[Federal Register Volume 81, Number 79 (Monday, April 25, 2016)]
[Proposed Rules]
[Pages 24178-24227]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-09397]



[[Page 24177]]

Vol. 81

Monday,

No. 79

April 25, 2016

Part II





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 2017; Proposed Rule

  Federal Register / Vol. 81 , No. 79 / Monday, April 25, 2016 / 
Proposed Rules  

[[Page 24178]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 412

[CMS-1647-P]
RIN 0938-AS78


Medicare Program; Inpatient Rehabilitation Facility Prospective 
Payment System for Federal Fiscal Year 2017

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would update the prospective payment rates 
for inpatient rehabilitation facilities (IRFs) for federal fiscal year 
(FY) 2017 as required by the statute. As required by section 1886(j)(5) 
of the Act, this rule includes the classification and weighting factors 
for the IRF prospective payment system's (IRF PPS's) case-mix groups 
and a description of the methodologies and data used in computing the 
prospective payment rates for FY 2017. We are also proposing to revise 
and update quality measures and reporting requirements under the IRF 
quality reporting program (QRP).

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, not later than 5 p.m. on June 20, 2016.

ADDRESSES: In commenting, please refer to file code CMS-1647-P. Because 
of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit comments in one of four ways (please choose only one 
of the ways listed):
    1. Electronically. You may submit electronic comments on this 
regulation to http://www.regulations.gov. Follow the ``Submit a 
comment'' instructions.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-1647-P, P.O. Box 8016, 
Baltimore, MD 21244-8016.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address ONLY: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-1647-P, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    4. By hand or courier. Alternatively, you may deliver (by hand or 
courier) your written comments ONLY to the following addresses prior to 
the close of the comment period:

a. For delivery in Washington, DC--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, Room 445-G, Hubert 
H. Humphrey Building, 200 Independence Avenue SW., Washington, DC 20201

    (Because access to the interior of the Hubert H. Humphrey Building 
is not readily available to persons without Federal government 
identification, commenters are encouraged to leave their comments in 
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing 
by stamping in and retaining an extra copy of the comments being 
filed.)

b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, 7500 Security 
Boulevard, Baltimore, MD 21244-1850

    If you intend to deliver your comments to the Baltimore address, 
please call telephone number (410) 786-7195 in advance to schedule your 
arrival with one of our staff members.
    Comments erroneously mailed to the addresses indicated as 
appropriate for hand or courier delivery may be delayed and received 
after the comment period.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: 
    Gwendolyn Johnson, (410) 786-6954, for general information.
    Christine Grose, (410) 786-1362, for information about the quality 
reporting program.
    Kadie Derby, (410) 786-0468, or Susanne Seagrave, (410) 786-0044, 
for information about the payment policies and payment rates.

SUPPLEMENTARY INFORMATION: The IRF PPS Addenda along with other 
supporting documents and tables referenced in this proposed rule are 
available through the Internet on the CMS Web site at http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/.
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following Web 
site as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that Web site to 
view public comments.
    Comments received timely will also be available for public 
inspection as they are received, generally beginning approximately 3 
weeks after publication of a document, at the headquarters of the 
Centers for Medicare & Medicaid Services, 7500 Security Boulevard, 
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 
a.m. to 4 p.m. To schedule an appointment to view public comments, 
phone 1-800-743-3951.

Executive Summary

A. Purpose

    This proposed rule would update the prospective payment rates for 
IRFs for FY 2017 (that is, for discharges occurring on or after October 
1, 2016, and on or before September 30, 2017) as required under section 
1886(j)(3)(C) of the Social Security Act (the Act). As required by 
section 1886(j)(5) of the Act, this rule includes the classification 
and weighting factors for the IRF PPS's case-mix groups and a 
description of the methodologies and data used in computing the 
prospective payment rates for FY 2017. This proposed rule also proposes 
revisions and updates to the quality measures and reporting 
requirements under the IRF QRP.

B. Summary of Major Provisions

    In this proposed rule, we use the methods described in the FY 2016 
IRF PPS final rule (80 FR 47036) to propose updates to the federal 
prospective payment rates for FY 2017 using updated FY 2015 IRF claims 
and the most recent available IRF cost report data, which is FY 2014 
IRF cost report data. We are also proposing to revise and update 
quality measures and reporting requirements under the IRF QRP.

C. Summary of Impacts

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------------------------------------------------------------------------
 
------------------------------------------------------------------------
         Provision description                      Transfers
------------------------------------------------------------------------
FY 2017 IRF PPS payment rate update....  The overall economic impact of
                                          this proposed rule is an
                                          estimated $125 million in
                                          increased payments from the
                                          Federal government to IRFs
                                          during FY 2017.
------------------------------------------------------------------------
         Provision description                        Costs
------------------------------------------------------------------------
New quality reporting program            The total costs in FY 2017 for
 requirements.                            IRFs as a result of the
                                          proposed new quality reporting
                                          requirements are estimated to
                                          be $5,231,398.17.
------------------------------------------------------------------------

    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 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
    D. Advancing Health Information Exchange
II. Summary of Provisions of the Proposed Rule
III. Proposed Update to the Case-Mix Group (CMG) Relative Weights 
and Average Length of Stay Values for FY 2017
IV. Facility-Level Adjustment Factors
V. Proposed FY 2017 IRF PPS Payment Update
    A. Background
    B. Proposed FY 2017 Market Basket Update and Productivity 
Adjustment
    C. Proposed Labor-Related Share for FY 2017
    D. Proposed Wage Adjustment
    E. Description of the Proposed IRF Standard Payment Conversion 
Factor and Payment Rates for FY 2017
    F. Example of the Methodology for Adjusting the Proposed Federal 
Prospective Payment Rates
VI. Proposed Update to Payments for High-Cost Outliers under the IRF 
PPS
    A. Proposed Update to the Outlier Threshold Amount for FY 2017
    B. Proposed Update to the IRF Cost-to-Charge Ratio Ceiling and 
Urban/Rural Averages
VII. Proposed Revisions and Updates to the IRF Quality Reporting 
Program (QRP)
    A. Background and Statutory Authority
    B. General Considerations Used for Selection of Quality, 
Resource Use, and Other Measures for the IRF QRP
    C. Policy for Retention of IRF QRP Measures Adopted for Previous 
Payment Determinations
    D. Policy for Adopting Changes to IRF QRP Measures
    E. Quality Measures Previously Finalized for and Currently Used 
in the IRF QRP
    F. IRF QRP Quality, Resource Use and Other Measures Proposed for 
the FY 2018 Payment Determination and Subsequent Years
    G. IRF QRP Quality Measure Proposed for the FY 2020 Payment 
Determination and Subsequent Years
    H. IRF QRP Quality Measures and Measure Concepts under 
Consideration for Future Years
    I. Proposed Form, Manner, and Timing of Quality Data Submission 
for the FY 2018 Payment Determination and Subsequent Years
    J. IRF QRP Data Completion Thresholds for the FY 2016 Payment 
Determination and Subsequent Years
    K. IRF QRP Data Validation Process for the FY 2016 Payment 
Determination and Subsequent Years
    L. Previously Adopted and Codified IRF QRP Submission Exception 
and Extension Policies
    M. Previously Adopted and Finalized IRF QRP Reconsideration and 
Appeals Procedures
    N. Public Display of Measure Data for the IRF QRP & Procedures 
for the Opportunity to Review and Correct Data and Information
    O. Mechanism for Providing Feedback Reports to IRFs
    P. Proposed Method for Applying the Reduction to the FY 2017 IRF 
Increase Factor for IRFs That Fail to Meet the Quality Reporting 
Requirements
VIII. Collection of Information Requirements
    A. Statutory Requirement for Solicitation of Comments
    B. Collection of Information Requirements for Updates Related to 
the IRF QRP
IX. Response to Public Comments
X. Regulatory Impact Analysis
    A. Statement of Need
    B. Overall Impacts
    C. Detailed Economic Analysis
    D. Alternatives Considered
    E. Accounting Statement
    F. Conclusion

Acronyms, Abbreviations, and Short Forms

    Because of the many terms to which we refer by acronym, 
abbreviation, or short form in this final rule, we are listing the 
acronyms, abbreviation, and short forms used and their corresponding 
terms in alphabetical order.

The Act The Social Security Act
ADC Average Daily Census
ADE Adverse Drug Events
The Affordable Care Act Patient Protection and Affordable Care Act 
(Pub. L. 111-148, enacted on March 23, 2010)
AHRQ Agency for Healthcare Research and Quality
APU Annual Payment Update
ASAP Assessment Submission and Processing
ASCA The Administrative Simplification Compliance Act of 2002 (Pub. 
L. 107-105, enacted on December 27, 2002)
ASPE Office of the Assistant Secretary for Planning and Evaluation
BLS U.S. Bureau of Labor Statistics
CAH Critical Access Hospitals
CASPER Certification and Survey Provider Enhanced Reports
CAUTI Catheter-Associated Urinary Tract Infection
CBSA Core-Based Statistical Area
CCR Cost-to-Charge Ratio
CDC The Centers for Disease Control and Prevention
CDI Clostridium difficile Infection
CFR Code of Federal Regulations
CMG Case-Mix Group
CMS Centers for Medicare & Medicaid Services
COA Care for Older Adults
CY Calendar year
DSH Disproportionate Share Hospital
DSH PP Disproportionate Share Patient Percentage
eCQMs Electronically Specified Clinical Quality Measures
ESRD End-Stage Renal Disease
FFS Fee-for-Service
FR Federal Register
FY Federal Fiscal Year
GPCI Geographic Practice Cost Index
HAI Healthcare Associated Infection
HCC Hierarchical Condition Category
HHA Home Health Agencies
HCP Home Care Personnel
HHS U.S. Department of Health & Human Services
HIPAA Health Insurance Portability and Accountability Act of 1996 
(Pub. L. 104-191, enacted on August 21, 1996)
Hospital VBP Hospital Value-Based Purchasing Program (also HVBP)
IGI IHS Global Insight
IMPACT Act Improving Medicare Post-Acute Care Transformation Act of 
2014 (Pub. L. 113-185, enacted on October 6, 2014)
IME Indirect Medical Education
IPF Inpatient Psychiatric Facility
IPPS Inpatient prospective payment system
IQR Inpatient Quality Reporting Program
IRF Inpatient Rehabilitation Facility
IRF-PAI Inpatient Rehabilitation Facility-Patient Assessment 
Instrument
IRF PPS Inpatient Rehabilitation Facility Prospective Payment System
IRF QRP Inpatient Rehabilitation Facility Quality Reporting Program
IRVEN Inpatient Rehabilitation Validation and Entry

[[Page 24180]]

LIP Low-Income Percentage
IVS Influenza Vaccination Season
LTCH Long-Term Care Hospital
MA (Medicare Part C) Medicare Advantage
MAC Medicare Administrative Contractor
MAP Measures Application Partnership
MedPAC Medicare Payment Advisory Commission
MFP Multifactor Productivity
MMSEA Medicare, Medicaid, and SCHIP Extension Act of 2007 (Pub. L. 
110-173, enacted on December 29, 2007)
MRSA Methicillin-Resistant Staphylococcus aureus
MSPB Medicare Spending Per Beneficiary
MUC Measures Under Consideration
NHSN National Healthcare Safety Network
NQF National Quality Forum
OMB Office of Management and Budget
ONC Office of the National Coordinator for Health Information 
Technology
OPPS/ASC Outpatient Prospective Payment System/Ambulatory Surgical 
Center
PAC Post-Acute Care
PAC/LTC Post-Acute Care/Long-Term Care
PAI Patient Assessment Instrument
PPR Potentially Preventable Readmissions
PPS Prospective Payment System
PRA Paperwork Reduction Act of 1995 (Pub. L. 104-13, enacted on May 
22, 1995)
QIES Quality Improvement Evaluation System
QM Quality Measure
QRP Quality Reporting Program
RIA Regulatory Impact Analysis
RIC Rehabilitation Impairment Category
RFA Regulatory Flexibility Act (Pub. L. 96-354, enacted on September 
19, 1980)
RN Registered Nurse
RPL Rehabilitation, Psychiatric, and Long-Term Care market basket
RSRR Risk-standardized readmission rate
SIR Standardized Infection Ratio
SNF Skilled Nursing Facilities
SRR Standardized Risk Ratio
SSI Supplemental Security Income
TEP Technical Expert Panel

I. Background

A. Historical Overview of the IRF PPS

    Section 1886(j) of the Act provides for the implementation of a 
per-discharge prospective payment system (PPS) for inpatient 
rehabilitation hospitals and inpatient rehabilitation units of a 
hospital (collectively, hereinafter referred to as IRFs). Payments 
under the IRF PPS encompass inpatient operating and capital costs of 
furnishing covered 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 FYs 2002 through 2016.
    Under the IRF PPS from FY 2002 through FY 2005 the federal 
prospective payment rates were computed across 100 distinct case-mix 
groups (CMGs), as described in the FY 2002 IRF PPS final rule (66 FR 
41316). 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 IRFs' 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 IRFs would have received had the IRF PPS not been implemented. 
This provision also allowed IRFs to elect to bypass this blended 
payment and immediately be paid 100 percent of the federal IRF PPS 
rate. The transition methodology expired as of cost reporting periods 
beginning on or after October 1, 2002 (FY 2003), and payments for all 
IRFs now consist of 100 percent of the federal IRF PPS rate.
    We established a CMS Web site as a primary information resource for 
the IRF PPS which is available at http://www.cms.gov/Medicare/Medicare-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 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 was a 
market basket reflecting the operating and capital cost structures for 
freestanding IRFs, freestanding inpatient psychiatric facilities 
(IPFs), and long-term care hospitals (LTCHs) (hereinafter 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

[[Page 24181]]

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, 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) (formerly called 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, hereinafter 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 multifactor 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.
    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) 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

[[Page 24182]]

effective in the correcting amendments. For more information on the FY 
2010 and FY 2011 adjustments or the updates for FY 2011, please refer 
to the FY 2011 IRF PPS notice (75 FR 42836 and 75 FR 70013).
    In the FY 2012 IRF PPS final rule (76 FR 47836), we updated the IRF 
federal prospective payment rates, rebased and revised the RPL market 
basket, and established a new quality reporting program for IRFs in 
accordance with section 1886(j)(7) of the Act. We also revised 
regulation text for the purpose of updating and providing greater 
clarity. For more information on the policy changes implemented for FY 
2012, please refer to the FY 2012 IRF PPS final rule (76 FR 47836), in 
which we published the final FY 2012 IRF federal prospective payment 
rates.
    The FY 2013 IRF PPS notice (77 FR 44618) described the required 
adjustments to the FY 2013 federal prospective payment rates and 
outlier threshold amount for IRF discharges occurring on or after 
October 1, 2012, and on or before September 30, 2013. It also updated 
the FY 2013 federal prospective payment rates, the CMG relative 
weights, and the average length of stay values. For more information on 
the updates for FY 2013, please refer to the FY 2013 IRF PPS notice (77 
FR 44618).
    In the FY 2014 IRF PPS final rule (78 FR 47860), we updated the 
federal prospective payment rates, the CMG relative weights, and the 
outlier threshold amount. We also updated the facility-level adjustment 
factors using an enhanced estimation methodology, revised the list of 
diagnosis codes that count toward an IRF's 60 percent rule compliance 
calculation to determine ``presumptive compliance,'' revised sections 
of the Inpatient Rehabilitation Facility-Patient Assessment Instrument 
(IRF-PAI), revised requirements for acute care hospitals that have IRF 
units, clarified the IRF regulation text regarding limitation of 
review, updated references to previously changed sections in the 
regulations text, and revised and updated quality measures and 
reporting requirements under the IRF quality reporting program. For 
more information on the policy changes implemented for FY 2014, please 
refer to the FY 2014 IRF PPS final rule (78 FR 47860), in which we 
published the final FY 2014 IRF federal prospective payment rates.
    In the FY 2015 IRF PPS final rule (79 FR 45872), we updated the 
federal prospective payment rates, the CMG relative weights, and the 
outlier threshold amount. We also further revised the list of diagnosis 
codes that count toward an IRF's 60 percent rule compliance calculation 
to determine ``presumptive compliance,'' revised sections of the IRF-
PAI, and revised and updated quality measures and reporting 
requirements under the IRF quality reporting program. For more 
information on the policy changes implemented for FY 2015, please refer 
to the FY 2015 IRF PPS final rule (79 FR 45872) and the FY 2015 IRF PPS 
correction notice (79 FR 59121).
    In the FY 2016 IRF PPS final rule (80 FR 47036), we updated the 
federal prospective payment rates, the CMG relative weights, and the 
outlier threshold amount. We also adopted an IRF-specific market basket 
that reflects the cost structures of only IRF providers, a blended one-
year transition wage index based on the adoption of new OMB area 
delineations, a 3-year phase-out of the rural adjustment for certain 
IRFs due to the new OMB area delineations, and revisions and updates to 
the IRF QRP. For more information on the policy changes implemented for 
FY 2016, please refer to the FY 2016 IRF PPS final rule (80 FR 47036).

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 previously 
discussed, 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 2017 is discussed in section V.B. of 
this proposed rule. Section 3401(d) of the Affordable Care Act requires 
an additional 0.75 percentage point adjustment to the IRF increase 
factor for FY 2017, as discussed in section V.B. of this proposed rule. 
Section 1886(j)(3)(C)(ii)(II) of the Act notes that the application of 
these adjustments to the market basket update may result in an update 
that is less than 0.0 for a fiscal year and in payment rates for a 
fiscal year being less than such payment rates for the preceding fiscal 
year.
    Section 3004(b) of the Affordable Care Act also addressed the IRF 
PPS program. It reassigned the previously designated section 1886(j)(7) 
of the Act to section 1886(j)(8) and inserted a new section 1886(j)(7), 
which contains requirements for the Secretary to establish a quality 
reporting program for IRFs. Under that program, data must be submitted 
in a form and manner and at a time specified by the Secretary. 
Beginning in FY 2014, section 1886(j)(7)(A)(i) of the Act requires the 
application of a 2 percentage point reduction of the applicable market 
basket increase factor for IRFs that fail to comply with the quality 
data submission requirements. Application of the 2 percentage point 
reduction may result in an update that is less than 0.0 for a fiscal 
year and in payment rates for a fiscal year being less than such 
payment rates for the preceding fiscal year. Reporting-based reductions 
to the market basket increase factor will not be cumulative; they will 
only apply for the FY involved.
    Under section 1886(j)(7)(D)(i) and (ii) of the Act, the Secretary 
is generally required to select quality measures for the IRF quality 
reporting program from those that have been endorsed by the consensus-
based entity which holds a performance measurement contract under 
section 1890(a) of the Act. This contract is currently held by the 
National Quality Forum (NQF). So long as due consideration is given to 
measures that have been endorsed or adopted by a consensus-based 
organization, section 1886(j)(7)(D)(ii) of the Act authorizes the 
Secretary to select non-endorsed measures for specified areas or 
medical topics when there are no feasible or practical endorsed 
measure(s).
    Section 1886(j)(7)(E) of the Act requires the Secretary to 
establish procedures for making the IRF PPS quality reporting data 
available to the public. In so doing, the Secretary must ensure that 
IRFs have the opportunity to review any such data prior to its release 
to the public.

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 (FFS) patient, the 
IRF is required to complete the appropriate sections of a patient 
assessment instrument (PAI), designated as the IRF-PAI. In addition, 
beginning with IRF discharges occurring on or after October 1, 2009, 
the IRF is also required to complete the appropriate sections of the 
IRF-PAI upon the admission and discharge of each Medicare Advantage 
(MA) (formerly called Medicare Part C) 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

[[Page 24183]]

CMGs and account for the existence of any relevant comorbidities.
    The Grouper software produces a 5-character CMG number. The first 
character is an alphabetic character that indicates the comorbidity 
tier. The last 4 characters are numeric characters that represent the 
distinct CMG number. Free downloads of the Inpatient Rehabilitation 
Validation and Entry (IRVEN) software product, including the Grouper 
software, are available on the CMS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Software.html.
    Once a Medicare FFS 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-character CMG number and sends it to the appropriate Medicare 
Administrative Contractor (MAC). In addition, once a Medicare Advantage 
patient is discharged, in accordance with the Medicare Claims 
Processing Manual, chapter 3, section 20.3 (Pub. 100-04), hospitals 
(including IRFs) must submit an informational-only bill (Type of Bill 
(TOB) 111), which includes Condition Code 04 to their MAC. This will 
ensure that the Medicare Advantage days are included in the hospital's 
Supplemental Security Income (SSI) ratio (used in calculating the IRF 
low-income percentage adjustment) for fiscal year 2007 and beyond. 
Claims submitted to Medicare must comply with both ASCA and HIPAA.
    Section 3 of the ASCA amends section 1862(a) of the Act by adding 
paragraph (22), which requires the Medicare program, subject to section 
1862(h) of the Act, to deny payment under Part A or Part B for any 
expenses for items or services ``for which a claim is submitted other 
than in an electronic form specified by the Secretary.'' Section 
1862(h) of the Act, in turn, provides that the Secretary shall waive 
such denial in situations in which there is no method available for the 
submission of claims in an electronic form or the entity submitting the 
claim is a small provider. In addition, the Secretary also has the 
authority to waive such denial ``in such unusual cases as the Secretary 
finds appropriate.'' For more information, see the ``Medicare Program; 
Electronic Submission of Medicare Claims'' final rule (70 FR 71008). 
Our instructions for the limited number of Medicare claims submitted on 
paper are available at http://www.cms.gov/manuals/downloads/clm104c25.pdf.
    Section 3 of the ASCA operates in the context of the administrative 
simplification provisions of HIPAA, which include, among others, the 
requirements for transaction standards and code sets codified in 45 
CFR, parts 160 and 162, subparts A and I through R (generally known as 
the Transactions Rule). The Transactions Rule requires covered 
entities, including covered health care providers, to conduct covered 
electronic transactions according to the applicable transaction 
standards. (See the CMS program claim memoranda at http://www.cms.gov/ElectronicBillingEDITrans/ and listed in 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).

D. Advancing Health Information Exchange

    The Department of Health & Human Services (HHS) has a number of 
initiatives designed to encourage and support the adoption of health 
information technology and to promote nationwide health information 
exchange to improve health care. As discussed in the August 2013 
Statement ``Principles and Strategies for Accelerating Health 
Information Exchange'' (available at http://www.healthit.gov/sites/default/files/acceleratinghieprinciples_strategy.pdf). HHS believes 
that all individuals, their families, their healthcare and social 
service providers, and payers should have consistent and timely access 
to health information in a standardized format that can be securely 
exchanged between the patient, providers, and others involved in the 
individual's care. Health IT that facilitates the secure, efficient, 
and effective sharing and use of health-related information when and 
where it is needed is an important tool for settings across the 
continuum of care, including inpatient rehabilitation facilities. The 
effective adoption and use of health information exchange and health IT 
tools will be essential as IRFs seek to improve quality and lower costs 
through value-based care.
    The Office of the National Coordinator for Health Information 
Technology (ONC) has released a document entitled ``Connecting Health 
and Care for the Nation: A Shared Nationwide Interoperability Roadmap'' 
(available at https://www.healthit.gov/sites/default/files/hie-interoperability/nationwide-interoperability-roadmap-final-version-1.0.pdf). In the near term, the Roadmap focuses on actions that will 
enable individuals and providers across the care continuum to send, 
receive, find, and use a common set of electronic clinical information 
at the nationwide level by the end of 2017. The Roadmap's goals also 
align with the Improving Medicare Post-Acute Care Transformation Act of 
2014 (Pub. L. 113-185) (IMPACT Act), which requires assessment data to 
be standardized and interoperable to allow for exchange of the data.
    The Roadmap identifies four critical pathways that health IT 
stakeholders should focus on now in order to create a foundation for 
long-term success: (1) Improve technical standards and implementation 
guidance for priority data domains and associated elements; (2) rapidly 
shift and align federal, state, and commercial payment policies from 
FFS to value-based models to stimulate the demand for interoperability; 
(3) clarify and align federal and state privacy and security 
requirements that enable interoperability; and (4) align and promote 
the use of consistent policies and business practices that support 
interoperability, in coordination with stakeholders. In addition, ONC 
has released the final version of the 2016 Interoperability Standards 
Advisory (available at https://www.healthit.gov/standards-advisory/2016), which provides a list of the best available standards and 
implementation specifications to enable priority health information 
exchange functions. Providers, payers, and vendors are encouraged to 
take these ``best available standards'' into account as they implement 
interoperable health information exchange across the continuum of care, 
including care settings such as inpatient rehabilitation facilities.
    We encourage stakeholders to utilize health information exchange 
and certified health IT to effectively and

[[Page 24184]]

efficiently help providers improve internal care delivery practices, 
engage patients in their care, support management of care across the 
continuum, enable the reporting of electronically specified clinical 
quality measures (eCQMs), and improve efficiencies and reduce 
unnecessary costs. As adoption of certified health IT increases and 
interoperability standards continue to mature, HHS will seek to 
reinforce standards through relevant policies and programs.

II. Summary of Provisions of the Proposed Rule

    In this proposed rule, we propose to update the IRF federal 
prospective payment rates for FY 2017 and to revise and update quality 
measures and reporting requirements under the IRF QRP.
    The proposed updates to the IRF federal prospective payment rates 
for FY 2017 are as follows:
     Update the FY 2017 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 this proposed rule.
     Describe the continued use of FY 2014 facility-level 
adjustment factors as discussed in section IV of this proposed rule.
     Update the FY 2017 IRF PPS payment rates by the proposed 
market basket increase factor, based upon the most current data 
available, with a 0.75 percentage point reduction as required by 
sections 1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(v) 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 this 
proposed rule.
     Update the FY 2017 IRF PPS payment rates by the FY 2017 
wage index and the labor-related share in a budget-neutral manner, as 
discussed in section V of this proposed rule.
     Describe the calculation of the IRF standard payment 
conversion factor for FY 2017, as discussed in section V of this 
proposed rule.
     Update the outlier threshold amount for FY 2017, as 
discussed in section VI of this proposed rule.
     Update the cost-to-charge ratio (CCR) ceiling and urban/
rural average CCRs for FY 2017, as discussed in section VI of this 
proposed rule.
     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 VII of this proposed rule.

III. Proposed Update to the Case-Mix Group (CMG) Relative Weights and 
Average Length of Stay Values for FY 2017

    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 this proposed rule, we propose to update the CMG relative 
weights and average length of stay values for FY 2017. 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 2017, we propose 
to use the FY 2015 IRF claims and FY 2014 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 2015 IRF cost report data are 
available for analysis, but the majority of the FY 2015 IRF claims data 
are available for analysis.
    In this proposed rule, we propose to apply these data using the 
same methodologies that we have used to update the CMG relative weights 
and average length of stay values each fiscal year since we implemented 
an update to the methodology to use the more detailed CCR data from the 
cost reports of IRF subprovider units of primary acute care hospitals, 
instead of CCR data from the associated primary care hospitals, to 
calculate IRFs' average costs per case, as discussed in the FY 2009 IRF 
PPS final rule (73 FR 46372). In calculating the CMG relative weights, 
we use a hospital-specific relative value method to estimate operating 
(routine and ancillary services) and capital costs of IRFs. The process 
used to calculate the CMG relative weights for this proposed rule is as 
follows:
    Step 1. We estimate the effects that comorbidities have on costs.
    Step 2. We adjust the cost of each Medicare discharge (case) to 
reflect the effects found in the first step.
    Step 3. We use the adjusted costs from the second step to calculate 
CMG relative weights, using the hospital-specific relative value 
method.
    Step 4. We normalize the FY 2017 CMG relative weights to the same 
average CMG relative weight from the CMG relative weights implemented 
in the FY 2016 IRF PPS final rule (80 FR 47036).
    Consistent with the methodology that we have used to update the IRF 
classification system in each instance in the past, we propose to 
update the CMG relative weights for FY 2017 in such a way that total 
estimated aggregate payments to IRFs for FY 2017 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 
2017 CMG relative weights, we use the following steps:
    Step 1. Calculate the estimated total amount of IRF PPS payments 
for FY 2017 (with no changes to the CMG relative weights).
    Step 2. Calculate the estimated total amount of IRF PPS payments 
for FY 2017 by applying the proposed changes to the CMG relative 
weights (as discussed in this proposed rule).
    Step 3. Divide the amount calculated in step 1 by the amount 
calculated in step 2 to determine the budget neutrality factor (0.9990) 
that would maintain the same total estimated aggregate payments in FY 
2017 with and without the proposed changes to the CMG relative weights.
    Step 4. Apply the budget neutrality factor (0.9990) to the FY 2016 
IRF PPS standard payment amount after the application of the budget-
neutral wage adjustment factor.
    In section V.E. of this proposed rule, we discuss the proposed use 
of the existing methodology to calculate the proposed standard payment 
conversion factor for FY 2017.
    In Table 1, ``Proposed Relative Weights and Average Length of Stay 
Values for Case-Mix Groups,'' we present the CMGs, the comorbidity 
tiers, the corresponding relative weights, and the average length of 
stay values for each CMG and tier for FY 2017. 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 24185]]



                                Table 1--Proposed Relative Weights and Average Length of Stay Values for Case-Mix Groups
--------------------------------------------------------------------------------------------------------------------------------------------------------
                             CMG Description                        Relative weight                                 Average length of stay
          CMG            (M=motor, C=cognitive,  -------------------------------------------------------------------------------------------------------
                                 A=age)              Tier 1       Tier 2       Tier 3        None        Tier 1       Tier 2       Tier 3        None
--------------------------------------------------------------------------------------------------------------------------------------------------------
0101..................  Stroke M>51.05..........       0.8007       0.7158       0.6527       0.6228            8            9            9            8
0102..................  Stroke M>44.45 and             1.0117       0.9044       0.8247       0.7869           11           12           10           10
                         M<51.05 and C>18.5.
0103..................  Stroke M>44.45 and             1.1804       1.0552       0.9622       0.9181           11           13           12           12
                         M<51.05 and C<18.5.
0104..................  Stroke M>38.85 and             1.2603       1.1266       1.0274       0.9803           12           12           12           12
                         M<44.45.
0105..................  Stroke M>34.25 and             1.4562       1.3018       1.1871       1.1327           14           15           14           14
                         M<38.85.
0106..................  Stroke M>30.05 and             1.6306       1.4576       1.3293       1.2683           16           16           15           15
                         M<34.25.
0107..................  Stroke M>26.15 and             1.8168       1.6241       1.4811       1.4132           17           19           17           17
                         M<30.05.
0108..................  Stroke M<26.15 and             2.2856       2.0432       1.8632       1.7779           21           22           21           20
                         A>84.5.
0109..................  Stroke M>22.35 and             2.0579       1.8396       1.6776       1.6007           19           20           18           19
                         M<26.15 and A<84.5.
0110..................  Stroke M<22.35 and             2.7293       2.4398       2.2249       2.1230           29           27           24           24
                         A<84.5.
0201..................  Traumatic brain injury         0.7826       0.6402       0.5775       0.5385            8            8            8            7
                         M>53.35 and C>23.5.
0202..................  Traumatic brain injury         1.0939       0.8948       0.8072       0.7527           12           10            9           10
                         M>44.25 and M<53.35 and
                         C>23.5.
0203..................  Traumatic brain injury         1.2187       0.9969       0.8993       0.8385           11           12           11           11
                         M>44.25 and C<23.5.
0204..................  Traumatic brain injury         1.3419       1.0977       0.9902       0.9233           16           13           12           11
                         M>40.65 and M<44.25.
0205..................  Traumatic brain injury         1.6233       1.3279       1.1979       1.1170           14           15           14           13
                         M>28.75 and M<40.65.
0206..................  Traumatic brain injury         1.9247       1.5744       1.4202       1.3243           19           18           16           15
                         M>22.05 and M<28.75.
0207..................  Traumatic brain injury         2.5314       2.0708       1.8680       1.7418           31           23           20           19
                         M<22.05.
0301..................  Non-traumatic brain            1.1417       0.9423       0.8561       0.8003           10           11           10           10
                         injury M>41.05.
0302..................  Non-traumatic brain            1.4064       1.1608       1.0546       0.9858           13           13           12           12
                         injury M>35.05 and
                         M<41.05.
0303..................  Non-traumatic brain            1.6478       1.3600       1.2356       1.1550           15           15           14           14
                         injury M>26.15 and
                         M<35.05.
0304..................  Non-traumatic brain            2.1328       1.7604       1.5993       1.4949           21           20           17           16
                         injury M<26.15.
0401..................  Traumatic spinal cord          0.9816       0.8589       0.7927       0.7201           11           11           10            9
                         injury M>48.45.
0402..................  Traumatic spinal cord          1.4090       1.2330       1.1379       1.0337           14           14           14           13
                         injury M>30.35 and
                         M<48.45.
0403..................  Traumatic spinal cord          2.2221       1.9445       1.7946       1.6303           21           21           20           19
                         injury M>16.05 and
                         M<30.35.
0404..................  Traumatic spinal cord          3.8903       3.4042       3.1418       2.8541           47           37           34           32
                         injury M<16.05 and
                         A>63.5.
0405..................  Traumatic spinal cord          3.4259       2.9979       2.7668       2.5134           47           33           28           28
                         injury M<16.05 and
                         A<63.5.
0501..................  Non-traumatic spinal           0.8605       0.6793       0.6459       0.5815            9            8            7            8
                         cord injury M>51.35.
0502..................  Non-traumatic spinal           1.1607       0.9162       0.8712       0.7843           11           11           10           10
                         cord injury M>40.15 and
                         M<51.35.
0503..................  Non-traumatic spinal           1.4538       1.1476       1.0912       0.9824           14           13           13           12
                         cord injury M>31.25 and
                         M<40.15.
0504..................  Non-traumatic spinal           1.7071       1.3475       1.2813       1.1535           19           16           14           14
                         cord injury M>29.25 and
                         M<31.25.
0505..................  Non-traumatic spinal           1.9596       1.5468       1.4708       1.3242           20           17           17           16
                         cord injury M>23.75 and
                         M<29.25.
0506..................  Non-traumatic spinal           2.7126       2.1412       2.0360       1.8330           28           24           22           21
                         cord injury M<23.75.
0601..................  Neurological M>47.75....       1.0371       0.8203       0.7581       0.6940           10            9            9            9
0602..................  Neurological M>37.35 and       1.3356       1.0563       0.9762       0.8936           12           12           11           11
                         M<47.75.
0603..................  Neurological M>25.85 and       1.6450       1.3010       1.2023       1.1007           14           14           13           13
                         M<37.35.
0604..................  Neurological M<25.85....       2.1787       1.7232       1.5924       1.4578           20           18           16           16
0701..................  Fracture of lower              1.0013       0.8151       0.7777       0.7065           10            9            9            9
                         extremity M>42.15.
0702..................  Fracture of lower              1.2773       1.0398       0.9921       0.9013           12           12           12           11
                         extremity M>34.15 and
                         M<42.15.
0703..................  Fracture of lower              1.5395       1.2533       1.1958       1.0863           15           14           14           13
                         extremity M>28.15 and
                         M<34.15.
0704..................  Fracture of lower              1.9955       1.6245       1.5500       1.4081           18           18           17           16
                         extremity M<28.15.
0801..................  Replacement of lower           0.7944       0.6410       0.5920       0.5443            8            8            7            7
                         extremity joint M>49.55.
0802..................  Replacement of lower           1.0351       0.8353       0.7714       0.7093           11           10            9            9
                         extremity joint M>37.05
                         and M<49.55.
0803..................  Replacement of lower           1.3845       1.1173       1.0318       0.9488           13           13           12           12
                         extremity joint M>28.65
                         and M<37.05 and A>83.5.
0804..................  Replacement of lower           1.2461       1.0055       0.9286       0.8539           12           12           11           10
                         extremity joint M>28.65
                         and M<37.05 and A<83.5.

