[Federal Register Volume 82, Number 148 (Thursday, August 3, 2017)]
[Rules and Regulations]
[Pages 36238-36305]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-16291]



[[Page 36237]]

Vol. 82

Thursday,

No. 148

August 3, 2017

Part III





Department of Health and Human Services





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Centers for Medicare & Medicaid Services





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42 CFR Part 412





 Medicare Program; Inpatient Rehabilitation Facility Prospective 
Payment System for Federal Fiscal Year 2018; Final Rule

  Federal Register / Vol. 82 , No. 148 / Thursday, August 3, 2017 / 
Rules and Regulations  

[[Page 36238]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 412

[CMS-1671-F]
RIN 0938-AS99


Medicare Program; Inpatient Rehabilitation Facility Prospective 
Payment System for Federal Fiscal Year 2018

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

ACTION: Final rule.

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SUMMARY: This final rule updates the prospective payment rates for 
inpatient rehabilitation facilities (IRFs) for federal fiscal year (FY) 
2018 as required by the statute. As required by section 1886(j)(5) of 
the Social Security Act (the Act), this rule includes the 
classification and weighting factors for the IRF prospective payment 
system's (IRF PPS) case-mix groups and a description of the 
methodologies and data used in computing the prospective payment rates 
for FY 2018. This final rule also revises the International 
Classification of Diseases, 10th Revision, Clinical Modification (ICD-
10-CM) diagnosis codes that are used to determine presumptive 
compliance under the ``60 percent rule,'' removes the 25 percent 
payment penalty for inpatient rehabilitation facility patient 
assessment instrument (IRF-PAI) late transmissions, removes the 
voluntary swallowing status item (Item 27) from the IRF-PAI, summarizes 
comments regarding the criteria used to classify facilities for payment 
under the IRF PPS, provides for a subregulatory process for certain 
annual updates to the presumptive methodology diagnosis code lists, 
adopts the use of height/weight items on the IRF-PAI to determine 
patient body mass index (BMI) greater than 50 for cases of single-joint 
replacement under the presumptive methodology, and revises and updates 
measures and reporting requirements under the IRF quality reporting 
program (QRP).

DATES: 
    Effective Dates: These regulations are effective on October 1, 
2017.
    Applicability Dates: The updated IRF prospective payment rates are 
applicable for IRF discharges occurring on or after October 1, 2017, 
and on or before September 30, 2018 (FY 2018). All other changes 
discussed in this final rule, including the revisions to the ICD-10-CM 
diagnosis codes that are used to determine presumptive compliance under 
the 60 percent rule, removal of the 25 percent payment penalty for IRF-
PAI late transmissions, removal of the voluntary swallowing status item 
(Item 27) from the IRF-PAI, provision for a subregulatory process for 
certain annual updates to the presumptive methodology diagnosis code 
lists, use of height/weight items on the IRF-PAI to determine patient 
BMI greater than 50 for cases of single-joint replacement under the 
presumptive methodology, and the updated measures and reporting 
requirements under the IRF QRP, are applicable for IRF discharges 
occurring on or after October 1, 2017.

FOR FURTHER INFORMATION CONTACT: 
    Gwendolyn Johnson, (410) 786-6954, for general information.
    Catie Kraemer, (410) 786-0179, for information about the wage 
index.
    Kadie Derby, (410) 786-0468, or Susanne Seagrave, (410) 786-0044, 
for information about the payment policies and payment rates.
    Christine Grose, (410) 786-1362, for information about the quality 
reporting program.

SUPPLEMENTARY INFORMATION:  The IRF PPS Addenda along with other 
supporting documents and tables referenced in this final rule are 
available through the Internet on the CMS Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/index.html.

Executive Summary

A. Purpose

    This final rule updates the prospective payment rates for IRFs for 
FY 2018 (that is, for discharges occurring on or after October 1, 2017, 
and on or before September 30, 2018) as required under section 
1886(j)(3)(C) of 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 2018. This final 
rule also revises the ICD-10-CM diagnosis codes that are used to 
determine presumptive compliance under the 60 percent rule, removes the 
25 percent payment penalty for IRF-PAI late transmissions, removes the 
voluntary swallowing status item (Item 27) from the IRF-PAI, provides 
for a subregulatory process for certain annual updates to the 
presumptive methodology diagnosis code lists, summarizes comments 
regarding the criteria used to classify facilities for payment under 
the IRF PPS, adopts the use of height/weight items from the IRF-PAI to 
determine patient BMI greater than 50 for cases of lower extremity 
single joint replacement under the presumptive methodology, and revises 
and updates the measures and reporting requirements under the IRF QRP.

B. Summary of Major Provisions

    In this final rule, we use the methods described in the FY 2017 IRF 
PPS final rule (81 FR 52056) to update the prospective payment rates 
for FY 2018 using updated FY 2016 IRF claims and the most recent 
available IRF cost report data, which is FY 2015 IRF cost report data. 
(Note: In the interest of brevity, the rates previously referred to as 
the ``Federal prospective payment rates'' are now referred to as the 
``prospective payment rates''. No change in meaning is intended.) We 
are also finalizing revisions and updates to the quality measures and 
reporting requirements under the IRF QRP.

C. Summary of Impacts

------------------------------------------------------------------------
       Provision description                      Transfers
------------------------------------------------------------------------
FY 2018 IRF PPS payment rate        The overall economic impact of this
 update.                             final rule is an estimated $75
                                     million in increased payments from
                                     the Federal government to IRFs
                                     during FY 2018.
                                   -------------------------------------
                                                    Costs
                                   -------------------------------------
New quality reporting program       The total reduction in costs in FY
 requirements.                       2018 for IRFs for the new quality
                                     reporting requirements is estimated
                                     to be $2.6 million.
------------------------------------------------------------------------


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    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 PPACA 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. Analysis and Responses to Public Comments
IV. Update to the Case-Mix Group (CMG) Relative Weights and Average 
Length of Stay Values for FY 2018
V. Facility-Level Adjustment Factors
VI. FY 2018 IRF PPS Payment Update
    A. Background
    B. FY 2018 Market Basket Update and Productivity Adjustment
    C. Labor-Related Share for FY 2018
    D. Wage Adjustment
    E. Description of the IRF Standard Payment Conversion Factor and 
Payment Rates for FY 2018
    F. Example of the Methodology for Adjusting the Prospective 
Payment Rates
VII. Update to Payments for High-Cost Outliers under the IRF PPS
    A. Update to the Outlier Threshold Amount for FY 2018
    B. Update to the IRF Cost-to-Charge Ratio Ceiling and Urban/
Rural Averages
VIII. Removal of the 25 Percent Payment Penalty for IRF-PAI Late 
Submissions
IX. Removal of the Voluntary Item 27 (Swallowing Status) from the 
IRF-PAI
X. Refinements to the Presumptive Compliance Methodology ICD-10-CM 
Diagnosis Codes
    A. Background on the IRF 60 Percent Rule
    B. Enforcement of the IRF 60 Percent Rule
    C. Background on the Use of ICD-10-CM Diagnosis Codes in the 
Presumptive Compliance Method
    D. Changes to the Presumptive Methodology Diagnosis Code List
    E. Revisions Involving Traumatic Brain Injury and Hip Fracture 
Codes
    F. Revisions Regarding Major Multiple Trauma Codes
    G. Further examination of Unspecified Codes and Arthritis Codes
    H. Further examination of ICD-10-CM Code G72.89--Other Specified 
Myopathies
    I. Implementation of the Revisions to the Presumptive 
Methodology
    J. Summary of Comments Regarding the Criteria Used to Classify 
Facilities for Payment Under the IRF PPS
XI. Subregulatory Process for Certain Updates to Presumptive 
Methodology Diagnosis Code Lists
XII. Use of IRF-PAI Data to Determine Patient Body Mass Index (BMI) 
Greater Than 50 for Cases of Lower Extremity Single Joint 
Replacement
XIII. Revisions and Updates to the IRF Quality Reporting Program 
(QRP)
    A. Background and Statutory Authority
    B. General Considerations Used for Selection of Quality Measures 
for the IRF QRP
    C. Collection of Standardized Patient Assessment Data under the 
IRF QRP
    D. Policy for Retaining IRF QRP Measures and Application of That 
Policy to Standardized Patient Assessment Data
    E. Policy for Adopting Changes to IRF QRP Measures and 
Application of that Policy to Standardized Patient Assessment Data
    F. Quality Measures Currently Adopted for the IRF QRP
    G. IRF QRP Quality Measures Beginning with the FY 2020 IRF QRP
    H. Removal of the All-Cause Unplanned Readmission Measure for 30 
Days Post-Discharge from IRFs from the IRF QRP
    I. IRF QRP Quality Measures under Consideration for Future Years
    J. Standardized Patient Assessment Data Reporting for the IRF 
QRP
    K. Form, Manner, and Timing of Data Submission Under the IRF QRP
    L. Application of the IRF QRP Submission Requirements and 
Payment Impact to the Standardized Patient Assessment Data Beginning 
with the FY 2019 IRF QRP
    M. Application of the IRF QRP Exception and Extension 
Requirements to the Submission of Standardized Patient Assessment 
Data Beginning with the FY 2019 IRF QRP
    N. Application of the IRF QRP Data Completion Thresholds to the 
Submission of Standardized Patient Assessment Data Beginning with 
the FY 2019 IRF QRP
    O. Policies Regarding Public Display of Measure Data for the IRF 
QRP
    P. Mechanism for Providing Feedback Reports to IRFs
    Q. Method for Applying the Reduction to the FY 2018 IRF Increase 
Factor for IRFs That Fail to Meet the Quality Reporting Requirements
XIV. Miscellaneous Comments
XV. Provisions of the Final Regulations
XVI. Collection of Information Requirements
    A. Statutory Requirement for Solicitation of Comments
    B. Collection of Information Requirements for Updates Related to 
the IRF QRP
XVII. Regulatory Impact Statement
Regulation Text

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
AHA American Hospital Association
AHRQ Agency for Healthcare Research and Quality
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
BIMS Brief Interview for Mental Status
BiPAP Bilevel Positive Airway Pressure
BLS U.S. Bureau of Labor Statistics
BMI Body Mass Index
CAM Confusion Assessment Method
CARE Continuity Assessment Record and Evaluation
CAUTI Catheter-Associated Urinary Tract Infection
CBSA Core-Based Statistical Area
CCR Cost-to-Charge Ratio
CDI Clostridium difficile Infection
CMG Case-Mix Group
CMS Centers for Medicare & Medicaid Services
CPAP Continuous Positive Airway Pressure
CY Calendar year
DRA Deficit Reduction Act of 2005 (Pub. L. 109-171, enacted on 
February 8, 2006)
DSH Disproportionate Share Hospital
DTI Deep Tissue Injury
FFS Fee-for-Service
FISS Fiscal Intermediary Shared System
FR Federal Register
FY Federal Fiscal Year
GAO Government Accountability Office
GEMS General Equivalence Mapping
HHA Home Health Agency
HHS U.S. Department of Health and Human Services
HIPAA Health Insurance Portability and Accountability Act of 1996 
(Pub. L. 104-191, enacted on August 21, 1996)
ICD-9-CM International Classification of Diseases, 9th Revision, 
Clinical Modification
ICD-10-CM International Classification of Diseases, 10th Revision, 
Clinical Modification
IGC Impairment Group Code
IGI IHS Global Insight
IMPACT Act Improving Medicare Post-Acute Care Transformation Act of 
2014 (Pub. L. 113-185, enacted on October 6, 2014)
IPPS Inpatient prospective payment system
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
IV Intravenous
LIP Low-Income Percentage
LTCH Long-Term Care Hospital
MA Medicare Advantage (formerly known as Medicare Part C)
MAC Medicare Administrative Contractor
MACRA Medicare Access and CHIP Reauthorization Act of 2015 (Pub. L. 
114-10, enacted on April 16, 2015)
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

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NCHS National Center for Health Statistics
NHSN National Healthcare Safety Network
NPUAP National Pressure Ulcer Advisory Panel
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
PHQ Patient Health Questionnaire
PPACA Patient Protection and Affordable Care Act (Pub. L. 111-148, 
enacted on March 23, 2010)
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
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
RTI International Research Triangle Institute International
SME Subject Matter Experts
SNF Skilled Nursing Facility
SODF Special Open Door Forum
SSI Supplemental Security Income
TEP Technical Expert Panel
TPN Total Parenteral Nutrition

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 a 
general description of the IRF PPS for FYs 2002 through 2017.
    Under the IRF PPS from FY 2002 through FY 2005, the 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 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 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, 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 FY 2007 IRF PPS final rule (71 FR 48354).
    In the FY 2008 IRF PPS final rule (72 FR 44284), we updated the 
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

[[Page 36241]]

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 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 prospective 
payment rates for each FY. Based on the legislative change to the 
increase factor, we revised the FY 2008 prospective payment rates for 
IRF discharges occurring on or after April 1, 2008. Thus, the final FY 
2008 IRF 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 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 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 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 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 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 ``PPACA''), 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 (MFP) 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 PPACA, 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 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 
prospective payment rates applied to discharges occurring on or after 
April 1, 2010, and on or before September 30, 2010. The adjusted FY 
2010 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 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 
prospective payment rates, the CMG relative weights, and the average 
length of stay values. Any reference to the FY 2011 IRF PPS notice in 
this final rule also includes the provisions effective in the 
correcting amendments. For more information on the FY 2010 and FY 2011 
adjustments or the updates for FY 2011, please refer to the FY 2011 IRF 
PPS notice (75 FR 42836 and 75 FR 70013).
    In the FY 2012 IRF PPS final rule (76 FR 47836), we updated the IRF 
prospective payment rates, rebased and revised the RPL market basket, 
and established a new QRP for IRFs in accordance with section 
1886(j)(7) of the

[[Page 36242]]

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 prospective 
payment rates.
    The FY 2013 IRF PPS notice (77 FR 44618) described the required 
adjustments to the FY 2013 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 
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 
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 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 QRP. 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 
prospective payment rates.
    In the FY 2015 IRF PPS final rule (79 FR 45872), we updated the 
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 QRP. 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 
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).
    In the FY 2017 IRF PPS final rule (81 FR 52056), we updated the 
prospective payment rates, the CMG relative weights, and the outlier 
threshold amount. We also revised and updated quality measures and 
reporting requirements under the IRF QRP. For more information on the 
policy changes implemented for FY 2017, please refer to the FY 2017 IRF 
PPS final rule (81 FR 52056) and the FY 2017 IRF PPS correction notice 
(81 FR 59901).

B. Provisions of the PPACA Affecting the IRF PPS in FY 2012 and Beyond

    The PPACA 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 PPACA 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 2018 
is discussed in section VI.B. of this final rule. Section 3401(d) of 
the PPACA requires an additional 0.75 percentage point adjustment to 
the IRF increase factor for each of FYs 2017, 2018, and 2019. The 
applicable adjustment for FY 2018 is discussed in section V.B. of this 
final rule. Section 1886(j)(3)(C)(ii)(II) of the Act notes that the 
application of these adjustments to the market basket update may result 
in an update that is less than 0.0 for a fiscal year and in payment 
rates for a fiscal year being less than such payment rates for the 
preceding fiscal year.
    Section 3004(b) of the PPACA also addressed the IRF PPS. 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 QRP 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 QRP 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 MA patient, as 
described in the FY 2010 IRF PPS final rule. All required data must be 
electronically encoded into the IRF-PAI software product. Generally, 
the software product includes patient classification programming called 
the Grouper software. The Grouper software uses specific IRF-PAI data 
elements to classify (or group) patients into distinct CMGs and account 
for the existence of any relevant comorbidities.
    The Grouper software produces a 5-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

[[Page 36243]]

CMS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Software.html.
    Once a Medicare Part A FFS 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 MA 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 MA 
days are included in the hospital's Supplemental Security Income (SSI) 
ratio (used in calculating the IRF LIP 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 and 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), we believe 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 information technology (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'' 
(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, enacted on October 6, 2014) (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 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 2017 Interoperability Standards 
Advisory (available at https://www.healthit.gov/standards-advisory), a 
coordinated catalog of standards and implementation specifications to 
enable priority health information exchange functions. Providers, 
payers, and vendors are encouraged to take these health IT 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 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, 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

[[Page 36244]]

standards through relevant policies and programs.

II. Summary of Provisions of the Proposed Rule

    In the FY 2018 IRF PPS proposed rule (82 FR 20690), we proposed to 
update the IRF prospective payment rates for FY 2018, revise the lists 
of ICD-10-CM diagnosis codes that are used to determine presumptive 
compliance under the 60 percent rule, remove the 25 percent penalty for 
IRF-PAI late transmissions, remove the voluntary swallowing status item 
(Item 27) from the IRF-PAI, provide for a subregulatory process for 
certain annual updates to the presumptive methodology diagnosis code 
lists, use height/weight items from the IRF-PAI to determine patient 
BMI greater than 50 for cases of lower extremity single-joint 
replacement under the presumptive methodology, and revise and update 
measures and reporting requirements under the IRF QRP. We also 
solicited comments regarding the criteria used to classify facilities 
for payment under the IRF PPS.
    The proposed updates to the IRF prospective payment rates for FY 
2018 were as follows:
     Update the FY 2018 IRF PPS relative weights and average 
length of stay values using the most current and complete Medicare 
claims and cost report data in a budget-neutral manner, as discussed in 
section III. of the FY 2018 IRF PPS proposed rule (82 FR 20690, 20697 
through 20699).
     Describe the continued use of FY 2014 facility-level 
adjustment factors, as discussed in section IV. of the FY 2018 IRF PPS 
proposed rule (82 FR 20690, 20699 through 20700).
     Update the FY 2018 IRF PPS payment rates by the proposed 
market basket increase factor, as required by section 
1886(j)(3)(C)(iii) of the Act, as described in section V. of the FY 
2018 IRF PPS proposed rule (82 FR 20690 at 20700).
     Update the FY 2018 IRF PPS payment rates by the FY 2018 
wage index and the labor-related share in a budget-neutral manner, as 
discussed in section V. of the FY 2018 IRF PPS proposed rule (82 FR 
20690, 20700 through 20703).
     Describe the calculation of the IRF standard payment 
conversion factor for FY 2018, as discussed in section V. of the FY 
2018 IRF PPS proposed rule (82 FR 20690, 20703 through 20705).
     Update the outlier threshold amount for FY 2018, as 
discussed in section VI. of the FY 2018 IRF PPS proposed rule (82 FR 
20690, 20705 through 20706).
     Update the cost-to-charge ratio (CCR) ceiling and urban/
rural average CCRs for FY 2018, as discussed in section VI. of the FY 
2018 IRF PPS proposed rule (82 FR 20690 at 20706).
     Describe the proposed removal of the 25 percent payment 
penalty for IRF-PAI late transmissions, as discussed in section VII. of 
the FY 2018 IRF PPS proposed rule (82 FR 20690, 20706 through 20707).
     Describe proposed revisions to the IRF-PAI to remove the 
voluntary swallowing status item, as discussed in section VIII. of the 
FY 2018 IRF PPS proposed rule (82 FR 20690 at 20707).
     Describe proposed refinements to the presumptive 
compliance methodology ICD-10-CM diagnosis codes, as discussed in 
section IX. of the FY 2018 IRF PPS proposed rule (82 FR 20690, 20707 
through 20711).
     Solicit comments regarding the criteria used to classify 
facilities for payment under the IRF PPS, as discussed in section IX. 
of the FY 2018 IRF PPS proposed rule (82 FR 20690 at 20712).
     Describe the proposed subregulatory process for certain 
annual updates to the presumptive methodology diagnosis code lists, as 
discussed in section X. of the FY 2018 IRF PPS proposed rule (82 FR 
20690, 20713 through 20714).
     Describe the proposed use of height/weight items on the 
IRF-PAI to determine patient BMI greater than 50 for cases of lower 
extremity single joint replacement under the presumptive methodology, 
as discussed in section XI. of the FY 2018 IRF PPS proposed rule (82 FR 
20690 at 20714).
     Describe proposed revisions and updates to quality 
measures and reporting requirements under the IRF QRP in accordance 
with section 1886(j)(7), which in part requires IRFs to report certain 
data specified under section 1899B of the Act, as discussed in section 
XII. of the FY 2018 IRF PPS proposed rule (82 FR 20690, 20714 through 
20742).

III. Analysis and Responses to Public Comments

    We received 76 timely responses from the public, many of which 
contained multiple comments on the FY 2018 IRF PPS proposed rule (82 FR 
20690). We received comments from various trade associations, inpatient 
rehabilitation facilities, individual physicians, therapists, 
clinicians, health care industry organizations, and health care 
consulting firms. The following sections, arranged by subject area, 
include a summary of the public comments that we received, and our 
responses.

IV. Update to the Case-Mix Group (CMG) Relative Weights and Average 
Length of Stay Values for FY 2018

    As specified in Sec.  412.620(b)(1), we calculate a relative weight 
for each CMG that is proportional to the resources needed by an average 
inpatient rehabilitation case in that CMG. For example, cases in a CMG 
with a relative weight of 2, on average, will cost twice as much as 
cases in a CMG with a relative weight of 1. Relative weights account 
for the variance in cost per discharge due to the variance in resource 
utilization among the payment groups, and their use helps to ensure 
that IRF PPS payments support beneficiary access to care, as well as 
provider efficiency.
    In the FY 2018 IRF PPS proposed rule (82 FR 20690, 20697 through 
20699), we proposed to update the CMG relative weights and average 
length of stay values for FY 2018. 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 2018, we proposed to use the FY 
2016 IRF claims and FY 2015 IRF cost report data. These data are the 
most current and complete data available at this time. We note that, as 
we typically do, we updated our data between the FY 2018 IRF PPS 
proposed and final rules to ensure that we use the most recent 
available data in calculating IRF PPS payments. This updated data 
reflects a more complete set of claims for FY 2016 and additional cost 
report data for FY 2015.
    In the FY 2018 IRF PPS proposed rule, we proposed to apply these 
data using the same methodologies that we have used to update the CMG 
relative weights and average length of stay values each fiscal year 
since we implemented an update to the methodology to use the more 
detailed 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 final rule is as follows:
    Step 1. We estimate the effects that comorbidities have on costs.

[[Page 36245]]

    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 2018 CMG relative weights to the same 
average CMG relative weight from the CMG relative weights implemented 
in the FY 2017 IRF PPS final rule (81 FR 52056).
    Consistent with the methodology that we have used to update the IRF 
classification system in each instance in the past, we proposed to 
update the CMG relative weights for FY 2018 in such a way that total 
estimated aggregate payments to IRFs for FY 2018 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 
2018 CMG relative weights, we use the following steps:
    Step 1. Calculate the estimated total amount of IRF PPS payments 
for FY 2018 (with no changes to the CMG relative weights).
    Step 2. Calculate the estimated total amount of IRF PPS payments 
for FY 2018 by applying the changes to the CMG relative weights (as 
discussed in this final rule).
    Step 3. Divide the amount calculated in step 1 by the amount 
calculated in step 2 to determine the budget neutrality factor (0.9976) 
that would maintain the same total estimated aggregate payments in FY 
2018 with and without the changes to the CMG relative weights.
    Step 4. Apply the budget neutrality factor (0.9976) to the FY 2017 
IRF PPS standard payment amount after the application of the budget-
neutral wage adjustment factor.
    In section VI.E. of this final rule, we discuss the use of the 
existing methodology to calculate the standard payment conversion 
factor for FY 2018.
    In Table 1, ``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 2018. The average length of stay for each 
CMG is used to determine when an IRF discharge meets the definition of 
a short-stay transfer, which results in a per diem case level 
adjustment.

                                     Table 1--Relative Weights and Average Length of Stay Values for Case-Mix Groups
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   Relative weight                       Average length of stay
                                                                     -----------------------------------------------------------------------------------
               CMG                     CMG description (M=motor,                                       No                                        No
                                          C=cognitive, A=age)          Tier 1   Tier 2   Tier 3  comorbidities   Tier 1   Tier 2   Tier 3  comorbidities
                                                                                                      tier                                      tier
--------------------------------------------------------------------------------------------------------------------------------------------------------
0101............................  Stroke M>51.05....................   0.8505   0.7289   0.6734        0.6435         9        9        9             8
0102............................  Stroke M>44.45 and M<51.05 and       1.0680   0.9152   0.8455        0.8080        11       12       10            10
                                   C>18.5.
0103............................  Stroke M>44.45 and M<51.05 and       1.2076   1.0349   0.9560        0.9136        13       13       12            11
                                   C<18.5.
0104............................  Stroke M>38.85 and M<44.45........   1.2954   1.1102   1.0256        0.9800        13       13       12            12
0105............................  Stroke M>34.25 and M<38.85........   1.5073   1.2918   1.1933        1.1404        14       14       14            13
0106............................  Stroke M>30.05 and M<34.25........   1.6695   1.4307   1.3217        1.2630        16       16       15            15
0107............................  Stroke M>26.15 and M<30.05........   1.8640   1.5975   1.4758        1.4103        17       17       16            16
0108............................  Stroke M<26.15 and A>84.5.........   2.3689   2.0301   1.8754        1.7922        21       23       21            20
0109............................  Stroke M>22.35 and M<26.15 and       2.1373   1.8317   1.6921        1.6170        19       19       19            19
                                   A<84.5.
0110............................  Stroke M<22.35 and A<84.5.........   2.7867   2.3882   2.2063        2.1083        27       26       23            24
0201............................  Traumatic brain injury M>53.35 and   0.8537   0.6885   0.6269        0.5749         9        9        9             7
                                   C>23.5.
0202............................  Traumatic brain injury M>44.25 and   1.0944   0.8827   0.8037        0.7369        12       11       10             9
                                   M<53.35 and C>23.5.
0203............................  Traumatic brain injury M>44.25 and   1.2638   1.0192   0.9280        0.8510        12       13       11            11
                                   C<23.5.
0204............................  Traumatic brain injury M>40.65 and   1.3883   1.1197   1.0195        0.9348        11       12       12            12
                                   M<44.25.
0205............................  Traumatic brain injury M>28.75 and   1.6317   1.3160   1.1982        1.0987        15       15       14            13
                                   M<40.65.
0206............................  Traumatic brain injury M>22.05 and   1.9691   1.5881   1.4460        1.3259        18       18       16            15
                                   M<28.75.
0207............................  Traumatic brain injury M<22.05....   2.5114   2.0255   1.8443        1.6911        28       23       19            18
0301............................  Non-traumatic brain injury M>41.05   1.1608   0.9425   0.8574        0.8103        10       11       10            10
0302............................  Non-traumatic brain injury M>35.05   1.4099   1.1447   1.0414        0.9842        13       13       12            12
                                   and M<41.05.
0303............................  Non-traumatic brain injury M>26.15   1.6565   1.3450   1.2236        1.1563        15       15       13            13
                                   and M<35.05.
0304............................  Non-traumatic brain injury M<26.15   2.1517   1.7470   1.5893        1.5020        21       19       17            16
0401............................  Traumatic spinal cord injury         0.9016   0.8476   0.7569        0.6842        12       12       10             9
                                   M>48.45.
0402............................  Traumatic spinal cord injury         1.2903   1.2130   1.0831        0.9792        13       14       13            12
                                   M>30.35 and M<48.45.
0403............................  Traumatic spinal cord injury         2.0938   1.9683   1.7576        1.5889        22       22       19            18
                                   M>16.05 and M<30.35.
0404............................  Traumatic spinal cord injury         3.6744   3.4541   3.0844        2.7884        42       36       31            32
                                   M<16.05 and A>63.5.
0405............................  Traumatic spinal cord injury         3.3965   3.1929   2.8512        2.5776        33       35       31            27
                                   M<16.05 and A<63.5.
0501............................  Non-traumatic spinal cord injury     0.9313   0.7002   0.6637        0.6090         9        9        9             7
                                   M>51.35.
0502............................  Non-traumatic spinal cord injury     1.2192   0.9167   0.8689        0.7973        12       10       10            10
                                   M>40.15 and M<51.35.
0503............................  Non-traumatic spinal cord injury     1.5288   1.1495   1.0895        0.9998        16       13       12            12
                                   M>31.25 and M<40.15.
0504............................  Non-traumatic spinal cord injury     1.7362   1.3054   1.2373        1.1354        17       15       14            13
                                   M>29.25 and M<31.25.
0505............................  Non-traumatic spinal cord injury     1.9897   1.4960   1.4179        1.3011        18       17       16            15
                                   M>23.75 and M<29.25.
0506............................  Non-traumatic spinal cord injury     2.7549   2.0714   1.9632        1.8015        26       23       21            20
                                   M<23.75.
0601............................  Neurological M>47.75..............   1.0661   0.8148   0.7562        0.6879        10        9        9             8
0602............................  Neurological M>37.35 and M<47.75..   1.3922   1.0640   0.9876        0.8984        12       12       11            11
0603............................  Neurological M>25.85 and M<37.35..   1.7073   1.3049   1.2111        1.1017        14       14       13            13
0604............................  Neurological M<25.85..............   2.2213   1.6977   1.5757        1.4334        19       18       16            16
0701............................  Fracture of lower extremity          1.0372   0.8298   0.7877        0.7175        12       11       10             9
                                   M>42.15.
0702............................  Fracture of lower extremity          1.3168   1.0534   1.0001        0.9109        12       12       11            11
                                   M>34.15 and M<42.15.
0703............................  Fracture of lower extremity          1.5903   1.2722   1.2078        1.1001        15       14       14            13
                                   M>28.15 and M<34.15.
0704............................  Fracture of lower extremity          2.0160   1.6128   1.5311        1.3946        18       18       17            16
                                   M<28.15.
0801............................  Replacement of lower extremity       0.8710   0.6418   0.6113        0.5644         8        8        7             7
                                   joint M>49.55.
0802............................  Replacement of lower extremity       1.1197   0.8249   0.7858        0.7255        11       10        9             9
                                   joint M>37.05 and M<49.55.
0803............................  Replacement of lower extremity       1.4515   1.0694   1.0187        0.9406        13       13       12            11
                                   joint M>28.65 and M<37.05 and
                                   A>83.5.
0804............................  Replacement of lower extremity       1.3342   0.9830   0.9363        0.8645        12       11       11            10
                                   joint M>28.65 and M<37.05 and
                                   A<83.5.
0805............................  Replacement of lower extremity       1.5821   1.1657   1.1103        1.0252        14       13       12            12
                                   joint M>22.05 and M<28.65.
0806............................  Replacement of lower extremity       1.9159   1.4116   1.3445        1.2415        16       16       15            14
                                   joint M<22.05.
0901............................  Other orthopedic M>44.75..........   1.0053   0.8078   0.7245        0.6736        10       10        9             8
0902............................  Other orthopedic M>34.35 and         1.3219   1.0621   0.9526        0.8858        12       12       11            10
                                   M<44.75.

[[Page 36246]]

 
0903............................  Other orthopedic M>24.15 and         1.6223   1.3035   1.1691        1.0870        15       14       13            13
                                   M<34.35.
0904............................  Other orthopedic M<24.15..........   2.0319   1.6327   1.4643        1.3615        18       18       16            15
1001............................  Amputation, lower extremity          1.0461   0.9022   0.7937        0.7245        10       11       10             9
                                   M>47.65.
1002............................  Amputation, lower extremity          1.3734   1.1844   1.0421        0.9512        13       13       12            11
                                   M>36.25 and M<47.65.
1003............................  Amputation, lower extremity          2.0115   1.7348   1.5262        1.3931        18       18       17            16
                                   M<36.25.
1101............................  Amputation, non-lower extremity      1.3160   1.1741   1.0154        0.8714        12       14       12            10
                                   M>36.35.
1102............................  Amputation, non-lower extremity      1.9052   1.6998   1.4701        1.2615        17       23       15            14
                                   M<36.35.
1201............................  Osteoarthritis M>37.65............   1.2296   0.9239   0.8627        0.7939         9       11       10            10
1202............................  Osteoarthritis M>30.75 and M<37.65   1.5807   1.1877   1.1090        1.0206        11       13       13            12
1203............................  Osteoarthritis M<30.75............   1.9306   1.4506   1.3545        1.2466        12       15       15            14
1301............................  Rheumatoid, other arthritis          1.2253   0.9248   0.8323        0.7983        10       10       10             9
                                   M>36.35.
1302............................  Rheumatoid, other arthritis          1.6852   1.2720   1.1447        1.0980        16       14       12            13
                                   M>26.15 and M<36.35.
1303............................  Rheumatoid, other arthritis          2.1972   1.6584   1.4925        1.4315        18       18       16            16
                                   M<26.15.
1401............................  Cardiac M>48.85...................   0.9289   0.7480   0.6832        0.6204        10        8        8             8
1402............................  Cardiac M>38.55 and M<48.85.......   1.2231   0.9849   0.8997        0.8169        12       11       10            10
1403............................  Cardiac M>31.15 and M<38.55.......   1.4635   1.1785   1.0764        0.9774        13       13       12            11
1404............................  Cardiac M<31.15...................   1.8540   1.4929   1.3637        1.2382        17       16       15            14
1501............................  Pulmonary M>49.25.................   1.0171   0.8497   0.7768        0.7449        10        9        9             8
1502............................  Pulmonary M>39.05 and M<49.25.....   1.3119   1.0959   1.0020        0.9607        11       12       11            10
1503............................  Pulmonary M>29.15 and M<39.05.....   1.5971   1.3341   1.2197        1.1696        14       14       12            12
1504............................  Pulmonary M<29.15.................   1.9783   1.6526   1.5109        1.4487        20       16       15            14
1601............................  Pain syndrome M>37.15.............   1.1488   0.9072   0.8293        0.7609        10       11       10             9
1602............................  Pain syndrome M>26.75 and M<37.15.   1.5294   1.2078   1.1040        1.0130        12       14       13            12
1603............................  Pain syndrome M<26.75.............   1.9062   1.5054   1.3759        1.2625        14       16       15            14
1701............................  Major multiple trauma without        1.1972   0.9344   0.8406        0.7717        10       10       10             9
                                   brain or spinal cord injury
                                   M>39.25.
1702............................  Major multiple trauma without        1.5294   1.1936   1.0739        0.9858        14       14       12            12
                                   brain or spinal cord injury
                                   M>31.05 and M<39.25.
1703............................  Major multiple trauma without        1.8066   1.4100   1.2686        1.1645        17       15       14            14
                                   brain or spinal cord injury
                                   M>25.55 and M<31.05.
1704............................  Major multiple trauma without        2.2842   1.7827   1.6039        1.4723        21       19       17            17
                                   brain or spinal cord injury
                                   M<25.55.
1801............................  Major multiple trauma with brain     1.2772   0.9992   0.8861        0.8123        12       11       10            10
                                   or spinal cord injury M>40.85.
1802............................  Major multiple trauma with brain     1.8275   1.4298   1.2679        1.1624        17       16       14            14
                                   or spinal cord injury M>23.05 and
                                   M<40.85.
1803............................  Major multiple trauma with brain     2.8872   2.2589   2.0031        1.8364        33       26       21            20
                                   or spinal cord injury M<23.05.
1901............................  Guillian Barre M>35.95............   1.2930   1.0758   0.9919        0.9474        13       12       12            11
1902............................  Guillian Barre M>18.05 and M<35.95   2.2297   1.8550   1.7103        1.6336        23       20       21            18
1903............................  Guillian Barre M<18.05............   3.7343   3.1069   2.8646        2.7361        41       32       28            30
2001............................  Miscellaneous M>49.15.............   0.9444   0.7644   0.6979        0.6338         9        9        8             8
2002............................  Miscellaneous M>38.75 and M<49.15.   1.2403   1.0039   0.9167        0.8325        11       11       10            10
2003............................  Miscellaneous M>27.85 and M<38.75.   1.5431   1.2490   1.1404        1.0357        14       14       13            12
2004............................  Miscellaneous M<27.85.............   1.9716   1.5958   1.4571        1.3233        18       17       15            15
2101............................  Burns M>0.........................   1.8289   1.8238   1.3855        1.2884        29       17       15            14
5001............................  Short-stay cases, length of stay    .......  .......  .......        0.1565   .......  .......  .......             2
                                   is 3 days or fewer.
5101............................  Expired, orthopedic, length of      .......  .......  .......        0.6581   .......  .......  .......             7
                                   stay is 13 days or fewer.
5102............................  Expired, orthopedic, length of      .......  .......  .......        1.6393   .......  .......  .......            18
                                   stay is 14 days or more.
5103............................  Expired, not orthopedic, length of  .......  .......  .......        0.8132   .......  .......  .......             9
                                   stay is 15 days or fewer.
5104............................  Expired, not orthopedic, length of  .......  .......  .......        2.0334   .......  .......  .......            21
                                   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 revisions for FY 2018 
would affect particular CMG relative weight values, which would affect 
the overall distribution of payments within CMGs and tiers. Note that, 
because we proposed to implement the CMG relative weight revisions in a 
budget-neutral manner (as previously described), total estimated 
aggregate payments to IRFs for FY 2018 would not be affected as a 
result of the CMG relative weight revisions. However, the revisions 
would affect the distribution of payments within CMGs and tiers.

   Table 2--Distributional Effects of the Changes to the CMG Relative
                                 Weights
              [FY 2017 values compared with FY 2018 values]
------------------------------------------------------------------------
    Percentage change in CMG relative        Number of     Percentage of
                 weights                  cases affected  cases affected
------------------------------------------------------------------------
Increased by 15% or more................              51             0.0
Increased by between 5% and 15%.........           1,802             0.5
Changed by less than 5%.................         397,273            99.%
Decreased by between 5% and 15%.........             999             0.2
Decreased by 15% or more................               0             0.0
------------------------------------------------------------------------


[[Page 36247]]

    As Table 2 shows, 99.3 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 revisions for FY 2018. The largest estimated increase in the CMG 
relative weight values that affects the largest number of IRF 
discharges would be a 4.0 percent change in the CMG relative weight 
value for CMG 0603--Neurological, with a motor score greater than 25.85 
and less than 37.35--in tier 1. In the FY 2016 claims data, 1,334 IRF 
discharges (0.3 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 3.6 percent decrease in the CMG 
relative weight for CMG 0506--Non-traumatic spinal cord injury, with a 
motor score less than 23.75--in tier 3. In the FY 2016 IRF claims data, 
this change would have affected 2,421 cases (0.6 percent of all IRF 
cases).
    The proposed changes in the average length of stay values for FY 
2018, compared with the FY 2017 average length of stay values, are 
small and do not show any particular trends in IRF length of stay 
patterns.
    We received 3 comments on the proposed update to the CMG relative 
weights and average length of stay values for FY 2018, which are 
summarized below.
    Comment: The commenters were supportive of our proposal to use the 
most recent data available to update the relative weights and average 
length of stays values for FY 2018. The commenters encouraged CMS to 
assess costs within CMGs and requested that CMS make available a report 
or analysis that is performed to update the relative weights as well as 
provide cost data related to comorbidities. Additionally, a commenter 
requested that we outline the methodology used to calculate the average 
length of stay values in the FY 2018 IRF PPS proposed rule.
    Response: We appreciate the commenters' support of our proposal to 
use the most recent data available to update the relative weights and 
average length of stays values for FY 2018. We note that we are 
conducting ongoing evaluation of costs across CMGs and those related to 
comorbidities and will take the commenter's request for a report or 
analysis into consideration when developing future updates to the CMG 
relative weights. As we most recently discussed in the FY 2017 IRF PPS 
final rule (81 FR 52071), the methodology for calculating the average 
length of stay values is available for download from the IRF PPS Web 
site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Research.html.
    Final Decision: After consideration of the public comments, we are 
finalizing our proposal to update the CMG relative weight and average 
length of stay values for FY 2018, as shown in Table 1 of this final 
rule. These updates are effective October 1, 2017.

V. 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 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 IRF PPS 2014 final rule (78 FR 
47860, 47868 through 47872), in the FY 2015 IRF PPS 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 2018, 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.

VI. FY 2018 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 IRF 
PPS payment, 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 prospective payment rates for each FY. Section 
1886(j)(3)(C)(ii)(I) of the Act requires the application of a 
productivity adjustment. 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 
2018. However, section 411(b) of the Medicare Access and CHIP 
Reauthorization Act of 2015 (MACRA) amended section 1886(j)(3)(C) of 
the Act by adding clause (iii), which provides that the increase factor 
for fiscal year 2018, after the application of the productivity 
adjustment and other adjustment, must be 1.0 percent. In accordance 
with section 1886(j)(3)(C)(iii) of the Act, we are applying an increase 
factor of 1.0 percent to update the IRF prospective payment rates for 
FY 2018 in this final rule.
    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, 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. FY 2018 Market Basket Update and Productivity Adjustment

    As previously noted, in accordance with section 1886(j)(3)(C)(iii) 
of the Act, as added by section 411(b) of MACRA, we are applying an 
increase factor of 1.0 percent to update the IRF prospective payment 
rates for FY 2018 in this final rule. For comparison purposes, we are 
providing a current estimate of what the proposed IRF increase factor 
would have been for FY 2018 prior to the enactment of section 411(b) of 
MACRA.
    This estimate is based on the same methodology described in the FY 
2017 IRF PPS final rule (81 FR 52071) and IHS Global Inc.'s (IGI) 
second quarter

[[Page 36248]]

2017 forecast of the market basket update and MFP adjustment with 
historical data through the first quarter 2017. IGI is a nationally 
recognized economic and financial forecasting firm with which CMS 
contracts to forecast the components of the market baskets and MFP.
    Using this methodology, the FY 2018 payment increase factor would 
be 1.25 percent (based on IGI's second quarter 2017 forecast with 
historical data through the first quarter of 2017), reflecting a FY 
2018 estimated market basket update of 2.6 percent as required by 
section 1886(j)(3)(C) of the Act, with an estimated productivity 
adjustment of 0.6 percentage point 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. However, section 411(b) of MACRA amended section 1886(j)(3)(C) 
of the Act by adding clause (iii), which provides that the increase 
factor for fiscal year 2018, after the application of the productivity 
adjustment and other adjustment, must be 1.0 percent.
    For FY 2018, the Medicare Payment Advisory Commission (MedPAC) 
recommends that we reduce IRF PPS payment rates by 5 percent. As 
discussed, and in accordance with sections 1886(j)(3)(C) and 
1886(j)(3)(D) of the Act, as amended by MACRA, the Secretary will 
update the IRF PPS payment rates for FY 2018 by 1.0 percent, as section 
1886(j)(3)(C)(iii) of the Act does not provide the Secretary with the 
authority to apply a different update factor to IRF PPS payment rates 
for FY 2018.
    We received eight public comments on the proposed payment update 
and productivity adjustment, which are summarized below.
    Comment: Several commenters generally supported the proposed 
payment update for FY 2018.
    Response: We appreciate the commenters' support for the proposed 
payment update for FY 2018.
    Comment: A few commenters stated that the payment update does not 
keep up with inflationary costs in healthcare or the effects of the 
sequestration, and is therefore effectively a reduction in payments. As 
a result, the commenters expressed concern that their hospitals' 
financial viability and their ability to care for their patients will 
be threatened.
    Response: As discussed, and in accordance with section 
1886(j)(3)(C)(iii) of the Act, as added by section 411(b) of MACRA, we 
are applying an increase factor of 1.0 percent to update the IRF 
prospective payment rates for FY 2018 in this final rule. Section 
1886(j)(3)(C)(iii) of the Act does not provide the Secretary with the 
authority to apply a different update factor to IRF PPS payment rates 
for FY 2018.
    Comment: Several commenters expressed concerns regarding the 
applicability of the PPACA-mandated MFP to the IRF setting. Commenters 
stated their belief that the theory underlying the productivity 
adjustment is that Medicare providers should be able to achieve the 
same level of productivity improvement as workers across the U.S. 
economy since the MFP adjustment is applied using a measure based on 
the total private nonfarm business sector rather than the 
rehabilitation sector. However, several commenters claimed that it is 
unlikely, given that IRF services are so labor-intensive, that 
productivity improvements will be generated by the rehabilitation 
hospital industry at a pace matching the productivity of the economy at 
large on an ongoing, consistent basis as currently contemplated by the 
PPACA.
    Several commenters noted that general economic growth could lead to 
larger productivity adjustments that may not be correlated to gains in 
the IRF sector. One commenter noted that the requirements applicable to 
IRFs (for example, the intensity of therapy requirements, pre-admission 
screening requirements, and medical director coverage requirements) 
also make it difficult for the IRF industry to achieve significant 
productivity gains. Commenters generally expressed concerns that, while 
other medical fields may benefit from improved technology that yields 
increased productivity, rehabilitation, by its nature and by virtue of 
the requirements applicable to it, cannot advance productivity through 
technology or other means in the same way other medical fields can. 
Additionally, commenters expressed concerns that if the economy grows 
at a faster rate and IRFs' costs related to the IRF QRP increase, the 
productivity adjustments will likely also become more pronounced.
    Finally, these commenters respectfully requested that we carefully 
monitor the impact these productivity adjustments have on the 
rehabilitation hospital sector, provide feedback to Congress as 
appropriate, and utilize any authority the agency has to reduce the 
productivity adjustment.
    Response: We acknowledge the commenters' concerns regarding MFP 
growth at the economy-wide level and its application to IRFs. As stated 
above, section 1886(j)(3)(C)(ii)(I) of the Act requires the application 
of a productivity adjustment to the IRF PPS market basket increase 
factor. Under section 1886(j)(3)(C)(ii)(I) of the Act, the productivity 
adjustment is required to be equal to the 10-year moving average 
changes in annual economy-wide private nonfarm business MFP (as 
projected by the Secretary for the 10-year period ending with the 
applicable fiscal year, year, cost reporting period, or other annual 
period).
    However, as stated above, in accordance with section 
1886(j)(3)(C)(iii) of the Act, as added by section 411(b) of MACRA, the 
increase factor for FY 2018, after the application of the productivity 
adjustment and other adjustment, must be 1.0 percent. Section 
1886(j)(3)(C)(iii) of the Act does not provide the Secretary with the 
authority to apply a different update factor to IRF PPS payment rates 
for FY 2018. We will continue to monitor the impact of the payment 
updates, including the effects of the productivity adjustment, on IRFs 
as well as beneficiary access to care.
    Comment: One commenter (MedPAC) stated that they understand CMS is 
required to implement the statutory update; however, the commenter 
noted that after reviewing many factors, they determined that 
Medicare's current payment rates for IRFs appear to be more than 
adequate and therefore recommended that the Congress reduce the IRF 
payment rate by 5 percent for FY 2018. The commenter appreciated that 
CMS cited its recommendation even while noting that the Secretary does 
not have the authority to deviate from statutorily mandated updates.
    Response: As discussed, in accordance with section 
1886(j)(3)(C)(iii) of the Act, as added by section 411(b) of MACRA, the 
increase factor for FY 2018, after the application of the productivity 
adjustment and other adjustment, must be 1.0 percent. Section 
1886(j)(3)(C)(iii) of the Act does not provide the Secretary with the 
authority to apply a different update factor to IRF PPS payment rates 
for FY 2018.
    Final Decision: Based on careful consideration of the comments, we 
are finalizing the FY 2018 payment update for IRF payments of 1.0 
percent, as required by section 1886(j)(3)(C)(iii) of the Act, as added 
by section 411(b) of MACRA.

