates to the 
rural, LIP, and teaching status adjustment factors to the FY 2013 IRF 
PPS standard payment amount after the application of the budget 
neutrality factors for the wage adjustment and the CMG relative 
weights.
    In section VI.E. of this final rule, we discuss the methodology for 
calculating the standard payment conversion factor for FY 2014.
    We received 19 comments on the proposed updates to the facility-
level adjustment factors, which are summarized below.
    Comment: Several commenters expressed concerns about the financial 
impact that the reductions to the rural and LIP adjustments would have 
on individual IRFs. These commenters also expressed concerns about the 
potential effects of this policy change combined with possible state 
Medicaid expansions under the Affordable Care Act. These commenters 
suggested that we delay implementation until FY 2015, phase in the 
updates over multiple years, or implement a stop-loss policy to 
mitigate the financial impact of the changes.
    Response: Although we are mindful of the significant financial 
impacts on a small number of individual IRFs of finalizing these 
proposals, we believe that updating the facility level adjustments as 
proposed is necessary at this time to ensure that the adjustment 
factors reflect as accurately as possible the costs of providing IRF 
care across the full spectrum of IRF providers. In addition, we 
estimate that the maximum financial impact on any one facility from 
these proposed policy changes is similar to the financial impact that 
can result from annual fluctuations in the geographic wage index 
values, and we do not typically implement a delay or phase-in period to 
account for annual wage index fluctuations.
    Although we understand that providers are subject to multiple 
financial pressures in today's economic climate, the policies 
established by this final rule are focused on providing accurate 
payment for Medicare Part A services provided in an IRF setting. 
However, we note that, to the extent that Medicaid coverage is expanded 
under the Affordable Care Act provisions, we believe that this could 
increase IRFs' LIP percentages, potentially leading to higher LIP 
adjustment payments under the IRF PPS. We do not believe that such 
potential increases in spending for the LIP adjustment undercut the 
need to ensure that LIP adjustment payments are as fair and accurate as 
possible for FY 2014.
    Further, whereas the proposed updates to the facility-level 
adjustment factors would decrease payments to some IRFs, they would 
increase payments to other IRFs, by as much as 16.8 percent. By 
updating the facility-level adjustment factors with the proposed 
methodology, we ensure that the adjustment factors reflect as 
accurately as possible the costs of providing IRF care across the full 
spectrum of IRF providers where individual providers may see an 
increase or decrease. In addition, because we update the rural and LIP 
adjustments in a budget-neutral manner, decreases to these adjustments 
result in increases to the base payment rates for all IRF providers, 
partially offsetting some of the decreases in the rural and LIP 
adjustment payments for the affected providers. Thus, we believe it is 
necessary to update the adjustments at this time, using the proposed 
new enhancement to the methodology, to pay providers as accurately and 
fairly as possible.
    Comment: Several commenters did not support our proposal to include 
an indicator variable for an IRF's freestanding/hospital-based status 
in the regression model, based on their belief that such variables 
should only be included if they are used as payment adjusters. These 
commenters further suggested that CMS pursue further analysis to 
explain the fluctuations in the teaching status adjustment factor over 
time. One commenter recommended that CMS cap the IRF teaching status 
adjustment factor at the same level as the IPPS IME adjustment, the IPF 
teaching status adjustment, or some combination of these adjustments.
    Response: We appreciate the commenters' concerns and 
recommendations. However, given that our analysis showed large 
differences in cost structures between freestanding and hospital-based 
IRFs, and that a significant amount of the differences in costs between 
different types of IRFs (for example, urban/rural, teaching/non-
teaching, and high LIP percentage/low LIP percentage) can be attributed 
instead to a facility's freestanding/hospital-based status, we believe 
that we would be remiss in not accounting for this indicator variable 
in the regression analysis. Thus, we believe that the inclusion of the 
indicator variable enables us to more precisely and accurately 
calculate each of the facility-level adjustment factors.
    For several reasons, however, we do not believe that a facility's 
freestanding/hospital-based status can be used as a payment adjuster at 
this time. First, we do not know how much of the higher costs we 
observe in hospital-based IRFs can be attributed to the actual costs of 
treating patients in hospital-based settings (versus freestanding 
settings) and how much of the higher costs result from a hospital's 
decisions about allocating costs among its different components. 
Secondly, the IRF PPS has traditionally treated freestanding IRF 
hospitals and IRF units of acute care hospitals (or CAHs) the same for 
Medicare payment purposes. Thus, we do not believe it is appropriate to 
introduce a freestanding/hospital-based payment adjuster for the IRF 
PPS without substantial evidence that a change in policy is warranted 
at this time. However, we do believe that it is necessary to recognize 
the important differences in cost structures of the two types of 
facilities in order to pay IRFs as accurately and fairly as possible 
under the IRF PPS.

[[Page 47871]]

    As one commenter suggested, we have done extensive analysis to 
uncover the reasons for the fluctuations in the IRF teaching status 
adjustment factor over time. Our analysis shows that such fluctuations 
are related primarily to the fact that there are relatively few IRF 
teaching facilities (around 110 in each year), and therefore 
fluctuations in the teaching status of one or two of these IRFs will be 
evident in overall fluctuations in the teaching adjustment factor over 
time. Specifically, we found that one IRF did not report training any 
interns and residents from 2007 through 2009, then reported relatively 
large intern and resident to average daily census ratios in 2010 and 
2011, and then did not report training any interns and residents after 
2011. This one provider appears to have contributed to swings in the 
overall teaching status adjustment factor over time. However, we have 
no reason to believe that any of the teaching status information for 
this provider is incorrect, and therefore believe that including this 
data is appropriate.
    Further, our analysis of the IRF teaching adjustment trends shows 
no significant cause for concern in terms of unusually high or 
increasing Medicare payments for this adjustment over time. We found 
that the number of IRFs receiving this adjustment and the Medicare 
payments per IRF for this adjustment have remained very stable over 
time. Total Medicare spending for the IRF teaching adjustment peaked at 
$78 million (almost 9 percent of total IRF PPS payments) for 124 
facilities in FY 2006, and fell to $56 million (6 percent of total IRF 
PPS payments) for 111 facilities in FY 2012. The average Medicare 
payment to an individual IRF for the teaching status adjustment 
decreased from $773,000 in FY 2006 to $508,000 in FY 2012. The average 
number of interns and residents relative to an IRF's average daily 
census (the factor on which an IRF's teaching status adjustment is 
based) was 0.12 in FY 2006, and declined to 0.11 in FY 2012. Given the 
small magnitude of the IRF teaching status adjustment relative to total 
IRF expenditures, the lack of growth in spending for this adjustment, 
and the need to ensure that IRFs are adequately compensated for 
training a new generation of physicians in the rehabilitation of 
Medicare beneficiaries in the IRF setting, we believe that continued 
funding of this adjustment is beneficial to the Medicare program and 
Medicare beneficiaries.
    As one commenter suggested, we explored the possibility of capping 
the IRF teaching status adjustment at the level of either the IPPS 
capital or operating IME adjustments. However, either of these options 
would decrease the IRF teaching status adjustment factor to such an 
extremely low level (0.03 or 0.04 compared with the current 0.6876) 
that the additional payment per facility would not be enough to 
adequately compensate or encourage the training of a new generation of 
physicians in the rehabilitation of Medicare beneficiaries in the IRF 
setting. While capping the adjustment at the amount currently reflected 
in the inpatient psychiatric facility teaching status adjustment 
(0.5150) would seem to provide greater compensation than capping at 
either the IPPS capital or operating IME adjustment levels, at this 
time there is not enough evidence to believe that teaching costs or 
compensation should be the same for these settings. In fact, inpatient 
psychiatric facilities are not similar to IRFs in the types of patients 
they treat or the types of services they provide, so we cannot find any 
logical justification for capping the IRF teaching status adjustment 
factor at the teaching status adjustment factor used in the IPF PPS.
    Comment: One commenter requested clarification on the 3-year moving 
average approach, including how the approach is used and whether or not 
the IRF area wage index adjustment is included as one of the 
adjustments that we estimate using this approach.
    Response: The 3-year moving average approach was implemented to 
decrease year-to-year fluctuations in the facility-level adjustment 
factors. The IRF area wage index adjustment is not included in the 
facility-level adjustments that we estimate using a 3-year moving 
average approach.
    Comment: Several commenters requested more information about the 
methodology used to compute the IRF facility-level adjustments, and the 
data to enable providers to replicate our analysis. In addition, one 
commenter requested that we provide the estimates that were averaged 
over the 3-year period to obtain the facility-level adjustment factors, 
and that we run our regression analysis on three years' worth of pooled 
discharge data instead of averaging each year's regression coefficients 
over three years.
    Response: Our regression analysis for computing the IRF facility-
level adjustments was posted on the IRF PPS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Downloads/Facility-Payment-Adjustment_KJS.pdf in 
2011. As we discussed in the proposed rule, the only change to this 
regression analysis would be the addition of an indicator variable for 
an IRF's freestanding/hospital-based status, which would equal ``1'' if 
the IRF was a freestanding facility and ``0'' if the IRF was a 
hospital-based facility. The data that we used to analyze the 
adjustments is available from the IRF rate-setting files on the IRF PPS 
Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Data-Files.html. The annual IRF facility-
level adjustment factor estimates are presented below in Table 3. For 
this final rule, we averaged the estimates for FY 2010, FY 2011, and FY 
2012.

                                             Table 3--Annual IRF Facility-Level Adjustment Factor Estimates
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    FY 05      FY 06      FY 07      FY 08      FY 09      FY 10      FY 11      FY 12
--------------------------------------------------------------------------------------------------------------------------------------------------------
LIP.............................................................     0.4172     0.5107     0.3865     0.4898     0.4866     0.1594     0.2702     0.5538
Teaching........................................................     1.5155     0.6732     1.0451     0.4045     1.5678     0.3597     0.6326     2.6930
Rural...........................................................     0.1860     0.1856     0.1765     0.1898     0.2123     0.1608     0.1516     0.1356
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Additionally, we investigated another commenter's suggestion that 
we reduce the annual fluctuation in the adjustment factors by 
performing the regression analysis on three years' worth of pooled 
discharge data instead of averaging each year's regression coefficients 
over three years. We tried the approach that the commenter suggested, 
and it did not materially change our estimates.
    Final Decision: After careful consideration of the public comments, 
we are finalizing our proposal to add an indicator variable for a 
facility's freestanding/hospital-based status to the payment 
regression, and, with that 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

[[Page 47872]]

facility-level adjustment factors, including the 3-year moving average 
approach. This results in 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. These updates are effective October 1, 2013.

VI. FY 2014 IRF PPS Federal Prospective Payment Rates

A. Market Basket Increase Factor, Productivity Adjustment, and Other 
Adjustment for FY 2014

    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)(iii) of the 
Act required the application of a 0.3 percentage point reduction to the 
market basket increase factor for FY 2014. 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 2014 IRF 
PPS proposed rule, we proposed to update the IRF PPS payments for FY 
2014 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 0.3 percentage 
point reduction as required by sections 1886(j)(3)(C)(ii)(II) and 
1886(j)(3)(D)(iii) 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 2014 market basket increase factor and labor-related 
share. In that final rule, we rebased the RPL market basket from a 2002 
base year to a 2008 base year. Based on IHS Global Insight's second 
quarter 2013 forecast, the most recent estimate of the 2008-based RPL 
market basket increase factor for FY 2014 is 2.6 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 2014 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 10-year 
period ending with the applicable FY cost reporting period, or other 
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 2014 (the 10-year 
moving average of MFP for the period ending FY 2014) 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 2013 forecast.
    Thus, in accordance with section 1886(j)(3)(C) of the Act, we base 
the FY 2014 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 2.6 percent based on IGI's second quarter 2013 forecast). We then 
reduce this percentage increase by the current estimate of the MFP 
adjustment for FY 2014 of 0.5 percentage point (the 10-year moving 
average of MFP for the period ending FY 2014 based on IGI's second 
quarter 2013 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 0.3 
percentage point, as required by sections 1886(j)(3)(C)(ii)(II) and 
1886(j)(3)(D)(iii) of the Act. Therefore, the current estimate of the 
FY 2014 IRF update is 1.8 percent (2.6 percent market basket update, 
less 0.5 percentage point MFP adjustment, less 0.3 percentage point 
legislative adjustment).

B. Secretary's Final Recommendation

    For FY 2014, the Medicare Payment Advisory Commission (MedPAC) 
recommends that a 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 is proposing to update IRF PPS 
payment rates for FY 2014 by an adjusted market basket increase factor 
of 1.8 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 2014.
    We received 5 comments on the proposed market basket increase 
factor, MFP adjustment, other adjustments for FY 2014, and the 
Secretary's proposed recommendation, which are summarized below.
    Comment: One commenter supported our proposal to update the IRF PPS 
payment rates for FY 2014 by the adjusted market basket estimate. 
Another commenter noted that MedPAC recommended a 0 percent update for 
IRFs for FY 2014, but recognized that CMS does not have the statutory 
authority to apply a different update factor to IRF PPS payment rates 
than is specified in statute. Several other commenters expressed 
concerns about the applicability of the MFP adjustment to the IRF 
setting, indicating that the unique services provided in IRFs do not 
lend themselves to the efficiency gains that are implied by the 
application of a MFP adjustment. These commenters recommended that we 
continue to monitor the impact of the MFP adjustment on IRFs and 
communicate our findings to the Congress.
    Response: We appreciate the commenters' concerns. As these 
commenters noted, we are bound in these matters by the statute. 
However, we will continue to monitor the effects of the annual updates 
to the IRF PPS payment rates, and will communicate our findings as 
appropriate.
    Comment: One commenter expressed concern about our use of some of 
the underlying cost categories, weights, and price proxies from the 
acute care hospital data, when the necessary RPL-specific data are not 
available, and suggested that we consider collecting additional 
information on the IRF cost reports prior to our next rebasing of the 
RPL market basket, so that we will not have to use the IPPS data for 
this purpose anymore.
    Response: As stated in the FY 2012 IRF 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, which includes a new worksheet (Worksheet S-
3, part V) which identifies the contract labor costs and benefit costs 
for the hospital complex and is applicable to sub-providers and units. 
Prior to any future rebasings, we plan to review any contract labor and 
benefit cost data submitted by RPL providers to determine the 
appropriateness of using this

[[Page 47873]]

information in the derivation of updated market basket cost weights.
    Final Decision: After careful consideration of the public comments, 
we are finalizing our decision to update IRF PPS payment rates for FY 
2014 based on the most recent estimate of the FY 2008-based RPL market 
basket (currently estimated to be 2.6 percent based on IGI's second 
quarter 2013 forecast). We then reduce this percentage increase by the 
current estimate of the MFP adjustment for FY 2014 of 0.5 percentage 
point (the 10-year moving average of MFP for the period ending FY 2014 
based on IGI's second quarter 2013 forecast), which was calculated as 
described in the FY 2012 IRF PPS final rule (76 FR 47836, 47859). 
Following application of the MFP adjustment, we further reduce the 
applicable percentage increase by 0.3 percentage point, as required by 
sections 1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(iii) of the Act. 
Therefore, the FY 2014 IRF update is 1.8 percent (2.6 percent market 
basket update, less 0.5 percentage point MFP adjustment, less 0.3 
percentage point legislative adjustment).

C. Labor-Related Share for FY 2014

    The labor-related share for FY 2014 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 2013 
forecast of the 2008-based RPL market basket, the IRF labor-related 
share for FY 2014 is the sum of the FY 2014 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 2014. As shown in Table 4, the FY 2014 labor-related share 
is 69.494 percent.

    Table 4--FY 2014 IRF RPL Labor-Related Share Relative Importance
------------------------------------------------------------------------
                                                        FY 2014 Relative
                                                       importance labor-
                                                         related share
------------------------------------------------------------------------
Wages and Salaries...................................             48.394
Employee Benefits....................................             12.963
Professional Fees: Labor-Related.....................              2.065
Administrative and Business Support Services.........              0.415
All Other: Labor-Related Services....................              2.080
Subtotal.............................................             65.917
Labor-Related Portion of Capital Costs (.46).........              3.577
                                                      ------------------
    Total Labor-Related Share........................             69.494
------------------------------------------------------------------------
Source: IHS Global Insight, Inc. 2nd quarter 2013 forecast; Historical
  Data through 1st quarter, 2013.

    We received 1 comment on the proposed update to the IRF labor-
related share, which is summarized below.
    Comment: One commenter expressed general concern with the proposed 
decrease in the IRF labor-related share from FY 2013 to FY 2014.
    Response: We believe that the methodology for determining the 
labor-related share is technically appropriate, as it estimates the 
proportion of IRF costs that are labor-intensive and vary with, or are 
influenced by, the local labor market. The methodology for determining 
the proposed IRF labor-related share for FY 2014 is the same general 
method that was used to derive the FY 2013 IRF PPS labor-related share. 
That is, the labor-related share is equal to the sum of the relative 
importance of each labor-related cost category in the RPL market 
basket. We calculate the labor-related relative importance for FY 2014 
in four steps. First, we compute the FY 2014 price index level for the 
total market basket and each cost category of the market basket. 
Second, we calculate a ratio for each cost category by dividing the FY 
2014 price index level for that cost category by the total market 
basket price index level. Third, we determine the FY 2014 relative 
importance for each cost category by multiplying this ratio by the base 
year (FY 2008) weight. Finally, we add the FY 2014 relative importance 
for each of the labor-related cost categories. The purpose of the 
relative importance is to capture the different rates of price change 
for each of the market basket cost categories between the base year (FY 
2008 for IRFs) and FY 2014. Therefore, to the extent an individual 
price proxy for a specific cost category is projected to grow faster 
from FY 2008 to FY 2014 relative to the proxies for other cost 
categories, the relative importance for that category in FY 2014 will 
be higher than the base year cost weight in FY 2008.
    Final Decision: After consideration of the public comments 
received, we are finalizing our decision to update IRF labor-related 
share for FY 2014 using the methodology described in the FY 2012 IRF 
PPS final rule (76 FR 47836, 47860 through 47863) and IGI's second 
quarter 2013 forecast of the 2008-based RPL market basket. The FY 2014 
labor-related share is 69.494 percent.

D. 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 2014, we are maintaining the policies and methodologies 
described in the FY 2012 IRF PPS final rule (76 FR 47836, at 47863 
through 47865) relating 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 2013 pre-reclassification 
and pre-floor hospital wage index data. In accordance with section 
1886(d)(3)(E) of the Act, the FY 2013 pre-reclassification and pre-
floor hospital wage index is based on data submitted for hospital cost 
reporting periods beginning on or after October 1, 2008, and before 
October 1, 2009 (that is, FY 2009 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

[[Page 47874]]

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 in which to 
base the calculation for the FY 2014 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 2013) pre-floor, pre-reclassified hospital 
wage index data to derive the FY 2014 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 pre-floor, 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. This 
bulletin contains a number of significant changes. For example, there 
are new CBSAs, counties that change from urban to rural, counties that 
change from rural to urban, and existing CBSAs that are being split 
apart. The OMB Bulletin with these changes was not published in time 
for incorporation into the FY 2014 pre-floor, pre-reclassified hospital 
wage index, since the proposed rule was already in the advanced stages 
of development at that time and the changes and their ramifications 
would need to be extensively reviewed and verified prior to their 
inclusion in the rule. 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 Census-based 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 2014 labor-related share based on the 
FY 2008-based RPL market basket (69.494 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/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/. Table 
A is for 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 Sec.  
412.624(e)(1), as described in the steps below. We use the listed steps 
to ensure that the FY 2014 IRF standard payment conversion factor 
reflects the update to the wage indexes (based on the FY 2009 hospital 
cost report data) and the labor-related share in a budget-neutral 
manner:
    Step 1. Determine the total amount of the estimated FY 2013 IRF PPS 
rates, using the FY 2013 standard payment conversion factor and the 
labor-related share and the wage indexes from FY 2013 (as published in 
the July 30, 2012 FY 2013 IRF PPS notice (77 FR 44618)).
    Step 2. Calculate the total amount of estimated IRF PPS payments 
using the FY 2013 standard payment conversion factor and the FY 2014 
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 2014 budget-
neutral wage adjustment factor of 1.0010.
    Step 4. Apply the FY 2014 budget-neutral wage adjustment factor 
from step 3 to the FY 2013 IRF PPS standard payment conversion factor 
after the application of the adjusted market basket update to determine 
the FY 2014 standard payment conversion factor.
    We received 3 comments on the proposed FY 2014 IRF PPS wage index, 
which are summarized below.
    Comment: Several 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. The commenters 
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: 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 Public Law 
105-33 (BBA). Furthermore, as we do not have an IRF-specific 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 final 
rule (70 FR 47880, 47926 through 47928).
    Finally, although some commenters recommended that we adopt the 
IPPS wage index policies such as reclassification and floor policies, 
we note that the Medicare Payment Advisory Commission (MedPAC's) June 
2007 report to the Congress, titled ``Report to Congress: Promoting 
Greater Efficiency in Medicare,'' 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 that adopting the IPPS wage 
index policies, such as reclassification or floor, would not be prudent 
at this time because MedPAC suggests that the reclassification and 
exception policies in the IPPS wage index alter the wage index values 
for one-third of IPPS hospitals. As one commenter noted, we have 
research currently under way to examine alternatives to the wage index 
methodology, including the issues the commenters mentioned about 
ensuring that the wage index minimizes fluctuations, matches the costs 
of labor in the market, and 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-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Reform.html.
    We enlisted the help of Acumen, LLC to assist us in meeting the 
requirements of section 106(b)(2), Division B, Title I of the Tax 
Relief and Health Care Act of 2006 (Pub. L. 109-432, enacted on 
December 20, 2006) (TRCA). Acumen, LLC conducted a study of both the 
current methodology used to construct the Medicare wage index and the

[[Page 47875]]

recommendations reported to Congress by MedPAC. Parts 1 and 2 of 
Acumen's final report, which analyzes the strengths and weaknesses of 
the data sources used to construct the CMS and MedPAC indexes, is 
available online at http://www.acumenllc.com/reports/cms. The report 
took MedPAC's 2009 recommendations on the Medicare wage index 
classification system into account, and includes a proposal to revise 
the IPPS wage index system. MedPAC's recommendations were noted in the 
FY 2009 IPPS final rule (75 FR 48434 at 48563). The proposal considered 
each of the following:
     The use of Bureau of Labor Statistics data or other data 
or methodologies to calculate relative wages for each geographic area.
     Minimizing variations in wage index adjustments between 
and within MSAs and statewide rural areas.
     Methods to minimize the volatility of wage index 
adjustments while maintaining the principle of budget neutrality.
     The effect that the implementation of the proposal would 
have on health care providers in each region of the county.
     Issues relating to occupational mix, such as staffing 
practices and any evidence on quality of care and patient safety, 
including any recommendations for alternative calculations to the 
occupational mix.
     The provision of a transition period.
    We plan to monitor the efforts to develop an alternative wage index 
system for the IPPS closely and determine the impact or influence they 
may have on the IRF PPS wage index.
    Final Decision: After consideration of the public comments 
received, we have decided to continue to use the policies and 
methodologies described in the FY 2008 IRF PPS final rule relating to 
the wage index methodology for areas without wage data. For FY 2014, we 
are maintaining the policies and methodologies described in the FY 2012 
IRF PPS final rule (76 FR 47836, at 47836 through 47865) relating to 
the labor market area definitions and the wage index methodology for 
areas with wage data. Therefore, this final rule continues to use the 
Core-Based Statistical Area (CBSA) labor market area definitions and 
the pre-reclassification and pre-floor hospital wage index data based 
on 2009 cost report data. However, we will continue to monitor the IPPS 
wage index to identify any policy changes that may be appropriate for 
IRFs.
    We discuss the calculation of the standard payment conversion 
factor for FY 2014 in section VI.E. of this final rule.

E. Description of the IRF Standard Conversion Factor and Payment Rates 
for FY 2014

    To calculate the standard payment conversion factor for FY 2014, as 
illustrated in Table 5, we begin by applying the adjusted market basket 
increase factor for FY 2014 that was adjusted in accordance with 
sections 1886(j)(3)(C) and (D) of the Act, to the standard payment 
conversion factor for FY 2013 ($14,343). Applying the 1.8 percent 
adjusted market basket increase factor for FY 2014 to the revised 
standard payment conversion factor for FY 2013 of $14,343 yields a 
standard payment amount of $14,601. Then, we apply the budget 
neutrality factor for the FY 2014 wage index and labor-related share of 
1.0010, which results in a standard payment amount of $14,616. We next 
apply the budget neutrality factors for the revised CMG relative 
weights of 1.0000, which results in a standard payment conversion 
factor of $14,616 for FY 2014.
    We then apply the budget neutrality factors for the facility 
adjustments. Applying the budget neutrality factor for the revised 
rural adjustment of 1.0025 results in a standard payment conversion 
factor of $14,652. We then apply the budget neutrality factor for the 
revised LIP adjustment of 1.0171 resulting in a standard payment 
conversion factor of $14,903. Lastly, we apply the budget neutrality 
factor for the revised teaching adjustment of 0.9962 which results in a 
final standard payment conversion factor for FY 2014 of $14,846.

     Table 5--Calculations To Determine the FY 2014 Standard Payment
                            Conversion Factor
------------------------------------------------------------------------
 
------------------------------------------------------------------------
              Explanation for adjustment                  Calculations
------------------------------------------------------------------------
Standard Payment Conversion Factor for FY 2013.......            $14,343
Market Basket Increase Factor for FY 2014 (2.6         x           1.018
 percent), reduced by 0.3 percentage point in
 accordance with sections 1886(j)(3)(C) and (D) of
 the Act and a 0.5 percentage point reduction for the
 productivity adjustment as required by section
 1886(j)(3)(C)(ii)(I) of the Act.....................
Budget Neutrality Factor for the Wage Index and Labor- x          1.0010
 Related Share.......................................
Budget Neutrality Factor for the Revisions to the CMG  x          1.0000
 Relative Weights....................................
Budget Neutrality Factor for the Update to the Rural   x          1.0025
 Adjustment Factor...................................
Budget Neutrality Factor for the Update to the LIP     x          1.0171
 Adjustment Factor...................................
Budget Neutrality Factor for the Update to the         x          0.9962
 Teaching Status Adjustment Factor...................
FY 2014 Standard Payment Conversion Factor...........  =         $14,846
------------------------------------------------------------------------

    After the application of the CMG relative weights described in 
Section IV of this final rule, to the FY 2014 standard payment 
conversion factor ($14,846), the resulting unadjusted IRF prospective 
payment rates for FY 2014 are shown in Table 6.

                                         Table 6--FY 2014 Payment Rates
----------------------------------------------------------------------------------------------------------------
                                            Payment rate      Payment rate      Payment rate     Payment rate no
                   CMG                         Tier 1            Tier 2            Tier 3          comorbidity
----------------------------------------------------------------------------------------------------------------
0101....................................        $11,851.56        $10,616.37         $9,707.80         $9,262.42
0102....................................         14,713.87         13,180.28         12,051.98         11,498.23
0103....................................         17,233.24         15,436.87         14,115.58         13,466.81
0104....................................         18,129.94         16,240.04         14,848.97         14,167.54
0105....................................         21,192.67         18,983.58         17,357.94         16,560.71
0106....................................         24,176.71         21,657.34         19,803.08         18,893.02
0107....................................         27,294.37         24,448.39         22,356.59         21,329.25
0108....................................         34,378.88         30,795.06         28,158.41         26,865.32

[[Page 47876]]

 
0109....................................         31,161.75         27,913.45         25,523.24         24,351.89
0110....................................         40,651.32         36,412.78         33,295.12         31,767.47
0201....................................         12,250.92         10,322.42          9,177.80          8,546.84
0202....................................         15,661.05         13,196.61         11,734.28         10,926.66
0203....................................         18,587.19         15,662.53         13,925.55         12,967.98
0204....................................         19,414.11         16,360.29         14,546.11         13,545.49
0205....................................         23,443.32         19,755.57         17,564.30         16,355.84
0206....................................         28,908.13         24,360.80         21,658.83         20,168.29
0207....................................         38,253.69         32,235.12         28,660.20         26,688.65
0301....................................         16,306.85         14,033.92         12,573.08         11,627.39
0302....................................         20,420.67         17,574.69         15,745.67         14,560.96
0303....................................         24,078.73         20,722.05         18,566.41         17,169.40
0304....................................         32,352.40         27,843.67         24,945.73         23,069.20
0401....................................         16,838.33         13,995.32         13,031.82         11,652.63
0402....................................         20,975.91         17,435.14         16,235.59         14,516.42
0403....................................         34,375.91         28,572.61         26,605.52         23,789.23
0404....................................         63,147.46         52,488.03         48,874.52         43,700.69
0405....................................         51,949.12         43,181.08         40,207.42         35,951.07
0501....................................         12,446.89          9,779.06          9,216.40          8,392.44
0502....................................         16,464.21         12,933.84         12,190.05         11,100.35
0503....................................         21,280.26         16,718.08         15,756.06         14,347.17
0504....................................         24,592.40         19,320.58         18,208.62         16,580.01
0505....................................         29,258.50         22,986.06         21,663.28         19,725.88
0506....................................         40,853.22         32,095.57         30,248.73         27,543.78
0601....................................         14,318.97         11,624.42         10,729.20          9,725.61
0602....................................         19,261.20         15,637.29         14,431.80         13,080.81
0603....................................         24,092.09         19,558.12         18,051.25         16,361.78
0604....................................         32,190.58         26,133.41         24,118.81         21,862.22
0701....................................         13,909.22         11,869.38         11,354.22         10,310.55
0702....................................         18,011.17         15,370.06         14,703.48         13,351.01
0703....................................         21,884.49         18,674.78         17,864.19         16,222.22
0704....................................         27,785.77         23,710.55         22,681.72         20,597.34
0801....................................         10,447.13          9,194.13          8,413.23          7,699.14
0802....................................         13,739.97         12,092.07         11,066.21         10,126.46
0803....................................         18,689.63         16,446.40         15,050.87         13,772.63
0804....................................         16,536.96         14,553.53         13,318.35         12,187.08
0805....................................         20,419.19         17,969.60         16,444.91         15,047.91
0806....................................         24,767.58         21,796.90         19,945.60         18,251.67
0901....................................         13,376.25         11,063.24         10,230.38          9,265.39
0902....................................         17,935.45         14,834.12         13,719.19         12,424.62
0903....................................         22,387.77         18,515.93         17,123.38         15,508.13
0904....................................         29,200.60         24,151.47         22,335.81         20,229.16
1001....................................         15,255.75         13,873.59         11,910.95         11,011.28
1002....................................         19,414.11         17,654.86         15,157.77         14,013.14
1003....................................         28,744.83         26,140.84         22,442.70         20,747.29
1101....................................         18,110.64         16,563.68         15,294.35         14,929.14
1102....................................         25,408.93         23,236.96         21,458.41         20,943.25
1201....................................         14,035.41         13,971.57         12,537.45         11,467.05
1202....................................         17,442.57         17,362.40         15,580.88         14,250.68
1203....................................         21,789.47         21,688.52         19,463.11         17,801.84
1301....................................         17,337.16         14,807.40         13,453.45         12,201.93
1302....................................         22,306.12         19,050.39         17,308.95         15,699.65
1303....................................         28,584.49         24,412.76         22,181.41         20,117.81
1401....................................         13,166.92         10,782.65          9,731.55          8,814.07
1402....................................         17,708.31         14,501.57         13,088.23         11,854.53
1403....................................         21,646.95         17,727.61         15,999.53         14,491.18
1404....................................         27,594.26         22,598.58         20,395.43         18,472.88
1501....................................         15,036.03         12,819.52         11,584.33         11,095.90
1502....................................         18,781.67         16,014.38         14,470.40         13,860.23
1503....................................         22,799.00         19,439.35         17,565.79         16,824.97
1504....................................         28,292.02         24,121.78         21,798.38         20,877.93
1601....................................         15,895.61         13,187.70         12,362.26         11,340.86
1602....................................         20,619.61         17,107.05         16,036.65         14,710.90
1603....................................         26,078.48         21,635.08         20,282.61         18,606.49
1701....................................         16,409.28         14,179.41         12,795.77         11,533.86
1702....................................         20,643.36         17,838.95         16,097.52         14,510.48
1703....................................         24,574.58         21,235.72         19,163.22         17,273.32
1704....................................         31,184.02         26,948.46         24,317.75         21,918.63
1801....................................         16,891.78         15,117.68         13,682.07         11,354.22
1802....................................         25,992.38         23,262.20         21,054.60         17,472.26
1803....................................         41,528.72         37,166.96         33,639.55         27,916.42
1901....................................         16,087.13         13,788.96         13,134.26         12,939.77

[[Page 47877]]

 
1902....................................         31,559.63         27,050.90         25,765.23         25,382.21
1903....................................         52,455.37         44,964.08         42,824.77         42,189.36
2001....................................         13,178.79         10,788.59          9,933.46          9,066.45
2002....................................         17,617.75         14,421.40         13,279.75         12,120.27
2003....................................         22,190.32         18,164.08         16,725.50         15,266.14
2004....................................         29,113.01         23,829.31         21,942.39         20,027.25
2101....................................         32,591.42         23,195.39         22,433.79         21,001.15
5001....................................  ................  ................  ................          2,283.31
5101....................................  ................  ................  ................          9,823.60
5102....................................  ................  ................  ................         21,298.07
5103....................................  ................  ................  ................         11,361.64
5104....................................  ................  ................  ................         29,224.35
----------------------------------------------------------------------------------------------------------------

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

    Table 7 illustrates the methodology for adjusting the federal 
prospective payments (as described in sections VI.A. through VI.D. 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 0.8472, and a rural 
adjustment of 14.9 percent. Facility B, an urban teaching hospital, 
has a DSH percentage of 15 percent (which would result in a LIP 
adjustment of 1.0454 percent), a wage index of 0.8862, and a 
teaching status adjustment of 0.0784.

    To calculate each IRF's labor and non-labor portion of the Federal 
prospective payment, we begin by taking the unadjusted Federal 
prospective payment rate for CMG 0110 (without comorbidities) from 
Table 6. Then, we multiply the labor-related share for FY 2014 (69.494 
percent) described in section VI.C. 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://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/. 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 wage-adjusted and rural-adjusted 
amount (if applicable). Finally, we add the additional teaching status 
payments (if applicable) to the wage, rural, and LIP-adjusted federal 
prospective payment rates. Table 7 illustrates the components of the 
adjusted payment calculation.

    Table 7--Example of Computing the IRF FY 2014 Federal Prospective
                                 Payment
------------------------------------------------------------------------
 
---------------------------------------------------------
      Steps                          Rural facility A
                                    (Spencer Co., IN)
                    Urban facility B
                      (Harrison Co.,
                           IN)
------------------------------------------------------------------------
1................  Unadjusted              $31,767.47         $31,767.47
                    Federal
                    Prospective
                    Payment.
2................  Labor Share....  x         0.69494  x         0.69494
3................  Labor Portion    =      $22,076.49  =      $22,076.49
                    of Federal
                    Payment.
4................  CBSA Based Wage  x          0.8472  x          0.8862
                    Index (shown
                    in the
                    Addendum,
                    Tables 1 and
                    2).
5................  Wage-Adjusted    =      $18,703.20  =      $19,564.19
                    Amount.
6................  Non-labor        +       $9,690.98  +       $9,690.98
                    Amount.
7................  Wage-Adjusted    =      $28,394.18  =      $29,255.17
                    Federal
                    Payment.
8................  Rural            x          1.1493  x           1.000
                    Adjustment.
9................  Wage- and Rural- =      $32,633.43  =      $29,255.17
                    Adjusted
                    Federal
                    Payment.
10...............  LIP Adjustment.  x          1.0156  x          1.0454
11...............  FY 2014 Wage-,   =      $33,142.51  =      $30,583.35
                    Rural- and LIP-
                    Adjusted
                    Federal
                    Prospective
                    Payment Rate.
12...............  FY 2014 Wage-           $32,633.43         $29,255.17
                    and Rural-
                    Adjusted
                    Federal
                    Prospective
                    Payment.
13...............  Teaching Status  x               0  x          0.0784
                    Adjustment.
14...............  Teaching Status  =           $0.00  =       $2,293.61
                    Adjustment
                    Amount.
15...............  FY 2014 Wage-,   +      $33,142.51  +      $30,583.35
                    Rural-, and
                    LIP-Adjusted
                    Federal
                    Prospective
                    Payment Rate.
16...............  Total FY 2014    =      $33,142.51  =      $32,876.96
                    Adjusted
                    Federal
                    Prospective
                    Payment.
------------------------------------------------------------------------

    Thus, the adjusted payment for Facility A would be $33,142.51, and 
the adjusted payment for Facility B would be $32,876.96.
    We did not receive any comments specifically on the FY 2014 IRF PPS 
Federal prospective payment rates.

[[Page 47878]]

VII. Update to Payments for High-Cost Outliers Under the IRF PPS

A. Update to the Outlier Threshold Amount for FY 2014

    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 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 2012 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, 
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 2014, we proposed 
to use FY 2012 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 2013. Based on an analysis of this updated data, we 
estimate that IRF outlier payments as a percentage of total estimated 
payments are approximately 2.5 percent in FY 2014. This estimated 
percentage changed more than usual between the proposed rule and the 
final rule due to the use of updated data for the final rule (from 2.8 
percent in the proposed rule to 2.5 percent in the final rule). Our 
analysis indicates that this change was due to a larger-than-usual 
change in individual IRFs' CCRs between the proposed rule and the final 
rule. This may be the result of outlier reconciliation policies that we 
recently implemented for the IRF PPS that result in more current CCRs 
being used to calculate the outlier payments. Based on our updated 
estimates, then, we update the outlier threshold amount to $9,272 to 
maintain estimated outlier payments at approximately 3 percent of total 
estimated aggregate IRF payments for FY 2014.
    We received 4 comments on the update to the outlier threshold 
amount for FY 2014, which are summarized below.
    Comment: Several commenters expressed support for the proposed 
update to the outlier threshold amount to maintain estimated IRF 
outlier payments for FY 2014 at 3 percent of total IRF PPS payments. 
However, several other 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 evaluate the 
IRF PPS outlier policy to ensure that it is working as intended, adopt 
similar changes in the IRF PPS outlier calculation that are proposed 
for the FY 2014 IPPS outlier calculation, and 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. One commenter also suggested that we lower the 
outlier pool from 3 percent to 1.5 or 2 percent, and add the money back 
into the IRF PPS base payment amount.
    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. At this time, we do 
not have any indications to suggest that the outlier pool would be 
better set at 1.5 or 2 percent than at 3 percent.
    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 total IRF PPS 
payments. We 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 do not make retrospective 
adjustments. 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.
    We also note that the IPPS outlier payments are not calculated 
using the same methodology as the IRF PPS outlier calculations, so 
recently implemented and proposed changes to the IPPS methodology for 
calculating outlier payments would not be applicable for the IRF PPS 
unless we were to change our entire methodology for calculating IRF 
outlier payments to mirror the IPPS methodology, which we are not 
considering at this time.
    Final Decision: Having carefully considered the public comments 
received, we are reducing the outlier threshold amount to $9,272 to 
maintain estimated outlier payments at 3 percent of total estimated 
aggregate IRF payments for FY 2014. This update is effective October 1, 
2013. 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

[[Page 47879]]

rural CCRs for IRFs, as well as the national CCR ceiling for FY 2014, 
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 2014, as discussed below.
     Other IRFs for which accurate data to calculate an overall 
CCR are not available.
    Specifically, for FY 2014, we estimate a national average CCR of 
0.643 for rural IRFs, which we calculate by taking an average of the 
CCRs for all rural IRFs using their most recently submitted cost report 
data. Similarly, we estimate a national average CCR of 0.516 for urban 
IRFs, which we calculate 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 
2011). This includes all IRFs whose cost reporting periods begin on or 
after October 1, 2010, and before October 1, 2011. If, for any IRF, the 
FY 2011 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 
2010) 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 is set at 1.57 for FY 2014. This means that, 
if an individual IRF's CCR exceeds this ceiling of 1.57 for FY 2014, we 
will replace the IRF's CCR with the appropriate national average CCR 
(either rural or urban, depending on the geographic location of the 
IRF). We estimate 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: We did not receive any comments on the IRF CCR 
ceiling or urban/rural averages. Therefore, we are finalizing the 
national average urban CCR at 0.516, the national average rural CCR at 
0.643, and the national CCR ceiling at 1.57 percent for FY 2014. These 
updates are effective October 1, 2013.

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 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 Sec.  
412.22(c), a hospital or unit must meet the general criteria set forth 
in Sec.  412.22 and in the regulations at Sec.  412.23(b), Sec.  
412.25, and Sec.  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 12-month 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 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

[[Page 47880]]

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 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 Sec.  
412.23(b)(2), we did propose to amend these requirements in 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 a 
``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 Sec.  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 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 Sec.  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 Sec.  412.23(b)(2)(i) 
[now located at Sec.  412.29(b)(1) and Sec.  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 Sec.  
412.29(b), the existing regulation allows for 40 percent of reasonable 
and

[[Page 47881]]

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.