[[Page 24186]]

 
0805..................  Replacement of lower           1.4829       1.1966       1.1051       1.0162           15           13           12           12
                         extremity joint M>22.05
                         and M<28.65.
0806..................  Replacement of lower           1.7995       1.4521       1.3410       1.2331           16           16           15           14
                         extremity joint M<22.05.
0901..................  Other orthopedic M>44.75       0.9866       0.7948       0.7350       0.6689           11           10            9            8
0902..................  Other orthopedic M>34.35       1.2620       1.0166       0.9402       0.8556           12           12           11           10
                         and M<44.75.
0903..................  Other orthopedic M>24.15       1.5866       1.2780       1.1819       1.0757           15           15           13           13
                         and M<34.35.
0904..................  Other orthopedic M<24.15       2.0099       1.6190       1.4973       1.3627           18           18           16           16
1001..................  Amputation, lower              1.0742       0.9500       0.8207       0.7414           11           11           10            9
                         extremity M>47.65.
1002..................  Amputation, lower              1.3925       1.2314       1.0639       0.9611           14           15           12           12
                         extremity M>36.25 and
                         M<47.65.
1003..................  Amputation, lower              1.9643       1.7371       1.5008       1.3558           18           19           17           16
                         extremity M<36.25.
1101..................  Amputation, non-lower          1.3216       1.1917       0.9756       0.8848           12           12           10           11
                         extremity M>36.35.
1102..................  Amputation, non-lower          1.8958       1.7094       1.3994       1.2692           17           16           16           14
                         extremity M<36.35.
1201..................  Osteoarthritis M>37.65..       1.0418       1.0235       0.9300       0.8239           10           11           11           10
1202..................  Osteoarthritis M>30.75         1.2108       1.1895       1.0808       0.9576           12           13           12           11
                         and M<37.65.
1203..................  Osteoarthritis M<30.75..       1.5410       1.5140       1.3756       1.2187           14           17           15           14
1301..................  Rheumatoid, other              1.1826       0.9291       0.8691       0.8014           13           10           10           10
                         arthritis M>36.35.
1302..................  Rheumatoid, other              1.6264       1.2778       1.1954       1.1021           14           15           13           13
                         arthritis M>26.15 and
                         M<36.35.
1303..................  Rheumatoid, other              2.0043       1.5746       1.4731       1.3582           16           20           15           15
                         arthritis M<26.15.
1401..................  Cardiac M>48.85.........       0.8643       0.7307       0.6621       0.6007            9            8            8            8
1402..................  Cardiac M>38.55 and            1.1810       0.9985       0.9047       0.8208           11           11           10           10
                         M<48.85.
1403..................  Cardiac M>31.15 and            1.4079       1.1903       1.0785       0.9785           13           13           12           11
                         M<38.55.
1404..................  Cardiac M<31.15.........       1.7799       1.5048       1.3635       1.2371           17           16           15           14
1501..................  Pulmonary M>49.25.......       1.0124       0.8580       0.7912       0.7466           10            9            9            8
1502..................  Pulmonary M>39.05 and          1.2770       1.0823       0.9980       0.9418           11           11           11           10
                         M<49.25.
1503..................  Pulmonary M>29.15 and          1.5560       1.3187       1.2160       1.1475           15           14           12           12
                         M<39.05.
1504..................  Pulmonary M<29.15.......       1.9351       1.6400       1.5123       1.4271           19           17           15           14
1601..................  Pain syndrome M>37.15...       0.9845       0.8935       0.8304       0.7671            9            9           10            9
1602..................  Pain syndrome M>26.75          1.2824       1.1639       1.0817       0.9993           12           13           12           12
                         and M<37.15.
1603..................  Pain syndrome M<26.75...       1.6089       1.4602       1.3571       1.2537           13           17           15           14
1701..................  Major multiple trauma          1.1329       0.9223       0.8471       0.7644           16           10           10           10
                         without brain or spinal
                         cord injury M>39.25.
1702..................  Major multiple trauma          1.4266       1.1614       1.0667       0.9626           13           14           13           12
                         without brain or spinal
                         cord injury M>31.05 and
                         M<39.25.
1703..................  Major multiple trauma          1.7041       1.3873       1.2743       1.1498           16           16           14           14
                         without brain or spinal
                         cord injury M>25.55 and
                         M<31.05.
1704..................  Major multiple trauma          2.1883       1.7815       1.6363       1.4766           22           19           18           17
                         without brain or spinal
                         cord injury M<25.55.
1801..................  Major multiple trauma          1.3252       1.0733       0.9440       0.8290           15           13           12           10
                         with brain or spinal
                         cord injury M>40.85.
1802..................  Major multiple trauma          1.8549       1.5023       1.3214       1.1604           17           17           15           14
                         with brain or spinal
                         cord injury M>23.05 and
                         M<40.85.
1803..................  Major multiple trauma          2.8949       2.3447       2.0623       1.8110           31           27           21           20
                         with brain or spinal
                         cord injury M<23.05.
1901..................  Guillian Barre M>35.95..       1.1743       1.0503       0.9267       0.9127           13           13           11           11
1902..................  Guillian Barre M>18.05         2.1344       1.9090       1.6843       1.6589           19           22           19           19
                         and M<35.95.
1903..................  Guillian Barre M<18.05..       3.4585       3.0934       2.7292       2.6881           50           31           32           28
2001..................  Miscellaneous M>49.15...       0.9216       0.7549       0.6924       0.6268            9            9            8            8
2002..................  Miscellaneous M>38.75          1.2117       0.9926       0.9103       0.8241           12           11           11           10
                         and M<49.15.
2003..................  Miscellaneous M>27.85          1.5152       1.2412       1.1383       1.0305           14           14           13           12
                         and M<38.75.
2004..................  Miscellaneous M<27.85...       1.9423       1.5911       1.4591       1.3210           19           17           16           15
2101..................  Burns M>0...............       1.6749       1.6749       1.4953       1.3672           24           18           16           17
5001..................  Short-stay cases, length  ...........  ...........  ...........       0.1586  ...........  ...........  ...........            2
                         of stay is 3 days or
                         fewer.
5101..................  Expired, orthopedic,      ...........  ...........  ...........       0.6791  ...........  ...........  ...........            7
                         length of stay is 13
                         days or fewer.
5102..................  Expired, orthopedic,      ...........  ...........  ...........       1.4216  ...........  ...........  ...........           17
                         length of stay is 14
                         days or more.

[[Page 24187]]

 
5103..................  Expired, not orthopedic,  ...........  ...........  ...........       0.8033  ...........  ...........  ...........            8
                         length of stay is 15
                         days or fewer.
5104..................  Expired, not orthopedic,  ...........  ...........  ...........       2.1360  ...........  ...........  ...........           21
                         length of stay is 16
                         days or more.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Generally, updates to the CMG relative weights result in some 
increases and some decreases to the CMG relative weight values. Table 2 
shows how we estimate that the application of the proposed revisions 
for FY 2017 would affect particular CMG relative weight values, which 
would affect the overall distribution of payments within CMGs and 
tiers. Note that, because we propose to implement the CMG relative 
weight revisions in a budget-neutral manner (as previously described), 
total estimated aggregate payments to IRFs for FY 2017 would not be 
affected as a result of the proposed CMG relative weight revisions. 
However, the proposed revisions would affect the distribution of 
payments within CMGs and tiers.

   Table 2--Distributional Effects of the Proposed Changes to the CMG
                            Relative Weights
              [FY 2016 Values compared with FY 2017 values]
------------------------------------------------------------------------
                                                  Number of   Percentage
                Percentage change                   cases      of cases
                                                   affected    affected
------------------------------------------------------------------------
Increased by 15% or more........................          0          0.0
Increased by between 5% and 15%.................        797          0.2
Changed by less than 5%.........................    391,183         99.5
Decreased by between 5% and 15%.................      1,237          0.3
Decreased by 15% or more........................         14          0.0
------------------------------------------------------------------------

    As Table 2 shows, 99.5 percent of all IRF cases are in CMGs and 
tiers that would experience less than a 5 percent change (either 
increase or decrease) in the CMG relative weight value as a result of 
the proposed revisions for FY 2017. The largest estimated increase in 
the proposed CMG relative weight values that affects the largest number 
of IRF discharges would be a 0.1 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 2015 
claims data, 18,696 IRF discharges (4.8 percent of all IRF discharges) 
were classified into this CMG and tier.
    The largest decrease in a CMG relative weight value affecting the 
largest number of IRF cases would be a 1.4 percent decrease in the CMG 
relative weight for CMG 0110--Stroke, with a motor score less than 
22.35 and age less than 84.5 -in the ``no comorbidity'' tier. In the FY 
2015 IRF claims data, this change would have affected 13,587 cases (3.5 
percent of all IRF cases).
    The proposed changes in the average length of stay values for FY 
2017, compared with the FY 2016 average length of stay values, are 
small and do not show any particular trends in IRF length of stay 
patterns.
    We invite public comment on our proposed updates to the CMG 
relative weights and average length of stay values for FY 2017.

IV. Facility-Level Adjustment Factors

    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. Under 
this authority, we currently 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).
    Based on the substantive changes to the facility-level adjustment 
factors that were adopted in the FY 2014 final rule (78 FR 47860, 47868 
through 47872), in the FY 2015 final rule (79 FR 45872, 45882 through 
45883), we froze the facility-level adjustment factors at the FY 2014 
levels for FY 2015 and all subsequent years (unless and until we 
propose to update them again through future notice-and-comment 
rulemaking). For FY 2017, we will continue to hold the adjustment 
factors at the FY 2014 levels as we continue to monitor the most 
current IRF claims data available and continue to evaluate and monitor 
the effects of the FY 2014 changes.

V. Proposed FY 2017 IRF PPS Payment Update

A. Background

    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. Section 1886(j)(3)(C)(ii)(I) of the Act requires the 
application of a productivity adjustment, as described below. In 
addition, sections 1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(v) of the 
Act require the application of a 0.75 percentage point reduction to the 
market basket increase factor for FY 2017. Thus, in this proposed rule, 
we propose to update the IRF PPS payments for FY 2017 by a market 
basket increase factor as required by section 1886(j)(3)(C) of the Act, 
with a productivity adjustment as required by section 
1886(j)(3)(C)(ii)(I) of the Act, and a 0.75 percentage point reduction 
as required by sections 1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(v) of 
the Act.
    For FY 2015, IRF PPS payments were updated using the 2008-based RPL 
market basket. Beginning with the FY 2016 IRF PPS, we created and 
adopted a stand-alone IRF market basket, which was referred to as the 
2012-based IRF market basket, reflecting the operating and capital cost 
structures for freestanding IRFs and hospital-based IRFs. The general 
structure of the 2012-based IRF market basket is similar to the 2008-
based RPL market basket; however, we made several notable changes. In 
developing the 2012-based IRF market basket, we derived cost weights 
from Medicare cost report data for both freestanding and hospital-based 
IRFs (the 2008-based RPL market basket was based on freestanding data 
only), incorporated the 2007 Input-Output data from the Bureau of 
Economic Analysis (the 2008-based RPL market basket was based on the 
2002 Input-Output data); used new price proxy blends for two cost 
categories (Fuel, Oil,

[[Page 24188]]

and Gasoline and Medical Instruments); added one additional cost 
category (Installation, Maintenance, and Repair), which was previously 
included in the residual All Other Services: Labor-Related cost 
category of the 2008-based RPL market basket; and eliminated three cost 
categories (Apparel, Machinery & Equipment, and Postage). The FY 2016 
IRF PPS final rule (80 FR 47046 through 47068) contains a complete 
discussion of the development of the 2012-based IRF market basket.

B. Proposed FY 2017 Market Basket Update and Productivity Adjustment

    For FY 2017, we are proposing to use the same methodology described 
in the FY 2016 IRF PPS final rule (80 FR 47066) to compute the FY 2017 
market basket increase factor to update the IRF PPS base payment rate. 
Consistent with historical practice, we are proposing to estimate the 
market basket update for the IRF PPS based on IHS Global Insight's 
forecast using the most recent available data. IHS Global Insight 
(IGI), Inc. is a nationally recognized economic and financial 
forecasting firm with which CMS contracts to forecast the components of 
the market baskets and multifactor productivity (MFP).
    Based on IGI's first quarter 2016 forecast with historical data 
through the fourth quarter of 2015, the projected 2012-based IRF market 
basket increase factor for FY 2017 would be 2.7 percent. Therefore, 
consistent with our historical practice of estimating market basket 
increases based on the best available data, we are proposing a market 
basket increase factor of 2.7 percent for FY 2017. We are also 
proposing that if more recent data are subsequently available (for 
example, a more recent estimate of the market basket update), we would 
use such data to determine the FY 2017 update in the final rule.
    According to section 1886(j)(3)(C)(i) of the Act, the Secretary 
shall establish an increase factor based on an appropriate percentage 
increase in a market basket of goods and services. Section 
1886(j)(3)(C)(ii) of the Act then requires that, after establishing the 
increase factor for a FY, the Secretary shall reduce such increase 
factor for FY 2012 and each subsequent FY, by the productivity 
adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act. 
Section 1886(b)(3)(B)(xi)(II) of the Act sets forth the definition of 
this productivity adjustment. The statute defines the productivity 
adjustment to be equal to the 10-year moving average of changes in 
annual economy-wide private nonfarm business MFP (as projected by the 
Secretary for the 10-year period ending with the applicable FY, year, 
cost reporting period, or other annual period) (the ``MFP 
adjustment''). The BLS publishes the official measure of private 
nonfarm business MFP. Please see http://www.bls.gov/mfp for the BLS 
historical published MFP data. A complete description of the MFP 
projection methodology is available on the CMS Web site at http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch.html.
    Using IGI's first quarter 2016 forecast, the MFP adjustment for FY 
2017 (the 10-year moving average of MFP for the period ending FY 2017) 
is currently projected to be 0.5 percent. Thus, in accordance with 
section 1886(j)(3)(C) of the Act, we are proposing to base the FY 2017 
market basket update, which is used to determine the applicable 
percentage increase for the IRF payments, on the most recent estimate 
of the 2012-based IRF market basket. We are proposing to then reduce 
this percentage increase by the most up-to-date estimate of the MFP 
adjustment for FY 2017 of 0.5 percentage point (the 10-year moving 
average of MFP for the period ending FY 2017 based on IGI's first 
quarter 2016 forecast). Following application of the MFP, we are 
proposing to further reduce the applicable percentage increase by 0.75 
percentage point, as required by sections 1886(j)(3)(C)(ii)(II) and 
1886(j)(3)(D)(v) of the Act. Therefore, the estimate of the FY 2017 IRF 
update for the proposed rule is 1.45 percent (2.7 percent market basket 
update, less 0.5 percentage point MFP adjustment, less 0.75 percentage 
point legislative adjustment). Furthermore, we propose that if more 
recent data are subsequently available (for example, a more recent 
estimate of the market basket update and MFP adjustment), we would use 
such data to determine the FY 2017 market basket update and MFP 
adjustment in the final rule.
    For FY 2017, the Medicare Payment Advisory Commission (MedPAC) 
recommends that a 0-percent update be applied to IRF PPS payment rates. 
As discussed, and in accordance with sections 1886(j)(3)(C) and 
1886(j)(3)(D) of the Act, the Secretary is proposing to update the IRF 
PPS payment rates for FY 2017 by an adjusted market basket increase 
factor of 1.45 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 2017.

C. Proposed Labor-Related Share for FY 2017

    Section 1886(j)(6) of the Act specifies that the Secretary is to 
adjust the proportion (as estimated by the Secretary from time to time) 
of rehabilitation facilities' costs which are attributable to wages and 
wage-related costs of the prospective payment rates computed under 
section 1886(j)(3) for area differences in wage levels 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 such facilities. The labor-related 
share is determined by identifying the national average proportion of 
total costs that are related to, influenced by, or vary with the local 
labor market. We continue to classify a cost category as labor-related 
if the costs are labor-intensive and vary with the local labor market.
    Based on our definition of the labor-related share and the cost 
categories in the 2012-based IRF market basket, we propose to include 
in the labor-related share for FY 2017 the sum of the FY 2017 relative 
importance of Wages and Salaries, Employee Benefits, Professional Fees: 
Labor- Related, Administrative and Facilities Support Services, 
Installation, Maintenance, and Repair, All Other: Labor-related 
Services, and a portion of the Capital-Related cost weight from the 
2012-based IRF market basket. For more details regarding the 
methodology for determining specific cost categories for inclusion in 
the 2012-based IRF labor-related share, see the FY 2016 IRF final rule 
(80 FR 47066 through 47068).
    Using this proposed method and the IHS Global Insight, Inc. first 
quarter 2016 forecast for the 2012-based IRF market basket, the 
proposed IRF labor-related share for FY 2017 is the sum of the FY 2017 
relative importance of each labor-related cost category. The relative 
importance reflects the different rates of price change for these cost 
categories between the base year (FY 2012) and FY 2017.
    The sum of the relative importance for FY 2017 operating costs 
(Wages and Salaries, Employee Benefits, Professional Fees: Labor-
related, Administrative and Facilities Support Services, Installation 
Maintenance & Repair Services, and All Other: Labor-related Services) 
using the 2012-based IRF market basket is 67.1 percent, as shown in 
Table 3.
    We propose that the portion of Capital that is influenced by the 
local labor market is estimated to be 46 percent. Since the relative 
importance for

[[Page 24189]]

Capital-Related Costs is 8.4 percent of the 2012-based IRF market 
basket in FY 2017, we propose to take 46 percent of 8.4 percent to 
determine the labor-related share of Capital for FY 2017. The result 
would be 3.9 percent, which we propose to add to 67.1 percent for the 
operating cost amount to determine the total proposed labor-related 
share for FY 2017. Thus, the labor-related share that we are proposing 
to use for IRF PPS in FY 2017 would be 71.0 percent. By comparison, the 
FY 2016 labor-related share under the 2012-based IRF market basket was 
also 71.0 percent. Furthermore, we propose that if more recent data are 
subsequently available (for example, a more recent estimate of the 
labor-related share), we would use such data to determine the FY 2017 
IRF labor-related share in the final rule.

                    Table 3--IRF Labor-Related Share
------------------------------------------------------------------------
                                   FY 2017 proposed      FY 2016 final
                                     labor-related       labor related
                                       share \1\           share \2\
------------------------------------------------------------------------
Wages and Salaries..............                47.7                47.6
Employee Benefits...............                11.4                11.4
Professional Fees: Labor-related                 3.5                 3.5
Administrative and Facilities                    0.8                 0.8
 Support Services...............
Installation, Maintenance, and                   1.9                 2.0
 Repair.........................
All Other: Labor-related                         1.8                 1.8
 Services.......................
                                 ---------------------------------------
    Subtotal....................                67.1                67.1
Labor-related portion of capital                 3.9                 3.9
 (46%)..........................
                                 ---------------------------------------
        Total Labor-Related                     71.0                71.0
         Share..................
------------------------------------------------------------------------
\1\ Based on the 2012-based IRF Market Basket, IHS Global Insight, Inc.
  1st quarter 2016 forecast.
\2\ Federal Register 80 FR 47068.

D. Proposed Wage Adjustment

1. Background
    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 2017, we propose to maintain the policies and methodologies 
described in the FY 2016 IRF PPS final rule (80 FR 47036, 47068 through 
47075) related to the labor market area definitions and the wage index 
methodology for areas with wage data. Thus, we propose to use the CBSA 
labor market area definitions and the FY 2016 pre-reclassification and 
pre-floor hospital wage index data. The current statistical areas which 
were implemented in FY 2016 are based on OMB standards published on 
February 28, 2013, in OMB Bulletin No. 13-01. For FY 2017, we are 
continuing to use the new OMB delineations that we adopted beginning 
with FY 2016. In accordance with section 1886(d)(3)(E) of the Act, the 
FY 2016 pre-reclassification and pre-floor hospital wage index is based 
on data submitted for hospital cost reporting periods beginning on or 
after October 1, 2011, and before October 1, 2012 (that is, FY 2012 
cost report data).
    The labor market designations made by the OMB include some 
geographic areas where there are no hospitals and, thus, no hospital 
wage index data on which to base the calculation of the IRF PPS wage 
index. We propose to continue to use the same methodology discussed in 
the FY 2008 IRF PPS final rule (72 FR 44299) to address those 
geographic areas where there are no hospitals and, thus, no hospital 
wage index data on which to base the calculation for the FY 2017 IRF 
PPS wage index.
2. Update
    The wage index used for the IRF PPS is calculated using the pre-
reclassification and pre-floor acute care hospital wage index data and 
is assigned to the IRF on the basis of the labor market area in which 
the IRF is geographically located. IRF labor market areas are 
delineated based on the CBSAs established by the OMB. In the FY 2016 
IRF PPS final rule (80 FR 47036, 47068), we established an IRF wage 
index based on FY 2011 acute care hospital wage data to adjust the FY 
2016 IRF payment rates. We also adopted the revised CBSAs set forth by 
OMB. The current CBSA delineations (which were implemented for the IRF 
PPS beginning with FY 2016) are based on revised OMB delineations 
issued on February 28, 2013, in OMB Bulletin No. 13-01. OMB Bulletin 
No. 13-01 established revised delineations for Metropolitan Statistical 
Areas, Micropolitan Statistical Areas, and Combined Statistical Areas 
in the United States and Puerto Rico, and provided guidance on the use 
of the delineations of these statistical areas based on new standards 
published on June 28, 2010, in the Federal Register (75 FR 37246 
through 37252). A copy of this bulletin may be obtained at http://www.whitehouse.gov/sites/default/files/omb/bulletins/2013/b-13-01.pdf. 
For FY 2017, we are continuing to use the new OMB delineations that we 
adopted beginning with FY 2016 to calculate the area wage indexes and 
the transition periods, which we discuss below.
3. Transition Period
    In FY 2016, we applied a 1-year blended wage index for all IRF 
providers to mitigate the impact of the wage index change due to the 
implementation of the revised CBSA delineations. In FY 2016, all IRF 
providers received a blended wage index using 50 percent of their FY 
2016 wage index based on the revised OMB CBSA delineations and 50 
percent of their FY 2016 wage index based on the OMB delineations used 
in FY 2015. We propose to maintain the policy established in FY 2016 
IRF PPS final rule related to the blended one-year transition wage 
index (80 FR 47036, 47073 through 47074). This 1-year blended wage 
index became effective on

[[Page 24190]]

October 1, 2015, and expires on September 30, 2016.
    For FY 2016, in addition to the blended wage index, we also adopted 
a 3-year budget neutral phase out of the rural adjustment for FY 2015 
rural IRFs that became urban in FY 2016 under the revised CBSA 
delineations. In FY 2016, IRFs that were designated as rural in FY 2015 
and became designated as urban in FY 2016 received two-thirds of the 
2015 rural adjustment of 14.9 percent. FY 2017 represents the second 
year of the 3-year phase out of the rural adjustment, in which these 
same IRFs will receive one-third of the 2015 rural adjustment of 14.9 
percent, as finalized in the FY 2016 IRF PPS final rule (80 FR 47036, 
47073 through 47074).
    For FY 2017, the proposed wage index will be based solely on the 
previously adopted revised CBSA delineations and their respective wage 
index (rather than on a blended wage index). We are not proposing any 
additional wage index transition adjustments for IRF providers due to 
the adoption of the new OMB delineations in FY 2016, but will continue 
the 3-year phase out of the rural adjustments for IRF providers that 
changed from rural to urban status that was finalized in the FY 2016 
IFR PPS final rule (80 FR 47036, 47073 through 47074).
    For a full discussion of our implementation of the new OMB labor 
market area delineations for the FY 2016 wage index, please refer to 
the FY 2016 IRF PPS final rule (80 FR 47036, 47068 through 47076). We 
are not proposing any changes to this policy in this proposed rule. For 
FY 2017, 19 IRFs that were designated as rural in FY 2015 and became 
designated as urban in FY 2016 will receive the proposed FY 2017 wage 
index (based solely on the revised CBSA delineations) and one-third of 
the FY 2015 rural adjustment of 14.9 percent (80 FR 47036, 47073 
through 47076). The proposed wage index applicable to FY 2017 is 
available on the CMS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Data-Files.html. Table A 
is for urban areas, and Table B is for rural areas.
    To calculate the wage-adjusted facility payment for the payment 
rates set forth in this proposed rule, we multiply the unadjusted 
federal payment rate for IRFs by the FY 2017 labor-related share based 
on the 2012-based IRF market basket (71.0 percent) to determine the 
labor-related portion of the standard payment amount. A full discussion 
of the calculation of the labor-related share is located in section V.C 
of this proposed rule. We then multiply the labor-related portion by 
the applicable IRF wage index from the tables in the addendum to this 
proposed rule. These tables are available through the Internet on the 
CMS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Data-Files.html.
    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 
propose to 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 propose to 
use the listed steps to ensure that the FY 2017 IRF standard payment 
conversion factor reflects the proposed update to the wage indexes 
(based on the FY 2012 hospital cost report data) and the labor-related 
share in a budget-neutral manner:
    Step 1. Determine the total amount of the estimated FY 2016 IRF PPS 
payments, using the FY 2016 standard payment conversion factor and the 
labor-related share and the wage indexes from FY 2016 (as published in 
the FY 2016 IRF PPS final rule (80 FR 47036)).
    Step 2. Calculate the total amount of estimated IRF PPS payments 
using the proposed FY 2017 standard payment conversion factor and the 
proposed FY 2017 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 proposed FY 2017 
budget-neutral wage adjustment factor of 0.9992.
    Step 4. Apply the proposed FY 2017 budget-neutral wage adjustment 
factor from step 3 to the FY 2016 IRF PPS standard payment conversion 
factor after the application of the adjusted market basket update to 
determine the proposed FY 2017 standard payment conversion factor.
    We discuss the calculation of the proposed standard payment 
conversion factor for FY 2017 in section V.E of this proposed rule.
    We invite public comment on the proposed IRF wage adjustment for FY 
2017.

E. Description of the Proposed IRF Standard Payment Conversion Factor 
and Payment Rates for FY 2017

    To calculate the proposed standard payment conversion factor for FY 
2017, as illustrated in Table 4, we begin by applying the proposed 
adjusted market basket increase factor for FY 2017 that was adjusted in 
accordance with sections 1886(j)(3)(C) and (D) of the Act, to the 
standard payment conversion factor for FY 2016 ($15,478). Applying the 
proposed 1.45 percent adjusted market basket increase for FY 2017 to 
the standard payment conversion factor for FY 2016 of $15,478 yields a 
standard payment amount of $15,702. Then, we apply the proposed budget 
neutrality factor for the FY 2017 wage index and labor-related share of 
0.9992, which results in a proposed standard payment amount of $15,690. 
We next apply the proposed budget neutrality factors for the revised 
CMG relative weights of 0.9990, which results in the proposed standard 
payment conversion factor of $15,674 for FY 2017.

Table 4--Calculations To Determine the Proposed FY 2017 Standard Payment
                            Conversion Factor
------------------------------------------------------------------------
              Explanation for adjustment                  Calculations
------------------------------------------------------------------------
Standard Payment Conversion Factor for FY 2016.......            $15,478
Market Basket Increase Factor for FY 2017 (2.7                  x 1.0145
 percent), reduced by 0.5 percentage point for the
 productivity adjustment as required by section
 1886(j)(3)(C)(ii)(I) of the Act, and reduced by 0.75
 percentage point in accordance with paragraphs
 1886(j)(3)(C) and (D) of the Act....................
Budget Neutrality Factor for the Wage Index and Labor-          x 0.9992
 Related Share.......................................
Budget Neutrality Factor for the Revisions to the CMG           x 0.9990
 Relative Weights....................................
Proposed FY 2017 Standard Payment Conversion Factor..          = $15,674
------------------------------------------------------------------------

    We invite public comment on the proposed FY 2017 standard payment 
conversion factor.
    After the application of the proposed CMG relative weights 
described in section III of this proposed rule to the proposed FY 2017 
standard payment conversion factor ($15,674), the resulting proposed 
unadjusted IRF

[[Page 24191]]

prospective payment rates for FY 2017 are shown in Table 5.