C. Labor-Related Share for FY 2018

    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

[[Page 36249]]

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 proposed to 
calculate the labor-related share for FY 2018 as the sum of the FY 2018 
relative importance of Wages and Salaries, Employee Benefits, 
Professional Fees: Labor-Related, Administrative and Facilities Support 
Services, Installation, Maintenance, and Repair Services, 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 method and IGI's first quarter 2017 forecast for the 
2012-based IRF market basket, the proposed IRF labor-related share for 
FY 2018 was 70.7 percent. We proposed that if more recent data were 
subsequently available, we would use such data to determine the FY 2018 
IRF labor-related share in the final rule.
    Incorporating the most recent estimate of the 2012-based IRF market 
basket based on IGI's second quarter 2017 forecast with historical data 
through the first quarter of 2017, the sum of the relative importance 
for FY 2018 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 66.9 
percent. We proposed that the portion of Capital-Related Costs that is 
influenced by the local labor market is estimated to be 46 percent. 
Incorporating the most recent estimate of the FY 2018 relative 
importance of Capital-Related costs from the 2012-based IRF market 
basket based on IGI's second quarter 2017 forecast with historical data 
through the first quarter of 2017, which is 8.3 percent, we take 46 
percent of 8.3 percent to determine the labor-related share of Capital 
for FY 2018. As we proposed, we then add this amount (3.8 percent) to 
the sum of the relative importance for FY 2018 operating costs (66.9 
percent) to determine the total labor-related share for FY 2018 of 70.7 
percent.

                    Table 3--IRF Labor-Related Share
------------------------------------------------------------------------
                                      FY 2018 Final      FY 2017 Final
                                      labor-related      labor related
                                        share \1\          share \2\
------------------------------------------------------------------------
Wages and Salaries................               47.8               47.7
Employee Benefits.................               11.2               11.3
Professional Fees: Labor-related..                3.4                3.5
Administrative and Facilities                     0.8                0.8
 Support Services.................
Installation, Maintenance, and                    1.9                1.9
 Repair Services..................
All Other: Labor-related Services.                1.8                1.8
                                   -------------------------------------
    Subtotal......................               66.9               67.0
Labor-related portion of capital                  3.8                3.9
 (46%)............................
                                   -------------------------------------
        Total Labor-Related Share.               70.7               70.9
------------------------------------------------------------------------
\1\ Based on the 2012-based IRF Market Basket, IHS Global Inc. 2nd
  quarter 2017 forecast with historical data through the first quarter
  of 2017.
\2\ Federal Register (81 FR 52073).

    Final Decision: We did not receive any public comments on the 
proposed labor-related share for FY 2018. We are finalizing the FY 2018 
labor-related share of 70.7 percent as proposed.

D. 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 2018, we proposed to maintain the policies and methodologies 
described in the FY 2017 IRF PPS final rule (81 FR 52055, 52073 through 
52074) related to the labor market area definitions and the wage index 
methodology for areas with wage data. Thus, we proposed to use the CBSA 
labor market area definitions and the FY 2017 pre-reclassification and 
pre-floor hospital wage index data. In accordance with section 
1886(d)(3)(E) of the Act, the FY 2017 pre-reclassification and pre-
floor hospital wage index is based on data submitted for hospital cost 
reporting periods beginning on or after October 1, 2012, and before 
October 1, 2013 (that is, FY 2013 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 proposed 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 2018 IRF 
PPS wage index.
    We received 4 public comments on these proposals, which are 
summarized below.
    Comment: Commenters suggested that we should use the FY 2018 IPPS 
pre-reclassified acute care hospital wage index in the calculation of 
the FY 2018

[[Page 36250]]

IRF PPS wage index, as other post-acute and acute care settings do, 
rather than using the FY 2017 IPPS pre-reclassified acute care hospital 
wage index, as we do in the IRF PPS. Commenters indicated that using 
the same wage index data for the IRF PPS that is used in other post-
acute care settings would eliminate one difference between Medicare 
payments for IRFs and Medicare payments for other post-acute care 
providers, thereby allowing IRFs to demonstrate their cost-
effectiveness relative to other competing post-acute care service 
providers in the alternative payment models.
    Response: Consistent with historical practice, we proposed to 
update the IRF wage index for FY 2018 using the FY 2017 pre-
reclassification acute care hospital wage index (that is, using a one-
year lag of the hospital wage index). At the point we use these data 
for the IRF wage index, these values are more stable and do not tend to 
change. The FY 2017 pre-reclassification and pre-floor hospital wage 
index values are based on data collected from the Medicare cost reports 
submitted by hospitals for cost reporting periods beginning in FY 2013. 
We believe that data from the FY 2013 cost reporting periods are 
appropriate to determine the applicable wage index values under the IRF 
PPS in this final rule as they are the most recent final data 
available.
    Comment: One commenter requested that, until a new wage index 
system is implemented, we should institute a smoothing variable to be 
applied to the current IRF wage index to reduce the fluctuations IRFs 
experience annually.
    Response: As stated above, under section 1886(j)(6) of the Act, we 
adjust IRF PPS rates to account for differences in area wage levels. 
Any perceived volatility in the wage index is predicated upon 
volatility in actual wages in that area and reflects real differences 
in area wage levels. As we believe that the application of a smoothing 
variable would make the wage index values less reflective of the area 
wage levels, it would not be appropriate to implement such a change to 
the IRF wage index policy.
    As we most recently discussed in the FY 2017 IRF PPS final rule (81 
FR 52075), section 3137(b) of the PPACA required us to submit a report 
to the Congress by December 31, 2011 that included a plan to reform the 
hospital wage index system. This report describes the concept of a 
Commuting Based Wage Index as a potential replacement to the current 
Medicare wage index methodology. While this report addresses the goals 
of broad based Medicare wage index reform, no consensus has been 
achieved regarding how best to implement a replacement system. This 
concern will be taken into consideration while we continue to explore 
potential wage index reforms. The report that we submitted is available 
online at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Reform.html.
    Final Decision: After careful consideration of the comments, we are 
finalizing our proposal to use the CBSA labor market area definitions 
and the FY 2017 pre-reclassification and pre-floor hospital wage index 
data for areas with wage data. We are also finalizing our proposal 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.
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 https://obamawhitehouse.archives.gov/sites/default/files/omb/bulletins/2013/b13-01.pdf.
    Generally, OMB issues major revisions to statistical areas every 10 
years, based on the results of the decennial census. However, OMB 
occasionally issues minor updates and revisions to statistical areas in 
the years between the decennial censuses. On July 15, 2015, OMB issued 
OMB Bulletin No. 15-01, which provides minor updates to and supersedes 
OMB Bulletin No. 13-01 that was issued on February 28, 2013. The 
attachment to OMB Bulletin No. 15-01 provides detailed information on 
the update to statistical areas since February 28, 2013. The updates 
provided in OMB Bulletin No. 15-01 are based on the application of the 
2010 Standards for Delineating Metropolitan and Micropolitan 
Statistical Areas to Census Bureau population estimates for July 1, 
2012 and July 1, 2013. The complete list of statistical areas 
incorporating these changes is provided in OMB Bulletin No. 15-01. A 
copy of this bulletin may be obtained at https://obamawhitehouse.archives.gov/sites/default/files/omb/bulletins/2015/15-01.pdf.
    According to OMB, the bulletin establishes revised delineations for 
the Nation's Metropolitan Statistical Areas, Micropolitan Statistical 
Areas, and Combined Statistical Areas. The bulletin also provides 
delineations of Metropolitan Divisions as well as delineations of New 
England City and Town Areas. OMB Bulletin No. 15-01 made the following 
changes that are relevant to the IRF wage index:
     Garfield County, OK, with principal city Enid, OK, which 
was a Micropolitan (geographically rural) area, now qualifies as an 
urban new CBSA 21420 called Enid, OK.
     The county of Bedford City, VA, a component of the 
Lynchburg, VA CBSA 31340, changed to town status and is added to 
Bedford County. Therefore, the county of Bedford City (SSA State county 
code 49088, FIPS State County Code 51515) is now part of the county of 
Bedford, VA (SSA State county code 49090, FIPS State County Code 
51019). However, the CBSA remains Lynchburg, VA, 31340.
     The name of Macon, GA, CBSA 31420, as well as a principal 
city of the Macon-Warner Robins, GA combined statistical area, is now 
Macon-Bibb County, GA. The CBSA code remains as 31420.
    We believe that it is important for the IRF PPS to use the latest 
labor market area delineations available as soon as is reasonably 
possible to maintain a more accurate and up-to-date payment system that 
reflects the reality of population shifts and labor market conditions. 
As discussed in the FY 2017 Inpatient prospective payment system (IPPS) 
and Long-Term Care Hospital (LTCH) PPS final rule (81 FR 56913), these 
updated labor market area definitions were implemented under the IPPS 
beginning on October 1, 2016. Therefore, we proposed to implement these 
revisions for the IRF PPS beginning October 1,

[[Page 36251]]

2017, consistent with our historical practice of modeling IRF PPS 
adoption of the labor market area delineations after IPPS adoption of 
these delineations.
    We did not receive any comments on our proposal to adopt the 
revised OMB delineations.
    Final Decision: As we did not receive any comments on our proposal 
to adopt the new OMB delineations, we are finalizing the implementation 
of the revised OMB delineations as described in the July 15, 2015 OMB 
Bulletin No. 15-01, effective beginning October 1, 2017 with the FY 
2018 IRF PPS wage index.
3. Transition Period
    In FY 2016, we applied a transition period when implementing the 
OMB delineations as described in the February 28, 2013 OMB Bulletin No. 
13-01, as this bulletin contained a number of significant changes that 
resulted in substantial payment implications for some IRF providers. We 
proposed to incorporate the CBSA changes published in the most recent 
OMB bulletin without a transition period as we anticipate that these 
changes will have minor effects for a single IRF provider. One 
provider, located in Garfield County, OK and designated as rural in FY 
2017, will be designated as urban in FY 2018. While this provider will 
no longer have the 14.9 percent rural adjustment in FY 2018, this 
provider will experience an increase of 13 percent in their wage index 
value. As this provider is not expected to experience as steep of a 
reduction in payments as the majority of facilities for which a phase 
out of the rural adjustment was implemented, we do not believe it is 
appropriate or necessary to adopt a transition policy. As the changes 
made in OMB Bulletin No 15-01 are minor and do not have a large effect 
on a substantial number of providers, we did not propose a transition 
period to adopt these updates.
    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. This 1-year blended wage index became effective on October 
1, 2015 and expired on September 30, 2016.
    For FY 2016, in addition to the blended wage index, we also adopted 
a three-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. In FY 2017, the second year of 
the 3-year phase out, these IRFs received one-third of the 2015 rural 
adjustment of 14.9 percent, as finalized in the FY 2017 IRF PPS final 
rule (81 FR 52055, 52074 through 52076). FY 2018 represents the third 
and final year of the three-year phase out of the rural adjustment. We 
will no longer apply any portion of the rural adjustment for IRFs that 
became urban in FY 2016 under the revised CBSA delineations, as 
finalized in the FY 2016 IRF PPS final rule (80 FR 47036, 47073 through 
47074). We did not propose any additional wage index transition 
adjustments for IRF providers due to the adoption of the new OMB 
delineations in FY 2016. We refer readers to the FY 2016 IRF PPS final 
rule (80 FR 47036, 47068 through 47076) for a full discussion of our 
implementation of the new OMB labor market area delineations for the FY 
2016 wage index. The wage index applicable to FY 2018 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 final rule, we multiply the unadjusted federal 
payment rate for IRFs by the FY 2018 labor-related share based on the 
2012-based IRF market basket (70.7 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 VI.C 
of this final rule. We then multiply the labor-related portion by the 
applicable IRF wage index from the tables in the addendum to this final 
rule. These tables are available through the Internet on the CMS Web 
site at http://www.cms.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 
proposed 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 proposed to 
use the listed steps to ensure that the FY 2018 IRF standard payment 
conversion factor reflects the update to the wage indexes (based on the 
FY 2013 hospital cost report data) and the labor-related share in a 
budget-neutral manner:
    Step 1. Determine the total amount of the estimated FY 2017 IRF PPS 
payments, using the FY 2017 standard payment conversion factor and the 
labor-related share and the wage indexes from FY 2017 (as published in 
the FY 2017 IRF PPS final rule (81 FR 52056)).
    Step 2. Calculate the total amount of estimated IRF PPS payments 
using the FY 2018 standard payment conversion factor and the FY 2018 
labor-related share and CBSA urban and rural wage indexes.
    Step 3. Divide the amount calculated in step 1 by the amount 
calculated in step 2. The resulting quotient is the FY 2018 budget-
neutral wage adjustment factor of 1.0007.
    Step 4. Apply the FY 2018 budget-neutral wage adjustment factor 
from step 3 to the FY 2017 IRF PPS standard payment conversion factor 
after the application of the increase factor to determine the FY 2018 
standard payment conversion factor.
    We discuss the calculation of the standard payment conversion 
factor for FY 2018 in section VI.E of this final rule.
    We invited public comment on the proposed IRF wage adjustment for 
FY 2018. We did not receive any comments on the proposed IRF wage 
adjustment for FY 2018.
    Final Decision: As we did not receive any comments on the proposed 
IRF wage adjustment for FY 2018, we are finalizing a budget-neutral 
wage adjustment factor of 1.0007 for FY 2018.

E. Description of the IRF Standard Payment Conversion Factor and 
Payment Rates for FY 2018

    To calculate the standard payment conversion factor for FY 2018, as 
illustrated in Table 4, we begin by applying the increase factor for FY 
2018, as adjusted in accordance with sections 1886(j)(3)(C)(iii) of the 
Act, as added by MACRA, to the standard payment conversion factor for 
FY 2017 ($15,708). Applying the 1.0 percent increase factor for FY 2018 
to the standard payment conversion factor for FY 2017 of $15,708 yields 
a standard payment amount of $15,865. Then, we apply the budget 
neutrality factor for the FY 2018 wage index and labor-related share of 
1.0007, which results in a standard payment amount of $15,876. We next 
apply the budget neutrality factor for the revised CMG relative weights 
of 0.9976, which

[[Page 36252]]

results in the standard payment conversion factor of $15,838 for FY 
2018.

     Table 4--Calculations To Determine the FY 2018 Standard Payment
                            Conversion Factor
------------------------------------------------------------------------
              Explanation for adjustment                  Calculations
------------------------------------------------------------------------
Standard Payment Conversion Factor for FY 2017.......            $15,708
Market Basket Increase Factor for FY 2018 (1.0                  x 1.0100
 percent), as required by section 1886(j)(3)(C)(iii)
 of the Act..........................................
Budget Neutrality Factor for the Wage Index and Labor-          x 1.0007
 Related Share.......................................
Budget Neutrality Factor for the Revisions to the CMG           x 0.9976
 Relative Weights....................................
FY 2018 Standard Payment Conversion Factor...........          = $15,838
------------------------------------------------------------------------

    We received four comments on the proposed FY 2018 standard payment 
conversion factor.
    Comment: The commenters noted that the FY 2018 standard payment 
conversion factor does not include any additional payment to IRFs for 
the time and resources needed to complete assessments for quality 
reporting.
    Response: Section 1886(j)(3) of the Act does not provide the 
Secretary with the authority to adjust payments to reflect increases in 
costs due to quality reporting requirements. We will continue to 
monitor the impact of the FY 2018 payment updates and quality reporting 
requirements on IRF providers.
    Final Decision: After careful consideration of the comments we 
received, we are finalizing the IRF standard payment conversion factor 
of $15,838 for FY 2018.
    After the application of the CMG relative weights described in 
section IV of this final rule to the FY 2018 standard payment 
conversion factor ($15,838), the resulting unadjusted IRF prospective 
payment rates for FY 2018 are shown in Table 5.

                                         Table 5--FY 2018 Payment Rates
----------------------------------------------------------------------------------------------------------------
                                                   Payment rate    Payment rate    Payment rate    Payment rate
                       CMG                            tier 1          tier 2          tier 3      no comorbidity
----------------------------------------------------------------------------------------------------------------
0101............................................      $13,470.22      $11,544.32      $10,665.31      $10,191.75
0102............................................       16,914.98       14,494.94       13,391.03       12,797.10
0103............................................       19,125.97       16,390.75       15,141.13       14,469.60
0104............................................       20,516.55       17,583.35       16,243.45       15,521.24
0105............................................       23,872.62       20,459.53       18,899.49       18,061.66
0106............................................       26,441.54       22,659.43       20,933.08       20,003.39
0107............................................       29,522.03       25,301.21       23,373.72       22,336.33
0108............................................       37,518.64       32,152.72       29,702.59       28,384.86
0109............................................       33,850.56       29,010.46       26,799.48       25,610.05
0110............................................       44,135.75       37,824.31       34,943.38       33,391.26
0201............................................       13,520.90       10,904.46        9,928.84        9,105.27
0202............................................       17,333.11       13,980.20       12,729.00       11,671.02
0203............................................       20,016.06       16,142.09       14,697.66       13,478.14
0204............................................       21,987.90       17,733.81       16,146.84       14,805.36
0205............................................       25,842.86       20,842.81       18,977.09       17,401.21
0206............................................       31,186.61       25,152.33       22,901.75       20,999.60
0207............................................       39,775.55       32,079.87       29,210.02       26,783.64
0301............................................       18,384.75       14,927.32       13,579.50       12,833.53
0302............................................       22,330.00       18,129.76       16,493.69       15,587.76
0303............................................       26,235.65       21,302.11       19,379.38       18,313.48
0304............................................       34,078.62       27,668.99       25,171.33       23,788.68
0401............................................       14,279.54       13,424.29       11,987.78       10,836.36
0402............................................       20,435.77       19,211.49       17,154.14       15,508.57
0403............................................       33,161.60       31,173.94       27,836.87       25,165.00
0404............................................       58,195.15       54,706.04       48,850.73       44,162.68
0405............................................       53,793.77       50,569.15       45,157.31       40,824.03
0501............................................       14,749.93       11,089.77       10,511.68        9,645.34
0502............................................       19,309.69       14,518.69       13,761.64       12,627.64
0503............................................       24,213.13       18,205.78       17,255.50       15,834.83
0504............................................       27,497.94       20,674.93       19,596.36       17,982.47
0505............................................       31,512.87       23,693.65       22,456.70       20,606.82
0506............................................       43,632.11       32,806.83       31,093.16       28,532.16
0601............................................       16,884.89       12,904.80       11,976.70       10,894.96
0602............................................       22,049.66       16,851.63       15,641.61       14,228.86
0603............................................       27,040.22       20,667.01       19,181.40       17,448.72
0604............................................       35,180.95       26,888.17       24,955.94       22,702.19
0701............................................       16,427.17       13,142.37       12,475.59       11,363.77
0702............................................       20,855.48       16,683.75       15,839.58       14,426.83
0703............................................       25,187.17       20,149.10       19,129.14       17,423.38
0704............................................       31,929.41       25,543.53       24,249.56       22,087.67
0801............................................       13,794.90       10,164.83        9,681.77        8,938.97
0802............................................       17,733.81       13,064.77       12,445.50       11,490.47
0803............................................       22,988.86       16,937.16       16,134.17       14,897.22
0804............................................       21,131.06       15,568.75       14,829.12       13,691.95

[[Page 36253]]

 
0805............................................       25,057.30       18,462.36       17,584.93       16,237.12
0806............................................       30,344.02       22,356.92       21,294.19       19,662.88
0901............................................       15,921.94       12,793.94       11,474.63       10,668.48
0902............................................       20,936.25       16,821.54       15,087.28       14,029.30
0903............................................       25,693.99       20,644.83       18,516.21       17,215.91
0904............................................       32,181.23       25,858.70       23,191.58       21,563.44
1001............................................       16,568.13       14,289.04       12,570.62       11,474.63
1002............................................       21,751.91       18,758.53       16,504.78       15,065.11
1003............................................       31,858.14       27,475.76       24,171.96       22,063.92
1101............................................       20,842.81       18,595.40       16,081.91       13,801.23
1102............................................       30,174.56       26,921.43       23,283.44       19,979.64
1201............................................       19,474.40       14,632.73       13,663.44       12,573.79
1202............................................       25,035.13       18,810.79       17,564.34       16,164.26
1203............................................       30,576.84       22,974.60       21,452.57       19,743.65
1301............................................       19,406.30       14,646.98       13,181.97       12,643.48
1302............................................       26,690.20       20,145.94       18,129.76       17,390.12
1303............................................       34,799.25       26,265.74       23,638.22       22,672.10
1401............................................       14,711.92       11,846.82       10,820.52        9,825.90
1402............................................       19,371.46       15,598.85       14,249.45       12,938.06
1403............................................       23,178.91       18,665.08       17,048.02       15,480.06
1404............................................       29,363.65       23,644.55       21,598.28       19,610.61
1501............................................       16,108.83       13,457.55       12,302.96       11,797.73
1502............................................       20,777.87       17,356.86       15,869.68       15,215.57
1503............................................       25,294.87       21,129.48       19,317.61       18,524.12
1504............................................       31,332.32       26,173.88       23,929.63       22,944.51
1601............................................       18,194.69       14,368.23       13,134.45       12,051.13
1602............................................       24,222.64       19,129.14       17,485.15       16,043.89
1603............................................       30,190.40       23,842.53       21,791.50       19,995.48
1701............................................       18,961.25       14,799.03       13,313.42       12,222.18
1702............................................       24,222.64       18,904.24       17,008.43       15,613.10
1703............................................       28,612.93       22,331.58       20,092.09       18,443.35
1704............................................       36,177.16       28,234.40       25,402.57       23,318.29
1801............................................       20,228.29       15,825.33       14,034.05       12,865.21
1802............................................       28,943.95       22,645.17       20,081.00       18,410.09
1803............................................       45,727.47       35,776.46       31,725.10       29,084.90
1901............................................       20,478.53       17,038.52       15,709.71       15,004.92
1902............................................       35,313.99       29,379.49       27,087.73       25,872.96
1903............................................       59,143.84       49,207.08       45,369.53       43,334.35
2001............................................       14,957.41       12,106.57       11,053.34       10,038.12
2002............................................       19,643.87       15,899.77       14,518.69       13,185.14
2003............................................       24,439.62       19,781.66       18,061.66       16,403.42
2004............................................       31,226.20       25,274.28       23,077.55       20,958.43
2101............................................       28,966.12       28,885.34       21,943.55       20,405.68
5001............................................  ..............  ..............  ..............        2,478.65
5101............................................  ..............  ..............  ..............       10,422.99
5102............................................  ..............  ..............  ..............       25,963.23
5103............................................  ..............  ..............  ..............       12,879.46
5104............................................  ..............  ..............  ..............       32,204.99
----------------------------------------------------------------------------------------------------------------

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

    Table 6 illustrates the methodology for adjusting the federal 
prospective payments (as described in sections VI.A. through VI.F. of 
this final rule). The following examples are based on two hypothetical 
Medicare beneficiaries, both classified into CMG 0110 (without 
comorbidities). The unadjusted 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 0.8167, 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 0.8859, and a teaching status adjustment of 
0.0784.
    To calculate each IRF's labor and non-labor portion of the 
prospective payment, we begin by taking the unadjusted prospective 
payment rate for CMG 0110 (without comorbidities) from Table 5. Then, 
we multiply the labor-related share for FY 2018 (70.7 percent) 
described in section VI.C. of this final rule by the unadjusted 
prospective payment rate. To determine the non-labor portion of the 
prospective payment rate, we subtract the labor portion of the federal 
payment from the unadjusted prospective payment.
    To compute the wage-adjusted prospective payment, we multiply the 
labor portion of the federal payment by the appropriate wage index 
located in Tables A and B. These tables are available on the CMS Web 
site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/
InpatientRehab

[[Page 36254]]

FacPPS/Data-Files.html. The resulting figure is the wage-adjusted labor 
amount. Next, we compute the wage-adjusted federal payment by adding 
the wage-adjusted labor amount to the non-labor portion.
    Adjusting the wage-adjusted federal payment by the facility-level 
adjustments involves several steps. First, we take the wage-adjusted 
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 prospective 
payment rates. Table 6 illustrates the components of the adjusted 
payment calculation.

    Table 6--Example of Computing the FY 2018 IRF Prospective Payment
------------------------------------------------------------------------
                                  Rural Facility A     Urban Facility B
             Steps               (Spencer Co., IN)    (Harrison Co., IN)
------------------------------------------------------------------------
1. Unadjusted Payment.........           $33,391.26           $33,391.26
2. Labor Share................              x 0.707              x 0.707
3. Labor Portion of Payment...         = $23,607.62         = $23,607.62
4. CBSA-Based Wage Index                   x 0.8167             x 0.8859
 (shown in the Addendum,
 Tables A and B)..............
5. Wage-Adjusted Amount.......         = $19,280.34         = $20,913.99
6. Non-Labor Amount...........          + $9,783.64          + $9,783.64
7. Wage-Adjusted Payment......         = $29,063.98         = $30,697.63
8. Rural Adjustment...........              x 1.149              x 1.000
9. Wage- and Rural-Adjusted            = $33,394.51         = $30,697.63
 Payment......................
10. LIP Adjustment............             x 1.0156             x 1.0454
11. Wage-, Rural- and LIP-             = $33,915.46         = $32,091.30
 Adjusted Payment.............
12. Wage- and Rural-Adjusted             $33,394.51           $30,697.63
 Payment......................
13. Teaching Status Adjustment                  x 0             x 0.0784
14. Teaching Status Adjustment              = $0.00          = $2,406.69
 Amount.......................
15. Wage-, Rural-, and LIP-            + $33,915.46         + $32,091.30
 Adjusted Payment.............
16. Total Adjusted Payment....         = $33,915.46         = $34,497.99
------------------------------------------------------------------------

    Thus, the adjusted payment for Facility A would be $33,915.46, and 
the adjusted payment for Facility B would be $34,497.99.

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

A. Update to the Outlier Threshold Amount for FY 2018

    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 2017 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, 81 FR 52056, 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 2018, we proposed 
to use FY 2016 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 2017. 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 3.0 
percent in FY 2017. Therefore, we proposed to update the outlier 
threshold amount from $7,984 for FY 2017 to $8,656 for FY 2018 to 
maintain estimated outlier payments at approximately 3 percent of total 
estimated aggregate IRF payments for FY 2018.
    We note that, as we typically do, we updated our data between the 
FY 2018 IRF PPS proposed and final rules to ensure that we use the most 
recent available data in calculating IRF PPS payments. This updated 
data includes a more complete set of claims for FY 2016. Based on our 
analysis using this updated data, we now estimate that IRF outlier 
payments as a percentage of total estimated payments are approximately 
3.1 percent in FY 2017. In addition, we stated that we still need to 
adjust the IRF outlier threshold to reflect changes in estimated costs 
and payments for IRFs in FY 2018. That is, as discussed previously in 
this final rule, we are increasing IRF PPS payment rates by 1.0 
percent, in accordance with section 1886(j)(3)(C)(iii) of the Act. 
Similarly,

[[Page 36255]]

IRF estimated costs for FY 2018 are expected to increase. Therefore, we 
will update the outlier threshold amount from $7,984 for FY 2017 to 
$8,679 for FY 2018 to account for the increases in IRF PPS payments and 
estimated costs and to maintain estimated outlier payments at 
approximately 3 percent of total estimated aggregate IRF payments for 
FY 2018.
    We received 4 public comments on the proposed update to the FY 2018 
outlier threshold amount to maintain estimated outlier payments at 
approximately 3 percent of total estimated IRF payments, which are 
summarized below.
    Comment: Some commenters were supportive of maintaining estimated 
payments for outlier payments at approximately 3 percent and requested 
that CMS update the outlier threshold amount in the final rule using 
the latest available data. One commenter reiterated their 
recommendation to expand the outlier pool from 3 to 5 percent to 
redistribute payments within the IRF PPS and to reduce the impact of 
misalignments between IRF payments and costs. Specifically, the 
commenter suggested that expanding the outlier pool would help to 
ameliorate the financial burden on IRFs that have a relatively high 
share of costly cases. However, this same commenter noted that such an 
expansion in the outlier pool could inappropriately reward some 
facilities for inefficiencies. Another commenter suggested that CMS 
should lower the outlier pool below 3 percent.
    Response: We agree that we should use the most recent data 
available to calculate the outlier threshold. Therefore, as previously 
stated, we updated the data used to calculate the outlier threshold 
between the FY 2018 IRF PPS proposed and final rule.
    We refer readers to the 2002 IRF PPS final rule (66 FR 41316, 41362 
through 41363), for a discussion of the 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. We continue to 
believe that the outlier policy of 3 percent of total estimated 
aggregate payments accomplishes this objective. Increasing the outlier 
pool would leave less money available to cover the costs of non-outlier 
cases, due to the fact that we would implement such a change in a 
budget-neutral manner. We believe that our current outlier policy, to 
set outlier payments at 3 percent of total estimated aggregate 
payments, is consistent with the statute and the goals of the IRF PPS.
    Comment: Several commenters suggested that CMS should modify the 
methodology for determining the outlier threshold so that the full 3 
percent outlier pool is paid out to providers, as they indicated that 
CMS has paid out less than the estimated 3 percent for each of the past 
several years. Some commenters suggested implementing a forecast error 
correction if the full amount of the outlier pool is not paid out.
    Response: We appreciate the commenters' analyses and suggestions 
regarding the outlier threshold calculations. As previously noted, we 
updated our data between the FY 2018 IRF PPS proposed and final rules 
to ensure that we use the most recent available data in calculating IRF 
PPS payments. Based on our analysis using this updated data, we now 
estimate that IRF outlier payments as a percentage of total estimated 
aggregate payments are approximately 3.1 percent in FY 2017, thus 
indicating that we paid out more than 3 percent, not less, in this most 
recent fiscal year.
    We will continue to monitor our IRF outlier policies to ensure that 
they continue to compensate IRFs appropriately for treating unusually 
high-cost patients and do not limit access to care for patients who are 
likely to require unusually high-cost care. As we most recently noted 
in the FY 2017 IRF PPS final rule (81 FR 52079), we do not make 
adjustments to IRF PPS payment rates for the sole purpose of accounting 
for differences between projected and actual outlier payments. We use 
the best available data at the time to establish an outlier threshold 
for IRF PPS payments prior to the beginning of each fiscal year to help 
ensure that estimated outlier payments for that fiscal year will equal 
3 percent of total estimated IRF PPS payments. We analyze expenditures 
annually, and if there is a difference from our projection, that 
information is used to make a prospective adjustment to lower or raise 
the outlier threshold for the upcoming fiscal year. We believe a 
retrospective adjustment would not be appropriate to recoup or make 
excess payments to hospitals.
    If outlier payments for a given year turn out to be greater than 
projected, we do not recoup money from hospitals; if outlier payments 
for a given year are lower than projected, we do not make an adjustment 
to account for the difference. Payments for a given discharge in a 
given fiscal year are generally intended to reflect or address the 
prospective average costs of that discharge in that year; that goal 
would be undermined if we adjusted IRF PPS payments to account for 
``underpayments'' or ``overpayments'' in IRF outliers in previous 
years.
    Comment: Several commenters suggested that we consider implementing 
a cap on the amount of outlier payments an individual IRF can receive 
under the IRF PPS to ensure that outliers are fairly distributed.
    Response: As we did not propose to implement a cap on the amount of 
outlier payments an individual IRF can receive under the IRF PPS, these 
comments are outside the scope of this rule. However, any future 
consideration given to imposing a limit on outlier payments would have 
to carefully analyze and take into consideration the effect on access 
to IRF care for certain high-cost populations.
    Final Decision: Having carefully considered the public comments 
received and also taking into account the most recent available data, 
we are finalizing the outlier threshold amount of $8,679 to maintain 
estimated outlier payments at approximately 3 percent of total 
estimated aggregate IRF payments for FY 2018.

B. Update to the IRF Cost-to-Charge Ratio Ceiling and Urban/Rural 
Averages

    Cost-to-charge ratios are used to adjust charges from Medicare 
claims to costs and are computed annually from facility-specific data 
obtained from Medicare cost reports. IRF specific cost-to-charge ratios 
are used in the development of the CMG relative weights and the 
calculation of outlier payments under the IRF prospective payment 
system. In accordance with the methodology stated in the FY 2004 IRF 
PPS final rule (68 FR 45674, 45692 through 45694), we proposed to apply 
a ceiling to IRFs' CCRs. Using the methodology described in that final 
rule, we proposed 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 2018, as discussed below in this section.

[[Page 36256]]

     Other IRFs for which accurate data to calculate an overall 
CCR are not available.
    Specifically, for FY 2018, we proposed to estimate a national 
average CCR of 0.516 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 proposed to estimate a 
national average CCR of 0.416 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 total costs factor more heavily into the averages than the 
CCRs of IRFs with lower total costs. For this final rule, we have used 
the most recent available cost report data (FY 2015). This includes all 
IRFs whose cost reporting periods begin on or after October 1, 2014, 
and before October 1, 2015. If, for any IRF, the FY 2015 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 2014) 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. 
Using updated FY 2015 cost report data for this final rule, we estimate 
a national average CCR of 0.518 for rural IRFs, and a national average 
CCR of 0.416 for urban IRFs.
    In accordance with past practice, we proposed to set the national 
CCR ceiling at 3 standard deviations above the mean CCR. Using this 
method, we proposed a national CCR ceiling of 1.28 for FY 2018. This 
means that, if an individual IRF's CCR were to exceed this proposed 
ceiling of 1.28 for FY 2018, 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.
    Using the updated FY 2015 cost report data for this final rule, we 
estimate a national average CCR ceiling of 1.31, using the same 
methodology.
    We did not receive any comments on the proposed update to the IRF 
CCR ceiling and the urban/rural averages for FY 2018.
    Final Decision: As we did not receive any comments on the proposed 
update to the IRF CCR ceiling and the urban/rural averages for FY 2018, 
we are finalizing the national average urban CCR at 0.416, the national 
average rural CCR at 0.518, and the national CCR ceiling at 1.31 for FY 
2018.

VIII. Removal of the 25 Percent Payment Penalty for IRF-PAI Late 
Submissions

    Under section 1886(j)(2)(D) of the Act, the Secretary is authorized 
to require rehabilitation facilities that provide inpatient hospital 
services to submit such data as the Secretary deems necessary to 
establish and administer the IRF PPS. The timely collection of patient 
data is indispensable for the successful operation of the IRF PPS. A 
comprehensive, reliable system for collecting standardized patient 
assessment data is necessary to assign beneficiaries to the appropriate 
CMGs, to monitor the effects of the IRF PPS on patient care and 
outcomes, and to determine whether adjustments to the CMGs are 
warranted.
    In the FY 2002 IRF PPS final rule (66 FR 41316), we implemented the 
IRF-PAI data collection instrument, through which IRFs are required to 
collect and electronically submit patient data for all Medicare Part A 
FFS patients. IRFs are required to submit their IRF-PAI to CMS through 
its contractor, currently the CMS National Assessment Collection 
Database, in accordance with the requirements in Sec. Sec.  
412.610(c)(2)(i)(B), 412.610(d), and 412.614(c). To encourage timely 
filling, the requirement at Sec.  412.614(d)(1)(ii) provides that 
failure to submit the IRF-PAI on Medicare Part A FFS patients within 
the required deadline would result in the imposition of a 25 percent 
payment penalty.
    The FY 2010 IRF PPS final rule (74 FR 39798 through 39800) expanded 
collection of IRF-PAI data to Medicare Part C (Medicare Advantage) IRF 
patients. IRFs that failed to timely submit IRF-PAIs on their Part C 
patients would forfeit their ability to have any of their Part C data 
used in the calculations for determining their eligibility for 
exclusion under Sec.  412.23(b). We did not propose any changes to the 
Medicare Part C IRF-PAI submission requirements or the consequences of 
failure to submit complete and timely IRF-PAI data for Medicare Part C 
(Medicare Advantage) patients in the proposed rule.
    Effective October 1, 2012, we issued a change request (CR 7760) 
that created a new edit within the Fiscal Intermediary Shared System 
(FISS) for IRF PPS claim submissions. In the event that an IRF attempts 
to submit a Medicare Part A FFS claim for a patient, and there is not a 
corresponding IRF-PAI for the patient on file to match the claim with, 
the FISS edit will return an error to the IRF provider advising that an 
IRF-PAI needs to be submitted. Since IRFs can now only receive payment 
from Medicare for a Medicare Part A FFS patient when both an IRF claim 
and an IRF-PAI are submitted and matched accordingly, we believe that 
they will be financially motivated to file a patient's claim and the 
patient's corresponding IRF-PAI in a timely manner. Therefore, we 
believe that the 25 percent payment penalty for late transmission of 
the IRF-PAI is no longer needed to encourage providers to submit data 
to CMS.
    Furthermore, we believe that the 25 percent payment penalty is no 
longer necessary, and we also believe it is placing an unnecessary 
burden on IRFs when they need to apply for a waiver from the penalty. 
Section 412.614(e) enables CMS to waive the 25 percent payment penalty 
in extraordinary situations that are beyond the control of the IRF. 
These include, but are not limited to, fires, floods, earthquakes, or 
similar unusual events that inflict extensive damage to an inpatient 
facility as well as situations in which data transmission issues beyond 
the control of the IRF have made it impossible for the IRF to submit 
IRF-PAIs in the required timeframe. In such instances, IRFs have 
generally filed waiver requests under the waiver provision. We review 
each waiver request on a case-by-case basis and have found that the 
vast majority of the requests that we received since October 2012 met 
the waiver criteria. In such cases, the penalty is waived per Sec.  
412.614(e), the claim is reprocessed, and the IRF is paid for the claim 
in full. Of the approximately 10,000 fee-for-service IRF-PAIs that we 
estimate (based on FY 2015 data) are transmitted late each year, 
amounting to a total payment penalty of approximately $37.6 million per 
year, the vast majority qualify for a

[[Page 36257]]

waiver under Sec.  412.614(e). Thus, based on our review of our 
records, we have found that the vast majority of these cases incurred 
the expenses of the IRF requesting a waiver, CMS reviewing the waiver 
request, and CMS reprocessing the applicable claims. Without the 25 
percent payment penalty, this process, where the vast majority of cases 
ultimately meet the waiver criteria, would also no longer by necessary. 
Therefore, in the FY 2018 IRF PPS proposed rule (82 FR 20706 through 
20707), we proposed to remove the 25 percent payment penalty for late 
IRF-PAI transmissions.
    We did not propose any changes to the timely filing requirements at 
Sec.  412.614(c). However, we did propose to remove the payment penalty 
by revising the following regulations that pertain to the application 
of the 25 percent payment penalty for late transmission of the IRF-PAI 
effective for all discharges beginning on or after October 1, 2017.
     Revise Sec.  412.614(d) Consequences of failure to submit 
complete and timely IRF-PAI data.
     Revise Sec.  412.614 (d)(1).
     Revise Sec.  412.614(d)(1)(i)
     Revise Sec.  412.614(d)(1)(ii).
     Revise Sec.  412.614(e) Exemption to the consequences for 
transmitting the IRF-PAI data late.
    We received 16 comments on the proposed removal of the 25 percent 
payment penalty for late IRF-PAI transmissions, which are summarized 
below.
    Comment: All comments that we received regarding the proposed 
removal of the 25 percent payment penalty were supportive. The 
commenters agreed with our assessment that IRFs already have sufficient 
incentive to submit the IRF-PAI in a timely manner because it is 
required for IRF payment. Some of the commenters also stated that they 
agreed with our proposal, because it would decrease the administrative 
burden placed on providers needing to request a waiver.
    Response: We appreciate the support from the commenters regarding 
the removal of the 25 percent payment penalty.
    Final Decision: After careful consideration of the comments we 
received, we are finalizing our proposal to remove the 25 percent 
payment penalty for late IRF-PAI transmissions, including our proposed 
revisions to the regulation text that pertain to the application of the 
25 percent payment penalty for late transmission of the IRF-PAI, 
effective for all IRF discharges beginning on and after October 1, 
2017.

IX. Removal of the Voluntary Item 27 (Swallowing Status) From the IRF-
PAI

    In the FY 2014 IRF PPS final rule (78 FR 47896 through 47897), we 
removed the voluntary Items 25, 26, and 28 from the IRF-PAI. We chose 
not to remove the voluntary Item 27: Swallowing status, from the IRF-
PAI at the time because we believed that it was an integral part of the 
patient's IRF care and should continue to be evaluated and monitored. 
However, in the FY 2016 IRF PPS final rule (80 FR 47113 through 47117), 
we revised the IRF-PAI to include Section K--Swallowing/Nutritional 
Status, as a risk adjustor for the functional outcome measures. We 
believe that this new quality item captures very similar data as Item 
27. Thus, in the FY 2018 IRF PPS proposed rule (82 FR 20707), we 
proposed to remove this item from the IRF-PAI for all IRF discharges 
beginning on or after October 1, 2017, as we no longer believe that 
this item is necessary.
    We received 10 comments on the proposed removal of Item 27 from the 
IRF-PAI for all discharges beginning on or after October 1, 2017, which 
are summarized below.
    Comment: Overall, the majority of commenters supported the removal 
of this voluntary item from the IRF-PAI, in order to reduce the burden 
of data collection and reporting of a duplicate item.
    Response: We appreciate the support from the commenters regarding 
the removal of this voluntary item from the IRF-PAI. We believe this 
change will further reduce unnecessary provider burden as this item is 
duplicative since the new quality item on the IRF-PAI, Section K--
Swallowing/Nutritional Status, captures very similar data.
    Comment: One commenter did not support the proposed removal of Item 
27 from the IRF-PAI stating that, as a voluntarily reported item, Item 
27 is not burdensome. The commenter also stated that only Item 27 
tracks patients' feeding modalities at both admission and discharge and 
thereby captures information on a patient's improvement through the 
course of their IRF stay. Lastly, the commenter suggested that we 
retain Item 27 until October 1, 2018 when IRF-PAI version 2.0 is 
implemented, adding Item K0520--Nutritional Approaches to admission and 
discharge assessment (if adopted as proposed).
    Response: We respectfully disagree with this commenter and continue 
to believe that removing the voluntary Item 27 from the IRF-PAI is 
appropriate because it is duplicative with the new quality item on the 
IRF-PAI, Section K--Swallowing/Nutritional Status, and is burdensome 
for providers to complete. Additionally, we believe that if an IRF 
provider has supplementary information pertaining to a patient's 
swallowing status beyond completing Section K--Swallowing/Nutritional 
Status, it will be thoroughly documented in the patient's medical 
record.
    Final Decision: Upon careful consideration of the comments we 
received we are finalizing our proposal to remove voluntary Item 27: 
Swallowing status from the IRF-PAI, effective for all IRF discharges 
beginning on or after October 1, 2017.