B. Changes to the ICD-9-CM Codes That Are Used To Determine Presumptive 
Compliance

    The presumptive compliance method is one of two ways that 
Medicare's contractors may evaluate an IRF's compliance with the 60 
percent rule (the other method is called the medical review method). 
IRFs may only be evaluated using the presumptive compliance method if 
their Medicare Fee-for-Service and Medicare Advantage patient 
populations make up over half of their total patient population, so 
that the Medicare populations can be presumed to be representative of 
the IRF's total patient population. If an IRF is eligible to have its 
compliance under the 60 percent rule measured using the presumptive 
compliance method, under the rule, it is given the option of whether 
the Medicare contractor will review all of the IRF's discharges from 
that period, or all admissions from that period. All of its IRF-PAI 
assessments in the chosen category from the most recently completed 12 
month compliance review period are then examined (with the use of a 
computer program) to determine whether they contain any of the ICD-9-CM 
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). Each selected assessment is categorized 
as either meeting or not meeting the criteria for the medical 
conditions that may be counted towards the IRF's 60 percent rule 
compliance calculation based on coded information about the primary 
reason the patient was admitted to the IRF (the impairment group) and 
the ICD-9-CM 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 the comorbidities listed on the 
assessment. An impairment group code is not an ICD-9-CM 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. Those 
ICD-9-CM diagnosis codes that appear on the patient's IRF-PAI 
assessment as either the etiologic diagnosis or comorbid conditions 
that are also listed in ``ICD-9-CM Codes That Meet Presumptive 
Compliance Criteria'' are deemed to demonstrate that the patient meets 
the criteria for the medical conditions that may be counted toward the 
IRF's compliance percentage under the presumptive compliance method of 
calculating the compliance percentage. The current presumptive 
compliance list 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-Service-Payment/InpatientRehabFacPPS/Criteria.html. The ICD-9-CM Codes That Meet 
Presumptive Compliance Criteria that takes what we are finalizing in 
this rule into account can be downloaded from the Medicare IRF PPS Web 
site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Data-Files.html. We will build our ICD-10-CM 
version of the presumptive methodology list off of this document.
    The underlying premise of the presumptive 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 for treatment of one or more of the 
conditions specified at Sec.  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 
inpatient rehabilitation facilities and cannot be appropriately 
performed in another care setting.
    Recently, we began a close examination of the list of ICD-9-CM 
codes that are currently deemed to meet the criteria for the medical 
conditions that may be counted toward an IRF's compliance with the 60 
percent rule under the presumptive compliance method to begin the 
process of converting this code list to ICD-10-CM. Upon this 
examination, we found that changes over time (including changes in the 
use of the individual codes, changes in clinical practice, changes in 
the frequency of various types of illness and disability, and changes 
to the application of 60 percent rule itself) supported our updating 
the ICD-9-CM codes that are deemed appropriate to count toward a 
facility's 60 percent rule compliance calculation. Such updates would 
ensure that the codes better reflect the regulations at Sec.  
412.29(b).
    Our review included taking a fresh look at the regulations in Sec.  
412.29(b), which revealed that the following parts of the regulation 
were not being adequately addressed in the current application of the 
presumptive method of calculating compliance with the IRF 60 percent 
rule:
     The details of the requirements in paragraph Sec.  
412.29(b)(1), which specify that the IRF must serve ``an inpatient 
population of whom at least 60 percent required intensive 
rehabilitation services for treatment of one or more of the conditions 
specified . . .'', and
     The details of the requirements regarding the specific 
conditions under which a patient's comorbidity may be used to show that 
a patient meets the 60 percent rule criteria, specifically that, ``The 
comorbidity 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 inpatient rehabilitation facilities . . .and that cannot be 
appropriately performed in another care setting . . .''
    These requirements must be met in conjunction with a patient having 
one of the 13 conditions listed in Sec.  412.29(b)(2) for the case to 
meet the 60 percent rule compliance criteria. It is not enough for the 
patient to just have one of the 13 conditions. Mindful of these 
requirements, we took a fresh look at the ICD-9-CM codes on the 
presumptive methodology list.
    Further, the regulations in Sec.  412.29 also specify that the 
arthritis conditions only meet the 60 percent rule compliance criteria 
if certain severity and prior treatment criteria are met. It is 
impossible to discern from the ICD-9-CM codes alone whether or not the 
required severity and prior treatment criteria are met for those 
patients being treated for arthritis conditions. This type of 
information can only be assessed on medical review. Thus, we found that 
the presence of the ICD-9-CM code, by itself, cannot always allow us to 
presume that patients meet all of the requirements for being counted 
toward a facility's meeting the 60 percent rule requirements. As such, 
we believe that certain ICD-9-CM codes currently on the presumptive 
methodology list do not necessarily demonstrate a patient's meeting the 
medical condition (including severity and prior treatment) requirements 
for inclusion in a facility's

[[Page 47882]]

60 percent compliance calculation under the presumptive compliance 
method, and, as such, should be removed from the presumptive 
methodology list to better reflect the regulations.
    Therefore, we performed a clinical analysis of the ICD-9-CM code 
list to determine the clinical appropriateness of each individual ICD-
9-CM code's inclusion on the list, and a statistical analysis of the 
ICD-9-CM diagnoses code list to enhance our understanding of how 
individual ICD-9-CM codes are being used by IRFs. Based on these 
analyses, we proposed specific revisions to the ICD-9-CM code list that 
are described below in sections VIII.B.1 through VIII.B.6 of this final 
rule.
    We received 39 public comments on the proposed changes to the 
presumptive methodology list, which are summarized below.
    Comment: Several commenters stated that section 5005 of the DRA of 
2005, and section 115 of the MMSEA of 2007 ``codified'' the 13 
qualifying medical conditions that were originally adopted in our May 
7, 2004 final rule and that were still in the regulations in effect as 
of January 1, 2007, and froze the compliance threshold at 60 percent. 
These commenters also expressed the belief that CMS does not have the 
legal authority to make changes to the presumptive methodology list as 
proposed and must appeal to Congress to make such changes. One 
commenter stated that Congress ``was clear in the statute'' that for 
purposes of determining a facility's compliance under the presumptive 
compliance method, that CMS should utilize the May 7, 2004 final rule 
and the 13 qualifying medical conditions described in that final rule.
    Response: While the commenters are correct that the DRA of 2005 and 
the MMSEA of 2007 both referenced the regulatory text that was adopted 
in the May 7, 2004 final rule, or the rule itself, we disagree with the 
assertion that the proposed changes to the ``ICD-9-CM Codes That Meet 
Presumptive Compliance Criteria'' list are in contravention of section 
5005 of the DRA as amended by section 115 of MMSEA. Additionally, as we 
did not propose any changes to the compliance threshold (it remains at 
60 percent), the comments regarding the 60 percent threshold are 
outside the scope of this rule.
    Subsection (a) of section 5005 of the DRA stipulated that the 
Secretary should apply the applicable percent ``in the classification 
criterion used under the IRF regulation (as defined in subsection (c)) 
to determine whether a hospital or unit of a hospital is an inpatient 
rehabilitation facility under the Medicare program under title XVIII of 
the Social Security Act.'' Subsection (c) of section 5005 of the DRA 
then stated that ``[f]or purposes of subsection (a), the term ``IRF 
regulation'' means the rule published in the Federal Register on May 7, 
2004. . . .''
    Even if we were to agree with commenters' assertions that this 
cross-reference froze the medical conditions that could be considered 
for the 75-percent compliance rule to the 13 medical conditions listed 
in the May 7, 2004 final rule, however, it would not follow that 
Congress froze the sub-regulatory means of verifying compliance with 
the severity and prior treatment requirements that were contained in 
that final rule. We disagree with any assertion that the proposed 
removal of certain ICD-9-CM codes from the sub-regulatory listing of 
codes that presumptively count toward the IRF compliance calculation 
under the presumptive compliance method would, in fact or effect, 
remove any of the 13 qualifying medical conditions under the 
classification criteria established in our May 7, 2004 final rule (69 
FR 25752). Rather, it merely means that the medical review method would 
need to be used.
    For example, the ``arthritis'' categories in the May 7, 2004 final 
rule only included those arthritis patients that meet the severity and 
pretreatment conditions specified in the regulations prior to the 
patient's admission to the IRF. See, the former 42 CFR Sec.  
412.23(b)(2)(iii)(L), which can be found at 69 FR 25772. As such, the 
severity and pretreatment requirements were part of the defined 
condition, and any sub-regulatory procedures to implement these 
regulatory conditions would have to take into account the need to 
ensure compliance with these severity and pretreatment requirements.
    Furthermore, while the May 7, 2004 final rule noted that CMS would 
be issuing sub-regulatory guidance to its contractors that were to be 
tasked with the administration of the verification process for these 
requirements, the substance of such processes is not in the final rule. 
What are in the rule, however, are multiple statements that ICD-9-CM 
diagnosis codes alone would not, in the absence of additional clinical 
data, demonstrate compliance with the severity and pre-treatment 
requirements. Some other mechanism, such as medical review, was 
contemplated from the outset for these conditions (69 FR 25752, 25755 
and 25761).
    Thus, we have not proposed changes to the criteria established in 
the May 7, 2004 final rule. It remains as a list of 13 medical 
conditions, at times, paired with additional severity and prior 
treatment requirements. And, with the exception of discussion about 
imputing the Medicare portion of a facility's patient population 
compliance percentage to the entire population when the Medicare 
population represents the majority of that facility's patients, it did 
not discuss, let alone ``codify'' the methods we would use to verify 
IRFs' compliance percentages. Rather, we merely stated in that rule 
that we would issue instructions to the FIs that serve as the Medicare 
contractors and provide guidance to the clinical/medical FI personnel 
responsible for performing the compliance reviews to ensure that they 
use a method that consistently counts only cases with a diagnosis that 
both serves as the basis for intensive rehabilitation services and 
meets one of the 13 qualifying medical conditions; noted that we were 
still determining how best to provide guidance to the FIs on how to 
identify patients that fall into the 13 medical conditions; noted that 
we would not be providing ICD-9-CM codes in response to a commenter 
because diagnosis would be only one aspect of the FI's determination; 
and stated that FIs would also ``review information to assess (1) the 
medical necessity of rehabilitation in an inpatient setting; (2) the 
severity of the specific condition(s); (3) the patient's function; and 
(4) the capacity of the patient to participate in intensive 
rehabilitation and benefit from it.''
    As such, we believe that the proposed removal of some of the ICD-9-
CM codes in our sub-regulatory presumptive methodology list is 
consistent with the legislation and the May 7, 2004 regulation. We have 
not proposed the revision of the list of 13 medical conditions or the 
severity and prior treatment requirements that were paired with those 
conditions. For example, consistent with the severity and pretreatment 
requirements defined in the regulations (which are currently located at 
Sec.  412.29(b)(2)(x) through Sec.  412.29(b)(2)(xiii), we proposed the 
removal of the ``arthritis'' ICD-9-CM codes because those codes do not 
provide the pertinent information necessary to assess whether the 
applicable severity and prior treatment requirements for those 
conditions have been met. If and when the severity and pretreatment 
requirements are confirmed using the medical review method, however, 
patients with those arthritis conditions will be counted toward the 
IRF's compliance threshold.

[[Page 47883]]

In this manner, we administratively apply the regulation as codified 
and as outlined in the May 7, 2004 final rule. Ultimately, the code 
refinements to the ICD-9-CM Codes That Meet Presumptive Compliance 
Criteria list will ensure that the codes represent the types of medical 
conditions that we believe clearly, and without further evidence, can 
be found to indicate that the criteria for the medical conditions that 
may be counted toward the 60 percent rule compliance calculation have 
been met, and, therefore, that the presumptive compliance method can be 
used to include that individual in the IRF's compliance percentage.
    Comment: Several commenters suggested that we delay these 
refinements to the presumptive compliance list until next year when the 
implementation of ICD-10-CM is planned. Commenters also stated that 
making these changes effective for discharges on or after October 1, 
2013 will cause significant disruption for providers. One commenter 
asked for clarification regarding how the proposed changes would be 
implemented, specifically whether the prior list would be applied for 
the first part of a facility's fiscal year and the new list be applied 
for the second part. Several commenters asked that we provide a 6-month 
transition period to implement these changes.
    Response: We considered the impact that our proposals would have on 
IRF providers if we were to make the changes effective for FY 2014 
instead of in FY 2015 when we plan to move to ICD-10-CM. We believed 
that a gradual approach allowing IRF providers time to adjust their 
coding practices in response to the specific changes made to the 
presumptive methodology list before also moving to ICD-10-CM was the 
appropriate course of action. However, we recognize that IRFs may need 
more time to adjust to the changes to the presumptive methodology list. 
In recognition of these concerns, we will adopt these changes, but only 
apply the revised list to compliance review periods beginning on or 
after October 1, 2014. This will eliminate any problems associated with 
changing lists in the middle of a fiscal year.
    Comment: One commenter supported our efforts to refine the list of 
ICD-9-CM codes in the presumptive methodology list. But, the commenter 
also stated that a better overall system would be one in which payment 
systems would be focused on patient-based criteria at the level of the 
episode of care or other broader site-neutral systems; however, within 
the current payment system, they supported CMS' efforts to improve 
accuracy in determining the need for the intensive inpatient 
rehabilitation services that IRFs provide. Further, the commenter 
stated that by ``requiring IRFs to use more detailed coding, we could 
potentially collect information on IRF patients that would 
differentiate them from patients with similar conditions who are 
treated in other settings (for example, skilled nursing facilities, 
home health agencies, or outpatient therapy providers).''
    Response: We thank the commenter for their support of our efforts 
to refine the presumptive methodology list so that it reflects codes 
that truly indicate compliance with the 60 percent rule criteria for 
inclusion in the compliance calculation. Additionally, we thank the 
commenter for their suggestions as the agency continues research 
efforts into broader site-neutral payment systems.
    Comment: Several commenters stated that they had concerns about the 
viability of the ``60 percent rule.'' One commenter stated that the 60 
percent rule should be repealed or modified in that the current 
classification criteria do not reflect the full range of factors that 
contribute to a patient's need for intensive inpatient rehabilitation. 
The commenter also stated that if we continue to use the 60 percent 
rule, then the list of 13 qualifying medical conditions under the 60 
percent rule should be expanded to include patients with the following 
conditions: orthopedic/joint/limb replacement patients, post-transplant 
patients, patients with chronic pulmonary and cardiac conditions, and 
medically complex patients.
    Response: We appreciate the commenters' suggestions, and will take 
these suggestions into account in future analyses. However, since we 
did not propose any modifications to the qualifying medical conditions 
for the 60 percent rule, these comments are beyond the scope of this 
final rule.
    Comment: One commenter stated that we should clarify the alphabet 
designations for appendices associated with IRF-PAI completion because 
in our rules (this year and in past rulemakings) we have used the same 
alphabet character for more than one list.
    Response: We agree that the alphabet designations used for 
appendices in the IRF PPS may lead to confusion because appendices for 
several tables are listed with the same alphabet character. Appendix C: 
ICD-9-CM Codes That Meet Presumptive Compliance Criteria is used to 
determine an IRF's presumptive compliance with the 60 percent rule. 
However, there is also the list of comorbidities (ICD-9-CM codes) that 
is used to determine placement in tiers, Appendix C--List of 
Comorbidities. Beginning with the publication of this rule, we will no 
longer use alphabet characters to identify these appendices. Beginning 
with this final rule and related sub-regulatory guidance, we will refer 
to the two lists by their titles, without the Appendix labels.
    Comment: One commenter recommended that in lieu of removing the 
ICD-9-CM codes from the ICD-9-CM Codes That Meet Presumptive Compliance 
Criteria, CMS should establish modifiers that could be entered on the 
IRF-PAI to indicate that the patient meets the requirements for the 
medical conditions that may be included in the IRF's presumptive 
compliance method's compliance calculation. The commenter offered the 
following example that is used on claims: the KX modifier with respect 
to outpatient therapy services to indicate that a patient qualifies for 
an exception to the therapy caps on the claim. The commenter stated 
that using modifiers would ensure that ``clinically appropriate'' 
records would count under the presumptive compliance method compliance 
calculations without having to do medical review.
    Response: We appreciate the commenter's suggestion. However, we 
note that the presumptive compliance method relies on information 
recorded on the IRF-PAI, rather than information from the IRF claim. 
The purpose of the IRF-PAI is to collect the clinical characteristics 
of the patient for use in care planning, payment, and quality reporting 
and therefore we believe it presents a more accurate and comprehensive 
record of the medical conditions of the patient, which is important 
when the record is then used to calculate the presumptive compliance 
percentage. Thus, we do not currently use and are not planning in the 
future to use, the IRF claim for the presumptive compliance method. 
Thus, a modifier applied to the coding on the claim, similar to the KX 
modifier for outpatient therapy services, is not useful in this 
context, and we do not currently have a similar mechanism for modifying 
codes on the IRF-PAI. However, we will take the commenter's suggestions 
into consideration. We believe that a delayed implementation of the 
changes to the presumptive compliance list of ICD-9-CM codes will allow 
us additional time to study ways to minimize the burden of the 
operational aspects of the changes to the presumptive compliance 
methodology.

[[Page 47884]]

    Comment: Several commenters stated that we have incorrectly applied 
a medical necessity measurement (the coverage criteria) to the 60 
percent rule. One commenter stated that we conflated individualized 
medical necessity review with the presumptive compliance method's 
review. Another commenter requested that we distinguish between the 
policies for IRF classification criteria and medical necessity coverage 
criteria in the final rule.
    Response: We disagree with the commenters; we are not conflating 
the criteria for the medical conditions that may be counted under the 
presumptive method to determine compliance with the 60 percent rule 
with the coverage criteria. IRF coverage criteria are not used to 
determine IRF classification. As we stated in the August 7, 2009 final 
rule (74 FR 39762), we do not intend for any IRF to lose its 
classification status because an individual patient does not meet the 
coverage criteria. Failure to meet the coverage criteria in a 
particular case will only result in the denial of the IRF's claim for 
the services provided to that patient, not in a change in the 
classification of the facility.
    Comment: Several commenters expressed concerns that, in the 
proposed rule, we changed our policy articulated in previous rules of 
distinguishing IRFs from other care settings by identifying certain 
conditions that ``typically require'' intensive inpatient 
rehabilitation. Specifically, commenters asserted that we have deviated 
from the policy standard of serving those with conditions that 
``typically required'' an IRF-level of service. The commenters point to 
our statement in the proposed rule that ``[i]t is not enough for the 
patient to just have one of the 13 conditions'' to indicate that we 
proposed adding additional criteria to the medical conditions that may 
be counted under the presumptive compliance method. For example, the 
commenters believed that we had proposed adding a new criterion by 
indicating that beyond having one of the 13 medical conditions, we now 
proposed to require that patients need intensive inpatient 
rehabilitation services. According to the commenters, this is 
inconsistent with the history of the 60 percent rule and our own 
interpretations of the policy in previous rulemaking.
    Response: We disagree with the commenters' assertions that we have 
introduced new criteria to the presumptive compliance method of 
determining whether an IRF has met the criteria for a given medical 
condition such that the individual with that condition may be counted 
toward the IRF's 60 percent rule compliance percentage. Section 412.29 
outlines the requirements for a facility to be classified for payment 
under the IRF PPS. Within this section, the regulations at Sec.  
412.29(b)(1) require the 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) . . . (emphasis added). As such, the 
``intensive rehabilitation service needs'' criterion is part of the 
original criteria for the medical conditions that can be counted toward 
an IRF's 60 percent rule compliance rate. We also point out that this 
particular part of the regulation read the same in the May 7, 2004 
final rule (then codified in Sec.  412.23(b)(2)(i), now codified in 
Sec.  412.29(b)(1)). Thus, our statement in the proposed rule was 
consistent with what has been our stated policy since the May 7, 2004 
final rule.
    We also disagree with any assertion that the proposed changes to 
the presumptive methodology list are an indication that we have 
departed from historical discussions outlined in the preamble of 
previous rules. As we stated previously, 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. In the preamble 
of the May 7, 2004 final rule, when discussing how CMS contractors 
would administratively identify patients with the 13 medical 
conditions, we specifically declined to provide a list of ICD-9-CM 
codes because ICD-9-CM codes alone are not always enough to ascertain 
whether someone falls into one of the 13 medical condition categories. 
As such, the regulations have never included such a list. Rather, we 
use a bifurcated sub-regulatory approach with a presumptive compliance 
method and a medical review compliance method. We continue to believe 
that the 13 medical conditions that are listed in regulation at Sec.  
412.29(b)(2) are conditions that ``typically'' require the level of 
intensive rehabilitation that provide the basis of need to 
differentiate the services offered in IRFs from those offered in other 
care settings.
    Comment: One commenter requested that we make available the 
methodology that was used to assess the ``clinical appropriateness'' 
determinations for the ICD-9-CM codes that were proposed for removal.
    Response: To analyze the ``clinical appropriateness'' of the ICD-9-
CM codes on the list used to determine compliance under the presumptive 
compliance method, we used the extensive clinical and coding expertise 
available within CMS's staff. Our clinical staff went through the 
current list code-by-code to determine whether, in their professional 
judgment, a particular ICD-9-CM code's use would indicate a patient's 
presumptive need for intensive inpatient rehabilitation for one of the 
13 medical conditions listed in 412.29(b)(2), absent additional 
information about a particular patient's clinical condition and 
rehabilitation needs. The details of our clinical rationale for each of 
the proposed changes to the ICD-9-CM codes used to determine compliance 
percentages under the presumptive compliance method were presented in 
the FY 2014 IRF PPS proposed rule (78 FR 26880 at 26895 through 26906) 
and are further reflected in this final rule. We also used the public 
comments we received on the FY 2014 IRF PPS proposed rule (78 FR 26880) 
to further refine our clinical analysis, in that we used a lot of the 
input from commenters in forming our final decisions regarding which 
ICD-9-CM codes to retain on the list and which to proceed to remove 
from the list. As discussed in detail below, in some cases we agreed 
with the commenter's input and have added codes back to the list, as 
appropriate.
    Comment: Several commenters requested that we make an IRF's 
presumptive testing data available to that IRF to allow the IRF to 
monitor its presumptive compliance with the 60 percent rule.
    Response: Until now, we did not have the capability within our data 
system for securely communicating information about an IRF's individual 
IRF-PAI submissions back to that IRF. We are in the process of 
developing such a system, and will consider the feasibility of 
incorporating a report of an IRF's compliance percentage into this new 
system.
1. Non-Specific Diagnosis Codes
    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. Generally, 
``unspecified'' codes are used when there is a lack of information 
about location or severity of medical conditions in the medical record.

[[Page 47885]]

However, site and/or severity of condition is often an important 
determinant in assessing whether a patient's principal or secondary 
diagnosis falls into the 13 qualifying medical conditions that may be 
counted toward the facility's 60 percent rule compliance percentage 
under the presumptive compliance method. For this reason, we believe 
that specific diagnosis codes that narrowly identify anatomical sites 
where disease, injury, or condition exist should be used when coding 
patients' conditions on the IRF-PAI whenever such codes are available. 
Furthermore, on the same note, we believe that one should also include 
on the IRF-PAI the more descriptive ICD-9-CM code that indicates the 
degree of injury in instances of burns. In accordance with these 
principles, we proposed to remove non-specific codes from the list, 
ICD-9-CM Codes That Meet Presumptive Compliance Criteria, in instances 
in which more specific codes are available as 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. If the IRF does not have enough 
information about the patient's 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 list of ICD-
9-CM codes that we proposed removing can be found in the May 8, 2013 
proposed rule at 78 FR 26880, 26901 through 26906.
    We received 18 comments on the proposed changes to the non-specific 
diagnosis codes listed in ICD-9-CM Codes That Meet Presumptive 
Compliance Criteria, which are summarized below.
    Comment: Several commenters noted that IRFs are post-acute settings 
and that etiological documentation is based on the data received from 
the acute care hospital. They argued that, in some cases, the 
specificity demanded in coding as described in the proposed rule cannot 
be achieved because the information is not in the records that IRFs 
receive from the acute care setting. For example, for ICD-9-CM codes 
433.91--Occlusion and stenosis of unspecified pre-cerebral artery with 
cerebral infarction--and 434.91--Cerebral artery occlusion, unspecified 
with cerebral infarction--, several commenters stated that a large 
proportion of ischemic strokes may not be able to be identified as 
thrombotic or embolic. Several commenters stated that the ICD-9-CM code 
434.91--Cerebral artery occlusion, unspecified with cerebral 
infarction--should not be removed from the presumptive methodology list 
because in order to be more specific the physiatrist would need to note 
whether the stroke was embolic or thrombotic in nature. The commenters 
stated that this is often unknown, even after radiological results.
    Response: We recognize that the IRF builds its understanding of its 
patients that are admitted to the IRF from the acute care hospital in 
part from the acute care medical records, and that sometimes the 
information needed to code a more specific diagnosis is not available 
in those records. In the case of certain ICD-9-CM codes that we had 
proposed to remove from the presumptive compliance list, we agree with 
the commenters and have determined that the information necessary to 
appropriately code certain conditions may not always be available. To 
avoid diagnostic misclassification, we are revising our proposals in 
Table 7 of the proposed rule and will retain codes 433.91 and 434.91 on 
the list of codes that meet the presumptive compliance criteria. We may 
revisit this decision in the future, if information to code the more 
specific diagnosis codes becomes more readily available.
    Though we agree with commenters that some information is either not 
available or may not always be found in the documentation sent by the 
acute care hospital and that this impacts the coding of some diagnoses, 
we do not agree that this is the case for all the diagnosis codes 
proposed for removal in Table 7 of the proposed rule or that the IRF 
would not be able to obtain the necessary information through other 
means in many instances. IRFs are required under the IRF coverage 
requirements to conduct thorough preadmission screenings on all 
prospective IRF patients prior to each IRF admission. During the 
preadmission screenings, a complete medical chart review is required, 
unless the patient is being assessed in person by the IRF personnel 
conducting the preadmission screening. Even if the patient is being 
assessed in person, a medical chart review is typically needed to 
gather all of the pertinent information to complete a thorough 
preadmission screening. Generally, diagnostic reports, radiological 
reports, and consultation notes, among other informational 
documentation are available in the acute care medical record to assist 
IRF staff in building a more complete clinical picture so that 
diagnostic coding, whenever possible, can be more specific. Even if 
such information is not available in the acute care medical record, 
however, we believe that the IRF should make every effort to obtain the 
necessary information to code more specifically.
    Comment: We received several comments on various non-specific 
diagnosis codes that the commenters stated should not be removed from 
the list. The commenters provided a variety of rationales for the 
continued use of these codes to meet the presumptive compliance 
criteria. For example, several commenters stated that the ICD-9-CM 
codes related to hip fracture should not be excluded from the list. The 
commenters stated that the specific information required to provide 
where the fracture occurred on the neck of the femur is often not 
available to IRF staff that do not have access to x-ray reports and 
that such specificity would not impact the type of treatment in the 
IRF. Several other commenters stated that we should reconsider the 
proposed removal of some non-specific traumatic brain injury codes. The 
commenters stated that the removal of these codes is ``administratively 
unrealistic.'' The commenters also stated that for incidents of loss of 
consciousness of short duration this information, usually documented by 
on-site emergency technicians (when known), is no longer in the records 
by the time the patient is admitted to the IRF. One commenter argued 
that in cases of unobserved traumatic brain injury the duration of a 
patient's loss of consciousness may never be specifically determined. 
This commenter further stated that despite the absence of this 
information, the patient may still be clinically appropriate for 
intensive inpatient rehabilitation services.
    Several commenters also argued that the identity of virus or 
bacteria associated with diagnoses such as ICD-9-CM codes 049.9--
Unspecified non-arthropod-borne viral diseases of central nervous 
system--, 320.9--Meningitis due to unspecified bacterium--, 322.9--
Meningitis, unspecified--, 323.9--Unspecified causes of encephalitis, 
myelitis, and encephalomyelitis cannot frequently be found in the 
medical records from the transferring hospital or in some cases may 
never be known. As such, the commenters suggest that these codes not be 
removed from the presumptive methodology list.
    Several commenters stated that ICD-9-CM codes 343.9--Infantile 
cerebral palsy, unspecified should not be removed from the presumptive 
methodology list because many times

[[Page 47886]]

these patients are seen in IRFs as adults, when the patient's current 
clinical presentation may be different from their original presentation 
as infants. Moreover, the commenters argue, the adults may have no 
available medical records that state the appropriate cerebral palsy 
type. Similarly, these commenters argue that ICD-9-CM code 344.00--
Quadriplegia, unspecified should not be removed from the presumptive 
methodology list because of the potential for a change from the 
original presentation that was the basis of appropriate classification 
of the level of completeness of the injury.
    Response: Upon further review and after thoughtful consideration of 
the comments we received, we have determined that several codes that we 
proposed to remove from the ICD-9-CM Codes That Meet Presumptive 
Compliance Criteria list should be retained. Thus, in this final rule 
we will not remove these codes from the presumptive methodology list. 
The ICD-9-CM codes that we proposed for removal from the ICD-9-CM Codes 
That Meet Presumptive Compliance Criteria list, but we have determined 
should be retained, are listed in Table 8. We also note here that we 
inadvertently included 4 codes in Table 7 of the proposed rule that 
were never on the ICD-9-CM Codes That Meet Presumptive Compliance 
Criteria list. The codes are as follows: 804.00--Closed fractures 
involving skull or face with other bones, without mention of 
intracranial injury, unspecified state of consciousness--, 804.09--
Closed fractures involving skull of face with other bones, without 
mention of intracranial injury, with concussion, unspecified--, 
851.90--Other and unspecified cerebral laceration and contusion, with 
open intracranial wound, unspecified state of consciousness--, 851.99--
Other and unspecified cerebral laceration and contusion, with open 
intracranial wound, with concussion, unspecified.
    Comment: Several commenters expressed concerns about our proposal 
to remove ICD-9-CM code 356.9--Unspecified hereditary and idiopathic 
peripheral neuropathy (IPN) from the ICD-9-CM Codes That Meet 
Presumptive Compliance Criteria list because ``IPN is one of the most 
common chronic neurologic disorders in America.'' One commenter further 
stated that the precise etiology of a neuropathy has little effect on a 
patient's rehabilitation, and that there are a limited number of codes 
that can be used to specify the type of neuropathy.
    Response: We believe that the fact that ICD-9-CM code 356.9--
Unspecified hereditary and idiopathic peripheral neuropathy (IPN)--is 
such a commonly used code for multiple types of chronic neurological 
disorders in the U.S. means that it is too broad a diagnosis to enable 
us to determine whether a patient coded with this code meets the 
criteria for the medical conditions that may be counted toward an IRF's 
60 percent rule compliance percentage or not. We believe that some 
patients coded with this code could meet the requirements in 
412.29(b)(1), but others would not. That is, we believe that it is 
impossible to tell from the possible application of this code to such a 
broad and diverse population of patients whether patients coded with 
this diagnosis code require intensive rehabilitation services for 
treatment of one or more of the conditions specified at 42 CFR 
412.29(b)(2). Our analysis shows that the percent of patients in IRFs 
that are coded with this diagnosis code has increased substantially 
over time (from 2.7 percent of all IRF patients in FY 2004 to 4.5 
percent in FY 2012), with more dramatic increases occurring within 
specific IRF providers. This finding may be the result of an increase 
in the patient population for which this code applies, an increase in 
the percent of patients with these conditions being admitted to the 
IRF, or upcoding on the part of IRFs. Regardless, we believe that this 
code does not provide enough information for us to determine whether a 
patient coded with this diagnosis code would meet the requirements at 
42 CFR 412.29(b). Thus, we believe that the most appropriate course of 
action at this time is to remove this code from the presumptive 
methodology list. However, we note that patients that are coded with 
this diagnosis code may, where appropriate upon medical review, be 
found to meet the criteria for the medical conditions that may be 
counted toward a facility's 60 percent rule compliance percentage.

     Table 8--ICD-9-CM Codes Retained in ``ICD-9-CM Codes That Meet
                 Presumptive Compliance Criteria'' \**\
------------------------------------------------------------------------
      ICD-9-CM Code                          Diagnosis
------------------------------------------------------------------------
049.9....................  Unspecified non-arthropod-borne viral
                            diseases of central nervous system.
320.9....................  Meningitis due to unspecified bacterium.
322.9....................  Meningitis, unspecified.
323.9....................  Unspecified causes of encephalitis, myelitis,
                            and encephalomyelitis.
343.9....................  Infantile cerebral palsy, unspecified.
344.00...................  Quadriplegia, unspecified.
433.91...................  Occlusion and stenosis of unspecified
                            precerebral artery with cerebral infarction.
434.91...................  Cerebral artery occlusion, unspecified with
                            cerebral infarction.
800.00...................  Closed fracture of vault of skull without
                            mention of intracranial injury, unspecified
                            state of consciousness.
800.10...................  Closed fracture of vault of skull with
                            cerebral laceration and contusion,
                            unspecified state of consciousness.
800.20...................  Closed fracture of vault of skull with
                            subarachnoid, subdural, and extradural
                            hemorrhage, unspecified state of
                            consciousness.
800.30...................  Closed fracture of vault of skull with other
                            and unspecified intracranial hemorrhage,
                            unspecified state of consciousness.
800.40...................  Closed fracture of vault of skull with
                            intracranial injury of other and unspecified
                            nature, unspecified state of consciousness.
800.50...................  Open fracture of vault of skull without
                            mention of intracranial injury, unspecified
                            state of consciousness.
800.60...................  Open fracture of vault of skull with cerebral
                            laceration and contusion, unspecified state
                            of consciousness.
800.70...................  Open fracture of vault of skull with
                            subarachnoid, subdural, and extradural
                            hemorrhage, unspecified state of
                            consciousness.
800.80...................  Open fracture of vault of skull with other
                            and unspecified intracranial hemorrhage,
                            unspecified state of consciousness.
800.90...................  Open fracture of vault of skull with
                            intracranial injury of other and unspecified
                            nature, unspecified state of consciousness.
801.00...................  Closed fracture of base of skull without
                            mention of intra cranial injury, unspecified
                            state of consciousness.
801.10...................  Closed fracture of base of skull with
                            cerebral laceration and contusion,
                            unspecified state of consciousness.
801.20...................  Closed fracture of base of skull with
                            subarachnoid, subdural, and extradural
                            hemorrhage, unspecified state of
                            consciousness.
801.30...................  Closed fracture of base of skull with other
                            and unspecified intracranial hemorrhage,
                            unspecified state of consciousness.
801.40...................  Closed fracture of base of skull with
                            intracranial injury of other and unspecified
                            nature, unspecified state of consciousness.
801.50...................  Open fracture of base of skull without
                            mention of intracranial injury, unspecified
                            state of consciousness.
801.60...................  Open fracture of base of skull with cerebral
                            laceration and contusion, unspecified state
                            of consciousness.

[[Page 47887]]

 
801.70...................  Open fracture of base of skull with
                            subarachnoid, subdural, and extradural
                            hemorrhage, unspecified state of
                            consciousness.
801.80...................  Open fracture of base of skull with other and
                            unspecified intracranial hemorrhage,
                            unspecified state of consciousness.
801.90...................  Open fracture of base of skull with
                            intracranial injury of other and unspecified
                            nature, unspecified state of consciousness.
803.00...................  Other closed skull fracture without mention
                            of intracranial injury, unspecified state of
                            consciousness.
803.10...................  Other closed skull fracture with cerebral
                            laceration and contusion, unspecified state
                            of consciousness.
803.20...................  Other closed skull fracture with
                            subarachnoid, subdural, and extradural
                            hemorrhage, unspecified state of
                            consciousness.
803.30...................  Other closed skull fracture with other and
                            unspecified intracranial hemorrhage,
                            unspecified state of unconsciousness.
803.40...................  Other closed skull fracture with intracranial
                            injury of other and unspecified nature,
                            unspecified state of consciousness.
803.50...................  Other open skull fracture without mention of
                            injury, unspecified state of consciousness.
803.60...................  Other open skull fracture with cerebral
                            laceration and contusion, unspecified state
                            of consciousness.
803.70...................  Other open skull fracture with subarachnoid,
                            subdural, and extradural hemorrhage,
                            unspecified state of consciousness.
803.80...................  Other open skull fracture with other and
                            unspecified intracranial hemorrhage,
                            unspecified state of consciousness.
803.90...................  Other open skull fracture with intracranial
                            injury of other and unspecified nature,
                            unspecified state of consciousness.
804.10...................  Closed fractures involving skull or face with
                            other bones, with cerebral laceration and
                            contusion, unspecified state of
                            consciousness.
804.20...................  Closed fractures involving skull or face with
                            other bones with subarachnoid, subdural, and
                            extradural hemorrhage, unspecified state of
                            consciousness.
804.30...................  Closed fractures involving skull or face with
                            other bones, with other and unspecified
                            intracranial hemorrhage, unspecified state
                            of consciousness.
804.40...................  Closed fractures involving skull or face with
                            other bones, with intracranial injury of
                            other and unspecified nature, unspecified
                            state of consciousness.
804.60...................  Open fractures involving skull or face with
                            other bones, with cerebral laceration and
                            contusion, unspecified state of
                            consciousness.
804.70...................  Open fractures involving skull or face with
                            other bones with subarachnoid, subdural, and
                            extradural hemorrhage, unspecified state of
                            consciousness.
804.80...................  Open fractures involving skull or face with
                            other bones, with other and unspecified
                            intracranial hemorrhage, unspecified state
                            of consciousness.
804.90...................  Open fractures involving skull or face with
                            other bones, with intracranial injury of
                            other and unspecified nature, unspecified
                            state of consciousness.
820.00...................  Closed fracture of intracapsular section of
                            neck of femur, unspecified.
820.10...................  Open fracture of intracapsular section of
                            neck of femur, unspecified.
820.30...................  Open fracture of trochanteric section of neck
                            of femur, unspecified.
851.00...................  Cortex (cerebral) contusion without mention
                            of open intracranial wound, unspecified
                            state of consciousness.
851.10...................  Cortex (cerebral) contusion with open
                            intracranial wound, unspecified state of
                            consciousness.
851.20...................  Cortex (cerebral) laceration without mention
                            of open intracranial wound, unspecified
                            state of consciousness.
851.30...................  Cortex (cerebral) laceration with open
                            intracranial wound, unspecified state of
                            consciousness.
851.40...................  Cerebellar or brain stem contusion without
                            mention of open intracranial wound,
                            unspecified state of consciousness.
851.50...................  Cerebellar or brain stem contusion with open
                            intracranial wound, unspecified state of
                            consciousness.
851.60...................  Cerebellar or brain stem laceration without
                            mention of open intracranial wound,
                            unspecified state of consciousness.
851.70...................  Cerebellar or brain stem laceration with open
                            intracranial wound, unspecified state of
                            consciousness.
851.80...................  Other and unspecified cerebral laceration and
                            contusion, without mention of open
                            intracranial wound, unspecified state of
                            consciousness.
852.00...................  Subarachnoid hemorrhage following injury
                            without mention of open intracranial wound,
                            unspecified state of consciousness.
852.10...................  Subarachnoid hemorrhage following injury with
                            open intracranial wound, unspecified state
                            of consciousness.
852.20...................  Subdural hemorrhage following injury without
                            mention of open intracranial wound,
                            unspecified state of consciousness.
852.30...................  Subdural hemorrhage following injury with
                            open intracranial wound, unspecified state
                            of consciousness.
852.40...................  Extradural hemorrhage following injury
                            without mention of open intracranial wound,
                            unspecified state of consciousness.
852.50...................  Extradural hemorrhage following injury with
                            open intracranial wound, unspecified state
                            of consciousness.
853.00...................  Other and unspecified intracranial hemorrhage
                            following injury without mention of open
                            intracranial wound, unspecified state of
                            consciousness.
853.10...................  Other and unspecified intracranial hemorrhage
                            following injury with open intracranial
                            wound, unspecified state of consciousness.
854.00...................  Intracranial injury of other and unspecified
                            nature without mention of open intracranial
                            wound, unspecified state of consciousness.
854.10...................  Intracranial injury of other and unspecified
                            nature with open intracranial wound,
                            unspecified state of consciousness.
------------------------------------------------------------------------
\**\ This table includes ICD-9-CM codes that were proposed (Table 7) in
  the May 8, 2013 proposed rule for removal from ``ICD-9-CM Codes That
  Meet Presumptive Compliance Criteria,'' but we have determined should
  be retained.