                                     Table 5--Proposed FY 2017 Payment Rates
----------------------------------------------------------------------------------------------------------------
                                      Payment rate tier  Payment rate tier  Payment rate tier   Payment rate no
                 CMG                          1                  2                  3             comorbidity
----------------------------------------------------------------------------------------------------------------
0101................................         $12,550.17         $11,219.45         $10,230.42          $9,761.77
0102................................          15,857.39          14,175.57          12,926.35          12,333.87
0103................................          18,501.59          16,539.20          15,081.52          14,390.30
0104................................          19,753.94          17,658.33          16,103.47          15,365.22
0105................................          22,824.48          20,404.41          18,606.61          17,753.94
0106................................          25,558.02          22,846.42          20,835.45          19,879.33
0107................................          28,476.52          25,456.14          23,214.76          22,150.50
0108................................          35,824.49          32,025.12          29,203.80          27,866.80
0109................................          32,255.52          28,833.89          26,294.70          25,089.37
0110................................          42,779.05          38,241.43          34,873.08          33,275.90
0201................................          12,266.47          10,034.49           9,051.74           8,440.45
0202................................          17,145.79          14,025.10          12,652.05          11,797.82
0203................................          19,101.90          15,625.41          14,095.63          13,142.65
0204................................          21,032.94          17,205.35          15,520.39          14,471.80
0205................................          25,443.60          20,813.50          18,775.88          17,507.86
0206................................          30,167.75          24,677.15          22,260.21          20,757.08
0207................................          39,677.16          32,457.72          29,279.03          27,300.97
0301................................          17,895.01          14,769.61          13,418.51          12,543.90
0302................................          22,043.91          18,194.38          16,529.80          15,451.43
0303................................          25,827.62          21,316.64          19,366.79          18,103.47
0304................................          33,429.51          27,592.51          25,067.43          23,431.06
0401................................          15,385.60          13,462.40          12,424.78          11,286.85
0402................................          22,084.67          19,326.04          17,835.44          16,202.21
0403................................          34,829.20          30,478.09          28,128.56          25,553.32
0404................................          60,976.56          53,357.43          49,244.57          44,735.16
0405................................          53,697.56          46,989.08          43,366.82          39,395.03
0501................................          13,487.48          10,647.35          10,123.84           9,114.43
0502................................          18,192.81          14,360.52          13,655.19          12,293.12
0503................................          22,786.86          17,987.48          17,103.47          15,398.14
0504................................          26,757.09          21,120.72          20,083.10          18,079.96
0505................................          30,714.77          24,244.54          23,053.32          20,755.51
0506................................          42,517.29          33,561.17          31,912.26          28,730.44
0601................................          16,255.51          12,857.38          11,882.46          10,877.76
0602................................          20,934.19          16,556.45          15,300.96          14,006.29
0603................................          25,783.73          20,391.87          18,844.85          17,252.37
0604................................          34,148.94          27,009.44          24,959.28          22,849.56
0701................................          15,694.38          12,775.88          12,189.67          11,073.68
0702................................          20,020.40          16,297.83          15,550.18          14,126.98
0703................................          24,130.12          19,644.22          18,742.97          17,026.67
0704................................          31,277.47          25,462.41          24,294.70          22,070.56
0801................................          12,451.43          10,047.03           9,279.01           8,531.36
0802................................          16,224.16          13,092.49          12,090.92          11,117.57
0803................................          21,700.65          17,512.56          16,172.43          14,871.49
0804................................          19,531.37          15,760.21          14,554.88          13,384.03
0805................................          23,242.97          18,755.51          17,321.34          15,927.92
0806................................          28,205.36          22,760.22          21,018.83          19,327.61
0901................................          15,463.97          12,457.70          11,520.39          10,484.34
0902................................          19,780.59          15,934.19          14,736.69          13,410.67
0903................................          24,868.37          20,031.37          18,525.10          16,860.52
0904................................          31,503.17          25,376.21          23,468.68          21,358.96
1001................................          16,837.01          14,890.30          12,863.65          11,620.70
1002................................          21,826.05          19,300.96          16,675.57          15,064.28
1003................................          30,788.44          27,227.31          23,523.54          21,250.81
1101................................          20,714.76          18,678.71          15,291.55          13,868.36
1102................................          29,714.77          26,793.14          21,934.20          19,893.44
1201................................          16,329.17          16,042.34          14,576.82          12,913.81
1202................................          18,978.08          18,644.22          16,940.46          15,009.42
1203................................          24,153.63          23,730.44          21,561.15          19,101.90
1301................................          18,536.07          14,562.71          13,622.27          12,561.14
1302................................          25,492.19          20,028.24          18,736.70          17,274.32
1303................................          31,415.40          24,680.28          23,089.37          21,288.43
1401................................          13,547.04          11,452.99          10,377.76           9,415.37
1402................................          18,510.99          15,650.49          14,180.27          12,865.22
1403................................          22,067.42          18,656.76          16,904.41          15,337.01
1404................................          27,898.15          23,586.24          21,371.50          19,390.31
1501................................          15,868.36          13,448.29          12,401.27          11,702.21
1502................................          20,015.70          16,963.97          15,642.65          14,761.77
1503................................          24,388.74          20,669.30          19,059.58          17,985.92

[[Page 24192]]

 
1504................................          30,330.76          25,705.36          23,703.79          22,368.37
1601................................          15,431.05          14,004.72          13,015.69          12,023.53
1602................................          20,100.34          18,242.97          16,954.57          15,663.03
1603................................          25,217.90          22,887.17          21,271.19          19,650.49
1701................................          17,757.07          14,456.13          13,277.45          11,981.21
1702................................          22,360.53          18,203.78          16,719.46          15,087.79
1703................................          26,710.06          21,744.54          19,973.38          18,021.97
1704................................          34,299.41          27,923.23          25,647.37          23,144.23
1801................................          20,771.18          16,822.90          14,796.26          12,993.75
1802................................          29,073.70          23,547.05          20,711.62          18,188.11
1803................................          45,374.66          36,750.83          32,324.49          28,385.61
1901................................          18,405.98          16,462.40          14,525.10          14,305.66
1902................................          33,454.59          29,921.67          26,399.72          26,001.60
1903................................          54,208.53          48,485.95          42,777.48          42,133.28
2001................................          14,445.16          11,832.30          10,852.68           9,824.46
2002................................          18,992.19          15,558.01          14,268.04          12,916.94
2003................................          23,749.24          19,454.57          17,841.71          16,152.06
2004................................          30,443.61          24,938.90          22,869.93          20,705.35
2101................................          26,252.38          26,252.38          23,437.33          21,429.49
5001................................  .................  .................  .................           2,485.90
5101................................  .................  .................  .................          10,644.21
5102................................  .................  .................  .................          22,282.16
5103................................  .................  .................  .................          12,590.92
5104................................  .................  .................  .................          33,479.66
----------------------------------------------------------------------------------------------------------------

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

    Table 6 illustrates the methodology for adjusting the proposed 
federal prospective payments (as described in sections V.A. through 
V.F. of this proposed rule). The following examples are based on two 
hypothetical Medicare beneficiaries, both classified into CMG 0110 
(without comorbidities). The proposed unadjusted federal prospective 
payment rate for CMG 0110 (without comorbidities) appears in Table 5.
    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 0.8297, 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 0.8756, 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 5. Then, we multiply the labor-related share for FY 2017 (71.0 
percent) described in section V.E. of this proposed rule by the 
proposed unadjusted federal prospective payment rate. To determine the 
non-labor portion of the proposed federal prospective payment rate, we 
subtract the labor portion of the proposed federal payment from the 
proposed unadjusted federal prospective payment.
    To compute the proposed wage-adjusted federal prospective payment, 
we multiply the labor portion of the proposed federal payment by the 
appropriate proposed wage index located in tables A and B. These tables 
are available on 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 proposed 
wage-adjusted federal payment by adding the wage-adjusted labor amount 
to the non-labor portion.
    Adjusting the proposed 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 6 illustrates the 
components of the adjusted payment calculation.

                    TABLE 6--Example of Computing the IRF FY 2017 Federal Prospective Payment
----------------------------------------------------------------------------------------------------------------
                                                                    Rural Facility A         Urban Facility B
                             Steps                                 (Spencer Co., IN)        (Harrison Co., IN)
----------------------------------------------------------------------------------------------------------------
1. Unadjusted Federal Prospective Payment.....................               $33,275.90               $33,275.90
2. Labor Share................................................                  x 0.710                  x 0.710
3. Labor Portion of Federal Payment...........................             = $23,625.89             = $23,625.89
4. CBSA-Based Wage Index (shown in the Addendum, Tables A and                  x 0.8297                 x 0.8756
 B)...........................................................
5. Wage-Adjusted Amount.......................................             = $19,602.40             = $20,686.83
6. Non-Labor Amount...........................................              + $9,650.01              + $9,650.01
7. Wage-Adjusted Federal Payment..............................             = $29,252.41             = $30,336.84

[[Page 24193]]

 
8. Rural Adjustment...........................................                  x 1.149                  x 1.000
9. Wage- and Rural-Adjusted Federal Payment...................             = $33,611.02             = $30,336.84
10. LIP Adjustment............................................                 x 1.0156                 x 1.0454
11. FY 2017 Wage-, Rural- and LIP-Adjusted Federal Prospective             = $34,135.35             = $31,714.13
 Payment Rate.................................................
12. FY 2017 Wage- and Rural-Adjusted Federal Prospective                     $33,611.02               $30,336.84
 Payment......................................................
13. Teaching Status Adjustment................................                      x 0                 x 0.0784
14. Teaching Status Adjustment Amount.........................                  = $0.00              = $2,378.41
15. FY 2017 Wage-, Rural-, and LIP-Adjusted Federal                        + $34,135.35             + $31,714.13
 Prospective Payment Rate.....................................
16. Total FY 2017 Adjusted Federal Prospective Payment........             = $34,135.35             = $34,092.54
----------------------------------------------------------------------------------------------------------------

    Thus, the proposed adjusted payment for Facility A would be 
$34,135.35, and the proposed adjusted payment for Facility B would be 
$34,092.54.

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

A. Proposed Update to the Outlier Threshold Amount for FY 2017

    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 2016 IRF PPS final rules and the FY 2011 and FY 2013 
notices (70 FR 47880, 71 FR 48354, 72 FR 44284, 73 FR 46370, 74 FR 
39762, 75 FR 42836, 76 FR 47836, 76 FR 59256, and 77 FR 44618, 78 FR 
47860, 79 FR 45872, 80 FR 47036, 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 2017, we propose 
to use FY 2015 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 2016. Based on an analysis of the preliminary data 
used for the proposed rule, we estimated that IRF outlier payments as a 
percentage of total estimated payments would be approximately 2.8 
percent in FY 2016. Therefore, we propose to update the outlier 
threshold amount from $8,658 for FY 2016 to $8,301 for FY 2017 to 
maintain estimated outlier payments at approximately 3 percent of total 
estimated aggregate IRF payments for FY 2017.
    We invite public comment on the proposed update to the FY 2017 
outlier threshold amount to maintain estimated outlier payments at 
approximately 3 percent of total estimated IRF payments.

B. Proposed 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 propose to apply a 
ceiling to IRFs' CCRs. Using the methodology described in that final 
rule, we propose to update the national urban and rural CCRs for IRFs, 
as well as the national CCR ceiling for FY 2017, 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 2017, as discussed below.
     Other IRFs for which accurate data to calculate an overall 
CCR are not available.
    Specifically, for FY 2017, we propose to estimate a national 
average CCR of 0.562 for rural IRFs, which we calculated by taking an 
average of the CCRs for all rural IRFs using their most recently 
submitted cost report data. Similarly, we propose to estimate a 
national average CCR of 0.435 for urban IRFs, which we calculated by 
taking an average of the CCRs for all urban IRFs using their most 
recently submitted cost report data. We apply weights to both of these 
averages using the IRFs' estimated costs, meaning that the CCRs of IRFs 
with higher costs factor more heavily into the averages than the CCRs 
of IRFs with lower costs. For this proposed rule, we have used the most 
recent available cost report data (FY 2014). This includes all IRFs 
whose cost reporting periods begin on or after October 1, 2013, and 
before October 1, 2014. If, for any IRF, the FY 2014 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 2013) 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 propose to set the national 
CCR ceiling at 3 standard deviations above the mean CCR. Using this 
method, the proposed national CCR ceiling would be 1.36 for FY 2017. 
This means that, if an

[[Page 24194]]

individual IRF's CCR exceeds this proposed ceiling of 1.36 for FY 2017, 
we would replace the IRF's CCR with the appropriate proposed national 
average CCR (either rural or urban, depending on the geographic 
location of the IRF). We calculated the proposed national CCR ceiling 
by:
    Step 1. Taking the national average CCR (weighted by each IRF's 
total costs, as previously discussed) 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.
    The proposed national average rural and urban CCRs and the proposed 
national CCR ceiling in this section will be updated in the final rule 
if more recent data becomes available to use in these analyses.
    We invite public comment on the proposed update to the IRF CCR 
ceiling and the urban/rural averages for FY 2017.

VII. Proposed Revisions and Updates to the IRF Quality Reporting 
Program (QRP)

A. Background and Statutory Authority

    We seek to promote higher quality and more efficient health care 
for Medicare beneficiaries, and our efforts are furthered by QRPs 
coupled with public reporting of that information. Section 3004(b) of 
the Affordable Care Act amended section 1886(j)(7) of the Act, 
requiring the Secretary to establish the IRF QRP. This program applies 
to freestanding IRFs, as well as IRF units affiliated with either acute 
care facilities or critical access hospitals (CAHs). Beginning with the 
FY 2014 payment determination and subsequent years, the Secretary is 
required to reduce any annual update to the standard federal rate for 
discharges occurring during such fiscal year by 2 percentage points for 
any IRF that does not comply with the requirements established by the 
Secretary. Section 1886(j)(7) of the Act requires that for the FY 2014 
payment determination and subsequent years, each IRF submit data on 
quality measures specified by the Secretary in a form and manner, and 
at a time, specified by the Secretary. For more information on the 
statutory history of the IRF QRP, please refer to the FY 2015 IRF PPS 
final rule (79 FR 45908).
    The Improving Medicare Post-Acute Care Transformation Act of 2014 
(IMPACT Act) imposed new data reporting requirements for certain PAC 
providers, including IRFs. For information on the statutory background 
of the IMPACT Act, please refer to the FY 2016 IRF PPS final rule (80 
FR 47080 through 47083).
    In the FY 2016 IRF PPS final rule, we reviewed general activities 
and finalized the general timeline and sequencing of such activities 
that would occur under the IRF QRP. For further information, please 
refer to the FY 2016 IRF PPS final rule (80 FR 40708 through 47128). In 
addition, we established our approach for identifying cross-cutting 
measures and process for the adoption of measures, including the 
application and purpose of the Measures Application Partnership (MAP) 
and the notice-and-comment rulemaking process (80 FR 47080 through 
47084). For information on these topics, please refer to the FY 2016 
IRF PPS final rule (80 FR 47080).

B. General Considerations Used for Selection of Quality, Resource Use, 
and Other Measures for the IRF QRP

    For a detailed discussion of the considerations we use for the 
selection of IRF QRP quality measures, such as alignment with the CMS 
Quality Strategy,\1\ which incorporates the 3 broad aims of the 
National Quality Strategy,\2\ please refer to the FY 2015 IRF PPS final 
rule (79 FR 45911) and the FY 2016 IRF PPS final rule (80 FR 47083 
through 47084). Overall, we strive to promote high quality and 
efficiency in the delivery of health care to the beneficiaries we 
serve. Performance improvement leading to the highest-quality health 
care requires continuous evaluation to identify and address performance 
gaps and reduce the unintended consequences that may arise in treating 
a large, vulnerable, and aging population. QRPs, coupled with public 
reporting of quality information, are critical to the advancement of 
health care quality improvement efforts. Valid, reliable, relevant 
quality measures are fundamental to the effectiveness of our QRPs. 
Therefore, selection of quality measures is a priority for us in all of 
our QRPs.
---------------------------------------------------------------------------

    \1\ http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/CMS-Quality-Strategy.html.
    \2\ http://www.ahrq.gov/workingforquality/nqs/nqs2011annlrpt.htm.
---------------------------------------------------------------------------

    In this proposed rule, we propose to adopt for the IRF QRP one 
measure that we are specifying under section 1899B(c)(1) of the Act to 
meet the Medication Reconciliation domain, that is, Drug Regimen Review 
Conducted with Follow-Up for Identified Issues-Post Acute Care 
Inpatient Rehabilitation Facility Quality Reporting Program. Further, 
we are proposing to adopt for the IRF QRP, three measures to meet the 
resource use and other measure domains identified in section 
1899B(d)(1) of the Act. These include: (1) Total Estimated Medicare 
Spending per Beneficiary: Medicare Spending Per Beneficiary-Post Acute 
Care Inpatient Rehabilitation Facility Quality Reporting Program; (2) 
Discharge to Community: Discharge to Community-Post Acute Care 
Inpatient Rehabilitation Facility Quality Reporting Program, and (3) 
Measures to reflect all-condition risk-adjusted potentially preventable 
hospital readmission rates: Potentially Preventable 30-Day Post-
Discharge Readmission Measure for Inpatient Rehabilitation Facility 
Quality Reporting Program. Also, we are proposing an additional 
measure: (4) Potentially Preventable Within Stay Readmission Measure 
for Inpatient Rehabilitation Facilities.
    In our selection and specification of measures, we employ a 
transparent process in which we seek input from stakeholders and 
national experts and engage in a process that allows for pre-rulemaking 
input on each measure, as required by section 1890A of the Act. To meet 
this requirement, we provided the following opportunities for 
stakeholder input: Our measure development contractor convened 
technical expert panel (TEPs) that included stakeholder experts and 
patient representatives on July 29, 2015, for the Drug Regimen Review 
Conducted with Follow-Up for Identified Issues measures; on August 25, 
2015, September 25, 2015, and October 5, 2015, for the Discharge to 
Community measures; on August 12 and 13, 2015, and October 14, 2015, 
for the Potentially Preventable 30-Day Post-Discharge Readmission 
Measures and Potentially Preventable Within Stay Readmission Measure 
for IRFs; and on October 29 and 30, 2015, for the Medicare Spending per 
Beneficiary (MSPB) measures. In addition, we released draft quality 
measure specifications for public comment for the Drug Regimen Review 
Conducted with Follow-Up for Identified Issues measures from September 
18, 2015, to October 6, 2015; for the Discharge to Community measures 
from November 9, 2015, to December 8, 2015; for the Potentially 
Preventable 30-Day Post-Discharge Readmission Measure for

[[Page 24195]]

IRFs and Potentially Preventable Within Stay Readmission Measure for 
IRFs from November 2, 2015 to December 1, 2015; and for the MSPB 
measures from January 13, 2016 to February 5, 2016. We implemented a 
public mailbox, [email protected], for the submission of 
public comments. This PAC mailbox is accessible on our post-acute care 
quality initiatives Web site at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014-and-Cross-Setting-Measures.html.
    Additionally, we sought public input from the MAP Post-Acute Care, 
Long-Term Care Workgroup during the annual in-person meeting held 
December 14 and 15, 2015. The MAP is composed of multi-stakeholder 
groups convened by the NQF, our current contractor under section 
1890(a) of the Act, tasked to provide input on the selection of quality 
and efficiency measures described in section 1890(b)(7)(B) of the Act.
    The MAP reviewed each IMPACT Act-related measure, as well as other 
quality measures proposed in this rule for use in the IRF QRP. For more 
information on the MAP's recommendations, please refer to the MAP 2016 
Final Recommendations to HHS and CMS public report at http://www.qualityforum.org/Publications/2016/02/MAP_2016_Considerations_for_Implementing_Measures_in_Federal_Programs_-_PAC-LTC.aspx.
    For measures that do not have NQF endorsement, or which are not 
fully supported by the MAP for use in the IRF QRP, we are proposing for 
the IRF QRP for the purposes of satisfying the measure domains required 
under the IMPACT Act, measures that closely align with the national 
priorities identified in the National Quality Strategy (http://www.ahrq.gov/workingforquality/) and for which the MAP supports the 
measure concept. Further discussion as to the importance and high-
priority status of these proposed measures in the IRF setting is 
included under each quality measure proposal in this proposed rule.

C. Policy for Retention of IRF QRP Measures Adopted for Previous 
Payment Determinations

    In the CY 2013 Hospital Outpatient Prospective Payment System/
Ambulatory Surgical Center (OPPS/ASC) Payment Systems and Quality 
Reporting Programs final rule (77 FR 68500 through 68507), we adopted a 
policy that would allow any quality measure adopted for use in the IRF 
QRP to remain in effect until the measure was actively removed, 
suspended, or replaced, when we initially adopt a measure for the IRF 
QRP for a payment determination. For the purpose of streamlining the 
rulemaking process, when we initially adopt a measure for the IRF QRP 
for a payment determination, this measure will also be adopted for all 
subsequent years or until we propose to remove, suspend, or replace the 
measure. For further information on how measures are considered for 
removal, suspension, or replacement, please refer to the CY 2013 OPPS/
ASC final rule (77 FR 68500).
    We are not proposing any changes to the policy for retaining IRF 
QRP measures adopted for previous payment determinations.

D. Policy for Adopting Changes to IRF QRP Measures

    In the CY 2013 OPPS/ASC final rule (77 FR 68500 through 68507), we 
adopted a subregulatory process to incorporate NQF updates to IRF 
quality measure specifications that do not substantively change the 
nature of the measure. Substantive changes will be proposed and 
finalized through rulemaking. For further information on what 
constitutes a substantive versus a nonsubstantive change and the 
subregulatory process for nonsubstantive changes, please refer to the 
CY 2013 OPPS/ASC final rule (77 FR 68500). We are not proposing any 
changes to the policy for adopting changes to IRF QRP measures.

E. Quality Measures Previously Finalized for and Currently Used in the 
IRF QRP

    A history of the IRF QRP quality measures adopted for the FY 2014 
payment determinations and subsequent years is presented in Table 7. 
The year in which each quality measure was first adopted and 
implemented, and then subsequently re-proposed or revised, if 
applicable, is displayed. The initial and subsequent annual payment 
determination years are also shown in Table 7. For more information on 
a particular measure, please refer to the IRF PPS final rule and 
associated page numbers referenced in the Table 7.

   Table 7--Quality Measures Previously Finalized for and Currently Used in the IRF Quality Reporting Program
----------------------------------------------------------------------------------------------------------------
                                                    Data  collection  Annual payment determination:  initial and
         Measure title              Final rule         start date                subsequent APU years
----------------------------------------------------------------------------------------------------------------
National Healthcare Safety      Adopted an         October 1, 2012..  FY 2014 and subsequent years.
 Network (NHSN) Catheter-        application of
 Associated Urinary Tract        the measure in
 Infection (CAUTI) Outcome       FY 2012 IRF PPS
 Measure (NQF #0138).            Final Rule (76
                                 FR 47874 through
                                 47886).
                                Adopted the NQF-   January 1, 2013..  FY 2015 and subsequent years.
                                 endorsed version
                                 and expanded
                                 measure (with
                                 standardized
                                 infection ratio)
                                 in CY 2013 OPPS/
                                 ASC Final Rule
                                 (77 FR 68504
                                 through 68505).
Percent of Residents or         Adopted            October 1, 2012..  FY 2014 and subsequent years.
 Patients with Pressure Ulcers   application of
 That Are New or Worsened        measure in FY
 (Short Stay) (NQF #0678).       2012 IRF PPS
                                 final rule (76
                                 FR 47876 through
                                 47878).
                                Adopted a non-     January 1, 2013..  FY 2015 and subsequent years.
                                 risk-adjusted
                                 application of
                                 the NQF-endorsed
                                 version in CY
                                 2013 OPPS/ASC
                                 Final Rule (77
                                 FR 68500 through
                                 68507).
                                Adopted the risk   October 1, 2014..  FY 2017 and subsequent years.
                                 adjusted, NQF-
                                 endorsed version
                                 in FY 2014 IRF
                                 PPS Final Rule
                                 (78 FR 47911
                                 through 47912).

[[Page 24196]]

 
                                Adopted in the FY  October 1, 2015..  FY 2018 and subsequent years.
                                 2016 IRF PPS
                                 final rule (80
                                 FR 47089 through
                                 47096) to
                                 fulfill IMPACT
                                 Act requirements.
Percent of Residents or         Adopted in FY      October 1, 2014..  FY 2017 and subsequent years.
 Patients Who Were Assessed      2014 IRF PPS
 and Appropriately Given the     final rule (78
 Seasonal Influenza Vaccine      FR 47906 through
 (Short Stay) (NQF #0680).       47911).
Influenza Vaccination Coverage  Adopted in FY      October 1, 2014..  FY 2016 and subsequent years.
 among Healthcare Personnel      2014 IRF PPS
 (NQF #0431).                    final rule (78
                                 FR 47905 through
                                 47906).
All-Cause Unplanned             Adopted in FY      N/A..............  FY 2017 and subsequent years.
 Readmission Measure for 30      2014 IRF PPS
 Days Post Discharge from        final rule (78
 Inpatient Rehabilitation        FR 47906 through
 Facilities (NQF #2502).         47910).
                                Adopted the NQF-   N/A..............  FY 2018 and subsequent years.
                                 endorsed version
                                 in FY 2016 IRF
                                 PPS final rule
                                 (80 FR 47087
                                 through 47089).
National Healthcare Safety      Adopted in the FY  January 1, 2015..  FY 2017 and subsequent years.
 Network (NHSN) Facility-Wide    2015 IRF PPS
 Inpatient Hospital-Onset        final rule (79
 Methicillin-Resistant           FR 45911 through
 Staphylococcus aureus (MRSA)    45913).
 Bacteremia Outcome Measure
 (NQF #1716).
National Healthcare Safety      Adopted in the FY  January 1, 2015..  FY 2017 and subsequent years.
 Network (NHSN) Facility-Wide    2015 IRF PPS
 Inpatient Hospital-Onset        final rule (79
 Clostridium difficile           FR 45913 through
 Infection (CDI) Outcome         45914).
 Measure (NQF #1717).
Application of Percent of       Adopted an         October 1, 2016..  FY 2018 and subsequent years.
 Residents Experiencing One or   application of
 More Falls with Major Injury    the measure in
 (Long Stay) (NQF #0674).        FY 2016 IRF PPS
                                 Final Rule (80
                                 FR 47096 through
                                 47100).
Application of Percent of Long- Adopted an         October 1, 2016..  FY 2018 and subsequent years.
 Term Care Hospital Patients     application of
 with an Admission and           the measure in
 Discharge Functional            the FY 2016 IRF
 Assessment and a Care Plan      PPS final rule
 That Addresses Function (NQF    (80 FR 47100
 #2631).                         through 47111).
IRF Functional Outcome          Adopted in the FY  October 1, 2016..  FY 2018 and subsequent years.
 Measure: Change in Self-Care    2016 IRF PPS
 for Medical Rehabilitation      final rule (80
 Patients (NQF #2633)*.          FR 47111 through
                                 47117).
IRF Functional outcome          Adopted in the FY  October 1, 2016..  FY 2018 and subsequent years.
 Measure: Change in Mobility     2016 IRF PPS
 Score for Medical               final rule (80
 Rehabilitation (NQF #2634)*.    FR 47117 through
                                 47118).
IRF Functional Outcome          Adopted in the FY  October 1, 2016..  FY 2018 and subsequent years.
 Measure: Discharge Self-Care    2016 IRF PPS
 Score for Medical               final rule (80
 Rehabilitation Patients (NQF    FR 47118 through
 #2635).                         47119).
IRF Functional Outcome          Adopted in the FY  October 1, 2016..  FY 2018 and subsequent years.
 Measure: Discharge Mobility     2016 IRF PPS
 Score for Medical               final rule (80
 Rehabilitation Patients (NQF    FR 47119 through
 #2636).                         47120).
----------------------------------------------------------------------------------------------------------------
* These measures were under review at NQF when they were finalized for use in the IRF QRP. These measures are
  now NQF-endorsed.

F. IRF QRP Quality, Resource Use and Other Measures Proposed for the FY 
2018 Payment Determination and Subsequent Years

    For the FY 2018 payment determinations and subsequent years, in 
addition to the quality measures we are retaining under our policy 
described in section VII.C. of this proposed rule, we are proposing 
four new measures. Three of these measures proposed were developed to 
meet the requirements of IMPACT Act. They are:
    (1) MSPB-PAC IRF QRP,
    (2) Discharge to Community-PAC IRF QRP, and
    (3) Potentially Preventable 30-Day Post-Discharge Readmission 
Measure for IRF QRP.
    The fourth measure to be proposed is: (4) Potentially Preventable 
Within Stay Readmission Measure for IRFs. The measures are described in 
more detail below.
    For the risk-adjustment of the resource use and other measures, we 
understand the important role that sociodemographic status plays in the 
care of patients. However, we continue to have concerns about holding 
providers to different standards for the outcomes of their patients of 
diverse sociodemographic status because we do not want to mask 
potential disparities or minimize incentives to improve the outcomes of 
disadvantaged populations. We routinely monitor the impact of 
sociodemographic status on providers' results on our measures.
    The NQF is currently undertaking a two-year trial period in which 
new measures and measures undergoing maintenance review will be 
assessed to determine if risk-adjusting for sociodemographic factors is 
appropriate. For two years, NQF will conduct a trial of temporarily 
allowing inclusion of sociodemographic factors in the risk-adjustment 
approach for some performance measures. At the conclusion of the trial, 
NQF will issue recommendations on future permanent inclusion of 
sociodemographic factors. During the trial, measure developers are

[[Page 24197]]

expected to submit information such as analyses and interpretations as 
well as performance scores with and without sociodemographic factors in 
the risk adjustment model.
    Furthermore, the Office of the Assistant Secretary for Planning and 
Evaluation (ASPE) is conducting research to examine the impact of 
sociodemographic status on quality measures, resource use, and other 
measures under the Medicare program as directed by the IMPACT Act. We 
will closely examine the findings of the ASPE reports and related 
Secretarial recommendations and consider how they apply to our quality 
programs at such time as they are available.
    We are inviting public comment on how socioeconomic and demographic 
factors should be used in risk adjustment for the resource use 
measures.
1. Proposal To Address the IMPACT Act Domain of Resource Use and Other 
Measures: Total Estimated MSPB-PAC IRF QRP
    We are proposing an MSPB-PAC IRF QRP measure for inclusion in the 
IRF QRP for the FY 2018 payment determination and subsequent years. 
Section 1899B(d)(1)(A) of the Act requires the Secretary to specify 
resource use measures, including total estimated MSPB, on which PAC 
providers consisting of Skilled Nursing Facilities (SNFs), IRFs, Long-
Term Care Hospitals (LTCHs), and Home Health Agencies (HHAs) are 
required to submit necessary data specified by the Secretary.
    Rising Medicare expenditures for post-acute care as well as wide 
variation in spending for these services underlines the importance of 
measuring resource use for providers rendering these services. Between 
2001 and 2013, Medicare PAC spending grew at an annual rate of 6.1 
percent and doubled to $59.4 billion, while payments to inpatient 
hospitals grew at an annual rate of 1.7 percent over this same 
period.\3\ A study commissioned by the Institute of Medicine discovered 
that variation in PAC spending explains 73 percent of variation in 
total Medicare spending across the United States.\4\
---------------------------------------------------------------------------

    \3\ MedPAC, ``A Data Book: Health Care Spending and the Medicare 
Program,'' (2015). 114
    \4\ Institute of Medicine, ``Variation in Health Care Spending: 
Target Decision Making, Not Geography,'' (Washington, DC: National 
Academies 2013). 2.
---------------------------------------------------------------------------

    We reviewed the NQF's consensus-endorsed measures and were unable 
to identify any NQF-endorsed resource use measures for PAC settings. As 
such, we are proposing this MSPB-PAC IRF measure under the Secretary's 
authority to specify non-NQF-endorsed measures under section 
1899B(e)(2)(B). Given the current lack of resource use measures for PAC 
settings, our proposed MSPB-PAC IRF QRP measure has the potential to 
provide valuable information to IRF providers on their relative 
Medicare spending in delivering services to approximately 338,000 
Medicare beneficiaries.\5\
---------------------------------------------------------------------------

    \5\ Figures for 2013. MedPAC, ``Medicare Payment Policy,'' 
Report to the Congress (2015). xvii-xviii.
---------------------------------------------------------------------------

    The proposed MSPB-PAC IRF episode-based measure will provide 
actionable and transparent information to support IRF providers' 
efforts to promote care coordination and deliver high quality care at a 
lower cost to Medicare. The MSPB-PAC IRF QRP measure holds IRF 
providers accountable for the Medicare payments within an ``episode of 
care'' (episode), which includes the period during which a patient is 
directly under the IRF's care, as well as a defined period after the 
end of the IRF treatment, which may be reflective of and influenced by 
the services furnished by the IRF. MSPB-PAC IRF QRP episodes, 
constructed according to the methodology described below, have high 
levels of Medicare spending with substantial variation. In FY 2013 and 
FY 2014, Medicare FFS beneficiaries experienced 613,089 MSPB-PAC IRF 
QPR episodes triggered by admission to an IRF. The mean payment-
standardized, risk-adjusted episode spending for these episodes is 
$30,370. There is substantial variation in the Medicare payments for 
these MSPB-PAC IRF QRP episodes--ranging from approximately $15,059 at 
the 5th percentile to approximately $55,912 at the 95th percentile. 
This variation is partially driven by variation in payments occurring 
following IRF treatment.
    Evaluating Medicare payments during an episode creates a continuum 
of accountability between providers and has the potential to improve 
post-treatment care planning and coordination. While some stakeholders 
throughout the measure development process supported the measures and 
believe that measuring Medicare spending was critical for improving 
efficiency, others believed that resource use measures did not reflect 
quality of care in that they do not take into account patient outcomes 
or experience beyond those observable in claims data. However, IRFs 
involved in the provision of high quality PAC care as well as 
appropriate discharge planning and post-discharge care coordination 
would be expected to perform well on this measure since beneficiaries 
would likely experience fewer costly adverse events (for example, 
avoidable hospitalizations, infections, and emergency room usage). 
Further, it is important that the cost of care be explicitly measured 
so that, in conjunction with other quality measures, we can recognize 
providers that are involved in the provision of high quality care at 
lower cost.
    We have undertaken development of MSPB-PAC measures for each of the 
four PAC settings. We are proposing an LTCH-specific MSPB-PAC measure 
in the FY 2017 IPPS/LTCH proposed rule published elsewhere in this 
issue of the Federal Register and a SNF-specific MSBP-PAC measure in 
the FY 2017 SNF PPS proposed rule published elsewhere in this issue of 
the Federal Register. We intend to propose a HHA-specific MSBP-PAC 
measure through future notice-and-comment rulemaking. The four setting-
specific MSPB-PAC measures are closely aligned in terms of episode 
construction and measure calculation. Each of the MSPB-PAC measures 
assess Medicare Part A and Part B spending during an episode, and the 
numerator and denominator are defined similarly for each of the MSPB-
PAC measures. However, developing setting-specific measures allows us 
to account for differences between settings in payment policy, the 
types of data available, and the underlying health characteristics of 
beneficiaries. For example, we are proposing to use the IRF setting-
specific rehabilitation impairment categories (RICs) in the MSPB-PAC 
IRF QRP risk adjustment model, as detailed below.
    The MSPB-PAC measures mirror the general construction of the 
inpatient prospective payment system (IPPS) hospital MSPB measure that 
was finalized in the FY 2012 IPPS/LTCH PPS Final Rule (76 FR 51618 
through 51627). It was endorsed by the NQF on December 6, 2013, and has 
been used in the Hospital Value-Based Purchasing (VBP) Program (NQF 
#2158) since FY 2015.\6\ The hospital MSPB measure was originally 
established under the authority of section 1886(o)(2)(B)(ii) of the 
Act. The hospital MSPB measure evaluates hospitals' Medicare spending 
relative to the Medicare spending for the national median hospital 
during a hospital MSPB episode. It assesses Medicare Part A and Part B 
payments for services performed by hospitals and other healthcare 
providers during a

[[Page 24198]]

hospital MSPB episode, which is comprised of the periods immediately 
prior to, during, and following a patient's hospital 
stay.7 8 Similarly, the MSPB-PAC measures assess all 
Medicare Part A and Part B payments for FFS claims with a start date 
during the episode window (which, as discussed below, is the time 
period which Medicare FFS Part A and Part B services are counted 
towards the MSPB-PAC IRF QRP episode). However, there are differences 
between the MSPB-PAC measures, as proposed, and the hospital MSPB 
measure to reflect differences in payment policies and the nature of 
care provided in each PAC setting. For example, the MSPB-PAC measures 
exclude a limited set of services (for example, clinically unrelated 
services) provided to a beneficiary during the episode window while the 
hospital MSPB measure does not exclude any services.\9\
---------------------------------------------------------------------------