X. Refinements to the Presumptive Compliance Methodology ICD-10-CM 
Diagnosis Codes

A. Background on the IRF 60 Percent Rule

    The compliance percentage has been part of the criteria for 
defining IRFs since implementation of the IPPS in 1983. In the FY 2015 
IRF PPS final rule (79 FR 45872, 45891 through 45892), we discussed the 
development of the compliance percentage or the ``60 percent rule.'' We 
refer readers to that discussion for background on the 60 percent rule 
and the IRF PPS.

B. Enforcement of the IRF 60 Percent Rule

    As described in detail in Chapter 3, section 140.1.3 of the 
Medicare Claims Processing Manual (Pub. 100-04), which is located on 
the Web site at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Internet-Only-Manuals-IOMs.html, the MACs evaluate IRFs' 
compliance with the 60 percent rule policies annually, using two 
different methods. One of these methods is called the presumptive 
compliance method, and the other method is called the medical review 
method.
1. Presumptive Compliance Method
    The presumptive compliance method is typically the first method 
MACs use to evaluate an IRF's compliance with the 60 percent rule. To 
use the presumptive compliance method, an IRF must first demonstrate 
that it treats a patient population that consists of at least 50 
percent Medicare FFS or MA patients. If it cannot meet this 
requirement, then the MAC is required to evaluate the IRF's compliance 
using the medical review method (described below in this section).
    The presumptive compliance method relies on a computerized 
algorithm that compares lists of diagnosis codes with

[[Page 36258]]

the diagnosis codes that IRFs report on patients' IRF-PAIs. First, the 
computer algorithm compares the impairment group codes (IGCs), which 
represent the primary reason the patient is being treated in the IRF, 
with the list of IGCs that presumptively meets the 60 percent rule 
requirements (which can be downloaded from the IRF PPS Web site at 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Criteria.html). If the computer algorithm finds a 
match, then the computer algorithm examines further to determine 
whether there are any etiologic diagnosis exclusions on the list that 
match with any etiologic diagnosis codes (ICD-10-CM codes in item #22 
of the IRF-PAI). If the IGC on the IRF-PAI matches an IGC that 
presumptively meets the 60 percent rule requirements, and there are no 
etiologic diagnosis exclusions (or there are no matches with the 
etiologic diagnoses on the IRF-PAI), then the case is counted as 
meeting the requirements. If the IGC on the IRF-PAI matches one of the 
presumptive IGCs, but there is an etiologic diagnosis exclusion that 
matches one of the etiologic diagnoses on the IRF-PAI, then the case is 
not counted as meeting the requirements. If the IGC on the IRF-PAI does 
not match one of the presumptive IGCs, then the computer algorithm goes 
a further step to examine the comorbid conditions listed in item #24 on 
the IRF-PAI. If, in this second step, one or more comorbid conditions 
listed in item #24 match one of the ICD-10-CM diagnosis codes (or code 
combinations) listed on the presumptive compliance list (which can also 
be downloaded from the IRF PPS Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Criteria.html), then the case is counted as presumptively meeting the 
60 percent rule requirements. Otherwise, the case is not counted as 
meeting the requirements.
2. Medical Review Method
    The medical review method of determining an IRF's compliance with 
the 60 percent rule requirements must be used if the IRF's Medicare FFS 
and MA population makes up less than 50 percent of its total patient 
population, or for some reason the MAC is unable to generate a valid 
compliance percentage for the IRF using the presumptive compliance 
method, or the IRF fails to meet the 60 percent rule requirements using 
the presumptive compliance method. However, the MAC is always permitted 
to use the medical review method for an IRF if the MAC determines that 
this method will result in the most accurate portrayal of the IRF's 
compliance with the 60 percent rule requirements.
    Under the medical review method, the MAC takes a statistically 
valid random sample of an IRF's claims for the 12-month compliance 
review period, and requests the complete medical records for this 
sample of claims from the IRF. The MAC then reviews this sample of 
medical records to determine whether the IRF is in compliance with the 
60 percent rule requirements.
    Thus, if an IRF fails to meet the requirements according to the 
presumptive compliance method, the MAC must always perform the medical 
review method to determine whether the IRF has met the requirements. An 
IRF cannot fail to meet the requirements based solely on the outcome of 
the presumptive compliance method.

C. Background on the Use of ICD-10-CM Diagnosis Codes in the 
Presumptive Compliance Method

    We developed the presumptive compliance method to simplify the 
process of determining whether an IRF meets the 60 percent rule 
requirements. By using a computerized algorithm that looks for 
diagnosis codes on the IRF-PAI and attempts to match them to diagnosis 
codes on the lists of codes that presumptively meet the requirements, 
the presumptive compliance method can be performed quickly and 
efficiently. However, in order to accurately reflect whether an IRF 
meets the 60 percent rule requirements using the presumptive compliance 
method, we must ensure that the lists of diagnosis codes (IGCs, 
etiologic diagnosis exclusions, and comorbid condition codes) that are 
used in the presumptive compliance method are accurate and updated. 
That is, we must ensure that each code used in the presumptive 
compliance method, if applicable to a given patient, would more than 
likely mean that the patient required intensive rehabilitation services 
in an IRF for treatment of one or more of the conditions specified at 
Sec.  412.29(b)(2) or that they had a comorbidity that caused 
significant decline in functional ability such that, even in the 
absence of the admitting condition, the patient would require the 
intensive rehabilitation treatment.
    To ensure that the diagnosis codes used in the presumptive 
compliance method were accurately reflecting this, in the FY 2014 IRF 
PPS final rule (78 FR 47860, 47879 through 47895), we implemented the 
first updates and revisions in nearly a decade to the list of 
International Classification of Diseases, 9th Revision, Clinical 
Modification (ICD-9-CM) codes then used in determining presumptive 
compliance with the 60 percent rule when we revised the Presumptive 
Methodology list (then, ``ICD-9-CM Codes That Meet Presumptive 
Compliance Criteria''). At the time, our examination found that changes 
over time (including changes in the use of the individual codes, 
changes in clinical practice, changes in the frequency of various types 
of illness and disability, and changes to the application of 60 percent 
rule itself) supported our updating the diagnosis codes that are deemed 
appropriate to count toward a facility's 60 percent rule compliance 
calculation. Such updates ensured that the codes better reflected the 
regulations at Sec.  412.29(b). We performed a clinical analysis of the 
ICD-9-CM Presumptive Methodology code list to determine the clinical 
appropriateness of each individual ICD-9-CM code's inclusion on the 
list, and a statistical analysis of the ICD-9-CM diagnoses code list to 
enhance our understanding of how individual ICD-9-CM codes were being 
used by IRFs. For example, one revision we made was to remove non-
specific codes where we believed more specific codes were available for 
coding. These changes were in line with our overall goal to encourage 
more specific coding on the IRF-PAI.
    As a follow up to the revisions we implemented in the FY 2014 IRF 
PPS final rule, in the FY 2015 IRF PPS final rule (79 FR 45872, 45896 
through 45900), we revised the ICD-9-CM diagnosis codes on the ``IGCs 
That Meet Presumptive Compliance Criteria'' list. An ``impairment group 
code'' is not an ICD diagnosis code, but part of a separate unique set 
of codes specifically developed for the IRF PPS for assigning the 
primary reason for admission to an IRF. Our objective in revising the 
list was to make conforming changes to the IGC list that we had made to 
the Presumptive Methodology list in the FY 2014 IRF PPS final rule. We 
also revised the diagnosis codes listed as exclusions on the ``IGCs 
That Meet Presumptive Compliance Criteria'' list. In the IRF PPS, we 
exclude these diagnosis codes from counting if they are the patient's 
Etiologic Diagnosis (that is, the etiologic problem that led to the 
condition for which the patient is receiving rehabilitation). That is, 
a given IGC that would otherwise meet the presumptive compliance 
criteria will not meet such criteria if the patient has one of the 
``excluded'' Etiologic Diagnoses for that IGC.
    In the FY 2015 IRF PPS final rule (79 FR 45872, 45905 through 
45908), we

[[Page 36259]]

also finalized our translation of the diagnosis code lists from ICD-9-
CM to ICD-10-CM, effective for use when ICD-10 would become the 
required medical code data set for use on Medicare claims and IRF-PAI 
submissions (which occurred on October 1, 2015). As discussed in that 
rule, we translated the ICD-9-CM code lists used in the IRF PPS 
presumptive compliance methodology into ICD-10-CM using the General 
Equivalence Mappings (GEMs) tool. Our intention was to perform a 
straightforward translation of these codes from ICD-9-CM to ICD-10-CM 
using the GEMs tool. That is, we made no policy or clinical analysis of 
the codes under their ICD-10-CM code definition or label, but merely 
registered the ICD-10 diagnosis codes generated through the GEMS tool. 
Our intention in converting the ICD-9-CM diagnosis codes to ICD-10-CM 
diagnosis codes was for the converted codes to reflect the same 
``meaning'' as the original codes. That is, we did not intend to add 
conditions to, or remove conditions from, the ICD-9-CM codes used in 
the IRF PPS at that time.
    To ensure a smooth transition from the use of ICD-9-CM diagnosis 
codes to ICD-10-CM codes for the IRF PPS and to allow for public 
comment on these lists, we proposed and posted to the CMS Web site the 
resulting ICD-10-CM lists. After carefully considering the comments 
that we received on our proposed translation of the ICD-9-CM code lists 
into ICD-10-CM using the GEMs tool, we finalized the ICD-10-CM lists in 
the FY 2015 IRF PPS final rule. The current ICD-10-CM lists are 
available for download from the CMS Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Downloads/ICD-10-CM-DataFiles.zip.
    We stated in the FY 2014 and FY 2015 final rules that, after the 
adoption of the ICD-10 medical code set, we would review the lists in 
ICD-10 (once we had enough ICD-10 data available) and make any 
necessary changes to the lists.

D. Changes to the Presumptive Methodology Diagnosis Code List

    Over the past year, we have performed a comprehensive analysis of 
the presumptive methodology diagnosis code lists in ICD-10-CM. Overall, 
our analysis shows that the process we implemented for updating, 
revising, and converting the ICD-9-CM diagnosis codes to ICD-10-CM (in 
the FY 2014 and FY 2015 final rules) worked as intended. However, our 
analysis indicates that there are areas for improvement. Though we did 
not propose any specific proposals for changes to the presumptive 
methodology diagnosis code lists in ICD-10-CM or the presumptive 
compliance criteria in the FY 2017 IRF PPS proposed rule (81 FR 24178), 
we received several miscellaneous public comments on the ICD-10-CM 
diagnosis codes, some of which we summarized in the FY 2017 IRF PPS 
final rule (81 FR 52132). Our analysis and the public comments show the 
following areas for improvement:
     Issues with ICD-10-CM diagnosis codes that were added to 
the list of IGC exclusions through the ICD-9-CM to ICD-10-CM conversion 
process for patients with traumatic brain injury conditions and hip 
fracture conditions.
     Issues with identification of major multiple trauma codes 
that did not translate exactly from ICD-9-CM to ICD-10-CM.
     Issues with certain non-specific and arthritis diagnosis 
codes that were re-introduced back onto the lists through the ICD-10-CM 
conversion process.
     One ICD-10-CM code, G72.89--Other specified myopathies, 
that we believe may currently be inappropriately applied.
    Thus, to ensure that the ICD-10-CM diagnosis code lists reflect as 
accurately as possible the relevant conditions that we believe should 
count presumptively toward the 60 percent rule, we proposed revisions 
to the codes on the list. The proposed revisions were designed to 
maximize the extent to which the presumptive methodology is in 
alignment with the 60 percent rule in Sec.  412.29(b), the policies 
that we finalized in the FY 2014 and FY 2015 IRF PPS final rules (78 FR 
47860 and 79 FR 45872, respectively), and the ICD-10-CM coding 
guidelines, ``ICD-10-CM Official Guidelines for Coding and Reporting.'' 
CMS and the National Center for Health Statistics (NCHS) provide the 
guidelines for coding and reporting using ICD-10-CM. The current ICD-
10-CM coding guidelines are located on the CMS Web site at https://www.cms.gov/medicare/coding/icd10/2017-icd-10-cm-and-gems.html.

E. Revisions Involving Traumatic Brain Injury and Hip Fracture Codes

    Our comprehensive review of the ICD-10-CM code lists for the 
presumptive methodology showed that excluded diagnosis codes listed in 
two IGC categories were affected by the ICD-10-CM translation: 
Traumatic brain injury (TBI) and hip fracture(s).
    The excluded diagnosis codes on the IGC list fall into the 
following IGC categories:

 Brain Dysfunction--0002.21 Traumatic, Open Injury
 Brain Dysfunction--0002.22 Traumatic, Closed Injury
 Orthopedic Disorders--0008.11 Status Post Unilateral Hip 
Fracture
 Orthopedic Disorders--0008.12 Status Post Bilateral Hip 
Fractures
1. Traumatic Brain Injury Code Exclusions on the IGC List
    We used the GEMs tool purely to translate the ICD-9-CM diagnosis 
codes used in the presumptive compliance methodology lists to ICD-10-CM 
diagnosis code lists. We intended the breadth of conditions covered in 
the former would be equivalent to the latter. However, under ICD-10-CM, 
the code labels for certain etiologic diagnoses for traumatic brain 
injuries changed from the meaning of the diagnosis codes for traumatic 
brain injuries under ICD-9-CM. Thus, for the proposed rule, we analyzed 
the ICD-10-CM traumatic brain injury diagnosis codes listed as 
exclusions on the IGC list based on the ICD-10-CM code labels 
(diagnosis descriptions). Based on that analysis, we proposed to remove 
some of the traumatic brain injury codes listed as exclusions on the 
IGC list (that is, if listed as an Etiologic Diagnosis on the IRF-PAI, 
these diagnosis codes would count toward the presumptive compliance 
criteria). However, we proposed to retain S06.9X9A--Unspecified 
intracranial injury with loss of consciousness of unspecified duration, 
initial encounter as an excluded code under ``IGC Brain Dysfunction--
0002.22 Traumatic, Closed Injury'' as part of an excluded combination 
diagnosis code (meaning that one code contains more than one diagnosis) 
because we believe other, more specific codes are available on the 
presumptive compliance list that would be more appropriate for coding 
conditions suitable for inclusion in the presumptive compliance count 
for a facility.
2. Hip Fracture(s) Code Exclusions on the IGC List
    In the FY 2014 IRF PPS final rule (78 FR 47860, 47894), we removed 
ICD-9-CM diagnosis codes 820.8--Closed fracture of unspecified part of 
neck of femur, and 820.9--Open fracture of unspecified part of neck of 
femur, from the ICD-9-CM Codes That Meet Presumptive Compliance 
Criteria list. In the FY 2015 IRF PPS final rule (79 FR 45872, 45897), 
we excluded these diagnosis codes from counting if they are the 
patient's Etiologic Diagnosis (that is, the etiologic problem that led 
to the condition for which the patient is receiving rehabilitation) 
under IGC 0008.11--Orthopedic Disorders-Status

[[Page 36260]]

Post Unilateral Hip Fracture, and IGC 0008.12--Orthopedic Disorders-
Status Post Bilateral Hip Fractures. Also, in the FY 2015 IRF PPS final 
rule (79 FR 45872, 458905 through 45908), we adopted the ICD-10 medical 
code set for the IRF PPS, in which we translated these ICD-9-CM 
diagnosis codes to ICD-10-CM diagnosis codes.
    For the proposed rule, we reviewed the IGC ICD-10-CM diagnosis code 
exclusions under IGC 0008.11 and IGC 0008.12. After a thorough review 
of the codes listed as exclusions under these IGCs, we proposed to 
remove some of the exclusion codes for these two IGCs, to allow them to 
count under the presumptive compliance methodology. In the FY 2014 IRF 
PPS final rule (78 FR 47860, 47885), we agreed with commenters that 
treatment for a femoral neck fracture is the same regardless of the 
level of the fracture line within the capsule of the hip or the 
trochanteric region. During the ICD-10-CM conversion, some hip fracture 
codes were inadvertently added as exclusions to IGC 0008.11--Orthopedic 
Disorders-Status Post Unilateral Hip Fracture, and IGC 0008.12--
Orthopedic Disorders-Status Post Bilateral Hip Fractures. Consistent 
with our decision described in the FY 2014 IRF PPS final rule, we 
proposed to remove the diagnosis code exclusions for a fracture of 
``unspecified part of neck of femur.'' However, we proposed to retain 
the diagnosis code exclusions with the code label, ``fracture of 
unspecified part of neck of unspecified femur'' because we believe that 
documentation should support which femur (left/right or bilateral) is 
injured.
    In Table 1--ICD-10-CM Excluded Codes Removed From IGC List, we list 
the TBI and hip fracture diagnosis code exclusions removed from the IGC 
list (that is, if listed as an Etiologic Diagnosis on the IRF-PAI, 
these diagnosis codes would count toward the presumptive compliance 
criteria).
    Table 1 is available for download on the CMS Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Downloads/ICD-10-CM-DataFiles.zip.
    We received 18 public comments on our proposed revisions involving 
TBI and hip fracture codes, which are summarized below.
    Comment: Several commenters stated that they appreciated that CMS 
had performed a comprehensive analysis of the presumptive methodology 
diagnosis code lists in ICD-10-CM for TBI and hip fracture conditions 
and that CMS seemed to listen to IRF services providers' concerns.
    Response: We appreciate the commenters' support for our proposed 
revisions involving TBI and hip fracture codes.
    Comment: Several commenters stated that S06.9X9A--Unspecified 
intracranial injury with loss of consciousness of unspecified duration, 
initial encounter should not be listed as an exclusion on the IGC list. 
These commenters expressed concerns that the information to code the 
specific cause of a patient's injury and the duration of a patient's 
loss of consciousness is often unavailable to the IRF because it is not 
in the records from the transferring facility (for example, an acute 
care hospital) and the IRF is unable administratively or clinically to 
retrieve this information. Several commenters also noted that the 
clinical treatment of patients is not necessarily affected by whether 
or not the IRF can determine the exact cause of the patient's injury or 
the duration of the patient's loss of consciousness. Thus, commenters 
expressed concerns that the IRF would, in effect, be unfairly 
``penalized'' in that it would have a more difficult time meeting the 
60 percent rule requirements under the presumptive methodology if it is 
unable to obtain the necessary information to code more specifically.
    Response: We recognize that the IRF builds its understanding of its 
patients that are admitted to the IRF from the acute care hospital in 
part from the acute care medical record, and that very rarely the 
information needed to code a more specific diagnosis is not available 
in that record. However, as a required part of the IRF's admission 
process (in accordance with the regulations at Sec.  412.622(a)(4)(i)), 
the IRF must perform a comprehensive preadmission screening on each 
Medicare Part A fee-for-service patient. To meet the requirements of 
the comprehensive preadmission screening, the IRF clinical staff may, 
on rare occasions, need to consult diagnostic reports, radiological 
reports, and consultation notes, among other informational 
documentation. This information should provide the IRF clinicians 
enough of a clinical basis for determining a more specific diagnosis 
code for the patient. As stated in the proposed rule, we believe other 
more specific codes are available, such as those codes listed under 
subcategory S06.89-, Other specified intracranial injury. We believe 
that the IRF should make every effort to obtain the necessary 
information to code more specifically. Thus, we will retain S06.9X9A as 
an excluded code under IGC 0002.22--Brain Dysfunction, Traumatic, 
Closed Injury, and continue to review the presumptive compliance 
methodology code lists to ensure that the ICD-10-CM codes on the lists 
reflect as accurately as possible the conditions listed in Sec.  
412.29(b)(2).
    Comment: Several commenters expressed concerns that the following 
ICD-10-CM codes were listed as exclusions on the draft IGC list posted 
to the CMS Web site contemporaneously with the proposed rule under IGC 
0002.21--Brain Dysfunction, Traumatic, Open Injury and IGC 0002.22--
Brain Dysfunction Traumatic, Closed Injury:
     S02.101B--Fracture of base of skull, right side, initial 
encounter for open fracture;
     S02.102B--Fracture of base of skull, left side, initial 
encounter for open fracture;
     S02.101A--Fracture of base of skull, right side, initial 
encounter for closed fracture;
     S02.102A--Fracture of base of skull, left side, initial 
encounter for closed fracture.

These commenters suggested that we should remove these ICD-10-CM codes 
as exclusions from the IGC list under IGC 0002.21--Brain Dysfunction, 
Traumatic, Open Injury and IGC 0002.22--Brain Dysfunction Traumatic, 
Closed Injury (thereby allowing these codes to count toward the 
presumptive compliance criteria) because these codes conform with ICD-
10-CM coding guidelines, reflect serious injuries, and are 
representative of the types of conditions that fall under the 60 
percent rule.
    Response: Diagnosis codes S02.10XA--Unspecified fracture of base of 
skull, initial encounter for closed fracture and S02.10XB--Unspecified 
fracture of base of skull, initial encounter for open fracture were 
listed as excluded diagnosis codes on the IGC list prior to medical 
code data set updates. However, with the updates to the ICD-10-CM 
medical data code set (for ICD-10-CM coding updates see https://www.cms.gov/Medicare/Coding/ICD10/2018-ICD-10-PCS-and-GEMs.html and 
https://www.cms.gov/Medicare/Coding/ICD10/2017-ICD-10-PCS-and-GEMs.html), S02.10XA--Unspecified fracture of base of skull, initial 
encounter for closed fracture and S02.10XB--Unspecified fracture of 
base of skull, initial encounter for open fracture were removed from 
the ICD-10-CM medical code data set. These codes were replaced with the 
added codes: S02.101B--Fracture of base of skull, right side, initial 
encounter for open fracture; S02.102B--Fracture of base of skull, left 
side, initial encounter for open fracture; S02.101A--Fracture of

[[Page 36261]]

base of skull, right side, initial encounter for closed fracture; and 
S02.102A--Fracture of base of skull, left side, initial encounter for 
closed fracture. On the draft IGC list posted to the CMS Web site 
contemporaneously with the proposed rule, we retained the combination 
code exclusions that included these new added codes (that is, if listed 
as an Etiologic Diagnosis on the IRF-PAI, these diagnosis codes would 
not count toward the presumptive compliance criteria). In consideration 
of the comments and in light of the recent update to the ICD-10-CM 
medical code data set, we agree with the commenters that these codes 
indicate serious injuries and are representative of the conditions that 
are listed in 42 CFR 412.29(b)(2) as meeting the 60 percent rule 
criteria. Moreover, these codes provide more specificity than the prior 
codes S02.10XA and S02.10XB because they indicate the anatomic location 
of the injury. Accordingly, we are removing the combination code 
exclusions on the IGC list that contain S02.101B--Fracture of base of 
skull, right side, initial encounter for open fracture; S02.102B--
Fracture of base of skull, left side, initial encounter for open 
fracture; S02.101A--Fracture of base of skull, right side, initial 
encounter for closed fracture; and S02.102A--Fracture of base of skull, 
left side, initial encounter for closed fracture from the IGC exclusion 
list (thereby allowing these codes to count toward the presumptive 
compliance criteria).
    Comment: Commenters generally agreed with the proposed removal of 
the diagnosis code exclusions for a fracture of ``unspecified part of 
neck of femur'' from the IGC list for unilateral and bilateral hip 
fracture(s). However, one commenter stated that code exclusions with 
the code label, ``fracture of unspecified part of neck of unspecified 
femur'' should be retained on the list as the patient record should 
identify the right or left femur.
    Response: As discussed, we are removing the diagnosis code 
exclusions for a fracture of ``unspecified part of neck of femur'' 
consistent with our decision in the FY 2014 IRF PPS final rule. 
However, we will retain the 3 code exclusions for S72.009-, Fracture of 
unspecified part of neck of unspecified femur, as we continue to review 
the presumptive compliance methodology code lists to ensure that the 
ICD-10-CM codes on the lists reflect as accurately as possible the 
conditions listed in Sec.  412.29(b)(2). We agree with the commenter 
that there should be sufficient documentation in the patient's medical 
record in order to appropriately code whether the location of the 
fracture affects the right or left femur.
    Final Decision: After carefully considering the comments we 
received on our proposed revisions involving TBI and hip fracture 
codes, we are modifying our proposal, based on our own reassessment of 
the code exclusions and on commenters' suggestions. That is, we are 
finalizing the proposed revisions involving TBI and hip fracture codes 
for IGCs 0002.21, 0002.22, 0008.11, and 0008.12, with the additional 
removal of the following ICD-10-CM codes from the list of ``Impairment 
Group Codes that Meet Presumptive Compliance Criteria'' (allowing these 
codes to count toward the presumptive methodology):
     S02.101B--Fracture of base of skull, right side, initial 
encounter for open fracture;
     S02.102B--Fracture of base of skull, left side, initial 
encounter for open fracture;
     S02.101A--Fracture of base of skull, right side, initial 
encounter for closed fracture; and
     S02.102A--Fracture of base of skull, left side, initial 
encounter for closed fracture.
    In addition, we are finalizing our proposals to retain S06.9X9A--
Unspecified intracranial injury with loss of consciousness of 
unspecified duration, initial encounter as an excluded code under IGC 
0002.22--Brain Dysfunction, Traumatic, Closed Injury. We are also 
finalizing our proposal to retain the diagnosis code exclusions with 
the code label, ``fracture of unspecified part of neck of unspecified 
femur'', specifically the 3 code exclusions for S72.009-, Fracture of 
unspecified park of neck of unspecified femur.
    These changes are effective for IRF discharges occurring on and 
after October 1, 2017. The revised IGC list is available for download 
from the CMS Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Downloads/ICD-10-CM-DataFiles.zip.

F. Revisions Regarding Major Multiple Trauma Codes

    Under ICD-9-CM, diagnosis codes 828.0--Closed multiple fractures 
involving both lower limbs, lower with upper limb, and lower limb(s) 
with rib(s) and sternum, and 828.1--Open multiple fractures involving 
both lower limbs, lower with upper limb, and lower limb(s) with rib(s) 
and sternum, would count a case as meeting the 60 percent rule 
requirements under the presumptive compliance method. However, similar 
codes do not exist in ICD-10-CM. The GEMs tool translates these ICD-9-
CM codes to the ICD-10-CM code of T07--Unspecified multiple injuries. 
IRF providers have communicated to CMS their understanding that they 
would be violating ICD-10-CM Official Guidelines for Coding and 
Reporting if they were to use code T07 for patients with multiple 
fractures, unless they truly do not know where any of the patient's 
fractures are located. The IRFs stated that ICD-10-CM Official 
Guidelines for Coding and Reporting indicates that codes for specific 
bones fractured should be reported. As such, providers state that they 
no longer are able to code for these patients in a manner that allows 
them to count under presumptive compliance. The ICD-10-CM Official 
Guidelines for Coding and Reporting is located on the CMS Web site at 
https://www.cms.gov/medicare/coding/icd10/2017-icd-10-cm-and-gems.html.
    Under the IRF PPS, the GEMs translation provides the following ICD-
10-CM combination codes as eligible codes for multiple trauma cases:

S42.90XA A Fracture of unspecified shoulder girdle, part 
unspecified, initial encounter for closed fracture
S52.90XA A Unspecified fracture of unspecified forearm, initial 
encounter for closed fracture
S22.20XA B Unspecified fracture of sternum, initial encounter for 
closed fracture
S22.49XA C Multiple fractures of ribs, unspecified side, initial 
encounter for closed fracture
S42.91XA A Fracture of right shoulder girdle, part unspecified, 
initial encounter for closed fracture
S52.91XA A Unspecified fracture of right forearm, initial encounter 
for closed fracture
S42.92XA B Fracture of left shoulder girdle, part unspecified, 
initial encounter for closed fracture
S52.92XA B Unspecified fracture of left forearm, initial encounter 
for closed fracture

    However, it is noted that unlike ICD-9-CM codes 828.0--Closed 
multiple fractures involving both lower limbs, lower with upper limb, 
and lower limb(s) with rib(s) and sternum, and 828.1--Open multiple 
fractures involving both lower limbs, lower with upper limb, and lower 
limb(s) with rib(s) and sternum, the IRF PPS ICD-10-CM translation 
provided no codes for the lower extremities as part of multiple 
fractures.
    So that IRFs may appropriately count patients with multiple 
fractures that include lower extremity fractures under the presumptive 
methodology, we proposed to count IRF-PAIs that

[[Page 36262]]

contain 2 or more of the ICD-10-CM codes from the three major multiple 
trauma lists (in the specified code combinations) that are located on 
the CMS Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Downloads/ICD-10-CM-DataFiles.zip. 
These codes would need to be specifically combined so that (a) at least 
one lower extremity fracture is combined with an upper extremity 
fracture and/or a rib/sternum fracture or (b) fractures are present in 
both lower extremities.
    In order for patients with multiple fractures to qualify as meeting 
the 60 percent rule requirement for IRFs under the presumptive 
methodology, the following codes could be used if combined as described 
above:

 List A: Major Multiple Trauma--Lower Extremity Fracture
 List B: Major Multiple Trauma--Upper Extremity Fracture
 List C: Major Multiple Trauma--Ribs and Sternum Fracture

    We also proposed to remove ICD-10-CM diagnosis code T07--
Unspecified multiple injuries from the presumptive methodology list and 
replace it with codes from the three major multiple trauma lists (in 
the specified code combinations), as described above. We believe that 
any patient who suffered multiple trauma and subsequently required 
admission into an IRF would have experienced an extensive medical 
examination to identify the scope of his or her injuries in the acute 
care setting. After a review of the acute care medical record, these 
injuries would be known to both the IRF pre-admission personnel and the 
admitting IRF physician, and would be able to be coded from the medical 
record in the most specific manner possible in the IRF setting.
    We received 11 public comments on our proposed revisions to the 
presumptive methodology list for major multiple trauma, which are 
summarized below.
    Comment: Commenters were generally supportive of our proposal to 
count IRF cases that contain two or more of the ICD-10-CM codes from 
three major multiple trauma lists in the specified combinations. 
However, one commenter suggested that CMS include ICD-10-CM codes on 
the major multiple trauma lists that represent diagnoses similar to 
previously accepted ICD-9-CM codes 819.0--Multiple closed fractures 
involving both upper limbs and limb with rib(s) and sternum and 819.1--
Multiple open fractures involving both upper limbs and limb with rib(s) 
and sternum.
    Response: We appreciate the commenters' support of our proposal to 
count IRF cases that contain two or more of the ICD-10-CM codes from 
three major multiple trauma lists in the specified combinations. 
Regarding the comment on upper extremity multiple trauma, in the FY 
2015 IRF PPS final rule (79 FR 45872, 45905 through 45908), we 
finalized our translation of the diagnosis code lists from the ICD-9-CM 
codes used in the IRF PPS to ICD-10-CM codes. Under the IRF PPS, the 
GEMs translation provided the following ICD-10-CM combination codes 
(these are the same combination codes discussed above) as eligible 
codes for multiple trauma cases for ICD-9-CM codes 819.0 and 819.1:

S42.90XA A Fracture of unspecified shoulder girdle, part 
unspecified, initial encounter for closed fracture
S52.90XA A Unspecified fracture of unspecified forearm, initial 
encounter for closed fracture
S22.20XA B Unspecified fracture of sternum, initial encounter for 
closed fracture
S22.49XA C Multiple fractures of ribs, unspecified side, initial 
encounter for closed fracture
S42.91XA A Fracture of right shoulder girdle, part unspecified, 
initial encounter for closed fracture
S52.91XA A Unspecified fracture of right forearm, initial encounter 
for closed fracture
S42.92XA B Fracture of left shoulder girdle, part unspecified, 
initial encounter for closed fracture
S52.92XA B Unspecified fracture of left forearm, initial encounter 
for closed fracture

    We have retained these combination codes on the ICD-10-CM 
presumptive methodology list so that IRFs may continue to count 
multiple major trauma involving upper extremity and rib/sternum 
injuries.
    Final Decision: After carefully considering the comments that we 
received, we are finalizing our proposed revisions to the presumptive 
methodology list for major multiple trauma, effective for IRF 
discharges occurring on and after October 1, 2017. The lists for major 
multiple trauma: IRF List A--MMT-Lower Extremity Fracture; IRF List B--
MMT-Upper Extremity Fracture; and IRF List C-Ribs and Sternum Fracture 
are available for download from the CMS Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Downloads/ICD-10-CM-DataFiles.zip.

G. Further Consideration of Unspecified Codes and Arthritis Codes

1. Unspecified Codes
    In the FY 2014 IRF PPS final rule (78 FR 47860, 47884 through 
47885), we stated that we believe that highly descriptive coding 
provides the best and clearest way to document the appropriateness of a 
given patient's admission and would improve the accuracy of the 
presumptive compliance method of calculating a facility's 60 percent 
rule compliance percentage. Thus, whenever possible, we believe that 
the most specific code that describes a medical disease, condition, or 
injury should be used to document diagnoses on the IRF-PAI. As we 
stated in that final rule, generally, ``unspecified'' codes are used 
when there is a lack of information about location or severity of 
medical conditions in the medical record. We believe that specific 
diagnosis codes that narrowly identify anatomical sites where disease, 
injury, or condition exist should be used when coding patients' 
conditions on the IRF-PAI whenever such codes are available. Moreover, 
we believe that imprecise codes would inappropriately categorize an 
overly broad segment of the patient population as having the conditions 
required for inclusion in a facility's presumptive compliance 
calculation, which would result in an inflated compliance percentage. 
If the IRF does not have enough information about the patient's 
condition to code the more specific codes on the IRF-PAI, we would 
expect the IRF to seek out and document additional information from the 
patient's acute care hospital to determine and submit the appropriate, 
more specific code(s) to use.
    In the proposed rule, we used the same approach in analyzing the 
ICD-10-CM diagnosis codes that we used in our analysis of ICD-9-CM 
diagnosis codes in the FY 2014 IRF PPS final rule. That is, we went 
through each ICD-10-CM code currently on the presumptive compliance 
methodology lists individually to determine whether the ICD-10-CM code 
is sufficiently specific to reliably identify a subset of conditions 
suitable for inclusion in the presumptive methodology compliance 
calculation. If we determined that a given ICD-10-CM code was not 
sufficiently specific, we ascertained whether more specific codes were 
available for use (that could count for the presumptive compliance 
methodology) to identify those members of the patient population with 
conditions that we believe it would be appropriate to include in the

[[Page 36263]]

presumptive methodology compliance calculation. For example, we would 
likely determine that an injury to an unspecified part of the body 
would not be sufficiently specific, but we sought to identify where 
there were codes available (that could count for the presumptive 
compliance methodology) to code that injury for specific locations on 
the body. In the FY 2018 IRF PPS proposed rule (80 FR 20711), we 
proposed to remove certain unspecified diagnosis codes that, on review, 
we believed to be inappropriate to include in the presumptive 
compliance list. However, in light of the comments we received, we are 
going to take a more cautious approach and give further consideration 
to the removal of the unspecified codes, though we continue to 
encourage IRFs to adhere to ICD-10-CM guidelines and use the most 
specific information available to describe a medical disease, 
condition, or injury.
    In section X.G. of this final rule, we summarize and respond to the 
public comments we received on our proposed removal of the unspecified 
codes and arthritis codes that were re-introduced back onto the lists 
through the ICD-10-CM conversion process.
2. Arthritis Codes
    In the FY 2014 IRF PPS final rule (78 FR 47887 through 47895), we 
finalized the removal of ICD-9-CM diagnosis codes for arthritis 
conditions from the from the ICD-9-CM Codes That Meet Presumptive 
Compliance Criteria list because the inclusion of patients with these 
medical conditions in the presumptive compliance calculation of the 
IRF's compliance percentage is conditioned on those patients meeting 
the described severity and prior treatment requirements. The ICD-9-CM 
diagnosis codes that reflected these arthritis and arthropathy 
conditions did not provide any information about the severity of the 
condition or whether the prior treatment requirements were met. 
Therefore, we stated in the FY 2014 IRF PPS final rule (78 FR 47888) 
that we believe that additional information beyond the presence of the 
code is necessary to determine if the medical record would support 
inclusion of individuals with the arthritis and arthropathy conditions 
outlined in our regulations under Sec.  412.29(b)(2)(x) through (xii) 
in the presumptive compliance calculation of the facility's compliance 
percentage. For this reason, we finalized the removal of the ICD-9-CM 
diagnosis codes associated with the medical conditions outlined under 
Sec.  412.29(b)(2)(x) through (xii) from the list of ICD-9-CM Codes 
That Meet Presumptive Compliance Criteria list.
    Though we removed arthritis diagnosis codes from the ICD-9-CM Codes 
That Meet Presumptive Compliance Criteria list prior to the ICD-9-CM to 
ICD-10-CM conversion process, some ICD-10-CM arthritis codes are listed 
due to the straight translation. Though we had proposed to remove these 
codes in the FY 2018 IRF PPS proposed rule (80 FR 20711), consistent 
with our FY 2014 IRF PPS final rule rationale for removing ICD-9-CM 
arthritis diagnosis codes, we are going to take a more cautious 
approach and give further consideration to the removal of the remaining 
ICD-10-CM arthritis codes on the presumptive methodology list.
    We received 10 public comments on our proposed removal of the 
unspecified codes and arthritis codes that were re-introduced back onto 
the lists through the ICD-10-CM conversion process, which are 
summarized below.
    Comment: Several commenters expressed concerns about the proposed 
removal of unspecified codes from the presumptive methodology lists. 
These commenters stated that specific information may not be captured 
in the record in the acute care setting (for example, the emergency 
department), and the lack of this information would hinder the ability 
of the IRF to code the patient. Several commenters encouraged us not to 
remove codes from presumptive methodology simply because a code is 
``unspecified,'' as that descriptor should have no bearing on the 
patient's current functional status or treatment for the type of 
condition that typically is treated in IRFs and meets the 60 percent 
rule.
    Response: We recognize that, in rare instances, IRFs may not 
receive all of the information they need from the referring provider in 
order to code more specifically, and we want to move cautiously in this 
regard to ensure that IRFs have the information that they need to code 
more specifically. We agree with several of the comments that said that 
the ``unspecified'' descriptor, in and of itself, does not necessarily 
mean that the case fails to comply with the 60 percent rule criteria. 
In light of these comments, we have decided to take a more cautious 
approach and give further consideration to the removal of these 
unspecified codes. For now, then, we will retain the unspecified codes 
that were discussed in the FY 2018 IRF PPS proposed rule on the list of 
ICD-10-CM Codes That Meet Presumptive Compliance Criteria. In addition, 
we will continue to work together with the National Center for Health 
Statistics (NCHS), the American Hospital Association (AHA), and other 
organizations that provide guidance and education on the ICD-10 medical 
code data set to encourage providers to code to the highest level of 
specificity possible. For the IRF PPS in particular, we will continue 
holding National Provider Calls (as we have been doing for the IRF PPS 
since June 2014) to educate providers on coding to the greatest level 
of specificity possible in the IRF PPS. We will also continue to 
monitor the use of these codes and may propose adjustments to the 
presumptive methodology code lists in the future to ensure that the 
lists continue to reflect the conditions that meet the 60 percent rule 
criteria listed in Sec.  412.29(b)(2).
    Comment: While one commenter generally supported the CMS goal of 
encouraging better descriptive coding and documentation to demonstrate 
the appropriateness of a patient case under the presumptive 
methodology, the commenter strongly encouraged us not to remove the 
codes from counting under the presumptive methodology, but instead 
suggested that we monitor the coding practices of the service providers 
who refer patients to IRFs as the commenter indicated that the absence 
of specificity occurs earlier in the patient's hospitalization and 
negatively impacts IRFs.
    Response: We acknowledge that as a post-acute care service 
provider, IRFs admit patients who are well along the continuum of care 
and that, rarely, documentation they receive from the acute care 
setting may be incomplete, making it more difficult to determine 
appropriate treatment for the patient and hampering the provider's 
efforts to complete their own medical records. In light of these 
comments and in an abundance of caution to ensure that IRFs receive the 
information they need to code more specifically, we will retain the 
unspecified codes that were re-introduced back onto the lists through 
the ICD-10-CM conversion process and continue to monitor the practices 
of service providers who refer patients to IRFs to ensure that the IRFs 
receive the appropriately detailed information from these providers.
    Comment: One commenter suggested that CMS reconsider the removal of 
arthritis codes from the presumptive methodology lists. The commenter 
expressed concern that the removal of arthritis codes may impact access 
to care for certain populations with high incidence of these 
conditions.
    Response: In light of these comments, to ensure that we do not 
affect access to care for patients with these conditions, we will give 
further consideration to the removal of these arthritis codes. For now, 
then, we will retain the arthritis

[[Page 36264]]

codes that were re-introduced back onto the lists through the ICD-10-CM 
conversion process and continue to analyze whether they are appropriate 
for inclusion on the list.
    Comment: One commenter expressed concern that the proposed 
presumptive methodology revisions, if finalized, would put additional 
IRFs at risk for meeting the compliance standards and possibly burden 
IRFs (and CMS contractors) with additional medical record reviews.
    Response: We do not agree that the proposed presumptive methodology 
changes would put any IRFs at risk for failing to meet the 60 percent 
rule requirements or would cause many of them (if any) to have to use 
the medical review methodology. First, as we indicated in the FY 2014 
IRF PPS final rule (78 FR 47930), the proposed removal of unspecified 
diagnosis codes would not be expected to have any impact on IRFs' 
compliance with the 60 percent rule or on the amount of medical record 
reviews that would need to be completed for determining 60 percent rule 
compliance because IRFs would be able to choose another more specific 
code on the list to use instead of the unspecified code. As we did in 
the FY 2014 final rule, we were careful with the proposed changes for 
FY 2018 to ensure that more specific codes were available on the list 
in every instance for IRFs to use instead of an unspecified code. 
Second, in the FY 2015 IRF PPS final rule (79 FR 45903 through 45905), 
we implemented a new item on the IRF-PAI form to enable IRFs to 
indicate to us (and the Medicare Administrative Contractor to verify) 
whether or not a patient's arthritis condition meets the requirements 
in Sec.  412.29(b)(2). Thus, removal of the arthritis diagnosis codes 
from the presumptive methodology list would similarly be expected to 
have no effect on the number of IRFs that are in compliance with the 60 
percent rule requirements or the number of medical record reviews that 
would need to be completed for determining 60 percent rule compliance 
because the arthritis cases that count presumptively can be identified 
through this new verification process. Third, our analysis of the most 
current IRF-PAI data shows that IRFs' presumptive compliance 
percentages are almost always well above 60 percent. Thus, IRFs very 
rarely fail to meet the presumptive methodology or have to use the 
medical review methodology. However, as noted previously, we have 
decided to take a more cautious approach and give further consideration 
to the removal of the unspecified and arthritis codes. For now, then, 
we will retain the unspecified and arthritis codes that were re-
introduced back onto the lists through the ICD-10-CM conversion 
process, continue to educate providers on the appropriate use of these 
codes, and continue to analyze whether they are appropriate for 
inclusion on the list.
    Comment: Several commenters requested that CMS more clearly 
identify the code changes made to the presumptive compliance list and 
the IGC list by providing tables of the codes that are being added and 
the codes that are being removed, similar to the way that coding 
changes are presented in the IPPS setting and the way we presented 
presumptive methodology changes in the FY 2014 IRF PPS final rule. 
Other commenters suggested CMS employ a ``crosswalk'' or other 
mechanism for stakeholders to easily identify proposed changes from 
existing policy. Some commenters requested that we indicate the policy 
rationale behind each change on the lists. Another commenter expressed 
concern that the proposed changes to the code lists are supported with 
limited clinical or policy rationale. This commenter requested that for 
future changes to the presumptive methodology, CMS provide a 
comprehensive policy rationale, with supporting data, for each proposed 
coding change. Moreover, this commenter stated that it is difficult to 
determine the rationale behind the proposed changes, that is, whether 
they are for clinical reasons, policy reasons, due to the ICD-10-CM 
conversion, or changes related to the changes to the ICD-10 medical 
data codes set that are implemented annually.
    Response: We appreciate the commenters' suggestions, and while we 
believe that all of the proposed changes are fully supported by the 
policy rationales discussed in the proposed rule, we agree that it 
would be helpful for us to further clarify the coding changes to the 
presumptive compliance list (and other presumptive methodology lists) 
by providing tables of codes that we are adding and codes that we are 
deleting. We will include this information in all future rulemaking. 
For this final rule, we have organized the changes in Table 1--ICD-10-
CM Exclusion Codes Removed From IGC List. This list is available for 
download on the CMS Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Downloads/ICD-10-CM-DataFiles.zip.
    In addition, we will take the commenters' suggestions into account 
for future refinements to the presumptive methodology code lists, 
including the suggestion that we include more supporting data for each 
proposed coding change, along with a comprehensive rationale for any 
future refinements.
    Final Decision: After carefully considering the comments we 
received on the proposed removal of the unspecified codes and arthritis 
codes that were re-introduced back onto the lists through the ICD-10-CM 
conversion process, we are not finalizing these proposed changes to the 
presumptive compliance list. Instead, we have noted the commenter's 
concerns regarding issues of patient access to care, burden to 
providers, and potential absence of adequate information to support 
specificity of coding in the medical records of referring providers. 
Based on these concerns, we have decided to take a more cautious 
approach to these changes and not finalize the changes regarding 
removal of unspecified codes or arthritis codes. Instead, we will 
continue to educate providers and to analyze the use of these codes to 
determine their appropriateness for inclusion on the presumptive 
methodology list. We may propose additional changes to the presumptive 
methodology lists in the future, as needed, to ensure that the lists 
continue to reflect the conditions that meet the 60 percent rule 
criteria listed in 42 CFR 412.29(b)(2).