2. Arthritis Codes
    Our analysis of the list of ICD-9-CM codes that are currently 
included in the presumptive methodology list revealed utilization 
patterns that indicated that these codes were used far more frequently 
than we had anticipated. We also realized that such codes did not 
provide any information as to whether the patients met the severity and 
prior treatment requirement portions of the criteria for the medical 
conditions that may be counted toward an IRF's compliance percentage 
under the presumptive compliance method. We did not adopt any and all 
arthritis conditions in the May 7, 2004 final rule (69 FR 25752). 
Rather, we only provided for those patients with certain kinds of 
arthritic conditions that met defined severity and prior treatment 
requirements. We anticipated that less severe arthritic conditions 
could be satisfactorily managed outside of IRFs since these cases would 
not require the intensive therapy provided in the

[[Page 47888]]

inpatient rehabilitation setting. As we realized on reflection that 
there is no way to tell base on an arthritis ICD-9-CM code alone 
whether an individual met the severity and prior treatment requirements 
outlined in regulation, we realized that factors beyond the ICD-9-CM 
code would need to be reviewed to establish whether these IRF patients 
should be included in the IRF's compliance percentage.
    Specifically, the regulations under Sec.  412.29(b)(2)(x) through 
Sec.  412.29(b)(2)(xii), describe the following three (3) ``arthritis'' 
medical conditions that, if present, and all of the described 
circumstances are met, would make a patient eligible for inclusion in 
the presumptive compliance calculation of the IRF's compliance 
percentage. The 3 medical conditions are as follows:
     Active, polyarticular rheumatoid arthritis, psoriatic 
arthritis, and seronegative arthropathies resulting in significant 
functional impairment of ambulation and other activities of daily 
living that have 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 that result from a systemic 
disease activation immediately before admission, but have 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 that have 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 that result from a 
systemic disease activation immediately before admission, but have the 
potential to improve with more intensive rehabilitation.
     Severe or advanced osteoarthritis (osteoarthrosis or 
degenerative joint disease) involving two or more major weight bearing 
joints (elbow, shoulders, hips, or knees, but not counting a joint with 
a prosthesis) with joint deformity and substantial loss of range of 
motion, atrophy of muscles surrounding the joint, significant 
functional impairment of ambulation and other activities of daily 
living that have not improved after the patient has participated in 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 have 
the potential to improve with more intensive rehabilitation. (A joint 
replaced by a prosthesis is no longer is considered to have 
osteoarthritis, or other arthritis, even though this condition was the 
reason for the joint replacement.)
    As stated above, 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 whether these 
additional elements of the regulatory criteria were met. We therefore 
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 Sec.  412.29(b)(2)(x) through Sec.  
412.29(b)(2)(xii) in the presumptive compliance calculation of the 
facility's compliance percentage. Thus, we proposed to remove the ICD-
9-CM diagnosis codes associated with the medical conditions outlined in 
our regulations under Sec.  412.29(b)(2)(x) through Sec.  
412.29(b)(2)(xii) from the presumptive methodology list.
    We expect that the MACs will be able, upon medical review, to 
include those patients in a facility's 60 percent rule compliance after 
it has confirmed the severity and prior treatment portions of the 
criteria. As such, IRFs would continue to be able to have these 
individuals included in the medical review calculation of their 
compliance percentages. In Table 9, we list the ICD-9-CM codes 
associated with the medical conditions listed under Sec.  
412.29(b)(2)(x) through Sec.  412.29(b)(2)(xii) that we will remove 
from the list, ICD-9-CM Codes That Meet Presumptive Compliance 
Criteria.
    We received 11 comments on the proposed changes to arthritis 
diagnosis codes listed in ICD-9-CM Codes That Meet Presumptive 
Compliance Criteria, which are summarized below.
    Comment: One commenter suggested that the proposed changes to the 
presumptive methodology list and the removal of the arthritis codes 
will increase the use of the medical review method, which is more 
burdensome for both CMS and for IRFs. Several commenters suggested that 
the facility should not have to undergo a ``full medical review'' if it 
failed to meet the required compliance percentage using the presumptive 
compliance method. Instead, they suggested use of a ``limited medical 
review'' in which only arthritis and systemic vasculidities cases would 
be reviewed. The commenters further stated that, should a sufficient 
number of cases from the ``limited review'' be determined to meet 
criteria, these ``passing'' records would be added to the ``numerator'' 
of the presumptive calculation result to arrive at a compliance 
percentage equal at least 60 percent. In this manner the facility would 
be deemed compliant without needing a ``full medical review.'' However, 
if the IRF failed to meet criteria with this ``limited review,'' the 
MAC could then perform a ``full medical review.''
    Response: We acknowledge that because of the removal of the 
arthritis codes from the list of codes that are used to determine 
presumptive compliance under the ``60 percent'' rule, some facilities 
may not be able to reach the minimum compliance percentage using 
presumptive compliance method. In the May 8, 2013 proposed rule, we 
suggested that upon medical review (in accordance with chapter 3, 
section 140.1.4 of the Medicare Claims Processing Manual (Pub. 100-
04)), after which the MAC will have been able to determine that 
severity and pretreatment requirements have been met, these patients 
would be included in the calculation of a facility's 60 percent rule 
compliance percentage. Assuming providers make no other changes, we 
estimate that the removal of the arthritis and arthropathy codes will 
result in approximately 40 facilities failing to meet the 60 percent 
threshold using the presumptive compliance method, and would have to 
instead be evaluated under the medical review method. We assume that 
all of these facilities would obtain a satisfactory compliance 
percentage after medical review, as we assume that the patients that 
will be coded with the to-be removed arthritis and arthropathy codes 
will meet the severity and prior treatment requirements. Thus, we 
believe that few, if any facilities will ultimately lose their IRF 
classification by virtue of these changes.
    We appreciate the commenter's suggestions regarding the use of a 
modified medical review limited to only arthritis and systemic 
vasculidities cases to determine if patients have met severity and 
pretreatment requirements, in lieu of full medical review carried out 
in accordance with chapter 3, section 140.1.3(D), of the Medicare 
Claims Processing Manual (Pub. 100-04). We will use the time afforded 
by our one-year delay (that is, the application of the changes to the 
list will not apply to

[[Page 47889]]

compliance review periods beginning before October 1, 2014) to consider 
the feasibility of minimizing any burdens created by the operational 
aspects of this policy.
    Comment: One commenter expressed concern that in response to our 
proposal to remove arthritis codes from the ICD-9-CM Codes That Meet 
Presumptive Compliance Criteria list and no longer count them as part 
of the presumptive methodology, IRFs will seek to avoid ``unnecessary'' 
medical review by modifying their admission criteria so as to limit the 
admission of patients with arthritis conditions. The commenter also 
stated that our proposed removal of the arthritis codes from the list 
of presumptive ICD-9-CM codes that meet compliance criteria ``was as 
if'' we removed arthritis and arthropathy conditions from the 13 
qualifying medical conditions outlined in regulation.
    Response: Although we agree that it is plausible that some IRFs 
might seek to avoid the possibility of medical review by limiting 
admission of patients with arthritis conditions, this is not our 
intent. Our intent behind this policy is to ensure that we have enough 
information to ensure patients with arthritis conditions who are 
counted as meeting the compliance criteria in 412.29(b) are 
appropriately meeting the severity and prior treatment requirements, as 
per the regulation. We disagree that the proposed changes to the 
presumptive methodology list equates with the removal of arthritis and 
arthropathy conditions from the 13 qualifying medical conditions 
outlined in regulation. As discussed in the proposed rule's preamble 
and in prior discussion in this preamble, when we adopted the arthritis 
and arthropathy conditions in the May 7, 2004 final rule, we limited 
the conditions to those that met defined severity and prior treatment 
requirements, and that were sufficiently severe as to require intensive 
inpatient rehabilitation services. As discussed above, ICD-9-CM 
diagnosis codes alone do not provide sufficient information to 
establish whether these pretreatment and severity requirements have 
been met. More detailed information is necessary to determine if the 
patient meets the pretreatment and severity requirements. Verification 
using the medical review compliance method will allow an IRF to have 
these patients included in their compliance percentage. Thus, arthritis 
conditions will continue to be included in the calculation of 
compliance percentages in accordance with the 13 qualifying medical 
conditions in the regulations.
3. Some Congenital Anomaly Diagnosis Codes
    Though congenital deformity is one of the 13 medical conditions 
that may, subject to the limitations spelled out in the regulations, 
qualify for inclusion in the calculation of an IRF's compliance 
percentage under the 60 percent rule, certain congenital anomalies 
represent such serious conditions that a patient with one of these 
conditions would generally not be expected to be able to meaningfully 
participate in an intensive rehabilitation therapy program. For 
example, Craniorachischisis (ICD-9-CM code 740.1) is a congenital 
malformation where the neural tube from the midbrain down to the upper 
sacral region of the spinal cord remains open. The neural tube is the 
embryo's precursor to the central nervous system, which comprises the 
brain and spinal cord. Similarly, Iniencephaly (ICD-9-CD code 740.2) is 
a congenital malformation in which parts of the brain do not form and 
the patient does not have a neck. Because beneficiaries with these 
diagnoses likely would generally not be expected to be able to actively 
participate in an intensive rehabilitation program, we do not believe 
that we can include such cases in an IRF's presumptive compliance 
percentage. That said, as we noted in the proposed rule, if a patient 
with one of these conditions were able to participate in the intensive 
rehabilitation services provided in an IRF, then the MAC would be able 
to count that case toward an IRF's 60 percent rule compliance 
percentage upon medical review. Thus, we proposed the removal of these 
congenital deformity codes, and others that present similar concerns 
that were discussed in the proposed rule from the presumptive 
compliance list.
    We received 4 comments on the proposed changes to the congenital 
anomaly diagnosis codes, which are summarized below.
    Comment: The commenters supported our proposal to remove the 
specified congenital anomaly conditions from the presumptive 
methodology list. These commenters noted that these conditions are rare 
and agreed that patients with these conditions would be unlikely to 
require or to meaningfully participate in intensive inpatient 
rehabilitation services.
    Response: We thank the commenters for supporting our efforts to 
refine the presumptive methodology list so that the list truly 
represents diagnoses that would be expected to indicate that an 
individual meets the medical condition criteria, and that they should 
be included in an IRF's compliance percentage under the presumptive 
compliance method of calculating a compliance percentage. All of the 
congenital anomaly diagnosis codes that we are removing from ICD-9-CM 
Codes That Meet Presumptive Compliance Criteria list are listed in 
Table 9.
4. Unilateral Upper Extremity Amputations Diagnosis Codes
    Though amputation is generally one of the 13 medical conditions 
that qualify for inclusion in the an IRF's compliance calculation for 
the 60 percent rule, we proposed the removal of certain ICD-9-CM codes 
for unilateral upper extremity amputations from the presumptive 
methodology list, ICD-9-CM Codes That Meet Presumptive Compliance 
Criteria, because we believe 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 treatment of one 
or more of the conditions specified in Sec.  412.29(b)(2). We expect 
that some patients with these upper extremity amputations will not 
require close medical supervision by a physician or weekly 
interdisciplinary team conferences to achieve their goals, while others 
may require these services. But we generally believe that 
rehabilitation associated with unilateral upper extremity amputations 
would not 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 the unilateral upper 
extremity amputation, would necessitate treatment in an IRF. That is to 
say, a patient's need for intensive rehabilitation services provided in 
an IRF depends on other conditions which cannot be solely identified 
through the presence of a unilateral upper extremity amputation ICD-9-
CM code. If the patient has comorbidities that would necessitate 
treatment in an IRF, then those comorbidities would qualify the patient 
for inclusion under the presumptive compliance method of calculating 
compliance with the 60 percent rule if one or more of the comorbidities 
are on the presumptive methodology list. If the codes for such a 
patient's comorbidities do not appear in the presumptive compliance 
list, the patient can still be considered for inclusion in the IRF's 
compliance percentage following medical review and confirmation that 
they meet the

[[Page 47890]]

criteria for one or more of the medical conditions in the regulations. 
Thus, we proposed to remove the unilateral upper extremity amputation 
from the presumptive methodology list.
    We received 5 comments on the proposed changes to unilateral upper 
extremity amputation diagnosis codes listed in ICD-9-CM Codes That Meet 
Presumptive Compliance Criteria, which are summarized below.
    Comment: Several commenters supported our proposal to remove 
unilateral upper extremity amputation codes from ICD-9-CM Codes That 
Meet Presumptive Compliance. The commenters agreed with our assessment 
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 the extent that the patient 
would necessitate treatment in an IRF. However, one commenter disagreed 
with the proposal because an inpatient setting offering an intensive 
rehabilitation therapy program would be appropriate for the acute phase 
of wound healing, edema control, and desensitization and pain control 
that these patients may require.
    Response: We agree that unilateral upper extremity amputation 
patients have ongoing therapy needs and may require medical aftercare 
once discharged from an acute hospital stay. However, as long as the 
patient does not have any other comorbidities that have caused 
significant decline in his or her functional ability that, in the 
absence of the unilateral upper extremity amputation, would require 
treatment in an IRF, we do not believe that the patient could be 
presumed to meet the regulatory requirements for inclusion in an IRF's 
compliance percentage.
5. Miscellaneous Diagnosis Codes That Do Not Require Intensive 
Rehabilitation Services for Treatment
    We have identified additional ICD-9-CM diagnosis codes in the 
presumptive methodology list, ICD-9-CM Codes That Meet Presumptive 
Compliance Criteria, which do not, in the absence of additional 
confirmatory information, indicate a patient's need for intensive 
rehabilitation services or that they have met any severity or 
prerequisite treatment requirements for the medical conditions that may 
be counted toward an IRF's compliance percentage. We therefore proposed 
removal of the following ICD-9-CM codes from the list, ICD-9-CM Codes 
That Meet Presumptive Compliance Criteria.
     Tuberculous (abscess, meningitis, and encephalitis or 
myelitis) and Tuberculoma (of the meninges, brain, or spinal cord) 
where a bacterial or histological examination is unspecified or was not 
done (see Table 7 in the proposed rule for a list of the specific 
codes)--Appropriate patient care dictates that the IRF physician must 
attempt to ascertain the means by which the organism, whether it be 
bacteriologic or histologic, was tested. We expect the IRF physician to 
make a good faith effort to determine the type of diagnostic test which 
identified the tuberculous organism. In the circumstances where this is 
impossible (that is, documentation no longer exists), appropriate codes 
remain on the presumptive methodology list. However, we expect the IRF 
physician to make a good faith effort to determine the type of 
diagnostic test which identified the tuberculous organism. We therefore 
proposed to remove these unspecified codes from the list, ICD-9-CM 
Codes That Meet Presumptive Compliance Criteria.
     Postherpetic polyneuropathy (053.13)--This is a condition 
characterized by severe pain, which typically requires pain medication 
or other pain control therapies but does not typically require the 
intensive inpatient rehabilitation services of an IRF. In fact, the 
prescriptive hands-on therapeutic interventions provided in an IRF 
could exacerbate the patient's pain. For these reasons, we proposed the 
removal of this code from ICD-9-CM Codes That Meet Presumptive 
Compliance Criteria.
     Louping ill (063.1)--This ICD-9-CM code refers to an acute 
viral disease primarily of sheep that is not endemic to the United 
States. Louping ill disease has been recognized in Scotland for 
centuries, but only 39 cases of human infection have been described and 
none of these cases have been observed in the United States. Louping 
ill is a disease which has many manifestations, not all requiring 
inpatient rehabilitation hospital services. We believe that the ICD-9-
CM code for this diagnosis does not provide the information necessary 
for us to determine presumptively whether the patient has met the 
criteria for the medical conditions that may be counted toward an IRF's 
compliance percentage. However, as with all of the codes that we 
proposed removing from the list, ICD-9-CM Codes That Meet Presumptive 
Compliance Criteria, if someone with this diagnosis were to be admitted 
to an IRF, medical review could be used to confirm whether the 
regulatory criteria have been met.
     Brain death (348.82)--We believe that it is unlikely that 
a patient with this condition would require the intensive inpatient 
rehabilitation services provided in an IRF. For this reason, we 
proposed the removal of this code from ICD-9-CM Codes That Meet 
Presumptive Compliance Criteria.
     Myasthenia gravis without (acute) exacerbation (358.00)--
Although we believe that a patient experiencing an acute attack of 
Myasthenia Gravis could potentially require the intensive inpatient 
rehabilitative services of an IRF (these individuals are coded with 
ICD-9 code 358.01 ``Myasthenia gravis with (acute) exacerbation''), we 
proposed the removal of non-acute myasthenia gravis from the list, ICD-
9-CM Codes That Meet Presumptive Compliance Criteria because such 
patients would not be experiencing an acute exacerbation of the 
condition and most likely would not require the intensive inpatient 
rehabilitation services provided in an IRF.
     Other specified myotonic disorder (359.29)--codes patients 
with Myotonia fluctuans, myotonia permanens, and paramyotonia 
congenital which are conditions that are exacerbated by exercise. The 
intensive inpatient rehabilitation services of an IRF would be expected 
to exacerbate these conditions, so such care would likely be 
contraindicated. Therefore, we proposed the removal of this code from 
the list, ICD-9-CM Codes That Meet Presumptive Compliance Criteria.
     Periodic paralysis (359.3)--The treatment for periodic 
paralysis involves pharmaceutical interventions and lifestyle changes 
that control exercise and activity, but patients with this condition do 
not generally require the intensive inpatient rehabilitation services 
of an IRF. In fact, it is unclear how the intensive inpatient 
rehabilitation services provided in an IRF would effectively treat this 
condition. Thus, we proposed the removal of this code from the list, 
ICD-9-CM Codes That Meet Presumptive Compliance Criteria.
     Brachial plexus lesions (353.0)--Care and treatment for 
this condition, which affects an upper extremity in a manner that 
typically does not require close medical supervision by a physician or 
weekly interdisciplinary team meetings to reach the patient's goals, 
would not be expect to require the intensive inpatient rehabilitation 
services provided in an IRF. Therefore, we proposed the removal of this 
code from the list, ICD-9-CM Codes That Meet Presumptive Compliance 
Criteria.
     Neuralgic amyothrophy (353.5)--This condition is also 
known as

[[Page 47891]]

Parsonage-Turner syndrome or brachial plexus neuritis. It is a distinct 
peripheral nervous system disorder characterized by attacks of extreme 
neuropathic pain and rapid multifocal weakness and atrophy in the upper 
limbs. Patients with this condition do not typically require close 
medical supervision by a physician or weekly interdisciplinary team 
meetings to reach the patient's therapy goals. Thus, patients with this 
condition do not typically require the intensive inpatient 
rehabilitation services provided in an IRF. Therefore, we proposed the 
removal of this code from the list, ICD-9-CM Codes That Meet 
Presumptive Compliance Criteria.
     Other nerve root and plexus disorders (353.8)--This code 
does not, in the absence of additional information, reveal whether a 
patient is in need of intensive rehabilitation services for treatment 
of one or more of the conditions specified in the regulations. More 
descriptive codes should be used so as to document the appropriateness 
of a patient's IRF admission, and potentially, their inclusion in the 
IRF's compliance percentage. For example, Lumbosacral plexus lesions 
(353.1) could substitute for Other nerve root and plexus disorders 
(353.8). Patients with lumbosacral plexus lesions, however, do not 
typically require the intensive inpatient rehabilitation services 
provided in an IRF. Therefore, we proposed the removal of this code 
from the list, ICD-9-CM Codes That Meet Presumptive Compliance 
Criteria.
    We received 3 comments on the proposed changes to the miscellaneous 
diagnosis codes that we proposed removing from the presumptive 
methodology list in the proposed rule. These are summarized below.
    Comment: The commenters agreed with the proposed removal of the 
miscellaneous diagnosis codes that were discussed in the May 8, 2013 
proposed rule.
    Response: We appreciate the commenters support and thank them for 
their comments.
6. Additional Diagnosis Codes
    During our review of the diagnosis codes on the presumptive 
methodology list we did not identify any ICD-9-CM codes that would be 
appropriate to add to the list. However, we welcomed public comment 
regarding ICD-9-CM diagnosis codes that are not currently on the 
presumptive methodology list that stakeholders believe should be added. 
We noted that any such suggested codes would have to code for one of 
the medical conditions listed at Sec.  412.29(b)(2) (including any 
severity or pretreatment requirements), and require intensive inpatient 
rehabilitation.
    We received one comment suggesting additional diagnosis codes not 
currently listed in ICD-9-CM Codes That Meet Presumptive Compliance 
Criteria..
    Comment: The commenter suggested that we add ICD-9-CM code 348.31--
Metabolic encephalopathy and ICD-9-CM code 331.83--Parkinson's 
Dementia--to the list of qualifying codes.
    Response: We agree that code ICD-9-CM code 348.31--Metabolic 
encephalopathy-- should be added to the list with the other toxic 
encephalopathy codes to ensure that IRFs can code to the highest level 
of specificity. We will add this code to the list of ICD-9-CM Codes 
That Meet Presumptive Compliance Criteria. However, we disagree with 
the commenter's suggestion to add Parkinson's Dementia to the list of 
codes because we cannot determine ``presumptively'' whether these 
patients would be able to meaningfully participate in an intensive 
inpatient rehabilitation program.
    Final Decision: After carefully considering the comments that we 
received on the proposed changes to the ICD-9-CM in the presumptive 
methodology list, we are revising the list of ICD-9-CM codes to be 
removed from ``ICD-9-CM Codes That Meet Presumptive Compliance 
Criteria'' as follows: We are removing the codes listed in Table 9 of 
this final rule. We are also adding ICD-9-CM code 348.31--Metabolic 
encephalopathy to the presumptive methodology list. The revisions 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, 2014.

     Table 9--ICD-9-CM Codes Removed From ``ICD-9-CM Codes That Meet
                    Presumptive Compliance Criteria''
------------------------------------------------------------------------
      ICD-9-CM Code                          Diagnosis
------------------------------------------------------------------------
013.00...................  Tuberculous meningitis, unspecified.
013.01...................  Tuberculous meningitis, bacteriological or
                            histological examination not done.
013.10...................  Tuberculoma of meninges, unspecified.
013.11...................  Tuberculoma of meninges, bacteriological or
                            histological examination not done.
013.20...................  Tuberculoma of brain, unspecified.
013.21...................  Tuberculoma of brain, bacteriological or
                            histological examination not done.
013.30...................  Tuberculous abscess of brain, unspecified.
013.31...................  Tuberculous abscess of brain, bacteriological
                            or histological examination not done.
013.40...................  Tuberculoma of spinal cord, unspecified.
013.41...................  Tuberculoma of spinal cord, bacteriological
                            or histological examination not done.
013.50...................  Tuberculous abscess of spinal cord,
                            unspecified.
013.51...................  Tuberculous abscess of spinal cord,
                            bacteriological or histological examination
                            not done.
013.60...................  Tuberculous encephalitis or myelitis,
                            unspecified.
013.61...................  Tuberculous encephalitis or myelitis,
                            bacteriological or histological examination
                            not done.
047.9....................  Unspecified viral meningitis.
053.13...................  Postherpetic polyneuropathy.
062.9....................  Mosquito-borne viral encephalitis,
                            unspecified.
063.1....................  Louping ill.
063.9....................  Tick-borne viral encephalitis, unspecified.
324.9....................  Intracranial and intraspinal abscess of
                            unspecified site.
335.10...................  Spinal muscular atrophy, unspecified.
335.9....................  Anterior horn cell disease, unspecified.
336.9....................  Unspecified disease of spinal cord.
341.9....................  Demyelinating disease of central nervous
                            system, unspecified.
342.00...................  Flaccid hemiplegia and hemiparesis affecting
                            unspecified side.
342.10...................  Spastic hemiplegia and hemiparesis affecting
                            unspecified side.

[[Page 47892]]

 
342.80...................  Other specified hemiplegia and hemiparesis
                            affecting unspecified side.
342.90...................  Hemiplegia, unspecified, affecting
                            unspecified side.
342.91...................  Hemiplegia, unspecified, affecting dominant
                            side.
342.92...................  Hemiplegia, unspecified, affecting
                            nondominant side.
343.3....................  Congenital monoplegia.
344.5....................  Unspecified monoplegia.
348.82...................  Brain death.
353.0....................  Brachial plexus lesions.
353.2....................  Cervical root lesions, not elsewhere
                            classified.
353.3....................  Thoracic root lesions, not elsewhere
                            classified.
353.4....................  Lumbosacral root lesions, not elsewhere
                            classified.
353.5....................  Neuralgic amyotrophy.
353.8....................  Other nerve root and plexus disorders.
354.5....................  Mononeuritis multiplex.
356.9....................  Unspecified hereditary and idiopathic
                            peripheral neuropathy.
358.00...................  Myasthenia gravis without (acute)
                            exacerbation.
359.29...................  Other specified myotonic disorder.
359.3....................  Periodic paralysis.
432.9....................  Unspecified intracranial hemorrhage.
438.20...................  Late effects of cerebrovascular disease,
                            hemiplegia affecting unspecified side.
438.30...................  Late effects of cerebrovascular disease,
                            monoplegia of upper limb affecting
                            unspecified side.
438.31...................  Late effects of cerebrovascular disease,
                            monoplegia of upper limb affecting dominant
                            side.
438.32...................  Late effects of cerebrovascular disease,
                            monoplegia of upper limb affecting
                            nondominant side.
438.40...................  Late effects of cerebrovascular disease,
                            monoplegia of lower limb affecting
                            unspecified side.
438.50...................  Late effects of cerebrovascular disease,
                            other paralytic syndrome affecting
                            unspecified side.
446.0....................  Polyarteritis nodosa.
711.20...................  Arthropathy in Behcet's syndrome, site
                            unspecified.
711.21...................  Arthropathy in Behcet's syndrome, shoulder
                            region.
711.22...................  Arthropathy in Behcet's syndrome, upper arm.
711.23...................  Arthropathy in Behcet's syndrome, forearm.
711.24...................  Arthropathy in Behcet's syndrome, hand.
711.25...................  Arthropathy in Behcet's syndrome, pelvic
                            region and thigh.
711.26...................  Arthropathy in Behcet's syndrome, lower leg.
711.27...................  Arthropathy in Behcet's syndrome, ankle and
                            foot.
711.28...................  Arthropathy in Behcet's syndrome, other
                            specified sites.
711.29...................  Arthropathy in Behcet's syndrome, multiple
                            sites.
713.0....................  Arthropathy associated with other endocrine
                            and metabolic disorders.
713.1....................  Arthropathy associated with gastrointestinal
                            conditions other than infections.
713.2....................  Arthropathy associated with hematological
                            disorders.
713.3....................  Arthropathy associated with dermatological
                            disorders.
713.4....................  Arthropathy associated with respiratory
                            disorders.
713.6....................  Arthropathy associated with hypersensitivity
                            reaction.
713.7....................  Other general diseases with articular
                            involvement.
714.0....................  Rheumatoid arthritis.
714.1....................  Felty's syndrome.
714.2....................  Other rheumatoid arthritis with visceral or
                            systemic involvement.
714.32...................  Pauciarticular juvenile rheumatoid arthritis.
714.81...................  Rheumatoid lung.
714.89...................  Other specified inflammatory
                            polyarthropathies.
714.9....................  Unspecified inflammatory polyarthropathy.
715.11...................  Osteoarthrosis, localized, primary, shoulder
                            region.
715.12...................  Osteoarthrosis, localized, primary, upper
                            arm.
715.15...................  Osteoarthrosis, localized, primary, pelvic
                            region and thigh.
715.16...................  Osteoarthrosis, localized, primary, lower
                            leg.
715.21...................  Osteoarthrosis, localized, secondary,
                            shoulder region.
715.22...................  Osteoarthrosis, localized, secondary, upper
                            arm.
715.25...................  Osteoarthrosis, localized, secondary, pelvic
                            region and thigh.
715.26...................  Osteoarthrosis, localized, secondary, lower
                            leg.
715.31...................  Osteoarthrosis, localized, not specified
                            whether primary or secondary, shoulder
                            region.
715.32...................  Osteoarthrosis, localized, not specified
                            whether primary or secondary, upper arm.
715.35...................  Osteoarthrosis, localized, not specified
                            whether primary or secondary, pelvic region
                            and thigh.
715.36...................  Osteoarthrosis, localized, not specified
                            whether primary or secondary, lower leg.
716.01...................  Kaschin-Beck disease, shoulder region.
716.02...................  Kaschin-Beck disease, upper arm.
716.05...................  Kaschin-Beck disease, pelvic region and
                            thigh.
716.06...................  Kaschin-Beck disease, lower leg.
716.11...................  Traumatic arthropathy, shoulder region.
716.12...................  Traumatic arthropathy, upper arm.
716.15...................  Traumatic arthropathy, pelvic region and
                            thigh.
716.16...................  Traumatic arthropathy, lower leg.

[[Page 47893]]

 
716.21...................  Allergic arthritis, shoulder region.
716.22...................  Allergic arthritis, upper arm.
716.25...................  Allergic arthritis, pelvic region and thigh.
716.26...................  Allergic arthritis, lower leg.
716.51...................  Unspecified polyarthropathy or polyarthritis,
                            shoulder region.
716.52...................  Unspecified polyarthropathy or polyarthritis,
                            upper arm.
716.55...................  Unspecified polyarthropathy or polyarthritis,
                            pelvic region and thigh.
716.56...................  Unspecified polyarthropathy or polyarthritis,
                            lower leg.
719.30...................  Palindromic rheumatism, site unspecified.
719.31...................  Palindromic rheumatism, shoulder region.
719.32...................  Palindromic rheumatism, upper arm.
719.33...................  Palindromic rheumatism, forearm.
719.34...................  Palindromic rheumatism, hand.
719.35...................  Palindromic rheumatism, pelvic region and
                            thigh.
719.36...................  Palindromic rheumatism, lower leg.
719.37...................  Palindromic rheumatism, ankle and foot.
719.38...................  Palindromic rheumatism, other specified
                            sites.
719.39...................  Palindromic rheumatism, multiple sites.
720.0....................  Ankylosing spondylitis.
720.81...................  Inflammatory spondylopathies in diseases
                            classified elsewhere.
720.89...................  Other inflammatory spondylopathies.
721.91...................  Spondylosis of unspecified site, with
                            myelopathy.
722.70...................  Intervertebral disc disorder with myelopathy,
                            unspecified region.
740.1....................  Craniorachischisis.
740.2....................  Iniencephaly.
741.00...................  Spina bifida with hydrocephalus, unspecified
                            region.
741.90...................  Spina bifida without mention of
                            hydrocephalus, unspecified region.
742.1....................  Microcephalus.
754.30...................  Congenital dislocation of hip, unilateral.
754.31...................  Congenital dislocation of hip, bilateral.
754.32...................  Congenital subluxation of hip, unilateral.
755.20...................  Unspecified reduction deformity of upper
                            limb.
755.21...................  Transverse deficiency of upper limb.
755.22...................  Longitudinal deficiency of upper limb, not
                            elsewhere classified.
755.23...................  Longitudinal deficiency, combined, involving
                            humerus, radius, and ulna (complete or
                            incomplete).
755.24...................  Longitudinal deficiency, humeral, complete or
                            partial (with or without distal
                            deficiencies, incomplete).
755.25...................  Longitudinal deficiency, radioulnar, complete
                            or partial (with or without distal
                            deficiencies, incomplete).
755.26...................  Longitudinal deficiency, radial, complete or
                            partial (with or without distal
                            deficiencies, incomplete).
755.27...................  Longitudinal deficiency, ulnar, complete or
                            partial (with or without distal
                            deficiencies, incomplete).
755.28...................  Longitudinal deficiency, carpals or
                            metacarpals, complete or partial (with or
                            without incomplete phalangeal deficiency).
755.30...................  Unspecified reduction deformity of lower
                            limb.
755.4....................  Reduction deformities, unspecified limb.
755.51...................  Congenital deformity of clavicle.
755.53...................  Radioulnar synostosis.
755.61...................  Coxa valga, congenital.
755.62...................  Coxa vara, congenital.
755.63...................  Other congenital deformity of hip (joint).
756.50...................  Congenital osteodystrophy, unspecified.
800.09...................  Closed fracture of vault of skull without
                            mention of intracranial injury, with
                            concussion, unspecified.
800.19...................  Closed fracture of vault of skull with
                            cerebral laceration and contusion, with
                            concussion, unspecified.
800.29...................  Closed fracture of vault of skull with
                            subarachnoid, subdural, and extradural
                            hemorrhage, with concussion, unspecified.
800.39...................  Closed fracture of vault of skull with other
                            and unspecified intracranial hemorrhage,
                            with concussion, unspecified.
800.49...................  Closed fracture of vault of skull with
                            intracranial injury of other and unspecified
                            nature, with concussion, unspecified.
800.59...................  Open fracture of vault of skull without
                            mention of intracranial injury, with
                            concussion, unspecified.
800.69...................  Open fracture of vault of skull with cerebral
                            laceration and contusion, with concussion,
                            unspecified.
800.79...................  Open fracture of vault of skull with
                            subarachnoid, subdural, and extradural
                            hemorrhage, with concussion, unspecified.
800.89...................  Open fracture of vault of skull with other
                            and unspecified intracranial hemorrhage,
                            with concussion, unspecified.
800.99...................  Open fracture of vault of skull with
                            intracranial injury of other and unspecified
                            nature, with concussion, unspecified.
801.09...................  Closed fracture of base of skull without
                            mention of intra cranial injury, with
                            concussion, unspecified.
801.19...................  Closed fracture of base of skull with
                            cerebral laceration and contusion, with
                            concussion, unspecified.
801.29...................  Closed fracture of base of skull with
                            subarachnoid, subdural, and extradural
                            hemorrhage, with concussion, unspecified.
801.39...................  Closed fracture of base of skull with other
                            and unspecified intracranial hemorrhage,
                            with concussion, unspecified.
801.49...................  Closed fracture of base of skull with
                            intracranial injury of other and unspecified
                            nature, with concussion, unspecified.
801.59...................  Open fracture of base of skull without
                            mention of intracranial injury, with
                            concussion, unspecified.
801.69...................  Open fracture of base of skull with cerebral
                            laceration and contusion, with concussion,
                            unspecified.
801.79...................  Open fracture of base of skull with
                            subarachnoid, subdural, and extradural
                            hemorrhage, with concussion, unspecified.
801.89...................  Open fracture of base of skull with other and
                            unspecified intracranial hemorrhage, with
                            concussion, unspecified.
801.99...................  Open fracture of base of skull with
                            intracranial injury of other and unspecified
                            nature, with concussion, unspecified.
803.09...................  Other closed skull fracture without mention
                            of intracranial injury, with concussion,
                            unspecified.
803.19...................  Other closed skull fracture with cerebral
                            laceration and contusion, with concussion,
                            unspecified.

[[Page 47894]]

 
803.29...................  Other closed skull fracture with
                            subarachnoid, subdural, and extradural
                            hemorrhage, with concussion, unspecified.
803.39...................  Other closed skull fracture with other and
                            unspecified intracranial hemorrhage, with
                            concussion, unspecified.
803.49...................  Other closed skull fracture with intracranial
                            injury of other and unspecified nature, with
                            concussion, unspecified.
803.59...................  Other open skull fracture without mention of
                            intracranial injury, with concussion,
                            unspecified.
803.69...................  Other open skull fracture with cerebral
                            laceration and contusion, with concussion,
                            unspecified.
803.79...................  Other open skull fracture with subarachnoid,
                            subdural, and extradural hemorrhage, with
                            concussion, unspecified.
803.89...................  Other open skull fracture with other and
                            unspecified intracranial hemorrhage, with
                            concussion, unspecified.
803.99...................  Other open skull fracture with intracranial
                            injury of other and unspecified nature, with
                            concussion, unspecified.
804.19...................  Closed fractures involving skull or face with
                            other bones, with cerebral laceration and
                            contusion, with concussion, unspecified.
804.29...................  Closed fractures involving skull or face with
                            other bones with subarachnoid, subdural, and
                            extradural hemorrhage, with concussion,
                            unspecified.
804.39...................  Closed fractures involving skull or face with
                            other bones, with other and unspecified
                            intracranial hemorrhage, with concussion,
                            unspecified.
804.49...................  Closed fractures involving skull or face with
                            other bones, with intracranial injury of
                            other and unspecified nature, with
                            concussion, unspecified.
804.69...................  Open fractures involving skull or face with
                            other bones, with cerebral laceration and
                            contusion, with concussion, unspecified.
804.79...................  Open fractures involving skull or face with
                            other bones with subarachnoid, subdural, and
                            extradural hemorrhage, with concussion,
                            unspecified.
804.89...................  Open fractures involving skull or face with
                            other bones, with other and unspecified
                            intracranial hemorrhage, with concussion,
                            unspecified.
804.99...................  Open fractures involving skull or face with
                            other bones, with intracranial injury of
                            other and unspecified nature, with
                            concussion, unspecified.
806.00...................  Closed fracture of C1-C4 level with
                            unspecified spinal cord injury.
806.05...................  Closed fracture of C5-C7 level with
                            unspecified spinal cord injury.
806.10...................  Open fracture of C1-C4 level with unspecified
                            spinal cord injury.
806.15...................  Open fracture of C5-C7 level with unspecified
                            spinal cord injury.
806.20...................  Closed fracture of T1-T6 level with
                            unspecified spinal cord injury.
806.25...................  Closed fracture of T7-T12 level with
                            unspecified spinal cord injury.
806.30...................  Open fracture of T1-T6 level with unspecified
                            spinal cord injury.
806.35...................  Open fracture of T7-T12 level with
                            unspecified spinal cord injury.
806.60...................  Closed fracture of sacrum and coccyx with
                            unspecified spinal cord injury.
806.70...................  Open fracture of sacrum and coccyx with
                            unspecified spinal cord injury.
820.8....................  Closed fracture of unspecified part of neck
                            of femur.
820.9....................  Open fracture of unspecified part of neck of
                            femur.
839.10...................  Open dislocation, cervical vertebra,
                            unspecified.
850.5....................  Concussion with loss of consciousness of
                            unspecified duration.
851.09...................  Cortex (cerebral) contusion without mention
                            of open intracranial wound, with concussion,
                            unspecified.
851.19...................  Cortex (cerebral) contusion with open
                            intracranial wound, with concussion,
                            unspecified.
851.29...................  Cortex (cerebral) laceration without mention
                            of open intracranial wound, with concussion,
                            unspecified.
851.39...................  Cortex (cerebral) laceration with open
                            intracranial wound, with concussion,
                            unspecified.
851.49...................  Cerebellar or brain stem contusion without
                            mention of open intracranial wound, with
                            concussion, unspecified.
851.59...................  Cerebellar or brain stem contusion with open
                            intracranial wound, with concussion,
                            unspecified.
851.69...................  Cerebellar or brain stem laceration without
                            mention of open intracranial wound, with
                            concussion, unspecified.
851.79...................  Cerebellar or brain stem laceration with open
                            intracranial wound, with concussion,
                            unspecified.
851.89...................  Other and unspecified cerebral laceration and
                            contusion, without mention of open
                            intracranial wound, with concussion,
                            unspecified.
852.09...................  Subarachnoid hemorrhage following injury
                            without mention of open intracranial wound,
                            with concussion, unspecified.
852.19...................  Subarachnoid hemorrhage following injury with
                            open intracranial wound, with concussion,
                            unspecified.
852.29...................  Subdural hemorrhage following injury without
                            mention of open intracranial wound, with
                            concussion, unspecified.
852.39...................  Subdural hemorrhage following injury with
                            open intracranial wound, with concussion,
                            unspecified.
852.49...................  Extradural hemorrhage following injury
                            without mention of open intracranial wound,
                            with concussion, unspecified.
852.59...................  Extradural hemorrhage following injury with
                            open intracranial wound, with concussion,
                            unspecified.
853.09...................  Other and unspecified intracranial hemorrhage
                            following injury without mention of open
                            intracranial wound, with concussion,
                            unspecified.
853.19...................  Other and unspecified intracranial hemorrhage
                            following injury with open intracranial
                            wound, with concussion, unspecified.
854.09...................  Intracranial injury of other and unspecified
                            nature without mention of open intracranial
                            wound, with concussion, unspecified.
854.19...................  Intracranial injury of other and unspecified
                            nature with open intracranial wound, with
                            concussion, unspecified.
887.0....................  Traumatic amputation of arm and hand
                            (complete) (partial), unilateral, below
                            elbow, without mention of complication.
887.1....................  Traumatic amputation of arm and hand
                            (complete) (partial), unilateral, below
                            elbow, complicated.
887.2....................  Traumatic amputation of arm and hand
                            (complete) (partial), unilateral, at or
                            above elbow, without mention of
                            complication.
887.3....................  Traumatic amputation of arm and hand
                            (complete) (partial), unilateral, at or
                            above elbow, complicated.
887.4....................  Traumatic amputation of arm and hand
                            (complete) (partial), unilateral, level not
                            specified, without mention of complication.
887.5....................  Traumatic amputation of arm and hand
                            (complete) (partial), unilateral, level not
                            specified, complicated.
941.00...................  Burn of unspecified degree of face and head,
                            unspecified site.
941.02...................  Burn of unspecified degree of eye (with other
                            parts of face, head, and neck).
941.09...................  Burn of unspecified degree of multiple sites
                            [except with eye] of face, head, and neck.
942.00...................  Burn of unspecified degree of trunk,
                            unspecified site.
942.01...................  Burn of unspecified degree of breast.
942.02...................  Burn of unspecified degree of chest wall,
                            excluding breast and nipple.
942.03...................  Burn of unspecified degree of abdominal wall.

[[Page 47895]]

 
942.04...................  Burn of unspecified degree of back [any
                            part].
942.05...................  Burn of unspecified degree of genitalia.
942.09...................  Burn of unspecified degree of other and
                            multiple sites of trunk.
943.00...................  Burn of unspecified degree of upper limb,
                            except wrist and hand, unspecified site.
943.01...................  Burn of unspecified degree of forearm.
943.02...................  Burn of unspecified degree of elbow.
943.03...................  Burn of unspecified degree of upper arm.
943.04...................  Burn of unspecified degree of axilla.
943.05...................  Burn of unspecified degree of shoulder.
943.06...................  Burn of unspecified degree of scapular
                            region.
943.09...................  Burn of unspecified degree of multiple sites
                            of upper limb, except wrist and hand.
943.30...................  Full-thickness skin [third degree, not
                            otherwise specified] of upper limb,
                            unspecified site.
943.40...................  Deep necrosis of underlying tissues [deep
                            third degree] without mention of loss of a
                            body part, of upper limb, unspecified site.
943.50...................  Deep necrosis of underlying tissues [deep
                            third degree] with loss of a body part, of
                            upper limb, unspecified site.
944.30...................  Full-thickness skin loss [third degree, not
                            otherwise specified] of hand, unspecified
                            site.
944.40...................  Deep necrosis of underlying tissues [deep
                            third degree] without mention of loss of a
                            body part, hand, unspecified site.
944.50...................  Deep necrosis of underlying tissues [deep
                            third degree] with loss of a body part, of
                            hand, unspecified site.
945.00...................  Burn of unspecified degree of lower limb
                            [leg], unspecified site.
945.01...................  Burn of unspecified degree of toe(s) (nail).
945.02...................  Burn of unspecified degree of foot.
945.03...................  Burn of unspecified degree of ankle.
945.04...................  Burn of unspecified degree of lower leg.
945.05...................  Burn of unspecified degree of knee.
945.06...................  Burn of unspecified degree of thigh [any
                            part].
945.09...................  Burn of unspecified degree of multiple sites
                            of lower limb(s).
945.20...................  Blisters, epidermal loss [second degree] of
                            lower limb [leg], unspecified site.
945.40...................  Deep necrosis of underlying tissues [deep
                            third degree] without mention of loss of a
                            body part, lower limb [leg], unspecified
                            site.
945.50...................  Deep necrosis of underlying tissues [deep
                            third degree] with loss of a body part, of
                            lower limb [leg], unspecified site.
949.4....................  Deep necrosis of underlying tissue [deep
                            third degree] without mention of loss of a
                            body part, unspecified.
949.5....................  Deep necrosis of underlying tissues [deep
                            third degree] with loss of a body part,
                            unspecified.
997.60...................  Unspecified complication of amputation stump.
------------------------------------------------------------------------

IX. Non-Quality Related Revisions to IRF-PAI Sections

    Under section 1886(j)(2)(D) of the Act, the Secretary is authorized 
to require rehabilitation facilities that provide inpatient hospital 
services to submit such data as the Secretary deems necessary to 
establish and administer the prospective payment system under 
subsection P. The collection of patient data is indispensable for the 
successful development and implementation of the IRF payment system. In 
the August 7, 2001 final rule, the inpatient rehabilitation facility 
patient assessment instrument (IRF-PAI) was adopted as the standardized 
patient assessment instrument under the IRF prospective payment system 
(PPS). The IRF-PAI was established, and is still used to gather data to 
classify patients for payment under the IRF PPS. As discussed in 
section XIV of this final rule, it is also now used to collect certain 
data for the IRF Quality Reporting Program. IRFs are currently required 
to complete an IRF-PAI for every Medicare Part A or C patient who is 
admitted to, or discharged from an IRF. (We note that Medicare Part B 
was inappropriately listed in the proposed rule. We are clarifying that 
IRFs are not required to submit the IRF-PAI for Medicare Part B 
patients.)
    Although there have been significant advancements in the industry, 
no IRF PPS payment-related changes have been made to the IRF-PAI form 
since its implementation in FY 2002. In the FY 2014 IRF PPS proposed 
rule, we proposed amending certain response code options, adding 
additional data points, removing certain outdated items and changing 
certain references to ensure that our policies reflect the current data 
needs of the IRF PPS program.

A. Revisions

    We proposed to amend the response codes on the following items in 
the IRF-PAI:

 Item 15A: Admit From (Formerly item 15)
 Item 16A: Pre-Hospital Living Situation (Formerly item 16)
 Item 44D: Patient's Discharge Destination/Living Setting 
(Formerly item 44A)

    To minimize possible confusion due to the use of different sets of 
status codes on the IRF-PAI and the CMS-1450 (also referred to as the 
UB-04) claim form, we believe that the IRF-PAI status codes should be 
updated to mirror those used on the UB-04 claim form. We also believed 
this update would help with consistency, ultimately decreasing the rate 
of coding submission errors on the UB-04 claim form. We believed that 
would provide response options that mirror other commonly used 
instruments in the Medicare context allowing providers to use only one 
common set of response codes. We proposed to amend the response options 
for the three items listed above to:

 01--Home (private home/apt., board/care, assisted living, 
group home)
 02--Short-term General Hospital
 03--Skilled Nursing Facility (SNF)
 50--Hospice
 62--Another Inpatient Rehabilitation Facility
 63--Long-Term Care Hospital (LTCH)
 64--Medicaid Nursing Facility
 65--Inpatient Psychiatric Facility
 66--Critical Access Hospital
 99--Not Listed

    We also proposed to update the options for responding to item 20B: 
Secondary Source. While not expressly stated in the preamble, but 
evident from

[[Page 47896]]

the web-posted draft of the IRF-PAI that was cross-referenced in the 
proposed rule, we also proposed to amend the response codes for 20A: 
Primary Source as well. As we noted in the proposed rule, we find that 
the current response options for these data elements result in the 
collection of patient information that we do not currently need to 
operate the IRF PPS and the IRF quality programs. Therefore, we limit 
our data collections to those which are currently needed, and in an 
effort to decrease burden on IRFs through the implementation of 
simplified response options, we proposed to limit the secondary source 
response options to the following:

 02--Medicare--Fee for Service
 51--Medicare--Medicare Advantage
 99--Not Listed

B. Additions

    Further, we proposed to add (or expand) the following items to the 
IRF-PAI:
 Item 25A: Height
 Item 26A: Weight
 Item 24: Comorbid Conditions (15 additional spaces)
 Item 44C: Was the patient discharged alive?
 Signature of Persons Completing the IRF-PAI

    Items 25A: Height and 26A: Weight, are important items to collect 
for using in the classification of facilities for payment under the 
IRF-PPS as well as for the risk adjustment of quality measures (as 
described in section XIV of this final rule). In the regulations at 
section 412.29(b)(2), we specify a list of comorbid conditions that, if 
certain conditions are met, may qualify a patient for inclusion in an 
IRF's 60 percent rule compliance percentage. For example, a patient 
with a lower-extremity joint replacement comorbidity could qualify as 
an IRF patient under the 60 percent rule compliance percentage if they 
have one or more of the following:

 A bilateral joint replacement
 Is over the age of 85
 Has a BMI greater than 50.