    \6\ QualityNet, ``Measure Methodology Reports: Medicare Spending 
Per Beneficiary (MSPB) Measure,'' (2015). http://www.qualitynet.org/dcs/ContentServer?pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228772053996.
    \7\ QualityNet, ``Measure Methodology Reports: Medicare Spending 
Per Beneficiary (MSPB) Measure,'' (2015). http://www.qualitynet.org/dcs/ContentServer?pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228772053996.
    \8\ FY 2012 IPPS/LTCH PPS final rule (76 FR 51619).
    \9\ FY 2012 IPPS/LTCH PPS Final Rule (76 FR 51620).
---------------------------------------------------------------------------

    MSPB-PAC episodes may begin within 30 days of discharge from an 
inpatient hospital as part of a patient's trajectory from an acute to a 
PAC setting. An IRF stay beginning within 30 days of discharge from an 
inpatient hospital will be included once in the hospital's MSPB 
measure, and once in the IRF provider's MSPB-PAC measure. Aligning the 
hospital MSPB and MSPB-PAC measures in this way creates continuous 
accountability and aligns incentives to improve care planning and 
coordination across inpatient and PAC settings.
    We have sought and considered the input of stakeholders throughout 
the measure development process for the MSPB-PAC measures. We convened 
a TEP consisting of 12 panelists with combined expertise in all of the 
PAC settings on October 29 and 30, 2015 in Baltimore, Maryland. A 
follow-up email survey was sent to TEP members on November 18, 2015 to 
which 7 responses were received by December 8, 2015. The MSPB-PAC TEP 
Summary Report is available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html. 
The measures were also presented to the NQF-convened MAP Post-Acute 
Care/Long-Term Care (PAC/LTC) Workgroup on December 15, 2015. As the 
MSPB-PAC measures were under development, there were three voting 
options for members: (1) Encourage continued development, (2) do not 
encourage further consideration, and (3) insufficient information.\10\ 
The MAP PAC/LTC workgroup voted to ``encourage continued development'' 
for each of the MSPB-PAC measures.\11\ The MAP PAC/LTC workgroup's vote 
of ``encourage continued development'' was affirmed by the MAP 
Coordinating Committee on January 26, 2016.\12\ The MAP's concerns 
about the MSPB-PAC measures, as outlined in their final report ``MAP 
2016 Considerations for Implementing Measures in Federal Programs: 
Post-Acute Care and Long-Term Care'' and Spreadsheet of Final 
Recommendations, were taken into consideration during the measure 
development process and are discussed as part of our responses to 
public comments, described below.13 14
---------------------------------------------------------------------------

    \10\ National Quality Forum, Measure Applications Partnership, 
``Process and Approach for MAP Pre-Rulemaking Deliberations, 2015-
2016'' (February 2016) http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=81693.
    \11\ National Quality Forum, Measure Applications Partnership 
Post-Acute Care/Long-Term Care Workgroup, ``Meeting Transcript--Day 
2 of 2'' (December 15, 2015) 104-106 http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=81470.
    \12\ National Quality Forum, Measure Applications Partnership, 
``Meeting Transcript--Day 1 of 2'' (January 26, 2016) 231-232 http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=81637.
    \13\ National Quality Forum, Measure Applications Partnership, 
``MAP 2016 Considerations for Implementing Measures in Federal 
Programs: Post-Acute Care and Long-Term Care'' Final Report, 
(February 2016) http://www.qualityforum.org/Publications/2016/02/MAP_2016_Considerations_for_Implementing_Measures_in_Federal_Programs_-_PAC-LTC.aspx.
    \14\ National Quality Forum, Measure Applications Partnership, 
``Spreadsheet of MAP 2016 Final Recommendations'' (February 1, 2016) 
http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=81593.
---------------------------------------------------------------------------

    Since the MAP's review and recommendation of continued development, 
we have continued to refine risk adjustment models and conduct measure 
testing for the IMPACT Act measures in compliance with the MAP's 
recommendations. The proposed IMPACT Act measures are both consistent 
with the information submitted to the MAP and support the scientific 
acceptability of these measures for use in quality reporting programs.
    In addition, a public comment period, accompanied by draft measures 
specifications, was originally open from January 13 to 27, 2016 and 
twice extended to January 29 and February 5. A total of 45 comments on 
the MSPB-PAC measures were received during this 3.5 week period. Also, 
the comments received covered each of the MAP's concerns as outlined in 
their Final Recommendations.\15\ The MSPB-PAC Public Comment Summary 
Report is available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html and 
contains the public comments (summarized and verbatim), along with our 
responses including statistical analyses. If finalized, the MSPB-PAC 
IRF QRP measure, along with the other MSPB-PAC measures, as applicable, 
will be submitted for NQF endorsement.
---------------------------------------------------------------------------

    \15\ National Quality Forum, Measure Applications Partnership, 
``Spreadsheet of MAP 2016 Final Recommendations'' (February 1, 2016) 
http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=81593.
---------------------------------------------------------------------------

    To calculate the MSPB-PAC IRF QRP measure for each IRF provider, we 
first define the construction of the MSPB-PAC IRF QRP episode, 
including the length of the episode window as well as the services 
included in the episode. Next, we apply the methodology for the measure 
calculation. The specifications are discussed further below. More 
detailed specifications for the proposed MSPB-PAC measures, including 
the MSPB-PAC IRF QRP measure in this proposed rule, are available at 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
a. Episode Construction
    An MSPB-PAC IRF QRP episode begins at the episode trigger, which is 
defined as the patient's admission to an IRF. This admitting facility 
is the attributed provider, for whom the MSPB-PAC IRF QRP measure is 
calculated. The episode window is the time period during which Medicare 
FFS Part A and Part B services are counted towards the MSPB-PAC IRF QRP 
episode. Because Medicare FFS claims are already reported to the 
Medicare program for payment purposes, IRF providers will not be 
required to report any additional data to CMS for calculation of this 
measure. Thus, there will be no additional data collection burden from 
the implementation of this measure.
    The episode window is comprised of a treatment period and an 
associated services period. The treatment period begins at the trigger 
(that is, on the day

[[Page 24199]]

of admission to the IRF) and ends on the day of discharge from that 
IRF. Readmissions to the same facility occurring within 7 or fewer days 
do not trigger a new episode, and instead are included in the treatment 
period of the original episode. When two sequential stays at the same 
IRF occur within 7 or fewer days of one another, the treatment period 
ends on the day of discharge for the latest IRF stay. The treatment 
period includes those services that are provided directly or reasonably 
managed by the IRF provider that are directly related to the 
beneficiary's care plan. The associated services period is the time 
during which Medicare Part A and Part B services (with certain 
exclusions) are counted towards the episode. The associated services 
period begins at the episode trigger and ends 30 days after the end of 
the treatment period. The distinction between the treatment period and 
the associated services period is important because clinical exclusions 
of services may differ for each period. Certain services are excluded 
from the MSPB-PAC IRF QRP episodes because they are clinically 
unrelated to IRF care, and/or because IRF providers may have limited 
influence over certain Medicare services delivered by other providers 
during the episode window. These limited service-level exclusions are 
not counted towards a given IRF provider's Medicare spending to ensure 
that beneficiaries with certain conditions and complex care needs 
receive the necessary care. Certain services that have been determined 
by clinicians to be outside of the control of an IRF provider include 
planned hospital admissions, management of certain preexisting chronic 
conditions (for example, dialysis for end-stage renal disease (ESRD), 
and enzyme treatments for genetic conditions), treatment for 
preexisting cancers, organ transplants, and preventive screenings (for 
example, colonoscopy and mammograms). Exclusion of such services from 
the MSPB-PAC IRF QRP episode ensures that facilities do not have 
disincentives to treat patients with certain conditions or complex care 
needs.
    An MSPB-PAC episode may begin during the associated services period 
of an MSPB-PAC IRF QRP episode in the 30 days post-treatment. One 
possible scenario occurs where an IRF provider discharges a beneficiary 
who is then admitted to a HHA within 30 days. The HHA claim would be 
included once as an associated service for the attributed provider of 
the first MSPB-PAC IRF QRP episode and once as a treatment service for 
the attributed provider of the second MSPB-PAC HHA episode. As in the 
case of overlap between hospital and PAC episodes discussed earlier, 
this overlap is necessary to ensure continuous accountability between 
providers throughout a beneficiary's trajectory of care, as both 
providers share incentives to deliver high quality care at a lower cost 
to Medicare. Even within the IRF setting, one MSPB-PAC IRF QRP episode 
may begin in the associated services period of another MSPB-PAC IRF QRP 
episode in the 30 days post-treatment. The second IRF claim would be 
included once as an associated service for the attributed IRF provider 
of the first MSPB-PAC IRF QRP episode and once as a treatment service 
for the attributed IRF provider of the second MSPB-PAC IRF QRP episode. 
Again, this ensures that IRF providers have the same incentives 
throughout both MSPB-PAC IRF QRP episodes to deliver quality care and 
engage in patient-focused care planning and coordination. If the second 
MSPB-PAC IRF QRP episode were excluded from the second IRF provider's 
MSPB-PAC IRF QRP measure, that provider would not share the same 
incentives as the first IRF provider of the first MSPB-PAC IRF QRP 
episode. The MSPB-PAC IRF QRP measure is designed to benchmark the 
resource use of each attributed provider against what their spending is 
expected to be as predicted through risk adjustment. As discussed 
further below, the measure takes the ratio of observed spending to 
expected spending for each episode and then takes the average of those 
ratios across all of the attributed provider's episodes. The measure is 
not a simple sum of all costs across a provider's episodes, thus 
mitigating concerns about double counting.
b. Measure Calculation
    Medicare payments for Part A and Part B claims for services 
included in MSPB-PAC IRF QRP episodes, defined according to the 
methodology previously discussed, are used to calculate the MSPB-PAC 
IRF QRP measure. Measure calculation involves determination of the 
episode exclusions, the approach for standardizing payments for 
geographic payment differences, the methodology for risk adjustment of 
episode spending to account for differences in patient case mix, and 
the specifications for the measure numerator and denominator.
(1) Exclusion Criteria
    In addition to service-level exclusions that remove some payments 
from individual episodes, we exclude certain episodes in their entirety 
from the MSPB-PAC IRF QRP measure to ensure that the MSPB-PAC IRF QRP 
measure accurately reflects resource use and facilitates fair and 
meaningful comparisons between IRF providers. The proposed episode-
level exclusions are as follows:
     Any episode that is triggered by an IRF claim outside the 
50 states, DC, Puerto Rico, and U.S. territories.
     Any episode where the claim(s) constituting the attributed 
IRF provider's treatment have a standard allowed amount of zero or 
where the standard allowed amount cannot be calculated.
     Any episode in which a beneficiary is not enrolled in 
Medicare FFS for the entirety of a 90-day lookback period (that is, a 
90-day period prior to the episode trigger) plus episode window 
(including where a beneficiary dies), or is enrolled in Part C for any 
part of the lookback period plus episode window.
     Any episode in which a beneficiary has a primary payer 
other than Medicare for any part of the 90-day lookback period plus 
episode window.
     Any episode where the claim(s) constituting the attributed 
IRF provider's treatment include at least one related condition code 
indicating that it is not a prospective payment system bill.
(2) Standardization and Risk Adjustment
    Section 1899B(d)(2)(C) of the Act requires that the MSPB-PAC 
measures are adjusted for the factors described under section 
1886(o)(2)(B)(ii) of the Act, which include adjustment for factors such 
as age, sex, race, severity of illness, and other factors that the 
Secretary determines appropriate. Medicare payments included in the 
MSPB-PAC IRF QRP measure are payment-standardized and risk-adjusted. 
Payment standardization removes sources of payment variation not 
directly related to clinical decisions and facilitates comparisons of 
resource use across geographic areas. We propose to use the same 
payment standardization methodology as that used in the NQF-endorsed 
hospital MSPB measure. This methodology removes geographic payment 
differences, such as wage index and geographic practice cost index 
(GPCI), incentive payment adjustments, and other add-on payments that 
support broader Medicare program goals including indirect graduate 
medical education (IME) and hospitals serving a

[[Page 24200]]

disproportionate share of uninsured patients.\16\
---------------------------------------------------------------------------

    \16\ QualityNet, ``CMS Price (Payment) Standardization--Detailed 
Methods'' (Revised May 2015) https://qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier4&cid=1228772057350.
---------------------------------------------------------------------------

    Risk adjustment uses patient claims history to account for case-mix 
variation and other factors that affect resource use but are beyond the 
influence of the attributed IRF provider. To assist with risk 
adjustment for MSPB-PAC IRF QRP episodes, we create mutually exclusive 
and exhaustive clinical case mix categories using the most recent 
institutional claim in the 60 days prior to the start of the MSPB-PAC 
IRF QRP episode. The beneficiaries in these clinical case mix 
categories have a greater degree of clinical similarity than the 
overall IRF patient population, and allow us to more accurately 
estimate Medicare spending. Our proposed MSPB-PAC IRF QRP model, 
adapted for the IRF setting from the NQF-endorsed hospital MSPB measure 
uses a regression framework with a 90-day hierarchical condition 
category (HCC) lookback period and covariates including the clinical 
case mix categories, HCC indicators, age brackets, indicators for 
originally disabled, ESRD enrollment, and long-term care status, and 
selected interactions of these covariates where sample size and 
predictive ability make them appropriate. We sought and considered 
public comment regarding the treatment of hospice services occurring 
within the MSPB-PAC IRF QRP episode window. Given the comments 
received, we propose to include the Medicare spending for hospice 
services but risk adjust for them, such that MSPB-PAC IRF QRP episodes 
with hospice are compared to a benchmark reflecting other MSPB-PAC IRF 
QRP episodes with hospice. We believe that this provides a balance 
between the measure's intent of evaluating Medicare spending and 
ensuring that providers do not have incentives against the appropriate 
use of hospice services in a patient-centered continuum of care.
    We are proposing to use RICs in response to commenters' concerns 
about the risk adjustment approach for the MSPB-PAC IRF QRP measure. 
Commenters suggested the use of case mix groups (CMGs); however, we 
believe that the use of RICs may be more appropriate given that the 
other covariates incorporated in the model partially account for 
factors in CMGs (for example, age and certain HCC indicators). RICs do 
not account for functional status as CMGs do, as the functional status 
information in CMGs is based on the IRF-PAI. Given the move toward 
standardized data that was mandated by the IMPACT Act, we have chosen 
to defer risk adjustment for functional status until standardized data 
become available. We are seeking comment on whether the use of CMGs 
would still be appropriate to include in the MSPB-PAC IRF QRP risk 
adjustment model.
    We understand the important role that sociodemographic factors, 
beyond age, play in the care of patients. However, we continue to have 
concerns about holding providers to different standards for the 
outcomes of their patients of diverse sociodemographic status because 
we do not want to mask potential disparities or minimize incentives to 
improve the outcomes of disadvantaged populations. We routinely monitor 
the impact of sociodemographic status on providers' results on our 
measures.
    The NQF is currently undertaking a two-year trial period in which 
new measures and measures undergoing maintenance review will be 
assessed to determine if risk-adjusting for sociodemographic factors is 
appropriate. For two years, NQF will conduct a trial of temporarily 
allowing inclusion of sociodemographic factors in the risk-adjustment 
approach for some performance measures. At the conclusion of the trial, 
NQF will issue recommendations on future permanent inclusion of 
sociodemographic factors. During the trial, measure developers are 
expected to submit information such as analyses and interpretations as 
well as performance scores with and without sociodemographic factors in 
the risk adjustment model.
    Furthermore, ASPE is conducting research to examine the impact of 
sociodemographic status on quality measures, resource use, and other 
measures under the Medicare program as required under the IMPACT Act. 
We will closely examine the findings of the ASPE reports and related 
Secretarial recommendations and consider how they apply to our quality 
programs at such time as they are available.
    While we conducted analyses on the impact of age by sex on the 
performance of the MSPB-PAC IRF QRP risk-adjustment model, we are not 
proposing to adjust the MSPB-PAC IRF QRP measure for socioeconomic and 
demographic factors at this time. As this MSPB-PAC IRF QRP measure will 
be submitted for NQF endorsement, we prefer to await the results of 
this trial and study before deciding whether to risk adjust for 
socioeconomic and demographic factors. We will monitor the results of 
the trial, studies, and recommendations. We are inviting public comment 
on how socioeconomic and demographic factors should be used in risk 
adjustment for the MSPB-PAC IRF QRP measure.
(3) Measure Numerator and Denominator
    The MPSB-PAC IRF QRP measure is a payment-standardized, risk-
adjusted ratio that compares a given IRF provider's Medicare spending 
against the Medicare spending of other IRF providers within a 
performance period. Similar to the hospital MSPB measure, the ratio 
allows for ease of comparison over time as it obviates the need to 
adjust for inflation or policy changes.
    The MSPB-PAC IRF QRP measure is calculated as the ratio of the 
MSPB-PAC Amount for each IRF provider divided by the episode-weighted 
median MSPB-PAC Amount across all IRF providers. To calculate the MSPB-
PAC Amount for each IRF provider, one calculates the average of the 
ratio of the standardized episode spending over the expected episode 
spending (as predicted in risk adjustment), and then multiplies this 
quantity by the average episode spending level across all IRF providers 
nationally. The denominator for an IRF provider's MSPB-PAC IRF QRP 
measure is the episode-weighted national median of the MSPB-PAC Amounts 
across all IRF providers. An MSPB-PAC IRF QRP measure of less than 1 
indicates that a given IRF provider's Medicare spending is less than 
that of the national median IRF provider during a performance period. 
Mathematically, this is represented in equation (A) below:

[[Page 24201]]

[GRAPHIC] [TIFF OMITTED] TP25AP16.000

Where:

 Yij = attributed standardized spending for episode i and 
provider j
 Yij = expected standardized spending for episode i and 
provider j, as predicted from risk adjustment
 nj = number of episodes for provider j
 n = total number of episodes nationally
 i [isin] {Ij{time}  = all episodes i in the set of episodes 
attributed to provider j.
c. Data Sources
    The MSPB-PAC IRF QRP resource use measure is an administrative 
claims-based measure. It uses Medicare Part A and Part B claims from 
FFS beneficiaries and Medicare eligibility files.
d. Cohort
    The measure cohort includes Medicare FFS beneficiaries with an IRF 
treatment period ending during the data collection period.
e. Reporting
    If this proposed measure is finalized, we intend to provide initial 
confidential feedback to providers, prior to public reporting of this 
measure, based on Medicare FFS claims data from discharges in CY 2015 
and 2016. We intend to publicly report this measure using claims data 
from discharges in CY 2016 and 2017.
    We propose a minimum of 20 episodes for reporting and inclusion in 
the IRF QRP. For the reliability calculation, as described in the 
measure specifications identified and for which a link has been 
provided above, we used two years of data (FY 2013 and FY 2014) to 
increase the statistical reliability of this measure. The reliability 
results support the 20 episode case minimum, and 99.74 percent of IRF 
providers had moderate or high reliability (above 0.4).
    We invite public comment on our proposal to adopt the MSPB-PAC IRF 
QRP measure for the IRF QRP.
2. Proposal To Address the IMPACT Act Domain of Resource Use and Other 
Measures: Discharge to Community-Post Acute Care (PAC) Inpatient 
Rehabilitation Facility Quality Reporting Program
    Sections 1899B(d)(1)(B) and 1899B(a)(2)(E)(ii) of the Act require 
the Secretary to specify a measure to address the domain of discharge 
to community by SNFs, LTCHs, and IRFs by October 1, 2016, and HHAs by 
January 1, 2017. We are proposing to adopt the measure, Discharge to 
Community-PAC IRF QRP, for the IRF QRP for the FY 2018 payment 
determination and subsequent years as a Medicare FFS claims-based 
measure to meet this requirement.
    This proposed measure assesses successful discharge to the 
community from an IRF setting, with successful discharge to the 
community including no unplanned rehospitalizations and no death in the 
31 days following discharge from the IRF. Specifically, this proposed 
measure reports an IRF's risk-standardized rate of Medicare FFS 
patients who are discharged to the community following an IRF stay, and 
do not have an unplanned readmission to an acute care hospital or LTCH 
in the 31 days following discharge to community, and who remain alive 
during the 31 days following discharge to community. The term 
``community'', for this measure, is defined as home/self-care, with or 
without home health services, based on Patient Discharge Status Codes 
01, 06, 81, and 86 on the Medicare FFS claim.17 18 This 
measure is conceptualized uniformly across the PAC settings, in terms 
of the definition of the discharge to community outcome, the approach 
to risk adjustment, and the measure calculation.
---------------------------------------------------------------------------

    \17\ Further description of patient discharge status codes can 
be found, for example, at the following Web page: https://med.noridianmedicare.com/web/jea/topics/claim-submission/patient-status-codes.
    \18\ This definition is not intended to suggest that board and 
care homes, assisted living facilities, or other settings included 
in the definition of ``community'' for the purpose of this measure 
are the most integrated setting for any particular individual or 
group of individuals under the Americans with Disabilities Act (ADA) 
and Section 504.
---------------------------------------------------------------------------

    Discharge to a community setting is an important health care 
outcome for many patients for whom the overall goals of post-acute care 
include optimizing functional improvement, returning to a previous 
level of independence, and avoiding institutionalization. Returning to 
the community is also an important outcome for many patients who are 
not expected to make functional improvement during their IRF stay, and 
for patients who may be expected to decline functionally due to their 
medical condition. The discharge to community outcome offers a multi-
dimensional view of preparation for community life, including the 
cognitive, physical, and psychosocial elements involved in a discharge 
to the community.19 20
---------------------------------------------------------------------------

    \19\ El-Solh AA, Saltzman SK, Ramadan FH, Naughton BJ. Validity 
of an artificial neural network in predicting discharge destination 
from a postacute geriatric rehabilitation unit. Archives of physical 
medicine and rehabilitation. 2000;81(10):1388-1393.
    \20\ Tanwir S, Montgomery K, Chari V, Nesathurai S. Stroke 
rehabilitation: Availability of a family member as caregiver and 
discharge destination. European journal of physical and 
rehabilitation medicine. 2014;50(3):355-362.
---------------------------------------------------------------------------

    In addition to being an important outcome from a patient and family 
perspective, patients discharged to community settings, on average, 
incur lower costs over the recovery episode, compared with those 
discharged to institutional settings.21 22 Given the high 
costs of care in institutional settings, encouraging IRFs to prepare 
patients for discharge to community, when clinically appropriate, may 
have cost-saving implications for the Medicare program.\23\ Also, 
providers have discovered that successful discharge to community was a 
major driver of their ability to achieve savings, where capitated 
payments for post-acute care were in place.\24\ For patients who 
require long-term care due to persistent disability, discharge to 
community could result in lower long-term care

[[Page 24202]]

costs for Medicaid and for patients' out-of-pocket expenditures.\25\
---------------------------------------------------------------------------

    \21\ Dobrez D, Heinemann AW, Deutsch A, Manheim L, Mallinson T. 
Impact of Medicare's prospective payment system for inpatient 
rehabilitation facilities on stroke patient outcomes. American 
journal of physical medicine & rehabilitation/Association of 
Academic Physiatrists. 2010;89(3):198-204.
    \22\ Gage B, Morley M, Spain P, Ingber M. Examining Post Acute 
Care Relationships in an Integrated Hospital System. Final Report. 
RTI International;2009.
    \23\ Ibid.
    \24\ Doran JP, Zabinski SJ. Bundled payment initiatives for 
Medicare and non-Medicare total joint arthroplasty patients at a 
community hospital: Bundles in the real world. The journal of 
arthroplasty. 2015;30(3):353-355.
    \25\ Newcomer RJ, Ko M, Kang T, Harrington C, Hulett D, Bindman 
AB. Health Care Expenditures After Initiating Long-term Services and 
Supports in the Community Versus in a Nursing Facility. Medical 
Care. 2016;54(3):221-228.
---------------------------------------------------------------------------

    Analyses conducted for ASPE on PAC episodes, using a 5 percent 
sample of 2006 Medicare claims, revealed that relatively high average, 
unadjusted Medicare payments are associated with discharge to 
institutional settings from IRFs, SNFs, LTCHs or HHAs, as compared with 
payments associated with discharge to community settings.\26\ Average, 
unadjusted Medicare payments associated with discharge to community 
settings ranged from $0 to $4,017 for IRF discharges, $0 to $3,544 for 
SNF discharges, $0 to $4,706 for LTCH discharges, and $0 to $992 for 
HHA discharges. In contrast, payments associated with discharge to non-
community settings were considerably higher, ranging from $11,847 to 
$25,364 for IRF discharges, $9,305 to $29,118 for SNF discharges, 
$12,465 to $18,205 for LTCH discharges, and $7,981 to $35,192 for HHA 
discharges.\27\
---------------------------------------------------------------------------

    \26\ Gage B, Morley M, Spain P, Ingber M. Examining Post Acute 
Care Relationships in an Integrated Hospital System. Final Report. 
RTI International;2009.
    \27\ Ibid.
---------------------------------------------------------------------------

    Measuring and comparing facility-level discharge to community rates 
is expected to help differentiate among facilities with varying 
performance in this important domain, and to help avoid disparities in 
care across patient groups. Variation in discharge to community rates 
has been reported within and across post-acute settings; across a 
variety of facility-level characteristics, such as geographic location 
(for example, regional location, urban or rural location), ownership 
(for example, for-profit or nonprofit), and freestanding or hospital-
based units; and across patient-level characteristics, such as race and 
gender.28 29 30 31 32 33 Discharge to community rates in the 
IRF setting have been reported to range from about 60 to 80 
percent.34 35 36 37 38 39 Longer-term studies show that 
rates of discharge to community from IRFs have decreased over time as 
IRF length of stay has decreased.40 41 In the IRF Medicare 
FFS population, using CY 2013 national claims data, we discovered that 
approximately 69 percent of patients were discharged to the community. 
Greater variation in discharge to community rates is seen in the SNF 
setting, with rates ranging from 31 to 65 
percent.42 43 44 45 A multi-center study of 23 LTCHs 
demonstrated that 28.8 percent of 1,061 patients who were ventilator-
dependent on admission were discharged to home.\46\ A single-center 
study revealed that 31 percent of LTCH hemodialysis patients were 
discharged to home.\47\ One study noted that 64 percent of 
beneficiaries who were discharged from the home health episode did not 
use any other acute or post-acute services paid by Medicare in the 30 
days after discharge.\48\ However, significant numbers of patients were 
admitted to hospitals (29 percent) and lesser numbers to SNFs (7.6 
percent), IRFs (1.5 percent), home health (7.2 percent) or hospice (3.3 
percent).\49\
---------------------------------------------------------------------------

    \28\ Reistetter TA, Karmarkar AM, Graham JE, et al. Regional 
variation in stroke rehabilitation outcomes. Archives of physical 
medicine and rehabilitation. 2014;95(1):29-38.
    \29\ El-Solh AA, Saltzman SK, Ramadan FH, Naughton BJ. Validity 
of an artificial neural network in predicting discharge destination 
from a postacute geriatric rehabilitation unit. Archives of physical 
medicine and rehabilitation. 2000;81(10):1388-1393.
    \30\ March 2015 Report to the Congress: Medicare Payment Policy. 
Medicare Payment Advisory Commission;2015.
    \31\ Bhandari VK, Kushel M, Price L, Schillinger D. Racial 
disparities in outcomes of inpatient stroke rehabilitation. Archives 
of physical medicine and rehabilitation. 2005;86(11):2081-2086.
    \32\ Chang PF, Ostir GV, Kuo YF, Granger CV, Ottenbacher KJ. 
Ethnic differences in discharge destination among older patients 
with traumatic brain injury. Archives of physical medicine and 
rehabilitation. 2008;89(2):231-236.
    \33\ Berges IM, Kuo YF, Ostir GV, Granger CV, Graham JE, 
Ottenbacher KJ. Gender and ethnic differences in rehabilitation 
outcomes after hip-replacement surgery. American journal of physical 
medicine & rehabilitation/Association of Academic Physiatrists. 
2008;87(7):567-572.
    \34\ Galloway RV, Granger CV, Karmarkar AM, et al. The Uniform 
Data System for Medical Rehabilitation: Report of patients with 
debility discharged from inpatient rehabilitation programs in 2000-
2010. American journal of physical medicine & rehabilitation/
Association of Academic Physiatrists. 2013;92(1):14-27.
    \35\ Morley MA, Coots LA, Forgues AL, Gage BJ. Inpatient 
rehabilitation utilization for Medicare beneficiaries with multiple 
sclerosis. Archives of physical medicine and rehabilitation. 
2012;93(8):1377-1383.
    \36\ Reistetter TA, Graham JE, Deutsch A, Granger CV, Markello 
S, Ottenbacher KJ. Utility of functional status for classifying 
community versus institutional discharges after inpatient 
rehabilitation for stroke. Archives of physical medicine and 
rehabilitation. 2010;91(3):345-350.
    \37\ Gagnon D, Nadeau S, Tam V. Clinical and administrative 
outcomes during publicly-funded inpatient stroke rehabilitation 
based on a case-mix group classification model. Journal of 
rehabilitation medicine. 2005;37(1):45-52.
    \38\ DaVanzo J, El-Gamil A, Li J, Shimer M, Manolov N, Dobson A. 
Assessment of patient outcomes of rehabilitative care provided in 
inpatient rehabilitation facilities (IRFs) and after discharge. 
Vienna, VA: Dobson DaVanzo & Associates, LLC;2014.
    \39\ Kushner DS, Peters KM, Johnson-Greene D. Evaluating Siebens 
Domain Management Model for Inpatient Rehabilitation to Increase 
Functional Independence and Discharge Rate to Home in Geriatric 
Patients. Archives of physical medicine and rehabilitation. 
2015;96(7):1310-1318.
    \40\ Galloway RV, Granger CV, Karmarkar AM, et al. The Uniform 
Data System for Medical Rehabilitation: Report of patients with 
debility discharged from inpatient rehabilitation programs in 2000-
2010. American journal of physical medicine & rehabilitation/
Association of Academic Physiatrists. 2013;92(1):14-27.
    \41\ Mallinson T, Deutsch A, Bateman J, et al. Comparison of 
discharge functional status after rehabilitation in skilled nursing, 
home health, and medical rehabilitation settings for patients after 
hip fracture repair. Archives of physical medicine and 
rehabilitation. 2014;95(2):209-217.
    \42\ El-Solh AA, Saltzman SK, Ramadan FH, Naughton BJ. Validity 
of an artificial neural network in predicting discharge destination 
from a postacute geriatric rehabilitation unit. Archives of physical 
medicine and rehabilitation. 2000;81(10):1388-1393.
    \43\ Hall RK, Toles M, Massing M, et al. Utilization of acute 
care among patients with ESRD discharged home from skilled nursing 
facilities. Clinical journal of the American Society of Nephrology: 
CJASN. 2015;10(3):428-434.
    \44\ Stearns SC, Dalton K, Holmes GM, Seagrave SM. Using 
propensity stratification to compare patient outcomes in hospital-
based versus freestanding skilled-nursing facilities. Medical care 
research and review: MCRR. 2006;63(5):599-622.
    \45\ Wodchis WP, Teare GF, Naglie G, et al. Skilled nursing 
facility rehabilitation and discharge to home after stroke. Archives 
of physical medicine and rehabilitation. 2005;86(3):442-448.
    \46\ Scheinhorn DJ, Hassenpflug MS, Votto JJ, et al. Post-ICU 
mechanical ventilation at 23 long-term care hospitals: a multicenter 
outcomes study. Chest. 2007;131(1):85-93.
    \47\ Thakar CV, Quate-Operacz M, Leonard AC, Eckman MH. Outcomes 
of hemodialysis patients in a long-term care hospital setting: A 
single-center study. American journal of kidney diseases: The 
official journal of the National Kidney Foundation. 2010;55(2):300-
306.
    \48\ Wolff JL, Meadow A, Weiss CO, Boyd CM, Leff B. Medicare 
home health patients' transitions through acute and post-acute care 
settings. Medical care. 2008;46(11):1188-1193.
    \49\ Ibid.
---------------------------------------------------------------------------

    Discharge to community is an actionable health care outcome, as 
targeted interventions have been shown to successfully increase 
discharge to community rates in a variety of post-acute 
settings.50 51 52 53 Many of these interventions involve 
discharge planning or specific rehabilitation strategies, such as 
addressing discharge barriers and improving medical and functional 
status.54 55 56 57 The

[[Page 24203]]

effectiveness of these interventions suggests that improvement in 
discharge to community rates among post-acute care patients is possible 
through modifying provider-led processes and interventions.
---------------------------------------------------------------------------

    \50\ Kushner DS, Peters KM, Johnson-Greene D. Evaluating Siebens 
Domain Management Model for Inpatient Rehabilitation to Increase 
Functional Independence and Discharge Rate to Home in Geriatric 
Patients. Archives of physical medicine and rehabilitation. 
2015;96(7):1310-1318.
    \51\ Wodchis WP, Teare GF, Naglie G, et al. Skilled nursing 
facility rehabilitation and discharge to home after stroke. Archives 
of physical medicine and rehabilitation. 2005;86(3):442-448.
    \52\ Berkowitz RE, Jones RN, Rieder R, et al. Improving 
disposition outcomes for patients in a geriatric skilled nursing 
facility. Journal of the American Geriatrics Society. 
2011;59(6):1130-1136.
    \53\ Kushner DS, Peters KM, Johnson-Greene D. Evaluating use of 
the Siebens Domain Management Model during inpatient rehabilitation 
to increase functional independence and discharge rate to home in 
stroke patients. PM & R: The journal of injury, function, and 
rehabilitation. 2015;7(4):354-364.
    \54\ Kushner DS, Peters KM, Johnson-Greene D. Evaluating Siebens 
Domain Management Model for Inpatient Rehabilitation to Increase 
Functional Independence and Discharge Rate to Home in Geriatric 
Patients. Archives of physical medicine and rehabilitation. 
2015;96(7):1310-1318.
    \55\ Wodchis WP, Teare GF, Naglie G, et al. Skilled nursing 
facility rehabilitation and discharge to home after stroke. Archives 
of physical medicine and rehabilitation. 2005;86(3):442-448.
    \56\ Berkowitz RE, Jones RN, Rieder R, et al. Improving 
disposition outcomes for patients in a geriatric skilled nursing 
facility. Journal of the American Geriatrics Society. 
2011;59(6):1130-1136.
    \57\ Kushner DS, Peters KM, Johnson-Greene D. Evaluating use of 
the Siebens Domain Management Model during inpatient rehabilitation 
to increase functional independence and discharge rate to home in 
stroke patients. PM & R: The journal of injury, function, and 
rehabilitation. 2015;7(4):354-364.
---------------------------------------------------------------------------