H. Further Consideration of ICD-10-CM Code G72.89--Other Specified 
Myopathies

    Through our monitoring of IRFs' use of the ICD-10-CM codes that 
currently count toward a facility's compliance percentage under the 
presumptive compliance method, we have discovered what we believe to be 
inconsistent use of one ICD-10-CM code (G72.89--Other Specified 
Myopathies) among IRFs. We included this ICD-10-CM code on the 
presumptive compliance code list based on our understanding that it is 
intended to represent a relatively narrow set of specified myopathies 
that are confirmed by the results of specific medical testing and 
identified as such in the patients' medical records. However, having 
reviewed certain IRFs' disproportionately higher use of the code, we 
have found that certain IRFs are using this code more broadly, 
including to represent patients with generalized weakness who do not 
meet the requirements in the 60 percent rule under Sec.  412.29(b)(2). 
For the expanded use of this code by certain IRFs, we proposed to 
remove this code from the presumptive compliance list because we 
believed that we were unable to determine from the presence of this

[[Page 36265]]

code alone, without additional supporting information from the medical 
record, that patients coded with this code presumptively meet the 60 
percent rule criteria.
    We received 15 public comments on our proposal to remove ICD-10-CM 
code G72.89--Other specified myopathies from the presumptive compliance 
list, which are summarized below.
    Comment: Several commenters supported our proposal to remove 
G72.89--Other specified myopathies from counting under the presumptive 
methodology and agreed that this code should not be coded for patients 
with generalized weakness or general debility.
    Response: We appreciate the commenters' support for our proposal to 
remove G72.89--Other specified myopathies. However, as discussed below, 
we are not finalizing the removal of this code.
    Comment: One commenter noted that among patients who are 
appropriately coded with G72.89--Other specified myopathies are those 
with significant medical comorbidities or those who have experienced 
prolonged hospitalization. Both of these instances may contribute to 
proximal weakness and loss of function that amount to ``other specified 
myopathies.'' The commenter stated that these types of patients are 
best served in an IRF. Several commenters stated that the removal of 
this code would have a significant impact on presumptive compliance 
because there is no more specific code on the presumptive compliance 
list under which these patients can be coded. Another commenter noted 
that if there is a problem with the overutilization of this code, it 
may be a matter of physician documentation and provider coding 
practices in which the code is inappropriately used to code for 
patients with generalized weakness and not for those who suffer from 
other specified myopathies. This commenter suggested that, instead of 
removing this code from the presumptive compliance list, we should 
address this concern through targeted coding audit reviews. Several 
commenters recommended that we provide education on the appropriate use 
of this code and conduct ongoing monitoring of the use of the code. In 
addition, one commenter noted that medical testing is not the only way 
for a physician to diagnose a myopathy.
    Response: We continue to believe that the inappropriate use of 
G72.89--Other specified myopathies--does not allow us to determine, 
from the presence of the code alone without further information from 
the patient's medical record, that patients coded with this code 
presumptively meet the 60 percent rule criteria. However, we have 
decided to take a more cautious approach to ensure that we do not 
restrict access to IRF care for patients with myopathies, and are not 
finalizing removal of this code at this time. Our analysis indicates 
that many IRFs use this code appropriately, and that we are only unable 
to rely on this code alone for a particular subset of IRFs that are 
continuing to use the code for patients with generalized weakness and 
debility. Thus, we agree with many of the commenters that a more direct 
approach to addressing this issue may be to conduct targeted coding 
audit reviews (which we understand to mean targeted medical reviews) of 
claims containing this code, to provide education on the appropriate 
use of the code, and to conduct ongoing monitoring of the code. We have 
been and will continue doing these things. We note that we did not mean 
to imply that we believe that medical testing is the only way to 
determine whether a patient has an ``other specified myopathy,'' but 
was simply provided as one possible way of verifying this in the IRF 
medical record. We will consider re-proposing removal of this code in 
the future if our analysis indicates that the code continues to be used 
inappropriately.
    Final Decision: After careful consideration of the comments we 
received regarding our proposal to remove code G72.89--Other specified 
myopathies from the presumptive methodology code list, we are not 
finalizing the removal of this code because we agree with the 
commenters' suggestions that a more effective way to deal with 
inappropriate utilization of this code is through focused medical 
reviews of claims containing this code, provider education on the 
appropriate use of this code, and ongoing monitoring of the use of this 
code. We note that we may again propose removal of this code from the 
presumptive methodology lists in the future, if we find that the code 
continues to be used inappropriately.

I. Implementation of the Revisions to the Presumptive Methodology

    All revisions in the proposed rule were scheduled to take effective 
for IRF discharges occurring on or after October 1, 2017, unless 
otherwise stated. We believed that this was the most appropriate timing 
of the changes to the presumptive methodology because many of the 
changes (specifically, the restoration of the traumatic brain injury, 
hip fracture, and major multiple trauma codes) had been requested by 
IRFs, and they had also requested that these changes be made as soon as 
possible. However, we received 16 comments on the effective date for 
our proposed revisions to the presumptive methodology lists, which are 
summarized below.
    Comment: Several commenters expressed concerns about the proposed 
effective date of October 1, 2017 for the revisions to the presumptive 
methodology that would remove ICD-10-CM codes from counting. Commenters 
generally stated that making the effective date of these changes on a 
date other than the start date of an IRF's compliance review period 
could potentially constitute ``impermissible retroactive rulemaking'' 
(because it would make IRFs have to go back to the start of the current 
compliance review period and reevaluate their admitting practices to 
ensure that the facility is in compliance with the 60 percent rule for 
the entire compliance review period), could create added confusion and 
burden among IRFs by making IRFs have to absorb potentially disruptive 
changes in the middle of a compliance review period, was inconsistent 
with the way these changes have been applied historically, and could 
affect IRFs differently depending on each IRF's particular cost 
reporting period (or compliance review period), potentially causing 
inequities among IRFs.
    Response: We generally agree with the commenters that we should 
implement revisions to the presumptive methodology at the start of each 
IRF's compliance review period to ensure that implementation of the 
changes is equitable, minimizes the amount of confusion and burden 
among IRFs, is consistent with past implementation of similar changes, 
and affects all IRFs on a similar basis. As we are not finalizing any 
of the changes to the presumptive methodology in this final rule that 
would remove codes from counting under the presumptive methodology, we 
will keep these comments in mind for potential implementation of 
changes to the presumptive methodology codes in future rulemaking.
    Comment: Several commenters suggested that we implement proposed 
changes that would increase the number of cases counting under the 
presumptive methodology (that is, the changes involving traumatic brain 
injury codes, hip fracture codes, and major multiple trauma codes) as 
soon as possible to ensure continued access to IRF services for 
patients with these conditions. The commenters suggested that we either

[[Page 36266]]

make these changes effective retroactively to October 1, 2015 (the 
applicable date when ICD-10-CM became the required medical code set for 
use on Medicare claims and IRF-PAI submissions for the IRF PPS), or for 
discharges on or after October 1, 2017, at the latest.
    Response: We agree with the commenters that the immediacy of the 
need to ensure that patients with traumatic brain injuries, hip 
fractures, and major multiple traumas continue to have appropriate 
access to IRF services means that we need to ensure that these codes 
count toward meeting the 60 percent rule requirements under the 
presumptive methodology as soon as possible. As 60 percent rule 
determinations are always made prospectively, we disagree with the 
commenters and, consistent with past implementation, will implement 
these changes prospectively, effective for IRF discharges occurring on 
and after October 1, 2017, which represents the earliest possible 
prospective implementation time.
    Comment: Several commenters stated that IRFs need adequate time to 
make appropriate adjustments to the changes in the code lists that 
would that would remove ICD-10-CM codes from counting, including time 
to educate and train staff and clinicians. For this reason, they said 
that we should delay the effective date of any such changes by at least 
a year to allow IRFs additional time to adjust to the changes.
    Response: We are not finalizing any changes in this final rule that 
would remove ICD-10-CM codes from counting. However, we will take these 
comments into account for implementation of changes to the presumptive 
methodology in future rulemaking.
    Final Decision: After carefully considering the comments we 
received on the effective date for our proposed revisions to the 
presumptive methodology lists, we are implementing the changes to the 
presumptive methodology that will increase the number of cases counting 
under the presumptive methodology (that is, the changes involving 
traumatic brain injury codes, hip fracture codes, and major multiple 
trauma codes) for all IRF discharges occurring on or after October 1, 
2017. As previously discussed in sections X.G and X.H of this rule, we 
are not implementing any of the changes that would remove codes from 
counting under the presumptive methodology at this time, so we will 
take the comments on the effective date of these changes into 
consideration for possible future rulemaking on this issue.

J. Summary of Comments Regarding the Criteria Used To Classify 
Facilities for Payment Under the IRF PPS

    Sections 1886(d)(1)(B) and 1886(d)(1)(B)(ii) of the Act give the 
Secretary discretion in defining a ``rehabilitation unit'' and a 
``rehabilitation hospital'' for payment under the IRF PPS. In 1983, 
when Congress first authorized the Secretary to define IRFs for 
purposes of excluding them from the IPPS, we used some of the 
accreditation requirements that were used by the Joint Commission on 
Accreditation of Hospitals (which is now known as the Joint Commission) 
and other accrediting organizations to develop our definition of a 
rehabilitation hospital. We also used other criteria that we believed 
distinguished rehabilitation hospitals from other types of hospitals, 
including the requirement that the hospital must be primarily engaged 
in furnishing intensive rehabilitation services as demonstrated by 
patient medical records showing that, during the hospital's most 
recently completed 12-month cost reporting period, at least 75 percent 
of the hospital's inpatients were treated for one or more conditions 
specified in these regulations that typically require intensive 
inpatient rehabilitation (48 FR 39756). We included this requirement, 
commonly referred to as the 75 percent rule, as a defining feature of a 
rehabilitation hospital because we believed that examining the types of 
conditions for which the hospital's inpatients are treated, and the 
proportion of patients treated for conditions that typically require 
intensive inpatient rehabilitation, will help distinguish those 
hospitals in which the provisions of rehabilitation services is a 
primary, rather than a secondary, goal (48 FR 39756).
    The original list of medical conditions used in evaluating this 
requirement were stroke, spinal cord injury, congenital deformity, 
amputation, major multiple trauma, fracture of femur (hip fracture), 
brain injury, and polyarthritis, including rheumatoid arthritis. This 
list of 8 medical conditions was partly based on the information 
contained in a document entitled, ``Sample Screening Criteria for 
Review of Admissions to Comprehensive Medical Rehabilitation Hospitals/
Units,'' produced by the American Academy of Physical Medicine and 
Rehabilitation and the American Congress of Rehabilitation Medicine. On 
January 3, 1984, we published a final rule entitled ``Medicare Program: 
Prospective Payment for Medicare Inpatient Hospital Services'' (49 FR 
234), that expanded the initial list of conditions to include 
neurological disorders (including multiple sclerosis, motor neuron 
diseases, polyneuropathy, muscular dystrophy, and Parkinson's disease) 
and burns, in response to public comment.
    In the FY 2004 IRF PPS proposed rule, we provided additional 
background on how the definition of an IRF developed and evolved over 
time. In that proposed rule, we also discussed the need to use these 
requirements in distinguishing IRFs from other types of inpatient 
facilities and thereby maintaining compliance with sections 
1886(d)(1)(B) and 1886(d)(1)(B)(ii) of the Act. In addition, we stated 
that making this distinction is also critical to fulfilling the 
requirements of section 1886(j)(1)(A), which requires Medicare to make 
payments to IRFs under a PPS specifically designed for the services 
they furnish.
    In the May 7, 2004 final rule, we updated the list of conditions 
used to evaluate compliance with the ``75 percent rule'' from 10 
conditions to 13, and implemented a new presumptive compliance 
methodology, as discussed previously in this proposed rule, to simplify 
the rule and to promote more consistent enforcement. The list of 13 
conditions that were developed in the May 7, 2004 final rule, which is 
still the list that we use to evaluate compliance with the rule and 
which section 5005 of the Deficit Reduction Act of 2005, as amended by 
section 115(b) of MMSEA, subsequently required to be used, can be found 
in Sec.  412.29(b)(2):
     Stroke.
     Spinal cord injury.
     Congenital deformity.
     Amputation.
     Major multiple trauma.
     Fracture of femur (hip fracture).
     Brain injury.
     Neurological disorders, including multiple sclerosis, 
motor neuron diseases, polyneuropathy, muscular dystrophy, and 
Parkinson's disease.
     Burns.
     Active, polyarticular rheumatoid arthritis, psoriatic 
arthritis, and seronegative arthropathies, under specified conditions 
(see Sec.  412.29(b)(2)(x)).
     Systemic vasculidities with joint inflammation, under 
specified conditions (see Sec.  412.29(b)(2)(xi)).
     Severe or advanced osteoarthritis (osteoarthritis or 
degenerative joint disease), under specified conditions (see Sec.  
412.29(b)(2)(xii)).
     Knee or hip joint replacement, or both, if the 
replacements are bilateral, if the patient is age 85 or older, or if 
the

[[Page 36267]]

patient has a body mass index (BMI) of at least 50.
    Subsequent to the May 7, 2004 final rule, on June 16, 2005, the 
Government Accountability Office (GAO) issued a report entitled, ``More 
Specific Criteria Needed to Classify Inpatient Rehabilitation 
Facilities,'' which recommended that CMS describe more thoroughly the 
subgroups of patients within a condition that require IRF services, 
possibly using functional status or other factors in addition to 
condition. In this report, the GAO did not recommend that more 
conditions be added to the list of conditions in Sec.  412.29(b)(2), in 
part because the experts convened for this study could not agree on 
conditions to add and in part because the GAO said that it believed 
that the rule should instead be ``refined to clarify which types of 
patients should be in IRFs as opposed to another setting.''
    In addition, in September 2009, we issued a Report to Congress 
entitled ``Analysis of the Classification Criteria for Inpatient 
Rehabilitation Facilities.'' This report was required by section 115 of 
MMSEA, which also required the IRF compliance rate to be set no higher 
than 60 percent and required comorbidities to continue to be included 
in the compliance rate calculation. In conducting the analysis for this 
report, the contractor (Research Triangle Institute (RTI) 
International) solicited public comments and held a technical expert 
panel (TEP) to analyze the effects of, and potential refinements to, 
the 60 percent rule and the list of conditions that are used to 
evaluate compliance with the 60 percent rule. The report generally 
concluded the following:
     In considering changes to the 60 percent rule, CMS should 
establish policies that ensure the availability of IRF services to 
beneficiaries whose intensive rehabilitation needs cannot be adequately 
served in other settings.
     CMS should ensure that criteria for IRF classification 
focus on the intensity of service needs that justify the higher IRF 
payment rate.
     An IRF stay is not needed for all patients having a 
rehabilitation-type diagnosis.
     Patient characteristics, such as medical comorbidities, 
prognosis for improvement and cognitive deficits, are important to 
consider when identifying appropriate IRF patients.
    Thus, to assist us in generating ideas and information for 
analyzing refinements and updates to the criteria used to classify 
facilities for payment under the IRF PPS, in the FY 2018 IRF PPS 
proposed rule (82 FR 20712), we specifically solicited public comments 
from stakeholders on the 60 percent rule, including but not limited to, 
the list of conditions in Sec.  412.29(b)(2).
    We received 28 comments in response to our solicitation, which are 
summarized below.
    Comment: Most commenters suggested elimination of the 60 percent 
rule, indicating that the rule does not allow IRF care to be ``patient-
centered''. Many of these commenters suggested that existing criteria, 
including the IRF coverage requirements and the requirements for IRF 
classification, such as the need to conduct preadmission screenings on 
all patients, provide close physician supervision, provide 
interdisciplinary care, etc., would suffice for defining IRF care and 
would be more patient-centered. Alternatively, commenters suggested 
that we lower the IRF compliance percentage from 60 percent to 50 
percent. In addition, many commenters suggested that we add specific 
conditions to the list of conditions that meet the rule, including 
organ transplant, cardiac, pulmonology, and oncology conditions. Many 
commenters stated that elimination or relaxing of the 60 percent rule 
would allow IRFs to more easily participate in alternative payment 
models.
    Response: We appreciate the commenters' suggestions, and will 
carefully consider these suggestions as we explore ways to modernize 
the Medicare program.

XI. Subregulatory Process for Certain Updates to Presumptive 
Methodology Diagnosis Code Lists

    We have not established a formal process for updating the code 
lists used for the presumptive compliance methodology to account for 
changes to the ICD-10 medical code data set or to alert providers to 
the effects of these changes on the presumptive methodology code lists. 
In the proposed rule, we proposed to establish such a formal process, 
to distinguish between non-substantive updates to the ICD-10-CM codes 
on the lists that would be applied through a subregulatory process and 
substantive revisions to the ICD-10-CM codes on the lists that would 
only be proposed and finalized through notice and comment rulemaking.
    In the proposed rule, we proposed to establish a formal process of 
updating the lists of ICD-10-CM codes used in the presumptive 
compliance methodology using a subregulatory process to apply non-
substantive changes to the lists of ICD-10-CM codes used in the 
presumptive compliance methodology in accordance with changes to the 
ICD-10 medical data codes set that are implemented annually by the ICD-
10 Coordination and Maintenance Committee (information about the ICD-10 
Coordination and Maintenance Committee can be found at https://www.cdc.gov/nchs/icd/icd10_maintenance.htm). We would continue our 
practice of using notice-and-comment rulemaking to propose and finalize 
substantive changes to the lists of ICD-10-CM codes used in the 
presumptive methodology.
    The ICD-10 Coordination and Maintenance Committee is a federal 
interdepartmental committee that is chaired by representatives from the 
NCHS and by representatives from CMS. The committee typically meets bi-
annually, and publishes updates to the ICD-10 medical code data sets in 
June of each year, which become effective October 1 of each year. Note 
that the ICD-10 Coordination and Maintenance Committee has the ability 
to make changes to the ICD-10 medical code data sets effective on April 
1, but has not yet done so. In accordance with 45 CFR part 162, subpart 
J, we require Medicare providers to use the most current ICD-10 medical 
code data set in coding Medicare claims and IRF-PAIs.
    To ensure that the lists of ICD-10-CM codes used in the presumptive 
compliance methodology are updated in accordance with changes to the 
ICD-10 medical code data set, we proposed to obtain the list of changes 
to the ICD-10 medical code data set from the ICD-10 Coordination and 
Maintenance Committee (at https://www.cdc.gov/nchs/icd/icd10_maintenance.htm) and, through a subregulatory process, apply all 
relevant changes to the lists of codes used in the presumptive 
compliance methodology. Any such changes would be limited to those 
specific changes that are necessary to maintain consistency with the 
most current ICD-10 medical code data set, which Medicare providers are 
generally required to use in accordance with 45 CFR part 162, subpart 
J. Our intent in applying these changes through the subregulatory 
process is to keep the same conditions on the presumptive methodology 
lists, but ensure that the codes used to identify those conditions are 
synchronized with the most current ICD-10 medical code data set.
    We proposed to publish the updated lists of codes on the IRF PPS 
Web site which can be accessed at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Data-Files.html 
(we note that we inadvertently included the incorrect link in the 
proposed rule (82 FR 20690, 20713); this is the correct link, which was 
accessible from the original link in the proposed rule)

[[Page 36268]]

before the effective date for these changes so that IRFs will be able 
to use the most current ICD-10 medical code data set to appropriately 
count cases toward meeting the 60 percent rule requirements under the 
presumptive compliance methodology.
    For example, ICD-10-CM code M50.02--Cervical disc disorder with 
myelopathy, mid-cervical region--is one of the ICD-10-CM codes on the 
presumptive compliance methodology list that ``counts'' a patient as 
meeting the 60 percent rule requirements if the patient is coded with 
this diagnosis code. However, effective October 1, 2016, the ICD-10 
Coordination and Maintenance Committee made M50.02 an ``invalid'' code, 
meaning that this code is no longer available for use within the ICD-10 
medical code data set. In place of this code, the ICD-10 Coordination 
and Maintenance Committee added:

 M50.020--Cervical disc disorder with myelopathy, mid-cervical 
region, unspecified level (new code),
 M50.021--Cervical disc disorder at C4-C5 level with myelopathy 
(new code)
 M50.022--Cervical disc disorder at C5-C6 level with myelopathy 
(new code)
 M50.023--Cervical disc disorder at C6-C7 level with myelopathy 
(new code)

As we did not have a process for updating the ICD-10-CM codes in the 
presumptive compliance methodology prior to October 1, 2016, we were 
unable to reflect this change in the presumptive compliance methodology 
and therefore only counted patients that had M50.02 on their IRF-PAI 
submission and were not able to recognize codes M50.020, M50.021, 
M50.022, or M50.023 in the presumptive compliance methodology. Thus, an 
IRF that adopted the changes to the ICD-10 medical code data set on 
October 1, 2016, as required, and coded a patient with, for example, 
M5.023, would not have that patient counted as meeting the 60 percent 
rule requirements under the presumptive compliance methodology (unless 
the patient happened to have another ICD-10-CM code that would have 
counted under the presumptive compliance methodology). The update 
process that we proposed in the proposed rule would enable us to remove 
the invalid code M50.02 and add the new codes M50.020, M50.021, 
M50.022, and M50.023 to the lists of codes used in the presumptive 
compliance methodology prior to the effective date of the change 
(October 1, 2016) so that an IRF's appropriate use of the newly added 
code M50.023 would allow the patient to count as meeting the 60 percent 
rule requirements.
    We note that, in the example above, we would not make any policy 
judgments in adopting the changes to the ICD-10 medical code data set 
through subregulatory means. Whether or not we believed, for example, 
that M50.020 might be too non-specific to include in the presumptive 
compliance methodology, we would nevertheless add it through this 
subregulatory process because we would treat M50.020, M50.021, M50.022, 
and M50.023 exactly the same as the M50.02 code that they replaced. We 
would simply replace the invalid code with the four new valid codes. 
If, hypothetically speaking, we were to decide at a later date that 
M50.020 is too non-specific and would therefore want to remove it from 
the presumptive compliance lists, we would consider that to be a 
substantive change that would necessitate notice and comment 
rulemaking. Any substantive changes to the lists of codes used in the 
presumptive compliance methodology would be promulgated through notice 
and comment rulemaking.
    In the FY 2007 IRF PPS final rule (71 FR 48354 at 48360 through 
48361), we implemented the same subregulatory updating process for the 
IRF tier comorbidities list (also a list of ICD-10-CM codes) that we 
proposed to implement for the lists of ICD-10-CM codes used in the 
presumptive compliance methodology. As we discussed in that final rule, 
we believe that the best way for us to convey information about changes 
to the ICD-10 medical code data set that affect the presumptive 
compliance lists and alert providers to non-substantive program changes 
that result is to update the lists using a subregulatory process and 
make the documents containing the program's lists of ICD-10-CM codes 
web-based, rather than publishing each non-substantive change to the 
ICD-10-CM codes in regulation. We believe that this would ensure 
providers have the most up-to-date information possible for their 60 
percent compliance purposes. Therefore, we proposed that each year's 
updated lists of ICD-10-CM codes for presumptive compliance methodology 
will be available on the IRF PPS Web site (located at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Data-Files.html) prior to the effective date of 
the changes to the ICD-10 medical code data set.
    The current presumptive compliance lists are available for download 
from the IRF PPS Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Criteria.html. These lists 
reflect the substantive revisions outlined in this final rule, as well 
as adoption of the ICD-10 Coordination and Maintenance Committee's 
draft changes to the ICD-10 medical code data sets, effective October 
1, 2017. The version of these lists that is finalized in conjunction 
with this final rule will constitute the baseline for any future 
updates to the presumptive methodology lists.
    We received 13 public comments on the proposed subregulatory 
process for certain updates to the presumptive methodology ICD-10-CM 
code lists, which are summarized below.
    Comment: Several commenters suggested that we more clearly define 
how we determine a ``substantive'' change versus a ``non-substantive'' 
change in regards to the proposed subregulatory process to update the 
presumptive methodology code lists. Another commenter stated that any 
change or modification to the presumptive methodology that would make 
it more restrictive, should be viewed as ``substantive'' and thus 
should not be performed outside of formal notice and comment 
procedures. However, this commenter believed that changes that make the 
presumptive methodology less restrictive would be best immediately 
implemented. Still, several other commenters stated that they supported 
the proposal to make non-substantive changes to the presumptive 
methodology lists in accordance with annual changes to the ICD-10-CM 
code set. This commenter stated that mirroring the ICD-10-CM code set 
updates without a timing delay (like that of a formal proposed rule 
schedule) would provide better synchronization with national coding 
standards.
    Response: The proposed subregulatory process would only be used to 
make changes that are necessary to maintain consistency with the most 
current ICD-10 medical code data set, which Medicare providers are 
generally required to use in accordance with 45 CFR part 162, subpart 
J. Our intent in applying these changes through the subregulatory 
process is to keep the same conditions on the presumptive methodology 
lists, but ensure that the codes used to identify those conditions are 
synchronized with the most current ICD-10 medical code data set.
    We note that we would not make any policy judgments in adopting the 
changes to the ICD-10 medical code data set through subregulatory 
means.

[[Page 36269]]

Any substantive changes to the lists of codes used in the presumptive 
compliance methodology would be promulgated through notice-and-comment 
rulemaking.
    Comment: One commenter stated that since the ICD-10-CM medical data 
code set changes are finalized more than a year in advance of the 
implementation date, CMS has sufficient time to include these changes 
in annual rulemaking. The commenter stated that the changes that are 
necessary to maintain consistency with the most current ICD-10 medical 
data code set should not necessarily be considered ``non-substantive.''
    Response: The commenter is incorrect that the updates to the ICD-10 
medical code data set are finalized each year more than a year before 
the changes become effective. ICD-10 medical data code set changes are 
generally finalized in June of each year, and take effect on October 1 
of that same year. For further discussion of the ICD-10 Coordination 
and Maintenance Committee and the process that the committee uses to 
update the ICD-10 medical code data set, please refer to the FY 2018 
IPPS/LTCH PPS proposed rule (82 FR 19850 through 19852). Thus, we do 
not believe that we would have sufficient time to include these changes 
in the annual rulemaking.
    Comment: Several commenters stated that if CMS finalizes this 
proposed sub-regulatory process, it should clearly delineate the 
changes in a manner that makes clear what diagnosis codes are being 
deleted or added.
    Response: We appreciate these suggestions and will provide lists of 
which codes are being added and removed as part of this subregulatory 
process in conjunction with the IRF final rule or notice for each 
fiscal year.
    Final Decision: After careful consideration of the comments we 
received on the proposed subregulatory process for adopting changes to 
the ICD-10-CM medical code data set for the presumptive methodology 
lists, we are finalizing this proposed subregulatory process, effective 
for discharges occurring on and after October 1, 2017. We are providing 
a list of the codes that indicates whether codes are being added, 
removed, or the code label revised for FY 2018 as a result of this 
subregulatory process on the CMS Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Data-Files.html in conjunction with this final rule.

XII. Use of IRF-PAI Data To Determine Patient Body Mass Index (BMI) 
Greater Than 50 for Cases of Lower Extremity Single Joint Replacement

    Previously, we had no information from the IRF-PAI that we could 
use to calculate the BMI for patients. Thus, we were not able to count 
lower-extremity joint replacement patients with BMI greater than 50 as 
meeting the 60 percent rule requirements using the presumptive 
compliance methodology. We could only identify these specific patients 
using the medical review methodology.
    In the FY 2014 IRF PPS final rule (78 FR 47860, 47896 and 47899), 
we added Item 25A-Height and Item 26A-Weight to the IRF-PAI. This 
information can be used to calculate BMI and thereby provides the data 
necessary to presumptively identify and count lower extremity single 
joint replacement cases with a BMI greater than 50 in an IRF's 60 
percent rule compliance percentage. In the proposed rule, we proposed 
to use the information recorded for Item 25A-Height and Item 26A-Weight 
on the IRF-PAI in the calculation of a patient BMI greater than 50 and 
to use that data to determine and presumptively count lower extremity 
single joint replacement cases toward an IRF's compliance percentage.
    We received 2 public comments on the proposed plan to calculate BMI 
greater than 50 for cases of lower extremity single joint replacement, 
which are summarized below.
    Comment: One commenter expressed support for this proposal as it 
would serve to identify a patient's BMI without the need for a separate 
medical review. Another commenter expressed concern about using the 
information recorded for Item 25A-Height and Item 26A-Weight on the 
IRF-PAI to calculate BMI greater than 50 for cases of lower extremity 
single joint replacement and thereby provide the data necessary to 
presumptively identify and count lower extremity single joint 
replacement cases with a BMI greater than 50 in an IRF's 60 percent 
rule compliance percentage. The commenter stated that this method would 
be inconsistent with other methods we use to determine presumptive 
compliance, that is, through ICD-10-CM diagnosis codes. The commenter 
suggested that the ICD-10-CM code Z68.43--Body mass index (BMI) 50-
59.9, adult be included on the Presumptive Methodology list. Moreover, 
the commenter stated that using this code as an etiologic diagnosis or 
comorbid condition instead of using two items from the IRF-PAI that 
previously have been unrelated to the presumptive methodology would be 
more straightforward.
    Response: We disagree with the commenter's statement that we only 
use ICD-10-CM codes in the presumptive compliance methodology. In fact, 
as indicated on page 8 of the specifications document entitled 
``Determining IRF Compliance_specifications_081915.pdf'' (available for 
download from the IRF PPS Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Criteria.html), 
we already use a patient's age, as calculated as the number of complete 
years between the admission date and the patient's birth date, to count 
patients presumptively who are being treated in the IRF for lower-
extremity joint replacement and are over the age of 85. Using the 
height and weight items on the IRF-PAI to compute a patient's BMI is 
consistent with this approach. As the height and weight information is 
required on the IRF-PAI, we believe that this information would be more 
reliable and less burdensome than depending on the IRF to code an 
additional etiologic code or comorbidity using ICD-10-CM code Z68.43--
Body mass index (BMI) 50-59.9.
    Final Response: After careful consideration of the comments we 
received, we are finalizing our proposal to use the information 
recorded for Item 25A-Height and Item 26A-Weight on the IRF-PAI to 
calculate BMI greater than 50 for cases of lower extremity single joint 
replacement and to use that data to determine and presumptively count 
lower extremity single joint replacement cases toward an IRF's 
presumptive compliance percentage, effective for all IRF discharges 
occurring on and after October 1, 2017.

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

A. Background and Statutory Authority

    Section 3004(b) of the PPACA amended section 1886(j) of the Act by 
adding paragraph (7), 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. Beginning with the FY 2014 IRF QRP, 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 
IRF QRP, each IRF submit data on quality measures specified by the 
Secretary in a form and manner, and at

[[Page 36270]]

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).
    When we use the term ``FY [year] IRF QRP'', we are referring to the 
fiscal year for which the IRF QRP requirements applicable to that 
fiscal year must be met for a IRF to receive the full annual update 
when calculating the payment rates applicable to it for that fiscal 
year.
    The Improving Medicare Post-Acute Care Transformation Act of 2014 
(IMPACT Act) amended Title XVIII of the Act, in part, by adding a new 
section 1899B, entitled ``Standardized Post-Acute Care (PAC) Assessment 
Data for Quality, Payment and Discharge Planning,'' that enacts new 
data reporting requirements for certain post-acute care (PAC) 
providers, including IRFs. Specifically, sections 1899B(a)(1)(A)(ii) 
and (iii) of the Act require IRFs, long-term care hospitals (LTCHs), 
skilled nursing facilities (SNFs) and home health agencies (HHAs), 
under the provider type's respective quality reporting program (which, 
for IRFs, is found at section 1886(j)(7)), to report data on quality 
measures specified under section 1899B(c)(1), which in turn requires 
that the measures cover at least five domains, and data on resource use 
and other measures specified under section 1899B(d)(1), which in turn 
requires that the measures cover at least three domains. Section 
1899B(a)(1)(A)(i) further requires each of these PAC providers to 
report under their respective quality reporting program standardized 
patient assessment data in accordance with section (b), which requires 
that the data be for at least the quality measures specified under 
section (c)(1) and that is for five specific categories: functional 
status; cognitive function and mental status; special services, 
treatments, and interventions; medical conditions and co-morbidities; 
and impairments. Section 1899B(a)(1)(B) requires that all of the data 
that must be reported in accordance with section 1899B(a)(1)(A) be 
standardized and interoperable to allow for the exchange of the 
information among PAC providers and other providers and the use of such 
data in order to enable access to longitudinal information and to 
facilitate coordinated care. For information on the IMPACT Act, please 
refer to the FY 2016 IRF PPS final rule (80 FR 47080 through 47083).

B. General Considerations Used for Selection of Quality 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 three 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).
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    \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.
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    As part of our consideration for measures for use in the IRF QRP, 
we review and evaluate measures that have been implemented in other 
programs and take into account measures that have been endorsed by NQF 
for provider settings other than the IRF setting. We have previously 
adopted measures with the term ``Application of'' in the names of those 
measures. We have received questions pertaining to the term 
``application'' and want to clarify that when we refer to a measure as 
an ``application of'' the measure, we mean that the measure will be 
used in the IRF setting, rather than the setting for which it was 
endorsed by the NQF. For example, in the FY 2016 IRF PPS final rule (80 
FR 47096 through 47100), we adopted a measure entitled, Application of 
Percent of Residents Experiencing One or More Falls With Major Injury 
(Long Stay) (NQF #0674), which is currently endorsed for the nursing 
home setting, but not for the IRF setting. For such measures, we intend 
to seek NQF endorsement for the IRF setting, and if the NQF endorses 
one or more of them, we will update the title of the measure to remove 
the reference to ``application.''
    We received several comments generally related to the proposed 
measures, the IMPACT Act, NQF endorsement, and training needs, which 
are summarized and discussed below.
    Comment: Several commenters expressed support for the goals and 
objectives of the IMPACT Act, including the standardization of patient 
assessment data across PAC settings. One commenter noted that the 
collection of standardized patient assessment data in PAC settings will 
help ensure that PAC patients receive quality care in the appropriate 
setting. One commenter expressed support for the IMPACT Act quality 
measure domains and data elements. One commenter conveyed support for 
the continued additions and modifications to the IRF QRP as mandated by 
the IMPACT Act, stating that regulatory changes from the IRF QRP have 
not only required IRFs to focus more on care processes and data 
collection, but also promoted a shift in provider focus toward improved 
care quality, increased transparency, and enhanced provider 
accountability. A few commenters expressed appreciation for CMS' 
efforts to comply with the IMPACT Act, including CMS' efforts to 
maintain regular communication with stakeholders regarding the status 
of all aspects of the IMPACT Act implementation. However, one of the 
commenters indicated additional time may be necessary to fully 
implement changes outlined in the proposed rule.
    Response: We appreciate the commenters' support for the goals and 
objectives of the IMPACT Act to standardize data across PAC settings. 
We believe that standardizing patient assessment data will allow for 
the exchange of data among PAC providers to facilitate care 
coordination and improve patient outcomes. We value feedback regarding 
appreciation for CMS' efforts to maintain regular communication with 
stakeholders regarding implementation of the IMPACT Act. We will 
continue to utilize different mechanisms to communicate with 
stakeholders including memos, emails, Medicare Learning Network (MLN) 
announcements, and notices on our IRF QRP Web site to communicate 
further regarding implementation of the IMPACT Act. We also appreciate 
the commenters' feedback regarding the need for sufficient time to 
implement required changes. We are cognizant that all quality reporting 
processes are on-going and take time to implement. We believe the 
rulemaking process takes these timing issues into account and permits 
sufficient time for providers to implement appropriate data collection 
and reporting processes.
    Comment: A few commenters expressed concern about inconsistencies 
and insufficiencies in CMS training and support related to the 
collection of the quality measure data implemented in the IRF QRP. One 
commenter requested that CMS provide additional training materials and 
further clarification related to the collection of standardized patient 
assessment data, prior to the implementation of new quality measures.
    Response: We appreciate commenter's feedback regarding the need for 
consistent training. We are committed to providing educational 
opportunities to

[[Page 36271]]

ensure consistent collection of valid and reliable patient data. In 
order to ensure consistent data collection, we engage in multiple 
educational efforts regarding the coding of data elements. These 
include training events, updates to the manuals and training materials, 
and responses to Help Desk questions to promote understanding and 
proper coding of these data elements. As we further develop and modify 
any adopted quality measures or standardized patient assessment data 
elements, we will continue to engage in these training activities.
    Comment: One commenter noted the role of the NQF-convened MAP and 
the role of this public-private partnership for meeting CMS goals. The 
commenter further noted that the NQF has improved transparency in 
measure selection. A few commenters expressed concern about quality 
measures that do not have NQF endorsement. One commenter stated that 
all quality measures should be NQF endorsed in order to demonstrate 
validity. One commenter expressed concern about quality measures 
specified to meet IMPACT Act requirements that do not have PAC setting-
specific NQF endorsement. The commenter recommended that CMS delay or 
suspend the implementation of quality measures and standardized patient 
assessment data elements until the measures receive setting-specific 
NQF endorsement.
    Response: We acknowledge that the NQF-convened MAP serves a 
critical function in evaluating measures under consideration and 
providing recommendations for measure implementation prior to 
rulemaking though MAP support is not a requirement for a measure to be 
proposed or finalized. However, as the MAP's role is to maintain 
transparency for the public and encourage public engagement throughout 
the measure development process, we value the MAP's input and take into 
consideration all input received.
    We would like to clarify that the MAP recommended ``conditional 
support for rulemaking'' for the proposed measures for the IRF QRP. 
According to the MAP, the term ``conditional support for rulemaking'' 
is applied when a measure is fully developed and tested and meets MAP 
assessment criteria; however, should meet a condition specified by MAP 
before it can be supported for implementation. Measures that are 
conditionally supported are not expected to be resubmitted to MAP. In 
contrast, the MAP uses the phrase ``do not support'' when it does not 
support the measure at all.
    For the proposed measure, Changes in Skin Integrity Post-Acute 
Care: Pressure Ulcer/Injury, the MAP Post-Acute Care/Long-Term Care 
(PAC/LTC) Workgroup met on December 14 and 15, 2016, and provided CMS a 
recommendation of ``support for rulemaking'' for use of the measure in 
the IRF QRP. The MAP Coordinating Committee met on January 24 and 25, 
2017, and provided a recommendation of ``conditional support for 
rulemaking'' for use of the proposed measure in the IRF QRP. The MAP's 
conditions of support include as a part of measure implementation, that 
CMS provide guidance on the correct collection and calculation of the 
measure result. We intend to comply with all conditions recommended by 
the MAP and will engage in intensive training and guidance efforts to 
ensure appropriate calculation of the measure.
    We have consistently used the MAP process to improve measures prior 
to rulemaking and implementation and to ensure continued enhancement of 
the IRF QRP. We believe that the measures have been fully and robustly 
developed, and believe they are appropriate for implementation and 
should not be delayed.
    Comment: We received a few comments regarding standardization and 
interoperability of quality measures and patient assessment data 
elements. One commenter expressed concern about quality measures 
specified to meet IMPACT Act requirements that are not standardized and 
interoperable across PAC settings. The commenter recommended that CMS 
delay or suspend the implementation of quality measures and patient 
assessment data elements until the quality measures are standardized 
and interoperable across all PAC settings. Another commenter stated 
that the IRF-PAI, LTCH Care Data Set, MDS 3.0, and OASIS assessment 
instruments are not interoperable and not appropriate for measuring 
standardized patient assessment data across PAC settings. The commenter 
recommended that CMS develop a new uniform reporting tool that is 
interoperable across PAC settings, in order to align quality measures 
across PAC settings, further the objectives of the IMPACT Act, simplify 
reporting requirements, and reduce the financial and administrative 
burden of the IRF-PAI.
    Response: The data elements currently included in IMPACT Act 
measures are standardized and have been mapped to electronic exchange 
content standard vocabularies (such as LOINC and SNOMED) to enable 
interoperability. We are engaging in efforts to further facilitate 
interoperability, including populating the Data Element Library (DEL) 
data base. The DEL includes information to support interoperability, 
including information on patient assessment data elements, the domain 
of the element, whether the data elements are standardized across 
patient assessment instruments and applicable health information 
technology content and exchange standards. Regarding the recommendation 
that CMS delay or suspend the implementation of quality measures and 
patient assessment data elements, we discuss below our decision to not 
finalize the majority of our proposals related to the reporting of 
standardized patient assessment data.
    As for the request for a new uniform reporting tool, we recognize 
that data are currently collected by means of the commonly leveraged 
assessment instruments for each PAC setting; however, each assessment 
instrument has been developed to address patient care specific to that 
setting. Also, the use of setting-specific data elements and quality 
measures helps ensure that measures assess patient populations 
appropriately by setting and would preclude the development of a 
uniform assessment instrument that is utilized across PAC settings. 
Finally, data collected via assessment instruments are also used for 
other purposes, including for payment, survey, and certification.
    Comment: One commenter noted the role of the IMPACT Act in 
standardizing data collection across PAC settings to facilitate 
meaningful comparisons between PAC settings and protect Medicare 
beneficiaries against underservice. One commenter expressed agreement 
with CMS that quality improvement is appropriate for all patients 
regardless of payer source and expressed concern, along with several 
other commenters, that data for assessment-based quality measures are 
collected on different patient populations across PAC settings, 
inhibiting cross-setting comparison and impacting data validity and 
reliability. One commenter expressed concern that quality measures with 
different patient populations in the denominator are misleading to 
consumers and providers and requested that CMS clearly identify which 
measures are comparable. One commenter recommended that quality 
measures and data collection implemented under the IMPACT Act apply to 
uniform Medicare populations. One commenter expressed concern that the 
definition for standardized patient assessment data may be 
misinterpreted to mean that measures developed using standardized 
patient assessment data are identical across PAC settings. The

[[Page 36272]]

commenter expressed further concern that IMPACT Act measures are 
developed by PAC setting rather than across PAC settings, resulting in 
measures that use standardized assessment data but have risk adjustment 
and covariates that are unique to each PAC setting, limiting 
comparability. Multiple commenters expressed concern that current and 
proposed quality measures are not comparable across PAC settings 
because the measures are not adequately standardized across settings. 
One commenter noted that measures are not comparable across PAC 
settings because measures are not consistently representative of unique 
patient populations by PAC setting. One commenter expressed concern 
that some measures are not only not comparable across PAC settings, but 
also not comparable over time within the same PAC setting.
    Response: We appreciate comments regarding support for the IMPACT 
Act and quality improvement efforts for all patients regardless of 
payer source. While we acknowledge data for assessment-based quality 
measures are currently collected on different patient populations 
across PAC settings, primarily related to payer, we note that measures 
are developed and tested in their intended settings, ensuring greater 
reliability and validity.
    Regarding the concern that quality measures with different patient 
population denominators are misleading, we seek to clarify the intent 
and use of quality measures through rulemaking, provider training and 
ongoing communication with stakeholders. Ongoing communication includes 
posting measure specifications and public reporting.
    Additionally, we are working, in collaboration with our measure 
contractors, to standardize the measure methodology where feasible. For 
example, the patient assessment-based measure, Changes in Skin 
Integrity Post-Acute Care: Pressure Ulcer/Injury, was developed to be 
uniform across the PAC settings in terms of the measure definitions, 
measure calculations, and risk-adjustment. However, there is currently 
variation in the measure across settings primarily due to the data 
sources for each PAC setting. Refinement of measures is a significant 
part of the measure lifecycle which ensures that measures are reliable 
and valid. If significant refinements or modifications are made to 
measures, we will ensure these changes are clearly communicated to all 
stakeholders.
    Comment: Several commenters expressed concern regarding the 
increasing burden of reporting data under the current IRF QRP. Several 
commenters expressed concern that increased administrative burden 
requires additional facility clinical staff for data collection, which 
may take time away from patient care. One commenter expressed concern 
about time and financial resources expended on staff training to ensure 
data reporting accuracy. One commenter expressed concern about an 
increased regulatory and financial burden for providers without 
evidence of increased care quality or cost reduction. A few commenters 
stated that the IRF-PAI has increased in length and now requires 
clinicians to spend additional time on patient assessments. One 
commenter recommended that CMS further harmonize measures to reduce 
burden and enable clinical staff to focus on patient care.
    Response: We appreciate the commenters' concerns regarding 
perceived burden due to changes to the IRF QRP as a result of the 
IMPACT Act. Further, we appreciate the importance of avoiding undue 
burden on providers and will continue to evaluate and avoid any 
unnecessary burden associated with the implementation of the IRF QRP. 
We will continue to work with stakeholders to explore ways to minimize 
and decrease burden as our mutual goal is to focus on improving patient 
care. Finally, in response to stakeholders' concerns regarding burden, 
and as discussed further below, we have decided not to finalize a 
number of the proposed standardized patient assessment data elements.
    Comment: Several commenters expressed concern about the frequency 
of modifications to assessment items and measure calculation methods. 
Two commenters expressed concern that the frequency of modifications 
result in inconsistent data, making provider performance monitoring 
more difficult. One of these commenters also expressed concern that the 
frequency of modifications could adversely impact data reliability and 
validity, citing provider struggles with inconsistent data collection 
specifications, training materials, and feedback. Several commenters 
conveyed concern that providers have not had sufficient time to adjust 
to the volume of new data items and the frequency of modifications to 
the IRF QRP, including time to augment work flow processes, update data 
infrastructures, and train staff for changes to data collection 
requirements. One commenter acknowledged that implementation timeframe 
requirements are imposed by the IMPACT Act, but expressed that 
timeframe requirements do not allow sufficient time for successful 
implementation. One commenter requested that CMS use discretion and 
allow for phased implementation. One commenter recommended that CMS 
delay or suspend the implementation of new and previously finalized 
quality measures and patient assessment data elements until CMS 
provides evidence that standardized patient assessment data can be 
feasibly collected, and improves quality of care for patients. The 
commenter further recommended delay of the quality measures until CMS 
provides full support for the measures including training materials, 
data-collection specifications, and responses to provider questions.
    Response: We appreciate commenters' feedback regarding concerns 
about frequent changes to quality measures and the inability to 
consistently monitor performance related to changes in IRF QRP quality 
measures over time. We note that we have implemented modifications in 
data items and calculation methods for previously finalized measures 
primarily to improve quality measure reliability and validity and to 
increase standardization across PAC settings. These changes are part of 
the phased approach CMS adopted to meet the IMPACT Act requirements. We 
recognize that frequent changes are disruptive and strive to avoid 
unnecessary measure and manual revisions. While we aim to avoid 
unnecessary changes, we acknowledge that modifying measures is an 
important part of the measure lifecycle to ensure measures are 
scientifically sound. We will further our monitoring and data 
evaluation efforts in order to ensure we limit the frequent 
modifications.
    We also appreciate the feedback regarding the need for sufficient 
time to implement required changes. We are cognizant that all quality 
reporting processes are on-going and can take time to implement. We 
strive to provide sufficient training and education and advance notice 
of changes to support providers in adapting to changes. Regarding the 
recommendation that CMS delay or suspend the implementation of new and 
previously finalized quality measures and patient assessment data 
elements, below we discuss our decision to not finalize the majority of 
our proposals related to the reporting of standardized patient 
assessment data. With regard to previously finalized measures and data 
items, we wish to clarify that we have provided trainings, manuals, and 
ongoing Help Desk support to facilitate successful and accurate 
implementation by facilities.