The patient's BMI is calculated using height and weight. By adding a 
patient's height and weight information to the IRF-PAI, we will for the 
first time have enough information on the number and types of patients 
being treated for a lower-extremity joint replacement with a BMI 
greater than 50 for purposes of analyzing the effects of the 60 percent 
rule.
    We also proposed to add 15 additional spaces for providers to 
document patients' comorbid medical conditions at item 24: Comorbid 
Conditions (located in the medical information section of the IRF-PAI). 
The IRF-PAI currently has ten spaces available for providers to enter 
ICD codes for comorbid conditions. Including the 15 additional proposed 
spaces for this item will give providers a total of 25 spaces on the 
IRF-PAI. Such expansion will enable IRFs to code with greater 
specificity which may result in accounting for additional 
comorbidities. Further identification of patient characteristics may 
assist in care planning, payment assignment, and presumptive compliance 
method compliance calculations. Furthermore, in order to stay aligned, 
we believe that the number of data elements allowed on the IRF-PAI for 
item 24: Comorbid Conditions, should mirror the number of spaces 
currently available for providers to document patients' comorbidities 
on the UB-04 claim. Additionally, the ICD-10 coding scheme will become 
effective on October 1, 2014, and is much more specific than the 
current ICD-9 coding. Therefore, when the agency moves from ICD-9 to 
ICD-10 coding, providers may need the additional spaces to code because 
of the greater specificity under ICD-10.
    Furthermore, we proposed to add a new item 44C: ``Was the patient 
discharged alive?'' to the discharge information section on the IRF-
PAI. Adding this item as a standalone item would allow facilities that 
reply ``no'' to 44C to skip items 44D, 44E, and 45, which describe a 
living patient's discharge destination. This will also reduce the 
burden on the time it takes providers to complete the IRF-PAI. 
Facilities that respond ``yes'' to item 44C will complete items 44D, 
44E and 45 as they apply to the patient. We believe that adding this 
question as a standalone item would provide greater clarity for 
providers when documenting patient information on the IRF-PAI.
    We also proposed to add a page to the IRF-PAI dedicated as the 
signature page for persons completing the IRF-PAI. As of the effective 
date of the IRF Coverage Requirements (see the August 7, 2009 FY 2010 
IRF PPS final rule (74 FR 39762)) a patient's IRF-PAI must be 
maintained in their medical record at the IRF (electronic or paper 
format), and the information in the IRF-PAI must correspond with all of 
the information provided in the patient's IRF medical record. We 
received multiple public comments on the FY 2010 IRF PPS proposed rule 
regarding the requirement to include the IRF-PAI in the medical record. 
Commenters questioned whether IRFs would need to adhere to the 
conditions of participation in Sec.  482.24(c)(1) that require all 
patient medical record entries must be legible, complete, dated, timed, 
and authenticated in written or electronic form by the person 
responsible for providing or evaluating the service provided, 
consistent with hospital policies and procedures. When we responded (at 
http://cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Downloads/IRF-Training-call_version_1.pdf) that 
IRFs would need to adhere to Sec.  482.24(c)(1), providers responded by 
asking for a place on the IRF-PAI where they would be able to document 
the required authentication. The addition of a signature page for 
persons completing the IRF-PAI would fulfill providers' request to have 
an organized way to document who in the IRF has completed an IRF-PAI 
item and/or section when the information was completed. We also believe 
that the addition of a signature page for those completing the IRF-PAI 
will ensure that providers are satisfying both the IRF coverage 
requirements and the conditions of participation requirements.

C. Deletions

    We proposed to delete the following items from the IRF-PAI:

 Item 18: Pre-Hospital Vocational Category
 Item 19: Pre-Hospital Vocational Effort
 Item 25: Is patient comatose at admission?
 Item 26: Is patient delirious at admission?
 Item 28: Clinical signs of dehydration

    Because we no longer believe that these items are necessary and in 
the interest of reducing burden on providers, we would like to delete 
them.
    Items 18: Pre-Hospital Vocational Category and 19: Pre-Hospital 
Vocational Effort (currently located in the admission identification 
section on the IRF-PAI) are not used for payment or quality purposes. 
While these items will be removed from the IRF-PAI, we note that these 
data elements could be significant in a treatment context. For example, 
we believe that these data elements could be relevant during the care 
planning/discharge process, as well as during interdisciplinary team 
meetings. Therefore, we would expect them to appear in the patient's 
medical record.
    We also note, that items 25: Is patient comatose at admission, 26: 
Is patient delirious at admission, and 28: Clinical signs of 
dehydration (currently located in the medical information section on 
the IRF-PAI) are voluntary items that

[[Page 47897]]

are not used for our payment or quality program purposes. Therefore, we 
do not believe it is necessary to collect this information on the IRF-
PAI. Furthermore, to the extent such information would be relevant to 
the provision of patient care; this information should be captured in 
either the transfer documentation from the referring physician, or the 
patients' initial assessment documentation. As such, continuing to 
require this information on the IRF-PAI would be duplicative since the 
items should be well documented in the patients' medical record from 
their stay at the facility.

D. Changes

    We proposed to replace all references to the ICD-9-CM code(s) in 
the IRF-PAI with references to ICD code(s). This change would allow CMS 
to forgo making additional changes to the IRF-PAI when the adopted ICD 
code(s) change.
Proposed Technical Correction
    We proposed technical corrections at items 44D, 44E and 45 to 
conform to the additions above. We believe that adding language to 
these items indicating that the question can be skipped depending upon 
how item 44C is answered, will help reduce submission errors for 
providers when filling out the IRF-PAI.
    A draft of the IRF-PAI, with the revisions proposed in the proposed 
rule was made available for download on the IRF PPS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/IRFPAI.html.
    We received 18 comments on the proposed changes to the non-quality 
related revisions to IRF-PAI sections, which are summarized below.
    Comment: Overall, the majority of commenters commended CMS for 
assessing the non-quality related portions of the IRF-PAI for 
refinements.
    Response: We appreciate the support from the commenters regarding 
the changes to the IRF-PAI. We believe that the IRF-PAI changes will 
promote efficiency and clarity for providers as well as ensure that our 
policies reflect the current data needs required to support the IRF PPS 
program.
    Comment: Many of the commenters supported our proposal to align the 
status codes on the IRF-PAI with those used on the UB-04 claim form. 
Commenters agreed that the proposed changes would help providers avoid 
coding errors. More specifically, two commenters commended our proposed 
removal of the status code 13 (sub-acute care) stating that the term is 
not clearly defined and is more commonly used as a marketing term.
    Response: We appreciate the support from commenters regarding the 
proposed changes to the IRF-PAI. We believe that streamlining claim 
submission codes and IRF-PAI status codes will ease the administrative 
burden for providers as well as reduce coding errors.
    Comment: One commenter suggested that we should delete item 44E: 
Was patient discharged with Home Health Services, and instead add code 
06-Home under care of organized home health service organization, to 
item 44D: Patient's discharge destination/living setting. Likewise, 
another commenter recommended that we remove the proposed new item 44C: 
Was the patient discharged alive and add the status code option 20-
Expired. Additionally, another commenter supported our proposal to add 
50-Hospice as a status code option, however, suggested that CMS should 
add the status code option 51-Hospice (Institutional Facility). The 
commenters suggested that these status code options would more 
accurately reflect the UB-04 claim form.
    Response: As we mentioned in the proposed rule, many of the changes 
we made on the non-quality related IRF-PAI items were to initiate 
standardization between IRF claims and the IRF-PAI when coding 
patients. Our intent in mirroring the IRF-PAI status codes with the UB-
04 claim form codes was to help providers avoid future coding errors. 
After reviewing the comments submitted, we agree with most of the 
commenters suggestions to add several status code options to further 
mirror the UB-04 claim form. In addition to finalizing the proposed 
status code changes, we will also add the following status code 
options, which are identical to the options on the UB-04 claim form to 
items 15A: Admit From; 16A: Pre-hospital Living Setting; and 44D: 
Patient's discharge destination/living setting:

04--Intermediate Care Facility
06--Home under care of organized home health service organization
51--Hospice (Institutional Facility)
61--Within institution to swing bed

We do not agree with the commenters suggestion to remove item 44C: Was 
the patient discharged alive, and add 20-Expired as a status code 
option. Although the status code would mirror the UB-04 claim form, we 
do not believe ``expired'' is an adequate response when providers are 
answering a question regarding the patient's discharge destination. If 
a patient expires while in the IRF, they are not discharged from the 
facility therefore, we would still need item 44C: Was the patient 
discharged alive. Additionally, adding this item as a standalone item 
allows clear delineation of a section of the IRF-PAI that providers 
would not have to report if the reply to 44C is ``no''. Items 44D and 
45, which describe a living patient's discharge destination, can then 
be skipped. Finally, in light of the addition of status code option 
06--Home under care of organized home health service organization; we 
will remove item 44E: Was patient discharged with Home Health Services 
live, as this item would be redundant for providers to answer.
    Comment: One commenter suggested that we should consider creating a 
new status code option 08-subacute (SNF with continued therapy plan of 
care/skilled needs).
    Response: We appreciate the commenter's suggestion and will 
consider creating a new status code option 08-Subacute (SNF with 
continued therapy plan of care/skilled needs) during future rulemaking. 
However, our intentions of changing the status code options on the IRF-
PAI were to mirror those on the UB-04 claim form, and this suggestion 
does not conform to those changes as it is not currently necessary for 
IRF payment or quality reporting.
    Comment: Several commenters expressed concern that the coding 
changes to the IRF-PAI for items 15A: Admitted From; 16A: Pre-Hospital 
Living Situation; and 44D: Patient's Discharge Destination, are not 
optimal and suggested that we retain the current IRF-PAI coding options 
for these items. The commenters stated that the data collected by IRFs 
in response to these items provide valuable information for quality 
review and operational management. Limiting the response options too 
severely, the commenters indicated, would impair an IRF's ability to 
collect and retain valuable information for payers other than Medicare.
    Response: We appreciate the commenters suggestion as we continue to 
believe that the status code changes are necessary to provide better 
clarity and alignment with the UB-04 claim form, ultimately reducing 
coding submission errors. Although we have removed some status code 
options, we do not believe that we are preventing or deterring IRFs 
from continuing to collect patient information and document it within 
the medical record.
    Comment: One commenter disagreed with our proposal to group the 
existing status codes for private home, board/care, assisted living and 
group home

[[Page 47898]]

together under the proposed status code 01--Home (private home/apt., 
board/care, assisted living, group home) and to completely remove the 
code options for transitional living and intermediate care from items 
15A: Admitted From; 16A: Pre-Hospital Living Situation; and 44D: 
Patient's Discharge Destination. The commenter recommended that if the 
proposed status code changes are finalized, we should consider adding 
transitional living and intermediate care under the status code 01--
Home.
    Response: As we have previously mentioned, our goal in proposing to 
change some of the status code options on the IRF-PAI is to be as 
consistent as possible with the UB-04 claim form. Therefore, we 
disagree with the commenters' suggestion to ungroup the existing status 
codes for private home, board/care, assisted living, and group home 
under the proposed status code 01--Home. But we do agree with the 
commenter that intermediate care and transitional living are status 
code options that should be included in the IRF-PAI. Therefore, we will 
add status code 04--Intermediate care. Furthermore, we will include 
transitional living as one of the locations listed in status code 01--
Home to the response options.
    Comment: Several commenters expressed concerns with our proposed 
change to limit the status code options in item 22B: Secondary Source, 
to only 02--Medicare-Fee For Service; 51 Medicare-Medicare Advantage; 
and 99 Not Listed, stating that IRFs would lose the ability to track 
other payer sources beyond Medicare. One commenter suggested that if we 
remove the majority of the code options in item 20B: Secondary Source, 
then we should display the current comprehensive list of payment 
sources under item 20A: Primary Source. Additionally, the commenter 
recommended that we add Medicaid Expansion and the Health Insurance 
Marketplace as status code options. Another commenter stated that 
decreasing the number of code options will not really save time and 
burden for providers.
    Response: We respectfully disagree with the commenters and continue 
to believe that decreasing the number of code options will allow 
providers to code more accurately and reduce burden. However, even if 
this is not the case, we do not have authority to collect the various 
information requests the commenters suggested since the information is 
not currently relevant for administration of the IRF PPS or for the IRF 
Quality Reporting Program. According to the Privacy Act at 5 U.S.C. 
552a(e)(1), an ``agency that maintains a system of records shall--(1) 
maintain in its records only such information about an individual as is 
relevant and necessary to accomplish a purpose of the agency required 
to be accomplished by statute or executive order of the President.'' 
When an IRF uploads the IRF-PAI data, it is entered into CMS's Privacy 
Act System of Records. As the status code options removed from the 
secondary source item are currently irrelevant to both the IRF payment 
system and the IRF Quality Reporting Program, we do not have statutory 
authority to continue to collect this information. Furthermore, we do 
not believe that we are limiting IRFs from continuing to collect and 
document payer source information by way of their own internal 
mechanisms. Furthermore, as we previously mentioned, it was our intent 
to include item 20A: Primary Source regarding this update, as the list 
of status code options identified in the Payer Information section 
relates to both items 20A and 20B. Additionally, the draft version of 
the IRF-PAI that went on display with the proposed rule very clearly 
depicts the changes; therefore, we will finalize our proposals as they 
were described in the proposed rule and the draft IRF-PAI
    Comment: The majority of commenters supported the additional 15 
extra spaces in item 24: Comorbid Conditions, and the new items 25A: 
Height and 26A Weight. One commenter suggested that items 25A and 26A 
would be more beneficial if time parameters such as ``admission'' or 
``discharge'' were placed on the measure. One commenter suggested that 
adding items 25A: Height; 26A Weight; and 27: Swallowing Status, to the 
IRF-PAI would be redundant, as this information is already in the 
patient's medical record. This commenter also requested clarification 
as to whether these items would be mandatory or optional requirements 
on the IRF-PAI.
    Response: We appreciate the support from the commenters regarding 
the proposed addition of the 15 extra spaces in item 24: Comorbid 
Conditions, and the new items 25A: Height and 26A Weight. We believe 
these items are pertinent information to add to the IRF-PAI and allow 
additional information to be collected after the transition to the more 
specific ICD-10-CM codes. We note that the proposed items 25A: Height 
and 26A: Weight already indicate ``on admission'' as a time parameter. 
Additionally, items 25A: Height and 26A: Weight will be mandatory items 
on the IRF-PAI, as these items are needed for payment and quality 
measurement purposes. CMS did not propose any changes to item 27: 
Swallowing Status, therefore, it will remain a voluntary item.
    We disagree with the commenter's statement that items 25A and 26A 
are redundant, as all of the information on the IRF-PAI must also be 
included in some form in the medical record. We require this 
information on the IRF-PAI so that it may be submitted to us to enable 
the implementation of the IRF PPS and the IRF quality reporting 
program. Therefore, we are finalizing both of these items as they were 
proposed.
    Comment: The majority of commenters supported the addition of a 
signature page to the IRF-PAI. A few commenters suggested that we allow 
an electronic signature to satisfy this new requirement. One commenter 
suggested that we add a prompt on the signature page for ``time'' in 
order to comply with the requirements at 482.24(c)(1).
    Response: We appreciate the commenters' suggestions regarding the 
proposed signature page in the IRF-PAI. In order to stay consistent 
with our current procedures, providers should reference the 
clarification to our coverage requirements regarding the use of 
electronic signatures located at (http://cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Downloads/ElecSysClar.pdf).
    Should a formal policy be established for the development of 
Medicare's formal electronic signature policies, we may need to revise 
or further clarify these criteria to ensure that it is in accordance 
with those policies.
    Additionally, we agree with the commenters' suggestion that a 
``time'' prompt should be added to the signature page. Therefore, we 
will add an additional column for providers to indicate the time that 
they completed an item and/or section of the IRF-PAI.
    Comment: A few commenters requested that we clarify and/or provide 
more specific instructions for completing the proposed signature page 
in the IRF-PAI. One commenter was unclear as to why multiple signatures 
are required, as the information on the IRF-PAI is documented and 
authenticated within the medical record documentation. Another 
commenter requested clarification regarding the use of the word 
``submit'' when referring to the sentence, ``I also certify that I am 
authorized to submit this information by this facility on its behalf.'' 
The commenter acknowledged that anyone who contributes to the IRF-PAI 
is, in effect, involved in the submitting of data to us. However, in 
common parlance, ``submit'' often refers to the actual act of 
electronically submitting the final product to us.

[[Page 47899]]

    Response: We plan to provide more specific instructions for 
completing the signature page in the IRF-PAI training manual that will 
accompany the revised IRF-PAI form. We understand the commenter's 
concerns regarding the attestation statement on the signature page, and 
we are deleting the statement, ``I also certify that I am authorized to 
submit this information by this facility on its behalf.'' Removal of 
this statement from the attestation should clarify what providers are 
attesting to, and alleviate any concerns.
    Comment: Several commenters expressed concern that the proposed 
addition of the signature page is burdensome and unnecessary because 
staff entries in the electronic health record are already stamped with 
date and time, in addition to the name and credentials of the person 
entering the information. These commenters stated that it would be 
burdensome to track down individuals to sign an additional sheet of 
paper.
    Response: When the coverage requirements became effective January 
1, 2010, providers requested a place on the IRF-PAI where they could 
sign, date, and record the time in order to comply with the hospital 
conditions of participation (CoPs). We are taking this opportunity to 
acknowledge those requests made by the industry. Additionally, the 
signature item clarifies for the provider and CMS that the requirement 
has been met.
    Comment: One commenter requested that we provide a definition for 
the new discharge status code 64--Medicaid Nursing Facility.
    Response: Medicaid coverage of nursing facility services is 
available only for services provided in a nursing home licensed and 
certified by the state survey agency as a Medicaid Nursing Facility 
(NF). Medicaid nursing facility services are available only when other 
payment options are unavailable and the individual is eligible for the 
Medicaid program. For more information please reference the link 
provided: http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Delivery-Systems/Institutional-Care/Nursing-Facilities-NF.html.
    Comment: One commenter recommended that the IRF-PAI changes be 
delayed one year to coincide with the implementation of ICD-10, so that 
providers can incorporate all of the changes at one time. This 
commenter suggested that a delayed effective date for the IRF-PAI 
changes would decrease burden by only having to make updates to 
information systems once.
    Response: We proposed an effective date of October 1, 2014, for all 
of the finalized IRF-PAI changes. In concert with stakeholder 
recommendations, we are finalizing this proposal which will help 
alleviate burden on providers. We believe that the October 1, 2014 
effective date will provide IRF's with an adequate amount of time to 
make necessary changes to information systems as well as provide 
extensive education for clinicians.
    Final Decision: Based on careful consideration of the comments that 
we received on the proposed non-quality related updates to the IRF-PAI 
for FY 2014, we are finalizing the following items:
     The status code options for Items 15A: Admit From, 16A: 
Pre-hospital Living Situation and 44D: Patient's Discharge Destination/
Living Setting will be 01--Home (private home/apt., board/care, 
assisted living, group home, transitional living); 02--Short-term 
General Hospital; 03--Skilled Nursing Facility (SNF); 04--Intermediate 
Care; 06--Home under care of organized home health service 
organization; 50--Hospice (Home); 51--Hospice (Institutional Facility); 
61--Within institution to swing bed; 62--Another Inpatient 
Rehabilitation Facility; 63--Long-Term Care Hospital (LTCH); 64--
Medicaid Nursing Facility; 65--Inpatient Psychiatric Facility; 66--
Critical Access Hospital; 99--Not Listed
     The status code options for Items 20A: Primary Source and 
20B: Secondary Source will be 02--Medicare-Fee for Service; 51--
Medicare-Medicare Advantage; 99--Not Listed
     The additions will include Item 24: Comorbid Conditions 
(15 additional spaces); item 25A: Height; item 26A: Weight; Signature 
of Persons Completing the IRF-PAI (with the addition of a ``time'' 
prompt); 44C: Was the patient discharged alive?
     The deletions will include items 18: Pre-Hospital 
Vocational Category; 19: Pre-Hospital Vocational Effort; 25: Is the 
patient comatose at admission; 26: Is the patient delirious at 
admission; 28: Clinical signs of dehydration; 44E: Was patient 
discharged with Home Health Services
     Using the language ICD code(s) on the IRF-PAI
     The technical corrections at items 44D: Patient's 
discharge destination/living setting and 45: Discharge to Living With
     The revised IRF-PAI will become effective for IRF 
discharges occurring on or after October 1, 2014. All final changes to 
the IRF-PAI will be represented when it is posted with the final rule.

X. Technical Corrections to the Regulations at Sec.  412.130

    In the FY 2012 IRF PPS final rule (76 FR 47869 through 47873), we 
revised the regulations for inpatient rehabilitation facilities at 
Sec.  412.23(b), Sec.  412.25(b), Sec.  412.29, and Sec.  412.30 to 
update and simplify the policies, to eliminate unnecessary repetition 
and confusion, and to enhance consistency with the IRF coverage 
requirements. Among other revisions, we removed the regulations that 
were formerly in Sec.  412.30, and revised and consolidated the 
requirements regarding ``new'' IRFs and ``new'' IRF beds that 
previously existed in Sec.  412.30 into the revised regulations at 
Sec.  412.29(c). However, we have recently discovered that Sec.  
412.130, which outlines the policies regarding retroactive adjustments 
for incorrectly excluded hospitals and units, was not updated to 
reflect the changes to Sec.  412.30 and Sec.  412.29. Specifically, 
Sec.  412.130 still references regulations in Sec.  412.30 that were 
revised and consolidated into Sec.  412.29(c). Further, it still 
references regulations that were formerly in Sec.  412.23(b)(2), but 
were moved into Sec.  412.29(b) in the FY 2012 IRF PPS final rule (76 
FR 47869 through 47873).
    We proposed to make the following technical corrections to the 
regulations in Sec.  412.130 to conform with the revisions to the 
regulations in Sec.  412.23(b), Sec.  412.29, and Sec.  412.30 that 
were implemented in the FY 2012 IRF PPS final rule (76 FR 47869 through 
47873):
     Replace the current reference to ``Sec.  412.23(b)(8)'' in 
Sec.  412.130(a)(1) with the new reference to Sec.  412.29(c),
     Replace all of the current references to ``Sec.  
412.23(b)(2)'' in Sec.  412.130(a)(1), (2), and (3) with the new 
reference to Sec.  412.29(b),
     Replace the current reference to ``Sec.  412.30(a)'' in 
Sec.  412.130(a)(2) with the new reference to Sec.  412.29(c), and
     Replace the current reference to ``Sec.  412.30(c)'' in 
Sec.  412.130(a)(3) with the new reference to Sec.  412.29(c).
    We did not receive any comments on the proposed technical 
corrections to the regulations at Sec.  412.130. Thus, we are 
finalizing the technical corrections as proposed, effective for IRF 
discharges occurring on or after October 1, 2013.

XI. Revisions to the Conditions of Payment for IRF Units Under the IRF 
PPS

    The regulations at Sec.  412.25 specify the requirements for an IRF 
unit to be excluded from the inpatient prospective

[[Page 47900]]

payment system (IPPS) specified in Sec.  412.1(a)(1) and to instead be 
paid under the IRF PPS specified in Sec.  412.1(a)(3). The requirements 
at Sec.  412.25 are unique to IRF units of hospitals, whereas the 
requirements at Sec.  412.29 apply to both freestanding IRF hospitals 
and IRF units of hospitals. Among the requirements at Sec.  412.25 is 
the requirement (at Sec.  412.25(a)(1)(iii)) that the institution of 
which the IRF unit is a part must have ``enough beds that are not 
excluded from the prospective payment systems to permit the provision 
of adequate cost information, as required by Sec.  413.24(c) of this 
chapter.'' We have not previously specified how many such beds the 
hospital, of which the IRF unit is a part, must have to meet this 
requirement. However, we have recently received questions from 
providers about whether one or two hospital beds that are certified for 
payment under the IPPS, in some cases beds that are rarely used for 
patient care, would meet the requirement at Sec.  412.25(a)(1)(iii). We 
believe this does not meet the requirement at Sec.  412.25(a)(1)(iii), 
which provides for the hospital of which the IRF unit is a part to be 
an IPPS hospital, which we believe is not demonstrated by the presence 
of just one or two hospital beds.
    In addition, from a fairness and quality of care perspective, we 
are particularly concerned about the application of the regulations in 
Sec.  412.29(g), which require freestanding IRF hospitals to have a 
full-time director of rehabilitation, but only require IRF units of 
acute care hospitals (and CAHs) to have a director of rehabilitation 
for 20 hours per week. We believe that it is unfair to other 
freestanding IRF hospitals and potentially problematic from a quality 
of care standpoint for an IRF that is effectively operating as a 
freestanding IRF hospital, even though it is technically classified as 
an IRF unit, to be allowed to have a director of rehabilitation only 20 
hours per week.
    Further, we are unclear how the IRF unit that is part of a hospital 
with only one or two beds would be able to meet another requirement, at 
Sec.  412.25(a)(7), that specifies that an IRF unit must have beds that 
are ``physically separate from (that is, not commingled with) the 
hospital's other beds.'' The requirement at Sec.  412.25(a)(7) means 
that there is some sort of physical separation that distinguishes the 
IRF unit from the rest of the hospital beds. We believe that it is 
unlikely that this requirement would be met in the situation in which 
the hospital of which the IRF unit is a part only has one or two beds, 
in some cases beds that are rarely used for patient care.
    Thus, we proposed to specify at Sec.  412.25(a)(1)(iii) a minimum 
number of hospital beds that the IPPS hospital must have to meet the 
requirements at Sec.  412.25(a)(1)(iii) for having an IRF unit. We note 
that, thoughSec.  412.25(a)(1)(iii) also applies to inpatient 
psychiatric facilities (IPFs), these facilities have their own 
requirements at Sec.  412.27 for payment under the IPF PPS that we are 
not changing in this proposed rule. IPFs should continue following the 
regulations at Sec.  412.27.
    We proposed to specify in Sec.  412.25(a)(1)(iii) that the 
institution of which the IRF unit is a part must have at least 10 
staffed and maintained hospital beds that are not excluded from the 
IPPS, or at least 1 staffed and maintained hospital bed for every 10 
certified IRF beds, whichever number is greater. If the institution is 
not able to meet this requirement, then the IRF unit should instead be 
classified as an IRF hospital. We also proposed to exclude CAHs that 
have IRF units from these requirements, as CAHs already have very 
specific bed size restrictions.
    We received 3 comments on the proposed revisions to the conditions 
of payment for IRF units under the IRF PPS, which are summarized below.
    Comment: Several commenters noted that the conversion from an IRF 
unit to a freestanding IRF hospital to meet the new proposed 
requirements could pose problems for a facility in meeting certain 
state licensing and/or state certificate of need requirements. These 
commenters suggested that these state-level requirements could be 
``burdensome, difficult and expensive'' for the IRF.
    Response: Although the conversion from an IRF unit to a 
freestanding IRF hospital is a simple administrative task within 
Medicare, which does not necessitate any new surveys, any changes to 
the IRF's Medicare provider agreement, or any changes to the IRF's 
payment status under Medicare, we recognize that the conversion may 
take longer to complete under state laws. Thus, we are implementing 
this change on a one-year delay, so that it will be effective for IRF 
discharges occurring on or after October 1, 2014, to give IRFs who are 
affected by this change ample time to conform to state certificate of 
need or other state licensure laws.
    Final Decision: After considering the comments that we received on 
the proposed revision to the conditions of payment for IRF units under 
the IRF PPS, we are finalizing the change to Sec.  412.25(a)(1)(iii) to 
specify that the institution of which the IRF unit is a part must have 
at least 10 staffed and maintained hospital beds that are not excluded 
from the IPPS, or at least 1 staffed and maintained hospital bed for 
every 10 certified IRF beds, whichever number is greater. We exclude 
CAHs that have IRF units from these requirements, as CAHs already have 
very specific bed size restrictions. We are implementing this change 
effective for IRF discharges occurring on or after October 1, 2014 (a 
one-year delay in the effective date) to give IRFs affected by this 
change adequate time to comply with state certificate of need or other 
state licensure laws.

XII. Clarification of the Regulations at Sec.  412.630

    In the original rule establishing a prospective payment system for 
Medicare payment of inpatient hospital services provided by a 
rehabilitation hospital or by a rehabilitation unit of a hospital, we 
stated that that there would be no administrative or judicial review, 
under sections 1869 and 1878 of the Act or otherwise, of the 
establishment of case-mix groups, the methodology for the 
classification of patients within these groups, the weighting factors, 
the prospective payment rates, outlier and special payments and area 
wage adjustments. See FY 2002 IRF PPS final rule (66 FR 41316, 41319). 
Our intent was to honor the full breadth of the preclusion of 
administrative or judicial review provided by section 1886(j)(8) of the 
Act. However, the regulatory text reflecting the preclusion of review 
has been at times improperly interpreted to allow review of adjustments 
authorized under section 1886(j)(3)(v) of the Act. Because we interpret 
the preclusion of review at Sec.  1886(j)(8) of the Act to apply to all 
payments authorized under section 1886(j)(3) of the Act, we do not 
believe that there should be administrative or judicial review of any 
part of the prospective rate. Accordingly, we are clarifying our 
regulation at Sec.  412.630 by deleting the word ``unadjusted'' so that 
the regulation will clearly preclude review of ``the Federal per 
discharge payment rates.'' This clarification will provide for better 
conformity between the regulation and the statutory language.
    As such, in accordance with sections 1886(j)(7)(A), (B), and (C) of 
the Act, we are revising the regulations at Sec.  412.630 to clarify 
that administrative or judicial review under sections 1869 or 1878 of 
the Act, or otherwise, is prohibited with regard to the establishment 
of the methodology to classify a patient into the case-mix groups and 
the associated weighting factors, the federal per discharge payment 
rates, additional

[[Page 47901]]

payments for outliers and special payments, and the area wage index.
    We received 2 comments on the proposed clarification of the 
regulations at Sec.  412.630, which are summarized below.
    Comment: The commenters expressed concerns with our proposal to 
revise the regulations at 42 CFR 412.630 to clarify that the Medicare 
statute precludes administrative and judicial review of the Federal per 
discharge payment rates, including the LIP adjustment. One commenter 
stated that the proposal is not a ``clarification'' that can be applied 
to pending cases, is inconsistent with the statute, runs afoul of the 
presumption of judicial review, fails to give proper notice of the 
regulatory change, and is unconstitutional.
    Response: We disagree with the commenter's statements. Our proposed 
change serves to clarify the regulation so that it clearly reflects the 
preclusion of review found in the statute. It also removes any doubt as 
to the conformity of the regulation to the preclusion of review found 
in the statute, which by its own terms is applicable to all pending 
cases regardless of whether it is reflected in regulations or not.
    We also strongly disagree with the commenter's reading of the 
statute. Section 1886(j)(8) of the statute broadly precludes review of 
``the prospective payment rates under paragraph (3),'' that is, section 
1886(j)(3). Within this section, subsection 1886(j)(3)(A) authorizes 
certain adjustments to the IRF payment rates and, within that, 
subsection 1886(j)(3)(A)(v) authorizes adjustments to the rates by such 
other factors as the Secretary determines are necessary to properly 
reflect variations in necessary costs of treatment among rehabilitation 
facilities.'' The LIP adjustment is made under authority of section 
1886(j)(3)(A)(v). As that provision is contained within section 
1886(j)(3), and the IRF payment rates under section 1886(j)(3) are 
precluded from review by section 1886(j)(8), the LIP adjustment falls 
squarely within the statutory preclusion of review. Such preclusion 
overcomes any presumption of reviewability that might generally apply, 
and it is not unconstitutional for Congress (which has the power to 
define the jurisdiction of the federal courts) to preclude review of 
certain issues as it has done here. Several virtually identical 
preclusions of review in other sections of the Medicare statute have 
been repeatedly upheld and applied by federal courts. Finally, as to 
notice, the proposed rule itself served as notice of our intention to 
revise the regulation. In addition, as discussed below, the 
longstanding language of the statute itself provides sufficient notice 
to apply the preclusion.
    Comment: One commenter stated that our proposal cannot be a 
clarification because we have allowed review of matters concerning the 
LIP adjustment for many years. This commenter further stated that any 
preclusion of review should apply only to the ``formulas'' used in the 
IRF payment rates, and that to preclude review would prevent providers 
from correcting errors in their payments and would result in two 
separate methods being used to pay IRFs and hospitals paid under the 
inpatient prospective payment system (IPPS).
    Response: We disagree with these comments. The preclusion of review 
has been effective since its enactment as part of the IRF prospective 
payment system in 2002. No regulation or revision of any regulation was 
necessary for the statutory preclusion to become effective, regardless 
of whether we or our contractors may have participated in review of IRF 
LIP matters in the past without making a jurisdictional objection. To 
the extent that such erroneous participation may have occurred, it does 
not override the mandate of the statute or prevent us from immediately 
applying the statutory preclusion of review.
    In addition, the preclusion applies to all aspects of the IRF PPS 
payment rates, not just the formulas. Courts have applied nearly 
identical preclusion provisions in other parts of the Medicare statute 
to prevent review of all subsidiary aspects of the matter or 
determination protected from review. Finally, while precluding review 
of the IRF LIP adjustment may prevent correction of certain errors, we 
can only conclude that Congress has made the judgment that such a 
result is an appropriate trade-off for the gains in efficiency and 
finality that are achieved by precluding review. Similarly, although 
applying the preclusion here may result in certain questions being 
reviewable for an IPPS hospital but not an IRF, this is a judgment that 
Congress has made. We note that there is a preclusion of review 
provision in the IPPS statute also, at section 1886(d)(7). The precise 
contours of these preclusive provisions were for Congress to draw.
    Final Decision: After careful review of the comments we received on 
the clarification of the regulations at Sec.  412.630, we are adopting 
our proposal to revise the regulations at 42 CFR 412.630 to clarify 
that the Medicare statute precludes administrative and judicial review 
of the Federal per discharge payment rates under section 1886(j)(3), 
including the LIP adjustment. This revision to the regulation is 
effective October 1, 2013.

XIII. Revision to the Regulations at Sec.  412.29

    According to the regulations at Sec.  412.29(d), to be excluded 
from the inpatient prospective payment system (IPPS) and instead be 
paid under the IRF PPS, a facility must ``have in effect a preadmission 
screening procedure under which each prospective patient's condition 
and medical history are reviewed to determine whether the patient is 
likely to benefit significantly from an intensive inpatient hospital 
program. This procedure must ensure that the preadmission screening is 
reviewed and approved by a rehabilitation physician prior to the 
patient's admission to the IRF.'' The latter sentence of this 
regulation is based on the preadmission screening requirement for 
Medicare coverage of IRF services in Sec.  412.622(a)(4)(i)(D). The 
requirement was repeated in both places for consistency.
    However, in Sec.  412.622(a)(4)(i)(D), we specify that this 
requirement applies to patients ``for whom the IRF seeks payment'' from 
Medicare. We believe that the analogous requirement in Sec.  412.29(d) 
should also clearly state that it applies only to patients for whom the 
IRF is seeking payment directly from Medicare. Other payer sources, 
such as private insurance, have their own IRF admission requirements, 
and we do not believe that it would be appropriate to interfere with or 
duplicate the requirements that other payer sources may already have in 
place. Thus, we proposed to amend Sec.  412.29(d) to clarify that the 
IRF's preadmission screening procedure must ensure that the 
preadmission screening for a Medicare Part A Fee-for-Service patient is 
reviewed and approved by a rehabilitation physician prior to the 
patient's admission to the IRF. We continue to believe that the basic 
preadmission screening procedure itself is an important element of 
providing quality IRF care to all patients and, thus, we will require 
that the basic preadmission screening procedure requirement remain in 
place for all patients regardless.
    We received 5 comments on the revision to the regulations at Sec.  
412.29(d), which are summarized below.
    Comment: Several commenters expressed support for the proposed 
revisions to the regulations at Sec.  412.29, which clarify that we 
require rehabilitation physician review and concurrence of a patient's 
preadmission screening prior to the IRF admission

[[Page 47902]]

only for Medicare Fee-for-Service beneficiaries. The commenters 
indicated that this proposed regulation change would greatly relieve 
the burden on IRFs that treat a large proportion of non-Medicare 
patients, for whom other admission requirements typically apply. These 
commenters also requested that we amend the Rehabilitation Unit and 
Rehabilitation Hospital Criteria Worksheets and the Attestation 
Statement (State Operations Manual Exhibit 127, Attestation Statement) 
to appropriately reflect this change to the regulations.
    Response: We appreciate the stakeholder community bringing this 
issue to our attention, thereby giving us the opportunity to alleviate 
unintended provider burden. We encourage stakeholders to bring these 
types of issues to our attention, as we are always willing to consider 
suggestions that can improve the Medicare program while at the same 
time reducing the regulatory burden on providers. We will ensure that 
the appropriate adjustments are made to the Worksheets and the 
Attestation Statement in accordance with the change to the regulations.
    Comment: One commenter recommended that we further clarify the 
distinction between Medicare Conditions of Payment and the IRF coverage 
requirements. The commenter suggested that a table distinguishing the 
two requirements would be useful to providers.
    Response: We thank the commenter for the suggestion, and will take 
this into consideration for future stakeholder outreach in this area.
    Final Decision: Based on consideration of the comments received on 
the proposed change to Sec.  412.29(d), we are finalizing this change, 
effective for IRF discharges occurring on or after October 1, 2013.

XIV. 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 
IRF hospitals 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 IRFs that fail 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 this subsection for a 
fiscal year being less than the 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 section (j) for a subsequent fiscal year.
    Section 1886(j)(7)(C) of the Act requires that each IRF submit data 
to the Secretary on 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 consensus development process.
    We have generally adopted NQF-endorsed measures in our reporting 
programs. However, section 1886(j)(7)(D)(ii) of the Act provides that 
``in 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, so long as due consideration is given to measures that have 
been endorsed or adopted by a consensus-based organization identified 
by the Secretary.'' Under section 1886(j)(7)(D)(iii) of the Act, the 
Secretary was required to publish the selected measures that will be 
applicable to the FY 2014 IRF PPS no later than October 1, 2012.
    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'' \1\ (NQF0138); 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 Risk Standardized Post IRF Discharge Hospital Readmission 
Measure at a later date.
---------------------------------------------------------------------------

    \1\ The version of the CAUTI measure that was adopted in the FY 
2012 IRF PPS final rule (76 FR 47874 through 47876) was titled 
``Catheter-Associated Urinary Tract Infection [CAUTI] Rate Per 1,000 
Urinary Catheter Days for ICU patients. However, shortly after the 
FY 2012 IRF PPS final rule was published, this measure was submitted 
by the CDC (measure steward) to the NQF for a measure maintenance 
review, The CDC asked for changes to the measure, including 
expansion of the scope of the measure to non-ICU patient care 
locations and additional healthcare facility settings, including 
IRFs. The name of the measure was changed to reflect the character 
of the revised CAUTI measure. This measure is now titled ``National 
Health Safety Network (NHSN) Catheter Associated Urinary Tract 
Infection (CAUTI) Outcome Measure.''
---------------------------------------------------------------------------

2. Measures Finalized in the CY 2013 OPPS/ASC Final Rule
    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 measure to the IRF setting, replacing our previous 
adoption of an application of the measure for the IRF QRP;
     A policy that would allow any 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 sub-regulatory process to incorporate NQF updates to IRF 
quality

[[Page 47903]]

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 re-titled 
it to cover both residents and patients within LTCH and IRF settings, 
in addition to the Nursing Home/Skilled Nursing Facility setting. 
Although the 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. Public comments revealed that the ``Quality Indicator'' 
section of the IRF-PAI did not contain the data elements that would be 
needed to calculate a risk-adjusted measure. As a result, we decided 
to: (1) adopt an application of the NQF 0678 pressure ulcer 
measure that was a non-risk-adjusted pressure ulcer measure (numerator 
and denominator data only); (2) collect the data required for the 
numerator and the denominator using the 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 NQF 0678, 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 NQF 0138 NHSN Catheter Associated Urinary Tract Infection 
(CAUTI) Outcome Measure (replacing an application of this measure which 
we initially adopted in the FY 2012 IRF PPS (76 FR 47874 through 
47886). The NQF endorsed measure applies to the FY 2015 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 measure has not changed. Furthermore, we have not removed, 
suspended, or replaced this measure 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 NHSN can be found at the NHSN Web site at http://www.cdc.gov/nhsn/inpatient-rehab/index.html.
    We received several comments related to this previously finalized 
measure, NQF 0138, and some other previously finalized 
measures, raising some questions about 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 2014 IRF PPS proposed rule (78 FR 26880). As such, we will 
not, in general, be addressing them here. However, we will consider all 
of these views for future rulemaking and program development. We have 
responded, however, to a few comments in which commenters asked only 
for a clarification related to an existing policy and/or measure.
    Comment: Several commenters, including MedPAC, expressed that CMS 
should focus on measures that reflect the success of rehabilitation 
care, mentioning specifically functional improvement and/or discharge 
to community. One commenter suggested these measures be used instead of 
the ``process of care measures related to urinary tract infections and 
pressure ulcers''.
    Response: We appreciate the commenter's suggestion. We would like 
to thank MedPAC and the other commenters for their comments. We also 
agree that a discharge to community measure would likely be very 
important to beneficiaries and serve as a useful corollary to the 30-
day readmissions measure we proposed in the FY 2014 IRF PPS proposed 
rule, because it reflects whether a patient returns home, rather than 
returning directly to the acute hospital or another inpatient facility. 
We have developed a strategic plan related to the types of quality 
measures that we will propose over the next several rulemaking cycles. 
Patient experience of care and care coordination measures, such as a 
discharge to community measure, are included in this plan. We have 
previously discussed a measure of discharge to community in one of the 
IRF-QRP Technical Expert Panels. We also agree with MedPAC's suggestion 
that adding quality measures that assess functional improvement should 
be a priority for the IRFQRP. At this time, our quality measure 
development contractor is completing the development of quality 
measures that specifically focus on outcomes related to improvement of 
a patient's functional status, and these measures have been presented 
to the Measures Application Partnership (MAP) to determine whether the 
MAP at least supports the direction of the concept behind these 
measures (since the measures are not yet complete). The MAP) and its 
functions are described in detail at http://www.qualityforum.org/map/. 
The development of these measures has necessitated several years of 
work, involving testing, revisions, and expert review. However, we are 
now close to being in our final stages of the development of these 
measures, and will present them to the MAP this year. Before proposing 
to adopt these measures, we want to take all steps necessary to ensure 
that the introduction of functional measurement into the IRF-QRP is 
comprehensive in design so as to be meaningful to our beneficiaries, 
Medicare and our stakeholders.
    Comment: One commenter expressed concern about changes made by the 
CDC to the CAUTI infection definitions in 2013, and the pending review 
with further changes to the definition likely in early 2014. This 
commenter believed that instability of data between baseline years and 
into CY 2014 can be expected due to the changes in the CAUTI 
definitions. One commenter expressed support for the continued use of 
the CAUTI measure, but suggested that training could help to support a 
smooth transition when the new reporting definitions are introduced. 
The commenter further encouraged CMS to provide any training necessary 
that will support a smooth transition when new reporting definitions 
are introduced.
    Response: According to the measure steward, Centers for Disease 
Control and Prevention (CDC), NHSN's definition of CAUTI did not change 
in 2013, and the revised criteria in 2013 for what constitutes an 
healthcare-associated infection (HAI) amounts to providing operational 
guidance--already widely in use before the guidance was published--that 
makes identifying HAIs more consistent across reporting healthcare 
facilities. There was no change in the NQF measure specification; the 
CAUTI measure remains the same. As a result, CAUTI data reported for 
infections occurring in 2013 can be compared to the CAUTI baseline 
established using CAUTI date reported for infections occurring in 2009. 
In short, there was no significant change in the measure and the 
changes in HAI criteria have no bearing on reporting obligations. We 
will continue to work with the NHSN to provide provider training on any 
changes affecting the IRF QRP.