    A TEP convened by our measure development contractor was strongly 
supportive of the importance of measuring discharge to community 
outcomes, and implementing the proposed measure, Discharge to 
Community-PAC IRF QRP in the IRF QRP. The panel provided input on the 
technical specifications of this proposed measure, including the 
feasibility of implementing the measure, as well as the overall measure 
reliability and validity. A summary of the TEP proceedings is available 
on the PAC Quality Initiatives Downloads and Videos Web site at: 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    We also solicited stakeholder feedback on the development of this 
measure through a public comment period held from November 9, 2015, 
through December 8, 2015. Several stakeholders and organizations, 
including the MedPAC, among others, supported this measure for 
implementation. The public comment summary report for the proposed 
measure is available on the CMS Web site at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    The NQF-convened MAP met on December 14 and 15, 2015, and provided 
input on the use of this proposed Discharge to Community-PAC IRF QRP 
measure in the IRF QRP. The MAP encouraged continued development of the 
proposed measure to meet the mandate of the IMPACT Act. The MAP 
supported the alignment of this proposed measure across PAC settings, 
using standardized claims data. More information about the MAP's 
recommendations for this measure is available at: http://www.qualityforum.org/Publications/2016/02/MAP_2016_Considerations_for_Implementing_Measures_in_Federal_Programs_-_PAC-LTC.aspx.
    Since the MAP's review and recommendation of continued development, 
we have continued to refine risk-adjustment models and conduct measure 
testing for this measure, as recommended by the MAP. This proposed 
measure is consistent with the information submitted to the MAP and is 
scientifically acceptable for current specification in the IRF QRP. As 
discussed with the MAP, we fully anticipate that additional analyses 
will continue as we submit this measure to the ongoing measure 
maintenance process.
    We reviewed the NQF's consensus-endorsed measures and were unable 
to identify any NQF-endorsed resource use or other measures for post-
acute care focused on discharge to community. In addition, we are 
unaware of any other post-acute care measures for discharge to 
community that have been endorsed or adopted by other consensus 
organizations. Therefore, we are proposing the measure, Discharge to 
Community-PAC IRF QRP, under the Secretary's authority to specify non-
NQF-endorsed measures under section 1899B(e)(2)(B) of the Act.
    We are proposing to use data from the Medicare FFS claims and 
Medicare eligibility files to calculate this proposed measure. We are 
proposing to use data from the ``Patient Discharge Status Code'' on 
Medicare FFS claims to determine whether a patient was discharged to a 
community setting for calculation of this proposed measure. In all PAC 
settings, we tested the accuracy of determining discharge to a 
community setting using the ``Patient Discharge Status Code'' on the 
PAC claim by examining whether discharge to community coding based on 
PAC claim data agreed with discharge to community coding based on PAC 
assessment data. We found excellent agreement between the two data 
sources in all PAC settings, ranging from 94.6 percent to 98.8 percent. 
Specifically, in the IRF setting, using 2013 data, we found 98.8 
percent agreement in coding of community and non-community discharges 
when comparing discharge status codes on claims and the Discharge to 
Living Setting (item 44A) codes on the IRF-PAI. We further examined the 
accuracy of the ``Patient Discharge Status Code'' on the PAC claim by 
assessing how frequently discharges to an acute care hospital were 
confirmed by follow-up acute care claims. We discovered that 88 percent 
to 91 percent of IRF, LTCH, and SNF claims with acute care discharge 
status codes were followed by an acute care claim on the day of, or day 
after, PAC discharge. We believe these data support the use of the 
claims ``Patient Discharge Status Code'' for determining discharge to a 
community setting for this measure. In addition, this measure can 
feasibly be implemented in the IRF QRP because all data used for 
measure calculation are derived from Medicare FFS claims and 
eligibility files, which are already available to CMS.
    Based on the evidence discussed above, we are proposing to adopt 
the measure, Discharge to Community-PAC IRF QRP, for the IRF QRP for FY 
2018 payment determination and subsequent years. This proposed measure 
is calculated using 2 years of data. We are proposing a minimum of 25 
eligible stays in a given IRF for public reporting of the proposed 
measure for that IRF. Since Medicare FFS claims data are already 
reported to the Medicare program for payment purposes, and Medicare 
eligibility files are also available, IRFs will not be required to 
report any additional data to CMS for calculation of this measure. The 
proposed measure denominator is the risk-adjusted expected number of 
discharges to community. The proposed measure numerator is the risk-
adjusted estimate of the number of patients who are discharged to the 
community, do not have an unplanned readmission to an acute care 
hospital or LTCH in the 31-day post-discharge observation window, and 
who remain alive during the post-discharge observation window. The 
measure is risk-adjusted for variables such as age and sex, principal 
diagnosis, comorbidities, ESRD status, and dialysis, among other 
variables. For technical information about this proposed measure, 
including information about the measure calculation, risk adjustment, 
and denominator exclusions, we refer readers to the document titled, 
Proposed Measure Specifications for Measures Proposed in the FY 2017 
IRF QRP proposed rule, available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/IRF-Quality-Reporting-Program-Measures-Information-.html.
    If this proposed measure is finalized, we intend to provide initial 
confidential feedback to IRFs, prior to public reporting of this 
measure, based on

[[Page 24204]]

Medicare FFS claims data from discharges in CY 2015 and 2016. We intend 
to publicly report this measure using claims data from discharges in CY 
2016 and 2017. We plan to submit this proposed measure to the NQF for 
consideration for endorsement.
    We are inviting public comment on our proposal to adopt the 
measure, Discharge to Community-PAC IRF QRP, for the IRF QRP.
3. Proposal To Address the IMPACT Act Domain of Resource Use and Other 
Measures: Potentially Preventable 30-Day Post-Discharge Readmission 
Measure for Inpatient Rehabilitation Facility Quality Reporting Program
    Sections 1899B(a)(2)(E)(ii) and 1899B(d)(1)(C) of the Act require 
the Secretary to specify measures to address the domain of all-
condition risk-adjusted potentially preventable hospital readmission 
rates by SNFs, LTCHs, and IRFs by October 1, 2016, and HHAs by January 
1, 2017. We are proposing the measure Potentially Preventable 30-Day 
Post-Discharge Readmission Measure for IRF QRP as a Medicare FFS 
claims-based measure to meet this requirement for the FY 2018 payment 
determination and subsequent years.
    The proposed measure assesses the facility-level risk-standardized 
rate of unplanned, potentially preventable hospital readmissions for 
Medicare FFS beneficiaries in the 30 days post IRF discharge. The IRF 
admission must have occurred within up to 30 days of discharge from a 
prior proximal hospital stay which is defined as an inpatient admission 
to an acute care hospital (including IPPS, CAH, or a psychiatric 
hospital). Hospital readmissions include readmissions to a short-stay 
acute-care hospital or an LTCH, with a diagnosis considered to be 
unplanned and potentially preventable. This proposed measure is claims-
based, requiring no additional data collection or submission burden for 
IRFs. Because the measure denominator is based on IRF admissions, each 
Medicare beneficiary may be included in the measure multiple times 
within the measurement period. Readmissions counted in this measure are 
identified by examining Medicare FFS claims data for readmissions to 
either acute care hospitals (IPPS or CAH) or LTCHs that occur during a 
30-day window beginning two days after IRF discharge. This measure is 
conceptualized uniformly across the PAC settings, in terms of the 
measure definition, the approach to risk adjustment, and the measure 
calculation. Our approach for defining potentially preventable hospital 
readmissions is described in more detail below.
    Hospital readmissions among the Medicare population, including 
beneficiaries that utilize PAC, are common, costly, and often 
preventable.58 59 MedPAC and a study by Jencks et al. 
estimated that 17 to 20 percent of Medicare beneficiaries discharged 
from the hospital were readmitted within 30 days. MedPAC found that 
more than 75 percent of 30-day and 15-day readmissions and 84 percent 
of 7-day readmissions were considered ``potentially preventable.''\60\ 
In addition, MedPAC calculated that annual Medicare spending on 
potentially preventable readmissions would be $12 billion for 30-day, 
$8 billion for 15-day, and $5 billion for 7-day readmissions.\61\ For 
hospital readmissions from one post-acute care setting, SNFs, MedPAC 
deemed 76 percent of these readmissions as ``potentially avoidable''--
associated with $12 billion in Medicare expenditures.\62\ Mor et al. 
analyzed 2006 Medicare claims and SNF assessment data (Minimum Data 
Set), and reported a 23.5 percent readmission rate from SNFs, 
associated with $4.3 billion in expenditures.\63\ Fewer studies have 
investigated potentially preventable readmission rates from the 
remaining post-acute care settings.
---------------------------------------------------------------------------

    \58\ Friedman, B., and Basu, J.: The rate and cost of hospital 
readmissions for preventable conditions. Med. Care Res. Rev. 
61(2):225-240, 2004. doi:10.1177/1077558704263799.
    \59\ Jencks, S.F., Williams, M.V., and Coleman, E.A.: 
Rehospitalizations among patients in the Medicare Fee-for-Service 
Program. N. Engl. J. Med. 360(14):1418-1428, 2009. doi:10.1016/
j.jvs.2009.05.045.
    \60\ MedPAC: Payment policy for inpatient readmissions, in 
Report to the Congress: Promoting Greater Efficiency in Medicare. 
Washington, DC, pp. 103-120, 2007. Available from http://www.medpac.gov/documents/reports/Jun07_EntireReport.pdf.
    \61\ Ibid.
    \62\ Ibid.
    \63\ Mor, V., Intrator, O., Feng, Z., et al.: The revolving door 
of rehospitalization from skilled nursing facilities. Health Aff. 
29(1):57-64, 2010. doi:10.1377/hlthaff.2009.0629.
---------------------------------------------------------------------------

    We have addressed the high rates of hospital readmissions in the 
acute care setting as well as in PAC. For example, we developed the 
following measure: All-Cause Unplanned Readmission Measure for 30 Days 
Post-Discharge from IRFs (NQF #2502), as well as similar measures for 
other PAC providers (NQF #2512 for LTCHs and NQF #2510 for SNFs).\64\ 
These measures are endorsed by the NQF, and the NQF-endorsed IRF 
measure (NQF #2502) was adopted into the IRF QRP in the FY 2016 IRF PPS 
final rule (80 FR 47087 through 47089). Note that these NQF-endorsed 
measures assess all-cause unplanned readmissions.
---------------------------------------------------------------------------

    \64\ National Quality Forum: All-Cause Admissions and 
Readmissions Measures. pp. 1-319, April 2015. Available from http://www.qualityforum.org/Publications/2015/04/All-Cause_Admissions_and_Readmissions_Measures_-_Final_Report.aspx.
---------------------------------------------------------------------------

    Several general methods and algorithms have been developed to 
assess potentially avoidable or preventable hospitalizations and 
readmissions for the Medicare population. These include the Agency for 
Healthcare Research and Quality's (AHRQ's) Prevention Quality 
Indicators, approaches developed by MedPAC, and proprietary approaches, 
such as the 3M\TM\ algorithm for Potentially Preventable 
Readmissions.65 66 67 Recent work led by Kramer et al. for 
MedPAC identified 13 conditions for which readmissions were deemed as 
potentially preventable among SNF and IRF populations.68 69 
Although much of the existing literature addresses hospital 
readmissions more broadly and potentially avoidable hospitalizations 
for specific settings like long-term care, these findings are relevant 
to the development of potentially preventable readmission measures for 
PAC.70 71 72
---------------------------------------------------------------------------

    \65\ Goldfield, N.I., McCullough, E.C., Hughes, J.S., et al.: 
Identifying potentially preventable readmissions. Health Care Finan. 
Rev. 30(1):75-91, 2008. Available from http://www.ncbi.nlm.nih.gov/pmc/articles/PMC4195042/.
    \66\ National Quality Forum: Prevention Quality Indicators 
Overview. 2008.
    \67\ MedPAC: Online Appendix C: Medicare Ambulatory Care 
Indicators for the Elderly. pp. 1-12, prepared for Chapter 4, 2011. 
Available from http://www.medpac.gov/documents/reports/Mar11_Ch04_APPENDIX.pdf?sfvrsn=0.
    \68\ Kramer, A., Lin, M., Fish, R., et al.: Development of 
Inpatient Rehabilitation Facility Quality Measures: Potentially 
Avoidable Readmissions, Community Discharge, and Functional 
Improvement. pp. 1-42, 2015. Available from http://www.medpac.gov/documents/contractor-reports/development-of-inpatient-rehabilitation-facility-quality-measures-potentially-avoidable-readmissions-community-discharge-and-functional-improvement.pdf?sfvrsn=0.
    \69\ Kramer, A., Lin, M., Fish, R., et al.: Development of 
Potentially Avoidable Readmission and Functional Outcome SNF Quality 
Measures. pp. 1-75, 2014. Available from http://www.medpac.gov/documents/contractor-reports/mar14_snfqualitymeasures_contractor.pdf?sfvrsn=0.
    \70\ Allaudeen, N., Vidyarthi, A., Maselli, J., et al.: 
Redefining readmission risk factors for general medicine patients. 
J. Hosp. Med. 6(2):54-60, 2011. doi:10.1002/jhm.805.
    \71\ \4\ Gao, J., Moran, E., Li, Y.-F., et al.: Predicting 
potentially avoidable hospitalizations. Med. Care 52(2):164-171, 
2014. doi:10.1097/MLR.0000000000000041.
    \72\ Walsh, E.G., Wiener, J.M., Haber, S., et al.: Potentially 
avoidable hospitalizations of dually eligible Medicare and Medicaid 
beneficiaries from nursing facility and home[hyphen]and 
community[hyphen]based services waiver programs. J. Am. Geriatr. 
Soc. 60(5):821-829, 2012. doi:10.1111/j.1532-5415.2012.03920.x.
---------------------------------------------------------------------------

    Potentially Preventable Readmission Measure Definition: We 
conducted a

[[Page 24205]]

comprehensive environmental scan, analyzed claims data, and obtained 
input from a TEP to develop a definition and list of conditions for 
which hospital readmissions are potentially preventable. The Ambulatory 
Care Sensitive Conditions and Prevention Quality Indicators, developed 
by AHRQ, served as the starting point in this work. For patients in the 
30-day post-PAC discharge period, a potentially preventable readmission 
refers to a readmission for which the probability of occurrence could 
be minimized with adequately planned, explained, and implemented post-
discharge instructions, including the establishment of appropriate 
follow-up ambulatory care. Our list of PPR conditions is categorized by 
3 clinical rationale groupings:
     Inadequate management of chronic conditions;
     Inadequate management of infections; and
     Inadequate management of other unplanned events.
    Additional details regarding the definition for potentially 
preventable readmissions are available in the document titled, Proposed 
Measure Specifications for Measures Proposed in the FY 2017 IRF QRP 
proposed rule, available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/IRF-Quality-Reporting-Program-Measures-Information-.html.
    This proposed measure focuses on readmissions that are potentially 
preventable and also unplanned. Similar to the All-Cause Unplanned 
Readmission Measure for 30 Days Post-Discharge from IRFs (NQF #2502), 
this proposed measure uses the current version of the CMS Planned 
Readmission Algorithm as the main component for identifying planned 
readmissions. A complete description of the CMS Planned Readmission 
Algorithm, which includes lists of planned diagnoses and procedures, 
can be found on the CMS Web site at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html. In addition to the CMS 
Planned Readmission Algorithm, this proposed measure incorporates 
procedures that are considered planned in post-acute care settings, as 
identified in consultation with TEPs. Full details on the planned 
readmissions criteria used, including the CMS Planned Readmission 
Algorithm and additional procedures considered planned for post-acute 
care, can be found in the document titled, Proposed Measure 
Specifications for Measures Proposed in the FY 2017 IRF QRP proposed 
rule, available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/IRF-Quality-Reporting-Program-Measures-Information-.html.
    The proposed measure, Potentially Preventable 30-Day Post-Discharge 
Readmission Measure for IRF QRP, assesses potentially preventable 
readmission rates while accounting for patient demographics, principal 
diagnosis in the prior hospital stay, comorbidities, and other patient 
factors. While estimating the predictive power of patient 
characteristics, the model also estimates a facility-specific effect, 
common to patients treated in each facility. This proposed measure is 
calculated for each IRF based on the ratio of the predicted number of 
risk-adjusted, unplanned, potentially preventable hospital readmissions 
that occur within 30 days after an IRF discharge, including the 
estimated facility effect, to the estimated predicted number of risk-
adjusted, unplanned inpatient hospital readmissions for the same 
patients treated at the average IRF. A ratio above 1.0 indicates a 
higher than expected readmission rate (worse) while a ratio below 1.0 
indicates a lower than expected readmission rate (better). This ratio 
is referred to as the standardized risk ratio (SRR). The SRR is then 
multiplied by the overall national raw rate of potentially preventable 
readmissions for all IRF stays. The resulting rate is the risk-
standardized readmission rate (RSRR) of potentially preventable 
readmissions.
    An eligible IRF stay is followed until: (1) The 30-day post-
discharge period ends; or (2) the patient is readmitted to an acute 
care hospital (IPPS or CAH) or LTCH. If the readmission is unplanned 
and potentially preventable, it is counted as a readmission in the 
measure calculation. If the readmission is planned, the readmission is 
not counted in the measure rate.
    This measure is risk adjusted. The risk adjustment modeling 
estimates the effects of patient characteristics, comorbidities, and 
select health care variables on the probability of readmission. More 
specifically, the risk-adjustment model for IRFs accounts for 
demographic characteristics (age, sex, original reason for Medicare 
entitlement), principal diagnosis during the prior proximal hospital 
stay, body system specific surgical indicators, IRF case-mix groups 
which capture motor function, comorbidities, and number of acute care 
hospitalizations in the preceding 365 days.
    The proposed measure is calculated using 2 consecutive calendar 
years of FFS claims data, to ensure the statistical reliability of this 
measure for facilities. In addition, we are proposing a minimum of 25 
eligible stays for public reporting of the proposed measure.
    A TEP convened by our measure contractor provided recommendations 
on the technical specifications of this proposed measure, including the 
development of an approach to define potentially preventable hospital 
readmission for PAC. Details from the TEP meetings, including TEP 
members' ratings of conditions proposed as being potentially 
preventable, are available in the TEP summary report available on the 
CMS Web site at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html. We also 
solicited stakeholder feedback on the development of this measure 
through a public comment period held from November 2 through December 
1, 2015. Comments on the measure varied, with some commenters 
supportive of the proposed measure, while others either were not in 
favor of the measure, or suggested potential modifications to the 
measure specifications, such as including standardized function data. A 
summary of the public comments is also available on the CMS Web site 
at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    The MAP encouraged continued development of the proposed measure. 
Specifically, the MAP stressed the need to promote shared 
accountability and ensure effective care transitions. More information 
about the MAP's recommendations for this measure is available at: 
http://www.qualityforum.org/Publications/2016/02/MAP_2016_Considerations_for_Implementing_Measures_in_Federal_Programs_-_PAC-LTC.aspx. At the time, the risk-adjustment model was still under 
development. Following completion of that development work, we were 
able to test for measure validity and reliability as identified in the 
measure specifications document provided above. Testing results are 
within range for similar outcome measures finalized in public reporting 
and value-based purchasing programs, including the All-Cause Unplanned 
Readmission Measure for 30 Days Post

[[Page 24206]]

Discharge from IRFs (NQF #2502) adopted into the IRF QRP.
    We reviewed the NQF's consensus endorsed measures and were unable 
to identify any NQF-endorsed measures focused on potentially 
preventable hospital readmissions. We are unaware of any other measures 
for this IMPACT Act domain that have been endorsed or adopted by other 
consensus organizations. Therefore, we are proposing the Potentially 
Preventable 30-Day Post-Discharge Readmission Measure for IRF QRP, 
under the Secretary's authority to specify non-NQF-endorsed measures 
under section 1899B(e)(2)(B) of the Act, for the IRF QRP for the FY 
2018 payment determination and subsequent years, given the evidence 
previously discussed above.
    We plan to submit the proposed measure to the NQF for consideration 
of endorsement. If this proposed measure is finalized, we intend to 
provide initial confidential feedback to providers, prior to public 
reporting of this proposed measure, based on 2 calendar years of data 
from discharges in CY 2015 and 2016. We intend to publicly report this 
proposed measure using data from CY 2016 and 2017.
    We are inviting public comment on our proposal to adopt the 
measure, Potentially Preventable 30-Day Post-Discharge Readmission 
Measure for IRF QRP.
4. Potentially Preventable Within Stay Readmission Measure for 
Inpatient Rehabilitation Facilities
    In addition to the measure proposed in section VII.F.3. of the 
proposed rule, Potentially Preventable 30-Day Post-Discharge 
Readmission Measure for IRF QRP, we are proposing the Potentially 
Preventable Within Stay Readmission Measure for IRFs for the FY 2018 
payment determination and subsequent years. This measure is similar to 
the Potentially Preventable 30-Day Post-Discharge Readmission Measure 
for IRF QRP; however, the readmission window for this proposed measure 
focuses on potentially preventable hospital readmissions that take 
place during the IRF stay as opposed to during the 30-day post-
discharge period. The two proposed PPR measures are intended to 
function in tandem, covering readmissions during the IRF stay and for 
30 days following discharge from the IRF. Our proposal for two PPR 
measures for use in the IRF QRP will enable us to assess different 
aspects of care and care coordination. The proposed within stay measure 
focuses on the care transition into inpatient rehabilitation as well as 
the care provided during the IRF stay, whereas the 30-day post-IRF 
discharge measure focuses on transitions from the IRF into less-
intensive levels of care or the community.
    Similar to the Potentially Preventable 30-Day Post-Discharge 
Readmission Measure for IRF QRP proposed measure for IRFs, this measure 
assesses the facility-level risk-standardized rate of unplanned, 
potentially preventable hospital readmissions during the IRF stay. 
Hospital readmissions include readmissions to a short-stay acute-care 
hospital or an LTCH, with a diagnosis considered to be unplanned and 
potentially preventable. This Medicare FFS measure is claims-based, 
requiring no additional data collection or submission burden for IRFs.
    As described in section VII.F.3. of this proposed rule, we 
developed the approach for defining PPR measure based on a 
comprehensive environmental scan, analysis of claims data, and TEP 
input. Also, we obtained public comment.
    The definition for PPRs differs by readmission window. For the 
within-IRF stay window, PPRs should be avoidable with sufficient 
medical monitoring and appropriate patient treatment. The list of PPR 
conditions for the Potentially Preventable Within Stay Readmission 
Measure for IRFs are categorized by 4 clinical rationale groupings:
     Inadequate management of chronic conditions;
     Inadequate management of infections;
     Inadequate management of other unplanned events; and
     Inadequate injury prevention.
    Additional details regarding the definition for PPRs are available 
in our document titled, Proposed Measure Specifications for Measures 
Proposed in the FY 2017 IRF QRP proposed rule which can be found at 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/IRF-Quality-Reporting-Program-Measures-Information-.html.
    Refer to section VII.F of this proposed rule for the relevant 
background and details that are also relevant for this measure. This 
proposed measure defines planned readmissions in the same manner as 
described in section VII.F.3 of this proposed rule, for the Potentially 
Preventable 30-Day Post-Discharge Readmission Measure for IRF QRP. In 
addition, similar to the Potentially Preventable 30-Day Post-Discharge 
Readmission Measure for IRF QRP proposed measure, this proposed measure 
uses the same risk-adjustment and statistical approach as described in 
section VII.F.3 of this proposed rule. Note the full methodology is 
detailed in the document titled, Proposed Measure Specifications for 
Measures Proposed in the FY 2017 IRF QRP proposed rule, at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/IRF-Quality-Reporting-Program-Measures-Information-.html. This measure is also based on 2 consecutive 
calendar years of Medicare FFS claims data.
    A TEP convened by our measure contractor provided recommendations 
on the technical specifications of this proposed measure, including the 
development of an approach to define potentially preventable hospital 
readmission for PAC. Details from the TEP meetings, including TEP 
members' ratings of conditions proposed as being potentially 
preventable, are available in the TEP Summary Report available on the 
CMS Web site at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html. We also 
solicited stakeholder feedback on the development of this measure 
through a public comment period held from November 2 through December 
1, 2015. Comments on this and other PAC measures of PPR measures 
varied, with some commenters supportive of the proposed measure, while 
others either were not in favor of the measure, or suggested potential 
modifications to the measure specifications, such as including 
standardized function data. A summary of our public comment period is 
also available on the CMS Web site at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    The MAP encouraged continued development of the proposed measure. 
Specifically, the MAP stressed the need to promote shared 
accountability and ensure effective care transitions. More information 
about the MAP's recommendations for this measure is available at: 
http://www.qualityforum.org/Publications/2016/02/MAP_2016_Considerations_for_Implementing_Measures_in_Federal_Programs_-_PAC-LTC.aspx. At the time, the risk-adjustment model was still under 
development. Following completion of that development work, we were 
able to test for measure validity and reliability as described in the 
measure specifications document

[[Page 24207]]

provided above. Testing results are within range for similar outcome 
measures finalized in public reporting and value-based purchasing 
programs, including the All-Cause Unplanned Readmission Measure for 30 
Days Post-Discharge from IRFs (NQF #2502) that we previously adopted 
into the IRF QRP.
    We plan to submit the proposed measure to the NQF for consideration 
of endorsement. If this proposed measure is finalized, we intend to 
provide initial confidential feedback to providers, prior to public 
reporting of this proposed measure, based on 2 calendar years of claims 
data from discharges in 2015 and 2016. We propose a minimum of 25 
eligible stays in a given IRF for public reporting of the proposed 
measure for that IRF. We intend to publicly report this proposed 
measure using claims data from calendar years 2016 and 2017.
    We are inviting public comment on our proposal to adopt this 
measure, Potentially Preventable Within Stay Readmission Measure for 
IRFs.

G. IRF QRP Quality Measure Proposed for the FY 2020 Payment 
Determination and Subsequent Years

    In addition to the measures we are retaining as described in 
section VII.E. of this proposed rule under our policy described in 
section VII.C. of this proposed rule and the new quality measures 
proposed in section VII.F of this proposed rule for the FY 2018 payment 
determinations and subsequent years, we are proposing one new quality 
measure to meet the requirements of the IMPACT Act for the FY 2020 
payment determination and subsequent years. The proposed measure, Drug 
Regimen Review Conducted with Follow-Up for Identified Issues--PAC IRF 
QRP, addresses the IMPACT Act quality domain of Medication 
Reconciliation.
1. Quality Measure Addressing the IMPACT Act Domain of Medication 
Reconciliation: Drug Regimen Review Conducted With Follow-Up for 
Identified Issues-Post Acute Care IRF QRP
    Sections 1899B(a)(2)(E)(i)(III) and 1899B(c)(1)(C) of the Act, as 
added by the IMPACT Act, require the Secretary to specify a quality 
measure to address the quality domain of medication reconciliation by 
October 1, 2018 for IRFs, LTCHs and SNFs by January 1, 2017 for HHAs. 
We are proposing to adopt the quality measure, Drug Regimen Review 
Conducted with Follow-Up for Identified Issues-PAC IRF QRP, for the IRF 
QRP as a patient-assessment based, cross-setting quality measure to 
meet the IMPACT Act requirements with data collection beginning October 
1, 2018 for the FY 2020 payment determinations and subsequent years.
    This proposed measure assesses whether PAC providers were 
responsive to potential or actual clinically significant medication 
issue(s) when such issues were identified. Specifically, the proposed 
quality measure reports the percentage of patient stays in which a drug 
regimen review was conducted at the time of admission and timely 
follow-up with a physician occurred each time potential clinically 
significant medication issues were identified throughout that stay.
    For this proposed quality measure, drug regimen review is defined 
as the review of all medications or drugs the patient is taking to 
identify any potential clinically significant medication issues. The 
proposed quality measure utilizes both the processes of medication 
reconciliation and a drug regimen review, in the event an actual or 
potential medication issue occurred. The proposed measure informs 
whether the PAC facility identified and addressed each clinically 
significant medication issue and if the facility responded or addressed 
the medication issue in a timely manner. Of note, drug regimen review 
in PAC settings is generally considered to include medication 
reconciliation and review of the patient's drug regimen to identify 
potential clinically significant medication issues.\73\ This measure is 
applied uniformly across the PAC settings.
---------------------------------------------------------------------------

    \73\ Institute of Medicine. Preventing Medication Errors. 
Washington DC: National Academies Press; 2006.
---------------------------------------------------------------------------

    Medication reconciliation is a process of reviewing an individual's 
complete and current medication list. Medication reconciliation is a 
recognized process for reducing the occurrence of medication 
discrepancies that may lead to Adverse Drug Events (ADEs).\74\ 
Medication discrepancies occur when there is conflicting information 
documented in the medical records. The World Health Organization 
regards medication reconciliation as a standard operating protocol 
necessary to reduce the potential for ADEs that cause harm to patients. 
Medication reconciliation is an important patient safety process that 
addresses medication accuracy during transitions in patient care and in 
identifying preventable ADEs.\75\ The Joint Commission added medication 
reconciliation to its list of National Patient Safety Goals (2005), 
suggesting that medication reconciliation is an integral component of 
medication safety.\76\ The Society of Hospital Medicine published a 
statement in agreement of the Joint Commission's emphasis and value of 
medication reconciliation as a patient safety goal.\77\ There is 
universal agreement that medication reconciliation directly addresses 
patient safety issues that can result from medication miscommunication 
and unavailable or incorrect information.78 79 80
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    \74\ Ibid.
    \75\ Leotsakos A., et al. Standardization in patient safety: The 
WHO High 5s project. Int J Qual Health Care. 2014:26(2):109-116.
    \76\ The Joint Commission. 2016 Long Term Care: National Patient 
Safety Goals Medicare/Medicaid Certification-based Option. 
(NPSG.03.06.01).
    \77\ Greenwald, J.L., Halasyamani, L., Greene, J., LaCivita, C., 
et al. (2010). Making inpatient medication reconciliation patient 
centered, clinically relevant and implementable: A consensus 
statement on key principles and necessary first steps. Journal of 
Hospital Medicine, 5(8), 477-485.
    \78\ Leotsakos A., et al. Standardization in patient safety: The 
WHO High 5s project. Int J Qual Health Care. 2014:26(2):109-116.
    \79\ The Joint Commission. 2016 Long Term Care: National Patient 
Safety Goals Medicare/Medicaid Certification-based Option. 
(NPSG.03.06.01).
    \80\ IHI. Medication Reconciliation to Prevent Adverse Drug 
Events [Internet]. Cambridge, MA: Institute for Healthcare 
Improvement; [cited 2016 Jan 11]. Available from: http://www.ihi.org/topics/adesmedicationreconciliation/Pages/default.aspx.
---------------------------------------------------------------------------

    The performance of timely medication reconciliation is valuable to 
the process of drug regimen review. Preventing and responding to ADEs 
is of critical importance as ADEs account for significant increases in 
health services utilization and costs 81 82 83 including 
subsequent emergency room visits and re-hospitalizations.\84\ Annual 
health care costs in the United States are estimated at $3.5 billion, 
resulting in 7,000 deaths annually.85 86
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    \81\ Institute of Medicine. Preventing Medication Errors. 
Washington DC: National Academies Press; 2006.
    \82\ Jha A.K., Kuperman G.J., Rittenberg E., et al. Identifying 
hospital admissions due to adverse drug events using a computer-
based monitor. Pharmacoepidemiol Drug Saf. 2001;10(2):113-119.
    \83\ Hohl C.M., Nosyk B., Kuramoto L., et al. Outcomes of 
emergency department patients presenting with adverse drug events. 
Ann Emerg Med. 2011;58:270-279.
    \84\ Kohn L.T., Corrigan J.M., Donaldson M.S. To Err Is Human: 
Building a Safer Health System Washington, DC: National Academies 
Press; 1999.
    \85\ Greenwald, J.L., Halasyamani, L., Greene, J., LaCivita, C., 
et al. (2010). Making inpatient medication reconciliation patient 
centered, clinically relevant and implementable: A consensus 
statement on key principles and necessary first steps. Journal of 
Hospital Medicine, 5(8), 477-485.
    \86\ Phillips, David P.; Christenfeld, Nicholas; and Glynn, 
Laura M. Increase in US Medication-Error Deaths between 1983 and 
1993. The Lancet. 351:643-644, 1998.
---------------------------------------------------------------------------

    Medication errors include the duplication of medications, delivery 
of an incorrect drug, inappropriate drug omissions, or errors in the 
dosage, route, frequency, and duration of medications.