[[Page 36273]]

1. Measuring and Accounting for Social Risk Factors in the IRF QRP
    In the FY 2018 IRF PPS proposed rule (82 FR 20715), we discussed 
accounting for social risk factors in the IRF QRP. We stated that we 
consider related factors that may affect measures in the IRF QRP. We 
understand that social risk factors such as income, education, race and 
ethnicity, employment, disability, community resources, and social 
support (certain factors of which are also sometimes referred to as 
socioeconomic status (SES) factors or socio-demographic status (SDS) 
factors) play a major role in health. One of our core objectives is to 
improve beneficiary outcomes, including reducing health disparities, 
and we want to ensure that all beneficiaries, including those with 
social risk factors, receive high quality care. In addition, we seek to 
ensure that the quality of care furnished by providers and suppliers is 
assessed as fairly as possible under our programs while ensuring that 
beneficiaries have adequate access to excellent care.
    We have been reviewing reports prepared by the Office of the 
Assistant Secretary for Planning and Evaluation (ASPE \3\) and the 
National Academies of Sciences, Engineering, and Medicine on the issue 
of measuring and accounting for social risk factors in CMS' quality 
measurement and payment programs, and considering options on how to 
address the issue in these programs. On December 21, 2016, ASPE 
submitted a Report to Congress on a study it was required to conduct 
under section 2(d) of the Improving Medicare Post-Acute Care 
Transformation (IMPACT) Act of 2014. The study analyzed the effects of 
certain social risk factors of Medicare beneficiaries on quality 
measures and measures of resource use used in one or more of nine 
Medicare value-based purchasing programs.\4\ The report also included 
considerations for strategies to account for social risk factors in 
these programs. In a January 10, 2017 report released by The National 
Academies of Sciences, Engineering, and Medicine, that body provided 
various potential methods for measuring and accounting for social risk 
factors, including stratified public reporting.\5\
---------------------------------------------------------------------------

    \3\ https://aspe.hhs.gov/pdf-report/report-congress-social-risk-factors-and-performance-under-medicares-value-based-purchasing-programs.
    \4\ https://aspe.hhs.gov/pdf-report/report-congress-social-risk-factors-and-performance-under-medicares-value-based-purchasing-programs.
    \5\ National Academies of Sciences, Engineering, and Medicine. 
2017. Accounting for social risk factors in Medicare payment. 
Washington, DC: The National Academies Press.
---------------------------------------------------------------------------

    As discussed in the FY 2017 IRF PPS proposed rule (81 FR 52056), 
the NQF undertook a 2-year trial period in which new measures, measures 
undergoing maintenance review and measures endorsed with the condition 
that they enter the trial period can be assessed to determine whether 
risk adjustment for selected social risk factors is appropriate for 
these measures. This trial entailed temporarily allowing inclusion of 
social risk factors in the risk-adjustment approach for these measures. 
The trial has concluded and NQF will issue recommendations on the 
future inclusion of social risk factors in risk adjustment for quality 
measures.
    As we continue to consider the analyses and recommendations from 
these reports and await the results of the NQF trial on risk adjustment 
for quality measures, we are continuing to work with stakeholders in 
this process. As we previously communicated, we are concerned about 
holding providers to different standards for the outcomes of their 
patients with social risk factors because we do not want to mask 
potential disparities or minimize incentives to improve the outcomes 
for disadvantaged populations. Keeping this concern in mind, while we 
sought input on this topic previously, we continue to seek public 
comment on whether we should account for social risk factors in 
measures in the IRF QRP, and if so, what method or combination of 
methods would be most appropriate for accounting for social risk 
factors. Examples of methods include: confidential reporting to 
providers of measure rates stratified by social risk factors, public 
reporting of stratified measure rates, and potential risk adjustment of 
a particular measure as appropriate based on data and evidence.
    In addition, in the FY 2018 IRF PPS proposed rule (82 FR 20715), we 
sought public comment on which social risk factors might be most 
appropriate for reporting stratified measure scores and/or potential 
risk adjustment of a particular measure. Examples of social risk 
factors include, but are not limited to, dual eligibility/low-income 
subsidy, race and ethnicity, and geographic area of residence. We 
sought comments on which of these factors, including current data 
sources where this information would be available, could be used alone 
or in combination, and whether other data should be collected to better 
capture the effects of social risk. We will take the commenters' input 
into consideration as we continue to assess the appropriateness and 
feasibility of accounting for social risk factors in the IRF QRP. We 
note that any such changes would be proposed through future notice and 
comment rulemaking.
    We look forward to working with stakeholders as we consider the 
issue of accounting for social risk factors and reducing health 
disparities in CMS programs. Of note, implementing any of the above 
methods would be taken into consideration in the context of how this 
and other CMS programs operate (for example, data submission methods, 
availability of data, statistical considerations relating to 
reliability of data calculations, among others), so we sought comment 
on operational considerations. We are committed to ensuring that 
beneficiaries have access to and receive excellent care, and that the 
quality of care furnished by providers and suppliers is assessed fairly 
in CMS programs.
    We received several comments in response to our request for public 
comment on accounting for social risk factors in the calculation of 
measures adopted for the IRF QRP, which are summarized below.
    Comment: Some commenters expressed appreciation for the agency's 
efforts and ongoing consideration of this issue. Commenters were 
generally supportive of accounting for social risk factors for IRF QRP 
quality measures. Some commenters stated that social risk factors are 
beyond the control of the facility and were concerned that without risk 
adjustment, differences in quality scores may reflect differences in 
patient populations rather than differences in quality, which may be 
misleading to patients, payers, and policy makers. Commenters also 
recommended incorporating the results of the ASPE's Report to Congress 
into consideration of adopting risk-adjustment strategies.
    A few commenters, while acknowledging the influence of social risk 
factors on health outcomes, cautioned against adjusting for them in 
quality measurement due to the potential for unintended consequences. 
Several commenters expressed concern that adjusting for social risk 
factors may mask potential disparities and create disincentives to 
improve outcomes for vulnerable populations. Another commenter believes 
that social risk factors may be too subjective to adequately quantify 
and monitor over time.
    Regarding the methodology for risk adjustment, some commenters made 
specific recommendations regarding the type of risk adjustment to be 
used. Several commenters endorsed risk stratification as a means of 
enabling providers to compare themselves to their peers and identify 
opportunities for improvement. MedPAC noted that the stratification 
approach of peer

[[Page 36274]]

grouping of facilities would be straightforward to implement and would 
allow for shared social risk factors in a patient population to be 
considered without being dampened by other, non-social, individual 
patient characteristics. A few commenters drew attention to how 
adjustment should be conducted on a measure-specific basis, as 
different social risk factors affect different outcomes such as 
caregiver satisfaction and care delivery. Multiple commenters 
recommended further research into and testing of risk-adjustment 
methods.
    One commenter expressed support for risk stratification, but only 
as a temporary solution while CMS continues to explore more robust risk 
adjustment factors. Another commenter suggested using multivariate 
regression analyses to determine the impact of various social risk 
factors on health outcomes and stated that the use of a composite 
measure framework will ensure that idiosyncrasies of patient 
populations are preserved.
    In addition to expressing support for CMS's suggested categories of 
race/ethnicity, dual eligibility status, and geographical location, 
specific social risk factors suggested by commenters included: 
Availability of primary care and therapy services, access to food and 
medications, community resources, lack of personal resources, age, 
gender, comorbidities, education level, limited English proficiency, 
healthcare literacy, lack of adequate support system, living conditions 
including homelessness, and home access, unemployment, cognition, 
presence of pre-morbid assistance, and the presence and physical 
ability of a caregiver. While several commenters suggested the use of 
dual-eligibility status as an indicator, one commenter cautioned 
against its use because it takes neither community-based social risk 
factors associated with patient residence nor facility location into 
account. Another commenter suggested utilizing the Distressed Community 
Index compiled by the Economic Innovation Group.
    A few commenters discussed confidential and public display of data 
adjusted for social risk factors. Many of these commenters advocated 
for initial confidential reporting of risk stratified performance to 
providers, and for the eventual public reporting of this information.
    Other commenters recommended adjusting for social risk factors, 
specifically for resource use measures assessing potentially 
preventable readmissions, discharge to community, and Medicare spending 
per beneficiary. Several commenters recommended conducting additional 
testing and evaluating this on a measure by measure basis.
    Response: As we have previously stated, we are concerned about 
holding providers to different standards for the outcomes of their 
patients with social risk factors, because we do not want to mask 
potential disparities. We believe that the path forward should 
incentivize improvements in health outcomes for disadvantaged 
populations while ensuring that beneficiaries have adequate access to 
excellent care. We will consider all suggestions as we continue to 
assess each measure and the overall program. We intend to explore 
options including but not limited to measure stratification by social 
risk factors in a consistent manner across programs, informed by 
considerations of stratification methods described in section IX.A.13 
of the FY 2018 IPPS/LTCH PPS final rule. We appreciate the commenters 
for this important feedback and will continue to consider options to 
account for social risk factors that would allow us to view disparities 
and potentially incentivize improvement in care for patients and 
beneficiaries. We will also consider providing feedback to providers on 
outcomes for individuals with social risk factors in confidential 
reports.

C. Collection of Standardized Patient Assessment Data Under the IRF QRP

1. Definition of Standardized Patient Assessment Data
    Section 1886(j)(7)(F)(ii) of the Act requires that for fiscal year 
2019 (beginning October 1, 2018) and each subsequent year, IRFs report 
standardized patient assessment data required under section 1899B(b)(1) 
of the Act. For purposes of meeting this requirement, section 
1886(j)(7)(F)(iii) of the Act requires an IRF to submit the 
standardized patient assessment data required under section 1899B(b)(1) 
of the Act using the standard instrument in a time, form, and manner 
specified by the Secretary.
    Section 1899B(b)(1)(B) of the Act describes standardized patient 
assessment data as data required for at least the quality measures 
described in section 1899B(c)(1) of the Act and that is for the 
following categories:
     Functional status, such as mobility and self-care at 
admission to a PAC provider and before discharge from a PAC provider;
     Cognitive function, such as ability to express ideas and 
to understand and mental status, such as depression and dementia;
     Special services, treatments and interventions such as the 
need for ventilator use, dialysis, chemotherapy, central line placement 
and total parenteral nutrition (TPN);
     Medical conditions and co-morbidities such as diabetes, 
congestive heart failure and pressure ulcers;
     Impairments, such as incontinence and an impaired ability 
to hear, see or swallow; and
     Other categories deemed necessary and appropriate.
    As required under section 1899B(b)(1)(A) of the Act, the 
standardized patient assessment data must be reported at least for IRF 
admissions and discharges, but the Secretary may require the data to be 
reported more frequently.
    In this final rule, we define the standardized patient assessment 
data that IRFs must report to comply with section 1886(j)(7)(F)(ii) of 
the Act, as well as the requirements for the reporting of these data. 
The collection of standardized patient assessment data is critical to 
our efforts to drive improvement in healthcare quality across the four 
post-acute care (PAC) settings to which the IMPACT Act applies. We 
intend to use these data for a number of purposes, including 
facilitating their exchange and longitudinal use among healthcare 
providers to enable high quality care and outcomes through care 
coordination, as well as for quality measure calculations, and 
identifying comorbidities that might increase the medical complexity of 
a particular admission.
    IRFs are currently required to report patient assessment data 
through the IRF-PAI by responding to an identical set of assessment 
questions using an identical set of response options (we refer to each 
solitary question/response option as a data element and we refer to a 
group of questions/responses as data elements), both of which 
incorporate an identical set of definitions and standards. The primary 
purpose of the identical questions and response options is to ensure 
that we collect a set of standardized patient assessment data elements 
across IRFs which can then be used for a number of purposes, including 
IRF payment and measure calculation for the IRF QRP.
    LTCHs, skilled nursing facilities (SNFs), and home health 
associations (HHAs) are also required to report patient assessment data 
through their applicable PAC assessment instruments, and they do so by 
responding to identical assessment questions developed for their 
respective settings using an identical set of response

[[Page 36275]]

options (which incorporate an identical set of definitions and 
standards). Like the IRF-PAI, the questions and response options for 
each of these other PAC assessment instruments are standardized across 
the PAC provider type to which the PAC assessment instrument applies. 
However, the assessment questions and response options in the four PAC 
assessment instruments are not currently standardized with each other. 
As a result, questions and response options that appear on the IRF-PAI 
cannot be readily compared with questions and response options that 
appear, for example, on the MDS, the PAC assessment instrument used by 
SNFs. This is true even when the questions and response options are 
similar. This lack of standardization across the four PAC providers has 
limited our ability to compare one PAC provider type with another for 
purposes such as care coordination and quality improvement.
    To achieve a level of standardization across SNFs, LTCHs, IRFs, and 
HHAs that enables us to make comparisons between them, we proposed to 
define ``standardized patient assessment data'' as patient assessment 
questions and response options that are identical in all four PAC 
assessment instruments, and to which identical standards and 
definitions apply.
    Standardizing the questions and response options across the four 
PAC assessment instruments will also enable the data to be 
interoperable, allowing it to be shared electronically, or otherwise, 
between PAC provider types. It will enable the data to be comparable 
for various purposes, including the development of cross-setting 
quality measures, which may enhance provider and patient choice when 
selecting a post-acute care setting that will deliver the best outcome 
possible, and to inform payment models that take into account patient 
characteristics rather than setting, as described in the IMPACT Act.
    We proposed to define ``standardized patient assessment data'' as 
patient assessment questions and response options that are identical in 
all four PAC assessment instruments, and to which identical standards 
and definitions apply. We solicited comments on this proposal.
    We did not receive any specific comments on the proposed 
definition.
    Final Decision: We are finalizing as proposed our proposed 
definition of standardized patient assessment data.
2. General Considerations Used for the Selection of Standardized 
Patient Assessment Data
    As part of our effort to identify appropriate standardized patient 
assessment data for purposes of collecting under the IRF QRP, we sought 
input from the general public, stakeholder community, and subject 
matter experts on items that would enable person-centered, high quality 
health care, as well as access to longitudinal information to 
facilitate coordinated care and improved beneficiary outcomes.
    To identify optimal data elements for standardization, our data 
element contractor organized teams of researchers for each category, 
and each team worked with a group of advisors made up of clinicians and 
academic researchers with expertise in PAC. Information-gathering 
activities were used to identify data elements, as well as key themes 
related to the categories described in section 1899B(b)(1)(B) of the 
Act. In January and February 2016, our data element contractor also 
conducted provider focus groups for each of the four PAC provider 
types, and a focus group for consumers that included current or former 
PAC patients and residents, caregivers, ombudsmen, and patient advocacy 
group representatives. The Development and Maintenance of Post-Acute 
Care Cross-Setting Standardized Patient Assessment Data Focus Group 
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.
    Our data element contractor also assembled a 16-member TEP that met 
on April 7 and 8, 2016, and January 5 and 6, 2017, in Baltimore, 
Maryland, to provide expert input on data elements that are currently 
in each PAC assessment instrument, as well as data elements that could 
be standardized. The Development and Maintenance of Post-Acute Care 
Cross-Setting Standardized Patient Assessment Data TEP Summary Reports 
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.
    As part of the environmental scan, data elements currently in the 
four existing PAC assessment instruments were examined to see if any 
could be considered for proposal as standardized patient assessment 
data. Specifically, this evaluation included consideration of data 
elements in OASIS-C2 (effective January 2017); IRF-PAI, v1.4 (effective 
October 2016); LCDS, v3.00 (effective April 2016); and MDS 3.0, v1.14 
(effective October 2016). Data elements in the standardized assessment 
instrument that we tested in the Post-Acute Care Payment Reform 
Demonstration (PAC PRD)--the Continuity Assessment Record and 
Evaluation (CARE) were also considered. A literature search was also 
conducted to determine whether additional data elements to propose as 
standardized patient assessment data could be identified.
    We additionally held four Special Open Door Forums (SODFs) on 
October 27, 2015; May 12, 2016; September 15, 2016; and December 8, 
2016, to present data elements we were considering and to solicit 
input. At each SODF, some stakeholders provided immediate input, and 
all were invited to submit additional comments via the CMS IMPACT 
Mailbox at [email protected].
    We also convened a meeting with federal agency subject matter 
experts (SMEs) on May 13, 2016. In addition, a public comment period 
was open from August 12, to September 12, 2016, to solicit comments on 
detailed candidate data element descriptions, data collection methods, 
and coding methods. The IMPACT Act Public Comment Summary Report 
containing the public comments (summarized and verbatim) and our 
responses 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.
    We specifically sought to identify standardized patient assessment 
data that we could feasibly incorporate into the LTCH, IRF, SNF, and 
HHA assessment instruments and that have the following attributes: (1) 
Being supported by current science; (2) testing well in terms of their 
reliability and validity, consistent with findings from the Post-Acute 
Care Payment Reform Demonstration (PAC PRD); (3) the potential to be 
shared (for example, through interoperable means) among PAC and other 
provider types to facilitate efficient care coordination and improved 
beneficiary outcomes; (4) the potential to inform the development of 
quality, resource use and other measures, as well as future payment 
methodologies that could more directly take into account individual 
beneficiary health characteristics; and (5) the ability

[[Page 36276]]

to be used by practitioners to inform their clinical decision and care 
planning activities. We also applied the same considerations that we 
apply with quality measures, including the CMS Quality Strategy which 
is framed using the three broad aims of the National Quality Strategy.

D. Policy for Retaining IRF QRP Measures and Application of That Policy 
to Standardized Patient Assessment Data

    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 allows any quality measure adopted for use in the IRF QRP 
to remain in effect until the measure is removed, suspended, or 
replaced. 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 proposed to apply this policy to the 
standardized patient assessment data that we adopt for the IRF QRP.
    Comment: We received comments in support of our proposal to apply 
the existing policy for retaining IRF QRP quality measures to 
standardized patient assessment data.
    Response: We appreciate the commenters' support.
    Final decision: We are finalizing our proposal to apply the policy 
for retaining IRF QRP measures to standardized patient assessment data.

E. Policy for Adopting Changes to IRF QRP Measures and Application of 
That Policy to the Standardized Patient Assessment Data That We Adopt 
for the IRF QRP

    In the CY 2013 OPPS/ASC final rule (77 FR 68500 through 68507), we 
adopted a subregulatory process to incorporate updates to IRF quality 
measure specifications that do not substantively change the nature of 
the measure. Under that policy, substantive changes to quality measures 
are proposed and finalized through rulemaking. For further information 
on what constitutes a substantive versus a non-substantive change and 
the subregulatory process we use to make non-substantive changes to 
measures, please refer to the CY 2013 OPPS/ASC final rule (77 FR 
68500). We proposed that this policy would be applied to the 
standardized patient assessment data that we adopt for the IRF QRP.
    Comment: One commenter supported our proposal to apply our current 
policy for updating measures to the standardized patient assessment 
data. One commenter supported the concept of non-substantive changes, 
but expressed concern that CMS did not provide examples specific to the 
standardized patient assessment data. The commenter recommended that 
CMS delay this proposal until it has engaged stakeholders to vet 
examples of non-substantive changes. One commenter had concerns about 
the subjectivity of what is considered substantive, and suggested that 
CMS consider increased burden and any change that makes it more 
difficult for IRFs to fulfill their data collection obligations. The 
commenter encouraged CMS to use the rulemaking process to give 
stakeholders an opportunity to comment and allow time for training and 
preparation.
    Response: In the CY 2013 OPPS/ASC final rule (77 FR 68500), we 
listed examples of what we might generally regard as a non-substantive 
change to a quality measure in the IRF QRP, including but not limited 
to, updated diagnosis or procedure codes, medication updates for 
categories of medications, or a broadening of age ranges. We stated 
that we will continue to use rulemaking to adopt substantive updates. 
Examples of changes that we might generally consider to be substantive 
would include, but are not limited to: Those circumstances in which the 
changes are so significant that the measure is no longer the same 
measure; when a standard of performance assessed by a measure becomes 
more stringent (for example, changes in acceptable timing of 
medication; and NQF expansion of endorsement of a previously endorsed 
measure to a new setting, procedure/process, or test administration). 
We believe that many of these criteria would also apply to standardized 
patient assessment data. However, these and other changes would need to 
be evaluated on a case by-case basis to determine whether or not a 
change to a measure is in fact substantive.
    Final Decision: After consideration of the public comments, we are 
finalizing our proposal to apply the policy for adopting changes to IRF 
QRP measures to the standardized patient assessment data that we adopt 
for the IRF QRP.

F. Quality Measures Currently Adopted for the IRF QRP

    The IRF QRP currently has 18 currently adopted measures, as 
outlined in Table 7.
    We received several comments about quality measures currently 
adopted for the IRF QRP, which are summarized and discussed below.
    Comment: A few commenters expressed views regarding previously 
finalized readmission measures for the IRF QRP. A few commenters 
expressed concern over the performance categories used for public 
reporting, and one commenter opposed public reporting of the all-cause 
and PPR measures until an alternative approach for reporting could be 
developed.
    Commenters recommended additional transparency regarding the 
statistical methods used for measure calculation and suggested that CMS 
make patient-level data available to providers for quality improvement 
efforts. Some commenters recommended ongoing testing and evaluation of 
the PPR definition, and one expressed concern over hospital DRG coding 
practices. We also received several comments suggesting that the PPR 
measures be adjusted for social risk factors.
    Response: We refer commenters to the FY 2017 IRF PPS final rule (81 
FR 52103 through 52111) for detailed responses that address concerns 
related to statistical methods used for calculating these measures, the 
PPR definition, and hospital coding practices, which were raised by 
these commenters. For the same reasons we expressed in that final rule, 
we continue to believe that the measure specifications are appropriate 
for these measures.
    We appreciate the commenters' concerns over the performance 
categories used to publicly display the IRF QRP readmission measures 
and refer readers to section XIII.O of this final rule for responses to 
comments regarding this topic.
    We refer readers to section XIII.B.1. of this final rule for 
responses to comments received related to social risk factors for the 
IRF QRP PPR measures.
    Comment: A few commenters expressed views regarding Medicare 
Spending per Beneficiary--PAC IRF QRP, a measure previously finalized 
in the FY 2017 IRF PPS final rule (81 FR 52087 through 52095). 
Commenters addressed the risk-adjustment approach, accounting for 
social risk factors, NQF endorsement, and unintended consequences 
related to implementation of the measure. One commenter expressed 
concern that the measure was not NQF-endorsed. Several commenters 
encouraged CMS to utilize claims and patient assessment data to 
incorporate functional status into the risk-adjustment. Another 
commenter believed that the measure was confusing, and that patients 
and providers might incorrectly interpret it as a measure of quality 
rather than efficiency. The commenter expressed concern that PAC 
providers'

[[Page 36277]]

performance on this measure would focus on costs per patient, without 
fully accounting for patient outcomes, and that efficiency should not 
be based solely on the MSPB-PAC measures. This commenter also noted 
that this measure may result in limiting access to certain patients.
    Response: We addressed these issues in the FY 2017 IRF PPS final 
rule (81 FR 52087 through 52095), and we refer the reader to that 
detailed discussion. We continue to believe that the measure 
specifications, including the risk-adjustment, are appropriate for this 
measure. With regard to comments related to accounting for social risk 
factors, we refer readers to section XIII.B.1 of this rule.
    Comment: We received comments related to the Discharge to 
Community-PAC IRF QRP measure, a measure previously finalized in the FY 
2017 IRF PPS final rule. Comments included suggestions to adjust for 
sociodemographic and socioeconomic risk factors, to exclude patients 
who died in the observation window following return to a community 
setting, to distinguish between a patient's return to home in the 
community versus home in a custodial nursing facility, and to assess 
reliability and validity of the claims discharge status code used to 
calculate the measure.
    Response: We previously responded to comments on these topics in 
the FY 2017 IRF PPS final rule (81 FR 52095 through 52103); we refer 
readers to the FY 2017 IRF PPS final rule for a detailed response on 
these issues. In the FY 2018 IRF PPS proposed rule (82 FR 20721), we 
sought comment on the exclusion of baseline nursing facility residents 
as a potential future modification of the Discharge to Community-PAC 
IRF QRP measure. We refer readers to section XIII.I of this rule for a 
discussion of this issue. With regard to comments related to social 
risk factors, we refer readers to section XIII.B.1 of this final rule.

       Table 7--Quality Measures Currently Adopted for the IRF QRP
------------------------------------------------------------------------
            Short name                  Measure name and data source
------------------------------------------------------------------------
                                 IRF-PAI
------------------------------------------------------------------------
Pressure Ulcers...................  Percent of Residents or Patients
                                     with Pressure Ulcers That Are New
                                     or Worsened (Short Stay) (NQF
                                     #0678).
Patient Influenza Vaccine.........  Percent of Residents or Patients Who
                                     Were Assessed and Appropriately
                                     Given the Seasonal Influenza
                                     Vaccine (Short Stay) (NQF #0680).
Application of Falls..............  Application of Percent of Residents
                                     Experiencing One or More Falls with
                                     Major Injury (Long Stay) (NQF
                                     #0674).*
Application of Functional           Application of Percent of LTCH
 Assessment.                         Patients with an Admission and
                                     Discharge Functional Assessment and
                                     a Care Plan That Addresses Function
                                     (NQF #2631).*
Change in Self-Care...............  IRF Functional Outcome Measure:
                                     Change in Self-Care Score for
                                     Medical Rehabilitation Patients
                                     (NQF #2633).**
Change in Mobility................  IRF Functional Outcome Measure:
                                     Change in Mobility Score for
                                     Medical Rehabilitation Patients
                                     (NQF #2634).**
Discharge Self-Care Score.........  IRF Functional Outcome Measure:
                                     Discharge Self-Care Score for
                                     Medical Rehabilitation Patients
                                     (NQF #2635).**
Discharge Mobility Score..........  IRF Functional Outcome Measure:
                                     Discharge Mobility Score for
                                     Medical Rehabilitation Patients
                                     (NQF #2636).**
DRR...............................  Drug Regimen Review Conducted with
                                     Follow-Up for Identified Issues-PAC
                                     IRF QRP.*
------------------------------------------------------------------------
                                  NHSN
------------------------------------------------------------------------
CAUTI.............................  National Healthcare Safety Network
                                     (NHSN) Catheter-Associated Urinary
                                     Tract Infection (CAUTI) Outcome
                                     Measure (NQF #0138).
MRSA..............................  NHSN Facility-Wide Inpatient
                                     Hospital-Onset Methicillin-
                                     Resistant Staphylococcus aureus
                                     (MRSA) Bacteremia Outcome Measure
                                     (NQF #1716).
CDI...............................  NHSN Facility-wide Inpatient
                                     Hospital-Onset Clostridium
                                     difficile Infection (CDI) Outcome
                                     Measure (NQF #1717).
HCP Influenza Vaccine.............  Influenza Vaccination Coverage among
                                     Healthcare Personnel (NQF #0431).
------------------------------------------------------------------------
                              Claims-based
------------------------------------------------------------------------
All-Cause Readmissions............  All-Cause Unplanned Readmission
                                     Measure for 30 Days Post Discharge
                                     from IRFs (NQF #2502).
MSPB..............................  Medicare Spending per Beneficiary
                                     (MSPB)-PAC IRF QRP.*
DTC...............................  Discharge to Community-PAC IRF QRP.*
Potentially Preventable             Potentially Preventable 30-Day Post-
 Readmissions (PPR) 30 day.          Discharge Readmission Measure for
                                     IRF QRP.*
PPR Within Stay...................  Potentially Preventable Within Stay
                                     Readmission Measure for IRFs.*
------------------------------------------------------------------------
* Not currently NQF-endorsed for the IRF setting.
** In satisfaction of section 1899B(c)(1) of the Act quality measure
  domain: functional status, cognitive function, and changes in function
  and cognitive function domain.

G. IRF QRP Quality Measures Beginning With the FY 2020 IRF QRP

    In the FY 2018 IRF PPS Proposed Rule (82 FR 20718 through 20720), 
we proposed that beginning with the FY 2020 IRF QRP, in addition to the 
quality measures we are retaining under our policy described in section 
XIII.F. of this final rule, we will remove the current pressure ulcer 
measure entitled Percent of Residents or Patients with Pressure Ulcers 
That Are New or Worsened (Short Stay) (NQF #0678) and replace it with a 
modified version of the measure entitled Changes in Skin Integrity 
Post-Acute Care: Pressure Ulcer/Injury. We also proposed to 
characterize the data elements described below as standardized patient 
assessment data under section

[[Page 36278]]

1899B(b)(1)(B) of the Act that must be reported by IRFs under the IRF 
QRP through the IRF-PAI.
1. Replacing the Current Pressure Ulcer Quality Measure, Percent of 
Residents or Patients With Pressure Ulcers That Are New or Worsened 
(Short Stay) (NQF #0678), With a Modified Pressure Ulcer Measure, 
Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury
a. Measure Background
    In the FY 2018 IRF PPS proposed rule (82 FR 20717 through 20720), 
we proposed to remove the current pressure ulcer measure, Percent of 
Residents or Patients with Pressure Ulcers That Are New or Worsened 
(Short Stay) (NQF #0678), from the IRF QRP measure set and to replace 
it with a modified version of that measure, Changes in Skin Integrity 
Post-Acute Care: Pressure Ulcer/Injury, beginning with the FY 2020 IRF 
QRP. The change in the measure name is to reduce confusion about the 
new modified measure. The modified version differs from the current 
version of the measure because it includes new or worsened unstageable 
pressure ulcers, including deep tissue injuries (DTIs), in the measure 
numerator. The proposed modified version of the measure also contains 
updated specifications intended to eliminate redundancies in the 
assessment items needed for its calculation and to reduce the potential 
for underestimating the frequency of pressure ulcers. The modified 
version of the measure would satisfy the IMPACT Act domain of skin 
integrity and changes in skin integrity.
b. Measure Importance
    As described in the FY 2012 IRF PPS final rule (76 FR 47876 through 
47878), pressure ulcers are high-cost adverse events and are an 
important measure of quality. For information on the history and 
rationale for the relevance, importance, and applicability of having a 
pressure ulcer measure in the IRF QRP, we refer readers to the FY 2012 
IRF PPS final rule (76 FR 47876 through 47878) and the FY 2014 IRF PPS 
final rule (78 FR 47911 through 47912).
    We proposed to adopt a modified version of the current pressure 
ulcer measure because unstageable pressure ulcers, including DTIs, are 
similar to Stage 2, Stage 3, and Stage 4 pressure ulcers in that they 
represent poor outcomes, are a serious medical condition that can 
result in death and disability, are debilitating and painful, and are 
often an avoidable outcome of medical care.\6\ \7\ \8\ \9\ \10\ \11\ 
Studies show that most pressure ulcers can be avoided and can also be 
healed in acute, post-acute, and long-term care settings with 
appropriate medical care.\12\ Furthermore, some studies indicate that 
DTIs, if managed using appropriate care, can be resolved without 
deteriorating into a worsened pressure ulcer.\13\ \14\
---------------------------------------------------------------------------

    \6\ Casey, G. (2013). ``Pressure ulcers reflect quality of 
nursing care.'' Nurs NZ 19(10): 20-24.
    \7\ Gorzoni, M.L. and S.L. Pires (2011). ``Deaths in nursing 
homes.'' Rev Assoc Med Bras 57(3): 327-331.
    \8\ Thomas, J.M., et al. (2013). ``Systematic review: health-
related characteristics of elderly hospitalized adults and nursing 
home residents associated with short-term mortality.'' J Am Geriatr 
Soc 61(6): 902-911.
    \9\ White-Chu, E.F., et al. (2011). ``Pressure ulcers in long-
term care.'' Clin Geriatr Med 27(2): 241-258.
    \10\ Bates-Jensen BM. Quality indicators for prevention and 
management of pressure ulcers in vulnerable elders. Ann Int Med. 
2001;135 (8 Part 2), 744-51.
    \11\ Bennet, G, Dealy, C Posnett, J (2004). The cost of pressure 
ulcers in the UK, Age and Aging, 33(3):230-235.
    \12\ Black, Joyce M., et al. ``Pressure ulcers: avoidable or 
unavoidable? Results of the national pressure ulcer advisory panel 
consensus conference.'' Ostomy-Wound Management 57.2 (2011): 24.
    \13\ Sullivan, R. (2013). A Two-year Retrospective Review of 
Suspected Deep Tissue Injury Evolution in Adult Acute Care Patients. 
Ostomy Wound Management 59(9).
    \14\ Posthauer, ME, Zulkowski, K. (2005). Special to OWM: The 
NPUAP Dual Mission Conference: Reaching Consensus on Staging and 
Deep Tissue Injury. Ostomy Wound Management 51(4) http://www.o-wm.com/content/the-npuap-dual-mission-conference-reaching-consensus-staging-and-deep-tissue-injury.
---------------------------------------------------------------------------

    While there are few studies that provide information regarding the 
incidence of unstageable pressure ulcers in PAC settings, an analysis 
conducted by a contractor suggests the incidence of unstageable 
pressure ulcers varies according to the type of unstageable pressure 
ulcer and setting.\15\ This analysis examined the national incidence of 
new unstageable pressure ulcers in IRFs at discharge compared with 
admission using IRF discharges from January through December 2015. The 
contractor found a national incidence of 0.14 percent of new 
unstageable pressure ulcers due to slough and/or eschar, 0.02 percent 
of new unstageable pressure ulcers due to non-removable dressing/
device, and 0.26 percent of new DTIs. In addition, an international 
study spanning the time period 2006 to 2009 provides some evidence to 
suggest that the proportion of pressure ulcers identified as DTI has 
increased over time.\16\ The study found DTIs increased by three fold, 
to 9 percent of all observed ulcers in 2009, and that DTIs were more 
prevalent than either Stage 3 or 4 ulcers. During the same time period, 
the proportion of Stage 1 and 2 ulcers decreased, and the proportion of 
Stage 3 and 4 ulcers remained constant.
---------------------------------------------------------------------------

    \15\ Final Specifications for IRF QRP Quality Measures and 
Standardized Patient Assessment Data Elements, available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/IRF-Quality-Reporting-Program-Measures-Information-.html.
    \16\ VanGilder, C, MacFarlane, GD, Harrison, P, Lachenbruch, C, 
Meyer, S (2010). The Demographics of Suspected Deep Tissue Injury in 
the United States: An Analysis of the International Pressure Ulcer 
Prevalence Survey 2006-2009. Advances in Skin & Wound Care. 23(6): 
254-261.
---------------------------------------------------------------------------

    The inclusion of unstageable pressure ulcers, including DTIs, in 
the numerator of this measure is expected to increase measure scores 
and variability in measure scores, thereby improving the ability to 
discriminate among poor- and high-performing IRFs. In the currently 
implemented pressure ulcer measure, Percent of Residents or Patients 
with Pressure Ulcers That Are New or Worsened (Short Stay) (NQF #0678), 
analysis using data from Quarter 4 2016 reveals that the IRF mean score 
is 0.64 percent and the 25th and 75th percentiles are 0 percent and 
0.95 percent, respectively. In the proposed measure, Changes in Skin 
Integrity Post-Acute Care: Pressure Ulcer/Injury, during the same 
timeframe, the IRF mean score is 1.46 percent and the 25th and 75th 
percentiles are 0 percent and 2.27 percent, respectively.
c. Stakeholder Feedback
    Our measure development contractor sought input from subject matter 
experts, including Technical Expert Panels (TEPs), over the course of 
several years on various skin integrity topics and specifically those 
associated with the inclusion of unstageable pressure ulcers, including 
DTIs. Most recently, on July 18, 2016, a TEP convened by our measure 
development contractor provided input on the technical specifications 
of this quality measure, including the feasibility of implementing the 
proposed measure's updates across PAC settings. The TEP supported the 
updates to the measure across PAC settings, including the inclusion in 
the numerator of unstageable pressure ulcers due to slough and/or 
eschar that are new or worsened, new unstageable pressure ulcers due to 
a non-removable dressing or device, and new DTIs. The TEP also 
supported the use of different data elements for measure calculation. 
The TEP recommended supplying additional guidance to providers 
regarding each type of unstageable pressure ulcer. This support was in 
agreement with earlier TEP meetings, held on June 13 and

[[Page 36279]]

November 15, 2013, which had recommended that we update the 
specifications for the pressure ulcer measure to include unstageable 
pressure ulcers in the numerator.17 18 Exploratory data 
analysis conducted by our measure development contractor suggests that 
the addition of unstageable pressure ulcers, including DTIs, will 
increase the observed incidence and variation in the rate of new or 
worsened pressure ulcers at the facility level, which may improve the 
ability of the proposed quality measure to discriminate between poor- 
and high-performing facilities.
---------------------------------------------------------------------------

    \17\ Schwartz, M., Nguyen, K.H., Swinson Evans, T.M., Ignaczak, 
M.K., Thaker, S., and Bernard, S.L.: Development of a Cross-Setting 
Quality Measure for Pressure Ulcers: OY2 Information Gathering, 
Final Report. Centers for Medicare & Medicaid Services, November 
2013. Available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/Downloads/Development-of-a-Cross-Setting-Quality-Measure-for-Pressure-Ulcers-Information-Gathering-Final-Report.pdf.
    \18\ Schwartz, M., Ignaczak, M.K., Swinson Evans, T.M., Thaker, 
S., and Smith, L.: The Development of a Cross- Setting Pressure 
Ulcer Quality Measure: Summary Report on November 15, 2013, 
Technical Expert Panel Follow- Up Webinar. Centers for Medicare & 
Medicaid Services, January 2014. Available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/Downloads/Development-of-a-Cross-Setting-Pressure-Ulcer-Quality-Measure-Summary-Report-on-November-15-2013-Technical-Expert-Pa.pdf.
---------------------------------------------------------------------------

    We solicited stakeholder feedback on this proposed measure by means 
of a public comment period held from October 17 through November 17, 
2016. In general, we received considerable support for the proposed 
measure. A few commenters supported all of the changes to the current 
pressure ulcer measure that resulted in the proposed measure, with one 
commenter noting the significance of the work to align the pressure 
ulcer quality measure specifications across the PAC settings.
    Many commenters supported the inclusion of unstageable pressure 
ulcers due to slough/eschar, non-removable dressing/device, and DTIs in 
the quality measure. Other commenters did not support the inclusion of 
DTIs in the quality measure because they stated that there is no 
universally accepted definition for this type of skin injury.
    Some commenters provided feedback on the data elements used to 
calculate the proposed quality measure. We believe that these data 
elements will promote facilitation of cross-setting quality comparison 
as mandated by the IMPACT Act, alignment between quality measures and 
payment, reduction in redundancies in assessment items, and prevention 
of inappropriate underestimation of pressure ulcers. The currently 
implemented pressure ulcer measure is calculated using retrospective 
data elements that assess the number of new or worsened pressure ulcers 
at each stage, while the proposed measure is calculated using the 
number of unhealed pressure ulcers at each stage after subtracting the 
number that were present upon admission. Some commenters did not 
support the data elements that would be used to calculate the proposed 
measure and requested further testing of these data elements. Other 
commenters supported the use of these data elements, stating that these 
data elements simplified the measure calculation process.
    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. 
This summary includes further detail about our responses to various 
concerns and ideas stakeholders raised.
    The NQF-convened Measures Application Partnership (MAP) Post-Acute 
Care/Long-Term Care (PAC/LTC) Workgroup met on December 14 and 15, 
2016, and the MAP Coordinating Committee met on January 24 and 25, 
2017, and provided input to CMS about this proposed measure. The MAP 
provided a recommendation of ``conditional support for rulemaking'' for 
use of the proposed measure in the IRF QRP. The MAP's conditions of 
support include that, as a part of measure implementation, we provide 
guidance on the correct collection and calculation of the measure 
result, as well as guidance on public reporting Web sites explaining 
the impact of the specification changes on the measure result. The 
MAP's conditions also specify that we continue analyzing the proposed 
measure in order to investigate unexpected results reported in public 
comment. We intend to fulfill these conditions by offering additional 
training opportunities and educational materials in advance of public 
reporting, and by continuing to monitor and analyze the proposed 
measure. More information about the MAP's recommendations for this 
measure is available at http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=84452.
    We reviewed the NQF's consensus endorsed measures and were unable 
to identify any NQF-endorsed pressure ulcer quality measures for PAC 
settings that are inclusive of unstageable pressure ulcers. There are 
related measures, but after careful review, we determined these 
measures are not applicable for use in IRFs based on the populations 
addressed or other aspects of the specifications. We are unaware of any 
other such quality measures that have been endorsed or adopted by 
another consensus organization for the IRF setting. Therefore, based on 
the evidence discussed above, we proposed to adopt the quality measure 
entitled, Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/
Injury, for the IRF QRP beginning with the FY 2020 IRF QRP. We plan to 
submit the proposed measure to the NQF for endorsement consideration as 
soon as feasible.
d. Data Collection
    The data for this quality measure will be collected using the IRF-
PAI, which is currently submitted by IRFs through the Quality 
Improvement and Evaluation System (QIES) Assessment Submission and 
Processing (ASAP) System. The proposed standardized patient assessment 
admission and discharge data applicable to this measure that must be 
reported by IRFs for patients discharged on or after October 1, 2018 
are described in section XII.K of this final rule. While the inclusion 
of unstageable wounds in the proposed measure results in a measure 
calculation methodology that is different from the methodology used to 
calculate the current pressure ulcer measure, the data elements needed 
to calculate the proposed measure are already included on the IRF-PAI. 
In addition, our proposal to eliminate duplicative data elements that 
are used in the calculation of the current pressure ulcer measure will 
result in an overall reduced reporting burden for IRFs for the proposed 
measure. To view the updated IRF-PAI, with the changes, we refer the 
reader to https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/IRF-PAI-and-IRF-QRP-Manual.html. For more information on IRF-PAI submission using the QIES 
ASAP System, we refer readers to https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/IRFPAI.html and http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/index.html.
    For technical information about this measure, including information 
about the measure calculation and the standardized patient assessment 
data elements used to calculate this measure, we refer readers to the 
document titled, Final Specifications for IRF QRP Quality Measures and 
Standardized Patient