[[Page 47904]]

    Comment: One commenter expressed concern about the adequacy of the 
risk adjustment of the CAUTI measure, especially with regard to its 
impact on IRFs caring for patients with a spinal cord injury.
    Response: With regard to risk adjustment, the CAUTI measure relies 
on robust statistical analysis to inform its risk adjustment 
methodologies to ensure that the measure is accurately reported. We 
will work with the CDC to continue to collect data and to explore the 
possibility of refining the CAUTI measure through NQF measure 
maintenance and future rulemaking, if the change is substantive, as 
more data is collected.
b. Application of Percent of Residents or Patients With Pressure Ulcers 
That Are New or Worsened (Short-Stay) (NQF 0678)
    In the CY 2103 OPPS/ASC final rule (77 FR 68500 through 68507) we 
finalized adoption of a non-risk-adjusted application of this measure 
using the current version of the IRF-PAI. To adopt the NQF-endorsed 
version of this measure, we must update the existing IRF-PAI to include 
the additional data elements necessary to risk adjust this measure. We 
also delayed public reporting of pressure ulcer measure results until 
we amend the IRF-PAI to add the data elements necessary for risk 
adjusting NQF 0678 (77 FR 68507). We are not making any 
changes to the application of measure 0678 finalized in the CY 
2013 OPPS/ASC final rule for the FY 2015 and FY 2016 IRF PPS annual 
increase factors. Furthermore, we have not removed, suspended, or 
replaced this measure for those specific annual increase factors and 
the application of NQF 0678 remains an active part of the IRF 
QRP for that purpose. Additional information about this measure can be 
found at http://www.qualityforum.org/QPS/0678. Our procedures for data 
submission for this measure also have remained the same. IRFs should 
continue to collect and submit pressure ulcer measure data during CY 
2013 using the IRF-PAI released on October 1, 2012 for the FY 2015 IRF 
PPS annual increase factor. Further, IRFs should continue to collect 
and submit pressure ulcer measure data during the first three quarters 
of CY 2014 using the IRF-PAI released on October 1, 2012 for the FY 
2016 IRF PPS annual increase factor.
    In the May 8, 2013 proposed rule (78 FR 26909 through 26924), we 
did propose to adopt a revised version of the IRF-PAI starting October 
1, 2014 for the FY 2017 PPS annual increase factor and subsequent 
fiscal years annual increase factors. We noted that the proposed 
revisions to the IRF-PAI would allow collection of data elements 
necessary for risk adjustment of NQF 0678, which is required 
by the NQF endorsed version of the measure. We also proposed to replace 
the current application of NQF 0678 and adopt instead the NQF 
endorsed version of this measure. We have discussed these proposed 
changes in more detail in section C. below.

 Table 10--Quality Measures Finalized in the CY 2013 OPPS/ASC Final Rule
  Affecting the FY 2015 IRF Annual Increase Factor and Subsequent Year
                            Increase Factors
------------------------------------------------------------------------
        NQF measure ID                       Measure title
------------------------------------------------------------------------
NQF 0138............  National Health Safety Network (NHSN)
                                Catheter-associated Urinary Tract
                                Infection (CAUTI) Outcome Measure.\+\
Application of NQF 0678.                        Pressure Ulcers That are New or Worsened
                                (Short-Stay).*
------------------------------------------------------------------------
\+\ Using CDC/NHSN.
* Using October 1, 2012 release of IRF-PAI.

C. New IRF QRP Quality Measures Affecting the FY 2016 and FY 2017 IRF 
PPS Annual Increase Factor, and Subsequent Year Increase Factors

1. General Considerations Used for Selection of Quality Measures for 
the IRF QRP
    In the May 8, 2013 proposed rule (78 FR 26909 through 26924), we 
noted that the successful development of an IRF quality reporting 
program that promotes the delivery of high-quality healthcare services 
in IRFs is our paramount concern. We discussed many of the factors we 
had taken into account in selecting measures to propose in the May 8, 
2013 proposed rule (78 FR 26909 through 26924), and we refer readers 
there for details about our selection process. 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 1st 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 http://www.qualityforum.org/Setting_Priorities/Partnership/Measure_Applications_Partnership.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, and the National Strategy for Quality Improvement in 
Healthcare at http://www.ahrq.gov/workingforquality/nqs/nqs2012annlrpt.pdf. To the extent practicable, we have sought to adopt 
measures that have been endorsed by a national consensus organization, 
recommended by multi-stakeholder organizations, and developed with the 
input of providers, purchasers/payers, and other stakeholders.
2. New Measures for the FY 2016 and FY 2017 Annual Increase Factors
    For the FY 2016 IRF PPS annual increase factor, in addition to 
retaining the previously discussed CAUTI and Pressure Ulcer measures, 
we proposed in the May 8, 2013 proposed rule (78 FR 26909 through 
26924), to adopt one new measure: Influenza Vaccination Coverage among 
Healthcare Personnel Measure (NQF 0431). In addition, for the 
FY 2017 IRF PPS annual increase factor, we proposed to adopt three 
quality measures: (1) All-Cause Unplanned Readmission Measure for 30 
Days Post Discharge 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

[[Page 47905]]

0678). We discuss these measures in more detail below in this 
final rule.
2. New Quality Measures for Quality Data Reporting Affecting the FY 
2016 IRF PPS Annual Increase Factor
a. IRF QRP Measure 1: Influenza Vaccination Coverage Among 
Healthcare Personnel (NQF 0431)
    In the FY 2014 IRF PPS proposed rule (78 FR 26880), we proposed to 
adopt the CDC developed Influenza Vaccination Coverage among Healthcare 
Personnel (NQF 0431) 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. We 
noted that this measure was included on the CMS' List of Measures under 
Consideration for December 1, 2012 and that this measure was reviewed 
by the MAP and was included in the MAP input that was transmitted to 
CMS on February 1, 2013, as required by section 1890A(a)(3) of the Act. 
The MAP fully supported the use of this measure in the IRF setting, 
indicating it promotes alignment across quality reporting programs (for 
example, with Long-Term Care Hospital Quality Reporting Program (LTCHQR 
Program) and Hospital Inpatient Quality Reporting Program (Hospital 
IQR)) and addresses a core measure concept.
    Health care personnel are at risk for both acquiring influenza from 
patients and transmitting it to patients, and health care personnel 
often come to work when ill.\2\ One early report of health care 
personnel influenza infections during the 2009 H1N1 influenza pandemic 
estimated 50 percent of infected health care personnel had contracted 
the influenza virus from patients or coworkers in the healthcare 
setting.\3\
---------------------------------------------------------------------------

    \2\ Wilde JA, McMillan JA, Serwint J, et al. Effectiveness of 
influenza vaccine in healthcare professionals: A randomized trial. 
JAMA. 1999; 281:908-913.
    \3\ Harriman K, Rosenberg J, Robinson S, et al. Novel influenza 
A (H1N1) virus infections among health-care personnel--United 
States, April-May 2009. MMWR Morb Mortal Wkly Rep. 2009; 58(23): 
641-645.
---------------------------------------------------------------------------

    The CDC Advisory Committee on Immunization Practices (ACIP) 
guidelines recommends that all health care personnel get an influenza 
vaccination every year to protect themselves and patients.\4\ Even 
though levels of influenza vaccination among health care personnel have 
slowly increased over the past 10 years, less than 50 percent of health 
care personnel each year received the influenza vaccination until the 
2009 and 2010 season, when an estimated 62 percent of health care 
personnel got a seasonal influenza vaccination. In the 2010 and 2011 
season, 63.5 percent of health care personnel reported an influenza 
vaccination. Increased influenza vaccination coverage among health care 
personnel is expected to result in reduced morbidity and mortality 
related to influenza virus infection among patients, aligning with the 
NQS's aims of better care and healthy people/communities. This measure 
has been finalized for reporting in the Hospital IQR Program, LTCHQR 
Program, and the Ambulatory Surgical Center Quality Reporting Program 
(ASCQR Program).
---------------------------------------------------------------------------

    \4\ Fiore AE, Uyeki TM, Broder K, et al. Prevention and control 
of influenza with vaccines: Recommendations of the Advisory 
Committee on Immunization Practices (ACIP), 2010. MMWR Recomm Rep. 
2010. 59(08): 1-62.
---------------------------------------------------------------------------

    We refer readers to the NHSN Manual, Healthcare Personnel Safety 
Component Protocol Module, Influenza Vaccination and Exposure 
Management Modules, which is available at the CDC Web site at http://www.cdc.gov/nhsn/inpatient-rehab/hcp-vacc/index.html for measure 
specifications and additional details.
    In the FY 2014 IRF PPS proposed rule (78 FR 26909 through 26924), 
we proposed that the Influenza Vaccination Coverage Among Healthcare 
Personnel measure (NQF 0431) have its own reporting period to 
align with the influenza vaccination season, which is defined by the 
CDC as October 1st (or when the vaccine becomes available) through 
March 31st. We further proposed that IRFs will submit their data for 
this measure to the NHSN (http://www.cdc.gov/nhsn/). The National 
Healthcare Safety Network (NHSN) is a secure Internet-based healthcare-
associated infection tracking system maintained by the CDC and can be 
utilized by all types of health care facilities in the United States, 
including IRFs. NHSN collects data via a web-based tool hosted by the 
CDC. Information on the NHSN system, including protocols, report forms, 
and guidance documents can be found at the provided web link: http://www.cdc.gov/nhsn/. NHSN will submit data to CMS on behalf of the 
facility. We also proposed that for the FY 2016 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 (78 FR 26909 
through 26924).
    Details related to the use of 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 
data, the 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 season for the healthcare personnel (HCP) influenza 
vaccination measure NQF 0431, data submission is only required 
once per influenza season, unlike the other measure finalized for the 
IRF QRP that utilizes NHSN (CAUTI measure NQF 0138). For 
example, IRFs can choose to submit HCP influenza vaccination data on a 
monthly basis. However, each time an IRF submits these data, it will be 
asked to provide a cumulative total of vaccinations for the ``current'' 
influenza season. Thus, entering this information at the end of the 
influenza season would yield the same total number of vaccinations. The 
NHSN system will not track the individual number of vaccinations on a 
monthly basis, but, rather, will track the cumulative total of 
vaccinations for the ``current'' influenza season. We proposed that the 
final deadline associated with this measure should align with the other 
CMS deadline for IRF HAI (CAUTI) reporting into NHSN, which is May 
15th. IRF QRP data collection timelines and submission deadlines are 
discussed below.
    Also, as noted in the proposed rule, data collection for this 
measure is not 12 months, as with other measures, but is approximately 
6 months (that is, October 1st (or when the vaccine becomes available) 
through March 31st of the following year). This data collection period 
is applicable only to NQF 0431 Influenza Vaccination Coverage 
Among Healthcare Personnel, and 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.
    We sought public comments on the Influenza Vaccination Coverage 
among Healthcare Personnel (NQF 0431) measure for the FY 2016 
IRF PPS annual increase factor and subsequent years. The responses to 
public comments on our adopting NQF 0431 are discussed below 
in this section of the final rule.
    Comment: Several commenters expressed unconditional agreement with 
our proposal to adopt the Influenza Vaccination Coverage among 
Healthcare Personnel measure in the IRF QRP. However, a majority of 
commenters

[[Page 47906]]

expressed a conditional support for this measure in which they support 
the use of the measure by IRFs that are freestanding hospitals, but do 
not support the use of this measure by IRF units that are affiliated 
with an acute care facility. These commenters believe that IRF units 
should be excluded from this measure because most IPPS hospitals 
include IRF unit employees in reporting health care personnel influenza 
vaccination rates to NHSN under the IPPS Quality Reporting program.
    Response: The intent of NQF measure 0431 is to incentivize 
full influenza vaccination coverage of all healthcare workers (HCWs) 
within a specific kind of facility and to measure the extent to which 
that goal is accomplished within that facility. We regard an IRF unit 
that is affiliated with an acute care facility to be its own separate 
type of facility, with its own responsibility for HCW vaccination and 
data submission. The submission of data by an IRF unit that is 
affiliated with an acute care facility will constitute location-
specific reporting to NHSN for the HCWs who have worked within that 
specific unit. These IRF units will need to account for any staff that 
work within the unit for one day or more between Oct 1st and March 31st 
of a flu season and fall within the 3 required categories of staff as 
defined by the NHSN protocol, including payroll employees, licensed 
independent practitioners, and students/trainees/volunteers. The acute 
care facility will have the same requirements for submission of data, 
but will need to cover all of its inpatient care units, which will 
include any existing IRF units that are affiliated with an acute care 
facility, and will essentially be reporting facility-wide counts. The 
data submitted for these two separate requirements will never be summed 
together.
    Comment: Many of the commenters requested that CMS clarify that the 
data collection period for the influenza vaccine begins on October 1st 
and not at an earlier date, should the influenza vaccination become 
available at any time before October 1st.
    Response: NHSN specifies the reporting period for influenza vaccine 
coverage in its protocol. Vaccine coverage reporting, that is, measure 
numerator data, is required based on data collected from Oct 1 or 
whenever the vaccine becomes available. This statement ensures that if 
the vaccine is available early, any vaccines given before Oct 1 can be 
credited toward vaccination coverage, and if the vaccine is late, then 
the vaccination counts are to begin as soon as possible after Oct 1.
    For the denominator count, IRFs will need to account for any staff 
that work within the unit for 1 day or more between Oct 1st and March 
31st of a flu season and fall within the 3 required categories of staff 
as defined by the NHSN protocol, including payroll employees, licensed 
independent practitioners, and students/trainees/volunteers.
    Final Decision: Having carefully considered the comments we 
received on the Influenza Vaccination Coverage among Healthcare 
Personnel (NQF 0431), we are finalizing the adoption of this 
measure for use in the IRF QRP.

   Table 11--Summary of Quality Measures Affecting the FY 2016 IRF PPS
                         Annual Increase Factor
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Continued Measure Affecting the FY 2015 Annual Increase Factor and
 Subsequent Year Annual Increase Factors:
     NQF 0138: National Health Safety Network (NHSN)
     Catheter-associated Urinary Tract Infection (CAUTI) Outcome
     Measure. \+\
Continued Measure Affecting the FY 2015 and FY 2016 Annual Increase
 Factors:
     Application of NQF 0678: Percent of Residents with
     Pressure Ulcers That are New or Worsened (Short-Stay). *
New IRF QRP Measure Affecting the FY 2016 IRF PPS Annual Increase Factor
 and Subsequent Year Increase Factors:
     NQF 0431: Influenza Vaccination Coverage among
     Healthcare Personnel. \+\
------------------------------------------------------------------------
\+\ Using CDC NHSN.
* Using October 1, 2012 release of IRF-PAI.

3. Quality Measures for Quality Data Reporting Affecting the FY 2017 
IRF PPS Annual Increase Factor and Subsequent Years
    In the FY 2014 IRF PPS proposed rule (78 FR 26909 through 26924), 
we proposed to adopt 2 additional quality measures and replace an 
existing quality measure for the IRF QRP for the FY 2017 annual 
increase factor and subsequent year increase factors. The new measures 
we proposed are: (1) All-Cause Unplanned Readmission Measure for 30 
Days Post Discharge from Inpatient Rehabilitation Facilities, and (2) 
Percent of Residents or Patients Who Were Assessed and Appropriately 
Given the Seasonal Influenza Vaccine (Short-Stay) (NQF 0680). 
In addition, we proposed to replace the non-risk adjusted application 
of Percent of Residents or Patients with Pressure Ulcers That Are New 
or Worsened (short-stay) (NQF 0678) with adoption of the NQF-
endorsed version of this measure. A summary of the public comments 
received and our responses to comments are discussed below.
a. IRF QRP Measure 1: All-Cause Unplanned Readmission Measure 
for 30 Days Post Discharge From Inpatient Rehabilitation Facilities
    In the May 8, 2013 proposed rule (78 FR 26909 through 26924), we 
proposed to adopt an All-Cause Unplanned Readmission Measure for 30 
Days Post Discharge from Inpatient Rehabilitation Facilities. This 
measure estimates the risk-standardized rate of unplanned, all-cause 
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 which 
will not require reporting of new data by IRFs, and hence, will not be 
used to determine IRF reporting compliance for the IRF QRP.
    Addressing unplanned hospital readmissions is a high priority for 
HHS and CMS as our focus continues on promoting patient safety, 
eliminating healthcare associated infections, improving care 
transitions, and reducing the cost of healthcare. Readmissions are 
costly to the Medicare program and have been cited as sensitive to 
improvements in coordination of care and discharge planning for 
patients.\5\ Although the literature on readmissions is mainly 
concerned with discharges from short-term acute hospitals, the same 
issues of discharge planning, communications and coordination arise at 
discharge from other inpatient facilities.
---------------------------------------------------------------------------

    \5\ Federal Register/Vol. 76, No. 160/Thursday, August 18, 2011/
Rules and Regulations, C1a.
---------------------------------------------------------------------------

    IRFs provide intensive rehabilitation services to patients after an 
injury, illness, or surgery. According to MedPAC, the average length of 
stay for most patients in an IRF is 13.1 days.\6\ In 2010, almost 
360,000 Medicare Fee-for-Service (FFS) beneficiaries received care

[[Page 47907]]

in IRFs and cost the Medicare FFS program over $6 billion dollars. The 
unadjusted readmission rate to an IPPS hospital in the 30 days 
following an IRF discharge was about 15 percent.\7\ With such a large 
proportion of patients being readmitted to a hospital level of care, we 
proposed a risk-adjusted measure of readmission rate, the All-Cause 
Unplanned Readmission Measure for 30 Days Post Discharge from Inpatient 
Rehabilitation Facilities. An IRF's readmission rate is affected by 
complex and critical aspects of care, such as communication between 
providers or between providers and patients; prevention of, and 
response to, complications; patient safety; and coordinated transitions 
to the community or a less intense level of care. While disease-
specific measures of readmission are useful in identifying deficiencies 
in care for specific groups of patients, they account for only a small 
minority of total readmissions. By contrast, a facility-wide, all-cause 
readmission reflects a broader assessment of the quality of care in 
IRFs, and may consequently better promote quality improvement and 
inform consumers about quality.
---------------------------------------------------------------------------

    \6\ MedPAC, Report to Congress, Medicare Payment Policy, March, 
2012. http://www.medpac.gov/chapters/Mar12_Ch09.pdf.
    \7\ 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.
---------------------------------------------------------------------------

    While some readmissions are unavoidable, such as those resulting 
from the inevitable progression of disease or worsening of chronic 
conditions, readmissions may also result from poor quality of care or 
inadequate transitions between care settings. Randomized controlled 
trials in short-stay acute care hospitals have shown that improvement 
in the following areas can directly reduce hospital readmission rates: 
Quality of care during the initial admission; improvement in 
communication with patients, their caregivers and their clinicians; 
patient education; pre-discharge assessment; and coordination of care 
after discharge. Successful randomized trials have reduced 30-day 
readmission rates by 20 to 40 percent.8 9 10 11 12 13 14 and 
a 2011 meta-analysis of randomized clinical trials found evidence that 
interventions associated with discharge planning helped to reduce 
readmission rates,\15\ illustrating how hospitals may influence 
readmission rates through best practices.
---------------------------------------------------------------------------

    \8\ Jack BW, Chetty VK, Anthony D, Greenwald JL, Sanchez GM, 
Johnson AE, et al. A reengineered hospital discharge program to 
decrease rehospitalization: a randomized trial. Ann Intern Med 
2009;150(3):178-87.
    \9\ Coleman EA, Smith JD, Frank JC, Min SJ, Parry C, Kramer AM. 
Preparing patients and caregivers to participate in care delivered 
across settings: the Care Transitions Intervention. J Am Geriatr Soc 
2004;52(11):1817-25.
    \10\ Courtney M, Edwards H, Chang A, Parker A, Finlayson K, 
Hamilton K. Fewer emergency readmissions and better quality of life 
for older adults at risk of hospital readmission: a randomized 
controlled trial to determine the effectiveness of a 24-week 
exercise and telephone follow-up program. J Am Geriatr Soc 
2009;57(3):395-402.
    \11\ Garasen H, Windspoll R, Johnsen R. Intermediate care at a 
community hospital as an alternative to prolonged general hospital 
care for elderly patients: a randomized controlled trial. BMC Public 
Health 2007;7:68.
    \12\ Koehler BE, Richter KM, Youngblood L, Cohen BA, Prengler 
ID, Cheng D, et al. Reduction of 30-day post discharge hospital 
readmission or emergency department (ED) visit rates in high-risk 
elderly medical patients through delivery of a targeted care bundle. 
J Hosp Med 2009;4(4):211- 218.
    \13\ Naylor M, Brooten D, Jones R, Lavizzo-Mourey R, Mezey M, 
Pauly M. Comprehensive discharge planning for the hospitalized 
elderly. A randomized clinical trial. Ann Intern Med 
1994;120(12):999-1006.
    \14\ Naylor MD, Brooten D, Campbell R, Jacobsen BS, Mezey MD, 
Pauly MV, et al. Comprehensive discharge planning and home follow-up 
of hospitalized elders: a randomized clinical trial. JAMA 
1999;281(7):613-20.
    \15\ Naylor MD, Aiken LH, Kurtzman ET, Olds DM, Hirschman KB.The 
Importance of Transitional Care in Achieving Health Reform. Health 
Affairs 2011; 30(4):746-754.
---------------------------------------------------------------------------

    Because many studies have shown readmissions to be related to 
quality of care, and that interventions have been able to reduce 30-day 
readmission rates, we believe it is appropriate to include an all-
condition readmission rate as a quality measure in the IRF QRP. 
Promoting quality improvements leading to successful transitions of 
care for patients moving from the IRF setting to the community or 
another post-acute care setting, and reducing preventable facility-wide 
readmission rates, is consistent with the National Quality Strategy 
priorities of safer, better coordinated care and lower costs.
    Our approach to developing this measure is not the same as, but is 
in many ways very similar to NQF-endorsed Hospital-Wide (HWR) Risk-
Adjusted All-Cause Unplanned Readmission Measure (NQF 1789) 
(http://www.qualityforum.org/Publications/2012/07/Patient_Outcomes_All-Cause_Readmissions_Expedited_Review_2011.aspx) finalized for 
the Hospital IQR Program in the FY 2013 IPPS/LTCH PPS Final Rule (FR 77 
53521 through 53528). To the extent appropriate, we have harmonized the 
IRF measure with the HWR measure and other measures of readmission 
rates developed for post-acute care (PAC) settings, including LTCHs. We 
have provided more details about these measures and our attempts to 
harmonize with them below.
    The All-Cause Unplanned Readmission Measure for 30 Days Post 
Discharge from Inpatient Rehabilitation Facilities measure assesses 
returns to short-stay acute care hospitals or LTCHs within 30 days of 
discharge from an IRF to the community or another care setting of 
lesser intensity. Patient readmissions are tracked using Medicare 
claims data for 30 days after discharge, to the date of patient death, 
if the patient dies within 30 days of discharge. Because patients 
differ in complexity and morbidity, the measure is risk-adjusted for 
patient case-mix. The measure also excludes planned readmissions, 
because these are not considered to be indicative of poor quality of 
care on the part of the IRF.
    A model developed by a CMS measure development contractor predicts 
admission rates while accounting for patient demographics, primary 
condition in the prior short stay, comorbidities, and a few other 
patient factors. While estimating the predictive power of patient 
characteristics, the model also estimates a facility specific effect 
common to patients treated at that facility. Similar to the Hospital 
IQR Program hospital-wide readmission measure, the IRF QRP measure is 
the ratio of the number of risk-adjusted predicted unplanned 
readmissions for each individual IRF, including the estimated facility 
effect, to the average number of risk-adjusted predicted unplanned 
readmissions for the same patients treated at the average IRF. A ratio 
above one indicates a higher than expected readmission rate, or lower 
level of quality, while a ratio below one indicates a lower than 
expected readmission rate, or higher level of quality. (The methodology 
report detailing the development of the IPPS hospital-wide measure and 
the NQF report may be downloaded from: http://www.qualityforum.org/Publications/2012/07/Patient_Outcomes_AllCause_Readmissions_Expedited_Review_2011.aspx.)
    The patient population includes IRF patients who:
     Were discharged alive from the IRF.
     Had 12 months of Medicare Part A, Fee-for-Service coverage 
prior to the IRF stay.
     Had 30 days of Medicare Part A, Fee-for-Service coverage 
post discharge.
     Had an acute care facility (IPPS, CAH or psychiatric 
hospital) stay within the 30 days prior to the IRF stay.
     Were aged 18 years or above when admitted to the IRF.

[[Page 47908]]

    As with the Hospital IQR Program hospital-wide readmission measure, 
patients with medical treatment for cancer are excluded. Studies of 
this population that were reviewed for the Hospital IQR Program 
readmission measure showed them to have a different trajectory of 
illness and mortality than other patient populations.\16\ The measure 
also excludes patients who died during the IRF stay, IRF patients under 
the age of 18, or IRF patients discharged against medical advice (AMA).
---------------------------------------------------------------------------

    \16\ National Quality Forum. ``Patient Outcomes: All-Cause 
Readmissions Expedited Review 2011''. July 2012. pp12.
---------------------------------------------------------------------------

    Readmissions that are not included in the measure are:
     Transfers from an IRF to another IRF or acute care 
facility.
     Readmissions within the 30-day window that are usually 
considered planned due to the nature of the procedures and principal 
diagnoses of the readmission.
     IRF stays with data that are problematic. (The Medicare 
data files occasionally have anomalous records that indicate a person 
is in two facilities or stays that overlap in dates, or are otherwise 
potentially erroneous or contradictory.)
    The planned readmission list includes the planned procedures 
specified in the Hospital-Wide All-Cause Unplanned Readmission (HWR) 
Measure (NQF 1789) used in the Hospital IQR Program, plus 
other procedures that we determined in consultation with technical 
expert panels. In addition to the list of planned procedures is a list 
of diagnoses (provided at the link below in the planned readmission 
criteria), which, if found as the principal diagnosis on the 
readmission claim, would indicate that the procedure occurred during an 
unplanned readmission. The planned readmissions criteria may be found 
at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/Downloads/DRAFT-Specifications-for-the-Proposed-All-Cause-Unplanned-30-day-Post-IRF-Discharge-Readmission-Measure.pdf with a link to the latest planned readmissions criteria 
used in the HWR at the end of Table 1.
    A discharged patient is tracked until one of the following occurs: 
(1) The 30-day period ends; (2) the patient dies; or (3) the patient is 
readmitted to an acute level of care (short or long term). If multiple 
readmissions occur, only the first is considered for this measure. If 
the readmission is unplanned, it is counted as a readmission in the 
measure rate. If the readmission is planned, the readmission is not 
counted in the measure rate. The occurrence of a planned readmission 
ends further tracking for readmissions in the 30-day window following 
discharge from the IRF.
    Readmission rates are risk-adjusted for patient case-mix 
characteristics, independent of quality. The risk adjustment modeling 
estimates the effects of patient characteristics on the probability of 
readmission so they can be adjusted out when reporting the readmission 
rates. The risk-adjustment model for IRFs accounts for demographic 
characteristics, principal diagnosis, comorbidities, case-mix group in 
the IRF, length of stay in the prior acute care facility, critical care 
days in the prior acute care facility, number of acute care facility 
stays in the prior year, and the occurrence of various surgery types in 
the prior acute care facility stay. In modeling IRF readmissions, all 
patients are included in a single model. We did not divide patients 
into groups clinically, modeling separate patient types separately as 
was done in the IPPS HWR measure. In the HWR there are five patient 
cohorts, each modeled separately, and a combined score for the 
facility. All IRF patients are modeled as one group, both because IRFs 
have a substantially smaller patient population, restricting the 
ability to create reasonably large subgroups, and the technical expert 
panel did not recommend any such stratification.
    While the HWR measure used 1 year of data, the smaller IRF patient 
population led us to merge 2 years of data for the IRF QRP. This 
approach is similar to that used by the Hospital IQR Program condition-
specific readmission measures, such as that for heart attack and heart 
failure patients, which use 3 years of claims data. Increasing sample 
size by merging multiple years produces more precise estimates of the 
effects of all the risk adjusters and increases the sample size 
associated with each facility. Larger patient samples are generally 
better for meaningfully distinguishing facility performance. We 
proposed this measure under the exception authority in section 
1886(m)(5)(D)(ii) of the Act for the IRF QRP. This section provides 
that in 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.
    We noted in the proposed rule we had not been able to identify an 
NQF-endorsed readmission measure that was appropriate for the IRF 
setting. In 2012, NQF endorsed hospital-wide readmission measures, the 
National Committee for Quality Assurance (NCQA) measure intended for 
health plans, Plan All-Cause Readmissions (NQF 1768), and CMS' 
Hospital-Wide All-Cause Unplanned Readmission Measure (HWR) (NQF 
1789), of which the latter is the model for the All-Cause 
Unplanned Readmission Measure for 30 Days Post Discharge from Inpatient 
Rehabilitation Facilities measure, proposed in the FY 2014 IRF PPS 
proposed rule. This measure was present on CMS's List of Measures Under 
Consideration, and the most recent MAP Pre-Rulemaking Report noted that 
``readmission measures are also examples of measures that MAP 
recommends be standardized across settings, yet customized to address 
the unique needs of the heterogeneous PAC/LTC population'' (http://
www.qualityforum.org/Publications/2013/02/MAP_Pre-Rulemaking_Report_
_-February_2013.aspx (pp. 177-180)). Although the MAP supported the 
direction of this measure, they cautioned that the readmission measure 
required further development. The MAP has also continually noted the 
need for ``care transition measures in PAC/LTC performance measurement 
programs'' and stated that ``setting-specific admission and readmission 
measures under consideration would address this need.'' \17\
---------------------------------------------------------------------------

    \17\ National Quality Forum. Measure Applications Partnership 
Pre-Rulemaking Report: 2013 Recommendations of Measures Under 
Consideration by HHS: February 2013. Available at http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=72738.
---------------------------------------------------------------------------

    In the May 8, 2013 proposed rule, we stated our intention to seek 
NQF endorsement of the All-Cause Unplanned Readmission Measure for 30 
Days Post Discharge from Inpatient Rehabilitation Facilities measure. 
We noted that because this is a claims-based measure not requiring 
reporting of new data by IRFs, this measure will not be used to 
determine IRF reporting compliance for the IRF QRP. We also stated that 
we expected to begin reporting feedback to IRFs on performance of this 
measure in CY 2016 and that initial provider feedback will be based on 
CY 2013 and CY 2014 Medicare FFS claims data related to IRF 
readmissions and that the readmission measure will be part of the IRF 
public reporting program once public reporting

[[Page 47909]]

is implemented. We noted that details pertaining to this measure can be 
found on the IRF Quality Reporting Program Web site at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/index.html. We invited stakeholders 
to submit public comments in response to our proposal to adopt the All-
Cause Unplanned Readmission Measure for 30 Days Post Discharge from 
Inpatient Rehabilitation Facilities. A summary of the public comments 
received and our responses to comments are discussed below.
    Comment: Many commenters have expressed concern that CMS has not 
yet sought and obtained NQF endorsement for the IRF readmission 
measure.
    Response: We are aware this measure is not yet NQF-endorsed for the 
IRF setting and are working to submit the measure for NQF review and 
endorsement. Currently, we are working with contractors to submit the 
measure for NQF endorsement in October 2013. For the time being, we 
have chosen to adopt this measure by exercising our authority to 
finalize a non-NQF endorsed measure when NQF endorsed measures are not 
available or appropriate for a setting and the Secretary has given due 
consideration to measures that have been endorsed or adopted by a 
consensus organization identified by the Secretary. We were not able to 
find a measure that was appropriate for the IRF setting.
    Comment: Several commenters requested that additional risk 
adjustors be added to the risk adjustment model for the IRF readmission 
measure, including patient data such as function and social support, on 
the IRF-PAI.
    Response: The proposed readmission measure is a risk-standardized 
readmission measure that adjusts for case-mix differences based on the 
clinical status of the patient at the time of admission to the IRF. 
That is, the measure is risk-adjusted for certain key variables that 
are clinically relevant or have been found to have strong relationships 
with the outcome, including age group, sex, comorbid diseases, history 
of repeat admissions. We also include as adjusters the IRF case-mix 
groups (CMGs). The 92 CMGs are patient classes based on information on 
the IRF-PAI and are reported on claims. The CMG assigned to a patient 
contain information on the reason for IRF treatment (impairment group), 
functional status, and sometimes cognitive status and age group. These 
data elements from claims further enhance risk adjustment which, along 
with information from the IRF-PAI, are sufficient without requiring 
linking the IRF-PAI assessments themselves. We will investigate in the 
future if including data elements, such as function and social support, 
directly from the IRF-PAI would produce substantive improvement of the 
model.
    Comment: Several commenters suggested that socioeconomic status and 
social factors be added to the risk adjustment model for the IRF 
readmission measure.
    Response: The inclusion of factors related to socioeconomic status 
(SES) has been raised in the context of the IPPS Hospital IQR measures 
and our policy in that program omits them as explicit risk adjusters. 
Medicaid dual eligibility, which is related to income, is a 
socioeconomic factor, and is also not accounted for explicitly in IQR 
measures. The IRF measure harmonizes with the other readmission 
measures in that respect (the IQR and the final long-term care hospital 
readmission measure). The effect of SES is similar in the case of IRFs 
to the effects in the IPPS setting and the reasoning for not explicitly 
accounting for SES is similar. The effect of levels of SES is captured 
to a great extent by other variables included in the model. The 
readmission measure is a risk-standardized readmission measure that 
adjusts for case-mix differences based on the clinical status of the 
patient at the time of admission to the hospital. That is, they are 
risk-adjusted for certain key variables (for example, age, sex, 
comorbid diseases, and a history of repeat admissions) that are 
clinically relevant and/or have been found to have strong relationships 
with the outcome. To the extent that race or SES results in certain 
patient groups having a worse medical condition profile, those factors 
are accounted for in the measure.
    These measures are not otherwise adjusted for other factors such as 
race or English language proficiency. We believe such additional 
adjustments are not appropriate because the association between such 
patient factors and health outcomes can be due, in part, to differences 
in the quality of health care received by groups of patients with 
varying race/language/SES. Differences in the quality of health care 
received by certain racial and ethnic groups may be obscured if the 
measures risk-adjust for race and ethnicity. In addition, risk-
adjusting for patient race, for instance, may suggest that hospitals 
with a high proportion of minority patients are held to different 
standards of quality than hospitals treating fewer minority patients. 
We appreciate the concerns of hospitals that care for 
disproportionately large numbers of disadvantaged populations. Our 
analysis indicates that better quality of care is achievable regardless 
of the demographics of the hospital's patients.
    Comment: Many commenters, including MedPAC, suggested the IRF 
readmission measure should focus on avoidable or related 
hospitalizations.
    Response: The issue of all-cause readmissions as opposed to a more 
focused set of readmission types has been raised in other contexts such 
as the HWR IQR measure. Discussions with technical experts have led us 
to prefer using an all-cause measure rather than a condition-specific 
readmissions measure. A measure of avoidable or related readmissions is 
possible when the population being measured is narrowly defined and 
certain complications are being targeted. For broader measures, a 
narrow set of readmission types is not practical. In addition, 
readmissions may be clinically related even if they are not 
diagnostically related. A patient may have comorbid conditions that are 
unrelated to the reason for rehabilitation. If not properly dealt with 
in discharge planning a readmission for such a condition may become 
more likely. One of the primary purposes of a readmission measure is to 
encourage improved transitions at discharge, a choice among discharge 
destinations and care coordination. A readmission can occur that is 
less related to the primary condition being treated in the IRF than to 
the coordination of care post-discharge. That said, we have chosen to 
reduce the all-cause readmission set by excluding readmissions that are 
normally for planned or expected diagnosis and procedures. We augmented 
the research for the Hospital IQR set of planned readmissions for the 
IRF setting with recommendations and input from a TEP in the field of 
post-acute care (including IRFs). Nearly 9 percent of readmissions are 
considered planned. In the case where the readmission is due to a 
random event, such as a car accident, we expect these events to be 
randomly distributed across hospitals.
    Comment: Several commenters indicated that the readmission measure 
may have the unintended consequence of reducing access to IRF care.
    Response: We recognize that in some cases, hospital readmission 
will occur. Hospital readmission is not considered as a ``never event'' 
that hospitals are expected to reduce to zero. The measure of hospital 
readmission is risk-adjusted to account for the factors that increase 
this readmission risk, so that hospitals with a disproportionately 
larger share of patients who are at high risk for readmission do not 
perform worse on

[[Page 47910]]

the quality measure due to factors out of their control. We appreciate 
the commenters' concerns but the risk adjustment is intended to adjust 
for more complex patients so that access to care will not be reduced. 
Nonetheless, as with all quality measures that we have implemented, we 
will examine IRF data to monitor for potential unintended consequences.
    Comment: Some commenters suggested that more than 2 years of data 
be included in the readmissions measure to increase sample size.
    Response: The 2 years of data for each reporting period is a 
compromise between sample size and timeliness. In this case the total 
number of IRF stays in 1 year of national data is much smaller than the 
number of IPPS stays. However, 2 years of data generally yield good 
sample sizes at the facility level. Ninety-five percent of facilities 
have more than 100 patients averaged in their measure. We do not think 
that 3 years of data is needed at this time. However, we will continue 
to monitor this data over time and if there is a significant change in 
number of IRF discharges in total or in individual facilities we will 
reconsider the data requirement.
    Final Decision: Having carefully considered the comments we 
received on the All-Cause Unplanned Readmission Measure for 30 Days 
Post Discharge from Inpatient Rehabilitation Facilities, we are 
finalizing the adoption of this measure for use in the IRF QRP. We will 
also continue to seek NQF endorsement of the All-Cause Unplanned 
Readmission Measure for 30 Days Post Discharge from Inpatient 
Rehabilitation Facilities measure.
b. IRF QRP Quality Measure 2: Percent of Residents or Patients 
Who Were Assessed and Appropriately Given the Seasonal Influenza 
Vaccine (Short-Stay) (NQF 0680)
    In the May 8, 2013 proposed rule (78 FR 26909 through 26924), we 
proposed to add the NQF 0680 Percent of Residents or Patients 
who were assessed and Appropriately Given the Seasonal Influenza 
Vaccination (Short-Stay) measure to the IRF QRP, and we proposed to 
collect the data for this measure through the addition of data items to 
the Quality Indicator section of the IRF-PAI. We noted that this 
measure was on CMS's list of measures under consideration that were 
reviewed by the MAP and was included in the MAP input that was 
transmitted to CMS, as required by the pre-rulemaking process in 
section 1890A(a)(3) of the Act. The MAP panel supported the use of this 
measure in the IRF setting, noting that it promotes alignment across 
settings and addresses a core measure concept.
    Although influenza is prevalent among all population groups, the 
rates of death and serious complications related to influenza are 
highest among those ages 65 and older and those with medical 
complications that put them at higher risk. The CDC reports that an 
average of 36,000 Americans die annually from influenza and its 
complications, and most of these deaths are among people 65 years of 
age and over.\18\ In 2004, approximately 70,000 deaths were caused by 
influenza and pneumonia, and more than 85 percent of these deaths were 
among the elderly.\19\ Given that many individuals receiving health 
care services in IRFs are elderly and/or have several medical 
conditions, many IRF patients are within the target population for 
influenza immunization.20 21
---------------------------------------------------------------------------

    \18\ Centers for Medicare & Medicaid Services (2011, May). Adult 
Immunization: Overview. Retrieved from https://www.cms.gov/Immunizations/.
    \19\ Gorina Y, Kelly T, Lubitz J, et al. (2008, February). 
Trends in influenza and pneumonia among older persons in the United 
States. Aging Trends no. 8. Retrieved from http://www.cdc.gov/nchs/data/ahcd/agingtrends/08influenza.pdf.
    \20\ Centers for Disease Control and Prevention. (2008, 
September). Influenza e-brief: 2008-2009 flu facts for policymakers. 
Retrieved from http://www.cdc.gov/washington/pdf/flu_newsletter.pdf.
    \21\ Zorowitz, RD. Stroke Rehabilitation Quality Indicators: 
Raising the Bar in the Inpatient Rehabilitation Facility. Topics in 
Stroke Rehabilitation 2010; 17 (4):294-304.
---------------------------------------------------------------------------

    We have also proposed to add the data elements needed for this 
measure, as an influenza data item set, to the Quality Indicator 
section of the IRF-PAI and that data for this measure will be collected 
using a revised version of the IRF-PAI. Our proposed revision of the 
IRF-PAI includes a new data item set designed to assess patients' 
influenza vaccination status. The revised IRF-PAI would become 
effective on October 1, 2014. We noted that these proposed data set 
items are harmonized with data elements (O0250: Influenza Vaccination 
Status) from the Minimum Data Set (MDS) 3.0 and LTCH CARE Data Set item 
sets 22 23 and that the specifications and data elements for 
this proposed measure are available in the MDS 3.0 QM User's Manual 
available on our Web site at https://www.cms.gov/NursingHomeQualityInits/Downloads/MDS30QM-Manual.pdf.
---------------------------------------------------------------------------

    \22\ Centers for Medicare & Medicaid Services. MDS 3.0 Item 
Subsets V1.10.4 for the April 1, 2012 Release. Retrieved from 
https://www.cms.gov/NursingHomeQualityInits/30_NHQIMDS30TechnicalInformation.asp.
    \23\ The LTCH CARE Data Set Version 2.00, the data collection 
instrument for the submission of the Percent of Residents or 
Patients with Pressure Ulcers That are New or Worsened (Short-Stay) 
measure and the Percent of Residents or Patients Who Were Assessed 
and Appropriately Given the Seasonal Influenza Vaccine (Short-Stay) 
measure, is currently under review by the Office of Management and 
Budget (OMB) in accordance with the Paperwork Reduction Act (PRA) 
http://www.gpo.gov/fdsys/pkg/FR-2013-02-01/pdf/2013-02155.pdf. The 
LTCH CARE Data Set Version 1.01 was approved on April 24, 2012 by 
OMB in accordance with the PRA. The OMB Control Number is 0938-1163. 
Expiration Date April 30, 2013.
---------------------------------------------------------------------------

    For purposes of this measure, the influenza vaccination season 
consists of October 1st (or when the vaccine becomes available) through 
March 31st each year. We proposed that while an IRF's compliance with 
reporting quality data for this measure will be based on the calendar 
year, the measure calculation and public reporting of this measure 
(once public reporting is implemented) will be based on the influenza 
vaccination season starting on October 1 (or when vaccine becomes 
available) and ending on March 31 of the subsequent year.
    The IRF-PAI Training Manual will indicate how providers should 
complete these items during the time period outside of the vaccination 
season (that is, prior to October 1st or when 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 (Short-Stay) 
(NQF 0680), can be found on the CMS Web site: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/NHQIQualityMeasures.html. Measure 
specifications are located in the download titled: MDS 3.0 QM User's 
Manual V6.0. Additional information on this measure can also be found 
at http://www.qualityforum.org/QPS/0680.
    In the May 8, 2013 proposed rule, we invited public comment on our 
proposal to use the Percent of Residents or Patients Who Were Assessed 
and Appropriately Given the Seasonal Influenza Vaccine (Short-Stay) 
(NQF 0680) measure for the FY 2017 IRF PPS annual increase 
factor and subsequent years. A summary of the public comments received 
and our responses to comments are discussed below.
    Comment: Several commenters indicated that they did not support the 
patient immunization measure because it is not a core focus of care in 
IRFs.
    Response: While we appreciate the commenters' point of view, 
influenza is a serious illness, especially for patients who are 
elderly, immuno-compromised, or who have recently undergone surgery--
characteristics that describe