[[Page 24208]]

Medication errors are one of the most common types of medical error and 
can occur at any point in the process of ordering and delivering a 
medication. Medication errors have the potential to result in an 
ADE.87 88 89 90 91 92 Inappropriately prescribed medications 
are also considered a major healthcare concern in the United States for 
the elderly population, with costs of roughly $7.2 billion 
annually.\93\
---------------------------------------------------------------------------

    \87\ Institute of Medicine. To err is human: Building a safer 
health system. Washington, DC: National Academies Press; 2000.
    \88\ Lesar, T.S., Briceland, L., Stein, D.S. Factors related to 
errors in medication prescribing. JAMA. 1997:277(4): 312-317.
    \89\ Bond, C.A., Raehl, C.L., & Franke, T. Clinical pharmacy 
services, hospital pharmacy staffing, and medication errors in 
United States hospitals. Pharmacotherapy. 2002:22(2): 134-147.
    \90\ Bates, D.W., Cullen D.J., Laird, N., Petersen, L.A., Small, 
S.D., et al. Incidence of adverse drug events and potential adverse 
drug events. Implications for prevention. JAMA. 1995:274(1): 29-34.
    \91\ Barker, K.N., Flynn, E.A., Pepper, G.A., Bates, D.W., & 
Mikeal, R.L. Medication errors observed in 36 health care 
facilities. JAMA. 2002: 162(16):1897-1903.
    \92\ Bates, D.W., Boyle, D.L., Vander, Vliet M.B., Schneider, 
J., & Leape, L. Relationship between medication errors and adverse 
drug events. J Gen Intern Med. 1995:10(4): 199-205.
    \93\ Fu, Alex Z., et al. ``Potentially inappropriate medication 
use and healthcare expenditures in the US community-dwelling 
elderly.'' Medical care 45.5 (2007): 472-476.
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    There is strong evidence that medication discrepancies occur during 
transfers from acute care facilities to post-acute care facilities. 
Discrepancies occur when there is conflicting information documented in 
the medial records. Almost one-third of medication discrepancies have 
the potential to cause patient harm.\94\ An estimated 50 percent of 
patients experienced a clinically important medication error after 
hospital discharge in an analysis of two tertiary care academic 
hospitals.\95\
---------------------------------------------------------------------------

    \94\ Wong, Jacqueline D., et al. ``Medication reconciliation at 
hospital discharge: Evaluating discrepancies.'' Annals of 
Pharmacotherapy 42.10 (2008): 1373-1379.
    \95\ Kripalani, S., Roumie, C.L., Dalal, A.K., et al. Effect of 
a pharmacist intervention on clinically important medication errors 
after hospital discharge: A randomized controlled trial. Ann Intern 
Med. 2012:157(1):1-10.
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    Medication reconciliation has been identified as an area for 
improvement during transfer from the acute care facility to the 
receiving post-acute care facility. PAC facilities report gaps in 
medication information between the acute care hospital and the 
receiving post-acute-care setting when performing medication 
reconciliation.96 97 Hospital discharge has been identified 
as a particularly high risk time point, with evidence that medication 
reconciliation identifies high levels of 
discrepancy.98 99 100 101 102 103 Also, there is evidence 
that medication reconciliation discrepancies occur throughout the 
patient stay.104 105 For older patients, who may have 
multiple comorbid conditions and thus multiple medications, transitions 
between acute and post-acute care settings can be further 
complicated,\106\ and medication reconciliation and patient knowledge 
(medication literacy) can be inadequate post-discharge.\107\ The 
proposed quality measure, Drug Regimen Review Conducted with Follow-Up 
for Identified Issues--PAC IRF QRP, provides an important component of 
care coordination for PAC settings and would affect a large proportion 
of the Medicare population who transfer from hospitals into PAC 
services each year. For example, in 2013, 1.7 million Medicare FFS 
beneficiaries had SNF stays, 338,000 beneficiaries had IRF stays, and 
122,000 beneficiaries had LTCH stays.\108\
---------------------------------------------------------------------------

    \96\ Gandara, Esteban, et al. ``Communication and information 
deficits in patients discharged to rehabilitation facilities: An 
evaluation of five acute care hospitals.'' Journal of Hospital 
Medicine 4.8 (2009): E28-E33.
    \97\ Gandara, Esteban, et al. ``Deficits in discharge 
documentation in patients transferred to rehabilitation facilities 
on anticoagulation: Results of a system wide evaluation.'' Joint 
Commission Journal on Quality and Patient Safety 34.8 (2008): 460-
463.
    \98\ Coleman, E.A., Smith, J.D., Raha, D., Min, S.J. Post 
hospital medication discrepancies: Prevalence and contributing 
factors. Arch Intern Med. 2005 165(16):1842-1847.
    \99\ Wong, J.D., Bajcar, J.M., Wong, G.G., et al. Medication 
reconciliation at hospital discharge: Evaluating discrepancies. Ann 
Pharmacother. 2008 42(10):1373-1379.
    \100\ Hawes, E.M., Maxwell, W.D., White, S.F., Mangun, J., Lin, 
F.C. Impact of an outpatient pharmacist intervention on medication 
discrepancies and health care resource utilization in post 
hospitalization care transitions. Journal of Primary Care & 
Community Health. 2014; 5(1):14-18.
    \101\ Foust, J.B., Naylor, M.D., Bixby, M.B., Ratcliffe, S.J. 
Medication problems occurring at hospital discharge among older 
adults with heart failure. Research in Gerontological Nursing. 2012, 
5(1): 25-33.
    \102\ Pherson, E.C., Shermock, K.M., Efird, L.E., et al. 
Development and implementation of a post discharge home-based 
medication management service. Am J Health Syst Pharm. 2014; 71(18): 
1576-1583.
    \103\ Pronovosta, P., Weasta, B., Scwarza, M., et al. Medication 
reconciliation: A practical tool to reduce the risk of medication 
errors. J Crit Care. 2003; 18(4): 201-205.
    \104\ Bates, D.W., Cullen, D.J., Laird, N., Petersen, L.A., 
Small SD, et al. Incidence of adverse drug events and potential 
adverse drug events. Implications for prevention. JAMA. 1995:274(1): 
29-34.
    \105\ Himmel, W., M. Tabache, and M.M. Kochen. ``What happens to 
long-term medication when general practice patients are referred to 
hospital?.'' European journal of clinical pharmacology 50.4 (1996): 
253-257.
    \106\ Chhabra, P.T., et al. (2012). ``Medication reconciliation 
during the transition to and from long-term care settings: A 
systematic review.'' Res Social Adm Pharm 8(1): 60-75.
    \107\ Kripalani, S., Roumie, C.L., Dalal, A.K., et al. Effect of 
a pharmacist intervention on clinically important medication errors 
after hospital discharge: A randomized controlled trial. Ann Intern 
Med. 2012:157(1):1-10.
    \108\ March 2015 Report to the Congress: Medicare Payment 
Policy. Medicare Payment Advisory Commission; 2015.
---------------------------------------------------------------------------

    A TEP convened by our measure development contractor provided input 
on the technical specifications of this proposed quality measure, Drug 
Regimen Review Conducted with Follow-Up for Identified Issues--PAC IRF 
QRP, including components of reliability, validity, and the feasibility 
of implementing the measure across PAC settings. The TEP supported the 
measure's implementation across PAC settings and was supportive of our 
plans to standardize this measure for cross-setting development. A 
summary of the TEP proceedings is available on the PAC Quality 
Initiatives Downloads and Video Web site at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    We solicited stakeholder feedback on the development of this 
measure by means of a public comment period held from September 18 
through October 6, 2015. Through public comments submitted by several 
stakeholders and organizations, we received support for implementation 
of this proposed measure. The public comment summary report for the 
proposed measure is available on the CMS Web site at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    The NQF-convened MAP met on December 14 and 15, 2015, and provided 
input on the use of this proposed measure, Drug Regimen Review 
Conducted with Follow-Up for Identified Issues--PAC IRF QRP. The MAP 
encouraged continued development of the proposed quality measure to 
meet the mandate added by the IMPACT Act. The MAP agreed with the 
measure gaps identified by CMS, including medication reconciliation, 
and stressed that medication reconciliation be present as an ongoing 
process. More information about the MAPs recommendations for this 
measure is available at: http://www.qualityforum.org/Publications/2016/02/MAP_2016_Considerations_for_Implementing_Measures_in_Federal_Programs_-_PAC-LTC.aspx.

[[Page 24209]]

    Since the MAP's review and recommendation of continued development, 
we have continued to refine this proposed measure in compliance with 
the MAP's recommendations. The proposed measure is both consistent with 
the information submitted to the MAP and support its scientific 
acceptability for use in quality reporting programs. Therefore, we are 
proposing this measure for implementation in the IRF QRP as required by 
the IMPACT Act.
    We reviewed the NQF's endorsed measures and identified one NQF-
endorsed cross-setting and quality measure related to medication 
reconciliation, which applies to the SNF, LTCH, IRF, and HHA settings 
of care: Care for Older Adults (COA), (NQF #0553). The quality measure, 
Care for Older Adults (COA), (NQF #0553) assesses the percentage of 
adults 66 years and older who had a medication review. The Care for 
Older Adults (COA), (NQF #0553) measure requires at least one 
medication review conducted by a prescribing practitioner or clinical 
pharmacist during the measurement year and the presence of a medication 
list in the medical record. This is in contrast to the proposed quality 
measure, Drug Regimen Review Conducted with Follow-Up for Identified 
Issues--PAC IRF QRP, which reports the percentage of patient stays in 
which a drug regimen review was conducted at the time of admission and 
that timely follow-up with a physician occurred each time one or more 
potential clinically significant medication issues were identified 
throughout that stay.
    After careful review of both quality measures, we have decided to 
propose the quality measure, Drug Regimen Review Conducted with Follow-
Up for Identified Issues--PAC IRF QRP for the following reasons:
     The IMPACT Act requires the implementation of quality 
measures, using patient assessment data that are standardized and 
interoperable across PAC settings. The proposed quality measure, Drug 
Regimen Review Conducted with Follow-Up for Identified Issues--PAC IRF 
QRP, employs three standardized patient-assessment data elements for 
each of the four PAC settings so that data are standardized, 
interoperable, and comparable; whereas, the Care for Older Adults 
(COA), (NQF #0553) quality measure does not contain data elements that 
are standardized across all four PAC settings.
     The proposed quality measure, Drug Regimen Review 
Conducted with Follow-Up for Identified Issues--PAC IRF QRP, requires 
the identification of potential clinically significant medication 
issues at the beginning, during, and at the end of the patient's stay 
to capture data on each patient's complete PAC stay; whereas, the Care 
for Older Adults (COA), (NQF #0553) quality measure only requires 
annual documentation in the form of a medication list in the medical 
record of the target population.
     The proposed quality measure, Drug Regimen Review 
Conducted with Follow-Up for Identified Issues--PAC IRF QRP, includes 
identification of the potential clinically significant medication 
issues and communication with the physician (or physician designee) as 
well as resolution of the issue(s) within a rapid timeframe (by 
midnight of the next calendar day); whereas, the Care for Older Adults 
(COA), (NQF #0553) quality measure does not include any follow-up or 
timeframe in which the follow-up would need to occur.
     The proposed quality measure, Drug Regimen Review 
Conducted with Follow-Up for Identified Issues--PAC IRF QRP, does not 
have age exclusions; whereas, the Care for Older Adults (COA), (NQF 
#0553) quality measure limits the measure's population to patients aged 
66 and older.
     The proposed quality measure, Drug Regimen Review 
Conducted with Follow-Up for Identified Issues--PAC IRF QRP, would be 
reported to IRFs quarterly to facilitate internal quality monitoring 
and quality improvement in areas such as patient safety, care 
coordination, and patient satisfaction; whereas, the Care for Older 
Adults (COA), (NQF #0553) quality measure would not enable quarterly 
quality updates, and thus data comparisons within and across PAC 
providers would be difficult due to the limited data and scope of the 
data collected.
    Therefore, based on the evidence discussed above, we are proposing 
to adopt the quality measure entitled, Drug Regimen Review Conducted 
with Follow-Up for Identified Issues--PAC IRF QRP, for the IRF QRP for 
FY 2020 payment determination and subsequent years. We plan to submit 
the quality measure to the NQF for consideration for endorsement.
    The calculation of the proposed quality measure would be based on 
the data collection of three standardized items to be included in the 
IRF-PAI. The collection of data by means of the standardized items 
would be obtained at admission and discharge. For more information 
about the data submission required for this proposed measure, we refer 
readers to section VII.I.c of this proposed rule.
    The standardized items used to calculate this proposed quality 
measure do not duplicate existing items currently used for data 
collection within the IRF-PAI. The proposed measure denominator is the 
number of patient stays with a discharge assessment during the 
reporting period. The proposed measure numerator is the number of stays 
in the denominator where the medical record contains documentation of a 
drug regimen review conducted at: (1) Admission and (2) discharge with 
a lookback through the entire patient stay with all potential 
clinically significant medication issues identified during the course 
of care and followed up with a physician or physician designee by 
midnight of the next calendar day. This measure is not risk adjusted. 
For technical information about this proposed measure, including 
information about the measure calculation and discussion pertaining to 
the standardized items used to calculate this measure, we refer readers 
to the document titled, Proposed Measure Specifications for Measures 
Proposed in the FY 2017 IRF QRP proposed rule available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/IRF-Quality-Reporting-Program-Measures-Information-.html.
    Data for the proposed quality measure, Drug Regimen Review 
Conducted with Follow-Up for Identified Issues--PAC IRF QRP, would be 
collected using the IRF-PAI with submission through the Quality 
Improvement Evaluation System (QIES) Assessment Submission and 
Processing (ASAP) system.
    We invite public comment on our proposal to adopt the quality 
measure, Drug Regimen Review Conducted with Follow-Up for Identified 
Issues--PAC IRF QRP for the IRF QRP.

H. IRF QRP Quality Measures and Measure Concepts Under Consideration 
for Future Years

    We invite comment on the importance, relevance, appropriateness, 
and applicability of each of the quality measures listed in Table 8 for 
future years in the IRF QRP. We are developing a measure related to the 
IMPACT Act domain, ``Accurately communicating the existence of and 
providing for the transfer of health information and care preferences 
of an individual to the individual, family caregiver of the individual, 
and providers of services furnishing items and services to the 
individual, when the individual transitions.'' We are considering the

[[Page 24210]]

possibility of adding quality measures that rely on the patient's 
perspective; that is, measures that include patient-reported experience 
of care and health status data. We recently posted a ``Request for 
Information to Aid in the Design and Development of a Survey Regarding 
Patient and Family Member Experiences with Care Received in Inpatient 
Rehabilitation Facilities'' (80 FR 72725 through 72727). Also, we are 
considering a measure focused on pain that relies on the collection of 
patient-reported pain data. Finally, we are considering a measure 
related to patient safety, Venous Thromboembolism Prophylaxis.

 Table 8--IRF QRP Quality Measures Under Consideration for Future Years
------------------------------------------------------------------------
 
------------------------------------------------------------------------
IMPACT Act Domain.................  Accurately communicating the
                                     existence of and providing for the
                                     transfer of health information and
                                     care preferences of an individual
                                     to the individual, family caregiver
                                     of the individual, and providers of
                                     services furnishing items and
                                     services to the individual, when
                                     the individual transitions.
IMPACT Act Measure................     Transfer of health
                                    information and care preferences
                                    when an individual transitions.
NQS Priority......................  Patient- and Caregiver-Centered
                                     Care.
Measures..........................     Patient Experience of
                                    Care.
                                       Percent of Patients with
                                    Moderate to Severe Pain.
NQS Priority......................  Patient Safety.
Measure...........................     Venous Thromboembolism
                                    Prophylaxis.
------------------------------------------------------------------------

I. Proposed Form, Manner, and Timing of Quality Data Submission for the 
FY 2018 Payment Determination and Subsequent Years

1. Background
    Section 1886(j)(7)(C) of the Act requires that, for the FY 2014 
payment determination and subsequent years, each IRF submit to the 
Secretary data on quality measures specified by the Secretary. In 
addition, section 1886(j)(7)(F) of the Act requires that, for the 
fiscal year beginning on the specified application date, as defined in 
section 1899B(a)(2)(E) of the Act, and each subsequent year, each IRF 
submit to the Secretary data on measures specified by the Secretary 
under section 1899B of the Act. The data required under section 
1886(j)(7)(C) and (F) of the Act must be submitted in a form and 
manner, and at a time, specified by the Secretary. As required by 
section 1886(j)(7)(A)(i) of the Act, for any IRF that does not submit 
data in accordance with section 1886(j)(7)(C) and (F) of the Act for a 
given fiscal year, the annual increase factor for payments for 
discharges occurring during the fiscal year must be reduced by 2 
percentage points.
a. Timeline for Data Submission Under the IRF QRP for the FY 2018, FY 
2019 and Subsequent Year Payment Determinations
    Tables 9 through 17 represent our finalized data collection and 
data submission quarterly reporting periods, as well as the quarterly 
review and correction periods and submission deadlines for the quality 
measure data submitted via the IRF-PAI and the CDC/NHSN affecting the 
FY 2018 and subsequent year payment determinations. We also provide in 
Table 17 our previously finalized claims-based measures for FY 2018 and 
subsequent years, although we note that, for claims-based measures, 
there is no corresponding quarterly-based data collection or submission 
reporting periods with quarterly-based review and correction deadline 
periods.
    Further, in the FY 2016 IRF PPS final rule (80 FR 47122 through 
47123), we established that the IRF-PAI-based measures finalized for 
adoption into the IRF QRP would transition from reporting based on the 
fiscal year to an annual schedule consistent with the calendar year, 
with quarterly reporting periods followed by quarterly review and 
correction periods and submission deadlines, unless there is a clinical 
reason for an alternative data collection time frame. The pattern for 
annual, calendar year-based data reporting, in which we use 4 quarters 
of data, is illustrated in Table 9 and is in place for all Annual 
Payment Update (APU) years except for the measure in Table 10 for which 
the FY 2018 APU determination will be based on 5 calendar year quarters 
in order to transition this measure from FY to CY reporting. We also 
wish to clarify that payment determinations for the measures finalized 
for use in the IRF QRP that use the IRF-PAI or CDC NHSN data sources 
will subsequently use the quarterly data collection/submission and 
review, correction and submission deadlines described in Table 9 unless 
otherwise specified, as is with the measure NQF #0680: Percent of 
Residents or Patients Who Were Assessed and Appropriately Given the 
Seasonal Influenza Vaccine. For this measure, we clarify in a 
subsequent discussion that the data collection and reporting periods 
span two consecutive years from July 1 through June 30th and we 
therefore separately illustrate those collection/submission quarterly 
reporting periods and review and correction periods and submission 
deadlines for FY 2019 and subsequent years in Table 15. We also 
separately distinguish the reporting periods and data submission 
timeframes for the finalized measure Influenza Vaccination Coverage 
among Healthcare Personnel which spans two consecutive years in Table 
16.

   Table 9--Annual QRP CY IRF-PAI & CDC/NHSN Data Collection/Submission Reporting Periods and Data Submission/
                            Correction Deadlines ** Payment Determinations [supcaret]
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
Proposed CY data collection quarter      Data collection/       QRP quarterly review and correction periods data
                                        submission quarterly     submission deadlines for payment determination
                                          reporting period                             **
----------------------------------------------------------------------------------------------------------------
Quarter 1..........................  January 1-March 31 *....  April 1-August 15 *.....  Deadline: August 15.*
Quarter 2..........................  April 1-June 30.........  July 1-November 15......  Deadline: November 15.
Quarter 3..........................  July 1-September 30.....  October 1-February 15...  Deadline: February 15.
Quarter 4..........................  October 1-December 31 *.  January 1-May 15 *......  Deadline: May 15.*
----------------------------------------------------------------------------------------------------------------
* We refer readers to Table 16 for the annual data collection time frame for the measure, Influenza Vaccination
  Coverage among Healthcare Personnel.

[[Page 24211]]

 
** We note that the submission of IRF-PAI data must also adhere to the IRF PPS deadlines.
[supcaret] We refer readers to Table 15 for the 12 month (July-June) data collection/submission quarterly
  reporting periods, review and correction periods and submission deadlines for APU determinations for the
  measure NQF #0680: Percent of Residents or Patients Who Were Assessed and Appropriately Given the Seasonal
  Influenza Vaccine.


 Table 10--Summary Details on Data Collection Period and Data Submission Timeline for Previously Adopted Quality
Measure Affecting the FY 2018 Payment Determination That Will Use 5 CY Quarters in Order To Transition From a FY
                                             to a CY Reporting Cycle
----------------------------------------------------------------------------------------------------------------
                                                                  Quarterly review and
                                           Data collection/     correction periods data
          Submission method              submission quarterly     submission deadlines      APU determination
                                         reporting period(s)          for payment                affected
                                                                  determination * * *
----------------------------------------------------------------------------------------------------------------
Finalized Measure:
    NQF #0678 Percent of Residents or Patients with Pressure Ulcers That Are New or Worsened (Short
    Stay) (80 FR 47122)
----------------------------------------------------------------------------------------------------------------
IRF-PAI/QIES ASAP System.............  CY 15 Q4--10/1/15-12/31/ 1/1/2016-5/15/16         FY 2018.
                                        15.                      deadline.
                                       CY 16 Q1--1/1/16-3/31/   4/1/2016-8/15/16
                                        16.                      deadline.
                                       CY 16 Q2--4/1/16-6/30/   7/1/16-11/15/16
                                        16.                      deadline.
                                       CY 16 Q3--7/1/16-9/30/   10/1/16-2/15/17
                                        16.                      deadline.
                                       CY 16 Q4--10/01/16-12/   1/1/17-5/15/17 deadline
                                        31/16.
----------------------------------------------------------------------------------------------------------------
* We refer readers to the Table 9 for an illustration of the data collection/submission quarterly reporting
  periods and correction and submission deadlines.
** We note that the submission of IRF-PAI data must also adhere to the IRF PPS deadlines.


 Table 11--Summary Details on Data Collection Period and Data Submission Timeline for Previously Adopted IRF-PAI
    Quality Measure, NQF #0680 Percent of Residents or Patients Who Were Assessed and Appropriately Given the
                     Seasonal Influenza Vaccine, Affecting the FY 2018 Payment Determination
----------------------------------------------------------------------------------------------------------------
                                                                  Quarterly review and
                                           Data collection/     correction periods data
          Submission method              submission quarterly     submission deadlines      APU determination
                                         reporting period(s)          for payment                affected
                                                                    determination *
----------------------------------------------------------------------------------------------------------------
Finalized Measure:
    NQF #0680 Percent of Residents or Patients Who Were Assessed and Appropriately Given the Seasonal
    Influenza Vaccine (80 FR 47122)
----------------------------------------------------------------------------------------------------------------
IRF-PAI/QIES ASAP System.............  CY 15 Q4--10/1/15-12/31/ 1/1/2016-5/15/16         FY 2018.
                                        15.                      deadline.
                                       CY 16 Q1--1/1/16-3/31/   4/1/2016-8/15/16
                                        16.                      deadline.
                                       CY 16 Q2--4/1/16-6/30/   7/1/16-11/15/16
                                        16.                      deadline.
----------------------------------------------------------------------------------------------------------------
* We note that the submission of IRF-PAI data must also adhere to the IRF PPS deadlines.


 Table 12--Summary Details on Data Collection Period and Data Submission Timeline for Previously Adopted Quality
 Measures Affecting the FY 2018 Payment Determination That Will Use Only 1 CY Quarter of Data Initially for the
                                   Purpose of Determining Provider Compliance
----------------------------------------------------------------------------------------------------------------
                                                                  Quarterly review and
                                           Data collection/     correction periods data
          Submission method              submission quarterly     submission deadlines      APU determination
                                         reporting period(s)          for payment                affected
                                                                  determination * * *
----------------------------------------------------------------------------------------------------------------
Finalized Measure:
    NQF #0674 Application of Percent of Residents Experiencing One or More Falls with Major Injury (Long
    Stay) (80 FR 47122)
    NQF #2631 Application of Percent of Long-Term Care Hospital Patients with an Admission and Discharge
    Functional Assessment and a Care Plan That Addresses Function (80 FR 47122)
    NQF #2633 IRF Functional Outcome Measure: Change in Self-Care Score for Medical Rehabilitation
    Patients (80 FR 47122)
    NQF #2634 IRF Functional Outcome Measure: Change in Mobility Score for Medical Rehabilitation
    Patients (80 FR 47122)
    NQF #2635 IRF Functional Outcome Measure: Discharge Self-Care Score for Medical Rehabilitation
    Patients (80 FR 47122)
    NQF #2636 IRF Functional Outcome Measure: Discharge Mobility Score for Medical Rehabilitation
    Patients (80 FR 47122)
----------------------------------------------------------------------------------------------------------------
IRF-PAI/QIES ASAP System.............  CY 16 Q4--10/1/16-12/31/ 1/1/2017-5/15/17.......  FY 2018.
                                        16.
----------------------------------------------------------------------------------------------------------------
* We refer readers to the Table 9 for an illustration of the data collection/submission quarterly reporting
  periods and correction and submission deadlines, which will be followed for the above measures, for all
  payment determinations subsequent to that of FY 2018.
** We note that the submission of IRF-PAI data must also adhere to the IRF PPS deadlines.


Table 13--Summary Details on Data Collection Period and Data Submission Timeline for Previously Adopted CDC/NHSN
 Quality Measures Affecting the FY 2018 Payment Determination and Subsequent Years That Will Use 4 CY Quarters *
----------------------------------------------------------------------------------------------------------------
                                                                  Quarterly review and
                                           Data collection/     correction periods data
          Submission method              submission quarterly     submission deadlines      APU determination
                                         reporting period(s)          for payment                affected
                                                                     determination
----------------------------------------------------------------------------------------------------------------
Finalized Measure:

[[Page 24212]]

 
    NQF #0138 NHSN Catheter-Associated Urinary Tract Infection (CAUTI) Outcome Measure (80 FR 47122
    through 47123)
    NQF #1716 NHSN Facility-wide Inpatient Hospital-onset Methicillin-resistant Staphylococcus aureus
    (MRSA) Bacteremia Outcome Measure (80 FR 47122 through 47123)
    NQF #1717 NHSN Facility-wide Inpatient Hospital-onset Clostridium difficile Infection (CDI) Outcome
    Measure (79 FR 45917)
----------------------------------------------------------------------------------------------------------------
CDC/NHSN.............................  CY 16 Q1--1/1/16-3/31/   4/1/2016-8/15/16 ** and  FY 2018 and subsequent
                                        16 and Q1 of             4/1-8/15 of subsequent   years.**
                                        subsequent Calendar      years.
                                        Years.
                                       CY 16 Q2--4/1/16-6/30/   7/1/16-11/15/16 **nand
                                        16 and Q2 of             7/1-11/15 of
                                        subsequent Calendar      subsequent years.
                                        Years.
                                       CY 16 Q3--7/1/16-9/30/   10/1/16-2/15/17 ** and
                                        16 and Q3 of             10/1-2/15 of
                                        subsequent Calendar      subsequent years.
                                        Years.
                                       CY 16 Q4--10/1/16-12/31/ 1/1/17-5/15/17 ** and 1/
                                        16 and Q4 of             1-5/15 of subsequent
                                        subsequent Calendar      years.
                                        Years.
----------------------------------------------------------------------------------------------------------------
* We refer readers to the Table 9 for an illustration of the data collection/submission quarterly reporting
  periods and correction and submission deadlines.
** As is illustrated in Table 9: Subsequent years follow the same CY Quarterly Data Collection/submission
  Quarterly Reporting Periods and Quarterly Review and Correction Periods Deadlines for Payment Determination in
  which every CY quarter is followed by approximately 135 days for IRFs to review and correct their data until
  midnight on the final submission deadline dates.


 Table 14--Summary Details on Data Collection Period and Data Submission Timeline for Previously Adopted IRF-PAI
  Quality Measures Affecting the FY 2019 Payment Determination and Subsequent Years That Will Use 4 CY Quarters
----------------------------------------------------------------------------------------------------------------
                                                                  Quarterly review and
                                           Data collection/     correction periods data
          Submission method              submission quarterly     submission deadlines      APU determination
                                         reporting period(s)          for payment                affected
                                                                  determination * * *
----------------------------------------------------------------------------------------------------------------
Finalized Measure:
    NQF #0678 Percent of Residents or Patients with Pressure Ulcers That Are New or Worsened (Short
    Stay) (80 FR 47122)
    NQF #0674 Application of Percent of Residents Experiencing One or More Falls with Major Injury (Long
    Stay) (80 FR 47122)
    NQF #2631 Application of Percent of Long-Term Care Hospital Patients with an Admission and Discharge
    Functional Assessment and a Care Plan That Addresses Function (80 FR 47122)
    NQF #2633 IRF Functional Outcome Measure: Change in Self-Care Score for Medical Rehabilitation
    Patients (80 FR 47122)
    NQF #2634 IRF Functional Outcome Measure: Change in Mobility Score for Medical Rehabilitation
    Patients (80 FR 47122)
    NQF #2635 IRF Functional Outcome Measure: Discharge Self-Care Score for Medical Rehabilitation
    Patients (80 FR 47122)
    NQF #2636 IRF Functional Outcome Measure: Discharge Mobility Score for Medical Rehabilitation
    Patients (80 FR 47122)
----------------------------------------------------------------------------------------------------------------
IRF-PAI/QIES ASAP System.............  CY 17 Q1--1/1/17-3/31/   4/1/2017-8/15/17 ***     FY 2019 and subsequent
                                        17 and Q1 of             and 4/1-8/15 of          years.***
                                        subsequent Calendar      subsequent years.
                                        Years.
                                       CY 17 Q2--4/1/17-6/30/   7/1/17-11/15/17 *** and
                                        17 and Q2 of             7/1-11/15 of
                                        subsequent Calendar      subsequent years.
                                        Years.
                                       CY 17 Q3--7/1/17-9/30/   10/1/17-2/15/18 *** and
                                        17 and Q3 of             10/1-1/15 of
                                        subsequent Calendar      subsequent years.
                                        Years.
                                       CY 17 Q4--10/1/17-12/31/ 1/1/18-5/15/18 *** and
                                        17 and Q4 of             1/1-5/15 of subsequent
                                        subsequent Calendar      years.
                                        Years.
----------------------------------------------------------------------------------------------------------------
* We refer readers to the Table 9 for an illustration of the data collection/submission quarterly reporting
  periods and correction and submission deadlines.
** We note that the submission of IRF-PAI data must also adhere to the IRF PPS deadlines.
*** As is illustrated in Table 9: Subsequent years follow the same CY Quarterly Data Collection/submission
  Quarterly Reporting Periods and Quarterly Review and Correction Periods) and Data Submission Deadlines for
  Payment Determination in which every CY quarter is followed by approximately 135 days for IRFs to review and
  correct their data until midnight on the final submission deadline dates.

    In the FY 2014 IRF PPS final rule, we adopted 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 payment determination and subsequent years (78 FR 47910 through 
47911). In the FY 2014 IRF PPS final rule (78 FR 47917 through 47919), 
we finalized the data submission timelines and submission deadlines for 
the measures for FY 2017 payment determination. Refer to the FY 2014 
final rule for a more detailed discussion of these timelines and 
deadlines.
    We would like to clarify that this measure includes all patients in 
the IRF one or more days during the influenza vaccination season (IVS) 
(October 1 of any given CY through March 31 of the subsequent CY). This 
includes, for example, a patient is admitted September 15, 2015, and 
discharged April 1, 2016 (thus, the patient was in the IRF during the 
2015-2016 influenza vaccination season). If a patient's stay did not 
include one or more days in the IRF during the IVS, IRFs must also 
complete the influenza items. For example, if a patient was admitted 
after April 1, 2016, and discharged September 30, 2016, and the patient 
did not receive the influenza vaccine during the IVS, IRFs should code 
the reason the patient did not receive the influenza

[[Page 24213]]

vaccination as ``patient was not in the facility during this year's 
influenza vaccination season.''
    Further, we wish to clarify that the data submission timeline for 
this measure includes 4 calendar quarters and is based on the influenza 
season (July 1 through June 30 of the subsequent year), rather than on 
the calendar year. For the purposes of APU determination and for public 
reporting, data calculation and analysis uses data from an influenza 
vaccination season that is within the influenza season itself. While 
the influenza vaccination season is October 1 of a given year (or when 
the vaccine becomes available) through March 31 of the subsequent year, 
this timeframe rests within a greater time period of the influenza 
season which spans 12 months--that is July 1 of a given year through 
June 30 of the subsequent year. Thus for this measure, we utilize data 
from a timeframe of 12 months that mirrors the influenza season which 
is July 1 of a given year through June 30th of the subsequent year. 
Additionally, for the APU determination, we review data that has been 
submitted beginning on July 1 of the calendar year 2 years prior to the 
calendar year of the APU effective date and ending June 30 of the 
subsequent calendar year, one year prior to the calendar year of the 
APU effective date. For example, and as provided in Table 15 for the FY 
2019 (October 1, 2018) APU determination, we review data submission 
beginning July 1 of 2016 through June 30th of June 2017 for the 2016/
2017 influenza vaccination season, so as to capture all data that an 
IRF will have submitted with regard to the 2016/2017 Influenza season 
itself. We will use assessment data for that time period as well for 
public reporting. Further, because we enable the opportunity to review 
and correct data for all assessment based IRF-PAI measures within the 
IRF QRP, we continue to follow quarterly calendar data collection/
submission quarterly reporting period(s) and their subsequent quarterly 
review and correction periods with data submission deadlines for public 
reporting and payment determinations. However, rather than using CY 
timeframe, these quarterly data collection/submission periods and their 
subsequent quarterly review and correction periods and submission 
deadlines begin with CY quarter 3, July 1, of a given year and end June 
30th, CY quarter 2, of the following year. For further information on 
data collection for this measure, please refer to section 4 of the IRF-
PAI training manual, which is available on the CMS IRF QRP Measures 
Information Web site at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/IRF-Quality-Reporting-Program-Measures-Information-.html, under the 
downloads section. For further information on data submission of the 
IRF-PAI, please refer to the IRF-PAI Data Specifications Version 1.12.1 
(FINAL)--in effect on October 1, 2015, available for download at 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Software.html.
    Refer to Table 15 for details about the quarterly data collection/
submission and the review and correction deadlines for FY 2019 and 
subsequent years for NQF #0680 Percent of Residents or Patients Who 
Were Assessed and Appropriately Given the Seasonal Influenza Vaccine.