[[Page 36280]]

Assessment Data Elements, available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/IRF-Quality-Reporting-Program-Measures-Information-.html.
    We proposed that IRFs would begin reporting the pressure ulcer 
measure Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/
Injury with data collection beginning October 1, 2018.
    We invited public comment on our proposal to replace the current 
pressure ulcer measure, Percent of Residents or Patients with Pressure 
Ulcers That Are New or Worsened (Short Stay) (NQF #0678), with a 
modified version of that measure, entitled Changes in Skin Integrity 
Post-Acute Care: Pressure Ulcer/Injury, for the IRF QRP beginning with 
the FY 2020 IRF QRP.
    We received several comments about this proposal, which are 
summarized below.
    Comment: Many commenters supported the proposed replacement of the 
current pressure ulcer measure, the Percent of Residents or Patients 
with Pressure Ulcers That Are New or Worsened (Short Stay) (NQF #0678), 
with a modified version of that measure, entitled Changes in Skin 
Integrity Post- Acute Care: Pressure Ulcer/Injury. Commenters 
appreciated that the implementation of this modified measure will 
reduce burden for providers by eliminating redundancies in the 
assessment items needed for its calculation, as well as reduce the 
potential for underestimating the frequency of pressure ulcers. 
Commenters recognized that the proposed measure will meet the 
requirements of the IMPACT Act for the Skin Integrity and Changes in 
Skin Integrity domain.
    Response: We appreciate the commenters' support to replace the 
current pressure ulcer measure, Percent of Residents or Patients with 
Pressure Ulcers That Are New or Worsened (Short Stay) (NQF #0678), with 
a modified version of the measure, Changes in Skin Integrity Post-Acute 
Care: Pressure Ulcer/Injury to fulfill the requirements of the IMPACT 
Act. We agree that this proposal will limit regulatory burden and 
promote high quality care, as the commenters describe.
    Comment: Several commenters raised questions about the rationale 
for adopting the proposed measure. One commenter inquired how the 
proposed measure is a more appropriate way to identify skin changes.
    Response: The proposed measure includes new or worsened unstageable 
pressure ulcers, including deep tissue injuries (DTIs), in the measure 
numerator. These types of pressure ulcers are important to include in 
the measure because they represent poor outcomes, are often an 
avoidable outcome of medical care, are debilitating and painful, and 
can result in death and/or disability. The decision to include 
unstageable pressure ulcers, including DTIs was supported by TEPs held 
in 2013 and 2016, and closes a gap in quality reporting. Therefore, we 
believe that the proposed measure offers an improved measure of quality 
when compared to the current pressure ulcer measure.
    Comment: Several commenters requested that additional testing 
analyses be conducted prior to the implementation of this measure. 
These commenters indicated that the purpose of this additional testing 
should be to verify that the specifications of this measure reflect 
actual differences in the care practices and the quality of care 
provided by IRFs, rather than differences in compliance. Specifically, 
some commenters expressed concerns that the variation in measure scores 
between facilities could reflect differences in the interpretation of 
definitions for unstageable pressure ulcers or DTIs, rather than actual 
differences in quality or care practices. These commenters noted that a 
measure should not be changed to create performance variation, but 
rather to be consistent with current science or to provide clarity and 
consistent data collection.
    One commenter pointed out the difference in scores between the 
current and proposed measures, and questioned whether the proposed 
measure can be considered valid since it produces different scores. One 
commenter indicated concern that the proposed measure may quickly 
become ``topped-out'' since the rate of patients with new or worsened 
pressure ulcers is low.
    Some commenters stated that analysis related to development of the 
proposed measure has not been made publicly available. A few other 
commenters suggested that the specifications of the proposed measure 
are based on data from SNFs, rather than IRFs. Another commenter 
suggested that CMS conduct an independent medical record review to 
support the data elements used in calculation of the measure.
    Response: We have performed testing to compare the performance of 
the proposed measure with the existing pressure ulcer/injury measure. 
Current findings indicate that the measure is both valid and reliable 
in the SNF, LTCH, and IRF settings. One of the differences between the 
current and proposed pressure ulcer measures is that the proposed 
measure is calculated using the M0300 data element. Reliability and 
validity of the M0300 data element used to calculate this quality 
measure have been tested in several ways. Rigorous testing on both 
reliability and validity of the data elements in the MDS 3.0 provides 
evidence for the data elements used in the SNF, LTCH, and IRF 
settings.\19\ The MDS 3.0 pilot test showed good reliability, and the 
results are applicable to the IRF-PAI as well as the LTCH CARE Data Set 
because the data elements tested are the same as those used in the IRF-
PAI and LTCH CARE Data Set. Across pressure ulcer data elements, 
average gold-standard to gold-standard kappa statistic was 0.905. The 
average gold-standard to facility-nurse kappa statistic was 0.937. 
These kappa scores indicate ``almost perfect'' agreement using the 
Landis and Koch standard for strength of agreement.\20\ Analyses 
conducted by the measure development contractor indicate that there is 
a high level of alignment between the M0300 data element and the M0800 
data element, suggesting that the data elements assess an equivalent 
concept. Using the M0300 data elements improves accuracy by 
establishing a standardized calculation method.
---------------------------------------------------------------------------

    \19\ Saliba, D., & Buchanan, J. (2008, April). Development and 
validation of a revised nursing home assessment tool: MDS 3.0. 
Contract No. 500-00-0027/Task Order #2. Santa Monica, CA: Rand 
Corporation. Retrieved from http://www.cms.hhs.gov/NursingHomeQualityInits/Downloads/MDS30FinalReport.pdf.
    \20\ Landis, R., & Koch, G. (1977, March). The measurement of 
observer agreement for categorical data. Biometrics 33(1), 159-174.
---------------------------------------------------------------------------

    A second main difference between the current and proposed pressure 
ulcer measures is that the proposed measure includes unstageable 
pressure ulcers, including DTIs, in the numerator of the quality 
measure, resulting in increased scores in all settings, compared with 
the previously implemented pressure ulcer measure. This is due to the 
fact that the proposed measure includes unstageable pressure ulcers, 
including DTIs, while the current measure does not, as well as the fact 
some pressure ulcers captured as new or worsened in the M0300 data 
element were not reported in the M0800 data element. By including 
pressure ulcers that were not included in the numerator of the current 
pressure ulcer measure, the scores on the proposed measure are higher 
and the risk of the measure being ``topped-out'' are lower.
    To assess the construct validity of this measure, or the degree to 
which the measure construct measures what it claims or purports to be 
measuring, our

[[Page 36281]]

measure contractor sought input from TEPs over the course of several 
years. Most recently, on July 18, 2016, a TEP supported the inclusion 
in the numerator of unstageable pressure ulcers due to slough and/or 
eschar that are new or worsened, new unstageable pressure ulcers/
injuries due to a non-removable dressing or device, and new DTIs. The 
measure testing activities were presented to TEP members for their 
input on the reliability, validity, and feasibility of this measure 
change. The TEP members supported the measure construct.
    The proposed measure also increased the variability of measures 
scores between providers, as noted by some commenters. In the currently 
implemented pressure ulcer measure, analysis using 2016 data from 
Quarter 4 reveals that the IRF mean score is 0.64 percent and the 25th 
and 75th percentiles are 0 percent and 0.95 percent, respectively. In 
the proposed measure, during the same timeframe, the IRF mean score is 
1.46 percent and the 25th and 75th percentiles are 0 percent and 2.27 
percent, respectively. We would like to clarify that the goal of the 
proposed measure is not to create performance variation where none 
exists, but rather to better measure existing performance variation. 
This increased variability of scores between facilities will improve 
the ability of the measure to distinguish between high- and low-
performing facilities. In addition to the analyses presented in this 
rule and the measure specifications,\21\ we presented analyses 
supporting this measure in a letter submitted to the NQF MAP 
Coordinating Committee as part of their review of this measure. These 
analyses were included in MAP public comments and are publicly 
available.\22\
---------------------------------------------------------------------------

    \21\ Final Specifications for IRF QRP Quality Measures and 
Standardized Patient Assessment Data Elements, available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/IRF-Quality-Reporting-Program-Measures-Information-.html.
    \22\ http://public.qualityforum.org/MAP/MAP%20Coordinating%20Committee/CMS%20Public%20Comment%2012-22.pdf.
---------------------------------------------------------------------------

    We will continue to perform reliability and validity testing in 
compliance with NQF guidelines and the Blueprint for the CMS Measures 
Management System to ensure that that the measure demonstrates 
scientific acceptability (including reliability and validity) and meets 
the goals of the QRP. Finally, as with all measure development and 
implementation, we will provide training and guidance prior to 
implementation of the measure to promote consistency in the 
interpretation of the measure.
    Comment: Several commenters requested further training and guidance 
in completing the M0300 data element that will be used to calculate the 
proposed quality measure. Some commenters requested comprehensive 
guidance on completing the ``present on admission'' data element. A few 
comments indicated a belief that the data element used to calculate 
this measure would be new, and one included incorrect information about 
the M0300 data element. Some commenters supported the proposed measure 
calculation approach, which will not count pressure ulcers that were 
present at the time of admission at the same stage, but stated that 
this would add complexity in coding and would require further training. 
Some commenters stated that the modified measure may be difficult for 
providers to capture because they are requested to report on a 
different data element, and some stated that this may decrease the 
accuracy of documentation. One commenter stated that there may be 
misinterpretations of how to code the assessment data element, or 
operational or documentation issues that affect a facility's 
documentation of pressure ulcers that are present on admission. Some 
commenters indicated that the definition of pressure ulcers included in 
the measure is too subjective. One commenter requested that the 
proposed measure be delayed until the assessment items have been 
collected for 12 to 24 months. One commenter stated that the MAP's 
conditions of support for this measure have not been met.
    Response: The measure will be calculated using data reported on the 
M0300 data element collected at discharge, which only requires IRFs to 
report the number of pressure ulcers for each stage (including stages 
2, 3, and 4, unstageable due to slough and/or eschar, unstageable due 
to non-removable dressing/device, and DTIs), and of those, the number 
that were present on admission.
    The M0300 data element currently exists on the IRF-PAI, and the 
current IRF-PAI Manual, as well as prior versions of the Manual, 
include guidance about how to complete the M0300 data element, 
including the assessment and coding of pressure ulcers that are present 
on admission. We will provide further training, education, and guidance 
prior to implementation of the proposed measure. The IRF-PAI Manual 
will be updated with additional examples to further address the coding 
of unstageable pressure ulcers, and to provide further clarification on 
the coding of pressure ulcers/injuries that are ``present on 
admission.'' The IRF-PAI Manual can be found at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/IRF-PAI-and-IRF-QRP-Manual.html. We believe that 
these additional training opportunities, combined with ongoing 
monitoring and analysis of the measure, fulfill the conditions of 
support outlined by the MAP.
    Comment: We received several comments regarding the inclusion of 
unstageable pressure ulcers in the proposed measure. One commenter 
supported the modification of this measure. Other commenters did not 
support the inclusion of unstageable pressure ulcers in the quality 
measure as proposed, and encouraged further testing. Some commenters 
stated that there is a lack of clear definition of pressure ulcers 
included in this measure, and that those definitions may be too 
subjective to get reliable data. Commenters also requested that we 
provide training opportunities and educational materials prior to the 
implementation of this measure.
    Response: We appreciate the support we have received regarding the 
inclusion of unstageable pressure ulcers, including DTIs, in the 
proposed quality measure. We believe that the inclusion of unstageable 
pressure ulcers in the measure will result in a fuller picture of 
quality to patients and families, and lead to further quality 
improvement efforts that will advance patient safety by reducing the 
rate of facility-acquired pressure ulcers at any stage.
    We would like to clarify that the definitions of pressure ulcers 
are adapted from the National Pressure Ulcer Advisory Panel (NPUAP) and 
are standardized across all PAC settings. These definitions are 
universally accepted, objective, and considered to be the gold-standard 
definition by national and international stakeholders such as the 
NPUAP, European Pressure Ulcer Advisory Panel (EPUAP), Wound, Ostomy 
and Continence Nurses Society (WOCN), amongst others. As a result, the 
use of these universally accepted definitions of pressure ulcers 
furthers our commitment to ensuring that all quality measures 
implemented in the QRP meet the testing goals of the QRP.
    To provide greater clarity about the definitions of different types 
of unstageable pressure ulcers and how to code them on the IRF-PAI, we 
are currently engaged in multiple educational efforts. These include 
training events, updates to the manuals and training materials, and 
responses to Help Desk questions to promote

[[Page 36282]]

understanding and proper coding of these data elements. We will 
continue to engage in these training activities prior to implementation 
of the proposed measure.
    Comment: We received few comments regarding the inclusion of DTIs 
specifically. Some commenters did not support the inclusion of DTIs in 
the measure. Commenters stated that there is not a universally accepted 
definition of DTIs, and that DTIs are commonly misdiagnosed, which 
could lead to surveillance bias. One commenter stated that it is often 
difficult to determine the presence of a DTI at admission and many are 
not identifiable until a week or two after admission.
    Response: We appreciate the comments regarding the inclusion of 
DTIs in the proposed quality measure. DTIs are often an avoidable 
outcome of medical care, are debilitating and painful, and can result 
in death and/or disability, similar to Stage 2, Stage 3 and Stage 4 
pressure ulcers. While some DTIs may worsen, studies indicate that many 
DTIs, if managed using appropriate care, can be resolved without 
deteriorating into a worsened pressure ulcer. Therefore, we believe 
that the inclusion of DTIs in the proposed quality measure is essential 
to be able to accurately reflect the number of these types of pressure 
injuries and to provide the appropriate patient care. Further, we 
believe that it is important to do a thorough assessment on every 
patient in each PAC setting, including a thorough skin assessment 
documenting the presence of any pressure ulcers or injuries of any 
kind, including DTIs. We agree that it is important to conduct thorough 
and consistent assessments to avoid the possibility of surveillance 
bias.
    When considering the addition of DTIs to the measure numerator, we 
convened cross-setting TEPs in June and November 2013, and obtained 
input from clinicians, experts, and other stakeholders. An additional 
cross-setting TEP convened by our measure development contractor in 
July 2016 also supported the recommendation to include unstageable 
pressure ulcers, including DTIs, in the numerator of the quality 
measure. Given DTIs' potential impact on mortality, morbidity, and 
quality of life, it may be detrimental to the quality of care to 
exclude DTIs from a pressure ulcer quality measure.
    Comment: Several commenters recommended that CMS attain NQF 
endorsement of the Changes in Skin Integrity Post- Acute Care: Pressure 
Ulcer/Injury measure prior to implementation.
    Response: While this measure is not currently NQF-endorsed, we 
recognize that the NQF endorsement process is an important part of 
measure development and we plan to submit this measure for NQF 
endorsement consideration as soon as feasible.
    Comment: We received several comments regarding the use of the term 
``pressure injury.'' Some comments received were in support of adapting 
the NPUAP terminology. Other commenters stated that the proposed 
measure does not align with the NPUAP standard. One commenter requested 
that staging definitions be updated to match the NPUAP standard, and 
that the category of pressure ulcers that are unstageable due to non-
removable dressing/device be removed.
    Response: We appreciate the feedback regarding the terminology used 
in the Changes in Skin Integrity Post- Acute Care: Pressure Ulcer/
Injury measure. The terminology and definitions developed by the NPUAP 
for the care of pressure ulcers are often used to inform the PAC 
patient and resident assessment instruments and corresponding 
assessment manuals. The pressure ulcer definitions used in the IRF-PAI 
Training Manual have been adapted from those recommended by the NPUAP 
2007 Pressure Ulcer Stages.
    Considering the recent updates made by the NPUAP to their Pressure 
Ulcer Staging System, we intend to continue the adaptation of NPUAP 
terminology for coding the patient and resident assessment instruments. 
The updated NPUAP guidance was discussed by a TEP in December 2016, and 
the TEP recommended we maintain current guidance for staging pressure 
ulcers, despite some differences from NPUAP staging definitions.
    We are aware of the array of terms used to describe alterations in 
skin integrity due to pressure. Some of these terms include: pressure 
ulcer, pressure injury, pressure sore, decubitus ulcer, and bed sore. 
However, for purposes of the proposed measure, a skin condition should 
be coded on the IRF-PAI as a pressure ulcer if the primary cause of the 
skin condition is related to pressure. For example, if the medical 
record reflects the presence of a Stage 2 pressure injury, it should be 
coded on the assessment as a Stage 2 pressure ulcer.
    Comment: We received some comments related to burden associated 
with this pressure ulcer measure. One commenter supported CMS's efforts 
to implement this measure as it may reduce the burden of collecting 
assessment data. Other commenters noted that there have been multiple 
changes to the current pressure ulcer quality measure over the years, 
and indicated that those changes, in addition to the current proposal, 
place a burden on providers by requiring further training or education. 
One commenter noted a burden on software developers. Commenters 
recommended that CMS suspend or delay implementing the proposed 
measure.
    Response: While we avoid making unnecessary changes to measures, 
modifying measures is an important part of the measure lifecycle to 
ensure measures that are reliable, valid, and scientifically sound. We 
do not believe that the reporting of the proposed measure will impose a 
new burden on IRFs because the measure is calculated using data 
elements that are currently included in IRF-PAI. Further, our proposal 
to remove duplicative data elements will result in an overall reduced 
reporting burden for providers for the proposed measure.
    Comment: One commenter noted that there is a difference in the 
denominator across settings in terms of which payer sources (Medicare 
Part A or Medicare Advantage) are included in the measure. Commenters 
recommended that we ensure that common denominators are used when 
displaying this measure for quality comparison purposes. Another 
commenter requested clarification on measure specification differences 
between IRFs and other PAC settings. Some commenters stated that there 
is an IMPACT Act mandate to implement ``interoperable measures'' across 
PAC settings.
    Response: We recognize that data is currently collected from 
different payer sources for each PAC setting. We believe that quality 
care is best assessed through the collection of data from all patients, 
and strive to include the largest possible patient population in the 
measure denominator. For this reason, we do not seek to limit the 
denominator in each setting based on the data currently available in 
other settings (that is, limiting every setting denominator to Medicare 
Part A patients). Regarding the concern that different patient 
population denominators are misleading to consumers and providers, we 
seek to clarify the intent and use of this quality measure through 
rulemaking, provider training, and ongoing communication with 
stakeholders. Ongoing communication includes the posting of measure 
specifications and communication accompanying public reporting. 
Further, we will take into consideration the expansion of the SNF QRP 
to include all payer sources through future rulemaking.

[[Page 36283]]

    The Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/
Injury measure is harmonized across all PAC settings and uses 
standardized patient assessment data as required by the IMPACT Act. 
Further, we would like to clarify that the M0300 data element used to 
calculate this measure is standardized across all PAC settings, 
enabling interoperability. This standardization and interoperability of 
patient assessment data elements allow for the exchange of information 
among PAC providers and other providers to whom this data is 
applicable. We refer readers to the measure specifications, which 
describe the specifications for the measure in PAC settings, Final 
Specifications for IRF QRP Quality Measures and Standardized Patient 
Assessment Data Elements, available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/IRF-Quality-Reporting-Program-Measures-Information-.html.
    Comment: A few commenters noted that IRF performance scores on the 
proposed measure are likely to differ from performance scores on the 
currently implemented pressure ulcer measure, Percent of Residents or 
Patients with Pressure Ulcers That Are New or Worsened (Short Stay) 
(NQF #0678). The commenters recommended development of educational 
materials for the public to explain the perceived shifts in 
performance. One commenter stated that changes to the measure can make 
it difficult for IRFs to review and improve their performance. One 
commenter expressed concern that, since this measure will be publicly 
reported, it may impact case-mix development or provider reimbursement.
    Response: We appreciate commenters' concerns about differences in 
performance scores between the two measures, and the possibility of 
misinterpretation. While the proposed measure will not be directly 
comparable to the existing measure, it is expected to provide an 
improved measure of quality moving forward since it will more 
accurately capture the number of new and worsened pressure ulcers and 
include unstageable pressure ulcers. Further information and training 
will be provided to providers as well as consumers regarding how to 
interpret scores on the proposed measure, to avoid any possible 
confusion between the proposed measure and the existing measure. We 
would like to clarify for the IRF QRP, APU determination is not 
predicated on performance results for the measures.
    Comment: We received one comment recommending the addition of 
morbid obesity as a risk adjustor for this quality measure.
    Response: The proposed quality measure would be risk adjusted for 
functional mobility admission performance, bowel continence, diabetes 
mellitus or peripheral vascular disease/peripheral arterial disease, 
and low body mass index in each of the four settings. This risk 
adjustment methodology is described further in the Specifications for 
IRF QRP Quality Measures and Standardized Patient Assessment Data 
Elements, available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/IRF-Quality-Reporting-Program-Measures-Information-.html. As with our 
measure modification and evaluation processes, we will continue to 
analyze this measure, specifically assessing the addition of variables 
to the risk adjustment model, and testing the inclusion of other risk 
factors as additional risk adjustors. This continued refinement of the 
risk adjustment models will ensure that the measure remains valid and 
reliable to inform quality improvement within and across each PAC 
setting, and to fulfill the public reporting goals of quality reporting 
programs.
    Comment: Some commenters requested that CMS maintain the M0900 data 
element, which captures healed pressure ulcers, on the IRF-PAI. The 
commenters stated that IRFs heal many pressure ulcers and it is 
clinically valuable to monitor these positive outcomes. One commenter 
requested that CMS add three additional items to address healed 
unstageable pressure ulcers due to slough or eschar, healed unstageable 
pressure ulcers/injuries due to non-removable dressing or device, and 
healed DTIs. This commenter recommended that CMS consider developing a 
pressure ulcer quality measure that tracks the rate of healed pressure 
ulcers in addition to the rate of new or worsened wounds.
    Response: We appreciate the suggestion for additional quality of 
care measures. We are responsible for continuously evaluating existing 
quality reporting programs and identifying potential new measures. We 
will take this suggestion into consideration as we continue our 
evaluation and refinement of skin integrity quality measures for PAC 
settings.
    Comment: One commenter indicated that IRFs should not be required 
to report late stage pressure ulcers because these pressure ulcers are 
rare events during IRF stays.
    Response: We agree that new or worsened stage 3 or 4 pressure 
ulcers are rare events in IRFs. Pressure ulcers interfere with 
activities of daily living and functional gains made during 
rehabilitation, predispose patients to osteomyelitis and septicemia, 
and are strongly associated with longer hospital stays, longer IRF 
stays, and mortality.23 24 25Analysis conducted by our 
measure development contractor examined the national incidence of new 
or worsened Stage 2, 3, or 4 pressure ulcers in IRFs at discharge 
compared with admission using discharges from January through December 
2015. In IRFs, we found a national incidence of 0.56 percent of new or 
worsened Stage 2 pressure ulcers, 0.09 percent of new or worsened Stage 
3 pressure ulcers, and 0.01 percent of new or worsened Stage 4 pressure 
ulcers. This indicates that, while the rates of stage 3 or stage 4 
pressure ulcers are low, there are still some stage 3 or 4 pressure 
ulcers developing in IRFs. Overall, we believe it is important to 
continue to collect information on these types of pressure ulcers 
because of the serious nature of this medical condition.
---------------------------------------------------------------------------

    \23\ Bates-Jensen BM. Quality indicators for prevention and 
management of pressure ulcers in vulnerable elders. Ann Int Med. 
2001;135 (8 Part 2), 744-51.
    \24\ Park-Lee E, Caffrey C. Pressure ulcers among nursing home 
residents: United States, 2004 (NCHS Data Brief No. 14). 
Hyattsville, MD: National Center for Health Statistics, 2009. 
Available from http://www.cdc.gov/nchs/data/databriefs/db14.htm.
    \25\ Wang, H., et al. (2014). ``Impact of pressure ulcers on 
outcomes in inpatient rehabilitation facilities.'' Am J Phys Med 
Rehabil 93(3): 207-216.
---------------------------------------------------------------------------

    Final Decision: After consideration of the public comments we 
received, we are finalizing our proposal to remove the current pressure 
ulcer measure, Percent of Residents or Patients with Pressure Ulcers 
That Are New or Worsened (Short Stay) (NQF #0678), from the IRF QRP and 
to replace it with a modified version of that measure, entitled Changes 
in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury, for the IRF 
QRP with an implementation date of October 1, 2018.

H. Removal of the All-Cause Unplanned Readmission Measure for 30 Days 
Post-Discharge From IRFs From the IRF QRP

    In the FY 2018 IRF PPS proposed rule (82 FR 20720), we proposed to 
remove the All-Cause Unplanned Readmission Measure for 30 Days Post-
Discharge from IRFs (NQF #2502) beginning with the FY 2019 IRF QRP.
    In the FY 2016 IRF PPS final rule (80 FR 47087 through 47089), we 
adopted the All-Cause Unplanned Readmission Measure for 30 Days Post-
Discharge from IRFs (NQF #2502) for the IRF QRP.

[[Page 36284]]

This measure assesses all-cause unplanned hospital readmissions from 
IRFs. In the FY 2017 IRF PPS final rule (81 FR 52103 through 52108), we 
adopted the Potentially Preventable 30-Day Post-Discharge Readmission 
Measure for IRF QRP to fulfill IMPACT Act requirements. We also adopted 
the Potentially Preventable Within Stay Readmission Measure for IRFs 
(81 FR 52108 through 52111) for the IRF QRP. In response to the FY 2017 
IRF PPS proposed rule, we received public comments expressing concern 
over the multiplicity of readmission measures and the overlap between 
the All-Cause Readmission and Potentially Preventable Readmission (PPR) 
30-Day Post-Discharge measures (see 81 FR 52106; 81 FR 52109 through 
52111). Commenters also commented that multiple readmission measures 
would create confusion and require additional effort by providers to 
track and improve performance.
    We retained the All-Cause Readmission measure because it would 
allow us to monitor trends in both all-cause and PPR rates. In 
particular, we could compare facility performance on the All-Cause 
Readmission and PPR 30-Day Post-Discharge measures. However, upon 
further consideration of the public comments, we believe that removing 
the All-Cause Readmission measure and retaining the PPR 30-Day Post-
Discharge measure in the IRF QRP would prevent duplication, because 
potentially preventable readmissions are a subset of all-cause 
readmissions. Although there is no data collection burden associated 
with these claims-based measures, we recognize that having 3 hospital 
readmission measures in the IRF QRP may create confusion. We also agree 
with commenters who preferred the PPR measures, which identify a subset 
of all-cause readmissions, because we believe the PPR measures will be 
more actionable for quality improvement.
    Accordingly, we proposed to remove the All-Cause Readmission 
measure beginning with the FY 2019 IRF QRP. We proposed that public 
reporting of this measure would end by October 2018 when public 
reporting of the PPR 30-Day Post-Discharge and PPR Within Stay measures 
begins by October 2018. We refer readers to section XIII.O of this 
final rule for more information regarding public reporting for the PPR 
30-Day Post Discharge and PPR Within Stay measures. We refer readers to 
the PPR 30-Day Post-Discharge and PPR Within Stay measure 
specifications available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/Downloads/Measure-Specifications-for-FY17-IRF-QRP-Final-Rule.pdf.
    We invited public comment on our proposal to remove the All-Cause 
Unplanned Readmission Measure for 30 Days Post-Discharge from IRFs (NQF 
#2502) from the IRF QRP, beginning with the FY 2019 IRF QRP. We 
received several comments, which are summarized below.
    Comment: Several commenters, including MedPAC, supported the 
proposed removal of the All-Cause Readmission measure from the IRF QRP. 
The commenters supported the PPR measures over the All-Cause 
Readmission measure, which hold providers accountable for a subset of 
all-cause readmissions that are considered potentially preventable.
    Some commenters were concerned that three hospital readmission 
measures in the IRF QRP is burdensome and supported the removal of the 
All-Cause Readmission measure because they consider it confusing and 
duplicative of the PPR 30-Day Post-Discharge measure. Commenters 
expressed concern that a lack of patient-level data makes it difficult 
to track and improve performance. Some commenters suggested that CMS 
evaluate PAC readmission measures adopted for other quality reporting 
programs to ensure that they create consistent incentives across the 
system.
    Response: We appreciate the support for the proposed removal of the 
All-Cause Readmission measure from the IRF QRP. We note commenters' 
concerns regarding the availability of patient-level data for tracking 
and improving performance, and are exploring the feasibility of making 
additional data available to IRFs. We appreciate commenters' concern 
over consistent incentives and will continue to monitor PAC readmission 
measures to ensure they align incentives across the system.
    Final Decision: After consideration of the public comments, we are 
finalizing our proposal to remove the All-Cause Unplanned Readmission 
Measure for 30 Days Post Discharge from IRFs from the IRF QRP, 
beginning with the FY 2019 IRF QRP.

I. IRF QRP Quality Measures under Consideration for Future Years

    We invited public 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 solicited public comments on the use of survey-based experience 
of care measures for the IRF QRP. We are currently developing an 
experience of care survey for IRFs, and survey-based measures will be 
developed from this survey. These survey-based measures may be 
considered for inclusion in the IRF QRP through future notice-and- 
comment rulemaking. This survey was developed using a rigorous survey 
development methodology that included a public request for measures 
(refer to 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, at 80 FR 72726 through 
72727); focus groups and interviews with patients, family members, and 
caregivers; input from a TEP of IRF providers, researchers, and patient 
advocates; and cognitive interviewing. The survey has also been field 
tested. The survey explores experience of care across five main areas: 
(1) Beginning stay at the rehabilitation hospital/unit; (2) 
interactions with staff; (3) experience during the rehabilitation 
hospital/unit stay; (4) preparing for leaving the rehabilitation 
hospital/unit; and (5) overall rehabilitation hospital/unit rating. We 
are specifically interested in comments regarding survey implementation 
and logistics, use of the survey-based measures in the IRF QRP, and 
general feedback. We are also considering a measure focused on pain 
that relies on the collection of patient-reported pain data.
    We received several comments on measures under considerations for 
future years, which are summarized below.
    Comment: In the FY 2018 IRF PPS proposed rule (82 FR 20720 through 
20721), we requested stakeholder feedback on the use of an experience 
of care survey in the IRF setting. CMS received several comments about 
the IRF survey currently in development. Some commenters raised the 
importance of including questions about experience with various types 
of rehabilitative therapy and the ability of the IRF to help meet 
patients' goals. Other commenters were concerned with response rates 
and burden. The commenters suggested ways to increase response rate and 
lessen burden, such as with electronic or mobile survey administration 
options and reducing the number of survey questions. Several commenters 
wanted more information about the survey to be made public and for CMS 
to ensure that stakeholder feedback is taken into account as the survey 
is finalized. One commenter questioned about subdividing survey 
respondents into diagnosis groups to allow for a more granular level of 
analysis.

[[Page 36285]]

    Response: We appreciate the comments about the IRF Experience of 
Care Survey. We will take those comments into consideration as we 
finish developing the survey and related survey-based measures.
    Comment: We received several comments about the Application of 
Percent of Residents Who Self-Report Moderate to Severe Pain (Short 
Stay) (NQF #0676) measure. Many commenters did not support this 
measure's inclusion in the IRF QRP because of the intensive nature of 
therapy in IRFs may cause patients to experience some degree of pain 
and discomfort. Commenters expressed concern that inquiring about pain 
does not provide enough information about whether the pain was treated 
or the patient's quality of life improved as a result of pain 
management, and suggested a measure that assessed whether staff 
responded to and helped manage pain instead. Many commenters had 
concerns about opioid over-prescription as a result of inquiring about 
pain, citing CMS's Opioid Misuse Strategy 2016, which can be found at 
https://www.cms.gov/Outreach-and-Education/Outreach/Partnerships/Downloads/CMS-Opioid-Misuse-Strategy-2016.pdf. Some commenters 
supported a measure related to pain, as it could prevent participation 
in rehabilitation and daily activities, and one commenter suggested an 
additional measure to capture this issue for non-verbal patients. One 
commenter supported that the measure could be collected as a patient 
reported outcome.
    Response: We appreciate the comments pertaining to the Application 
of Percent of Residents Who Self-Report Moderate to Severe Pain (Short 
Stay) (NQF #0676) measure under consideration for future implementation 
in the IRF QRP. We note that appropriately assessing pain as an outcome 
is important, and will take into consideration the commenters' 
recommendations.
    Comment: We received several other comments with recommendations 
for future measures. One commenter suggested CMS align any future 
measures across all post-acute care settings. One commenter suggested 
measures assessing patient and family goals and introducing palliative 
care, and recommended expanding measures related to mobility and self-
care. One commenter suggested including more immunization measures such 
as a pneumococcal quality measure.
    Response: We appreciate the commenters' recommendations and will 
take all their suggestions into consideration.
1. IMPACT Act Measure--Possible Future Update To Measure Specifications
    In the FY 2017 IRF PPS final rule (81 FR 52095 through 52103), we 
finalized the Discharge to Community-PAC IRF QRP measure, which 
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. We received public comments (see 81 FR 52098 through 52099), 
recommending exclusion of baseline nursing facility residents from the 
measure, as these residents did not live in the community prior to 
their IRF stay. At that time, we highlighted that using Medicare FFS 
claims alone, we were unable to accurately identify baseline nursing 
facility residents. We stated that potential future modifications of 
the measure could include assessment of the feasibility and impact of 
excluding baseline nursing facility residents from the measure through 
the addition of patient assessment-based data. In response to these 
public comments, we are considering a future modification of the 
Discharge to Community-PAC IRF QRP measure, which would exclude 
baseline nursing facility residents from the measure. We invited public 
comment on the possible exclusion of baseline nursing facility 
residents from the Discharge to Community-PAC IRF QRP measure in future 
years of the IRF QRP.
    We received several comments on this potential future modification, 
which are summarized below.
    Comment: Multiple commenters expressed support for excluding 
baseline nursing facility residents from the discharge to community 
measure as a potential future measure modification. Commenters stated 
that this exclusion would result in the measure more accurately 
portraying quality of care provided by IRFs, while controlling for 
factors outside of IRF control. One commenter emphasized that the 
proposed exclusion be applied across all PAC settings for cross-setting 
measure standardization and quality comparisons. One commenter 
supported this exclusion, and suggested that CMS try to address needs 
of long-term nursing facility residents in quality reporting programs 
via other strategies and not wholly exclude them from a nursing 
facility's accountability. One commenter stated that we are considering 
excluding patients admitted to IRF from a skilled nursing facility 
setting.
    Response: We appreciate the support for the potential exclusion of 
baseline nursing facility residents as a future measure modification. 
We will consider these views and determine whether to propose to 
exclude baseline nursing facility residents from the Discharge to 
Community-PAC IRF QRP measure in future years of the IRF QRP. We would 
like to clarify that we are only considering exclusion of baseline 
long-term nursing facility residents from the measure. We are not 
considering exclusion of patients admitted to IRF from a SNF setting.
2. IMPACT Act Implementation Update
    As a result of the input and suggestions provided by technical 
experts at the TEPs held by our measure developer, and through public 
comment, we engaged in additional development work, including 
performing additional testing, for two measures that would satisfy the 
domain of accurately communicating the existence of and providing for 
the transfer of health information and care preferences in section 
1899B(c)(1)(E) of the Act. The measures under development are: (1) 
Transfer of Information at Post-Acute Care Admission, Start or 
Resumption of Care from other Providers/Settings; and (2) Transfer of 
Information at Post-Acute Care Discharge, and End of Care to other 
Providers/Settings. We intend to specify these measures under section 
1899B(c)(1)(E) of the Act no later than October 1, 2018, and we intend 
to propose to adopt them for the FY 2021 IRF QRP, with data collection 
beginning on or about October 1, 2019.
    We received several comments on this implementation update, which 
are summarized below.
    Comment: A few commenters supported continued work on the two 
transfer of information measures. Some commenters suggested that CMS be 
cautious in its development of the Transfer of Information measure set 
and only propose and adopt measures that receive NQF endorsement. These 
commenters cited concerns about the measure development, citing the 
2016 MAP PAC/LTC meeting. One commenter noted that care is often 
fragmented, disorganized, and guided by factors that are not related to 
the quality of care or patient outcomes and that decision-makers often 
lack adequate information to make the best decisions during care 
transition planning. The commenter, noting the importance of including 
the patient and family members in decision-making about the most 
appropriate location for the patient's post-acute care,

[[Page 36286]]

recommended that CMS adopt a more direct approach for engaging the 
patient. The commenter believes that patient and family member insight 
and feedback on quality of care will ensure that the transfer of 
patient health information and care preferences are accurately 
communicated. One commenter emphasized that the measures should include 
both the receipt of information and the transmittal of information 
needed to coordinate care. Another commenter encourages more 
conversation about the measure and recommended types of information to 
be included to meet the measure criteria. The commenter supports 
balancing the burden of reporting with the utility of the measure and 
believes that limiting the information collected may not lead to 
improvements in the quality of care transitions.
    Response: We appreciate the comments and feedback on the Transfer 
of Health Information measures that are currently under development. As 
we continue to develop these measures, we will take the commenters' 
concerns into account. We agree with the comment that patient 
engagement in decisions about their care at transitions is a priority 
in ensuring patient-centered care. We will also consider the feedback 
pertaining to the importance of having the two measures, the types of 
information to be included in the measure numerators, balancing burden 
with the measure utility, patient and family engagement and involvement 
in decision-making about care, and the transfer of patient goals and 
care preferences. We intend to re-submit these measures, once fully 
specified and tested, for review to the MAP PAC/LTC Workgroup. Further, 
we plan to submit the measures to the NQF for consideration for 
endorsement when the measures are ready to be reviewed.