[[Page 47911]]

many of the patients in IRFs. CDC reports that pneumonia and influenza 
were the 5th leading cause of death amongst individuals 65 and older 
and that between 1997 and 2007, deaths among people aged 65 and older 
accounted for 87.9 percent of deaths related to pneumonia and 
influenza. Providing appropriate influenza vaccination is an important 
preventative measure that is the responsibility of healthcare providers 
in all settings. Although many patients may have already been offered 
and/or received the influenza vaccine in the acute care setting, the 
ultimate goal is that 100 percent of patients are assessed for 
appropriate receipt of the influenza vaccine, and achieving this goal 
requires the participation of all healthcare providers.
    Comment: Several commenters expressed concern that the NQF 
0680 Percent of Residents or Patients Who Were Assessed and 
Appropriately Given the Seasonal Influenza Vaccine is redundant because 
patients are offered many opportunities to receive the influenza 
vaccination prior to admission into the IRF and are highly likely to 
have already received the influenza vaccine in the acute care hospital. 
Several commenters also noted that the patient influenza measure may 
lead to over-vaccination of patients.
    Response: We appreciate the comments and acknowledge the 
commenters' concern for redundancy and over-vaccination. The 
specifications for the Percent of Patients or Residents Who Were 
Assessed and Appropriately Given the Seasonal Influenza Vaccine (short 
stay) measure are written so that clinicians can document if patients 
have already received the influenza vaccine for the current influenza 
season. The numerator statement of the measure includes patients who 
received the influenza vaccine, either inside or outside the IRF, for 
the current influenza season. An IRF can report that a patient received 
the vaccine prior to admission to the IRF and that it should not re-
vaccinate the patient for purposes of being able to report the patient 
receiving a vaccination in the IRF. We acknowledge that facilities will 
need to adhere to the principles of proper care coordination and 
documentation to avoid over-immunization and under-immunization. 
However, the specifications for the measure are designed to encourage 
facilities to only vaccinate when the patient has not already received 
the vaccination.
    Comment: Several commenters requested guidance on how to track down 
the influenza vaccination history of patients.
    Response: We refer commenters to the measure description and 
specifications of the NQF-endorsed measure at the NQF Web site http://www.qualityforum.org/QPS/0680. Further, to the extent that the 
commenters are asking us to issue guidance on proper vaccine 
documentation for purposes of ensuring that the receiving facility has 
an accurate immunization history, we agree that care coordination is 
essential to avoid over- as well as under-immunization. The influenza 
vaccination measure, however, was not designed to offer guidance to 
providers on how to vaccinate. The measure is specified to assess if 
the patient was vaccinated, where the patient was vaccinated (if they 
were vaccinated), or why the vaccination was not given (if the patient 
was not vaccinated). Patients who were not vaccinated due to a 
contraindication and patients who refused the vaccination are both 
counted in the numerator and accounted separately in the numerator of 
the measure. In a situation where vaccination status is unknown, we 
would expect that the IRF provider would make a clinical judgment on 
whether or not to vaccinate a patient, taking into account the 
patient's medical history and current health status, as well as the 
existing policy of their IRF on vaccination. The IRF must only report 
the decision it made; that is, whether the vaccination was or was not 
given. The measure does not require an IRF to provide a vaccination 
that was not appropriate due to a contraindication or a patient 
refusal, or to provide a vaccination to a patient who was already given 
a vaccination outside of the IRF. We encourage all IRFs to vaccinate 
according to their facilities' policies and the best clinical judgment 
of the medical providers treating each individual patient and to 
document the reason for the vaccination decision in the patient's 
medical record.
    Comment: Many commenters requested clarification about the data 
collection period for the patient influenza vaccine.
    Response: Starting with 2014-2015 Influenza season data collection 
will be required for all patients in the IRF for 1 or more days between 
October 1 and March 31. Clinicians can report that the reason a given 
patient did not receive the vaccine was that the patient was not in the 
facility during the current influenza vaccination season. Consistent 
with NQF 0431, the vaccination measure for healthcare 
personnel, it is the vaccinations received for patients in the IRF 
during the influenza season (October 1st to March 31st) that will be 
included in measure calculations and for the purpose of public 
reporting.
    Final Decision: After careful consideration of the public comments 
received, we are finalizing our proposal to adopt the Percent of 
Residents or Patients Who Were Assessed and Appropriately Given the 
Seasonal Influenza Vaccine (Short-Stay) (NQF 0680) measure for 
the FY 2017 IRF PPS annual increase factor and subsequent years. We are 
additionally clarifying that data collection will begin starting with 
the 2014-2015 Influenza season. Data collection for this and all 
subsequent influenza seasons will be from October 1 through March 31 of 
the following year. All data collection and submission guidelines will 
be addressed in the IRF Quality Reporting Manual.
c. IRF QRP Quality Measure 3: 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 May 8, 2013 proposed rule (78 FR 26909 through 26924), we 
have proposed to adopt the NQF-endorsed version of the NQF 
0678 pressure ulcer measure, with data collection beginning 
October 1, 2014 using the revised version of IRF-PAI, for quality 
reporting affecting the FY 2017 and subsequent years IRF PPS annual 
increase factors. We also proposed to remove the current non-risk 
adjusted application of this measure when the revised IRF-PAI is 
implemented on October 1, 2014. We noted in the proposed rule that, 
until September 30, 2014, IRFs should continue to submit pressure ulcer 
data using the IRF-PAI released on October 1, 2012 for the purposes of 
data submission requirements for the FY 2015 and FY 2016 IRF PPS 
increase factors. Details about our proposed changes to the IRF-PAI and 
additional information regarding data submission are discussed in the 
proposed rule (78 FR 26909 through 26924).
    We invited public comment in response to our proposed removal of 
the currently adopted non-risk adjusted application of the Percent of 
Residents or Patients with Pressure Ulcers That Are New or Worsened 
(short-stay) (NQF 0678) and the adoption of the NQF-endorsed 
version of the Percent of Residents or Patients with Pressure Ulcers 
That Are New or Worsened (NQF 0678). A summary of the public 
comments received and our responses to comments are discussed below in 
this final rule.
    Comment: Several commenters expressed support for our proposal to 
remove the currently adopted non-risk

[[Page 47912]]

adjusted application of the Percent of Residents or Patients with 
Pressure Ulcers That Are New or Worsened (short-stay) (NQF 
0678) and adopt the NQF endorsed version of the Percent of 
Residents or Patients with Pressure Ulcers That Are New or Worsened 
(Short Stay) (NQF 0678) for the FY 2017 annual increase 
factor. These commenters also expressed general support for the 
addition of the risk adjustment factors associated with this measure to 
the IRF-PAI.
    Response: We appreciate the commenters for their supportive 
comments and their feedback for the measure to the IRF-PAI.
    Final Decision: After careful consideration of the comments 
received, we are finalizing our proposal to adopt the NQF-endorsed 
version of the Percent of Residents or Patients with Pressure Ulcers 
That Are New or Worsened (short-stay) (NQF 0678) measure 
beginning on October 1, 2014, using the revised version of the IRF-PAI. 
We are also finalizing our proposal to remove the existing non-risk 
adjusted application of NQF 0678 from the IRF QRP effective 
October 1, 2014.

   Table 12--Summary of Measures Affecting the FY 2017 IRF PPS Annual
          Increase Factor and Subsequent Year Increase Factors
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Continued Measure Affecting the FY 2015 Annual Increase Factor:
     NQF 0138: National Health Safety Network (NHSN)
     Catheter-associated Urinary Tract Infection (CAUTI) Outcome
     Measure.\+\
New IRF QRP Measure Affecting the FY 2016 IRF PPS Annual Increase
 Factor:
     NQF 0431: Influenza Vaccination Coverage among
     Healthcare Personnel.\+\
New IRF QRP Measures Affecting the FY 2017 IRF PPS Annual Increase
 Factor:
     All-Cause Unplanned Readmission Measure for 30 Days Post
     Discharge from Inpatient Rehabilitation Facilities[supcaret]
     NQF 0680: Percent of Residents or Patients Who
     Were Assessed and Appropriately Given the Seasonal Influenza
     Vaccine (Short-Stay).*
     NQF 0678: Percent of Residents or Patients with
     Pressure Ulcers That are New or Worsened (Short-Stay).*
------------------------------------------------------------------------
+ Using CDC/NHSN.
* Using the IRF-PAI released October 1, 2014.
[supcaret] Medicare Fee-For-Service claims data.

D. Changes to the IRF-PAI That Are Related to the IRF Quality Reporting 
Program

1. General Background
    A version of the IRF-PAI has been in use in the IRF setting since 
January 1, 2002, when IRFs first began receiving payment under the IRF 
PPS. IRFs must submit a completed IRF-PAI for each Medicare Part A, B, 
and C patient that is admitted and discharged from the IRF.
    The IRF PPS utilizes information from the IRF-PAI to classify 
patients into distinct groups based on clinical characteristics and 
expected resource needs. Separate payments are calculated for each 
group, including the application of case and facility level adjustments 
available at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/index.html.
    In the FY 2014 proposed rule, we proposed to release an updated 
version of the IRF-PAI on October 1, 2014 (78 FR 26909-26924) . 
Proposed revisions included data elements that will (1) allow for risk 
adjustment of the NQF 0678 Percent of Residents or Patients 
with Pressure Ulcers That Are New or Worsened (Short-Stay), (2) allow 
for voluntary submission of more detailed data collection related to 
NQF 0678 Percent of Residents or Patients with Pressure Ulcers 
That Are New or Worsened (Short-Stay), and (3) allow for data 
collection for NQF 0680 Percent of Residents or Patients Who 
Were Assessed and Appropriately Given the Seasonal Influenza Vaccine 
(Short-Stay). We also proposed to adopt a new numbering schema for the 
IRF-PAI.
    What we have proposed includes both mandatory and voluntary 
additions to the IRF-PAI. Collection of voluntary data elements by IRFs 
will have no impact on measure calculations or on our determination of 
whether the IRF has met the reporting requirements under the IRF QRP. 
In contrast, failure to complete mandatory data elements may result in 
non-compliance with the IRF QRP requirements and subject the facility 
to a 2 percentage point reduction in its annual increase factor. We 
have provided more details about these items below at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/Spotlights-Announcements.html under 
``CMS-10036''.
    The October 1, 2014 release of the IRF-PAI that we proposed, 
inclusive of all the changes that we intend to finalize here, and 
information about the IRF-PAI submission process can be found at 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Downloads/508c-IRF-PAI-2014.pdf. A PRA package for 
the revised IRF-PAI discussed here has been submitted for the Office of 
Management and Budget's (OMB) review and approval. The PRA package 
documents are available for viewing on the CMS PRA Listings Web page 
at: https://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing-Items/CMS1216518.html?DLPage=1&DLFilter=IRF-PAI&DLSort=1&DLSortDir=descending. The PRA package form number is cms-
10036, and the OMB control number for this PRA package is 0938-0842.
a. Background Related to Collection of Pressure Ulcer Data Elements 
Using the IRF-PAI
    In the FY 2012 IRF PPS final rule, we finalized a proposal to adopt 
an application of the NQF 0678 ``Percent of Residents with 
Pressure Ulcers That Are New or Worsened (Short-Stay)'' measure for use 
in the IRF QRP, beginning with the IRF PPS annual increase factor for 
FY 2014. We also finalized our proposal to collect the data for this 
pressure ulcer measure using the IRF-PAI. In order to comply with 
section 3004 of the Affordable Care Act requirements, we deleted the 
set of outdated pressure ulcer assessment items that were voluntary 
quality questions and had been located in the ``Quality Indicator'' 
section of the IRF-PAI and replaced them with a new set of pressure 
ulcer quality measure data items that were designed to capture the data 
necessary for the finalized application of NQF 0687. These 
items were modeled after the MDS 3.0 items, numbered 48A to 50D, and 
changed the status of the pressure ulcer data items from ``voluntary'' 
to ``mandatory.'' These revisions to the IRF-PAI went into effect on 
October 1, 2012.
    Since the publication of the FY 2012 final rule (76 FR 47836) we 
have received numerous comments about the current version of the IRF-
PAI from IRF providers, provider organizations, and

[[Page 47913]]

advocacy groups. In the CY 2013 OPPS/ASC final rule, we discussed a 
number of specific public comments related to pressure ulcer data that 
we received in response to the CY 2013 OPPS/ASC IRF proposed rule (77 
FR 68506). In that CY 2013 proposed rule, we proposed to update the 
application of NQF 0678 that we had previously incorporated 
into the IRF QRP by instead incorporating the actual NQF-endorsed 
version of this measure (77 FR 45196). NQF 0678 is a risk 
adjusted measure. Commenters expressed specific concerns regarding the 
ability of the data elements in the IRF-PAI to sufficiently risk-adjust 
the measure. We agreed that there were limitations related to the risk 
adjustment data items that are on the IRF-PAI that went into effect on 
October 1, 2012, impacting the ability to calculate the measure using 
all of the risk adjustment related covariates. As a result, the CY 2013 
OPPS/ASC final rule adopted an application of 0680 without 
risk-adjustment for FY 2015 and subsequent years (77 FR 68507).
    In the proposed rule, we noted that in response to the comments and 
feedback received in previous rules discussed above, we intended to 
propose modifications to the data items in both the admission and 
discharge IRF-PAI assessments as discussed below.
2. Revisions to the IRF-PAI To Add Mandatory Risk Adjustment Data Items 
for NQF 0678 Percent of Residents or Patients With Pressure 
Ulcers That Are New or Worsened (Short-Stay)
    In the FY 2014 IRF PPS proposed rule (78 FR 26909-26924), we 
proposed to update the current IRF-PAI to include data elements that 
are necessary to risk adjust the Percent of Residents or Patients with 
Pressure Ulcers That Are New or Worsened (Short-Stay) (NQF 
0678). These updates to the IRF-PAI include the addition of 
the following indicator boxes to the IRF-PAI admission assessment: (1) 
Peripheral Vascular Disease, (2) Peripheral Arterial Disease, and (3) 
Diabetes. The additions would be placed in the Quality Indicators 
section of the revised IRF-PAI.
    We further determined that risk adjustment factors related to 
height and weight had inadvertently been left off of the revised 
version of the IRF-PAI that became effective on October 1, 2012. We 
proposed to add height and weight to the IRF-PAI to correct this 
oversight into the ``Medical Information'' section of the IRF-PAI. As a 
general rule, we would place all data items related to quality 
reporting and quality measures within the Quality Indicator section of 
the IRF-PAI. However, the height and weight items have a dual purpose 
because they can be used for the calculation of Body Mass Index (BMI), 
which is used as one part of the analysis for compliance with the 60 
percent rule. Even though the height and weight items are placed in the 
``Medical Information'' section of the IRF-PAI, they are also being 
added to the IRF-PAI for calculating risk adjustment for the pressure 
ulcer measure. Failure to provide height and weight information could 
result in a finding of non-compliance with the reporting requirements.
    We invited public comment on our proposal to include data elements 
required for risk-adjustment of NQF 0678 Percent of Patients 
with Pressure Ulcers That Are New or Worsened measure as mandatory data 
collection elements in the revised IRF-PAI. Below is a summary of 
public comments received for the additional elements required for risk-
adjustment of the pressure ulcer measure, and our responses to these 
comments.
    Comment: One commenter questioned the use of peripheral artery 
disease (PAD), peripheral vascular disease (PVD), and diabetes mellitus 
(DM) as risk adjusters for the pressure ulcer quality measure.
    Response: Peripheral Arterial Disease, Peripheral Vascular Disease, 
and Diabetes are all conditions affecting perfusion and oxygenation, 
which are considered to impact risk of pressure ulcer development. 
Conditions causing issues of sensory perception (for example, 
peripheral neuropathy) or an alteration to intact skin (dry skin, 
erythema and other skin alterations) also are considered to impact risk 
of pressure ulcer development (Pressure Ulcer Prevention Clinical 
Practice Guideline, NPUAP). Additionally, statistical analyses showed 
that these factors were found to be significantly associated with the 
development of pressure ulcers when risk adjustment models were tested 
in a large sample of IRF patients.
    Comment: Several commenters requested that CMS consider adding 
impairment group as a risk adjuster for the pressure ulcer measure.
    Response: When developing the pressure ulcer quality measure, we 
reviewed the literature and obtained input from clinicians on which 
factors should be tested as potential risk adjustors. Various 
measurements of functional status/functional impairment were tested on 
a large sample of IRF patients, and were not found to be statistically 
significant in the population as a whole. We will continue to analyze 
this measure as more data is collected and will consider testing 
additional risk adjustors for future iterations of the measure.
    Comment: A commenter expressed concern that the adoption of the 
NQF-endorsed version of the pressure ulcer measure ``may be too 
premature.'' This commenter noted that CMS recently held a technical 
expert panel to discuss the potential development of a standardized set 
of pressure ulcer measurement items to be used across multiple 
healthcare settings (referred to as ``cross-setting''), and therefore, 
this commenter suggested that CMS delay implementing the revised 
pressure ulcer items.
    Response: It was necessary for us to finalize development of the 
proposed updates to the pressure ulcer data items for the October 1, 
2014 IRF-PAI release prior to work on the cross-setting pressure ulcer 
measures because of the significant amount of time required to 
implement such a data item set. However, we will continue to work on 
improving the data collection efforts to ensure that the most relevant 
patient information is obtained.
    Final Decision: After careful consideration of the public comments 
we received, we are finalizing our proposal to include the additional 
risk adjustment elements discussed above to the IRF-PAI for the purpose 
of risk-adjustment for NQF 0678 Percent of Residents or 
Patients with Pressure Ulcers That Are New or Worsened (Short-Stay).
3. Revisions to the IRF-PAI To Add Voluntary Data Items Related to NQF 
0678 Percent of Residents or Patients With Pressure Ulcers 
That Are New or Worsened (Short-Stay)
    The pressure ulcer measure numerator for the NQF 0678 
endorsed version of the ``Percent of Residents or Patients with 
Pressure Ulcers That Are New or Worsened (Short-Stay)'' measure looks 
at the number of patients with a target assessment during the selected 
time window who have one or more Stage 2 through 4 pressure ulcer(s) 
that are new or that have worsened compared with the previous 
assessment. According to the NQF Web site, in its description of NQF 
0678, ``Stage 1 pressure ulcers are excluded from this measure 
because recent studies have identified difficulties in objectively 
measuring them across different populations.'' The measure numerator 
also does not include what is referred to as ``unstageable'' pressure 
ulcers, which we describe below. The data that that has been mandatory 
for IRFs to report under the IRF QRP are those that met

[[Page 47914]]

the requirements of the application of NQF 0678 that we 
finalized in the CY 2013 OPPS/ASC final rule (as incorporated into the 
2012 version of the IRF PAI), which reflected the same staging for 
pressure ulcers as the NQF-endorsed version of the measure. We have 
proposed to include in the 2014 version of the IRF-PAI additional 
mandatory data items to accommodate the risk adjustment requirements of 
the NQF-endorsed version of this measure.
    We have received feedback from providers through a variety of 
sources (including a May 2, 2012 in-person training and special open 
door forums that occurred on November 29, 2011; April 19, 2012; July 
26, 2012; August 16, 2012; September 20, 2012; and October 18, 2012) in 
regard to the pressure ulcer items on the IRF-PAI. Additionally, we 
have received feedback in the form of questions from IRF providers 
submitted to the IRF Quality Reporting Program Helpdesk.
    We learned from provider feedback that a majority of IRF providers 
want the ability and flexibility to document information about all 
stages of pressure ulcers (numerical stages 1 through 4 and pressure 
ulcers that are not numerically stageable due to suspected deep tissue 
injury, slough and/or eschar, or non-removable devices, known as 
unstageable pressure ulcers), in addition to data on the stages of 
pressure ulcers required for the quality measure, and that they felt 
this extended documentation would allow them to track the evolution of 
pressure ulcers. We further learned that many providers felt that it is 
important to have a way to document information about healed pressure 
ulcers because they wanted us to know about these positive outcomes.
    In response to the feedback we received from providers, we proposed 
to add voluntary data items to the IRF-PAI Quality Indicators section, 
designed to address providers' concerns about the adequacy of current 
pressure ulcer data items. As modified, our proposed admission 
assessment consists of 2 main topics: (1) Unhealed Pressure Ulcers; and 
(2) Pressure Ulcer Risk Conditions. Also, the discharge assessment 
consists of 2 main topics: (1) Unhealed Pressure Ulcers; and (2) Healed 
Pressure Ulcers. Within each main topic there are sub-topics that 
contain a set of questions. The provider is asked to document how many 
pressure ulcers, if any, the patient has at each stage upon admission. 
We have added new questions that extend beyond stages 2 through 4 
pressure ulcers, covering the presence of stage 1 pressure ulcers, as 
well as unstageable pressure ulcers that are due to a non-removable 
device or dressing, to slough or eschar, or deep tissue injury. We note 
that the discharge assessment differs somewhat from the admission 
assessment with regard to the pressure ulcer questions. A copy of the 
2014 IRF-PAI can be found at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/IRFPAI.html.
    We have added this greater specificity to the pressure ulcer items 
to allow providers to document pressure ulcers in more detail. In 
describing the inadequacy they perceived in the present pressure ulcer 
items, providers described such situations as those in which a patient 
is admitted into an IRF with an unstageable pressure ulcer that is a 
suspected deep tissue injury (DTI). During the course of the IRF stay 
the DTI evolves into a stage 3 and, after several days, worsens to a 
stage 4. On the current version of the IRF-PAI, providers have no 
ability to document the presence of an unstageable pressure ulcer that 
existed when the patient was admitted. Whether or not the IRF believes 
there is an unstageable pressure ulcer, the IRF must document that the 
patient had no pressure ulcers on the admission assessment. However 
later, after the DTI worsens to a stage 3, if the IRF judges from the 
nature of the pressure ulcer that it was extremely likely to have been 
present at admission, the IRF would have to go back and change their 
documentation on the admission assessment to reflect that the patient 
actually had a stage 3 pressure ulcer upon admission. Upon discharge, 
the IRF would document that the patient has a stage 4 pressure ulcer. 
With the new pressure ulcer data items for 2014, the IRF will be able 
to document the presence of the unstageable pressure ulcer or suspected 
DTI on the admission assessment. The revisions to the IRF-PAI for 2014 
will allow the IRF to give a more complete and accurate picture of the 
progression of this pressure ulcer when the patient is discharged.
    While Stage 1 and unstageable pressure ulcers are not part of the 
NQF 0678 endorsed version of the ``Percent of Residents or 
Patients with Pressure Ulcers That Are New or Worsened (Short-Stay),'' 
and are not mandatory, we nonetheless believe that it is appropriate 
and important for us to collect this information. As the measure 
steward for this measure, CMS would like to gather and analyze data 
regarding Stage 1 and unstageable pressure ulcers to help determine if 
any modification to the existing measure should be made. This data 
could also help us determine if any additional pressure ulcer measures 
should be developed. For example, collecting data about Stage 1 
pressure ulcers could provide us with information that would allow us 
to assess whether these pressure ulcers can now be objectively measured 
across different populations.
    Additionally, as we have noted above, some pressure ulcers that are 
present on admission can become stageable and then worsen to a higher 
stage during the IRF stay. Access to data on these kinds of situations 
would assist us in determining whether including unstageable and Stage 
1 measures in the measure results may be appropriate in the future. We 
might accomplish this by expanding the current measure or developing an 
entirely new pressure ulcer measure.
    We invited public comment on our proposed revisions to the IRF-PAI 
of voluntary items related to the staging of pressure ulcers. We 
received the following public comments in response to our proposals for 
the addition of these voluntary pressure ulcer items to the IRF-PAI.
    Comment: Several commenters suggested that stage 1 pressure ulcers 
should not be collected on the IRF-PAI.
    Response: We obtained feedback from providers on the pressure ulcer 
items on the IRF-PAI released in October 2012 during Provider 
Trainings, Open Door Forums, and via the Quality Reporting Program 
Helpdesk. Based on the feedback we received, we learned that many IRF 
providers want the ability to document as much information as possible 
about all types of pressure ulcers and feel that this will help them to 
better track the evolution of pressure ulcers. Because it would be 
useful to us, as well as providers, to obtain complete, accurate 
information about the quality of care being provided in IRFs, we 
included fields for the documentation of all stages of pressure ulcers, 
including Stage 1 and Unstageable pressure ulcers. However, NQF 
0678 covers only Stages 2-4 pressure ulcers. Stage 1 pressure 
ulcers are not included in the quality measure. If a facility does not 
wish to report data on these pressure ulcers, they are under no 
obligation to do so.
    Comment: Several commenters requested that each IRF-PAI quality 
indicator pressure ulcer item be labeled as to whether it is mandatory 
or voluntary. Another commenter recommended that the voluntary IRF-PAI 
quality indicator pressure ulcer items be segregated from the mandatory 
items, or that CMS in some way on the IRF-PAI indicate which of the 
items are voluntary.
    Response: We have posted on our Web site a detailed matrix that 
identifies which data elements will be required,

[[Page 47915]]

and which will be voluntary (available at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/Spotlights-Announcements.html) and this matrix will also be 
incorporated into the final IRF PAI Training Manual which will be 
posted on CMS IRF PPS Web site. We do not directly indicate on the IRF-
PAI which items are mandatory versus which items are voluntary. These 
designations are subject to change, and although we can address such 
changes in rulemaking, the IRF-PAI is only released biannually. Thus, 
our ability to change these designations on the IRF-PAI itself is 
limited and could lead to provider confusion should these designations 
not align with current policy because they have changed during the 
interim year when we do not have a new release of the IRF-PAI.
    Comment: One commenter suggested that if a pressure ulcer is 
discovered after the removal of a ``non-removable device or other 
dressing'' during the IRF stay, and there was no documentation of this 
wound from the discharging hospital, this should not be counted on the 
IRF-PAI due to issues of attribution.
    Response: Assessment items collecting data on unstageable pressure 
ulcers are voluntary. However, if a numerically staged pressure ulcer 
is observed when a non-removable device/dressing is removed, and the 
pressure ulcer is still present at the time of discharge, that pressure 
ulcer will be reported on the IRF-PAI at discharge. If there were 
documentation that the pressure ulcer was present at admission at the 
same stage, and it did not worsen to a higher stage during the stay, 
then the pressure ulcer would not be considered new or worsened. The 
item in the proposed October 1, 2014 IRF-PAI ``Unstageable due to Non-
Removable Device or Dressing'' should be used on admission when there 
is documentation of a known pressure ulcer that cannot be fully 
visualized and staged due to a non-removable device.
    Comment: Several commenters indicated that the IRF-PAI is now too 
long and causes undue burden.
    Response: We obtained feedback from providers in October of 2012 on 
the IRF PAI during Provider Trainings, Open Door Forums, and via the 
Quality Reporting Program Helpdesk. Based on the feedback we received, 
providers wanted the ability to provide as much information as possible 
to truly track the evolution of pressure ulcers, so in order to 
accommodate these providers, we are adding voluntary items. However, 
only those pressure ulcer items required to calculate the quality 
measure NQF 0678, Percent of Patients or Residents with 
Pressure Ulcers That Are New or Worsened (Short Stay), are required in 
order for providers to avoid a 2 percentage point reduction of the 
applicable IRF PPS annual increase factor. Therefore, if a facility 
finds completing the additional data items burdensome, it is under no 
obligation to do so. Please refer to the 2014 IRF-PAI training manual 
for the voluntary/mandatory status of each item.
    Comment: One commenter requested that CMS consider capturing the 
degree to which a pressure ulcer has healed by discharge.
    Response: Pressure ulcer healing and treatment is a complex 
clinical issue that is difficult to capture in standardized assessment 
items. The IRF-PAI does not record incremental improvement, but instead 
captures only condition on admission and discharge, based on staging 
pressure ulcers, to avoid undue burden of data collection on 
facilities. Possible indicators of healing are numerous and not always 
accurate. These include surface area reduction, a common indicator for 
tracking the healing of pressure ulcers; however, we do not believe it 
is an appropriate data element to include in the IRF-PAI because it is 
not the sole determinant of healing. Development of granulation tissue, 
decrease in erythema, decrease in exudate, re-epithelialization, etc., 
are also other ways to document pressure ulcer healing. We cannot add 
data elements for all possible indicators. Also, many IRF stays are 
short, averaging 13 days, and we have no expectation that severe 
pressure ulcers will heal completely during this timeframe. If the 
patient is admitted with a full thickness pressure ulcer which will 
likely not be healed in approximately 13 days, it would simply be noted 
in the patient's record as full thickness on discharge. The IRF would 
not experience any negative impact from a quality reporting standpoint 
in a situation such as this, because this information is not required 
for purposes of NQF 0678. Also, from a more general 
perspective, quality measures are not designed to track a full set of 
details about the progress of any individual patient, but rather to 
include just enough information to register a patient's decline or 
improvement while in the care of a facility. This kind of assessment 
can assist us in monitoring the overall quality of facilities to ensure 
patients are receiving high-quality care and to identify facilities 
whose practices can be improved.
    Final Decision: After giving careful consideration to the public 
comments received in response to our proposal to add new voluntary 
pressure ulcer items to the IRF-PAI, we are finalizing the proposal to 
add the new pressure ulcer items that were posted on the IRF PPS Web 
page and as part of the IRF-PAI PRA package.
4. Revisions to the IRF-PAI To Add Mandatory Data Items Related to NQF 
0680 Percent of Residents or Patients Who Were Assessed and 
Appropriately Given the Seasonal Influenza Vaccine (Short-Stay)
    We have proposed to make changes to the IRF-PAI discharge 
assessment to include the addition of elements necessary to report data 
for the proposed measure, Percent of Residents or Patients Who Were 
Assessed and Appropriately Given the Seasonal Influenza Vaccine (Short-
Stay) (NQF 0680). These items will be based on the items from 
the MDS 3.0 and LTCH CARE Data Set items.24 25 There are 3 
data elements that will be collected in relation to this measure: Two 
are used to calculate the measure, and a third is used to ensure 
internal consistency and data accuracy. The items are as follows:
---------------------------------------------------------------------------

    \24\ Centers for Medicare & Medicaid Services. MDS 3.0 Item 
Subsets V1.10.4 for the April 1, 2012 Release. Retrieved from 
https://www.cms.gov/NursingHomeQualityInits/30_NHQIMDS30TechnicalInformation.asp.
    \25\ The LTCH CARE Data Set Version 2.00, the data collection 
instrument for the submission of the Percent of Residents or 
Patients with Pressure Ulcers That are New or Worsened (Short-Stay) 
measure and the Percent of Residents or Patients Who Were Assessed 
and Appropriately Given the Seasonal Influenza Vaccine (Short-Stay) 
measure, is currently under review by the Office of Management and 
Budget (OMB) in accordance with the Paperwork Reduction Act (PRA) 
http://www.gpo.gov/fdsys/pkg/FR-2013-02-01/pdf/2013-02155.pdf. The 
LTCH CARE Data Set Version 1.01 was approved on April 24, 2012 by 
OMB in accordance with the PRA. The OMB Control Number is 0938-1163. 
Expiration Date April 30, 2013.
---------------------------------------------------------------------------

     Did the patient receive the influenza vaccine in this 
facility for this year's influenza vaccination season?
     Date influenza vaccine was received, and
     If influenza vaccine not received, state reason.
    These items and questions allow the IRF to report if and when an 
influenza vaccine was given at the facility. They also allow the IRF to 
indicate why a vaccine was not given if that is the case. Further 
details on the specifications and data elements for this measure are 
available in the MDS 3.0 QM User's Manual available on our Web site at 
http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/NHQIQualityMeasures.html. Measure 
specifications are located in the download titled: MDS 3.0 QM User's 
Manual V6.0. Measure information is

[[Page 47916]]

also available at http://www.qualityforum.org/QPS/0680.
    In the proposed rule, we invited public comment on our proposed 
revisions to the IRF-PAI related to NQF 0680 Percent of 
Residents or Patients Who Were Assessed and Appropriately Given the 
Seasonal Influenza Vaccine (Short-Stay). The comments we received were 
related to our proposal to adopt the measure itself, and not on how we 
were proposing to modify the IRF-PAI. For a summary of comments and 
responses on this issue, please see section XIV.3.b. of this final 
rule.
    Final Decision: After careful consideration of the public comments 
we received, we are finalizing our proposal to modify the IRF-PAI 
discharge item set to add the 3 data elements for collecting data for 
NQF 0680.
5. Revisions to the IRF-PAI Related to Numbering of Quality Indicator 
Items
    In the revised IRF-PAI, we include changes in the numbering scheme 
used in the Quality Indicator section of the IRF-PAI from a 
``consecutive numbering scheme'' for numbering assessment items to a 
numbering scheme that allows greater flexibility for item removal and 
insertion. Problems arise with a consecutive numbering scheme when 
items are removed or new ones are inserted because this changes the 
numbers of some or all of the items around them. Other CMS post-acute 
care data collection vehicles, such as the MDS 3.0 and the LTCH CARE 
Data Set, have adopted a more flexible numbering schema that allows 
insertion or removal of items without requiring renumbering of the 
remaining items. We proposed to adopt a similar numbering schema in the 
revised IRF-PAI. A less flexible numbering system that necessitates 
renumbering items on the IRF-PAI in the event of such changes will 
result in a given item number having very different meanings on 
different versions of the IRF-PAI item set.
    For more details about our plans for changes to the IRF-PAI, see 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/IRFPAI.html.
    In the May 8, 2013 proposed rule, we invited public comments about 
our proposal to change the numbering scheme used in the quality 
indicator section of the IRF-PAI. A summary of the public comments 
received and our responses to comments are discussed below.
    Comment: We did not receive any comments in response to our 
proposal to change the type of numbering used on the quality indicator 
section of the IRF-PAI from a consecutive scheme to a numbering scheme 
similar to that used in the MDS 3.0. We did, however, receive comments 
requesting that page numbers be added to the IRF-PAI. The commenters 
suggested that because this document was being increased from 3 to 9 
pages in length as a result of the proposed changes to the Quality 
Indicator section of the IRF-PAI then the page numbering should be 
added. Another commenter requested that page numbers be added to the 
IRF-PAI because ``numbering the IRF-PAI pages will help keep it in 
correct order, since it is filed in the medical record.''
    Response: We agree with the commenters that adding page numbering 
to the IRF-PAI can assist IRFs in keeping the document in correct 
order. We also acknowledge that the proposed changes to the Quality 
Indicator section of the IRF-PAI will significantly increase the length 
of this document.
    Final Decision: After careful consideration of the public comments 
we received, we are finalizing our proposal to adopt a flexible 
numbering scheme (similar to that used in MDS 3.0) into the Quality 
Indicator section of the IRF-PAI. In addition, we will add general page 
numbering to the IRF-PAI document.

E. Change in Data Collection and Submission Periods for Future Program 
Years

    The FY 2012 final rule (76 FR 47836) included an initial framework 
for the IRF QRP. In that rule we also finalized the initial quality 
measures to be used in the IRF QRP, stated how data for these measures 
would to be collected, and selected the time periods for the data 
collection and reporting of the quality data.
    The FY 2012 final rule (76 FR 47836) also finalized the initial IRF 
QRP data reporting cycle, affecting the FY 2014 annual increase factor, 
as beginning on October 1, 2012 and ending on December 31, 2012. 
Beginning in 2013 for the FY 2015 annual increase factor, and for 
subsequent year annual increase factors, we finalized that quality 
reporting cycles would be based on a full calendar year (CY) cycle (76 
FR 47879).
    When there are new measures added to the quality reporting program 
that will be collected on the IRF-PAI, that data collection instrument 
must be updated accordingly. The next update to the IRF- PAI will take 
place on October 1, 2014. Under current policy, the IRF QRP data 
collection cycle for the FY 2016 annual increase factor will not begin 
until January 1, 2014.
    In the FY 2014 proposed rule, we proposed to change the IRF-PAI 
data collection periods for the FY 2016 and FY 2017 annual increase 
factors in order to align with the release of the new version of the 
IRF-PAI on October 1, 2014. We have also proposed to shorten the data 
collection period impacting the FY 2016 IRF PPS annual increase factor 
to 9 months, so that the FY 2017 reporting periods can begin on October 
1, 2014 using the new version of the IRF-PAI. Under this proposal, the 
next data collection period would run from January 1, 2014 to September 
30, 2014 and affect the IRF PPS annual increase factor for FY 2016.
    We further proposed to start fiscal year data collection periods 
beginning on October 1, 2014, and data collected for discharges during 
October 1, 2014 to September 30, 2015 will affect the FY 2017 IRF PPS 
annual increase factor. In addition, we proposed that data collection 
will continue on FY cycles unless there is an event that requires that 
this cycle be amended. We noted that, in the event the established 
cycles must be changed, we will make this apparent to the public and 
follow all necessary processes to make the change. Finalizing these 
proposals will result in having 2 separate data collection and 
submission schedules for IRF-PAI and NHSN based measures. We provide 
more details on this distinction below.
    We invited public comment on our proposal to alter the IRF-PAI data 
collection periods impacting the FY 2016 and FY 2017 increase factors 
in a way that aligns with the release of the next version of the IRF-
PAI instrument. A summary of the public comments received and our 
responses to comments are discussed below.
    Comment: Several commenters expressed support for this proposal. We 
did not receive any comments that included objections to our proposal 
to change the data collection and submission timeframe for data 
collected using the IRF-PAI from a calendar year basis to a fiscal year 
basis, beginning on October 1, 2014. Likewise, no commenters objected 
to our continuing collection of NHSN data on a calendar year basis.
    Response: We thank those commenters for their support of the 
proposed changes to the data collection and submission cycle for data 
collected using the IRF-PAI from a calendar to a fiscal year basis.
    Comment: Several commenters expressed their support for our 
proposal to continue data collection and submission of NHSN measures 
data on a calendar year basis beginning on October 1, 2014 with the 
exception of

[[Page 47917]]

the Influenza Vaccination Among Healthcare Personnel Measure (NQF 
0431). These commenters expressed an opinion that IRF units 
within acute care hospitals should be permitted to attest that their 
health care personnel flu vaccination measure data is reported through 
the acute care hospital's reporting, thereby automatically receiving 
credit for reporting in the IRF QRP.
    Response: We thank those commenters for their support of our 
proposal to continue to report data to NHSN on a calendar year. We do 
not agree, however, that IRF units located within IPPS hospitals should 
be permitted to attest to the submission of (NQF 0431) 
Influenza Vaccination among Healthcare Personnel measure data as part 
of the IPPS data. We will require all IRFs to report data for this 
measure. For a full discussion of this specific issue, as well as 
details about this measure, see section XIV.3.C.2 above ``IRF QRP 
Measure #1: Influenza Vaccination Coverage among Healthcare Personnel 
(NQF #0431)''.
    Final Decision: After careful consideration of the public comments 
received, we are finalizing our proposal to change the data collection 
timeframe for data submitted via the IRF-PAI to a fiscal year basis 
beginning on October 1, 2014, and to continue data collection of data 
that is reported via NHSN on a calendar year basis.
1. Implementation of Data Submission Deadlines for the IRF QRP
    In the FY 2012 IRF PPS final rule we stated that details regarding 
data submission and reporting requirements would be posted on the CMS 
Web site at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/index.html no later than 
January 31, 2012 (76 FR 47879). Further data submission details for the 
IRF QRP were posted on the CMS IRF QRP Web site on January 31, 2012, as 
promised. In addition, data submission details were disseminated to 
IRFs at various times from January 31, 2012 to December 31, 2012, 
through an in-person training held on May 2, 2012, Open Door Forums, 
list-serve announcements, IRF QRP Web page postings and responses to 
IRF QRP Helpdesk inquiries. In these communications, we announced that 
the final data submission deadline for the IRF QRP would be May 15th 
for all measures finalized for the FY 2014 annual increase factor and 
each subsequent years annual increase factor.
    We realize the value in providing clear submission deadlines for 
the IRF QRP and we believe that we should provide deadlines that 
clearly distinguish between data submitted using the NHSN and data 
submitted using the IRF-PAI. Further, it is important to have distinct 
deadlines at which point data submitted afterward, including data 
modifications and corrections, could not be used for reporting or IRF 
PPS annual increase factor determinations. For purposes of the FY 2016 
and subsequent year IRF PPS annual increase factors, and for the 
purposes of applying quarterly deadlines for public reporting purposes, 
we proposed the inclusion of quarterly data submission deadlines in 
addition to the previously finalized deadlines. We believe that clear 
submission deadlines this will ensure timely submission of data.
2. Quarterly Timelines for Submitting Data Using the IRF-PAI
    For the purposes of submitting quality data using the IRF-PAI for 
the IRF QRP, we have proposed new quarterly timeframes described below 
that we believe will provide sufficient time for IRFs to meet quality 
reporting requirements and allow us to harmonize IRF QRP data 
submission deadlines with the LTCHQR Program and Hospital IQR. 
Beginning with data collection and reporting impacting the FY 2016 
annual increase factor, we proposed that IRFs follow the deadlines 
presented in the tables below to complete submission of data for each 
quarter. For each quarter outlined in the tables below during which 
IRFs are required to collect data, we proposed a final deadline 
occurring approximately 135 days (or approximately 4 and \1/2\ months) 
after the end of each quarter by which all data collected during that 
quarter must be submitted. We believe that this is a reasonable amount 
of time to allow IRFs to submit data and make any necessary 
corrections. We have summarized these deadlines in the tables below.

  Table 13--Timelines for Submission of IRF QRP Program Quality Data Using IRF-PAI * for FY 2016 IRF PPS Annual
Increase Factor \+\: Application of NQF 0678 Percent of Residents or Patients With Pressure Ulcers That
                                        Are New or Worsened (Short-Stay)
----------------------------------------------------------------------------------------------------------------
                                                                                         IRF-PAI Data submission
               Quarter                         IRF-PAI Data collection period           deadline for corrections
                                                                                             of the IRF QRP
----------------------------------------------------------------------------------------------------------------
                                         FY 2016 Annual Increase Factor
----------------------------------------------------------------------------------------------------------------
Quarter 1...........................  January 1, 2014-March 31, 2014..................  August 15, 2014.
Quarter 2...........................  April 1, 2014-June 30, 2014.....................  November 15, 2014.
Quarter 3...........................  July 1, 2014-September 30, 2014.................  February 15, 2015.
----------------------------------------------------------------------------------------------------------------
* Using October 1, 2012 release of IRF-PAI.
\+\ FY 2016 APU determination is based on 3 quarters of data submission for the pressure ulcer measure.


  Table 14--Timelines for Submission of IRF QRP Program Quality Data Using IRF-PAI * for FY 2017 IRF PPS Annual
    Increase Factor: NQF 0678 Percent of Residents or Patients With Pressure Ulcers That Are New or
       Worsened (Short-Stay), and NQF 0680 Percent of Residents or Patients Who Were Assessed and
                         Appropriately Given the Seasonal Influenza Vaccine (Short-Stay)
----------------------------------------------------------------------------------------------------------------
                                                                                         IRF-PAI Data submission
               Quarter                         IRF-PAI Data collection period           deadline for corrections
                                                                                             of the IRF QRP
----------------------------------------------------------------------------------------------------------------
                                         FY 2017 Annual Increase Factor
----------------------------------------------------------------------------------------------------------------
Quarter 1...........................  October 1, 2014-December 31, 2014...............  May 15, 2015.