 Table 15--Summary Details on Data Collection Period and Data Submission Timeline for Previously Adopted IRF-PAI
    Quality Measure, NQF #0680 Percent of Residents or Patients Who Were Assessed and Appropriately Given the
         Seasonal Influenza Vaccine, Affecting the FY 2019 Payment Determination and Subsequent Years *
----------------------------------------------------------------------------------------------------------------
                                                                  Quarterly review and
                                           Data collection/     correction periods data
          Submission method              submission quarterly     submission deadlines      APU determination
                                         reporting period(s)          for payment                affected
                                                                    determination **
----------------------------------------------------------------------------------------------------------------
Finalized Measure:
    NQF #0680 Percent of Residents or Patients Who Were Assessed and Appropriately Given the Seasonal
    Influenza Vaccine (80 FR 47122)
----------------------------------------------------------------------------------------------------------------
IRF-PAI/QIES ASAP System.............  CY 16 Q3--7/1/16-9/30/   10/1/16-2/15/17 ** and   FY 2019 and subsequent
                                        16 and Q3 of             10/1-2/15 of             years.**
                                        subsequent Calendar      subsequent years.
                                        Years.
                                       CY 16 Q4--10/1/16-12/31/ 1/1/17-5/15/17 ** and 1/
                                        16 and Q4 of             1-5/15 of subsequent
                                        subsequent Calendar      years.
                                        Years.
                                       CY 17 Q1--1/1/17-3/31/   4/1/17-8/15/17 ** and 4/
                                        17 and Q1 of             1-8/15 of subsequent
                                        subsequent Calendar      years.
                                        Years.
                                       CY 17 Q2--4/1/17-6/30/   7/1/17-11/15/17 ** and
                                        17 and Q2 of             7/1-11/15 of
                                        subsequent Calendar      subsequent years.
                                        Years.
----------------------------------------------------------------------------------------------------------------
* We note that the submission of IRF-PAI data must also adhere to the IRF PPS deadlines.
** As is illustrated in Table 9: Subsequent years follow the same CY Quarterly Data Collection/submission
  Quarterly Reporting Periods and Quarterly Review and Correction Periods (IRF-PAI) and Data Submission (CDC/
  NHSN) Deadlines for Payment Determination in which every CY quarter is followed by approximately 135 days for
  IRFs to review and correct their data until midnight on the final submission deadline dates.

    We finalized in the FY 2014 IRF PPS final rule (78 FR 47905 through 
47906) that for FY 2018 and subsequent years IRFs would submit data on 
the quality measure Influenza Vaccination Coverage among Healthcare 
Personnel (NQF #0431) beginning with data submission starting October 
1, 2015. To clarify that while the data collected by IRFs for this 
measure includes vaccination information for a flu vaccination season 
that begins October 1 (or when the vaccine becomes available) of a 
given year through March 31 of the subsequent year, the CDC/NHSN system 
only allows for the submission of the corresponding data any time 
between October 1 of a given year until March 31 of the subsequent 
year; however, corrections can be made to such data until May 15th of 
that year. Quality data for this measure are only required to be 
submitted once per IVS (Oct 1 through March 31), but must be submitted 
prior to the May 15 deadline for the year in which the IVS ends; 
quarterly reporting is not required. For example, for FY 2018 payment 
determinations, while IRFs can begin immunizing their staff when the 
vaccine is available throughout the influenza vaccine season which ends 
on March 31, 2016, IRFs can only begin submitting the data for this 
measure via the CDC/NHSN system starting on October 1, 2015, and may do 
so up until May 15 of 2016.

[[Page 24214]]



  TABLE 16--Summary Details on the Data Submission Timeline and Correction Deadline Timeline For the Previously
    Adopted Influenza Vaccination Coverage Among Healthcare Personnel Affecting CY 2018 and Subsequent Years
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
 Influenza vaccination coverage among   Data submission period    Review and correction periods data submission
 healthcare personnel data submission                                    (CDC/NHSN) deadlines for payment
              quarters+                                                          determination++
----------------------------------------------------------------------------------------------------------------
CY QTR 4 through Subsequent CY QTR 1.  10/1/15-3/31/16 and 10/  4/1/16-5/15/16 and 4/1-  Deadline: May 15, 2016
                                        1-3/31 of subsequent     5/15 of subsequent       and May 15 of
                                        years.                   years.                   subsequent years.
----------------------------------------------------------------------------------------------------------------
+ Data on this measure may be submitted via the CDC/NHSN system from October 1 of a given year through May 15 of
  the subsequent year.
++ A time period of April 1-May 15th is also allotted for the submission, review, and corrections.


 TABLE 17--Finalized IRF QRP Claims-Based Measure Affecting FY 2018 and
                            Subsequent Years
------------------------------------------------------------------------
                                    Data submission
         Quality measure                method        Performance period
------------------------------------------------------------------------
NQF #2502 All-Cause Unplanned     Medicare FFS        CY 2013 and 2014
 Readmission Measure for 30 Days   Claims.             for public
 Post-Discharge from Inpatient                         reporting in
 Rehabilitation Facilities (80                         2016.
 FR 47087 through 47089).                             CY 2014 and 2015
                                                       for public
                                                       reporting in
                                                       2017.
------------------------------------------------------------------------

b. Proposed Timeline and Data Submission Mechanisms for the FY 2018 
Payment Determination and Subsequent Years for the Proposed IRF QRP 
Resource Use and Other Measures Claims-Based Measures
    The MSPB PAC IRF QRP measure; Discharge to Community PAC IRF QRP 
measure; Potentially Preventable 30-Day Post-Discharge Readmission 
Measure for IRF QRP, and Potentially Preventable Within Stay 
Readmission Measure for IRFs, which we have proposed in this proposed 
rule, are Medicare FFS claims-based measures. Because claims-based 
measures can be calculated based on data that are already reported to 
the Medicare program for payment purposes, no additional information 
collection will be required from IRFs. As discussed in section VII.F of 
this proposed rule, these measures will use 2 years of claims-based 
data beginning with CY 2015 and CY 2016 claims to inform confidential 
feedback reports for IRFs, and CYs 2016 and 2017 claims data for public 
reporting,
    We invite public comments on this proposal.
c. Proposed Timeline and Data Submission Mechanisms for the IRF QRP 
Quality Measure for the FY 2020 Payment Determination and Subsequent 
Years
    As discussed in section VII.F of this proposed rule, we propose 
that the data for the proposed quality measure, Drug Regimen Review 
Conducted with Follow-Up for Identified Issues--PAC IRF QRP, affecting 
FY 2020 payment determination and subsequent years, be collected by 
completing data elements that would be added to the IRF-PAI with 
submission through the QIES-ASAP system. Data collection would begin on 
October 1, 2018. More information on IRF reporting using the QIES-ASAP 
system is located at the Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/IRFPAI.html.
    For the FY 2020 payment determinations, we propose to collect CY 
2018 4th quarter data, that is beginning with discharges on October 1, 
2018, through discharges on December 31, 2018, to remain consistent 
with the usual October release schedule for the IRF-PAI, to give IRFs 
sufficient time to update their systems so that they can comply with 
the new data reporting requirements, and to give us sufficient time to 
determine compliance for the FY 2020 program. The proposed use of 1 
quarter of data for the initial year of assessment data reporting in 
the IRF QRP is consistent with the approach we used previously for the 
SNF, LTCH, and Hospice QRPs.
    Table 18 presents the proposed data collection period and data 
submission timelines for the new proposed IRF QRP Quality Measure for 
the FY 2020 Payment Determination. We invite public comments on this 
proposal.

TABLE 18--Details on the Proposed Data Collection Period and Data Submission Timeline for Resource Use and Other
                              Measures Affecting the FY 2020 Payment Determination
----------------------------------------------------------------------------------------------------------------
                                                        Data collection     Data correction    APU determination
         Quality measure           Submission method        period            deadlines*           affected
----------------------------------------------------------------------------------------------------------------
Drug Regimen Review Conducted     IRF-PAI/QIES ASAP.  CY 2018 Q4 10/1/18- 5/15/19 Quarterly   FY 2020.
 with Follow-Up for Identified                         12/31/18;           approximately 135
 Issues PAC IRF QRP.                                   Quarterly for       days after the
                                                       each subsequent     end of each
                                                       calendar year.      quarter for
                                                                           subsequent years.
----------------------------------------------------------------------------------------------------------------
* We note that the submission of IRF-PAI data must also adhere to the IRF PPS deadlines.

    Following the close of the reporting quarter, October 1, 2018, 
through December 31, 2018, for the FY 2020 payment determination, IRFs 
would have the already established additional 4.5 months to correct 
their quality data and that the final deadline for correcting data for 
the FY 2020 payment determination would be May 15, 2019 for these 
measures. We further propose that for the FY 2021 payment determination 
and subsequent years, we will collect data using the calendar year 
reporting cycle as described in section VII.I.c of this proposed rule, 
and illustrated in Table 19. We invite public comments on this 
proposal.

[[Page 24215]]



     TABLE 19--Proposed Data Collection Period and Data Correction Deadlines* Affecting the FY 2021 Payment
                                       Determination and Subsequent Years
----------------------------------------------------------------------------------------------------------------
                                                                                              Proposed quarterly
                                                                                                review and data
                                                       Proposed CY data      Proposed data    correction periods
         Quality measure           Submission method  collection quarter   collection period    * deadlines for
                                                                                                    payment
                                                                                                 determination
----------------------------------------------------------------------------------------------------------------
Drug Regimen Review Conducted     IRF-PAI/QIES ASAP.  Quarter 1.........  January 1- March    April 1- August
 with Follow-Up for Identified                                             31.                 15.
 Issues PAC IRF QRP.
                                                      Quarter 2.........  April 1-June 30...  July 1-November
                                                                                               15.
                                                      Quarter 3.........  July 1- September   October 1-
                                                                           30.                 February 15.
                                                      Quarter 4.........  October 1-          January 1- May 15.
                                                                           December 31.
----------------------------------------------------------------------------------------------------------------
* We note that the submission of IRF-PAI data must also adhere to the IRF PPS deadlines

J. IRF QRP Data Completion Thresholds for the FY 2016 Payment 
Determination and Subsequent Years

    In the FY 2015 IRF PPS final rule (79 FR 45921 through 45923), we 
finalized IRF QRP thresholds for completeness of IRF data submissions. 
To ensure that IRFs are meeting an acceptable standard for completeness 
of submitted data, we finalized the policy that, beginning with the FY 
2016 payment determination and for each subsequent year, IRFs must meet 
or exceed two separate data completeness thresholds: One threshold set 
at 95 percent for completion of quality measures data collected using 
the IRF-PAI submitted through the QIES and a second threshold set at 
100 percent for quality measures data collected and submitted using the 
CDC NHSN.
    Additionally, we stated that we will apply the same thresholds to 
all measures adopted as the IRF QRP expands and IRFs begin reporting 
data on previously finalized measure sets. That is, as we finalize new 
measures through the regulatory process, IRFs will be held accountable 
for meeting the previously finalized data completion threshold 
requirements for each measure until such time that updated threshold 
requirements are proposed and finalized through a subsequent regulatory 
cycle.
    Further, we finalized the requirement that an IRF must meet or 
exceed both thresholds to avoid receiving a 2 percentage point 
reduction to their annual payment update for a given fiscal year, 
beginning with FY 2016 and for all subsequent payment updates. For a 
detailed discussion of the finalized IRF QRP data completion 
requirements, please refer to the FY 2015 IRF PPS final rule (79 FR 
45921 through 45923). We propose to codify the IRF QRP Data Completion 
Thresholds at Sec.  412.634. We invite public comments on this 
proposal.

K. IRF QRP Data Validation Process for the FY 2016 Payment 
Determination and Subsequent Years

    Validation is intended to provide added assurance of the accuracy 
of the data that will be reported to the public as required by sections 
1886(j)(7)(E) and 1899B(g) of the Act. In the FY 2015 IRF PPS rule (79 
FR 45923), we finalized, for the FY 2016 adjustments to the IRF PPS 
annual increase factor and subsequent years, a process to validate the 
data submitted for quality purposes. However, in the FY 2016 IRF PPS 
final rule (80 FR 47124), we finalized our decision to temporarily 
suspend the implementation of this policy. We are not proposing a data 
validation policy at this time, as we are developing a policy that 
could be applied to several PAC QRPs. We intend to propose a data 
validation policy through future rulemaking.

L. Previously Adopted and Codified IRF QRP Submission Exception and 
Extension Policies

    Refer to Sec.  412.634 for requirements pertaining to submission 
exception and extension for the FY 2017 payment determination and 
subsequent years. At this time, we are proposing to revise Sec.  
412.634 to change the timing for submission of these exception and 
extension requests from 30 days to 90 days from the date of the 
qualifying event which is preventing an IRF from submitting their 
quality data for the IRF QRP. We are proposing the increased time 
allotted for the submission of the requests from 30 to 90 days to be 
consistent with other quality reporting programs; for example, the 
Hospital Inpatient Quality Reporting (IQR) Program is also proposing to 
extend the deadline to 90 days in section VIII.A.15.a. of the FY 2017 
IPPS/LTCH PPS proposed rule published elsewhere in this issue of the 
Federal Register. We believe that this increased time will assist 
providers experiencing an event in having the time needed to submit 
such a request. We believe that allowing only 30 days was insufficient. 
With the exception of this one change, we are not proposing any 
additional changes to the exception and extension policies for the IRF 
QRP at this time.
    We invite public comments on the proposal to revise Sec.  412.634 
to change the timing for submission of these exception and extension 
requests from 30 days to 90 days from the date of the qualifying event 
which is preventing an IRF from submitting their quality data for the 
IRF QRP.

M. Previously Adopted and Finalized IRF QRP Reconsideration and Appeals 
Procedures

    Refer to Sec.  412.634 for a summary of our finalized 
reconsideration and appeals procedures for the IRF QRP for FY 2017 
payment determination and subsequent years. We are not proposing any 
changes to this policy. However, we wish to clarify that in order to 
notify IRFs found to be non-compliant with the reporting requirements 
set forth for a given payment determination, we may include the QIES 
mechanism in addition to US Mail, and we may elect to utilize the MACs 
to administer such notifications.

N. Public Display of Measure Data for the IRF QRP & Procedures for the 
Opportunity To Review and Correct Data and Information

1. Public Display of Measures
    Section 1886(j)(7)(E) of the Act requires the Secretary to 
establish procedures for making the IRF QRP data

[[Page 24216]]

available to the public. In the FY 2016 IRF PPS final rule (80 FR 47126 
through 47127), we finalized our proposals to display performance data 
for the IRF QRP quality measures by Fall 2016 on a CMS Web site, such 
as the Hospital Compare, after a 30-day preview period, and to give 
providers an opportunity to review and correct data submitted to the 
QIES-ASAP system or to the CDC NHSN. The procedures for the opportunity 
to review and correct data are provided in the following section. In 
addition, we finalized the proposal to publish a list of IRFs that 
successfully meet the reporting requirements for the applicable payment 
determination on the IRF QRP Web site at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/Spotlights-Announcements.html. In the FY 2016 IRF PPS final 
rule, we finalized that we would update the list after the 
reconsideration requests are processed on an annual basis.
    Also, in the FY 2016 IRF PPS final rule (80 FR 47126 through 
47127), we also finalized that the display of information for fall 2016 
contains performance data on three quality measures:
     Percent of Residents or Patients with Pressure Ulcers That 
Are New or Worsened (Short Stay) (NQF #0678);
     NHSN CAUTI Outcome Measure (NQF #0138); and
     All-Cause Unplanned Readmission Measure for 30 Days Post-
Discharge from IRFs (NQF #2502).
    The measures Percent of Residents or Patients with Pressure Ulcers 
That Are New or Worsened (Short Stay) (NQF #0678) and NHSN CAUTI 
Outcome Measure (NQF #0138) are based on data collected beginning with 
the first quarter of 2015 or discharges beginning on January 1, 2015. 
With the exception of the All-Cause Unplanned Readmission Measure for 
30 Days Post-Discharge from IRFs (NQF #2502), rates are displayed based 
on 4 rolling quarters of data and would initially use discharges from 
January 1, 2015, through December 31, 2015 (CY 2015) for Percent of 
Residents or Patients with Pressure Ulcers That Are New or Worsened 
(Short Stay) (NQF #0678) and data collected from January 1, 2015, 
through December 31, 2015 (CY 2015) for NHSN CAUTI Outcome Measure (NQF 
#0138). For the readmissions measure, data will be publicly report 
beginning with data collected for discharges beginning January 1, 2013, 
and rates would be displayed based on 2 consecutive years of data. For 
IRFs with fewer than 25 eligible cases, we propose to assign the IRF to 
a separate category: ``The number of cases is too small (fewer than 25) 
to reliably tell how well the IRF is performing.'' If an IRF has fewer 
than 25 eligible cases, the IRF's readmission rates and interval 
estimates will not be publicly reported for the measure.
    Calculations for all three measures are discussed in detail in the 
FY 2016 IRF PPS final rule (80 FR 47126 through 47127).
    Pending the availability of data, we are proposing to publicly 
report data in CY 2017 on 4 additional measures beginning with data 
collected on these measures for the first quarter of 2015, or 
discharges beginning on January 1, 2015: (1) Facility-wide Inpatient 
Hospital-onset Methicillin-resistant Staphylococcus aureus (MRSA) 
Bacteremia Outcome Measure (NQF #1716) ; (2) Facility-wide Inpatient 
Hospital-onset Clostridium difficile Infection (CDI) Outcome Measure 
(NQF #1717) and, beginning with the 2015-16 influenza vaccination 
season, these two measures; (3) Influenza Vaccination Coverage Among 
Healthcare Personnel (NQF #0431); and (4) Percent of Residents or 
Patients Who Were Assessed and Appropriately Given the Seasonal 
Influenza Vaccine (NQF #0680).
    Standardized infection ratios (SIRs) for the Facility-wide 
Inpatient Hospital-onset Methicillin-resistant Staphylococcus aureus 
(MRSA) Bacteremia Outcome Measure (NQF #1716) and Facility-wide 
Inpatient Hospital-onset Clostridium difficile Infection (CDI) Outcome 
Measure (NQF #1717) would be displayed based on 4 rolling quarters of 
data and would initially use MRSA bacteremia and CDI events that 
occurred from January 1, 2015 through December 31, 2015 (CY 2015), for 
calculations. We are proposing that the display of these ratios would 
be updated quarterly.
    Rates for the Influenza Vaccination Coverage Among Healthcare 
Personnel (NQF #0431) would be displayed for personnel working in the 
reporting facility October 1, 2015 through March 31, 2016. Rates for 
the Percent of Residents or Patients Who Were Assessed and 
Appropriately Given the Seasonal Influenza Vaccine (NQF #0680) would be 
displayed for patients in the IRF during the influenza vaccination 
season, from October 1, 2015, through March 31, 2016. We are proposing 
that the display of these rates would be updated annually for 
subsequent influenza vaccination seasons.
    Calculations for the MRSA and CDI Healthcare Associated Infection 
(HAI) measures adjust for differences in the characteristics of 
hospitals and patients using a SIR. The SIR is a summary measure that 
takes into account differences in the types of patients that a hospital 
treats. For a more detailed discussion of the SIR, please refer to the 
FY 2016 IRF PPS final rule (80 FR 47126 through 47127). The MRSA and 
CDI SIRs may take into account the laboratory methods, bed size of the 
hospital, and other facility-level factors. It compares the actual 
number of HAIs in a facility or state to a national benchmark based on 
previous years of reported data and adjusts the data based on several 
factors. A confidence interval with a lower and upper limit is 
displayed around each SIR to indicate that there is a high degree of 
confidence that the true value of the SIR lies within that interval. A 
SIR with a lower limit that is greater than 1.0 means that there were 
more HAIs in a facility or state than were predicted, and the facility 
is classified as ``Worse than the U.S. National Benchmark.'' If the SIR 
has an upper limit that is less than 1, the facility had fewer HAIs 
than were predicted and is classified as ``Better than the U.S. 
National Benchmark.'' If the confidence interval includes the value of 
1, there is no statistical difference between the actual number of HAIs 
and the number predicted, and the facility is classified as ``No 
Different than U.S. National Benchmark.'' If the number of predicted 
infections is less than 1.0, the SIR and confidence interval are not 
calculated by CDC.
    Calculations for the Influenza Vaccination Coverage Among 
Healthcare Personnel (NQF #0431) are based on reported numbers of 
personnel who received an influenza vaccine at the reporting facility 
or who provided written documentation of influenza vaccination outside 
the reporting facility. The sum of these two numbers is divided by the 
total number of personnel working at the facility for at least 1 day 
from October 1 through March 31 of the following year, and the result 
is multiplied by 100 to produce a compliance percentage (vaccination 
coverage). No risk adjustment is applicable to these calculations. More 
information on these calculations and measure specifications is 
available at http://www.cdc.gov/nhsn/pdfs/hps-manual/vaccination/4-hcp-vaccination-module.pdf. We propose that this data will be displayed on 
an annual basis and will include data submitted by IRFs for a specific, 
annual influenza vaccination season. A single compliance (vaccination 
coverage) percentage for all eligible healthcare personnel will be 
displayed for each facility.

[[Page 24217]]

    We are inviting public comment on our proposal to begin publicly 
reporting in CY 2017 pending the availability of data on Facility-wide 
Inpatient Hospital-onset Methicillin-resistant Staphylococcus aureus 
(MRSA) Bacteremia Outcome Measure (NQF #1716); Facility-wide Inpatient 
Hospital-onset Clostridium difficile Infection (CDI) Outcome Measure 
(NQF #1716); and Influenza Vaccination Coverage Among Healthcare 
Personnel (NQF #0431).
    For the Percent of Residents or Patients Who Were Assessed and 
Appropriately Given the Seasonal Influenza Vaccine (Short Stay) (NQF 
#0680), we propose to display rates annually based on the influenza 
season to avoid reporting for more than one influenza vaccination 
within a CY. For example, in 2017 we would display rates for the 
patient vaccination measure based on discharges starting on July 1, 
2015, to June 30, 2016. This is proposed because it includes the entire 
influenza vaccination season (October 1, 2015, to March 31, 2016).
    Calculations for Percent of Residents or Patients Who Were Assessed 
and Appropriately Given the Seasonal Influenza Vaccine (Short Stay) 
(NQF #0680) will be based on patients meeting any one of the following 
criteria: Patients who received the influenza vaccine during the 
influenza season, patients who were offered and declined the influenza 
vaccine, and patients who were ineligible for the influenza vaccine due 
to contraindication(s). The facility's summary observed score will be 
calculated by combining the observed counts of all the criteria. This 
is consistent with the publicly reported patient influenza vaccination 
measure for Nursing Home Compare. Additionally, for the patient 
influenza measure, we will exclude IRFs with fewer than 20 stays in the 
measure denominator. For additional information on the specifications 
for this measure, please refer to the IRF Quality Reporting Measures 
Information Web page at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/IRF-Quality-Reporting-Program-Measures-Information-.html.
    We invite public comments on our proposal to begin publicly 
reporting the Percent of Residents or Patients Who Were Assessed and 
Appropriately Given the Seasonal Influenza Vaccine (Short Stay) (NQF 
#0680) measure on discharges from July 1st of the previous calendar 
year to June 30th of the current calendar year. We invite comments on 
the public display of the measure Percent of Residents or Patients Who 
Were Assessed and Appropriately Given the Seasonal Influenza Vaccine 
(NQF #0680) in 2017 pending the availability of data.
    Additionally, we are requesting public comments on whether to 
include, in the future, public display comparison rates based on CMS 
regions or US census regions for Percent of Residents or Patients with 
Pressure Ulcers That Are New or Worsened (Short Stay) (NQF #0678); All-
Cause Unplanned Readmission Measure for 30 Days Post-Discharge from 
IRFs (NQF #2502); and Percent of Residents or Patients Who Were 
Assessed and Appropriately Given the Seasonal Influenza Vaccine (Short 
Stay) (NQF #0680) for CY 2017 public display.
2. Procedures for the Opportunity To Review and Correct Data and 
Information
    Section 1899B(g) of the Act requires the Secretary to establish 
procedures for public reporting of IRFs' performance, including the 
performance of individual IRFs, on quality measures specified under 
section 1899B(c)(1) of the Act and resource use and other measures 
specified under section 1899B(d)(1) of the Act (collectively, IMPACT 
Act measures) beginning not later than 2 years after the applicable 
specified application date under section 1899B(a)(2)(E) of the Act. 
Under section 1899B(g)(2) of the Act, the procedures must ensure, 
including through a process consistent with the process applied under 
section 1886(b)(3)(B)(viii)(VII) of the Act, which refers to public 
display and review requirements in the Hospital IQR Program, that each 
IRF has the opportunity to review and submit corrections to its data 
and information that are to be made public prior to the information 
being made public.
    In the FY 2016 IRF PPS final rule (80 FR 47126 through 47128), and 
as illustrated in Table 9 in section VII.I.a of this proposed rule, we 
finalized that once the provider has an opportunity to review and 
correct quarterly data related to measures submitted via the QIES-ASAP 
system or CDC NHSN, we would consider the provider to have been given 
the opportunity to review and correct this data. We wish to clarify 
that although the correction of data (including claims) can occur after 
the submission deadline, if such corrections are made after a 
particular quarter's submission and correction deadline, such 
corrections will not be captured in the file that contains data for 
calculation of measures for public reporting purposes. To have publicly 
displayed performance data that is based on accurate underlying data, 
it will be necessary for IRFs to review and correct this data before 
the quarterly submission and correction deadline.
    In this proposed rule, we are restating and proposing additional 
details surrounding procedures that would allow individual IRFs to 
review and correct their data and information on measures that are to 
be made public before those measure data are made public.
    For assessment-based measures, we propose a process by which we 
would provide each IRF with a confidential feedback report that would 
allow the IRF to review its performance on such measures and, during a 
review and correction period, to review and correct the data the IRF 
submitted to CMS via the CMS QIES-ASAP system for each such measure. In 
addition, during the review and correction period, the IRF would be 
able to request correction of any errors in the assessment-based 
measure rate calculations.
    We propose that these confidential feedback reports would be 
available to each IRF using the CASPER system. We refer to these 
reports as the IRF Quality Measure (QM) Reports. We propose to provide 
monthly updates to the data contained in these reports as data become 
available. We propose to provide the reports so that providers would be 
able to view their data and information at both the facility and 
patient level for its quality measures. The CASPER facility level QM 
Reports may contain information such as the numerator, denominator, 
facility rate, and national rate. The CASPER patient-level QM Reports 
may contain individual patient information which will provide 
information related to which patients were included in the quality 
measures to identify any potential errors for those measures in which 
we receive patient-level data. Currently, we do not receive patient-
level data on the CDC measure data received via the NHSN system. In 
addition, we would make other reports available in the CASPER system, 
such as IRF-PAI assessment data submission reports and provider 
validation reports, which would disclose the IRFs data submission 
status providing details on all items submitted for a selected 
assessment and the status of records submitted. We refer providers to 
the CDC/NHSN system Web site for information on obtaining reports 
specific to NHSN submitted data at http://www.cdc.gov/nhsn/inpatient-rehab/index.html. Additional information regarding the content and 
availability of these confidential

[[Page 24218]]

feedback reports would be provided on an ongoing basis on our Web 
site(s) at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/index.html.
    As previously finalized in the FY 2016 IRF PPS final rule and 
illustrated in Table 10 in section VII.I.c of this proposed rule, IRFs 
would have approximately 4.5 months after the reporting quarter to 
correct any errors of their assessment-based data (that appear on the 
CASPER generated QM reports) and NHSN data used to calculate the 
measures. During the time of data submission for a given quarterly 
reporting period and up until the quarterly submission deadline, IRFs 
could review and perform corrections to errors in the assessment data 
used to calculate the measures and could request correction of measure 
calculations. However, as already established, once the quarterly 
submission deadline occurs, the data is ``frozen'' and calculated for 
public reporting and providers can no longer submit any corrections. We 
would encourage IRFs to submit timely assessment data during a given 
quarterly reporting period and review their data and information early 
during the review and correction period so that they can identify 
errors and resubmit data before the data submission deadline.
    As noted above, the assessment data would be populated into the 
confidential feedback reports, and we intend to update the reports 
monthly with all data that have been submitted and are available. We 
believe that the data collection/submission quarterly reporting periods 
plus 4.5 months to review correct and review the data is sufficient 
time for IRFs to submit, review and, where necessary, correct their 
data and information. These time frames and deadlines for review and 
correction of such measures and data satisfy the statutory requirement 
that IRFs be provided the opportunity to review and correct their data 
and information and are consistent with the informal process hospitals 
follow in the Hospital IQR Program.
    In FY 2016 IRF PPS final rule (80 FR 47126 through 47128), we 
finalized the data submission/correction and review period. Also, we 
afford IRFs a 30-day preview period prior to public display during 
which IRFs may preview the performance information on their measures 
that will be made public. We would like to clarify that we will provide 
the preview report using the CASPER system, with which IRFs are 
familiar. The CASPER preview reports inform providers of their 
performance on each measure which will be publicly reported. Please 
note that the CASPER preview reports for the reporting quarter will be 
available after the 4.5 month correction period and the applicable data 
submission/correction deadline have passed and are refreshed on a 
quarterly basis for those measures publicly reported quarterly, and 
annually for those measure publicly reported annually. We propose to 
give IRFs 30 days to review the preview report beginning from the date 
on which they can access the report. As already finalized, corrections 
to the underlying data would not be permitted during this time; 
however, IRFs may ask for a correction to their measure calculations 
during the 30-day preview period. We are proposing that if it 
determines that the measure, as it is displayed in the preview report, 
contains a calculation error, we could suppress the data on the public 
reporting Web site, recalculate the measure and publish it at the time 
of the next scheduled public display date. This process would be 
consistent with informal processes used in the Hospital IQR Program. If 
finalized, we intend to utilize a subregulatory mechanism, such as our 
IRF QRP Web site, to provide more information about the preview 
reports, such as when they will be made available and explain the 
process for how and when providers may ask for a correction to their 
measure calculations. We invite public comment on these proposals to 
provide preview reports using the CASPER system, giving IRFs 30 days 
review the preview report and ask for a correction, and to use a 
subregulatory mechanism to explain the process for how and when 
providers may ask for a correction.
    In addition to assessment-based measures and CDC measure data 
received via the NHSN system, we have also proposed claims-based 
measures for the IRF QRP. The claims-based measures include those 
proposed to meet the requirements of the IMPACT Act as well as the All-
Cause Unplanned Readmission Measure for 30 Days Post-Discharge from 
IRFs (NQF #2502) which was finalized for public display in the FY 2016 
IRF PPS final rule (80 FR 47126 through 47127). As noted in section 
VII.N.2., section 1899B(g)(2) of the Act requires prepublication 
provider review and correction procedures that are consistent with 
those followed in the Hospital IQR Program. Under the Hospital IQR 
Program's informal procedures, for claims-based measures, we provide 
hospitals 30 days to preview their claims-based measures and data in a 
preview report containing aggregate hospital-level data. We propose to 
adopt a similar process for the IRF QRP.
    Prior to the public display of our claims-based measures, in 
alignment with the Hospital IQR, HAC and Hospital VBP Programs, we 
propose to make available through the CASPER system, a confidential 
preview report that will contain information pertaining to claims-based 
measure rate calculations, for example, facility and national rates. 
The data and information would be for feedback purposes only and could 
not be corrected. This information would be accompanied by additional 
confidential information based on the most recent administrative data 
available at the time we extract the claims data for purposes of 
calculating the measures. Because the claims-based measures are 
recalculated on an annual basis, these confidential CASPER QM reports 
for claims-based measures will be refreshed annually. As previously 
finalized in the FY 2016 IRF PPS final rule (80 FR 47126 through 
47128), IRFs would have 30 days from the date the preview report is 
made available in which to review this information. The 30-day preview 
period is the only time when IRFs would be able to see claims-based 
measures before they are publicly displayed. IRFs would not be able to 
make corrections to underlying claims data during this preview period, 
nor would they be able to add new claims to the data extract. However, 
IRFs may request that we correct our measure calculation if the IRF 
believes it is incorrect during the 30 day preview period. We propose 
that if we agree that the measure, as it is displayed in the preview 
report, contains a calculation error, we could suppress the data on the 
public reporting Web site, recalculate the measure, and publish it at 
the time of the next scheduled public display date. This process would 
be consistent with informal policies followed in the Hospital IQR 
Program. If finalized, we intend to utilize a subregulatory mechanism, 
such as our IRF QRP Web site, to explain the process for how and when 
providers may contest their measure calculations.
    The proposed claims-based measures--The MSPB-PAC IRF QRP measure; 
Discharge to Community--PAC, Potentially Preventable 30-Day Post-
Discharge Readmission Measure for IRF QRP, and Potentially Preventable 
Within Stay Readmission Measure for IRFs--use Medicare administrative 
data from hospitalizations for Medicare FFS beneficiaries. Public 
reporting of data will be based on 2 consecutive calendar years of 
data, which is consistent with the specifications of the proposed 
measures. We propose to create data

[[Page 24219]]

extracts using claims data for the proposed claims-based measures--The 
MSPB-PAC IRF QRP measure; Discharge to Community--PAC, Potentially 
Preventable 30-Day Post-Discharge Readmission Measure for IRF QRP, and 
Potentially Preventable Within Stay Readmission Measure for IRFs--at 
least 90 days after the last discharge date in the applicable period, 
which we will use for the calculations. For example, if the last 
discharge date in the applicable period for a measure is December 31, 
2017, for data collection January 1, 2016, through December 31, 2017, 
we would create the data extract on approximately March 31, 2018, at 
the earliest, and use that data to calculate the claims-based measures 
for that applicable period. Since IRFs would not be able to submit 
corrections to the underlying claims snapshot nor add claims (for 
measures that use IRF claims) to this data set at the conclusion of the 
at least the 90-day period following the last date of discharge used in 
the applicable period, at that time we would consider IRF claims data 
to be complete for purposes of calculating the claims-based measures.
    We propose that beginning with data that will be publicly displayed 
in 2018, claims-based measures will be calculated using claims data at 
least 90 days after the last discharge date in the applicable period, 
at which time we would create a data extract or snapshot of the 
available claims data to use for the measures calculation. This 
timeframe allows us to balance the need to provide timely program 
information to IRFs with the need to calculate the claims-based 
measures using as complete a data set as possible. As noted, under this 
proposed procedure, during the 30-day preview period, IRFs would not be 
able to submit corrections to the underlying claims data or to add new 
claims to the data extract. This is for two reasons: First, for certain 
measures, the claims data used to calculate the measure is derived not 
from the IRF's claims, but from the claims of another provider. For 
example, the proposed measure Potentially Preventable 30-Day Post-
Discharge Readmission Measure for IRF QRP uses claims data submitted by 
the hospital to which the patient was readmitted. The claims are not 
those of the IRF and, therefore, the IRF could not make corrections to 
them. Second, even where the claims used to calculate the measures are 
those of the IRF, it would not be not possible to correct the data 
after it is extracted for the measures calculation. This is because it 
is necessary to take a static ``snapshot'' of the claims in order to 
perform the necessary measure calculations.
    We seek to have as complete a data set as possible. We recognize 
that the proposed at least 90-day ``run-out'' period when we would take 
the data extract to calculate the claims-based measures is less than 
the Medicare program's current timely claims filing policy under which 
providers have up to 1 year from the date of discharge to submit 
claims. We considered a number of factors in determining that the 
proposed at least 90-day run-out period is appropriate to calculate the 
claims-based measures. After the data extract is created, it takes 
several months to incorporate other data needed for the calculations 
(particularly in the case of risk-adjusted or episode-based measures). 
We then need to generate and check the calculations. Because several 
months lead time is necessary after acquiring the data to generate the 
claims-based calculations, if we were to delay our data extraction 
point to 12 months after the last date of the last discharge in the 
applicable period, we would not be able to deliver the calculations to 
IRFs sooner than 18 to 24 months after the last discharge. We believe 
this would create an unacceptably long delay both for IRFs and for us 
to deliver timely calculations to IRFs for quality improvement.
    We invite public comment on these proposals.