 Table 8--IRF QRP Quality Measures Under Consideration for Future Years
------------------------------------------------------------------------
           NQS priority             Patient- and caregiver-centered care
------------------------------------------------------------------------
Measures..........................  Experience of Care.
                                    Application of Percent of Residents
                                     Who Self-Report Moderate to Severe
                                     Pain (Short Stay) (NQF #0676).
------------------------------------------------------------------------
           NQS priority              Communication and care coordination
------------------------------------------------------------------------
Measure...........................  Modification of the Discharge to
                                     Community-Post Acute Care Inpatient
                                     Rehabilitation Facility Quality
                                     Reporting Program measure.
------------------------------------------------------------------------

J. Standardized Patient Assessment Data Reporting for the IRF QRP

1. Standardized Patient Assessment Data Reporting for the FY 2019 IRF 
QRP
    Section 1886(j)(7)(F)(ii) of the Act requires that for fiscal year 
2019 and each subsequent year, IRFs report standardized patient 
assessment data required under section 1899B(b)(1) of the Act. As we 
describe in more detail in section XII.G.1 of this final rule, we are 
finalizing that the current pressure ulcer measure, Percent of 
Residents or Patients with Pressure Ulcers That Are New or Worsened 
(Short Stay) (NQF #0678), will be removed and replaced with the 
proposed pressure ulcer measure, Changes in Skin Integrity Post-Acute 
Care: Pressure Ulcer/Injury, beginning with the FY 2020 IRF QRP. The 
current pressure ulcer measure will remain in the IRF QRP until that 
time. Accordingly, for the requirement that IRFs report standardized 
patient assessment data for the FY 2019 IRF QRP, we proposed in the FY 
2018 IRF PPS proposed rule (82 FR 20721 through 20722) that the data 
elements used to calculate the current pressure ulcer measure, Percent 
of Residents or Patients with Pressure Ulcers That Are New or Worsened 
(Short Stay) (NQF #0678) meet the definition of standardized patient 
assessment data for medical conditions and co-morbidities under section 
1899B(b)(1)(B)(iv) of the Act, and that the successful reporting of 
that data under section 1886(j)(7)(F)(i) of the Act for admissions as 
well as discharges occurring during fourth quarter CY 2017 would also 
satisfy the requirement to report standardized patient assessment data 
for the FY 2019 IRF QRP.
    The collection of assessment data pertaining to skin integrity, 
specifically pressure related wounds, is important for multiple 
reasons. Clinical decision support, care planning, and quality 
improvement all depend on reliable assessment data collection. Pressure 
related wounds represent poor outcomes, are a serious medical condition 
that can result in death and disability, are debilitating, painful and 
are often an avoidable outcome of medical 
care.26 27 28 29 30 31 Pressure related wounds are 
considered healthcare acquired conditions.
---------------------------------------------------------------------------

    \26\ Casey, G. (2013). ``Pressure ulcers reflect quality of 
nursing care.'' Nurs N Z 19(10): 20-24.
    \27\ Gorzoni, M.L. and S.L. Pires (2011). ``Deaths in nursing 
homes.'' Rev Assoc Med Bras 57(3): 327-331.
    \28\ Thomas, J.M., et al. (2013). ``Systematic review: health-
related characteristics of elderly hospitalized adults and nursing 
home residents associated with short-term mortality.'' J Am Geriatr 
Soc 61(6): 902-911.
    \29\ White-Chu, E.F., et al. (2011). ``Pressure ulcers in long-
term care.'' Clin Geriatr Med 27(2): 241-258.
    \30\ Bates-Jensen BM. Quality indicators for prevention and 
management of pressure ulcers in vulnerable elders. Ann Int Med. 
2001;135 (8 Part 2), 744-51.
    \31\ Bennet, G, Dealy, C Posnett, J (2004). The cost of pressure 
ulcers in the UK, Age and Aging, 33(3):230-235.
---------------------------------------------------------------------------

    As we previously noted, the data elements needed to calculate the 
current pressure ulcer measure are already included on the IRF-PAI and 
reported for IRFs, and exhibit validity and reliability for use across 
PAC providers. Item reliability for these data elements was also tested 
for the nursing home setting during implementation of MDS 3.0. Testing 
results are from the RAND Development and Validation of MDS 3.0 
project.\32\ The RAND pilot test of the MDS 3.0 data elements showed 
good reliability and is also applicable to both the IRF-PAI and the 
LTCH CARE Data Set because the data elements tested are the same. 
Across the pressure ulcer data elements, the average gold-standard 
nurse to gold-standard nurse kappa statistic was 0.905. The average 
gold-standard nurse to facility-nurse kappa statistic was 0.937. Data 
elements used to risk adjust this quality measure were also tested 
under this same pilot test, and the gold-standard to gold-standard 
kappa statistic, or percent agreement (where kappa statistic is not 
available), ranged from 0.91 to 0.99 for these data elements. These 
kappa scores indicate ``almost perfect'' agreement using the

[[Page 36287]]

Landis and Koch standard for strength of agreement.\33\
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    \32\ Saliba, D., & Buchanan, J. (2008, April). Development and 
validation of a revised nursing home assessment tool: MDS 3.0. 
Contract No. 500-00-0027/Task Order #2. Santa Monica, CA: Rand 
Corporation. Retrieved from http://www.cms.hhs.gov/NursingHomeQualityInits/Downloads/MDS30FinalReport.pdf.
    \33\ Landis, R., & Koch, G. (1977, March). The measurement of 
observer agreement for categorical data. Biometrics 33(1), 159-174.
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    The data elements used to calculate the current pressure ulcer 
measure received public comment on several occasions, including when 
that measure was proposed in the FY 2012 IRF PPS (76 FR 47876) and 
IPPS/LTCH PPS proposed rules (76 FR 51754). Further, they were 
discussed in the past by TEPs held by our measure development 
contractor on June 13 and November 15, 2013, and recently by a TEP on 
July 18, 2016. TEP members supported the measure and its cross-setting 
use in PAC. The report, ``Technical Expert Panel Summary Report: 
Refinement of the Percent of Patients or Residents with Pressure Ulcers 
that are New or Worsened (Short-Stay) (NQF #0678) Quality Measure for 
Skilled Nursing Facilities (SNFs), Inpatient Rehabilitation Facilities 
(IRFs), Long-Term Care Hospitals (LTCHs), and Home Health Agencies 
(HHAs) is available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/Downloads/July-2016-Pressure-Ulcer-TEP-Report_revised.pdf. 
We solicited stakeholder feedback on our proposal and received several 
comments, which are summarized below.
    Comment: Several comments supported reporting the data elements 
already implemented in the IRF QRP to fulfill the requirement to report 
standardized patient assessment data for the FY 2019 IRF QRP. 
Specifically, many commenters supported the use of data elements used 
in calculation of the Percent of Residents or Patients with Pressure 
Ulcers That Are New or Worsened (Short Stay) (NQF #0678) to fulfill 
this requirement.
    Response: We appreciate the commenters' support of the proposal.
    Final decision: After consideration of the public comments 
received, we are finalizing that the data elements currently reported 
by IRFs to calculate the current measure, Percent of Residents or 
Patients with Pressure Ulcers That Are New or Worsened (Short Stay) 
(NQF #0678), meet the definition of standardized patient assessment 
data with respect to medical conditions and co-morbidities under 
section 1899B(b)(1)(B)(iv) of the Act, and that the successful 
reporting of that data under section 1886(j)(7)(F)(i) of the Act will 
also satisfy the requirement to report standardized patient assessment 
data under section 1886(j)(7)(F)(ii) of the Act.
2. Standardized Patient Assessment Data Reporting Beginning With the FY 
2020 IRF QRP
    In the FY 2018 IRF PPS proposed rule (82 FR 20722 through 20739), 
we described our proposals for the reporting of standardized patient 
assessment data by IRFs beginning with the FY 2020 IRF QRP. For FY 
2020, this would apply to all Medicare Part A and MA patients 
discharged between October 1, 2018 and December 31, 2018. IRFs would be 
required to report these data on admission and discharge, with the 
exception of three data elements (Brief Interview of Mental Status 
(BIMS), Hearing, and Vision) that would be collected on admission only. 
Following the initial reporting year for the FY 2020 IRF QRP, 
subsequent years for the IRF QRP would be based on a full calendar year 
of such data reporting.
    In selecting the data elements proposed in the FY 2018 IRF PPS 
proposed rule, we carefully weighed the balance of burden in 
assessment-based data collection and aimed to minimize additional 
burden through the utilization of existing data in the assessment 
instruments. We also noted that the patient assessment instruments are 
considered part of the medical record and sought the inclusion of data 
elements relevant to patient care. We also took into consideration the 
following factors for each data element: Overall clinical relevance; 
ability to support clinical decisions, care planning, and interoperable 
exchange to facilitate care coordination during transitions in care; 
and the ability to capture medical complexity and risk factors that can 
inform both payment and quality. Additionally, the data elements had to 
have strong scientific reliability and validity; be meaningful enough 
to inform longitudinal analysis by providers; had to have received 
general consensus agreement for its usability; and had to have the 
ability to collect such data once but support multiple uses. Further, 
to inform the final set of data elements for proposal, we took into 
account technical and clinical subject matter expert review, public 
comment, and consensus input in which such principles were applied. We 
also took into account the consensus work and empirical findings from 
the PAC PRD. We acknowledge that during the development process that 
led to these proposals, some providers expressed concern that changes 
to the IRF-PAI to accommodate standardized patient assessment data 
reporting would lead to an overall increased reporting burden. However, 
we noted that there is no additional data collection burden for 
standardized data already collected and submitted on the quality 
measures.
    We received several comments related to the reporting of the 
standardized patient assessment data, which are summarized below.
    Comment: Many commenters expressed significant concerns with 
respect to our standardized patient assessment data proposals. Several 
commenters stated that the new standardized patient assessment data 
reporting requirements will impose significant burden on providers, 
given the volume of new standardized patient assessment data elements 
that were proposed to be added to the IRF-PAI. Several commenters noted 
that the addition of the proposed standardized patient assessment data 
elements would require hiring more staff, retraining staff on revised 
questions or coding guidance, and reconfiguring internal databases and 
EHRs. Other commenters expressed concerns about the gradual but 
significant past and future expansion of the IRF-PAI through the 
addition of standardized patient assessment data elements and quality 
measures, noting the challenge of coping with ongoing additions and 
changes, especially for small or rural providers. Several commenters 
stated that clinicians already record comorbidities as ICD-10 diagnosis 
codes, and recommended that CMS investigate how to utilize patient 
information that is already reported (for example, claims) rather than 
adding new assessment items to the IRF-PAI.
    Several commenters expressed concern related to the implementation 
timeline in the proposed rule, which would require IRFs to begin 
collecting the proposed standardized patient assessment data elements 
in the timeframe stated in the proposed rule. Several commenters noted 
that CMS had not yet provided sufficient specifications or educational 
materials to support implementation of the new patient assessments in 
the proposed timeline.
    Several commenters recommended CMS to delay the reporting of new 
standardized patient assessment data elements by at least one year, and 
to carefully assess whether all of the proposed standardized patient 
assessment data elements are necessary under the IMPACT Act. Commenters 
suggested ways to delay the proposals for standardized patient 
assessment data elements in the categories of Cognitive Function and 
Mental Status; Special Services, Treatments, and Interventions; and 
Impairments, including allowing

[[Page 36288]]

voluntary or limited reporting for a period of time before making 
comprehensive reporting mandatory, and delaying the beginning of 
mandatory data collection for a period of time. Some commenters 
recommended that during the delay, CMS re-evaluate whether it can 
require the reporting of standardized patient assessment data in a less 
burdensome manner.
    Response: We understand the concerns raised by commenters that the 
finalization of our standardized patient assessment data proposals 
would require IRFs to spend a significant amount of resources preparing 
to report the data, including updating relevant protocols and systems 
and training appropriate staff. We also recognize that we can meet our 
obligation to require the reporting of standardized patient assessment 
data for the categories described in section 1899B(b)(1)(B) of the Act 
while simultaneously being responsive to these concerns. Therefore, 
after consideration of the public comments we received on these issues, 
we have decided that at this time, we will not finalize the 
standardized patient assessment data elements we proposed for three of 
the five categories under section 1899B(b)(1)(B) of the Act: Cognitive 
Function and Mental Status; Special Services, Treatments, and 
Interventions; and Impairments. Although we believe that the proposed 
standardized patient assessment data elements would promote 
transparency around quality of care and price as we continue to explore 
reforms to the PAC payment system, the data elements that we proposed 
for each of these categories would have imposed a new reporting burden 
on IRFs. We agree that it would be useful to evaluate further how to 
best identify the standardized patient assessment data that would 
satisfy each of these categories; would be most appropriate for our 
intended purposes including payment and measure standardization; and 
can be reported by IRFs in the least burdensome manner. As part of this 
effort, we intend to conduct a national field test that allows for 
stakeholder feedback and to consider how to maximize the time IRFs have 
to prepare for the reporting of standardized patient assessment data in 
these categories. We intend to make new proposals for the categories 
described in sections 1899B(b)(1)(B)(ii), (iii) and (v) of the Act no 
later than in the FY 2020 IRF PPS proposed rule.
    In this final rule, we are finalizing the standardized patient 
assessment data elements that we proposed to adopt for the IMPACT Act 
categories of Functional Status and Medical Conditions and Co-
Morbidities. Unlike the standardized patient assessment data that we 
are not finalizing, the standardized patient assessment data that we 
proposed for these categories are already required to calculate the 
Percent of Residents or Patients with Pressure Ulcers That Are New or 
Worsened (NQF #0678) quality measure, the Changes in Skin Integrity 
Post-Acute Care: Pressure Ulcer/Injury quality measure (which we are 
finalizing in this final rule), and the Application of Percent of Long-
Term Care Hospital Patients with an Admission and Discharge Functional 
Assessment and a Care Plan That Addresses Function (NQF #2631) measure 
(which we finalized in the FY 2016 IRF PPS final rule). As a result, we 
do not believe that finalizing these proposals creates a new reporting 
burden for IRFs or otherwise necessitates a delay.
    Comment: Several commenters expressed support for the adoption of 
standardized patient assessment data elements. Several commenters 
expressed support for standardizing the definitions as well as the 
implementation of the data collection effort. Several commenters also 
supported CMS' goal of standardizing the questions and responses across 
all PAC settings to help ``enable the data to be interoperable, 
allowing it to be shared electronically, or otherwise between PAC 
provider types.'' Several commenters stated that streamlining 
requirements across Medicare's quality reporting programs will reduce 
the administrative burden of quality reporting for these facilities as 
well as the physicians and other clinicians who contribute to that 
reporting. Another commenter noted full support of the IMPACT Act's 
goals and objectives and appreciated CMS' efforts to regularly 
communicate with stakeholders through various national provider calls, 
convening of stakeholders, and meetings with individual organizations. 
Another commenter recognized the value of and need for a unified 
patient assessment system for PAC as part of a potential unified 
payment system for PAC.
    Response: We appreciate the support of these proposals, but note 
that for the reasons previously explained, we have decided at this time 
to not finalize the proposals for three of the five categories under 
section 1899B(b)(1)(B) of the Act: Cognitive Function and Mental 
Status; Special Services, Treatments, and Interventions; and 
Impairments.
    Comment: Several commenters stated that there is insufficient 
evidence demonstrating the reliability and validity of the proposed 
standardized patient assessment data elements. Some commenters stated 
that the expanded standardized patient assessment data reporting 
requirements have not yet been adequately tested to ensure they collect 
accurate and useful data in this setting. A few commenters stated that 
only five of the proposed 23 standardized patient assessment data 
elements are currently reported in the IRF-PAI and the other 18 are 
currently used in other post-acute setting patient assessment 
instruments, mainly the Minimum Data Set (MDS) 3.0 used in skilled 
nursing facilities (SNFs). Other commenters stated that CMS' conclusion 
that the collection of these standardized patient assessment data 
elements in the IRF setting would be feasible and the standardized 
patient assessment data elements would result in valid and reliable 
data was based on the current use of these data elements in the MDS and 
the testing of these data elements in the PAC PRD. A few commenters 
stated that several of the proposed standardized patient assessment 
data elements that had not been adequately tested were deemed close 
enough to an item that had been tested in the PAC PRD or in other PAC 
settings and thus appropriate for implementation.
    Response: Our standardized patient assessment data elements were 
selected based on a rigorous multi-stage process described in the FY 
2018 IRF PPS Proposed Rule (82 FR 20716 through 20717). In addition, we 
believe that the PAC PRD testing of many of these data elements 
provides good evidence from a large, national sample of patients and 
residents in PAC settings to support the use of these standardized 
patient assessment data elements in and across PAC settings. However, 
as previously explained, we have decided at this time to not finalize 
the proposals for three of the five categories under section 
1899B(b)(1)(B) of the Act: Cognitive Function and Mental Status; 
Special Services, Treatments, and Interventions; and Impairments. Prior 
to making new proposals for these categories, we intend to conduct 
extensive testing to ensure that the standardized patient assessment 
data elements we select are reliable, valid and appropriate for their 
intended use.
    Comment: MedPAC suggested that CMS should be mindful that some data 
elements, when used for risk-adjustment, may be susceptible to provider 
manipulation. MedPAC is concerned about the proposed elements such as 
oxygen therapy, intravenous medications, and nutritional approaches 
that may induce service use. MedPAC supports the inclusion of these 
care items when they are tied to a medical

[[Page 36289]]

necessity, such as in previous MedPAC work, where patients were counted 
as using oxygen services only if they have diagnoses that typically 
require the use of oxygen. MedPAC encouraged CMS to take a similar 
approach in measuring use of services that are especially 
discretionary. For some data elements, the commenters suggested that 
CMS may want to consider requiring a physician signature to attest that 
the reported service was reasonable and necessary and including a 
statement adjacent to the signature line warning that filling a false 
claim is subject to treble damages under the False Claims Act.
    Response: We acknowledge the feedback from MedPAC, and agree with 
the importance of data integrity within patient assessment instruments. 
We will explore the suggestions made by MedPAC.
    A full discussion of the standardized patient assessment data 
elements that we proposed to adopt for the categories described in 
sections 1899B(b)(1)(B)(ii), (iii) and (v) of the Act can be found in 
the FY 2018 IRF PPS proposed rule (82 FR 20723 through 20739). In light 
of our decision to not finalize our proposals with respect to these 
categories, we are not going to address in this final rule the specific 
technical comments that we received on these proposed standardized 
patient assessment data elements. However, we appreciate the many 
technical comments we did receive specific to each of these data 
elements, and we will take them into consideration as we develop new 
proposals for these categories. Below we discuss the comments we 
received specific to the standardized patient assessment data we 
proposed to adopt, and are finalizing in this final rule, for the 
categories of Functional Status and Medical Conditions and Co-
Morbidities.
a. Standardized Patient Assessment Data by Category
(1) Functional Status Data
    We proposed that the data elements currently reported by IRFs to 
calculate the proposed measure, Application of Percent of Long-Term 
Care Hospital Patients with an Admission and Discharge Functional 
Assessment and a Care Plan That Addresses Function (NQF #2631), would 
also meet the definition of standardized patient assessment data for 
functional status under section 1899B(b)(1)(B)(i) of the Act, and that 
the successful reporting of that data under section 1886(j)(7)(F)(i) of 
the Act would also satisfy the requirement to report standardized 
patient assessment data under section 1886(j)(7)(F)(ii) of the Act.
    These patient assessment data for functional status are from the 
CARE Item Set. The development of the CARE Item Set and a description 
and rationale for each item is described in a report entitled ``The 
Development and Testing of the Continuity Assessment Record and 
Evaluation (CARE) Item Set: Final Report on the Development of the CARE 
Item Set: Volume 1 of 3.'' \34\ Reliability and validity testing were 
conducted as part of CMS' Post-Acute Care Payment Reform Demonstration, 
and we concluded that the functional status items have acceptable 
reliability and validity. A description of the testing methodology and 
results are available in several reports, including the report entitled 
``The Development and Testing of the Continuity Assessment Record And 
Evaluation (CARE) Item Set: Final Report On Reliability Testing: Volume 
2 of 3'' \35\ and the report entitled ``The Development and Testing of 
The Continuity Assessment Record And Evaluation (CARE) Item Set: Final 
Report on Care Item Set and Current Assessment Comparisons: Volume 3 of 
3.'' \36\ The reports are available on CMS' Post-Acute Care Quality 
Initiatives Web page at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/CARE-Item-Set-and-B-CARE.html.
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    \34\ Barbara Gage et al., ``The Development and Testing of the 
Continuity Assessment Record and Evaluation (CARE) Item Set: Final 
Report on the Development of the CARE Item Set'' (RTI International, 
2012).
    \35\ Ibid.
    \36\ Ibid.
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    For more information about this quality measure, we refer readers 
to the FY 2016 IRF PPS final rule (80 FR 47100 through 47111). We 
invited public comment on this proposal.
    We received several comments on this proposal, which are summarized 
below.
    Comment: Several commenters, including MedPAC, supported the 
collection of standardized patient assessment data across PAC settings. 
Some commenters specifically addressed support for CMS's proposal that 
data elements submitted to CMS to calculate the measure, Application of 
Percent of Long-Term Care Hospital Patients with an Admission and 
Discharge Functional Assessment and a Care Plan that Addresses Function 
(NQF #2631), would also satisfy the requirement to report standardized 
patient assessment data under section 1899B(b)(1)(B)(i) of the Act 
addressing functional status, such as mobility and self-care at 
admission to a PAC provider and before discharge from a PAC provider.
    Response: We appreciate the commenters' support.
    Comment: One commenter did not support the proposed standardized 
patient assessment data elements for functional status, stating that 
the items were burdensome for providers, do not relate to all patients, 
are often too granular, and are duplicative of existing items related 
to functional status. Some commenters noted that the proposed 
standardized functional assessment data are used to calculate the 
cross-setting process measure, Application of Percent of Long-Term Care 
Hospital Patients with an Admission and Discharge Functional Assessment 
and a Care Plan That Addresses Function (NQF #2631), and recommended 
that CMS consider proposing data elements from outcomes-based 
functional status quality measures in PAC settings in the future. 
Another commenter noted that the proposed standardized data are not 
intended to capture all significant impacts of IRF interventions and 
encouraged CMS to consider instrumental activities of daily living as a 
measurement construct in the future, because instrumental activities of 
daily living performance is critical to maintain safety and avoid 
readmissions.
    Response: We appreciate the commenters' concerns about the 
duplication of the functional data elements, relevance to the IRF 
population, and value of cross-setting application in post-acute 
settings. With regard to burden, we would like to clarify that the 
proposal to use data elements from the quality measure Application of 
Percent of Long-Term Care Hospital Patients with an Admission and 
Discharge Functional Assessment and a Care Plan that Addresses Function 
(NQF #2631) means that no new data elements will be added to the IRF-
PAI to satisfy the requirement to report standardized patient 
assessment data under section 1899B(b)(1)(B)(i) of the Act addressing 
functional status. Therefore, this proposal does not add burden as the 
proposed data elements are currently reported on the IRF-PAI. We note 
that the three self-care items and nine mobility items are daily 
activities that are relevant for the majority of patients, and that 
gateway questions allow IRFs to skip walking items for patients who do 
not walk and to skip wheelchair items if the person does not mobilize 
using a wheelchair. For more information about this previously 
finalized quality measure, we refer readers to the FY 2016 IRF PPS 
final rule (80 FR47100 through 47111).

[[Page 36290]]

    We appreciate the suggestions for future enhancements, such as 
including data elements related to instrumental activities of daily 
living and outcome-based measures on the IRF-PAI, and will take this 
suggestion into consideration.
    Comment: One commenter cautioned CMS that collection of functional 
status data across PAC settings may be affected by the education level 
and professional expertise of the individual completing the assessment. 
Two commenters recommended revisions to section GG of the IRF-PAI 
training manual with one requesting clarification guidance about coding 
09, Not Applicable and two commenters requesting clarification about 
coding 10, Activity not attempted due to environmental limitations. 
Another commenter requested clarification on the use of the ``Activity 
was not attempted'' codes on the IRF-PAI when setting goals. The 
commenter believed that use of the codes 07, Patient refused, 09, Not 
applicable, 10, Not attempted due to environmental limitations and 88, 
Not attempted due to medical or safety concerns for setting goals is 
inconsistent with IRF practices and clinical guidelines. Additionally, 
one commenter noted that the proposed changes to the existing 
standardized patient assessment data elements will be costly for 
providers as they retrain staff and modify items in documentation 
systems, both electronic and paper. The commenters suggested that these 
changes be submitted for review by the NQF.
    One commenter requested clarification about the coding of self-care 
and mobility goals questioning if all goals are expected to be 
completed as part of the use of the data elements from the measure 
Application of Percent of Long-Term Care Hospital Patients with an 
Admission and Discharge Functional Assessment and a Care Plan that 
Addresses Function (NQF #2631).
    Response: We appreciate the commenters' concerns related to the 
collection of standardized patient assessment data. We agree with the 
importance of comprehensive training for all PAC settings. We provide 
training materials through the CMS webinars, open door forums, and help 
desk support. We update training manuals based on feedback from 
providers, including help desk questions and public comments. We 
welcome ongoing input from stakeholders on key implementation and 
training considerations, which can be submitted via email at 
[email protected].
    The standardized patient assessment data element proposal proposed 
the use of data elements that are also used to calculate the adopted 
function process quality measure, Application of Percent of Long-Term 
Care Hospital Patients with an Admission and Discharge Functional 
Assessment and a Care Plan that Addresses Function (NQF #2631). This 
quality measure collects on the admission and discharge performance 
self-care and mobility items and requires only one goal to be reported 
for each IRF patient stay. Therefore, at least one goal is expected to 
be completed as part of the data elements for this adopted quality 
measure. For more information about this quality measure we refer the 
reader to our Quality Measure User's Manual, available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/IRF-Quality-Reporting-Program-Measures-Information-.html. We would like to clarify that our proposal 
to adopt the standardized patient assessment data elements for 
functional status includes the admission and discharge performance data 
elements; it does not include the discharge goal data elements. We note 
that at least one self-care or mobility goal is required for the 
quality measure, as described above.
    With regard to NQF review, we follow the NQF process of annual 
maintenance and endorsement maintenance for NQF-endorsed measures, 
including updating measure specifications each year to address any 
changes to the measure.
    Final Decision: After consideration of the public comments we 
received, we are finalizing that the data elements currently reported 
by IRFs to calculate the measure, Application of Percent of Long-Term 
Care Hospital Patients with an Admission and Discharge Functional 
Assessment and a Care Plan That Addresses Function (NQF #2631), also 
meet the definition of standardized patient assessment data for 
functional status under section 1899B(b)(1)(B)(i) of the Act, and that 
the successful reporting of that data under section 1886(j)(7)(F)(i) of 
the Act will also satisfy the requirement to report standardized 
patient assessment data under section 1886(j)(7)(F)(ii) of the Act.
(2) Medical Condition and Comorbidity Data
    We proposed that the data elements needed to calculate the current 
measure, Percent of Residents or Patients with Pressure Ulcers That Are 
New or Worsened (Short Stay) (NQF #0678), and the proposed measure, 
Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury, meet 
the definition of standardized patient assessment data for medical 
conditions and co-morbidities under section 1899B(b)(1)(B)(iv) of the 
Act, and that the successful reporting of that data under section 
1886(j)(7)(F)(i) of the Act would also satisfy the requirement to 
report standardized patient assessment data under section 
1886(j)(7)(F)(ii) of the Act.
    ``Medical conditions and comorbidities'' and the conditions 
addressed in the standardized patient assessment data elements used in 
the calculation and risk adjustment of these measures, that is, the 
presence of pressure ulcers, diabetes, incontinence, peripheral 
vascular disease or peripheral arterial disease, mobility, as well as 
low body mass index, are all health-related conditions that indicate 
medical complexity that can be indicative of underlying disease 
severity and other comorbidities.
    Specifically, the data elements used in the measure are important 
for care planning and provide information pertaining to medical 
complexity. Pressure ulcers are serious wounds representing poor 
healthcare outcomes, and can result in sepsis and death. Assessing skin 
condition, care planning for pressure ulcer prevention and healing, and 
informing providers about their presence in patient transitions of care 
is a customary and best practice. Venous and arterial disease and 
diabetes are associated with low blood flow which may increase the risk 
of tissue damage. These diseases are indicators of factors that may 
place individuals at risk for pressure ulcer development and are 
therefore important for care planning. Low BMI, which may be an 
indicator of underlying disease severity, may be associated with loss 
of fat and muscle, resulting in potential risk for pressure ulcers. 
Bowel incontinence, and the possible maceration to the skin associated, 
can lead to higher risk for pressure ulcers. In addition, the bacteria 
associated with bowel incontinence can complicate current wounds and 
cause local infection. Mobility is an indicator of impairment or 
reduction in mobility and movement which is a major risk factor for the 
development of pressure ulcers. Taken separately and together, these 
data elements are important for care planning, transitions in services 
and identifying medical complexities.
    In sections XII.G.1 and XII.J.1 of this final rule, we discuss our 
rationale for proposing that the data elements used in the measures 
meet the definition of standardized patient assessment data. In 
summary, we believe that the collection of such assessment data is 
important for multiple reasons, including clinical decision support, 
care planning, and quality improvement, and that the data elements 
assessing pressure ulcers and

[[Page 36291]]

the data elements used to risk adjust showed good reliability. We 
solicited stakeholder feedback on the quality measure, and the data 
elements from which it is derived, by means of a public comment period 
and TEPs, as described in section XII.G.1 of this final rule. We 
received several comments on our proposal, which are summarized below.
    Comment: We received support for the reporting of data elements 
already implemented in the IRF QRP to satisfy the requirement to report 
standardized patient assessment data. One commenter recommended the 
collection of additional data elements under the category of Medical 
conditions and co-morbidities.
    Response: We appreciate the comments in support of the proposal, 
and agree that these data elements currently reported by IRFs meet the 
definition of standardized patient assessment data and satisfy the 
requirement to report standardized patient assessment data. In our 
ongoing work to identify clinically useful data elements appropriate 
for standardization, we are evaluating and testing additional data 
elements in the category of Medical Conditions and Co-morbidities that 
may address some of the commenter's concerns.
    Final decision: After consideration of the public comments we 
received, we are finalizing that the data elements currently reported 
by IRFs to calculate the current measure, Percent of Residents or 
Patients with Pressure Ulcers That Are New or Worsened (Short Stay) 
(NQF #0678), and the proposed measure, Changes in Skin Integrity Post-
Acute Care: Pressure Ulcer/Injury, meet the definition of standardized 
patient assessment data for medical conditions and co-morbidities under 
section 1899B(b)(1)(B)(iv) of the Act, and that the successful 
reporting of that data under section 1886(j)(7)(F)(i) of the Act will 
also satisfy the requirement to report standardized patient assessment 
data under section 1886(j)(7)(F)(ii) of the Act.
    For comments related to the pressure ulcer quality measure, we 
refer readers to section XII.G.1. of this final rule.

K. Form, Manner, and Timing of Data Submission Under the IRF QRP

1. Start Date for Standardized Patient Assessment Data Reporting by New 
IRFs
    In the IRF PPS FY 2016 final rule (80 FR 47123 through 47124), we 
adopted timing for new IRFs to begin reporting quality data under the 
IRF QRP beginning with the FY 2017 IRF QRP. We proposed that the new 
IRFs will be required to begin reporting standardized patient 
assessment data on the same schedule.
    We did not receive any comments about the timing for new IRFs to 
begin reporting standardized patient assessment data.
    Final decision: We are finalizing our proposal that new IRFs will 
begin reporting standardized patient assessment data on the same 
schedule as the one established for quality data under the IRF QRP.
2. Mechanism for Reporting Standardized Patient Assessment Data 
Beginning With the FY 2019 IRF QRP
    Under our current policy, IRFs report data by completing applicable 
sections of the IRF-PAI, and submitting the IRF-PAI to CMS through the 
QIES, ASAP system. For more information on IRF QRP reporting through 
the QIES ASAP system, refer to the ``Related Links'' section at the 
bottom of https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Software.html. We proposed that the 
standardized patient assessment data elements would utilize the same 
mechanism, since they are either already included on, or would be added 
to, the IRF-PAI. Details regarding the IRF-PAI to the proposed 
standardized assessment data are available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/IRF-PAI-and-IRF-QRP-Manual.html.
    We did not receive any public comments on this proposal.
    Final decision: We are finalizing our proposal that IRFs must 
report standardized patient assessment data by completing applicable 
sections of the IRF-PAI, and submitting the IRF-PAI to CMS through the 
QIES ASAP system.
3. Schedule for Reporting Standardized Patient Assessment Data 
Beginning With the FY 2019 IRF QRP
    Starting with the FY 2019 IRF QRP, we proposed to apply our current 
schedule for the reporting of measure data to the reporting of 
standardized patient assessment data. Under that policy, except for the 
first program year for which a measure is adopted, IRFs must report 
data on measures for IRF Medicare patients who are discharged during 
the 12-month calendar year (CY) period that apply to the program year. 
For the first program year for which a measure is adopted, IRFs are 
only required to report data on IRF Medicare patients who are 
discharged on or after October 1 of the last quarter of the calendar 
year that applies to that program year. For example, for the FY 2018 
IRF QRP, data on measures adopted for earlier program years must be 
reported for all IRF Medicare patients who are discharged during CY 
2016. However, data on new measures adopted for the first time for the 
FY 2018 IRF QRP must only be reported for IRF Medicare patients who are 
discharged during the last calendar year quarter of 2016.
    Tables 9 and 10 illustrate this policy using the FY 2019 and FY 
2020 IRF QRP as examples.

   Table 9--Summary Illustration of Initial Reporting Cycle for Newly
Adopted Measure and Standardized Patient Assessment Data Reporting Using
                         CY Q4 Data *[supcaret]
------------------------------------------------------------------------
                                             Proposed data submission
  Proposed data collection/submission          quarterly  deadlines
      quarterly reporting period *       *[supcaret] for the FY 2019 IRF
                                                     QRP * *
------------------------------------------------------------------------
Q4: CY 2017 10/1/2017-12/31/2017.......  CY 2017 Q4 Deadline: May 15,
                                          2018.
------------------------------------------------------------------------
* We note that the submission of IRF-PAI data must also adhere to the
  IRF PPS deadlines.
* * The term ``FY 2019 IRF QRP'' means the fiscal year for which the IRF
  QRP requirements applicable to that fiscal year must be met in order
  for an IRF to receive the full annual update when calculating the
  payment rates applicable to it for that fiscal year.
[supcaret] Applies to data reporting using the IRF PAI and data
  reporting using the National Health Safety Network.


[[Page 36292]]


   Table 10--Summary Illustration of Calendar Year Quarterly Reporting
  Cycles for Measure and Standardized Patient Assessment Data Reporting
                               *[supcaret]
------------------------------------------------------------------------
                                             Proposed data submission
  Proposed data collection/submission    quarterly deadlines *[supcaret]
      quarterly reporting period *         for the FY 2020 IRF QRP * *
------------------------------------------------------------------------
Q1: CY 2018 1/1/2018-3/31/2018.........  CY 2018 Q1 Deadline: August 15,
                                          2018.
Q2: CY 2018 4/1/2018-6/30/2018.........  CY 2018 Q2 Deadline: November
                                          15, 2018.
Q3: CY 2018 7/1/2018-9/30/2018.........  CY 2018 Q3 Deadline: February
                                          15, 2019.
Q4: CY 2018 10/1/2018-12/31/2018.......  CY 2018 Q4 Deadline: May 15,
                                          2019.
------------------------------------------------------------------------
* We note that the submission of IRF-PAI data must also adhere to the
  IRF PPS deadlines.
* * The term ``FY 2020 IRF QRP'' means the fiscal year for which the IRF
  QRP requirements applicable to that fiscal year must be met in order
  for an IRF to receive the full annual update when calculating the
  payment rates applicable to it for that fiscal year.
[supcaret] Applies to data reporting using the IRF PAI and data
  reporting using the National Health Safety Network.

    We proposed to extend our current policy governing the schedule for 
reporting quality measure data to the reporting of standardized patient 
assessment data beginning with the FY 2019 IRF QRP. We sought public 
comment on our proposal.
    We did not receive any public comments on this proposal.
    Final decision: We are finalizing our proposal to extend our 
current policy governing the schedule for reporting quality measure 
data to the reporting of standardized patient assessment data beginning 
with the FY 2019 IRF QRP.
4. Schedule for Reporting the Changes in Skin Integrity Post-Acute 
Care: Pressure Ulcer/Injury Measure Beginning With the FY 2020 IRF QRP
    As discussed in section XIII.G. of this final rule, we are adopting 
the Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury 
measure beginning with the FY 2020 IRF QRP. In the FY 2018 IRF PPS 
proposed rule (82 FR 20740), we proposed that IRFs would report data on 
that measure using the IRF-PAI that is submitted through the QIES ASAP 
system. IRFs would be required to report these data on admission and 
discharge for all Medicare Part A and MA patients discharged between 
October 1, 2018 and December 31, 2018. More information on IRF 
reporting using the QIES ASAP system is located at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/Technical-Information.html.
    Under our current policy, IRFs would only be required to submit 
data on the proposed measure for the fourth quarter of CY 2018 for 
purposes of the FY 2020 IRF QRP. Starting in CY 2019, IRFs would be 
required to submit data for the entire calendar year beginning with the 
FY 2021 IRF QRP.
    We did not receive any public comments on this proposal.
    Final decision: We are finalizing our proposal to require IRFs to 
report data on the Changes in Skin Integrity Post-Acute Care: Pressure 
Ulcer/Injury measure using the IRF-PAI that is submitted through the 
QIES ASAP system beginning with the FY 2020 IRF QRP.
5. Input Sought for Data Reporting Related to Assessment Based Measures
    Through various means of public input, including that through 
previous rules, public comment on measures and the Measures Application 
Partnership, we received input suggesting that we expand the quality 
measures to include all patients regardless of payer status so as to 
ensure representation of the quality of the services provided on the 
population as a whole, rather than a subset limited to Medicare. For 
IRFs, the Medicare population comprises approximately 60 percent of the 
IRF population served. We agree that collecting quality data on all 
patients in the IRF setting supports CMS' mission to ensure quality 
care for all individuals, including Medicare beneficiaries. We also 
appreciate that collecting quality data on all patients regardless of 
payer source may create additional burden. However, we also note that 
the effort to separate out Medicare beneficiaries from other patients 
has clinical and work flow implications with an associated burden, and 
we further appreciate that it is common practice for IRFs to collect 
IRF- PAI data on all patients, regardless of payer source. Accurate 
representation of quality provided in IRFs is best conveyed using data 
on all IRF patients, regardless of payer. Thus, we sought, and continue 
to seek, input on whether we should require quality data reporting on 
all IRF patients, regardless of payer, where feasible--noting that Part 
A claims data are limited to only Medicare beneficiaries.
    We received several comments about the request for input on data 
reporting related to the IRF QRP, which are summarized below.
    Comment: Several commenters supported expanding the IRF QRP to 
include all patients regardless of payer. MedPAC was supportive of the 
effort to ensure quality care for all patients, but sensitive to the 
issue of burden, and cautioned CMS that any future payment adjustments 
related to performance should be based only on Medicare beneficiary 
outcomes. However, many commenters noted that this would not be overly 
burdensome, as most of their organizations' members currently complete 
the IRF-PAI on all patients, regardless of payer status. One commenter 
recommended that CMS continue to align the patient assessment 
instruments across PAC settings to apply quality measures and patient 
assessment data to a uniform Medicare population at a minimum, and 
account for payer status in public reporting. One commenter questioned 
how CMS would use data collected from other payers, and whether the use 
of the data would outweigh any additional reporting burden. One 
commenter supported collecting the IRF-PAI on all patients, with the 
concern that collecting on only a subset of patients could be 
interpreted as providing different levels of care based on payer.
    Response: We appreciate the feedback received on this topic and 
agree that it is import to ensure quality of care for all patients 
while accounting for burden. We will take into consideration the 
commenters' concerns, questions, and recommendations as we further 
assess expanding the IRF QRP to include all patients regardless of 
payer.

L. Application of the IRF QRP Submission Requirements and Payment 
Impact to the Standardized Patient Assessment Data Beginning With the 
FY 2019 IRF QRP

    We proposed to revise Sec.  412.634(b) to require IRFs to report 
both data on measures and standardized patient assessment data under 
the IRF QRP, in a form and manner, and at a time specified by CMS.
    We did not receive any comments on this proposal.
    Final decision: We are finalizing our proposal and revising Sec.  
412.634(b) to

[[Page 36293]]

require IRFs to report both data on measures and standardized patient 
assessment data under the IRF QRP, in a form and manner, and at a time 
specified by CMS.

M. Application of the IRF QRP Exception and Extension Requirements to 
the Submission of Standardized Patient Assessment Data Beginning With 
the FY 2019 IRF QRP

    In the FY 2017 IRF PPS final rule (81 FR 52124), we codified the 
requirements pertaining to data submission exception and extension for 
the IRF QRP at Sec.  412.634(c). We proposed to revise Sec.  412.634(c) 
to extend these policies to the submission of standardized patient 
assessment data beginning with the FY 2019 IRF QRP.
    We received one comment about this proposal, which is summarized 
below.
    Comment: A commenter supported applying the existing exception and 
extension policies for IRF QRP to the reporting of standardized patient 
assessment data.
    Response: We appreciate the commenter's support.
    Final decision: We are finalizing our proposal and revising Sec.  
412.634(c) to apply the existing exception and extension policies for 
the IRF QRP to the submission of standardized patient assessment data 
beginning with the FY 2019 IRF QRP.

N. Application of the IRF QRP Data Completion Thresholds to the 
Submission of Standardized Patient Assessment Data Beginning With the 
FY 2019 IRF QRP

    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 IRF QRP, IRFs must meet or exceed two separate data completeness 
thresholds: One threshold set at 95 percent for completion of measures 
data collected using the IRF-PAI submitted through the QIES and a 
second threshold set at 100 percent for measures data collected and 
submitted using the Centers for Disease Control and Prevention (CDC) 
National Healthcare Safety Network (NHSN). The term ``measures'' refers 
to quality measures, resource use, and other measures.
    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). In the FY 2017 IRF PPS final rule, (81 FR 52124), 
we codified the IRF QRP Data Completion Thresholds at Sec.  412.634. We 
noted that Sec.  412.634(f)(1) requires that IRFs meet or exceed the 
reporting threshold set at 95 percent for completion of measure data 
collected using the IRF-PAI. However, some assessment data will not 
invoke a response and in those circumstances are not ``missing'' nor is 
the data incomplete. For example, in the case of a patient who does not 
have any of the medical conditions in a check-all-that-apply listing, 
the absence of a response indicates that the condition is not present, 
and it would be incorrect to consider the absence of such data as 
missing in a threshold determination. In the FY 2018 IRF PPS proposed 
rule (82 FR 20740), we proposed to extend our current IRF QRP data 
completion requirements to the reporting of standardized patient 
assessment data.
    We also proposed to revise Sec.  412.634(f)(1) and (2) to include 
the submission of standardized patient assessment data that is 
collected using the IRF-PAI.
    As we noted in the FY 2015 IRF PPS final rule (79 FR 45921 through 
45923), the threshold of 95 percent is based on the need for complete 
records, which allows appropriate analysis of measure data for the 
purposes of updating measure specifications as they undergo measure 
maintenance reviews with the NQF. Additionally, complete data is needed 
to understand the validity and reliability of data items, including 
risk-adjustment models. Our data suggests that the majority of current 
IRF providers are in compliance with or exceed this threshold related 
to the measure data, and we believe it is feasible for the standardized 
patient assessment data as well.
    We invited public comment on our proposal to revise Sec.  
412.634(f)(1) and (2) to add standardized patient assessment data for 
the 95 percent completeness threshold for data collected via IRF-PAI. 
We received several comments, which are summarized below.
    Comment: Several commenters opposed the proposal to apply the 95 
percent data completion requirement for IRF quality measures to the 
standardized patient assessment data, suggesting that the IRF QRP 
requirements are higher than other PAC settings. Many commenters noted 
that CMS has proposed an 80 percent completion threshold for 
standardized patient assessment data in the LTCH and SNF QRPs, and 
recommended that CMS avoid perpetuating discrepant standards across PAC 
settings. Commenters recommended that CMS adopt an 80 percent threshold 
for standardized patient assessment data, in line with other PAC QRPs. 
A commenter believed that IRF thresholds were historically higher than 
the SNF thresholds because of the relative length of the assessment 
instruments in the settings, but noted that the IRF-PAI has increased 
by several pages in the past three rulemaking cycles, making it similar 
in length to the SNF MDS instrument. Commenters recommended that CMS 
work with stakeholders to develop a more appropriate threshold, 
consistent with the requirements for other PAC QRPs.
    One commenter suggested that the IRF QRP completion threshold 
should be lower in the first reporting year for which new items are 
required. One commenter suggested a grace period for the first three 
months of data collection on new measures to account for when IRFs are 
still training staff and adapting to new requirements. Alternatively, 
another commenter suggested that penalties for data completion 
threshold should be based on at least 12 months of data. One commenter 
stated that the availability of a ``dash'' response option on the IRF-
PAI without sufficient guidance increases the risk that an IRF will 
fall short of the threshold. These commenters suggested that the dash 
counts against the completion threshold, raising concern that the rapid 
increase in items for which dashes are an available response option is 
unnecessarily increasing the risk that an IRF will fall short of the 95 
percent threshold.
    Response: While we maintain that providers should be submitting 
complete and accurate data, and that our data compliance checks suggest 
that the majority of current IRF providers are in compliance with, or 
exceed, the 95 percent data completion threshold for the assessment-
based quality measure data, we also appreciate the concerns the 
commenters have expressed regarding the inconsistent reporting 
threshold for IRFs in comparison with other post-acute care quality 
reporting programs, the concerns expressed about the increased 
assessment data reporting required on the additional measures (and the 
proposed standardized patient assessment data elements) that have been 
implemented into the IRF QRP as the program has evolved, and the 
increased potential of falling short of achieving the threshold because 
the reporting requirements have increased. We also appreciate the 
concerns pertaining to an increase in assessment data elements are 
compounded because many response options include the use of a dash. 
However this assessment response option was intentional so as to enable 
the assessor to indicate if they

[[Page 36294]]

did not assess or know the status of the information at the time of the 
assessment rather than forcing a response.
    We appreciate the suggestion regarding CMS working with 
stakeholders to consider additional approaches related to threshold 
determinations, and further appreciate the suggestions related to a 
grace period in the first quarter of data reporting on new data 
submission, and only assessing on a year of data submission, or 
lowering the threshold in the first year of reporting. Although IRFs 
have largely been successful in their data reporting and achieving the 
threshold, we also appreciate the confusion that may exist with two 
thresholds. We also appreciate the importance of consistency across 
programs and agree that the IRF QRP has evolved to include additional 
measures and data reporting. Taken together, we believe that while we 
would agree that working with stakeholders on new approaches to fair 
and consistent thresholds would be informative and useful, we also 
believe that our current policy, as commented on, requires revision due 
to the growth of the program. We are also mindful of the burden placed 
on providers in tracking threshold compliance. Therefore, while we 
anticipate continued levels of reporting success, we appreciate the 
concerns raised that the completion of at least 95 percent of all 
required assessments and will take these concerns under considerations 
for future rulemaking.
    Regarding the suggestion that we not consider the initial quarter 
of data reporting by IRFs on new data that is required, we have 
analyzed the first quarter of data reporting on new measures submitted 
by IRFs and found that most IRFs were successful in their data 
submission and therefore do not believe that the first quarter of 
reporting should be waived at this time. While we appreciate that the 
suggestion regarding lowering the threshold for the first year of data 
reporting will address the concerns provided by commenters, we believe 
that addressing the concerns by reducing the overall threshold to a 
level that is consistent with the other programs, and maintained until 
we are able to further evaluate the data, would resolve the immediate 
concerns regarding our current policy pertaining to the fairness given 
the amount of data elements that must be coded 100 percent of the time 
on at least 95 percent of all assessments, which will likely expand as 
the program expands, as described. We believe that we should take such 
input into consideration. We are also sensitive to the level of 
tracking that would be necessary by IRFs and the potential this could 
have for increasing administrative burden and that such activities 
might detract from direct care services.
    Final Decision: We are finalizing our policy to revise Sec.  
412.634(f)(1) and (2) to apply the IRF QRP data completion thresholds 
to the submission of standardized patient assessment data beginning 
with the FY 2019 IRF QRP.