[[Page 47918]]

 
Quarter 2...........................  January 1, 2015-March 31, 2015..................  August 15, 2015.
Quarter 3...........................  April 1, 2015-June 30, 2015.....................  November 15, 2015.
Quarter 4...........................  July 1, 2015-September 30, 2015.................  February 15, 2016.
----------------------------------------------------------------------------------------------------------------
* Using October 1, 2014 release of IRF-PAI.

3. Quarterly Submission Timelines of Data Reported Using NHSN
    In the FY 2014 proposed rule (78 FR 26909 through 26924), we 
proposed that the IRF QRP align its deadlines for submitting of quality 
data via the NHSN with the established deadlines set forth in the 
Hospital IQR and LTCHQR Programs. We noted that the CDC recommends that 
a facility report Healthcare Acquired Infection (HAI) events such as 
CAUTI as close to the time of the event as possible, and certainly 
within 30 days after the event. We agree with the CDC's recommendations 
and therefore are requiring that IRFs report CAUTI events, even null 
events (months without CAUTIs) within 30 days (on a monthly level) 
after each event using the NHSN.
    We are finalizing our proposal to continue the calendar year basis 
of reporting CAUTI, using quarterly deadlines as established by the 
Hospital IQR program for all events that occur during each quarter. 
Final submission deadlines for data collected through the NHSN are 
shown in the tables below.

  Table 15--Timelines for Submission of IRF QRP Program Quality Data Using CDC/NSHN for FY 2016 and FY 2017 IRF
  PPS Annual Increase Factor: National Health Safety Network (NHSN) Catheter-Associated Urinary Tract Infection
                                             (CAUTI) Outcome Measure
----------------------------------------------------------------------------------------------------------------
                                                                                        CDC/NHSN Data submission
               Quarter                         CDC/NHSN Data collection period                  deadline
----------------------------------------------------------------------------------------------------------------
                                         FY 2016 Annual Increase Factor
----------------------------------------------------------------------------------------------------------------
Quarter 1...........................  January 1, 2014-March 31, 2014..................  August 15, 2014.
Quarter 2...........................  April 1, 2014-June 30, 2014.....................  November 15, 2014.
Quarter 3...........................  July 1, 2014-September 30, 2014.................  February 15, 2015.
Quarter 4...........................  October 1, 2014-December 31, 2014...............  May 15, 2015.
----------------------------------------------------------------------------------------------------------------
                                         FY 2017 Annual Increase Factor
----------------------------------------------------------------------------------------------------------------
Quarter 1...........................  January 1, 2015-March 31, 2015..................  August 15, 2015.
Quarter 2...........................  April 1, 2015-June 30, 2015.....................  November 15, 2015.
Quarter 3...........................  July 1, 2015-September 30, 2015.................  February 15, 2016.
Quarter 4...........................  October 1, 2015-December 31, 2015...............  May 15, 2016.
----------------------------------------------------------------------------------------------------------------

    Further, we proposed to apply to IRF QRP the same deadlines 
established for the reporting of the Influenza Vaccination Coverage 
Among Health Personnel (NQF 0431) measure in the Hospital IQR 
Program and proposed in the LTCH QRP.

Table 16--Timelines For Submission of IRF QRP Program Quality Data Using
  CDC/NSHN for FY 2016 and FY 2017 IRF PPS Annual Increase Factor: NQF
 0431 Influenza Vaccination Coverage Among Healthcare Personnel
------------------------------------------------------------------------
                                               CDC/NHSN Data submission
         Data collection timeframe                     deadline
------------------------------------------------------------------------
                     FY 2016 Annual Increase Factor
------------------------------------------------------------------------
October 1, 2014 (or when the influenza       May 15, 2015.
 vaccine becomes available)-March 31, 2015.
------------------------------------------------------------------------
                     FY 2017 Annual Increase Factor
------------------------------------------------------------------------
October 1, 2015 (or when the influenza       May 15, 2016.
 vaccine becomes available)-March 31, 2016.
------------------------------------------------------------------------

    We invited public comment on the proposals made in the proposed 
rule regarding data submission quarterly and final deadlines for the 
purposes of reporting data using the IRF-PAI and for the purposes of 
reporting data using the NHSN. The following are comments received in 
response to these proposals and our response to these comments.

[[Page 47919]]

    Comment: A few comments expressed support for our proposal to apply 
quarterly reporting deadlines to both the measures reported using the 
IRF-PAI on a fiscal year basis and to the measures reported to the CDC 
via NHSN on a calendar year basis.
    Response: We thank the commenters for their supportive comments on 
the IRF-PAI measure on a fiscal year basis.
    Final Decision: After careful consideration of the public comments 
we received, we are finalizing our proposal to apply quarterly 
deadlines to both the measures reported using the IRF-PAI on a fiscal 
year basis and to the measures reported to the CDC via NHSN on a 
calendar year basis.

F. Reconsideration and Appeals Process

    In the proposed rule (78 FR 26909 through 26921) we provided 
details pertaining to a reconsideration process, and the mechanisms 
related to provider requests for reconsideration of their annual 
increase factor, such as filing requests, required content, supporting 
documentation, and mechanisms of notification and final determinations 
on the IRF QRP Web site this spring at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/index.html. We also invited public comment on the proposed 
procedures for reconsideration and appeals. We received the following 
public comments related to our discussion of the reconsideration 
process in the proposed rule:
    Comment: Many commenters expressed support of CMS' proposed IRF QRP 
reconsideration and appeals process. Further, one commenter encouraged 
CMS to mirror the processes used in the Hospital IQR Program and the 
Hospital Outpatient Quality Reporting (OQR) Program when developing 
reconsideration and appeals and for the IRF QRP.
    Response: We thank the commenters for their support for the 
inclusion of reconsideration and appeals processes in the IRF QRP. It 
is our goal to align our reconsideration and appeals process and 
policies with those of existing quality reporting programs, such as 
Hospital IQR Program and the Hospital Outpatient Quality Reporting 
Program, to the extent appropriate for the IRF QRP. We greatly 
appreciate the commenters' views on the reconsideration process, and 
will consider all of these comments for future rulemaking and program 
development.
    Comment: One commenter expressed concern that CMS did not provide 
procedural details of the reconsideration process through rulemaking 
and encouraged CMS to ensure that sufficient outreach and education is 
conducted in a timely manner regarding these processes.
    Response: We thank the commenter for the comments. We established a 
Web site that provides procedural details for the FY 2014 IRF QRP 
reconsideration process. This information is available at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/Reconsideration-and-Disaster-Waiver-Requests.html. We noted in the FY 2014 proposed rule (78 FR 26909 
through 26921) that we developed this Web site as a resource to inform 
providers on how to seek reconsideration of any decision of non-
compliance for the FY 2014 annual increase factor, and the necessary 
steps to do so. We provided a process for reconsideration should IRFs 
choose to avail themselves of it. In the FY 2014 proposed rule (78 FR 
26909 through 26921), we stated that IRFs must first apply for 
reconsideration through CMS prior to appealing our initial finding of 
non-compliance to the PRRB. In light of a commenter's concern that CMS 
did not provide procedural details of the reconsideration process 
through rulemaking and concern that CMS ensure that sufficient outreach 
and education are available, we have decided to continue with an IRF 
QRP reconsideration process that is voluntary for the time being in 
order to fully address these concerns. We are therefore only 
recommending that IRFs use the reconsideration process prior to 
appealing to the PRRB. We note that the agency has had good success 
under the Hospital IQR program with a process that is very similar to 
the one we proposed for the IRF QR. From the provider perspective, it 
allows for the opportunity to resolve issues early in the process when 
we have dedicated resources to considering all reconsideration requests 
before payment changes are applied to an IRF's annual payment update. 
From CMS' perspective, it decreases the number of appeals presented to 
the PRRB, which reviews cases for all quality reporting programs, 
allowing for more efficient operations at the appeals level.
    Because we have been aware that providers should be able to request 
a reconsideration of their annual increase factor if their 
circumstances warrant it as soon as possible, we provided details 
pertaining to the voluntary reconsideration process, and the mechanisms 
related to provider requests for reconsiderations of their annual 
increase factor, such as filing requests, required content, supporting 
documentation, and mechanisms of notification and final determinations 
on the IRF QRP Web site in spring 2013 prior to any IRF's need for 
information on the CMS reconsideration process for the FY 2014 annual 
increase factor and subsequent years annual increase factors at: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting. CMS' subregulatory approach to the 
FY 2014 reconsideration process was necessary, as any other form of the 
reconsideration process that we might propose and finalize in this rule 
would not be final and in effect until October 1, 2013. This would have 
the effect of proposing and finalizing a FY 2014 process for 
reconsiderations that should already be completed. We note that we are 
finalizing the policy that this subregulatory approach to the 
reconsideration process will remain in effect until we can propose and 
finalize a regulatory version of the reconsideration process in future 
rulemaking.
    As part of the voluntary process, IRFs that are non-compliant with 
the reporting requirements during a given reporting cycle will be 
notified of that finding. The purpose of this notification is to put 
the IRF on notice of the following: (1) That the IRF has been 
identified as being non-compliant with the IRF QRP's reporting 
requirements for the reporting cycle in question; (2) that the IRF will 
be scheduled to receive a reduction in the amount of two percentage 
points to the annual payment update for the upcoming fiscal year; (3) 
that the IRF may file a request for reconsideration if they believe 
that the finding of non-compliance is erroneous, or that if they were 
non-compliant, they have a valid and justifiable excuse for this non-
compliance; and (4) that the IRF must follow a defined process on how 
to file a request for reconsideration, which will be described in the 
notification.
    Upon the conclusion of our review of each request for 
reconsideration, we will render a decision. We may reverse our initial 
finding of noncompliance if: (1) The IRF provides proof of full 
compliance with all requirements during the reporting period; or (2) 
the IRF provides adequate proof of a valid or justifiable excuse for 
non-compliance if the IRF was not able to comply with requirements 
during the reporting period. We will uphold our initial finding of 
noncompliance if the IRF cannot show any justification for 
noncompliance.

[[Page 47920]]

G. Policy for Granting a Waiver of the IRF QRP Data Submission 
Requirements in Case of Disaster or Extraordinary Circumstances

    Our experience with other quality reporting programs has shown that 
there are times when providers are unable to submit quality data due to 
the occurrence of extraordinary circumstances beyond their control (for 
example, natural or man-made disasters). We define a ``disaster'' as 
any natural or man-made catastrophe which causes damages of sufficient 
severity and magnitude to partially or completely destroy or delay 
access to medical records and associated documentation. Natural 
disasters could include events such as hurricanes, tornadoes, 
earthquakes, volcanic eruptions, fires, mudslides, snowstorms, and 
tsunamis. Man-made disasters could include such events as terrorist 
attacks, bombings, floods caused by man-made actions, civil disorders, 
and explosions. A disaster may be widespread or impact multiple 
structures or be isolated and impact a single site only.
    In certain instances of either natural or man-made disasters, an 
IRF may have the ability to conduct a full patient assessment, and 
record and save the associated data either during or before the 
occurrence of an extraordinary event. In this case, the extraordinary 
event has not caused the facility's data files to be destroyed, but it 
could hinder the IRF's ability to meet the quality reporting program's 
data submission deadlines. In this scenario, the IRF would potentially 
have the ability to report the data at a later date, after the 
emergency circumstances have subsided. In such cases, a temporary 
waiver of the IRF duty to report quality measure data may be 
appropriate.
    In other circumstances of natural or man-made disaster, an IRF may 
not have had the ability to conduct a full patient assessment, and 
record and save the associated data before the occurrence of an 
extraordinary event. In such a scenario, the facility does not have 
data to submit to CMS as a result of the extraordinary event. We 
believe that it is appropriate, in these situations, to grant a full 
waiver of the reporting requirements.
    It is our goal not to penalize IRF providers in these circumstances 
or to unduly increase their burden during these times. Therefore, we 
proposed a process, for payment year 2015 and subsequent years, for IRF 
providers to request and for us to grant waivers with respect to the 
reporting of quality data when there are extraordinary circumstances 
beyond the control of the provider. When a waiver is granted, an IRF 
will not incur payment reduction penalties for failure to comply with 
the requirements of the IRF QRP.
    In the FY 2014 proposed rule (78 FR 26909 through 26921), we 
proposed to establish a disaster waiver process, in which IRFs that 
have experienced a disaster can request a waiver of their quality 
reporting responsibilities for purposes of payment year 2015 and 
subsequent payment years. We proposed that the IRF may request a waiver 
for one or more quarters by submitting a written request to CMS. We 
also proposed that should IRFs compose a letter to CMS that documents 
the waiver request, with the information described below, and submit 
the letter to CMS via email to the IRF Help Desk at 
[email protected]. IRFs that have filed a request for 
an IRF QRP disaster waiver with an IRF-PAI waiver request using the 
procedure that is described under our regulations at 42 CFR Sec.  
412.614 can indicate this in their letter to CMS for their request for 
a waiver for quality reporting purposes.\26\
---------------------------------------------------------------------------

    \26\ http://www.gpo.gov/fdsys/pkg/CFR-2011-title42-vol2/pdf/CFR-2011-title42-vol2-sec412-614.pdf.
---------------------------------------------------------------------------

    Note that the subject of the email must read ``Disaster Waiver 
Request'' and the letter must contain the following information:
     IRF CCN;
     IRF name;
     CEO or CEO-designated personnel contact information 
including name, telephone number, email address, and mailing address 
(the address must be a physical address, not a post office box);
     IRF's reason for requesting a waiver;
     Evidence of the impact of extraordinary circumstances, 
including but not limited to photographs, newspaper and other media 
articles; and
     A date when the IRF believes that it will again be able to 
submit IRF QRP data and a justification for the proposed date.
    We proposed that the letter documenting the disaster waiver request 
be signed by the IRF's CEO, and must be submitted within 30 days of the 
date that the extraordinary circumstances occurred. Following receipt 
of the letter, we would: (1) Provide a written acknowledgement, using 
the contact information provided in the letter, to the CEO or 
designated contact person, notifying them that the request has been 
received, and (2) after CMS has made a decision as to whether to grant 
the waiver request, provide a formal response to the CEO, or designated 
contact person notifying them of our decision.
    This policy does not preclude us from granting waivers to IRFs that 
have not requested them when we determine that an extraordinary 
circumstance, such as an act of nature, affects an entire region or 
locale. If we make the determination to grant a waiver to IRFs in a 
region or locale, we propose to communicate this decision through 
routine communication channels to IRFs and vendors, including but not 
limited to issuing memos, emails, and notices on https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/index.html.
    In the proposed rule, we invited public comment on our proposed 
disaster waiver process. A summary of the public comments received and 
our responses to comments are discussed below.
    Comment: Several commenters stated that they support the IRF QRP 
disaster waiver policy and ``applaud the agency for recognizing the 
impact of natural disasters and other extenuating circumstances on the 
ability of IRFs to collect and report quality data.''
    Response: We appreciate the commenters' support and recognition of 
our efforts to plan for various types of emergency situations that can 
impact an IRF's ability to report quality data.
    Final Decision: After careful consideration of the public comments 
received, we are finalizing the IRF QRP disaster/extraordinary 
circumstances waiver and appeals processes as proposed.

H. Public Display of Data Quality Measures for the IRF QRP Program

    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 
procedures to ensure that each IRF provider has the opportunity to 
review the data that is to be made public with respect to its facility, 
prior to such data being made public. Section 1886(j)(7)(E) of the Act 
requires CMS to report quality measures that relate to services 
furnished in IRFs on CMS' Web site.
    Currently, the Agency is developing plans regarding the 
implementation of these provisions. We appreciate the need for 
transparency in 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

[[Page 47921]]

established procedures or timelines for public reporting of data, but 
we intend to include related proposals in future rule making.
    Comment: Several commenters urged CMS to convene stakeholders to 
inform this process prior to rulemaking. One commenter strongly 
encouraged CMS to display the most current performance data for public 
reporting of IRF QRP data.
    Response: We appreciate the commenters for their feedback. We 
appreciate the need to ensure that the data made publicly available is 
easily understood by all stakeholders, including providers and 
consumers. At this time, we are working to establish procedures for 
public reporting, including procedures that provide the opportunity for 
IRFs to review their data before it is made public, and will propose 
such procedures through future rulemaking after allowing stakeholders 
the opportunity to submit input.
    We thank the commenters for the input and suggestions, and we will 
consider them as we develop proposals for public reporting of quality 
measures in future rulemaking.

I. Method for Applying the Reduction to the FY 2014 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 
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. FY 2014 is to be the first year that the 
mandated reduction will be applied for IRFs that failed to comply with 
the data submission requirements during the data collection period 
October 1, 2012 through December 31, 2012. Thus, in compliance with 
1886(j)(7)(A)(i) of the Act, we will apply a 2 percentage point 
reduction to the applicable FY 2014 market basket increase factor (1.8 
percent) in calculating an adjusted FY 2014 standard payment conversion 
factor to apply to payments for only those IRFs that failed to comply 
with the data submission requirements. As noted previously, 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, 
reporting-based reductions to the market basket increase factor will 
not be cumulative; they will only apply for the FY involved. Table 17 
shows the calculation of the adjusted FY 2014 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 for 
the period from October 1, 2012 through December 31, 2012.

    Table 17--Calculations To Determine the Adjusted FY 2014 Standard
   Payment Conversion Factor for IRFs That Failed To Meet the Quality
                          Reporting Requirement
------------------------------------------------------------------------
              Explanation for Adjustment                    Calculations
------------------------------------------------------------------------
Standard Payment Conversion Factor for FY 2013.......  ...       $14,343
Adjusted Market Basket Increase Factor for FY 2014      x        0.99800
 (2.6 percent), reduced by 0.3 percentage point in
 accordance with sections 1886(j)(3)(C) and (D) of
 the Act and a 0.5 percentage point reduction for the
 productivity adjustment as required by section
 1886(j)(3)(C)(ii)(I) of the Act, 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-  x         1.0010
 Related Share.......................................
Budget Neutrality Factor for the Revisions to the CMG   x         1.0000
 Relative Weights....................................
Budget Neutrality Factor for the Update to the Rural    x         1.0025
 Adjustment Factor...................................
Budget Neutrality Factor for the Update to the LIP      x         1.0171
 Adjustment Factor...................................
Budget Neutrality Factor for the Update to the          x         0.9962
 Teaching Status Adjustment Factor...................
Adjusted FY 2014 Standard Payment Conversion Factor..   =        $14,555
------------------------------------------------------------------------

XV. Miscellaneous Comments

    Comment: Several commenters requested that CMS use the most recent 
three years of data and the first year of data collected under ICD-10 
to review and update the list of comorbidities used to determine the 
tier payments to ensure that the tier list reflects all conditions that 
contribute significantly to IRF costs of care. One commenter also 
suggested that CMS re-examine the omission from this list of certain 
comorbidities that are considered preventable and might lead to 
perverse incentives for the IRF to undertreat these conditions.
    Response: We appreciate the commenters' suggestions, and will 
consider these suggestions for future analyses.
    Comment: One commenter suggested that CMS revise the IRF coverage 
requirements that are described in chapter 1, section 110 of the 
Medicare Benefit Policy Manual (Pub. L. 100-02) to allow recreational 
therapy services to count, on a limited basis, towards the intensive 
rehabilitation therapy requirement in IRFs when the medical necessity 
is well-documented by the rehabilitation physician in the medical 
record and is ordered by the rehabilitation physician as part of the 
overall plan of care for the patient.
    Response: As we did not propose any changes to the IRF coverage 
requirements in Sec.  412.622(a)(3), (4), and (5) that would affect any 
of the requirements described in chapter 1, section 110 of the Medicare 
Benefit Policy Manual (Pub. L. 100-02), this comment is outside the 
scope of the proposed rule. However, as we have indicated previously in 
the FY 2012 IRF PPS final rule (76 FR 47836 at 47883), we do not 
believe that recreational therapy services should replace the provision 
of the 4 core skilled therapy services (physical therapy, occupational 
therapy, speech-language therapy, and prosthetics/orthotics). Thus, we 
believe it should be left to each individual IRF to determine whether 
offering recreational therapy is the best way to achieve the desired 
patient care outcomes. As we have stated previously, recreational 
therapy is a covered service in IRFs when the medical necessity is 
well-documented by the rehabilitation physician in the medical record 
and is ordered by the rehabilitation physician as part of the overall 
plan of care for the patient. Recreational therapy may be offered as an 
additional service above and beyond the core skilled therapy services 
used to demonstrate the provision of an intensive rehabilitation 
therapy program, but may not replace one of these therapies.
    Comment: One commenter requested that we consider a new model of 
payment for post-acute care services, such as the Continuing Care 
Hospital (CCH) model, that would pay based on the needs of the patient 
rather than the setting in which the care is provided.

[[Page 47922]]

This commenter urged us to pilot test the CCH idea.
    Response: As we did not propose any new payment models for post-
acute care services in the FY 2014 IRF PPS proposed rule (78 FR 26880), 
this comment is outside the scope of this rule. However, we appreciate 
the commenter's suggestions, and we note that on May 15, 2013, CMS 
announced a second round of Health Care Innovation Awards. Under this 
announcement, we will spend up to $1 billion for awards and evaluation 
of projects from across the country that test new payment and service 
delivery models that will deliver better care and lower costs for 
Medicare, Medicaid, and Children's Health Insurance Program (CHIP) 
enrollees. In addition, we commenced the Bundled Payments for Care 
Improvement Initiative, whereby organizations will enter into payment 
arrangements that include financial and performance accountability for 
episodes of care. These models may lead to higher quality, more 
coordinated care at a lower cost to Medicare. In one of the model 
designs being tested (referred to as ``Model 3'' at http://innovation.cms.gov/initiatives/BPCI-Model-3), the episode of care will 
be triggered by an acute care hospital stay and will begin at 
initiation of post-acute care services with a participating skilled 
nursing facility, inpatient rehabilitation facility, long-term care 
hospital or home health agency.
    Comment: Several commenters requested that we use the electronic 
signature guidelines provided in the Medicare Program Integrity Manual 
to allow the use of electronic signatures for all required 
documentation, including for the rehabilitation physician's review and 
concurrence with the preadmission screening requirements under the IRF 
coverage requirements in 412.622(a)(3)(i).
    Response: As we did not propose any changes to the regulations in 
Sec.  412.622(a)(3)(i) in the May 8, 2013 proposed rule (78 FR 26880), 
this comment in outside the scope of this final rule. However, we have 
provided specific guidance on the use of electronic signatures for 
documentation of the rehabilitation physician's review and concurrence 
with the IRF preadmission screening requirements, which can be 
downloaded from the IRF PPS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Downloads/ElecSysClar.pdf.

XVI. Provisions of the Final Regulations

    In this final rule, we are adopting the provisions set forth in the 
FY 2014 IRF PPS proposed rule (78 FR 26880), except as noted elsewhere 
in the preamble. Specifically:

A. Payment Provision Changes

     We will update the FY 2014 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 IV of this final rule.
     We will update the FY 2014 IRF PPS facility-level 
adjustment factors, using the most current and complete Medicare claims 
and cost report data with an enhanced estimation methodology, in a 
budget-neutral manner, as discussed in section V of this final rule.
     We will update the FY 2014 IRF PPS payment rates by the 
market basket increase factor, based upon the most current data 
available, with a 0.3 percentage point reduction as required by 
sections 1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(iii) 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 2014, in accordance with the statutory 
requirements, as described in section VI of this final rule.
     We will update the FY 2014 IRF PPS payment rates by the FY 
2014 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 2014, as discussed in section VI of this final 
rule.
     We will update the outlier threshold amount for FY 2014, 
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 2014, as discussed in section VII of 
this final rule.
     We will adopt revisions to the list of eligible ICD-9-CM 
diagnosis codes that meet the presumptive compliance criteria, with a 
one-year delayed implementation date, as discussed in section VIII of 
this final rule.
     We will adopt non-quality-related revisions to IRF-PAI 
sections effective October 1, 2014, as discussed in section IX of this 
final rule.
     We will adopt 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, effective October 1, 
2014, as discussed in section XIV of this final rule.

B. Revisions to Existing Regulation Text

    In this final rule, we will make the following revisions to the 
existing regulations:
     We will revise Sec.  412.25(a)(1)(iii) to specify a 
minimum required number of beds that are not excluded from the 
inpatient prospective payment system (IPPS) for a hospital that has an 
IRF unit, with a one-year delayed implementation date to give providers 
an opportunity to comply with the requirements, as described in section 
XI of this final rule.
     We will make technical corrections to Sec.  412.130, to 
reflect prior changes to the regulations at Sec.  412.29 and Sec.  
412.30 that we made in the FY 2012 IRF PPS final rule (76 FR 47836), as 
described in section X of this final rule.
     We will make clarifications to Sec.  412.630, to reflect 
the scope of section 1886(j)(8) of the Act, as described in section XII 
of this final rule.
     We will revise Sec.  412.29(d), to clarify that Medicare 
requires the rehabilitation physician's review and concurrence on the 
preadmission screening for Medicare Part A Fee-for-Service patients 
only, as described in section XIII of this final rule.

XVII. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 30-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. 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

[[Page 47923]]

following is a discussion of these information collections, some of 
which have already received OMB approval.

A. ICRs Regarding IRF QRP

    As stated in section XIV. of this final rule, we are adopting one 
new measure for use in the IRF QRP which will affect the increase 
factor for FY 2016. This quality measure is: Influenza Vaccination 
Coverage among Healthcare Personnel (NQF 0431). We are also 
adopting 2 new measures that will affect the increase factor for FY 
2017. The first is an All-Cause Unplanned Readmission Measure for 30 
Days Post Discharge from Inpatient Rehabilitation Facilities. This 
measure is a claims-based measure that does not require submission of 
data by IRF providers. In addition, we are adopting the Percent of 
Residents or Patients Who Were Assessed and Appropriately Given the 
Seasonal Influenza Vaccine (Short-Stay) (NQF 0680) measure. 
Finally, we are replacing a non-risk adjusted application of an NQF-
endorsed pressure ulcer measure, in which only numerator and 
denominator data is collected, to use the NQF-endorsed version of this 
measure ``Percent of Residents or Patients with Pressure Ulcers That 
Are New or Worsened (Short-Stay)'' (NQF 0678), which is a 
risk-adjusted measure. Each of these measures will be collected in the 
manner described below:
1. Influenza Vaccination Coverage Among Healthcare Personnel (NQF 
0431)
    In section XIV. of this final rule, we are adopting the new 
measure, Influenza Vaccination Coverage among Healthcare Personnel (NQF 
0431) to the IRF QRP. IRFs will be required to collect data 
related to the number of healthcare personnel working at a facility who 
have been vaccinated against the influenza virus during a given 
influenza vaccination season. The CDC has determined that the influenza 
vaccination season begins on October 1st (or when the vaccine becomes 
available) and ends on the following March 31st each year. This measure 
requires that the provider submit only one report to NHSN by the data 
submission deadline of May 15 following the close of the data 
collection period each year.
    It has become a common practice for healthcare facilities, 
including IRFs, to promote vaccination of employees for the influenza 
virus and to keep records of which of their staff members received this 
vaccination each year. Therefore, we do not believe that IRFs will 
incur any additional burden related to the collection of the data for 
this measure.
    We anticipate that it will take approximately 15 minutes to prepare 
and transmit the required data for this measure to the CDC each year. 
The reporting of the data for this measure can be done while the 
provider is logged onto NHSN for the purpose of entering their CAUTI 
measure data. We believe that this task can be completed by an 
administrative person such as a Medical Secretary/Medical Data Entry 
Clerk. The average hourly wage for Medical Records or Health 
Information Technicians is $15.55.\27\ We estimate that the annual cost 
to each IRF for the reporting of the staff influenza measure will be 
$3.89.\28\ The annual cost across the 1161 IRFs in the U.S. that are 
reporting data to CMS is estimated to be $4,516.\29\
---------------------------------------------------------------------------

    \27\ According to the U.S. Bureau of Labor Statistics, the mean 
hourly wage for a Medical Records & Health Information Technician is 
$15.55. See: http://www.bls.gov/ooh/healthcare/medical-records-and-health-information-technicians.htm.
    \28\ 15 minutes Administrative staff time to collect and report 
staff influenza measure @ $15.55 per hour = $3.9889 per IRF per 
year.
    \29\ At the time of the writing of this rule, there were 1161 
IRFs reporting quality data to CMS. ($3.9889 per IRF per year x 1161 
IRFs in U.S. = $4,621516).
---------------------------------------------------------------------------

2. All-Cause Unplanned Readmission Measure for 30 Days Post Discharge 
from Inpatient Rehabilitation Facilities
    As stated in section XIV. of this final rule, data for this measure 
will be collected from Medicare claims and therefore will not add any 
additional reporting burden for IRFs.
3. Percent of Residents or Patients with Pressure Ulcers that are New 
or Have Worsened (Short-Stay) (NQF 0678)
    In section XIV of this final rule, we are adopting the NQF-endorsed 
version of the measure titled ``Percent of Residents or Patients with 
Pressure Ulcers That Are New or Worsened (Short-Stay)'' (NQF 
0678), affecting the FY 2017 annual increase factor. To 
support the standardized collection and calculation of this quality 
measure, we are modifying the current Inpatient Rehabilitation 
Facility-Patient Assessment Instrument (IRF-PAI) by replacing the 
current pressure ulcer items with data elements similar or identical to 
those collected through the Minimum Data Set 3.0 (MDS 3.0) used in 
nursing homes. By building upon preexisting resources, we intend to 
reduce administrative burden related to data collection and submission. 
We anticipate that the initial setup and acclimation to pressure ulcer 
data collection will have already occurred with the adoption of the 
pressure ulcer measure for the IRF QRP for the FY 2014 annual increase 
factor. Therefore, we believe the transition to reporting similar as 
well as additional data elements for this measure will be less 
burdensome.
    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 estimate that it will take approximately 10 minutes 
of time by the RN to perform the admission pressure ulcer assessment. 
We further estimate that it will take an additional 15 minutes of time 
to complete the discharge pressure ulcer assessment. We expect that 
during these time periods, the RN would be engaged in the collection of 
data for the purpose of the IRF QRP and would not be engaged in the 
performance of routine patient care.
    We estimate that there are 359,000 IRF-PAI submissions per year 
\30\ and that there are 1161 IRFs in the U.S. reporting quality data to 
CMS. Based on these figures, we estimate that each IRF will submit 
approximately 309 IRF-PAIs per year or 26 IRF-PAIs per month.\31\ 
Assuming that each IRF-PAI submission requires 25 minutes of time by an 
RN at an average hourly wage of $33.23,\32\ the yearly cost to each IRF 
would be $4,278.36 \33\ and the annualized cost across all IRFs would 
be $4,967,176.\34\
---------------------------------------------------------------------------

    \30\ MedPAC, A Data Book: Health Care Spending and the Medicare 
Program (June 2012), http://www.medpac.gov/chapters/Jun12DataBookSec8.pdf.
    \31\ 359,000 IRF-PAIs per all IRFs per year/1161 IRFs in U.S. = 
309 IRF-PAIs per each IRF per year.
    309 IRF-PAI reports per IRF per year/12 months per year = 26 
IRF-PAI reports per each IRF per year.
    \32\ According to the U.S. Bureau of Labor Statistics, the mean 
hourly wage for a Registered Nurse is $33.23. (See http://www.bls.gov/oes/2011/may/oes291111.htm).
    \33\ 25 minutes x 309 IRF-PAI assessments per each IRF per year 
= 7,725 minutes per each IRF per year.
    7,725 minutes per each IRF per year/60 minutes per hour = 128.75 
hours per each IRF per year.
    128.75 hours per year x $33.23 per hour = $4,278.36 nursing 
wages per each IRF per year.
    \34\ $4,278.36 x 1161 IRF providers = $4,967,176 per all IRFs 
per year.
---------------------------------------------------------------------------

    We also expect 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 into their 
electronic health record (EHR) system and/or the CMS JIRVEN program. We 
estimate that this data entry task will take no more than 3 minutes for 
each IRF-PAI record or 15.45 hours for each IRF annually or

[[Page 47924]]

17,937 hours across all IRFs. As noted above, the average hourly wage 
for a Medical Records & Health Information Technician is $15.55. As we 
noted above, there are approximately 359,000 IRF-PAI submissions per 
year and 1161 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 
record is $278,930. We further estimate the average yearly cost to each 
individual IRF to be $240.25.
    We estimate 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 144.20 hours for each individual IRF 
and 167,416 hours across all IRFs. The total estimated annualized cost 
for collection and submission of pressure ulcer data is $4,518.61 for 
each IRF and $5,246,106 across all IRFs. We estimate the cost for each 
pressure ulcer submission to be $14.61.
4. Percent of Residents or Patients Who Were Assessed and Appropriately 
Given the Seasonal Influenza Vaccine (Short-Stay) (NQF 0680)
    In section XIV. of this final rule, we are adding the measure, 
Percent of Residents or Patients Who Were Assessed and Appropriately 
Given the Seasonal Influenza Vaccine (Short-Stay) (NQF 0680) 
to the IRF QRP. We further are adding a new set of standardized data 
elements now used in the MDS 3.0 to the IRF-PAI to collect the data 
required for this measure.
    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. By 
building upon preexisting resources, we intend to reduce administrative 
burden related to data collection and submission. We anticipate that 
the initial setup and acclimation to data collection through the IRF-
PAI for purposes of reporting IRF quality measure data will have 
already occurred with the adoption of the Pressure Ulcer measure for 
the IRF QRP for the FY 2014 increase factor. Therefore, we believe the 
transition to reporting an additional measure via the IRF-PAI may be 
less burdensome.
    We estimate that completion of the patient influenza measure item 
set will take approximately 5 minutes to complete. The patient 
influenza item set consists of three items (questions). Each item is 
straightforward and does not require physical assessment for 
completion. We estimate that it will take approximately 0.7 minutes to 
complete each item, or 2.1 minutes to complete the entire item set. 
However, in some 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 1.6 minutes per item 
or a total of 5 minutes to complete the item set.
    The IRF staff will be required to perform a full influenza 
assessment only during the influenza vaccination season. The CDC 
defines that influenza vaccination season as the time period from 
October 1st (or when the vaccine becomes available) through March 31 
each year. From April 1st through September 30th, IRFs are not required 
to perform full influenza screening and may skip to the next item set 
after checking the selection which indicates that the patient's IRF 
stay occurred outside of the influenza vaccination season. Our time 
estimate reflects the averaged amount of time necessary to complete the 
influenza item set both during and outside the influenza vaccination 
season.
    We anticipate that the patient influenza item set will be completed 
by a clinician such an RN, while completing the Quality Indicator 
section of the IRF-PAI. It is most appropriate for an RN to complete 
the influenza item set because it involves performing a skilled 
assessment to determine, from a patient's records, whether the patient 
has received a vaccination and, if not, to discuss with the patient any 
medications or other related topics such as medication allergies, other 
vaccinations that the patient may have had, and any contraindications 
that might exist for receiving the influenza vaccination. The nurse has 
knowledge and experience to determine the relevance of this information 
to the patient influenza items and also to determine if the patient 
should be given the influenza vaccination.
    As noted above, we estimate that it will take approximately 5 
minutes to complete the patient influenza measure item set. We have 
also noted above that there are approximately 359,000 IRF-PAIs 
completed annually across all 1161 IRFs that report IRF quality data to 
CMS. This breaks down to approximately 309 IRF-PAIs completed by each 
IRF yearly.\35\ We estimate that the annual time burden for reporting 
the patient influenza vaccination measure data is 29,896 hours across 
all IRFs in the U.S. and 26 hours for each individual IRF. According to 
the U.S. Bureau of Labor, the hourly wage for a Registered Nurse is 
$33.23. 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 $993,433. We further estimate the 
cost for each individual IRF to be $855.67. A summary of the public 
comments received on our burden estimate for this measure and our 
responses to those comments are discussed below.
---------------------------------------------------------------------------

    \35\ 359,000 IRF-PAI reports per all IRFs per year/1161 IRFs in 
U.S. = 309 IRF-PAI reports per each IRF per year.
---------------------------------------------------------------------------

    Comment: The additional burden of data collection (that is, seeking 
information directly from the patient or by searching through the paper 
medical record) must not take away from limited resources in these 
facilities which are needed to provide direct care.
    Response: We agree that there will be some additional burden added 
because IRFs will be required to check to see if the patient received 
the influenza vaccination prior to admission to the IRF. However, we 
believe that the burden will be minimal.
    Most patients are transferred to IRFs from an acute care facility. 
If the patient received the influenza vaccination while in the acute 
care facility, there should be several places where the information 
about the administration of this vaccination can be quickly and easily 
located. The influenza vaccination is a medication, so the Medication 
Administration Record would be one place that this information could be 
located. Also, if this vaccination was ordered by a physician or the 
acute care facility had standing orders for the administration of the 
vaccination, then the Physicians Order section of the chart is another 
place that is likely to contain the influenza vaccination information.
    Comment: One commenter suggested that CMS' estimates on the burden 
caused by the implementation of the two vaccination measures (Influenza 
Vaccination Coverage among Healthcare Personnel (NQF 0431) and 
Percent of Residents or Patients Who Were Assessed and Appropriately 
Given the Seasonal Influenza Vaccine (Short-Stay) (NQF0680) 
are inaccurate because they do not encompass changes that must be made 
to its billing software, electronic medical records, or administrative 
processes.
    Response: When making a burden estimate, we estimate only those 
activities and costs that are common to a majority of providers and 
which can be fairly and accurately estimated across all IRFs. 
Unfortunately, costs related to changes to billing and electronic 
medical record software, or

[[Page 47925]]

administrative processes are costs that are so variable among different 
IRFs we are not able to make an accurate estimate of these costs that 
can be applied across all providers.
    Costs for updates to electronic medical records are extremely 
variable and will depend on many factors such as the manufacturer of 
the electronic medical records software; whether there is a warranty 
that covers updates; whether the IRF has a service contract which 
covers updates; who the IRF hires to perform upgrades to its system; 
where the IRF is geographically located; or whether the cost is 
incurred by a large corporation that owns many IRFs or the IRF is a 
solely owned and operated facility. In regard to costs for changes to 
administrative processes, these costs are also difficult to define or 
quantify as they are equally variable, if not more so than costs 
related to changes to electronic record systems.
    Even though it was not reflected in the burden estimate, CMS does 
recognize that many IRFs will incur costs for changes that will be 
required to billing software, electronic medical records, or 
administrative processes. Some of these changes are required as a 
result of the IRF QRP proposals that we are finalizing in this final 
rule. However, we believe that some of these costs are also 
attributable to non-quality related proposals that are being finalized 
in this rule.

B. ICRs Regarding Non-Quality Related Changes to the IRF-PAI

    We will revise several items on the IRF-PAI to provide greater 
clarity for providers. The changes include updating several items 
regarding the response options available to providers. Additionally, we 
are removing several items that we believe are unnecessary for 
providers to continue documenting on the IRF-PAI since those items are 
already being documented in the patients' medical record. We are also 
adding several items, such as a signature page, to fulfill providers' 
request to have an organized way to document who has assessed the 
patient and when that assessment took place. We do not estimate any 
additional burden for IRFs to complete the IRF-PAI as a result of these 
changes. We estimate the time that will be needed to complete the new 
non-quality related proposed items, equals the time that was needed to 
complete the previous non-quality related items. When the original 
burden estimates were completed for the IRF-PAI, we estimated that the 
proposed deletion of the non-quality related items would take 
approximately 3 minutes to complete. Thus, removing these items the 
IRF-PAI would decrease the total estimated burden of completing the 
non-quality related portions of the IRF-PAI by 3 minutes. However, we 
estimate that it will take about 3 minutes to complete the new non-
quality related items that we are proposing to add. Therefore, we 
estimate no net change in the amount of time associated with completing 
the non-quality related portions of the IRF-PAI and that the burden for 
completing these portions of the IRF-PAI will not change.
    We did not receive any comments specifically on the information 
collection requirements regarding the non-quality related changes to 
the IRF-PAI.
    We will be submitting a revision to the current IRF-PAI collection 
of information approval under (OMB control number 0938-0842) for OMB 
review and approval.
    If you comment on these information collection and recordkeeping 
requirements, please do either of the following:
    1. Submit your comments electronically as specified in the 
ADDRESSES section of the proposed rule; or
    2. Submit your comments to the Office of Information and Regulatory 
Affairs, Office of Management and Budget, Attention: CMS Desk Officer, 
CMS-1448-P, Fax: (202) 395-6974; or, Email: [email protected].

XVIII. Regulatory Impact Analysis

A. Statement of Need

    This final rule updates the IRF prospective payment rates for FY 
2014 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 revise the list of diagnosis codes that are eligible under the 
presumptive compliance method of calculating an IRF's compliance 
percentage under the ``60 percent rule'' effective for compliance 
review periods beginning on or after October 1, 2014 (a one-year 
delay), update the IRF facility-level adjustment factors, revise 
sections of the Inpatient Rehabilitation Facility-Patient Assessment 
Instrument, revise requirements for acute care hospitals that have IRF 
units beginning on or after October 1, 2014 (a one-year delay), clarify 
the IRF regulation text regarding limitation of review, and revise and 
update quality measures under the IRF quality reporting program. We 
believe that the policy changes will enhance the clarity, accuracy, and 
fairness of the IRF PPS.

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 one year). We estimate the total impact of the policy 
updates described in this final rule by comparing the estimated 
payments in FY 2014 with those in FY 2013. This analysis results in an 
estimated $170 million increase for FY 2014 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.