O. Mechanism for Providing Feedback Reports to IRFs

    Section 1899B(f) of the Act requires the Secretary to provide 
confidential feedback reports to post-acute care providers on their 
performance to the measures specified under section 1899B(c)(1) and 
(d)(1) of the Act, beginning 1 year after the specified application 
date that applies to such measures and PAC providers. As discussed 
earlier, the reports we proposed to provide for use by IRFs to review 
their data and information would be confidential feedback reports that 
would enable IRFs to review their performance on the measures required 
under the IRF QRP. We propose that these confidential feedback reports 
would be available to each IRF using the CASPER system. Data contained 
within these CASPER reports would be updated as previously described, 
on a monthly basis as the data become available except for our claims-
based measures, which are only updated on an annual basis.
    We intend to provide detailed procedures to IRFs on how to obtain 
their confidential feedback CASPER reports on the IRF QRP Web site at 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/index.html. We propose to use the CMS 
QIES-ASAP system to provide quality measure reports in a manner 
consistent with how providers obtain various reports to date. The QIES-
ASAP system is a confidential and secure system with access granted to 
providers, or their designees.
    We seek public comment on this proposal to satisfy the requirement 
to provide confidential feedback reports to IRFs.

P. Proposed Method for Applying the Reduction to the FY 2017 IRF 
Increase Factor for IRFs That Fail To Meet the Quality Reporting 
Requirements

    As previously noted, section 1886(j)(7)(A)(i) of the Act requires 
the application of a 2-percentage point reduction of the applicable 
market basket increase factor for IRFs that fail to comply with the 
quality data submission requirements. In compliance with section 
1886(j)(7)(A)(i) of the Act, we will apply a 2-percentage point 
reduction to the applicable FY 2017 market basket increase factor (1.45 
percent) in calculating a proposed adjusted FY 2017 standard payment 
conversion factor to apply to payments for only those IRFs that failed 
to comply with the data submission requirements. As previously noted, 
application of the 2-percentage point reduction may result in an update 
that is less than 0.0 for a fiscal year and in payment rates for a 
fiscal year being less than such payment rates for the preceding fiscal 
year. Also, reporting-based reductions to the market basket increase 
factor will not be cumulative; they will only apply for the FY 
involved. Table 13 shows the calculation of the proposed adjusted FY 
2017 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 applicable reporting period(s).

[[Page 24220]]



    Table 20--Calculations To Determine the Proposed Adjusted FY 2017
   Standard Payment Conversion Factor for IRFs That Failed To Meet the
                      Quality Reporting Requirement
------------------------------------------------------------------------
        Explanation for adjustment                  Calculations
------------------------------------------------------------------------
Standard Payment Conversion Factor for FY   $15,478
 2016.
Market Basket Increase Factor for FY 2017   x 0.9945
 (2.7 percent), reduced by 0.5 percentage
 point for the productivity adjustment as
 required by section 1886(j)(3)(C)(ii)(I)
 of the Act, reduced by 0.75 percentage
 point in accordance with sections
 1886(j)(3)(C) and (D) of the Act and
 further reduced by 2 percentage points
 for IRFs that failed to meet the quality
 reporting requirement.
Budget Neutrality Factor for the Wage       x 0.9992
 Index and Labor-Related Share.
Budget Neutrality Factor for the Revisions  x 0.9990
 to the CMG Relative Weights.
Proposed Adjusted FY 2017 Standard Payment  = $15,365
 Conversion Factor.
------------------------------------------------------------------------

    We invite public comment on the proposed method for applying the 
reduction to the FY 2017 IRF increase factor for IRFs that fail to meet 
the quality reporting requirements.

VIII. Collection of Information Requirements

A. Statutory Requirement for Solicitation of Comments

    Under the Paperwork Reduction Act of 1995 (PRA), we are required to 
provide 60-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the OMB for review and approval. To fairly evaluate whether an 
information collection should be approved by OMB, section 3506(c)(2)(A) 
of the PRA 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 proposed rule makes reference to associated information 
collections that are not discussed in the regulation text contained in 
this document.

B. Collection of Information Requirements for Updates Related to the 
IRF QRP

    Failure to submit data required under section 1886(j)(7)(C) and (F) 
of the Act will result in the reduction of the annual update to the 
standard federal rate for discharges occurring during such fiscal year 
by 2 percentage points for any IRF that does not comply with the 
requirements established by the Secretary. At the time that this 
analysis was prepared, 91, or approximately 8 percent, of the 1166 
active Medicare-certified IRFs did not receive the full annual 
percentage increase for the FY 2015 annual payment update 
determination. Information is not available to determine the precise 
number of IRFs that will not meet the requirements to receive the full 
annual percentage increase for the FY 2017 payment determination.
    We believe that the burden associated with the IRF QRP is the time 
and effort associated with data collection and reporting. As of 
February 1, 2016 there are approximately 1131 IRFs currently reporting 
quality data to CMS. In this proposed rule, we are proposing 5 
measures. For the FY 2018 payment determinations and subsequent years, 
we are proposing four new measures: (1) MSPB-PAC IRF QRP; (2) Discharge 
to Community-PAC IRF QRP, and (3) Potentially Preventable 30-Day Post-
Discharge Readmission Measure for IRF QRP; (4) Potentially Preventable 
30-Day Within Stay Readmission Measure for IRF QRP. These four measures 
are Medicare claims-based measures; because claims-based measures can 
be calculated based on data that are already reported to the Medicare 
program for payment purposes, we believe there will be no additional 
impact.
    For the FY 2020 payment determination and subsequent years, we are 
proposing one measure: Drug Regimen Review Conducted with Follow-Up for 
Identified Issues--PAC IRF QRP. Additionally we propose that data for 
this new measure will be collected and reported using the IRF-PAI 
(version effective October 1, 2018).
    Our burden calculations take into account all ``new'' items 
required on the IRF-PAI (version effective October 1, 2018) to support 
data collection and reporting for this proposed measure. The addition 
of the new items required to collect the newly proposed measure is for 
the purpose of achieving standardization of data elements.
    We estimate the additional elements for the newly proposed Drug 
Regimen Review Conducted with Follow-Up for Identified Issues--PAC IRF 
QRP measure will take 6 minutes of nursing/clinical staff time to 
report data on admission and 4 minutes of nursing/clinical staff time 
to report data on discharge, for a total of 10 minutes. We estimate 
that the additional IRF-PAI items we are proposing will be completed by 
Registered Nurses (RN) for approximately 75 percent of the time 
required, and Pharmacists for approximately 25 percent of the time 
required. Individual providers determine the staffing resources 
necessary. In accordance with OMB control number 0938-0842, we estimate 
398,254 discharges from all IRFs annually, with an additional burden of 
10 minutes. This would equate to 66,375.67 total hours or 58.69 hours 
per IRF. We believe this work will be completed by RNs (75 percent) and 
Pharmacists (25 percent). We obtained mean hourly wages for these staff 
from the U.S. Bureau of Labor Statistics' May 2014 National 
Occupational Employment and Wage Estimates (http://www.bls.gov/oes/current/oes_nat.htm), and to account for overhead and fringe benefits, 
we have doubled the mean hourly wage. Per the U.S. Bureau of Labor and 
Statistics, the mean hourly wage for a RN is $33.55. However, to 
account for overhead and fringe benefits, we have doubled the mean 
hourly wage, making it $67.10 for an RN. Per the U.S. Bureau of Labor 
and Statistics, the mean hourly wage for a pharmacist is $56.98. 
However, to account for overhead and fringe benefits, we have doubled 
the mean hourly wage, making it $113.96 for a pharmacist. Given these 
wages and time estimates, the total cost related to the newly proposed 
measures is estimated at $4,625.46 per IRF annually, or $5,231,398.17 
for all IRFs annually.
    For the quality reporting during extraordinary circumstances, 
section VII.M of this proposed rule proposes to add a previously 
finalized process that IRFs may request an exception or extension from 
the FY 2019 payment determination and that of subsequent payment 
determinations. The request must be submitted by email within 90

[[Page 24221]]

days from the date that the extraordinary circumstances occurred.
    While the preparation and submission of the request is an 
information collection, unlike the aforementioned temporary exemption 
of the data collection requirements for the new drug regimen review 
measure, the request is not expected to be submitted to OMB for formal 
review and approval since we estimate less than two requests (total) 
per year. Since we estimate fewer than 10 respondents annually, the 
information collection requirement and associated burden is not subject 
as stated in 5 CFR 1320.3(c) of the implementing regulations of the 
Paperwork Reduction Act of 1995.
    As discussed in section VII.N of this proposed rule, this rule 
proposes to add a previously finalized process that will enable IRFs to 
request reconsiderations of our initial non-compliance decision in the 
event that it believes that it was incorrectly identified as being 
subject to the 2-percentage point reduction to its annual increase 
factor due to non-compliance with the IRF QRP reporting requirements. 
While there is burden associated with filing a reconsideration request, 
5 CFR 1320.4 of OMB's implementing regulations for PRA excludes 
activities during the conduct of administrative actions such as 
reconsiderations.
    If you comment on these information collection and recordkeeping 
requirements, please submit your comments electronically as specified 
in the ADDRESSES section of this proposed rule.

IX. Response to Public Comments

    Because of the large number of public comments we normally receive 
on Federal Register documents, we are not able to acknowledge or 
respond to them individually. We will consider all comments we receive 
by the date and time specified in the DATES section of this preamble, 
and, when we proceed with a subsequent document, we will respond to the 
comments in the preamble to that document.

X. Regulatory Impact Analysis

A. Statement of Need

    This proposed rule updates the IRF prospective payment rates for FY 
2017 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 proposed rule also 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.
    Furthermore, this proposed rule also adopts policy changes under 
the statutory discretion afforded to the Secretary under section 
1886(j)(7) of the Act. Specifically, we propose to revise and update 
the quality measures and reporting requirements under the IRF quality 
reporting program.

B. Overall Impacts

    We have examined the impacts of this proposed rule as required by 
Executive Order 12866 (September 30, 1993, Regulatory Planning and 
Review), Executive Order 13563 on Improving Regulation and Regulatory 
Review (January 18, 2011), the Regulatory Flexibility Act (September 
19, 1980, Pub. L. 96-354) (RFA), section 1102(b) of the Act, section 
202 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), 
Executive Order 13132 on Federalism (August 4, 1999), and the 
Congressional Review Act (5 U.S.C. 804(2)).
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. A regulatory impact analysis (RIA) must be prepared for a 
major final rule with economically significant effects ($100 million or 
more in any 1 year). We estimate the total impact of the policy updates 
described in this proposed rule by comparing the estimated payments in 
FY 2017 with those in FY 2016. This analysis results in an estimated 
$125 million increase for FY 2017 IRF PPS payments. As a result, this 
proposed rule is designated as economically ``significant'' under 
section 3(f)(1) of Executive Order 12866, and hence a major rule under 
the Congressional Review Act. Also, the rule has been reviewed by OMB.
    The Regulatory Flexibility Act (RFA) requires agencies to analyze 
options for 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 $7.5 million to $38.5 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 and updated on February 26, 2016.) 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 
HHS generally uses a revenue impact of 3 to 5 percent as a significance 
threshold under the RFA. As shown in Table 21, we estimate that the net 
revenue impact of this proposed rule on all IRFs is to increase 
estimated payments by approximately 1.6 percent. The rates and policies 
set forth in this proposed rule will not have a significant impact (not 
greater than 3 percent) on a substantial number of small entities. 
Medicare Administrative Contractors are not considered to be small 
entities. Individuals and states are not included in the definition of 
a small entity.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 604 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of a Metropolitan 
Statistical Area and has fewer than 100 beds. As discussed in detail 
below in this section, the rates and policies set forth in this 
proposed rule will not have a significant impact (not greater than 3 
percent) on a substantial number of rural hospitals based on the data 
of the 140 rural units and 11 rural hospitals in our database of 1,131 
IRFs for which data were available.

[[Page 24222]]

    Section 202 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 
104-04, enacted on March 22, 1995) also requires that agencies assess 
anticipated costs and benefits before issuing any rule whose mandates 
require spending in any 1 year of $100 million in 1995 dollars, updated 
annually for inflation. In 2016, that threshold level is approximately 
$146 million. This proposed rule will not mandate spending costs on 
state, local, or tribal governments, in the aggregate, or by the 
private sector, of greater than $146 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, this proposed 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 proposed rule proposes updates to the IRF PPS rates contained 
in the FY 2016 IRF PPS final rule (80 FR 47036). Specifically, this 
proposed rule would update the CMG relative weights and average length 
of stay values, the wage index, and the outlier threshold for high-cost 
cases. This proposed rule would apply a MFP adjustment to the FY 2017 
IRF market basket increase factor in accordance with section 
1886(j)(3)(C)(ii)(I) of the Act, and a 0.75 percentage point reduction 
to the FY 2017 IRF market basket increase factor in accordance with 
sections 1886(j)(3)(C)(ii)(II) and (D)(v) of the Act. Further, this 
proposed rule contains proposed revisions to the IRF quality reporting 
requirements that are expected to result in some additional financial 
effects on IRFs. In addition, section VII of this proposed rule 
discusses the implementation of the required 2 percentage point 
reduction of the market basket increase factor for any IRF that fails 
to meet the IRF quality reporting requirements, in accordance with 
section 1886(j)(7) of the Act.
    We estimate that the impact of the changes and updates described in 
this proposed rule will be a net estimated increase of $125 million in 
payments to IRF providers. This estimate does not include the 
implementation of the required 2 percentage point reduction of the 
market basket increase factor for any IRF that fails to meet the IRF 
quality reporting requirements (as discussed in section X.C.7. of this 
proposed rule). The impact analysis in Table 21 of this proposed rule 
represents the projected effects of the updates to IRF PPS payments for 
FY 2017 compared with the estimated IRF PPS payments in FY 2016. 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 2017, we are proposing standard annual 
revisions described in this proposed 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 2017 IRF 
market basket increase factor in accordance with section 
1886(j)(3)(C)(ii)(I) of the Act, and a 0.75 percentage point reduction 
to the FY 2017 IRF market basket increase factor in accordance with 
sections 1886(j)(3)(C)(ii)(II) and -(D)(v) of the Act. We estimate the 
total increase in payments to IRFs in FY 2017, relative to FY 2016, 
will be approximately $125 million.
    This estimate is derived from the application of the FY 2017 IRF 
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 0.75 
percentage point reduction in accordance with sections 
1886(j)(3)(C)(ii)(II) and (D)(v) of the Act, which yields an estimated 
increase in aggregate payments to IRFs of $110 million. Furthermore, 
there is an additional estimated $15 million increase in aggregate 
payments to IRFs due to the proposed update to the outlier threshold 
amount. Outlier payments are estimated to increase from approximately 
2.8 percent in FY 2016 to 3.0 percent in FY 2017. Therefore, summed 
together, we estimate that these updates will result in a net increase 
in estimated payments of $125 million from FY 2016 to FY 2017.
    The effects of the proposed updates that impact IRF PPS payment 
rates are shown in Table 21. The following proposed updates that affect 
the IRF PPS payment rates are discussed separately below:
     The effects of the proposed update to the outlier 
threshold amount, from approximately 2.8 percent to 3.0 percent of 
total estimated payments for FY 2017, consistent with section 
1886(j)(4) of the Act.
     The effects of the proposed annual market basket update 
(using the IRF 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 0.75 percentage point reduction 
in accordance with sections 1886(j)(3)(C)(ii)(II) and (D)(v) of the 
Act.
     The effects of applying the proposed budget-neutral labor-
related share and wage index adjustment, as required under section 
1886(j)(6) of the Act.
     The effects of the proposed budget-neutral changes to the 
CMG relative weights and average length of stay values, under the 
authority of section 1886(j)(2)(C)(i) of the Act.
     The total change in estimated payments based on the 
proposed FY 2017 payment changes relative to the estimated FY 2016 
payments.
2. Description of Table 21
    Table 21 categorizes IRFs by geographic location, including urban 
or rural location, and location for CMS's 9 Census divisions (as 
defined on the cost report) of the country. In addition, the table 
divides IRFs into those that are separate rehabilitation hospitals 
(otherwise called freestanding hospitals in this section), those that 
are rehabilitation units of a hospital (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 21 shows the overall impact on the 1,131 IRFs included in the 
analysis.
    The next 12 rows of Table 21 contain IRFs categorized according to 
their geographic location, designation as

[[Page 24223]]

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 980 
IRFs located in urban areas included in our analysis. Among these, 
there are 729 IRF units of hospitals located in urban areas and 251 
freestanding IRF hospitals located in urban areas. There are 151 IRFs 
located in rural areas included in our analysis. Among these, there are 
140 IRF units of hospitals located in rural areas and 11 freestanding 
IRF hospitals located in rural areas. There are 408 for-profit IRFs. 
Among these, there are 355 IRFs in urban areas and 53 IRFs in rural 
areas. There are 652 non-profit IRFs. Among these, there are 562 urban 
IRFs and 90 rural IRFs. There are 71 government-owned IRFs. Among 
these, there are 63 urban IRFs and 8 rural IRFs.
    The remaining four parts of Table 21 show IRFs grouped by their 
geographic location within a region, by teaching status, and by DSH PP. 
First, IRFs located in urban areas are categorized for their location 
within a particular one of the nine Census geographic regions. Second, 
IRFs located in rural areas are categorized for their location within a 
particular one of the nine Census geographic regions. In some cases, 
especially for rural IRFs located in the New England, Mountain, and 
Pacific regions, the number of IRFs represented is small. IRFs are then 
grouped by teaching status, including non-teaching IRFs, IRFs with an 
intern and resident to average daily census (ADC) ratio less than 10 
percent, IRFs with an intern and resident to ADC ratio greater than or 
equal to 10 percent and less than or equal to 19 percent, and IRFs with 
an intern and resident to ADC ratio greater than 19 percent. Finally, 
IRFs are grouped by DSH PP, including IRFs with zero DSH PP, IRFs with 
a DSH PP less than 5 percent, IRFs with a DSH PP between 5 and less 
than 10 percent, IRFs with a DSH PP between 10 and 20 percent, and IRFs 
with a DSH PP greater than 20 percent.
    The estimated impacts of each policy described in this proposed 
rule to the facility categories listed are shown in the columns of 
Table 21. The description of each column is as follows:
     Column (1) shows the facility classification categories.
     Column (2) shows the number of IRFs in each category in 
our FY 2016 analysis file.
     Column (3) shows the number of cases in each category in 
our FY 2016 analysis file.
     Column (4) shows the estimated effect of the proposed 
adjustment to the outlier threshold amount.
     Column (5) shows the estimated effect of the proposed 
update to the IRF labor-related share and wage index, in a budget-
neutral manner.
     Column (6) shows the estimated effect of the proposed 
update to the CMG relative weights and average length of stay values, 
in a budget-neutral manner.
     Column (7) compares our estimates of the payments per 
discharge, incorporating all of the proposed policies reflected in this 
proposed rule for FY 2017 to our estimates of payments per discharge in 
FY 2016.
    The average estimated increase for all IRFs is approximately 1.6 
percent. This estimated net increase includes the effects of the 
proposed IRF market basket increase factor for FY 2017 of 2.7 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 0.75 percentage point in accordance with sections 
1886(j)(3)(C)(ii)(II) and (D)(v) of the Act. It also includes the 
approximate 0.2 percent overall increase in estimated IRF outlier 
payments from the proposed update to the outlier threshold amount. 
Since we are making the proposed updates to the IRF wage index and the 
CMG relative weights in a budget-neutral manner, they will not be 
expected to affect total estimated IRF payments in the aggregate. 
However, as described in more detail in each section, they will be 
expected to affect the estimated distribution of payments among 
providers.

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[[Page 24225]]


3. Impact of the Proposed Update to the Outlier Threshold Amount
    The estimated effects of the proposed update to the outlier 
threshold adjustment are presented in column 4 of Table 21. In the FY 
2016 IRF PPS final rule (80 FR 47036), we used FY 2014 IRF claims data 
(the best, most complete data available at that time) to set the 
outlier threshold amount for FY 2016 so that estimated outlier payments 
would equal 3 percent of total estimated payments for FY 2016.
    For this proposed rule, we are using preliminary FY 2015 IRF claims 
data, and, based on that preliminary analysis, we estimate that IRF 
outlier payments as a percentage of total estimated IRF payments would 
be 2.8 percent in FY 2016. Thus, we propose to adjust the outlier 
threshold amount in this final rule to set total estimated outlier 
payments equal to 3 percent of total estimated payments in FY 2017. The 
estimated change in total IRF payments for FY 2017, therefore, includes 
an approximate 0.2 percent increase in payments because the estimated 
outlier portion of total payments is estimated to increase from 
approximately 2.8 percent to 3 percent.
    The impact of this proposed outlier adjustment update (as shown in 
column 4 of Table 21) is to increase estimated overall payments to IRFs 
by about 0.2 percent. We estimate the largest increase in payments from 
the update to the outlier threshold amount to be 0.8 percent for rural 
IRFs in the Pacific region.
4. Impact of the Proposed CBSA Wage Index and Labor-Related Share
    In column 5 of Table 21, we present the effects of the proposed 
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 proposed changes in the two 
have a combined effect on payments to providers. As discussed in 
section V.C. of this proposed rule, we are proposing to keep the labor-
related share unchanged from FY 2016 to FY 2017 at 71.0 percent.
5. Impact of the Proposed Update to the CMG Relative Weights and 
Average Length of Stay Values.
    In column 6 of Table 21, we present the effects of the proposed 
budget-neutral update of the CMG relative weights and average length of 
stay values. In the aggregate, we do not estimate that these proposed 
updates will affect overall estimated payments of IRFs. However, we do 
expect these updates to have small distributional effects.
6. Effects of Proposed Requirements for the IRF QRP for FY 2018
    In accordance with section 1886(j)(7) of the Act, we will implement 
a 2 percentage point reduction in the FY 2018 increase factor for IRFs 
that have failed to report the required quality reporting data to us 
during the most recent IRF quality reporting period. In section VII.P 
of this proposed rule, we discuss the proposed method for applying the 
2 percentage point reduction to IRFs that fail to meet the IRF QRP 
requirements. At the time that this analysis was prepared, 91, or 
approximately 8 percent, of the 1166 active Medicare-certified IRFs did 
not receive the full annual percentage increase for the FY 2015 annual 
payment update determination. Information is not available to determine 
the precise number of IRFs that will not meet the requirements to 
receive the full annual percentage increase for the FY 2017 payment 
determination.
    In section VII.L of this proposed rule, we discuss our proposal to 
suspend the previously finalized data accuracy validation policy for 
IRFs. While we cannot estimate the increase in the number of IRFs that 
will meet IRF QRP compliance standards at this time, we believe that 
this number will increase due to the temporary suspension of this 
policy. Thus, we estimate that the suspension of this policy will 
decrease impact on overall IRF payments, by increasing the rate of 
compliance, in addition to decreasing the cost of the IRF QRP to each 
IRF provider by approximately $47,320 per IRF, which was the estimated 
cost to each IRF provider to the implement the previously finalized 
policy.
    In section VII.F of this proposed rule, we are proposing four 
measures for the FY 2018 payment determinations and subsequent years: 
(1) MSPB-PAC IRF QRP; (2) Discharge to Community-PAC IRF QRP, and (3) 
Potentially Preventable 30-Day Post-Discharge Readmission Measure for 
IRF QRP; (4) Potentially Preventable Within Stay Readmission Measure 
IRFs. These four measures are Medicare claims-based measures; because 
claims-based measures can be calculated based on data that are already 
reported to the Medicare program for payment purposes, we believe there 
will be no additional impact.
    In section VII.G of this proposed rule, we are also proposing to 
adopt one measure for the FY 2020 payment determination and subsequent 
years: Drug Regimen Review Conducted with Follow-Up for Identified 
Issues--PAC IRF QRP. Additionally, we propose that data for this 
measure will be collected and reported using the IRF-PAI (version 
effective October 1, 2018). While the reporting of data on quality 
measures is an information collection, we believe that the burden 
associated with modifications to the IRF-PAI discussed in this proposed 
rule fall under the PRA exceptions provided in 1899B(m) of the Act 
because they are required to achieve the standardization of patient 
assessment data. Section 1899B(m) of the Act provides that the PRA does 
not apply to section 1899B and the sections referenced in section 
1899B(a)(2)(B) of the Act that require modification to achieve the 
standardization of patient assessment data. The requirement and burden 
will, however, be submitted to OMB for review and approval when the 
modifications to the IRF-PAI or other applicable PAC assessment 
instrument are not used to achieve the standardization of patient 
assessment data.
    The total cost related to the proposed measures is estimated at 
$4,625.46 per IRF annually, or $5,231,398.17 for all IRFs annually.
    We intend to continue to closely monitor the effects of this new 
quality reporting program on IRF providers and help perpetuate 
successful reporting outcomes through ongoing stakeholder education, 
national trainings, IRF provider announcements, Web site postings, CMS 
Open Door Forums, and general and technical help desks.

D. Alternatives Considered

    The following is a discussion of the alternatives considered for 
the IRF PPS updates contained in this proposed 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 IRF market basket 
increase factor for FY 2017. However, as noted previously in this 
proposed 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 2017, and sections 1886(j)(3)(C)(ii)(II) and 
1886(j)(3)(D)(v) of the Act require the Secretary to apply a 0.75 
percentage point reduction to the market basket increase factor for FY 
2017. Thus, in accordance with section 1886(j)(3)(C) of the Act, we 
propose to update the IRF

[[Page 24226]]

federal prospective payments in this proposed rule by 1.45 percent 
(which equals the 2.7 percent estimated IRF market basket increase 
factor for FY 2017 reduced by a 0.5 percentage point productivity 
adjustment as required by section 1886(j)(3)(C)(ii)(I) of the Act and 
further reduced by 0.75 percentage point).
    We considered maintaining the existing CMG relative weights and 
average length of stay values for FY 2017. 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 propose to update the CMG relative weights and 
average length of stay values at this time to ensure that IRF PPS 
payments continue to reflect as accurately as possible the current 
costs of care in IRFs.
    We considered updating facility-level adjustment factors for FY 
2017. However, as discussed in more detail in the FY 2015 final rule 
(79 FR 45872), we believe that freezing the facility-level adjustments 
at FY 2014 levels for FY 2015 and all subsequent years (unless and 
until the data indicate that they need to be further updated) will 
allow us an opportunity to monitor the effects of the substantial 
changes to the adjustment factors for FY 2014, and will allow IRFs time 
to adjust to the previous changes.
    We considered maintaining the existing outlier threshold amount for 
FY 2017. However, analysis of updated FY 2015 data indicates that 
estimated outlier payments would be lower than 3 percent of total 
estimated payments for FY 2017, by approximately 0.2 percent, unless we 
updated the outlier threshold amount. Consequently, we propose 
adjusting the outlier threshold amount in this proposed rule to reflect 
a 0.2 percent increase thereby setting the total outlier payments equal 
to 3 percent, instead of 2.8 percent, of aggregate estimated payments 
in FY 2017.

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 22, we have prepared an accounting statement showing 
the classification of the expenditures associated with the provisions 
of this proposed rule. Table 22 provides our best estimate of the 
increase in Medicare payments under the IRF PPS as a result of the 
proposed updates presented in this proposed rule based on the data for 
1,131 IRFs in our database. In addition, Table 22 presents the costs 
associated with the proposed new IRF quality reporting program for FY 
2017.

Table 22--Accounting Statement: Classification of Estimated Expenditures
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Category                                 Transfers
------------------------------------------------------------------------
Change in Estimated Transfers from FY
 2016 IRF PPS to FY 2017 IRF PPS:
Annualized Monetized Transfers.........  $125 million.
From Whom to Whom?.....................  Federal Government to IRF
                                          Medicare Providers.
------------------------------------------------------------------------
Category                                 Costs
------------------------------------------------------------------------
FY 2017 Cost to Updating the Quality
 Reporting Program:
Cost for IRFs to Submit Data for the     $5,231,398.17.
 Quality Reporting Program.
------------------------------------------------------------------------

F. Conclusion

    Overall, the estimated payments per discharge for IRFs in FY 2017 
are projected to increase by 1.6 percent, compared with the estimated 
payments in FY 2016, as reflected in column 7 of Table 21.
    IRF payments per discharge are estimated to increase by 1.7 percent 
in urban areas and 0.9 percent in rural areas, compared with estimated 
FY 2016 payments. Payments per discharge to rehabilitation units are 
estimated to increase 1.8 percent in urban areas and 1.1 percent in 
rural areas. Payments per discharge to freestanding rehabilitation 
hospitals are estimated to increase 1.5 percent in urban areas and 
decrease 0.1 percent in rural areas.
    Overall, IRFs are estimated to experience a net increase in 
payments as a result of the proposed policies in this proposed rule. 
The largest payment increase is estimated to be a 2.4 percent increase 
for urban IRFs located in the Middle Atlantic region.
    In accordance with the provisions of Executive Order 12866, this 
proposed rule was reviewed by the Office of Management and Budget.

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 proposes to amend 42 CFR chapter IV as set forth 
below:

PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL 
SERVICES

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

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh), sec. 124 of Pub. L. 106-113 (113 Stat. 
1501A-332), sec. 1206 of Pub. L. 113-67, and sec. 112 of Pub. L. 
113-93.

0
2. Section 412.634 is amended by revising paragraph (c)(2) and adding 
paragraph (f) to read as follows:


Sec.  412.634  Requirements under the Inpatient Rehabilitation Facility 
(IRF) Quality Reporting Program (QRP).

* * * * *
    (c) * * *
    (2) An IRF must request an exception or extension within 90 days of 
the date that the extraordinary circumstances occurred.
* * * * *
    (f) Data completion thresholds. (1) IRFs must meet or exceed two 
separate data completeness thresholds: One threshold set at 95 percent 
for completion of quality measures data collected using the IRF-PAI 
submitted through the QIES and a second threshold set at 100 percent 
for quality measures data collected and submitted using the CDC NHSN.
    (2) These thresholds will apply to all measures adopted into IRF 
QRP.
    (3) An IRF must meet or exceed both thresholds to avoid receiving a 
2 percentage point reduction to their annual payment update for a given 
fiscal year, beginning with FY 2016 and for all subsequent payment 
updates.


[[Page 24227]]


    Dated: April 5, 2016.
Andrew M. Slavitt,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Dated: April 14, 2016.
Sylvia M. Burwell,
Secretary, Department of Health and Human Services.
[FR Doc. 2016-09397 Filed 4-21-16; 4:15 pm]
BILLING CODE 4120-01-P