[[Page 47926]]

    The Regulatory Flexibility Act (RFA) requires agencies to analyze 
options for 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 $34.5 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 18, we estimate that the net revenue impact of 
this final rule on all IRFs is to increase estimated payments by 
approximately 2.3 percent. However, we find that certain categories of 
IRF providers would be expected to experience revenue impacts in the 3 
to 5 percent range. We estimate a 5.0 percent overall impact for 
teaching IRFs with resident to average daily census ratios of 10 to 19 
percent, a 10.1 percent overall impact for teaching IRFs with a 
resident to average daily census ratio greater than 19 percent, and a 
4.1 percent overall impact for IRFs with a DSH patient percentage of 0 
percent. As a result, we anticipate this final rule adoptes a net 
positive impact on a substantial number of small entities. Medicare 
fiscal intermediaries, Medicare Administrative Contractors, and 
carriers 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 603 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 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 167 rural units and 18 rural 
hospitals in our database of 1,134 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 one year of $100 million in 1995 dollars, 
updated annually for inflation. In 2013, 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

1. Basis and Methodology of Estimates
    This final rule sets forth policy changes and updates to the IRF 
PPS rates contained in the FY 2013 notice (77 FR 44618). Specifically, 
this final rule updates the CMG relative weights and average length of 
stay values, the facility-level adjustment factors, the wage index, and 
the outlier threshold for high-cost cases. This final rule also applies 
a MFP adjustment to the FY 2014 RPL market basket increase factor in 
accordance with section 1886(j)(3)(C)(ii)(I) of the Act, and a 0.3 
percentage point reduction to the FY 2014 RPL market basket increase 
factor in accordance with sections 1886(j)(3)(C)(ii)(II) and (D)(iii) 
of the Act. Further, this final rule contains changes to the list of 
ICD-9-CM codes that are used in the 60 percent rule presumptive 
methodology. Since these changes are being made with a one-year delayed 
implementation date, for compliance review periods beginning on or 
after October 1, 2014, no financial impacts will accrue until FY 2015 
from these changes. In addition, section XIV of this rule discusses the 
first implementation (in FY 2014) 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.
    We estimate that the impact of the changes and updates described in 
this final rule will be a net estimated increase of $170 million in 
payments to IRF providers. This estimate does not include the estimated 
impacts of the changes to the list of ICD-9-CM codes that are used in 
the 60 percent rule presumptive compliance (as discussed below), which 
are effective for compliance review periods on or after October 1, 
2014, or the estimated impacts of the implementation (in FY 2014) 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 below). The impact analysis in Table 18 of 
this final rule represents the projected effects of the updates to IRF 
PPS payments for FY 2014 compared with the estimated IRF PPS payments 
in FY 2013. 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 2014, 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 2014 RPL 
market basket increase factor in accordance with section 
1886(j)(3)(C)(ii)(I) of the Act, and

[[Page 47927]]

a 0.3 percentage point reduction to the FY 2014 RPL market basket 
increase factor in accordance with sections 1886(j)(3)(C)(ii)(II) and 
(D)(iii) of the Act. We estimate the total increase in payments to IRFs 
in FY 2014, relative to FY 2013, will be approximately $170 million.
    This estimate is derived from the application of the FY 2014 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 0.3 
percentage point reduction in accordance with sections 
1886(j)(3)(C)(ii)(II) and (D)(iii) of the Act, which yields an 
estimated increase in aggregate payments to IRFs of $135 million. 
Furthermore, there is an additional estimated $35 million increase in 
aggregate payments to IRFs due to the update to the outlier threshold 
amount. Outlier payments are estimated to increase from approximately 
2.5 percent in FY 2013 to 3.0 percent in FY 2014. Therefore, summed 
together, we estimate that these updates will result in a net increase 
in estimated payments of $170 million from FY 2013 to FY 2014.
    The effects of the updates that impact IRF PPS payment rates are 
shown in Table 18. 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 2.5 percent to 3.0 percent of total estimated 
payments for FY 2014, 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 0.3 percentage point reduction in 
accordance with sections 1886(j)(3)(C) and (D) of the Act.
     The effects of applying the budget-neutral 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 effects of the updates to the Rural, LIP, and Teaching 
Status adjustment factors, using an updated methodology.
     The total change in estimated payments based on the FY 
2014 payment changes relative to the estimated FY 2013 payments.
2. Description of Table 18
    Table 18 categorizes IRFs by geographic location, including urban 
or rural location, and location with respect to 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 (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 18 shows the overall impact on the 1,134 IRFs included 
in the analysis.
    The next 12 rows of Table 18 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 949 IRFs located in 
urban areas included in our analysis. Among these, there are 733 IRF 
units of hospitals located in urban areas and 216 freestanding IRF 
hospitals located in urban areas. There are 185 IRFs located in rural 
areas included in our analysis. Among these, there are 167 IRF units of 
hospitals located in rural areas and 18 freestanding IRF hospitals 
located in rural areas. There are 302 for-profit IRFs. Among these, 
there are 263 IRFs in urban areas and 39 IRFs in rural areas. There are 
688 non-profit IRFs. Among these, there are 571 urban IRFs and 117 
rural IRFs. There are 144 government-owned IRFs. Among these, there are 
115 urban IRFs and 29 rural IRFs.
    The remaining four parts of Table 18 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 with respect to 
their location within a particular one of the nine Census geographic 
regions. Second, IRFs located in rural areas are categorized with 
respect to 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 18. 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 2012 analysis file.
     Column (3) shows the number of cases in each category in 
our FY 2012 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 0.3 
percentage point reduction in accordance with sections 
1886(j)(3)(C)(ii)(II) and (D)(iii) of the Act.
     Column (6) shows the estimated effect of the update to the 
IRF labor-related 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) shows the estimated effect of the update to the 
facility adjustment factors using an updated methodology, in a budget-
neutral manner.
     Column (9) compares our estimates of the payments per 
discharge, incorporating all of the proposed policies reflected in this 
final rule for FY 2014 to our estimates of payments per discharge in FY 
2013.
    The average estimated increase for all IRFs is approximately 2.3 
percent. This estimated net increase includes the effects of the RPL 
market basket increase factor for FY 2014 of 2.6 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 0.3 
percentage point in accordance with sections

[[Page 47928]]

1886(j)(3)(C)(ii)(II) and (D)(iii) of the Act. It also includes the 
approximate 0.5 percent overall estimated 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, the facility-level 
adjustments, 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 18--IRF Impact Table for FY 2014
                                                                   [Columns 4-9 in %]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                    Adjusted
                                                                                                     market    FY 2014
                                                                                                     basket   CBSA wage                          Total
                     Facility classification                      Number of  Number of   Outlier    increase  index and     CMG      Facility   percent
                                                                     IRFs      cases                 factor     labor-               adjust.     change
                                                                                                     for FY     share
                                                                                                    2014 \1\
(1)                                                                     (2)        (3)        (4)        (5)        (6)        (7)        (8)        (9)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total...........................................................      1,134    382,756        0.5        1.8        0.0        0.0        0.0        2.3
Urban unit......................................................        733    181,133        0.7        1.8        0.0        0.0        0.2        2.8
Rural unit......................................................        167     27,098        0.6        1.8        0.1        0.0       -2.4        0.0
Urban hospital..................................................        216    168,609        0.2        1.8       -0.1        0.0        0.3        2.1
Rural hospital..................................................         18      5,916        0.1        1.8       -0.1       -0.1       -3.0       -1.3
Urban For-Profit................................................        263    143,162        0.2        1.8       -0.2        0.0        0.2        2.0
Rural For-Profit................................................         39      7,728        0.3        1.8        0.1        0.0       -2.9       -0.7
Urban Non-Profit................................................        571    178,424        0.6        1.8        0.2        0.0        0.2        2.8
Rural Non-Profit................................................        117     20,578        0.5        1.8        0.0        0.0       -2.4       -0.1
Urban Government................................................        115     28,156        0.7        1.8       -0.2        0.0        0.3        2.7
Rural Government................................................         29      4,708        0.7        1.8        0.2        0.0       -2.6        0.1
Urban...........................................................        949    349,742        0.5        1.8        0.0        0.0        0.2        2.5
Rural...........................................................        185     33,014        0.5        1.8        0.0        0.0       -2.5       -0.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Urban by Region
--------------------------------------------------------------------------------------------------------------------------------------------------------
Urban New England...............................................         32     16,779        0.3        1.8        0.7        0.0        0.0        2.8
Urban Middle Atlantic...........................................        140     59,466        0.4        1.8        0.0        0.0        0.7        2.9
Urban South Atlantic............................................        130     62,557        0.3        1.8       -0.3        0.0        0.0        1.9
Urban East North Central........................................        182     52,632        0.6        1.8        0.2        0.0        0.6        3.2
Urban East South Central........................................         49     24,489        0.2        1.8       -0.8        0.0        0.4        1.7
Urban West North Central........................................         73     18,097        0.6        1.8        0.5        0.0       -0.1        2.8
Urban West South Central........................................        171     67,575        0.4        1.8       -0.1        0.0        0.3        2.4
Urban Mountain..................................................         73     23,459        0.6        1.8       -0.5        0.0        0.1        2.0
Urban Pacific...................................................         99     24,688        0.9        1.8        0.7        0.0       -0.9        2.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Rural by Region
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rural New England...............................................          6      1,400        0.8        1.8       -0.5       -0.1       -1.8        0.1
Rural Middle Atlantic...........................................         15      2,711        0.3        1.8       -0.2        0.0       -2.2       -0.3
Rural South Atlantic............................................         24      5,624        0.3        1.8        0.1        0.0       -2.5       -0.3
Rural East North Central........................................         32      5,595        0.5        1.8        0.3        0.0       -2.4        0.1
Rural East South Central........................................         22      3,852        0.4        1.8        0.0        0.1       -2.7       -0.4
Rural West North Central........................................         27      3,660        0.7        1.8       -0.7        0.0       -2.2       -0.4
Rural West South Central........................................         48      9,130        0.4        1.8        0.4        0.0       -3.1       -0.6
Rural Mountain..................................................          7        664        1.2        1.8        0.2        0.1       -1.5        1.9
Rural Pacific...................................................          4        378        1.9        1.8        0.1       -0.1       -1.1        2.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Teaching Status
--------------------------------------------------------------------------------------------------------------------------------------------------------
Non-teaching....................................................      1,018    334,415        0.4        1.8        0.0        0.0       -0.2        2.0
Resident to ADC less than 10%...................................         65     32,238        0.5        1.8        0.1        0.0        0.6        3.0
Resident to ADC 10%-19%.........................................         39     14,504        0.8        1.8        0.1        0.0        2.3        5.0
Resident to ADC greater than 19%................................         12      1,599        0.6        1.8        0.3        0.0        7.1       10.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                   Disproportionate Share Patient Percentage (DSH PP)
--------------------------------------------------------------------------------------------------------------------------------------------------------
DSH PP = 0%.....................................................         38      7,859        1.1        1.8        0.2        0.0        1.0        4.1
DSH PP less than 5%.............................................        195     64,484        0.4        1.8       -0.1        0.0        0.8        2.9
DSH PP 5%-10%...................................................        323    123,384        0.3        1.8       -0.1        0.0        0.3        2.4
DSH PP 10%-20%..................................................        347    124,564        0.4        1.8        0.1        0.0       -0.1        2.2
DSH PP greater than 20%.........................................        231     62,465        0.7        1.8        0.0        0.0       -1.1        1.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ This column reflects the impact of the RPL market basket increase factor for FY 2014 of 1.8 percent, which includes a market basket update of 2.6
  percent, a 0.3 percentage point reduction in accordance with sections 1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(iii) of the Act and a 0.5 percentage
  point reduction for the productivity adjustment as required by section 1886(j)(3)(C)(ii)(I) of the Act.


[[Page 47929]]

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 18. In the July 30, 2012 
FY 2013 IRF PPS notice (77 FR 44618), we used FY 2011 IRF claims data 
(the best, most complete data available at that time) to set the 
outlier threshold amount for FY 2013 so that estimated outlier payments 
would equal 3 percent of total estimated payments for FY 2013.
    For this final rule, we are updating our analysis using FY 2012 IRF 
claims data and, based on this updated analysis, we estimate that IRF 
outlier payments as a percentage of total estimated IRF payments are 
2.5 percent in FY 2013. We attribute this underpayment in IRF outliers 
for FY 2013 to the effects of the recently-implemented IRF outlier 
reconciliation policy (as outlined in Chapter 3, Section 140.2.8 of the 
Medicare Claims Processing Manual (Pub. 100-04) that we believe is 
causing a downward trend in IRF cost-to-charge ratios (CCR). We are 
seeing this downward trend in CCRs in all of the settings for which we 
implemented the outlier reconciliation policy. 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 
2014. The estimated change in total IRF payments for FY 2014, 
therefore, includes an approximate 0.5 percent increase in payments 
because the estimated outlier portion of total payments is estimated to 
increase from approximately 2.5 percent to 3 percent.
    The impact of this outlier adjustment update (as shown in column 4 
of Table 18) is to increase estimated overall payments to IRFs by about 
0.5 percent. We estimate the largest increase in payments from the 
update to the outlier threshold amount to be 1.9 percent for rural IRFs 
in the Pacific region. We do not estimate that any group of IRFs will 
experience a decrease in payments from this 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 18. In the aggregate 
the update will result in a net 1.8 percent increase in overall 
estimated payments to IRFs. This net increase reflects the estimated 
RPL market basket increase factor for FY 2014 of 2.6 percent, reduced 
by the 0.3 percentage point in accordance with sections 
1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(iii) 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 18, we present the effects of the budget-
neutral update of the wage index and labor-related share. The proposed 
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 changes in the two have a combined effect 
on payments to providers. As discussed in section VI (C) of this final 
rule, we will decrease the labor-related share from 69.981 percent in 
FY 2013 to 69.494 percent in FY 2014.
    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 
proposed 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 0.7 
percent for urban IRFs in the New England and Pacific regions. We 
estimate the largest decrease in payments from the update to the CBSA 
wage index and labor-related share to be a 0.8 percent decrease for 
urban IRFs in the East South Central region.
6. Impact of the Update to the CMG Relative Weights and Average Length 
of Stay Values
    In column 7 of Table 18, 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 to IRFs. However, we do expect these 
updates to have small distributional effects. Freestanding rural 
hospitals will see a 0.1 decrease in payments as a result of these 
updates. The rural areas affected are New England and Pacific. The 
largest estimated increase in payments as a result of these updates is 
a 0.1 increase in the rural Mountain and East South Central regions.
7. Impact of the Updates to the Facility-Level Adjustments
    In column 8 of Table 18, we present the effects of the budget-
neutral updates to the IRF facility-level adjustment factors (the 
rural, LIP, and teaching status adjustment factors) for FY 2014. In the 
aggregate, we do not estimate that these updates will affect overall 
estimated payments to IRFs. However, we estimate that these updates 
will have distributional effects, as shown in Table 18. The largest 
estimated decrease in payments as a result of these updates is a 3.1 
percent decrease to rural IRFs in the West South Central region. The 
largest estimated increase in payments as a result of these updates is 
a 10.1 percent increase for teaching IRFs with a resident to average 
daily census ratio greater than 19 percent.
8. Impact of the Refinements to the Presumptive Compliance Criteria 
Methodology
    As discussed in section VIII of this final rule, we are changing 
the list of ICD-9-CM codes available to meet the presumptive compliance 
criteria. We believe that these changes will improve the accuracy and 
integrity of the IRF PPS by ensuring that the cases that qualify as 
meeting the 60 percent rule truly meet the requirements in 42 CFR 
412.29(b). These changes will affect all 1,134 IRFs, as these 
facilities will need to change their coding practices to continue to 
meet the 60 percent compliance percentage using the presumptive 
methodology. However, we are implementing these changes with a one-year 
delayed effective date, so that these changes will be effective for 
compliance review periods beginning on or after October 1, 2014. Thus, 
any potential financial impacts of these policy changes will not accrue 
until FY 2015.
    We estimate that the financial impact, in the absence of any 
behavioral responses to these changes on the part of providers, would 
be a decrease of 6.9 percent (or $520 million) in overall estimated 
payments to IRFs for FY 2015. We note that these estimates are 
unchanged from the ones we had noted in the proposed rule, even though 
we have decided to add some ICD-9-CM codes that we had proposed for 
deletion back onto the list of ICD-9-CM codes that would qualify a 
patient as meeting the 60 percent rule criteria. This is because we 
inadvertently used the wrong list of ICD-9-CM codes in our analysis for 
the proposed rule. Had we used the correct list of ICD-9-CM codes for 
the proposed rule analysis, our estimates of the financial impact of 
the proposals would have been $20 million (or 0.2%) higher than those 
presented in the proposed rule, and our estimates would therefore have 
reduced to $520 million (6.9 percent) for this final rule.
    However, as we noted in the proposed rule, we believe that IRFs 
will be able to improve the specificity of their

[[Page 47930]]

coding practices, alter their admitting practices, meet the 60 percent 
compliance threshold under medical review, and make other modifications 
to their operations to continue to meet the 60 percent compliance 
threshold.
    For example, we estimate that about 90 percent of the IRF cases 
that will potentially be affected by the final revisions to the 
presumptive methodology codes are affected by the removal of the non-
specific codes. However, we have been careful to remove only those non-
specific codes for which more specific codes for the same conditions 
will remain on the list of codes that meet the presumptive methodology. 
Thus, in all of these cases, we believe that the IRF will be able to 
switch to a more specific code for the same condition, leaving the 
IRF's admission practices and classification status unaffected.
    About 1 percent of the cases that we estimate would be affected by 
the final revisions are affected by the Unilateral Upper Extremity 
Amputation codes, the Congenital Anomaly codes, and the Miscellaneous 
codes combined. Thus, we do not estimate that the removal of these code 
groups will have a significant effect on IRF admission or coding 
practices, or classification status.
    Finally, approximately 9 percent of the cases that we estimate will 
be affected by the final revisions involve arthritis diagnoses. We 
estimate that the revisions in this category will have the largest 
potential effects on providers because, by the very nature of these 
revisions, IRFs would not have another arthritis code on the list to 
code instead. We estimate that about 14 percent of all IRF cases are 
coded with the arthritis codes that we are removing from the list, and 
in 11 percent of these cases, the arthritis code is the only code that 
would qualify the patient as meeting the 60 percent rule requirements. 
However, for the arthritis category of codes, we estimate that most of 
these cases will still be found to meet the 60 percent rule 
requirements under medical review, so we estimate that these revisions 
will lead to few if any IRF declassifications.
    Historically, we have seen that IRFs adapt quickly to changes in 
the 60 percent rule, as evidenced by the rapid response to changes over 
time in the compliance threshold. Thus, we have every reason to believe 
that they will adapt quickly to the changes to the presumptive 
methodology list. In addition, the changes will not affect how many 
patients would ultimately be shown to meet the 60 percent rule criteria 
on medical review. For these reasons, we believe that our best estimate 
of the impact on IRFs of these changes is no net change in Medicare 
reimbursement payments. Instead, IRFs will quickly change their coding 
practices, admission practices, meet the 60 percent compliance 
threshold under medical review, and make other changes to their 
business practice to ensure that they continue to meet the 60 percent 
rule requirements; although we lack data to more precisely characterize 
the rule-induced costs, benefits and transfers that would be 
experienced by IRFs, their patients and other relevant entities, we 
note that the $520 million estimate appearing earlier in this section 
represents an upper bound (probably an extreme upper bound) on the 
costs that would be borne by IRFs.
    We intend to closely monitor provider coding practices to these 
changes to the 60 percent rule in order to identify whether those 
patients that we envisioned would be served under the IRF PPS are 
counting toward the presumptive compliance percentage. We will also 
monitor whether these changes are having any unintended consequences in 
terms of limiting access to care.
    Comment: One commenter requested that CMS make its impact analysis 
of the changes to the presumptive methodology public.
    Response: We used the same methodology in the FY 2014 proposed and 
final rules to estimate the impacts of changes to the ICD-9-CM codes 
used in the presumptive methodology that we used in the May 7, 2004 to 
estimate the impacts of the modifications to the 60 percent rule, with 
one exception. A description of that methodology is included in the May 
7, 2004 final rule (69 FR 25752 at 25770 through 25774). We deviated 
from this methodology in one respect. In this final rule, we report the 
estimated financial impact on IRF providers of the changes to the 
presumptive compliance method. In the May 7, 2004 final rule, however, 
we reported the estimated financial impact on Medicare's baseline (that 
is, the amount of savings that would be projected to accrue to the 
Medicare program from the policies that were finalized in the May 7, 
2004 final rule). Thus, in the May 7, 2004 final rule, we estimated a 
net decrease in IRF admission, and then estimated that patients that 
were no longer treated in IRFs would be treated instead in another 
Medicare setting (such as a skilled nursing facility or home health 
care setting). We estimated the decrease in Medicare payments to IRFs, 
but added to that estimate the total estimated Medicare payments to the 
alternative Medicare settings in which the patients would have received 
care. Those estimates, therefore, represent the net savings to the 
Medicare program. In this final rule, we are only estimating the 
financial impacts on IRFs, so we do not add back in the payments for 
the patients treated in alternative settings.
9. Effects of Updates to the IRF QRP
    This final rule sets forth a number of updates and several policy 
changes to the IRF Quality Reporting Program. Specifically, we are 
taking the following actions: (A) finalizing the use of the following 
measures for the IRF QRP: (1) Percent of Patients/Residents with 
Pressure Ulcers that are New or Worsened (NQF 0678); (2) 
Percent of Residents or Patients Who Were Assessed and Appropriately 
Given the Seasonal Influenza Vaccine (Short-Stay) (NQF 0680); 
(3) Influenza Vaccination Coverage among Healthcare Personnel (NQF 
0431); (4) All-Cause Unplanned Readmission Measure for 30 Days 
Post Discharge from Inpatient Rehabilitation Facilities Measure; (B) 
Adding new data items to the IRF-PAI to collect data for the patient 
influenza vaccination and pressure ulcer measures; (C) Re-numbering of 
Quality Indicator section of the IRF-PAI items, using a flexible 
numbering system; (D) finalizing our proposal to change data collection 
for all IRF-PAI based measures to a fiscal year basis; (E) Finalizing 
our proposal to impose quarterly data submission deadlines for all but 
one measure; (F) providing a discussion of the voluntary 
reconsideration process for IRFs that CMS finds to be out of compliance 
with the reporting requirements; (G) and a disaster waiver process.
    We have based our assessment of the effects of this final rule on 
all of the actions described in the previous paragraph. One of the 
changes we have finalized is the adoption of a new pressure ulcer 
measure. Currently, the IRF QRP contains a pressure ulcer measure that 
is an application of an NQF-endorsed measure (Percent of Residents or 
Patients with Pressure Ulcers That Are New or Worsened (Short-Stay)'' 
(NQF 0678)) that we adopted in the FY 2012 IRF PPS final rule 
(76 FR 47836). That measure affects an IRF's annual increase factors up 
through the FY 2016 annual increase factor. We have now adopted the 
actual NQF-endorsed version of this measure, which will affect the IRF 
PPS increase factor for FY 2017 and subsequent years increase factors. 
We also made revisions to the pressure ulcer items on the IRF-PAI that 
providers will use to collect data for this measure.
    IRFs will incur some financial impact from the use of the pressure 
ulcer

[[Page 47931]]

measure item set that will be incorporated into the IRF-PAI. We expect 
that the admission and discharge pressure ulcer data will be collected 
by a clinician such as a RN because the assessment and staging of 
pressure ulcers requires a high degree of clinical judgment and 
experience. We estimate that it will take approximately 10 minutes of 
time by the RN to perform the admission pressure ulcer assessment. We 
further estimate that it will take 15 minutes of time to complete the 
discharge pressure ulcer assessment. During these time periods, the RN 
would be engaged in the collection of data for the purpose of the IRF 
QRP and would not be performing patient care. An RN or clinician with a 
similar level of training and expertise should perform the pressure 
ulcer assessment and record this data on the IRF-PAI.
    We believe use of the NQF-endorsed pressure ulcer measure will 
cause IRFs to incur additional annual financial burden in the amount of 
$4,518.61 and across all IRFs, $5,246,106. This burden is comprised of 
the clinical and administrative wages. The clinical wages are based on 
an average hourly wage rate of $33.23 for a RN.\36\ We estimate that 
there are 359,000 IRF-PAI submissions per year \37\ and that there are 
1161 IRFs in the U.S. that will report quality data to CMS. Based on 
these figures, we estimate that each IRF will submit approximately 309 
IRF-PAIs per year or 25.75 IRF-PAIs per month.\38\ Assuming that each 
IRF-PAI submission requires 25 minutes of time by an RN at an average 
hourly wage of $33.23, the yearly cost to each IRF would be $4,278.36 
\39\ and the annualized cost across all IRFs would be $4,967,176.\40\ 
To calculate the total amount of administrative staff wages incurred, 
we estimate that this data entry task will take no more than 3 minutes 
per each IRF-PAI record or 15.45 hours per each IRF annually or 17,937 
hours across all IRFs. According to the U.S. Bureau of Labor, the 
average hourly wage for Administrative Assistants is $15.55. We have 
estimated that there are approximately 359,000 IRF-PAI submissions per 
year and 1161 IRFs in the U.S. that are reporting quality data to CMS. 
Given this wage information, the estimated total annual cost across all 
IRFs for the time required for entry of pressure ulcer data into the 
IRF-PAI record is $278,930. We further estimate the average yearly cost 
to each IRF to be $240.25.
---------------------------------------------------------------------------

    \36\ According to the U.S. Bureau of Labor Statistics, the mean 
hourly wage for a Registered Nurse is $33.23. (See http://www.bls.gov/oes/2011/may/oes291111.htm).
    \37\ MedPAC, A Data Book: Health Care Spending and the Medicare 
Program (June 2012), http://www.medpac.gov/chapters/Jun12DataBookSec8.pdf.
    \38\ 359,000 IRF-PAI reports per all IRFs per year/1161 IRFs in 
U.S. = 309 IRF-PAI reports per each IRF per year 309 IRF-PAI reports 
per IRF per year/12 months per year = 26 IRF-PAI reports per each 
IRF per year.
    \39\ 25 minutes x 309 IRF-PAI assessments per each IRF per year 
= 7,725 minutes per each IRF per year 7,725 minutes per each IRF per 
year/60 minutes per hour = 128.75 hours per each IRF per year 128.75 
hours per year x $33.23 per hour = $4,278.36 nursing wages per each 
IRF per year.
    \40\ $4,278.36 x 1161 IRF providers = $4,967,176 per all IRFs 
per year.
---------------------------------------------------------------------------

    In addition to updating the pressure ulcer measure, we have added 3 
new quality measures to the IRF QRP. These measures include: (1) 
Percent of Residents or Patients Who Were Assessed and Appropriately 
Given the Seasonal Influenza Vaccine (Short-Stay) (NQF 0680), 
which will affect the FY 2017 increase factor and subsequent years 
increase factors; (2) Influenza Vaccination Coverage among Healthcare 
Personnel (NQF 0431), which will affect the FY 2016 increase 
factor and subsequent years increase factors; and (3) an All-Cause 
Unplanned Readmission Measure for 30 Days Post Discharge from Inpatient 
Rehabilitation Facilities, which will affect the FY 2017 increase 
factor and subsequent years increase factors. We discuss the impact of 
each measure upon IRFs below.
    IRFs will now submit their data for the patient influenza measure 
(NQF 0680) on the IRF-PAI. We have added a new data item set 
consisting of 3 items to the IRF-PAI to collect the data for this 
measure. IRF staff will be required to perform a full influenza 
assessment only during the influenza vaccination season, which has been 
defined by the CDC as the time period from October 1st (or when the 
vaccine becomes available) through March 31 each year. From April 1st 
through September 30th, IRFs are not required to perform a full 
influenza screening. Our time estimate reflects the averaged amount of 
time necessary to complete the influenza item set both during and 
outside the influenza vaccination season.
    We believe that it will be most appropriate for a clinician, such 
as an RN, to complete the influenza items because this assessment 
requires clinical judgment and knowledge of vaccinations. An 
administrative employee, such as a medical data entry clerk or 
administrative assistant would not have this level of knowledge. We do 
not believe that IRFs will require additional time by administrative 
staff to encode and transmit this data to CMS, because submission of an 
IRF-PAI for each patient is already required as a condition for 
payment.
    As noted above, we estimate that it will take approximately 5 
minutes to complete the patient influenza measure item set. We have 
also noted above that there are approximately 359,000 IRF-PAIs 
completed annually across all 1161 IRFs that report IRF quality data to 
CMS. This breaks down to approximately 309 IRF-PAIs completed by each 
IRF yearly. We estimate that the annual time burden for reporting the 
patient influenza vaccination measure data is 29,896 hours across all 
IRFs in the U.S. and 25.75 hours for each individual IRF. According to 
the U.S. Bureau of Labor, the hourly wage for a Registered Nurse is 
$33.23. The estimated annual cost across all IRFs in the U.S. for the 
submission of the patient influenza measure data is $993,433 and 
$855.67 for each individual IRF.
    IRFs will submit their data for the staff immunization measure (NQF 
0431) to the CDC's healthcare acquired (HAI) surveillance Web 
site known as NHSN. Data collection for this measure is only required 
from October 1st (or when the vaccine becomes available) through March 
31st each year, during which time IRFs will be required to keep records 
of which staff members receive the influenza vaccination. IRFs are only 
required to make one report to NHSN after the close of the reporting 
period on March 31st. All data must be submitted by May 15th of each 
year. We do not believe that IRFs will incur any new burden associated 
with the collection of data during the influenza vaccination season. We 
believe that most IRFs already keep records related to the influenza 
vaccination of their staff because this impacts many aspects of their 
business, including but not limited to, staff absences and transmission 
of illness to other staff and patients.
    We estimate that it will take each IRF approximately 15 minutes of 
time once per year to gather the data that was collected during the 
influenza vaccinations season, and prepare to make their report to 
NHSN. We do not estimate that it will take IRFs additional time to 
input their data into NHSN, once they have logged onto the system for 
the purpose of submitting their monthly CAUTI report. We believe that 
this task can be completed by an administrative person such as a 
Medical Secretary Medical Data Entry Clerk. As noted above, the average 
hourly wage for Medical Records or Health Information Technicians is 
$15.55.\41\ We

[[Page 47932]]

estimate that the average yearly cost to each IRF for the reporting of 
this measure will be $3.89 \42\ and the cost across all IRFs will be 
$4,516.\43\
---------------------------------------------------------------------------

    \41\ According to the U.S. Bureau of Labor Statistics, the mean 
hourly wage for a Medical Records & Health Information Technician is 
$15.55. See: http://www.bls.gov/ooh/healthcare/medical-records-and-health-information-technicians.htm.
    \42\ 15 minutes Administrative staff time to collect and report 
staff influenza measure @ $15.55 per hour = $3.9889 per IRF per 
year.
    \43\ $3.89 per IRF per year x 1161 IRFs in U.S. = $4,621,516.
---------------------------------------------------------------------------

    The readmission measure (All-Cause Unplanned Readmission Measure 
for 30 Days Post Discharge from Inpatient Rehabilitation Facilities) is 
a claims-based measure and, therefore, IRFs are not required to submit 
any data for this measure. We do not anticipate that IRFs will be 
impacted by any financial or time burdens as a result of the use of 
this measure for the IRF QRP.
    Taking all of the above-stated information into consideration, we 
estimate that the total cost to IRFs in FY 2015, including staff wages 
and 48 percent for fringe benefits and overhead, is $9.2 million as 
related to (1) Influenza Vaccination Coverage among Healthcare 
Personnel (NQF 0431); (2) Percent of Patients with Pressure 
Ulcers That Are New or Worsened (NQF 0678); and (3) Percent of 
Patients that Were Appropriately Assessed and Given the Influenza 
Vaccination (NQF 0680).
    Over the past 18 months, we have received a great deal of positive 
feedback from IRFs about the IRF QRP, and overall, IRFs have been very 
receptive to the introduction of the IRF QRP into the IRF setting. The 
IRF provider community has shared many suggestions and ideas related to 
the IRF QRP. Outreach activities, such as a one-day in-person training, 
and 6 open door forums were well attended. Given the amount of positive 
feedback and willingness to participate in the IRF QRP that has been 
demonstrated by IRFs, we anticipate that there will be a relatively 
small number of IRFs that fail to report the type and amount of quality 
data that IRFs are required to collect and submit. Our proposed 
reconsideration process allows IRFs that receive an initial finding of 
non-compliance an opportunity to file a request for reconsideration of 
this finding. Access to this process may have the effect of lowering 
even further the number of IRFs who have not ultimately succeeded in 
meeting the IRF QRP reporting requirements.
10. Impact of the Implementation of the 2 Percentage Point Reduction in 
the Increase Factor for Failure To Meet the IRF Quality Reporting 
Requirements
    As discussed in section XIV. 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 2014 increase factor for IRFs that have 
failed to report the required quality reporting data to us during the 
first IRF quality reporting period (from October 1, 2012 through 
December 31, 2012). In section XIV of this final rule, we discuss how 
the 2 percentage point reduction will be applied. Currently, we cannot 
estimate the overall financial impacts of the application of this 
reduction on aggregate IRF PPS payments or on the distribution of IRF 
PPS payments among providers because we cannot predict the number of or 
types of IRFs that will fail to report the required quality reporting 
data. IRFs are currently required to complete the non-quality portions 
of the IRF-PAI to receive payment for all Medicare fee-for-service 
admissions. Therefore, we estimate that the number of IRFs that would 
fail to submit the additional quality reporting data on the IRF-PAI 
form is very low.
    The official reporting period end date for the first IRF quality 
reporting period was May 15, 2013. While we made a preliminary 
determination of compliance related to IRFs in June 2013, we feel that 
it would not be prudent to release those numbers at this time. We 
believe that these numbers could change substantially during the 
reconsideration process (described in section XIII. of the May 8, 2013 
(78 FR 26880) proposed rule that will occur between July and September 
2013, and that we will not have a true picture of IRF performance until 
after this final rule is displayed. We intend to closely monitor the 
effects of this new quality reporting program on IRF providers as we 
cannot predict the number of, or types of IRFs that would fail to 
report the required quality reporting data for the first quality 
reporting period.

D. Alternatives Considered

    As stated in section XVIII (B) of this final rule, we estimate that 
the changes discussed in the rule would result in a significant 
economic impact on IRFs. The overall impact on all IRFs is an estimated 
increase in FY 2014 payments of $170 million (2.3 percent), relative to 
FY 2013. 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 2014. 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 2014 and sections 1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(iii) 
of the Act require the Secretary to apply a 0.3 percentage point 
reduction to the market basket increase factor for FY 2014. Thus, in 
accordance with section 1886(j)(3)(C) of the Act, we are updating IRF 
federal prospective payments in this final rule by 1.8 percent (which 
equals the 2.6 percent estimated RPL market basket increase factor for 
FY 2014 reduced by 0.3 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 2014. 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 maintaining the current facility-level adjustment 
factors (that is, the rural factor at 18.4 percent, the LIP factor at 
0.4613, and teaching status adjustment factor at 0.6876). However, as 
discussed in more detail in section V (B) of this final rule, our 
recent research efforts have shown significant differences in cost 
structures between freestanding IRFs and IRF units of acute care 
hospitals (and CAHs). We have found that these cost structure 
differences substantially influence the estimates of the adjustment 
factors. For this reason, our regression analysis found that the 
proposed inclusion of the control variable for a facility's status as 
either a freestanding IRF hospital or an IRF unit of an acute care 
hospital (or a CAH) would greatly enhance the accuracy of the 
adjustment factors for FY 2014, as we incorporate updated data. 
Further, as noted previously, we received comments on the FY 2012 IRF 
PPS proposed rule suggesting this enhancement to the methodology. Thus, 
we believe that the best approach at this time is to update the 
facility-level adjustment factors for FY 2014 using this enhancement to 
the methodology.
    We considered maintaining the existing outlier threshold amount for 
FY

[[Page 47933]]

2014. However, analysis of updated FY 2012 data indicates that 
estimated outlier payments would be lower than 3 percent of total 
estimated payments for FY 2013, by approximately 0.5 percent, unless we 
updated the outlier threshold amount. Consequently, we are adjusting 
the outlier threshold amount in this final rule to reflect a 0.5 
percent increase thereby setting the total outlier payments equal to 3 
percent, instead of 2.5 percent, of aggregate estimated payments in FY 
2014.
    Finally, we considered maintaining the current list of ICD-9-CM 
codes used to determine an IRF's compliance with the 60 percent rule 
under the presumptive methodology, or maintaining some of the 
categories of codes that we proposed removing from the list in the 
proposed rule. However, we believe that the specific ICD-9-CM codes 
removed in section VIII of this final rule results in a list that 
better reflects the 60 percent rule regulations. For example, the 
removal of the non-specific diagnosis codes (as discussed in section 
VIII of this final rule) is in accordance with the trend toward 
requiring more specific coding in other Medicare payment settings, such 
as the IPPS. We believe that the incentives to use more specific codes, 
whenever possible, will also lead to improvements in the quality of 
care for patients by providing more detailed information that medical 
personnel can use to enhance the specificity of patients' care plans. 
In addition, the removal of the arthritis diagnosis codes (as discussed 
in section VIII of this final rule) will enable CMS to ensure that we 
only count patients as meeting the 60 percent rule requirements if they 
have met the necessary severity and prior treatment requirements, 
information which is not discernible from the ICD-9-CM codes 
themselves. With respect to the other code categories that we are 
removing from the presumptive methodology list, we do not believe that 
patients who are coded with these codes would typically require 
treatment in an IRF, as described in more detail in section VIII of 
this final rule. However, to give providers more time to adjust to the 
changes, we are delaying the effective date of these changes by one 
year, so that the changes will be effective for compliance review 
periods beginning on or after October 1, 2014.

E. Accounting Statement

    As required by OMB Circular A-4 (available at http://www.whitehouse.gov/sites/default/files/omb/assets/omb/circulars/a004/a-4.pdf), in Table 19, we have prepared an accounting statement showing 
the classification of the expenditures associated with the provisions 
of this final rule. Table 19 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 1,134 IRFs in our 
database. In addition, the table below presents the costs associated 
with the new IRF quality reporting program requirements for FY 2015.

Table 19--Accounting Statement: Classification of Estimated Expenditures
------------------------------------------------------------------------
                Category                            Transfers
------------------------------------------------------------------------
Change in Estimated Transfers from FY 2013 IRF PPS to FY 2014 IRF PPS:
------------------------------------------------------------------------
Annualized Monetized Transfers.........  $170 million.
From Whom to Whom?.....................  Federal Government to IRF
                                          Medicare Providers.
------------------------------------------------------------------------
                      Estimated Impacts in FY 2015
------------------------------------------------------------------------
Refinements to the presumptive compliance criteria methodology under the
 `60 percent rule':
------------------------------------------------------------------------
Annualized Monetized Transfers.........  The estimated FY 2015 impact of
                                          the refinements to the
                                          presumptive compliance
                                          criteria methodology reflects
                                          a decrease of payments between
                                          $0 to $520 million, depending
                                          on the IRFs behavioral
                                          responses to the changes, with
                                          $520 million representing the
                                          upper bound.
From Whom to Whom?.....................  Federal Government to IRF
                                          Medicare Providers.
------------------------------------------------------------------------
Cost to updating the Quality Reporting Program for IRFs:
------------------------------------------------------------------------
Annualized Monetized Costs for IRFs to   $9.2 million.
 Submit Data (Quality Reporting
 Program).
------------------------------------------------------------------------

F. Conclusion

    Overall, the estimated payments per discharge for IRFs in FY 2014 
are projected to increase by 2.3 percent, compared with the estimated 
payments in FY 2013, as reflected in column 9 of Table 18. IRF payments 
per discharge are estimated to increase 2.5 percent in urban areas and 
decrease 0.2 percent in rural areas, compared with estimated FY 2013 
payments. Payments per discharge to rehabilitation units are estimated 
to increase 2.8 percent in urban areas, whereas we estimate no change 
in payments per discharge to rehabilitation units in rural areas. 
Payments per discharge to freestanding rehabilitation hospitals are 
estimated to increase 2.1 percent in urban areas and decrease 1.3 
percent in rural areas.
    Overall, IRFs are estimated to experience a net increase in 
payments as a result of the policies in this final rule. The largest 
payment increase is estimated to be a 3.2 percent increase for urban 
IRFs located in the East North Central region. This is due to the large 
positive effect of the facility adjustment updates for urban IRFs in 
this region. Finally, the total cost to IRFs in FY 2015 is $9.2 million 
as related to (1) Influenza Vaccination Coverage among Healthcare 
Personnel (NQF 0431); (2) Percent of Patients with Pressure 
Ulcers That Are New or Worsened (NQF 0678); and (3) Percent of 
Patients that Were Appropriately Assessed and Given the Influenza 
Vaccination (NQF 0680).

List of Subjects in 42 CFR Part 412

    Administrative practice and procedure, Health facilities, Medicare, 
Puerto Rico, Reporting and recordkeeping requirements.

    For the reasons set forth in the preamble, the Centers for Medicare 
& Medicaid Services amends 42 CFR chapter IV as follows:

[[Page 47934]]

PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL 
SERVICES

0
1. The authority citation for part 412 continues to read as follows:

    Authority:  Sections 1102, 1862, and 1871 of the Social Security 
Act (42 U.S.C. 1302, 1395y, and 1395hh).


0
2. Section 412.25 is amended by revising paragraph (a)(1)(iii) to read 
as follows:


Sec.  412.25  Excluded hospital units: Common requirements.

    (a) * * *
    (1) * * *
    (iii) Unless it is a unit in a critical access hospital, the 
hospital of which an IRF is a unit must have at least 10 staffed and 
maintained hospital beds that are not excluded from the inpatient 
prospective payment system, or at least 1 staffed and maintained 
hospital bed for every 10 certified inpatient rehabilitation facility 
beds, whichever number is greater. Otherwise, the IRF will be 
classified as an IRF hospital, rather than an IRF unit. In the case of 
an inpatient psychiatric facility unit, the hospital must have enough 
beds that are not excluded from the inpatient prospective payment 
system to permit the provision of adequate cost information, as 
required by Sec.  413.24(c) of this chapter.
* * * * *

0
3. Section 412.29 is amended by revising paragraph (d) to read as 
follows:


Sec.  412.29  Classification criteria for payment under the inpatient 
rehabilitation facility prospective payment system.

* * * * *
    (d) Have in effect a preadmission screening procedure under which 
each prospective patient's condition and medical history are reviewed 
to determine whether the patient is likely to benefit significantly 
from an intensive inpatient hospital program. This procedure must 
ensure that the preadmission screening for each Medicare Part A Fee-
for-Service patient is reviewed and approved by a rehabilitation 
physician prior to the patient's admission to the IRF.
* * * * *

0
4. Section 412.130 is amended by revising paragraphs (a)(1), (a)(2) and 
(a)(3) to read as follows:


Sec.  412.130  Retroactive adjustments for incorrectly excluded 
hospitals and units.

    (a) * * *
    (1) A hospital that was excluded from the prospective payment 
systems specified in Sec.  412.1(a)(1) or paid under the prospective 
payment system specified in Sec.  412.1(a)(3), as a new rehabilitation 
hospital for a cost reporting period beginning on or after October 1, 
1991 based on a certification under Sec.  412.29(c) regarding the 
inpatient population the hospital planned to treat during that cost 
reporting period, if the inpatient population actually treated in the 
hospital during that cost reporting period did not meet the 
requirements of Sec.  412.29(b).
    (2) A hospital that has a unit excluded from the prospective 
payment systems specified in Sec.  412.1(a)(1) or paid under the 
prospective payment system specified in Sec.  412.1(a)(3), as a new 
rehabilitation unit for a cost reporting period beginning on or after 
October 1, 1991, based on a certification under Sec.  412.29(c) 
regarding the inpatient population the hospital planned to treat in 
that unit during the period, if the inpatient population actually 
treated in the unit during that cost reporting period did not meet the 
requirements of Sec.  412.29(b).
    (3) A hospital that added new beds to its existing rehabilitation 
unit for a cost reporting period beginning on or after October 1, 1991 
based on a certification under Sec.  412.29(c) regarding the inpatient 
population the hospital planned to treat in these new beds during that 
cost reporting period, if the inpatient population actually treated in 
the new beds during that cost reporting period did not meet the 
requirements of Sec.  412.29(b).
* * * * *

0
5. Section 412.630 is revised to read as follows:


Sec.  412.630  Limitation on review.

    Administrative or judicial review under sections 1869 or 1878 of 
the Act, or otherwise, is prohibited with regard to the establishment 
of the methodology to classify a patient into the case-mix groups and 
the associated weighting factors, the Federal per discharge payment 
rates, additional payments for outliers and special payments, and the 
area wage index.

    Authority: (Catalog of Federal Domestic Assistance Program No. 
93.773, Medicare--Hospital Insurance; and Program No. 93.774, 
Medicare--Supplementary Medical Insurance Program).

    Dated: July 23, 2013.
Marilyn Tavenner,
Administrator, Centers for Medicare & Medicaid Services.
    Approved: July 29, 2013.
Kathleen Sebelius,
Secretary.
[FR Doc. 2013-18770 Filed 7-31-13; 4:15 pm]
BILLING CODE 4120-01-P