O. Policies Regarding Public Display of Measure Data for the IRF QRP

    Section 1886(j)(7)(E) of the Act requires the Secretary to 
establish procedures for making the IRF QRP data available to the 
public after ensuring that an IRF has the opportunity to review its 
data prior to public display. Measure data is currently displayed on 
the Inpatient Rehabilitation Facility Compare Web site, which is an 
interactive web tool that assists individuals by providing information 
on IRF quality of care, including those who need to select an IRF. For 
more information on IRF Compare, we refer readers to https://www.medicare.gov/inpatientrehabilitationfacilitycompare/. Additionally, 
for a more detailed discussion about the provider's confidential review 
process prior to public display of quality measures, we refer readers 
to the FY 2017 IRF PPS final rule (81 FR 52128 through 52131).
    We also finalized the process we use to publish a list of IRFs that 
successfully meet the reporting requirements for the applicable IRF QRP 
year on the IRF QRP Web site in the FY 2017 IRF PPS final rule (81 FR 
52125). The list of compliant IRFs is available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/IRF-Quality-Reporting-Data-Submission-Deadlines.html.
    In the FY 2017 IRF PPS final rule (81 FR 52055 through 52141), we 
finalized the public display of measure data on the IRF Compare Web 
site in CY 2017 for the following four quality measures pending the 
availability of data: (1) NHSN Facility-wide Inpatient Hospital-onset 
MRSA Bacteremia Outcome Measure (NQF #1716); (2) NHSN Facility-wide 
Inpatient Hospital-onset CDI Outcome Measure (NQF #1717); (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).
    In the FY 2017 IRF PPS final rule (81 FR 52126), we stated that 
``pending the availability of data'', the public display of NHSN 
Facility-wide Inpatient Hospital-onset MRSA Bacteremia Outcome Measure 
(NQF #1716) and NHSN Facility-wide Inpatient Hospital-onset CDI Outcome 
Measure (NQF #1717) would initially be based on data collected from 
January 1, 2015, through December 31, 2015 and will be displayed based 
on four rolling quarters. We would like to clarify that the initial 
public display of data for these two quality measures (MRSA and CDI) 
will be based on data collected from January 1, 2016 through December 
31, 2016 (CY 2016), as the CY 2015 data is not available for display 
using the Standardized Infection Ratio (SIR) metric, but rather this 
data (CY 2015) was used by the CDC to calculate the ``predicted'' 
number of infections (the number of infections that would be expected 
to occur based on previously reported data) for each IRF, so that 
subsequent data could be used to calculate the SIR for each of these 
quality measures.
    The SIR is a summary statistic that compares the ``predicted'' 
number of infections to the ``observed'' or actual number of infections 
for a given IRF. This process or ``rebaselining'' of data occurs 
periodically when the CDC determines that referent period of data or 
``baseline'' is no longer meaningful due to changes in the quality 
measure protocols or changes in provider populations. When the CDC uses 
a specific year's data to inform newly calculated ``predicted'' number 
of infections, we are unable to use that specific year of data to 
calculate the SIR, and for this reason, we are unable to display the 
MRSA and CDI performance data using the CY 2015 IRF NHSN data, and will 
use the CY 2016 data to inform the SIR calculations when we publicly 
display the SIRs for these measures in fall 2017. The Influenza 
Vaccination Coverage Among Healthcare Personnel (NQF #0431) and Percent 
of Residents or Patients Who Were Assessed and Appropriately Given the 
Seasonal Influenza Vaccine (NQF #0680) will be based on the influenza 
vaccination season from October 1, 2015, through March 31, 2016 and 
will be updated annually. We refer readers to the FY 2017 IRF PPS final 
rule (81 FR 52126 through 52128) for details on the calculations and 
display of these quality measures. In the FY 2018 IRF PPS proposed 
rule, pending the availability of data, we proposed to publicly report 
data in CY 2018 for the following two assessment-based measures: (1) 
Application of Percent of Long-Term Care Hospital (LTCH) Patients With 
an Admission and Discharge Functional Assessment and a Care Plan That

[[Page 36295]]

Addresses Function (NQF #2631); and (2) Application of Percent of 
Residents Experiencing One or More Falls with Major Injury (NQF #0674). 
Data collection for these two assessment-based measures began on 
October 1, 2016. We proposed to display data for the assessment-based 
measures based on four rolling quarters of data and would initially use 
discharges from January 1, 2017, through December 31, 2017. In 
addition, we proposed to publicly report four claims-based measures: 
(1) Medicare Spending Per Beneficiary--PAC IRF QRP; (2) Discharge to 
Community--PAC IRF QRP; (3) Potentially Preventable 30-Day Post-
Discharge Readmission Measure for IRF QRP; and (4) Potentially 
Preventable Within Stay Readmission Measure for IRFs.
    These measures were adopted for the IRF QRP in the FY 2017 IRF PPS 
final rule (81 FR 52130 through 52131) to be based on data from 2 
consecutive calendar years. As previously adopted, confidential 
feedback reports for these four claims-based measures will be based on 
calendar years 2015 and 2016 and data collected for discharges 
beginning January 1, 2015, through December 31, 2016. However, our 
current proposal revises the dates for public reporting and we proposed 
to transition from calendar year to fiscal year to make these measure 
data publicly available by October 2018. Thus, we proposed for public 
reporting beginning in CY 2018 for four claims-based measures based on 
fiscal years 2016 and 2017 and data collected from discharges beginning 
October 1, 2015, through September 30, 2017.
    We proposed to remove the following claims-based measure: ``All-
Cause Unplanned Readmission Measure for 30 Days Post Discharge from 
Inpatient Rehabilitation Facilities'' from the IRF QRP and public 
reporting by October 2018. We refer readers to section XIII.H. of this 
final rule for additional information regarding the removal of this 
measure from quality reporting and public display. We also proposed to 
remove the following assessment-based measure ``Percent of Residents or 
Patients with Pressure Ulcers That Are New or Worsened (Short Stay) 
(NQF #0678)'' and to replace it with a modified version of the measure 
entitled ``Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/
Injury'' from the IRF QRP and public reporting by October 2020. We 
refer readers to section XIII.G. of this final rule for additional 
information regarding the proposed replacement of this measure from 
quality reporting and public display.
    For the assessment-based measures, Application of Percent of LTCH 
Patients With an Admission and Discharge Functional Assessment and a 
Care Plan That Addresses Function (NQF #2631); and Application of 
Percent of Residents Experiencing One or More Falls with Major Injury 
(NQF #0674), to ensure the statistical reliability of the measures, we 
also proposed to assign IRFs with fewer than 20 eligible cases during a 
performance period to a separate category: ``The number of cases/
patient stays is too small to report.'' If an IRF had fewer than 20 
eligible cases, the IRF's performance would not be publicly reported 
for the measure for that performance period.
    For the claims-based measures, Discharge to Community--PAC IRF QRP; 
Potentially Preventable 30-Day Post-Discharge Readmission Measure for 
IRF QRP; and Potentially Preventable Within Stay Readmission Measure 
for IRFs, to ensure the statistical reliability of the measures, we 
also proposed to assign IRFs with fewer than 25 eligible cases during a 
performance period to a separate category: ``The number of cases/
patient stays is too small to report.'' If an IRF had fewer than 25 
eligible cases, the IRF's performance would not be publicly reported 
for the measure for that performance period. For Medicare Spending Per 
Beneficiary--PAC IRF QRP, to ensure the statistical reliability of the 
measure, we proposed to assign IRFs with fewer than 20 eligible cases 
during a performance period to a separate category: ``The number of 
cases/patient stays is too small to report.'' If an IRF had fewer than 
20 eligible cases, the IRF's performance would not be publicly reported 
for the measure for that performance period.

 Table 11--Previously Finalized and Measures for CY 2018 Public Display
                    and Confidential Feedback Reports
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Previously Finalized Measures:
    Percent of Residents or Patients with Pressure Ulcers That Are New
     or Worsened (Short Stay) (NQF #678).
    National Healthcare Safety Network Catheter-Associated Urinary Tract
     Infection (CAUTI) Outcome Measure (NQF #0138).
    NHSN Facility-wide Inpatient Hospital-onset Methicillin-resistant
     Staphylococcus aureus Bacteremia Outcome Measure (NQF #1716).
    NHSN Facility-wide Inpatient Hospital-onset Clostridium difficile
     Infection Outcome Measure (NQF #1717).
    Influenza Vaccination Coverage Among Healthcare Personnel (NQF
     #0431).
    Percent of Residents or Patients Who Were Assessed and Appropriately
     Given the Seasonal Influenza Vaccine (NQF #0680).
Proposed Measures:
    Application of Percent of Long-Term Care Hospital (LTCH) Patients
     With an Admission and Discharge Functional Assessment and a Care
     Plan That Addresses Function (NQF #2631).
    Application of Percent of Residents Experiencing One or More Falls
     with Major Injury (NQF #0674).
    Medicare Spending Per Beneficiary--PAC IRF QRP.
    Discharge to Community--PAC IRF QRP.
    Potentially Preventable 30-Day Post-Discharge Readmission Measure
     for IRF QRP.
    Potentially Preventable Within Stay Readmission Measure for IRFs.
------------------------------------------------------------------------

    We invited public comment on the proposal for the public display of 
the two assessment-based measures and four claims-based measures, the 
removal of the All-Cause Unplanned Readmission Measure for 30 Days Post 
Discharge from IRFs from the IRF QRP and from public display, and the 
replacement of ``Percent of Residents or Patients with Pressure Ulcers 
That Are New or Worsened (Short Stay) (NQF #0678)'' with a modified 
version of the measure entitled ``Changes in Skin Integrity Post-Acute 
Care: Pressure Ulcer/Injury'' as described above.
    We received several comments on our proposals related to public 
display, which are summarized below.
    Comment: A few commenters supported public display of quality 
measures. One commenter expressed support for publicly displaying 
measures as long as they are sufficiently risk adjusted, and 
specifically supported the following measures: Medicare Spending Per 
Beneficiary--PAC IRF QRP, Discharge to Community--PAC

[[Page 36296]]

IRF QRP, Potentially Preventable 30-Day Post-Discharge Readmission 
Measure for IRF QRP, and Potentially Preventable Within Stay 
Readmission Measure for IRFs. One commenter specifically supported 
public reporting for the Influenza Vaccination Coverage among 
Healthcare Personnel (NQF #0431) and Percent of Residents or Patients 
Who Were Assessed and Appropriately Given the Seasonal Influenza 
Vaccine (NQF #0680).
    Response: We acknowledge the support for finalized, risk adjusted 
measures that will be posted for public display, and agree that 
displaying IRF QRP data on the IRF Compare Web site is important for 
patients and families.
    Comment: Several commenters requested that CMS provide IRFs with 
patient-level feedback reports for the claims-based measures. The 
commenters expressed concern that IRFs cannot examine their performance 
and identify opportunities for modifications to their patient care 
practices and procedures to improve quality without patient-level data. 
A few of these commenters added that the claims-level data are updated 
infrequently, which also affects IRFs' ability to use the data to 
improve quality of care.
    Response: We acknowledge the commenters' request and agree that the 
reporting of patient-level feedback reports would be useful for 
providers. We are taking this recommendation into consideration and are 
actively exploring approaches to providing patient-level data for the 
claims-based measures. Regarding the timeliness of claims data for 
quality improvement, we addressed this issue in the FY 2017 IRF PPS 
final rule (81 FR 52129 through 52131), and we refer the reader to that 
detailed discussion.
    Comment: Several commenters expressed concern that measure changes 
on IRF Compare may be confusing to providers and difficult to use. One 
commenter stated that the proposed change to the pressure ulcer measure 
would fundamentally change the values reported on IRF Compare and that 
modifications to the way items are collected on the IRF-PAI will also 
influence measures that are being reported. The commenter requested 
that a clear methodology for adding, modifying, and removing measures 
be made available to providers so they are able to manage their data 
accordingly.
    Response: We acknowledge the concerns regarding updates to measures 
and underlying items, and the resulting performance results displayed 
on IRF Compare. We would like to clarify that the proposed 
modifications to the pressure ulcer measure will not result in changes 
to how the quality measure performance results are publicly displayed. 
We plan to provide IRFs with detailed instructions and outreach 
training regarding measure changes and how to obtain and interpret 
confidential feedback reports that give providers their quality measure 
information before it is posted on IRF Compare. Additionally, we will 
work to provide documentation, education, and notification to the 
public prior to any measure change that will be displayed on IRF 
Compare.
    Comment: A few commenters expressed concern that the measures 
employ different time frames for collecting data that result in 
provider performance based on different patient populations which could 
lead to misinterpretation of quality. As a result, a few commenters 
recommended delaying the public display of the IRF QRP data on IRF 
Compare until the measure reporting periods align.
    Response: We acknowledge the concern expressed from the commenters 
that the measures use different time frames for collecting data that 
result in provider performance based on different patient populations, 
which could lead to misinterpretation of quality. We align the 
reporting periods and deadlines across PAC settings where alignment of 
the reporting period for consistency is appropriate.
    Comment: One commenter recommended removal of the measure 
performance categories from IRF Compare, and requested that CMS provide 
the statistical methodologies used to calculate provider performance 
available to stakeholders. The commenter believed that this 
transparency would allow providers to analyze and replicate the IRF QRP 
data in order to validate measures on public display.
    Response: We appreciate the commenter's concerns over the 
performance categories used to publicly display the IRF QRP readmission 
measures. The methods used to construct and assign performance 
categories are based on a robust statistical approach. Further, the 
approach used for displaying these measures is consistent with those 
used for public reporting of readmission measures in other quality 
reporting programs. For the currently publicly displayed NQF-endorsed 
All-Cause Readmission measure, information regarding the consideration 
of the statistical approach used and creation of the comparative 
performance categories is detailed in the NQF submission materials 
available at http://www.qualityforum.org/ProjectTemplateDownload.aspx?SubmissionID=2502 (see section 2b of the 
IRF MSF Measure Testing document). Also, we plan to publish additional 
technical documentation regarding the methods used for categorizing 
provider performance for the claims-based measure that will be publicly 
displayed in 2018. We will continue to evaluate reporting methods for 
public display of the claims-based measures.
    Comment: The commenter expressed concern regarding CMS's current 
approach to publicly report readmissions data and stated that the 
proposed rule does not provide clear details on how this data would be 
displayed for Potentially Preventable 30-Day Post-Discharge Readmission 
Measure for IRF QRP and Potentially Preventable Within Stay Readmission 
Measure for IRFs. The commenter recommended that CMS work with 
stakeholders in the development of a meaningful approach to publicly 
report readmissions quality data. The commenter further recommended not 
using performance categories if the PPR measures are publicly reported.
    Response: We acknowledge the commenter's concerns regarding the 
public display of the readmission measures. We continue to encourage 
stakeholders to provide input regarding approaches to publicly report 
readmissions quality data through the public mailbox or through future 
technical expert panels and other opportunities. With regard to the 
commenter's recommendation not to use performance categories when the 
readmission measures are publicly reported, please refer to the 
detailed response above regarding the approach for public display for 
all claims-based measures.
    Comment: A commenter recommended not finalizing the proposal to 
publicly report the claims-based resource use measure, Medicare 
Spending Per Beneficiary-PAC IRF QRP. The commenter stated that this 
measure does not relate to quality of care in IRFs, is not an intuitive 
measure for consumers, and may be confused with other measures such as 
the Medical Loss Ratio (MLR) reported by private insurance plans. The 
commenter further stated that the measure should be available to 
researchers and others with an understanding of the measure's nuances, 
but is not ready to be made available for the public.
    Response: We appreciate the commenter's concerns and will take 
their suggestions into consideration. Section 1899B(g)(1) of the Act 
requires

[[Page 36297]]

the Secretary to provide for public reporting of provider performance 
on resource use and other measures under section 1899B(d)(1) of the Act 
which includes total estimated Medicare spending per beneficiary. 
Confidential feedback reports will be available to IRFs prior to the 
public display of this measure and measure specifications are available 
to providers, researchers, and other stakeholders on the IRF QRP Web 
site: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/IRF-Quality-Reporting-Program-Measures-Information-.html. We will also perform provider 
outreach and training. In regard to the commenter's concerns about 
public interpretation, before we display a measure on IRF Compare we 
perform consumer testing to understand if the information is meaningful 
to the consumer and if they understand the measure as we intend on 
displaying it. We also continue to receive and review public comment on 
an ongoing basis submitted by users regarding IRF Compare and take 
these into consideration when revising the Web site.
    Comment: One commenter supported the removal of the All-Cause 
Unplanned Readmission Measure for 30 Days Post-Discharge (NQF #2502) 
and replacing it with Changes in Skin Integrity Post-Acute Care: 
Pressure Ulcer/Injury, for public display.
    Response: We appreciate the support for the removal of the All-
Cause Unplanned Readmission Measure for 30 Days Post-Discharge (NQF 
#2502), and implementation of Changes in Skin Integrity Post-Acute 
Care: Pressure Ulcer/Injury on IRF Compare. We want to clarify that the 
Potentially Preventable 30-Day Post-Discharge Readmission Measure for 
IRF QRP and the Potentially Preventable Within Stay Readmission Measure 
for IRFs will replace the All-Cause Unplanned Readmission Measure for 
30 Days Post-Discharge (NQF #2502). Changes in Skin Integrity Post-
Acute Care: Pressure Ulcer/Injury will replace the Percent of Residents 
or Patients with Pressure Ulcers That Are New or Worsened (Short Stay) 
(NQF #0678) measure.
    Comment: One commenter expressed concern about the proposed minimum 
patient thresholds and recommended CMS provide rationale for proposed 
limits and use a threshold of 30 cases for all measures.
    Response: We appreciate the comment regarding the minimum patient 
threshold. Each measure has specifically applied minimum patient 
thresholds in public reporting so that there is enough volume of cases 
reported to protect individual privacy and provide meaningful results 
with a representative sample size. As we continue to monitor and 
evaluate measure performance, we will consider revising the minimum 
patient thresholds.
    Comment: A few commenters expressed concern about the claims-based 
measures reporting periods. One commenter stated that the claims-based 
measure reported on IRF Compare is one to two years behind the other 
IRF-PAI and CDC NHSN measures. Another commenter stated the claims-
based All-Cause measure is delayed three to four years (January 1, 2013 
through December 31, 2014), and that this delay affects how actionable 
the data is for providers and how meaningful the data is to 
stakeholders and consumers.
    Response: We acknowledge the commenters' concerns and suggestions 
to provide claims-based measure reports in a timelier manner. The All-
Cause Unplanned Readmission Measure for 30 Days Post Discharge from 
IRFs (NQF #2502) is based on two consecutive years of data to ensure a 
sufficient sample size to reliably assess IRF performance. As discussed 
in section XIII.H of this final rule, we are finalizing the removal of 
the All-Cause Readmission measure beginning with the FY 2019 IRF QRP 
and will replace it with the Potentially Preventable 30-Day Post-
Discharge Readmission Measure for IRF QRP and Potentially Preventable 
Within Stay Readmission Measure for IRFs, which will use more timely 
claims data and will initially include data from October 1, 2015 
through September 30, 2017. The measures are as current as possible 
given the time for the claims submission process and the run-off 
period.
    Comment: Some commenters expressed concern about the usefulness of 
the CAUTI, MRSA, and CDI quality measures due to the measures reported 
low incidence rate for CAUTI and expected low incidence rates for MRSA 
and CDI. A few commenters recommended publicly reporting data that is 
relevant and variable across IRFs or focus on one Hospital Acquired 
Infection (HAI) measure instead of all three CDC NHSN infection 
measures; CAUTI, MRSA, and CDI.
    Response: We appreciate commenters' concern about the usefulness of 
the HAI measures given the low incidence rates in IRFs. The HAI 
measures currently on IRF Compare and those being proposed for public 
reporting support the goals of the National Quality Strategy, the CMS 
Quality Strategy, the HHS HAI Action Plan (https://health.gov/hcq/prevent-hai-action-plan.asp), and the Hospital Acquired Condition (HAC) 
Reduction Program. It is both a CMS and an HHS priority to ensure the 
delivery of high quality, patient-centered, and safe care across all 
care settings.
    All of the HAI measures are fully endorsed by NQF for the IRF 
setting. The CAUTI measure is highly relevant to IRFs because urinary 
catheters are commonly used in the IRF setting. Healthcare-associated 
MRSA infections occur frequently in patients whose treatment involves 
the use of invasive devices, such as catheters. Older adults and 
patients in health care settings are most vulnerable to MRSA 
infections, as these patients may have weakened immune systems. CDIs 
are increasing in all health care facilities, and the IRF population is 
highly vulnerable to CDI. Readers can refer to additional information 
regarding the clinical significance of the MRSA and CDI measures in FY 
2015 IRF PPS final rule (79 FR 45911 through 45913).
    Even if the incidence rates may be low for these measures in IRFs, 
we have observed variability among facilities. We believe it is 
important to report data on HAIs acquired during the IRF stay because 
these infections are associated with increased cost, hospital length of 
stay, morbidity, and mortality. However, we appreciate the feedback and 
will continue to monitor IRF performance across all quality measures 
and reassess reporting certain measures in our QRPs.
    Comment: One commenter suggested CMS include the total number of 
pressure ulcers and the observed rate of pressure ulcers for the 
measure Percent of Residents or Patients with Pressure Ulcers That Are 
New or Worsened (Short Stay) (NQF #0678) in the Provider Preview 
reports to support IRFs in validating their information.
    Response: We appreciate the commenter's recommendation and will 
take it into consideration as we continue to make refinements to IRF 
Compare.
    Comment: A commenter expressed concern regarding providers' ability 
to review CDC NHSN measure results prior to public display on IRF 
Compare due to timing and system issues.
    Response: We acknowledge the commenter's concerns and are working 
closely with CDC to ensure provider access to timely and appropriate 
reports with accurate data prior to public display. In response to the 
various CDC NHSN systems issues providers experienced in late 2016 and 
early 2017, we have suppressed public display of the CDC NHSN CAUTI and 
CLABSI measure results on IRF Compare until such time as we are certain 
we can post accurate data. We would like to assure providers that they 
will be given the

[[Page 36298]]

opportunity to review any corrected data for a full 30 days, prior to 
the public posting of that data. We will notify providers when we are 
ready to add CAUTI and CLABSI measure results back to IRF Compare 
through normal channels of communications such as listserv notices, IRF 
QRP Web site postings, etc. Furthermore, given the systems issues that 
have arisen to date, we are considering any potential effect on 
provider compliance, and factoring this into our analysis.
    Comment: One commenter expressed concern that the measures on the 
IRF Compare are not discernable and relevant to the general public, and 
questioned whether differences in quality that are displayed are 
clinically meaningful and distinguishable between high- and low-quality 
providers.
    Response: We appreciate the commenter's feedback. We respectfully 
disagree that there is not enough variability to distinguish between 
high- and low-quality providers. Most of the measures are NQF-endorsed 
and go through a rigorous vetting process including analysis of data 
regarding variability, validity, and reliability. Reporting these 
measures encourages providers to strive for the highest quality of 
care. The measures currently on IRF Compare or proposed for public 
reporting support the goals of the National Quality Strategy, the CMS 
Quality Strategy, the HHS HAI Action Plan, and the HAC Reduction 
Program. It is both a CMS and an HHS priority to ensure the delivery of 
high quality, patient-centered, and safe care across all care settings.
    Comment: A few commenters recommended CMS delay the public display 
of quality measures until at least a full twelve months of data has 
been collected and providers are able to review and correct the 
information on these measures. In addition, one commenter suggested CMS 
could use case-mix index, length of stay efficiency, Functional 
Improvement Measure (FIM) change, and discharge FIM in public reporting 
because the data is easily available to CMS and provides a good source 
of comparison between IRF providers.
    Response: We acknowledge commenters' suggestions and note that the 
recommendations align with the current process for public display of 
quality measures. That is, data for the quality measures in the IRF QRP 
is collected for at least twelve months before it is available in 
confidential feedback reports. In addition, providers have the ability 
to review and correct their data prior to public display using Review 
and Correct reports. Subsequently, the Provider Preview reports will be 
available after the data correction deadline has passed for the last 
quarter of the reporting period. IRF Compare currently provides 
additional facility-level information on the medical conditions treated 
in the IRF over the last year. The quality of patient care that IRFs 
provide to patients can vary from facility to facility. IRF Compare 
reports information on over 1,100 facilities across the nation and 
allows consumers to obtain information on the quality of care each 
facility provides. They can compare IRFs based on important indicators 
of quality. The information can assist them to make more informed 
decisions. In regard to comparison data, we will take the commenter's 
suggestions into consideration for future updates to IRF Compare.
    Final Decision: After consideration of the public comments we 
received, we are finalizing our proposals as proposed to begin publicly 
reporting in CY 2018 the following two assessment-based measures 
pending the availability of the data: ``Application of Percent of Long-
Term Care Hospital (LTCH) Patients With an Admission and Discharge 
Functional Assessment and a Care Plan That Addresses Function'' (NQF 
#2631), and ``Application of Percent of Residents Experiencing One or 
More Falls with Major Injury'' (NQF #0674), as well as the following 
four claims-based measures: ``Medicare Spending Per Beneficiary--PAC 
IRF QRP'', ``Discharge to Community--PAC IRF QRP'', ``Potentially 
Preventable 30-Day Post-Discharge Readmission Measure for IRF QRP'', 
and ``Potentially Preventable Within Stay Readmission Measure for 
IRFs''. We are finalizing our proposals to remove the claims-based 
measure ``All-Cause Unplanned Readmission Measure for 30 Days Post 
Discharge from IRFs'' from the IRF QRP and from public display by 
October 2018. We are also finalizing our proposals to remove the 
assessment-based measure ``Percent of Residents or Patients with 
Pressure Ulcers That Are New or Worsened (Short Stay)'' (NQF #0678) and 
replace it with a modified version of the measure entitled ``Changes in 
Skin Integrity Post-Acute Care: Pressure Ulcer/Injury'' from the IRF 
QRP and public reporting by October 2020.

P. Mechanism for Providing Feedback Reports to IRFs

    Section 1899B(f) of the Act requires the Secretary to provide 
confidential feedback reports to PAC providers on their performance on 
the measures specified under sections 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. In the FY 2017 IRF PPS final rule 
(81 FR 52131), we finalized processes to provide IRFs the opportunity 
to review their data and information using confidential feedback 
reports that will enable IRFs to review their performance on the 
measures required under the IRF QRP. Information on how to obtain these 
and other reports available to the IRF can be found at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/IRF-Quality-Public-Reporting.html. We 
did not propose any changes to this policy.
    We received one comment on this topic, which is summarized below.
    Comment: One commenter recommended an alternative mechanism, 
QualityNet, for providing confidential feedback reports to post-acute 
care providers, including IRFs.
    Response: We appreciate the commenter's suggestion and will take 
this into consideration in future public reporting development for the 
IRF QRP and other post-acute care QRPs.

Q. Method for Applying the Reduction to the FY 2018 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 proposed to apply a 2-percentage point 
reduction to the applicable FY 2018 market basket increase factor in 
calculating a proposed adjusted FY 2018 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.
    We invited public comment on the proposed method for applying the 
reduction to the FY 2018 IRF increase factor for IRFs that fail to meet 
the quality reporting requirements. We did not receive any comments on 
this proposal.
    Final Decision: We are finalizing our proposed method for applying 
the

[[Page 36299]]

reduction to the FY 2018 IRF increase factor for IRFs that fail to meet 
the quality reporting requirements.
    Table 12 shows the calculation of the adjusted FY 2018 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).

    Table 12--Calculations To Determine the Adjusted FY 2018 Standard
   Payment Conversion Factor for IRFs That Failed To Meet the Quality
                          Reporting Requirement
------------------------------------------------------------------------
               Explanation for adjustment                  Calculations
------------------------------------------------------------------------
Standard Payment Conversion Factor for FY 2017..........         $15,708
Increase Factor for FY 2018 (1.0 percent), as required          x 0.9900
 by section 1886(j)(3)(C)(iii) of the Act, and further
 reduced by 2 percentage points for IRFs that failed to
 meet the quality reporting requirement.................
Budget Neutrality Factor for the Wage Index and Labor-          x 1.0007
 Related Share..........................................
Budget Neutrality Factor for the Revisions to the CMG           x 0.9976
 Relative Weights.......................................
Adjusted FY 2018 Standard Payment Conversion Factor.....       = $15,524
------------------------------------------------------------------------

XIV. Miscellaneous Comments

    Comment: Commenters suggested that CMS be more transparent about 
the methodology used to update the facility-level adjustments and the 
implementation schedule of these updates.
    Additionally, the commenters suggested that we establish a three-
year minimum interval or percentage change threshold in the methodology 
used to update these factors.
    Response: As we did not propose any changes to the facility-level 
adjustments, these comments are outside the scope of the proposed rule. 
We reiterate our belief that it is better for the overall efficiency of 
the IRF PPS to update the facility-level adjustment factors whenever it 
appears that the benefits of updating (in terms of improved accuracy of 
payment rates) outweigh the costs (in terms of less stability in the 
annual payment rates), rather than to specify an exact period or 
threshold for updating the adjustment factors. At such time as we 
determine that the data support updating the adjustment factors or 
changes in the methodology, we will make our findings available through 
the rulemaking process.
    Comment: One commenter stated that CMS should not remove G72.81--
Critical illness myopathy from the presumptive compliance list.
    Response: We did not propose to remove G72.81--Critical illness 
myopathy from the presumptive compliance list and are not doing so in 
this final rule.
    Comment: Two commenters recommended that CMS include the applicable 
7th character for ``subsequent encounter'' for diagnosis codes on the 
presumptive compliance list. The commenters stated that IRF providers 
should follow all official ICD-10-CM coding values, regardless of 
payer. These commenters stated that including the subsequent encounter 
7th character would eliminate the need for IRFs to keep up with 
multiple sets of coding rules.
    Response: We appreciate the feedback from the commenters regarding 
the use of the 7th character for subsequent encounter for the 
presumptive methodology. We will consider the commenters' suggestion to 
consider the 7th character ``D''--subsequent encounter for certain 
injury codes on the list in future rulemaking.
    Comment: One commenter requested the removal of the following codes 
as exclusions from the IGC list:
     S06.2X--(subcategory) Diffuse traumatic brain injury,
     S06.309A Unspecified focal traumatic brain injury, with 
loss of consciousness of unspecified duration, initial encounter.
     S06.309D Unspecified focal traumatic brain injury, with 
loss of consciousness of unspecified duration, subsequent encounter.
     S06.309S Unspecified focal traumatic brain injury, with 
loss of consciousness of unspecified duration, sequel.
    Response: These codes were not listed as code exclusions on the 
proposed IGC lists, nor are they listed as code exclusions on the IGC 
lists that we are finalizing in this final rule. In addition, the codes 
S06.2X0A--Diffuse traumatic brain injury without loss of consciousness, 
initial encounter and S06.2X0S--Diffuse traumatic brain injury without 
loss of consciousness, sequela were listed on the proposed presumptive 
compliance list and are listed on the presumptive compliance list that 
we are finalizing in this final rule. If the commenter intended to 
refer to the code exclusion S06.9X9A--Unspecified intracranial injury 
with loss of consciousness of unspecified duration, initial encounter, 
which we are retaining as an excluded code under ``IGC Brain 
Dysfunction--0002.22 Traumatic, Closed Injury'' on the IGC lists that 
we are finalizing in this final rule, then we refer readers to section 
X.E. of this final rule for a discussion of code S06.9X9A.
    Comment: One commenter stated that the proposed rule did not 
address the inclusion of recreational therapy in the case mix of 
therapies which are traditionally offered for selection by 
rehabilitation physicians for inclusion in the therapies order as 
medically necessary for patients of IRFs. The commenter encouraged us 
to include recreational therapy as one of covered therapy services 
(speech-language therapy, occupational therapy, physical therapy, and 
prosthetics/orthotics) in IRFs.
    Response: As we did not propose any changes to the IRF coverage 
requirements in Sec.  412.622(a)(3), (4), and (5) that would affect any 
of the requirements described in chapter 1, section 110 of the Medicare 
Benefit Policy Manual (Pub. L. 100-02), this comment is outside the 
scope of the proposed rule. As recreational therapy is generally less 
expensive for an IRF to provide than physical therapy, occupational 
therapy, or speech-language therapy, we believe that it would, in 
practice, replace many of these important core therapy services if it 
were included in the list of therapies that may be used to demonstrate 
the intensity of therapy provided in an IRF. We do not believe that 
recreational therapy services should replace the provision of any of 
the four core skilled therapy services (physical therapy, occupational 
therapy, speech-language therapy, and prosthetics/orthotics). Thus, we 
believe it should be left to each individual IRF to determine whether 
offering recreational therapy is the best way to achieve the desired 
patient care outcomes. As we have stated previously in the FY 2014 IRF 
PPS final rule (78 FR 47921), recreational therapy is a covered service 
in IRFs when the medical necessity is

[[Page 36300]]

well-documented by the rehabilitation physician in the medical record 
and is ordered by the rehabilitation physician as part of the overall 
plan of care for the patient. Recreational therapy may be offered as an 
additional service above and beyond the core skilled therapy services 
used to demonstrate the provision of an intensive rehabilitation 
therapy program, but may not replace one of these therapies.
    Comment: One commenter expressed concerns that the presumptive 
methodology specifications might not be appropriately counting 
patients' comorbidities, as required by section 115 of the Medicare, 
Medicaid and SCHIP Extension Act of 2007, because the presence of an 
etiologic diagnosis exclusion on the IRF-PAI will cause the case to 
fail the presumptive methodology, and the algorithm does not proceed 
further to examine the comorbidities. This commenter requested that we 
review and modify the specifications and software, as needed.
    Response: As we did not propose any changes to the presumptive 
methodology specifications, this comment is outside the scope of the 
proposed rule. However, section 115 of the Medicare, Medicaid, and 
SCHIP Extension Act of 2007 requires comorbidities to be included with 
respect to an IRF's 60 percent rule compliance percentage, not the 
presumptive compliance methodology specifically. Even though an 
individual case may fail to meet the requirements under the presumptive 
methodology if an excluded etiologic diagnosis is present, this does 
not mean that the IRF is out of compliance with the 60 percent rule. 
Rather, the IRF would undergo medical review, which would assess all 
relevant factors, including comorbidities.
    Comment: One commenter reiterated a recommendation from MedPAC's 
March 2016 Report to Congress, Chapter 9 (available at http://www.medpac.gov/-documents-/reports) that we should analyze patterns of 
coding across IRFs and reassess the inter-rater reliability of the IRF-
PAI.
    Response: This comment addresses data monitoring activities that 
were not discussed in the proposed rule, and are therefore outside the 
scope of the rule. However, we have shared this recommendation from 
MedPAC's March 2016 Report to Congress, Chapter 9 with the appropriate 
components within CMS for their consideration.

XV. Provisions of the Final Regulations

    In this final rule, we are adopting the provisions set forth in the 
FY 2018 IRF PPS proposed rule (82 FR 20690). Specifically:
     We will update the FY 2018 IRF PPS relative weights and 
average length of stay values using the most current and complete 
Medicare claims and cost report data in a budget-neutral manner, as 
discussed in section IV. of this final rule.
     As established in the FY 2015 IRF PPS final rule (79 FR 
45872 at 45882), the facility-level adjustments will remain frozen at 
FY 2014 levels for FY 2015 and all subsequent years (unless and until 
we propose to update them again through future notice-and-comment 
rulemaking), as discussed in section V. of this final rule.
     We will update the FY 2018 IRF PPS payment rates by the 
market basket increase factor, as required by section 
1886(j)(3)(C)(iii) of the Act, as described in section VI. of this 
final rule.
     We will update the FY 2018 IRF PPS payment rates by the FY 
2018 wage index and the labor-related share in a budget-neutral manner, 
as discussed in section VI. of this final rule.
     We will calculate the final IRF standard payment 
conversion factor for FY 2018, as discussed in section VI. of this 
final rule.
     We will update the outlier threshold amount for FY 2018, 
as discussed in section VII. of this final rule.
     We will update the CCR ceiling and urban/rural average 
CCRs for FY 2018, as discussed in section VII. of this final rule.
     We will remove the 25 percent payment penalty for IRF-PAI 
late transmissions, as discussed in section VIII. of this final rule.
     We will adopt revisions to the IRF-PAI to remove the 
voluntary swallowing status item, as discussed in section IX. of this 
final rule.
     We will adopt refinements to the presumptive compliance 
methodology ICD-10-CM diagnosis codes, as discussed in section X. of 
this final rule.
     We will consider the comments we received in response to 
our solicitation regarding the criteria used to classify facilities for 
payment under the IRF PPS, as discussed in section X. of this final 
rule.
     We will adopt the subregulatory process for certain 
updates to the presumptive methodology diagnosis code lists, as 
discussed in section XI. of this final rule.
     We will adopt the use of height/weight items on the IRF-
PAI to determine patient BMI greater than 50 for cases of lower 
extremity single joint replacement under the presumptive methodology, 
as discussed in section XII. of this final rule.
     We will adopt revisions and updates to measures and 
reporting requirements under the IRF QRP in accordance with sections 
1886(j)(7) and 1899B of the Act, as discussed in section XIII. of this 
final rule.

XVI. 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 final 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, 80, or approximately 7 percent, of the 1,137 
active Medicare-certified IRFs did not receive the full annual 
percentage increase for the FY 2017 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 2018 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, 2017, there

[[Page 36301]]

are approximately 1,137 IRFs currently reporting quality data to CMS. 
For the purposes of calculating the costs associated with the 
collection of information requirements, we obtained mean hourly wages 
for these staff from the U.S. Bureau of Labor Statistics' May 2016 
National Occupational Employment and Wage Estimates (http://www.bls.gov/oes/current/oes_nat.htm). To account for overhead and 
fringe benefits, we have doubled the hourly wage. These amounts are 
detailed in Table 13.

     Table 13--U.S. Bureau of Labor Statistics' May 2016 National Occupational Employment and Wage Estimates
----------------------------------------------------------------------------------------------------------------
                                                                                   Overhead and      Adjusted
                Occupation title                    Occupation      Mean hourly   fringe benefit  hourly wage ($/
                                                       code         wage ($/hr)       ($/hr)            hr)
----------------------------------------------------------------------------------------------------------------
Registered Nurse (RN)...........................         29-1141          $34.70          $34.70          $69.40
Licensed Practical and Licensed Vocational               29-2061           21.56           21.56           43.12
 Nurses (LVN)...................................
Respiratory Therapists (RT).....................         29-1126           29.15           29.15           58.30
Speech-Language Pathologists (SLP)..............         29-1127           37.60           37.60           75.20
Occupational Therapists (OT)....................         29-1122           40.25           40.25           80.50
Psychologist....................................         19-3030           38.77           38.77           77.54
----------------------------------------------------------------------------------------------------------------

    As discussed elsewhere, this rule finalizes the proposal to adopt 
one new pressure ulcer measure that has been specified under section 
1899B(c)(1)(C) of the Act, beginning with the FY 2020 IRF QRP (see 
section XIII.G.1 of this final rule). The measure will be calculated 
using data elements that are currently included in the IRF-PAI. The 
data elements are discrete questions and response codes that collect 
information on an IRF patient's health status, preferences, goals, and 
general administrative information.
    We are requiring that IRFs report certain standardized patient 
assessment data beginning with the FY 2019 IRF QRP (see section XIII.J 
of this final rule). We defined the term ``standardized patient 
assessment data'' as patient assessment questions and response options 
that are identical in all four PAC assessment instruments, and to which 
identical standards and definitions apply. The standardized patient 
assessment data are intended to be shared electronically among PAC 
providers and will otherwise enable the data to be comparable for 
various purposes, including the development of cross-setting quality 
measures and to inform payment models that take into account patient 
characteristics rather than setting.
    Under 1899B(m) of the Act, the Paperwork Reduction Act does not 
apply to the specific changes in the collection of information 
described in this final rule. The requirement and burden will be 
submitted to OMB for review and approval when the modifications to the 
IRF-PAI are not used to achieve standardization and are not exempt from 
the requirements under section 1899B(m) of the Act.
    These changes to the collections of information arise from section 
2(a) of the IMPACT Act, which added new section 1899B of the Act. That 
section requires IRFs to report standardized patient assessment data, 
data on quality measures, and data on resource use and other measures.
    As noted in section VIII of this final rule, we are removing item 
27 (Swallowing Status) from the IRF-PAI on admission and discharge, 
which will result in a 0.5 minute reduction in clinical staff time to 
report data.
    We are also removing the All-Cause Unplanned Readmission Measure 
for 30 Days Post-Discharge from IRFs (NQF #2502). This is a claims-
based measure, and IRFs will still be required to submit the claims on 
which this measure is calculated. Therefore, we believe the IRF QRP 
burden estimate is unaffected by the proposed removal of this measure.
    Adoption of the Changes in Skin Integrity Post-Acute Care: Pressure 
Ulcer/Injury measure will result in the removal of some data items 
related to pressure ulcer assessment that we believe are duplicative or 
no longer necessary. As a result, the estimated burden and cost for 
IRFs to report the updated version of the measure will be reduced from 
the burden and cost to report the current version of the measure. 
Specifically, we believe that there will be a 5-minute reduction in 
clinical staff time to report data, and we believe the items being 
removed would be completed by RNs. In addition, the removal of item 27 
(Swallowing Status) on both admission and discharge will result in a 
0.5 minute reduction in clinical staff time to report data. We believe 
that these swallowing items would be completed by RNs (approximately 75 
percent of the time) and SLPs (approximately 25 percent of the time). 
We estimate 402,311 discharges from 1,137 IRFs annually. This equates 
to 36,879 hours (0.0917 hours x 402,311 discharges) decrease in burden 
for all IRFs. Given 5.4 minutes of RN time and 0.1 minutes of SLP time, 
completing an average of 354 IRF-PAIs per provider per year, and the 
wages listed in Table 13, we estimated the total cost would be reduced 
by $2,255 per IRF annually, or $2,564,2230 for all IRFs annually. This 
decrease in burden will be accounted for in the information collection 
under OMB control number (0938-0842) which expires July 31, 2017. We 
have sent the revised information collection request to OMB for review 
and approval.
    In section XIII.J. of this final rule, we are finalizing 
requirements related to the reporting of standardized patient 
assessment data beginning with the FY 2019 IRF QRP. The data elements 
being finalized for the FY 2019 IRF QRP with respect to the Functional 
Status and Medical Condition and Comorbidity categories are already 
included on the current IRF-PAI assessment. Therefore, there is no new 
burden associated with the standardized patient assessment data being 
finalized for the IRF QRP in this final rule.
    However, as noted in section XIII.J of this final rule, we are not 
finalizing our proposal to require IRFs to submit data on 24 new 
standardized patient assessment data elements on IRF admissions and 24 
new standardized patient assessment data elements on IRF discharges. 
This results in a reduction to the burden estimate that appeared in the 
proposed rule. We refer readers to the FY 2018 IRF PPS proposed rule 
(82 FR 20743 through 20745) for a discussion of our burden estimates 
for these proposals.
    In summary, no new burden related to standardized patient 
assessment data is being added to the IRF-PAI, which is a reduction 
from the burden estimate in the proposed rule. Given the 5.5-minute

[[Page 36302]]

reduction in burden for items being removed from the IRF PAI, the 
overall cost associated with changes to the IRF QRP is a reduction of 
36,879 hours in burden for all IRFs. This equates to a reduction of 
$2,255.26 per IRF annually, or $2,564,229.74 for all IRFs annually. 
Under section 1899B(m) of the Act, the Paperwork Reduction Act does not 
apply to the specific changes to the collections of information 
described in this final rule. We are, however, setting out the burden 
as a courtesy to advise interested parties of the proposed actions' 
time and costs and refer readers to section XV of this final rule for 
the regulatory impact analysis (RIA). The requirement and burden will 
be submitted to OMB for review and approval when the modifications to 
the IRF-PAI are not used to achieve standardization and are not exempt 
from the requirements under section 1899B(m) of the Act.
    We received several comments about the collection of information 
requirements associated with the IRF QRP.
    Comment: Several commenters supported the removal of item 27 
(swallowing status) from the IRF-PAI, stating that they appreciate the 
decrease in administrative burden.
    Response: We appreciate the commenters' support for the removal of 
item 27 (swallowing status) from the IRF-PAI.
    Comment: We received a number of comments related to training, data 
specifications, and support that CMS has provided related to the 
implementation of the quality measures and standardized patient 
assessment data elements. Commenters stated that the guidance has been 
inconsistent and that CMS has not provided the necessary responses to 
questions from IRFs, and that due to inconsistencies, the commenters 
are concerned about the accuracy and reliability of the data.
    One commenter was concerned that the reliability of data was 
threatened by the data elements changing frequently, by different data 
elements being used for quality and payment, citing an example of 
functional status data elements, and by confusion over entering dashes 
for voluntary items. Several commenters requested that CMS provide 
training materials and data specifications in advance of 
implementation.
    Response: With regard to training and provider support, we 
acknowledge the importance of thorough and comprehensive training. We 
intend to provide both in-person and webinar-based training in advance 
of the IRF-PAI Version 2.0 release on October 1, 2018. When new quality 
measure data elements are implemented, we examine early data that is 
submitted in order to look for possible issues, such as unexpected 
patterns and inconsistent data for 2 or more items. If we identify any 
issues, we address them in updated training materials. For example, we 
examined the first three months of functional status data, and we 
identified areas of coding that could be clarified and scheduled a 
supplemental training via webinar. Information about and materials from 
each IRF QRP training are posted on the IRF-QRP Training Web site at 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/Training.html.
    We disagree with the commenters' suggestion that guidance has been 
inconsistent and that data collected has been unreliable. We maintain 
an IRF QRP help desk that responds to providers' data element coding 
questions, and keep a repository of past questions and responses in 
order to address questions in a consistent manner. Between June 1, 2016 
and June 1, 2017, we responded to more than 1,000 inquiries. The 
questions submitted by IRFs have provided us with various ``real life'' 
scenarios and these questions have helped us to create new examples for 
training, new coding tips that reinforce key training issues and we 
have updated definitions on the IRF-PAI to ensure the guidance is 
shared with all IRFs. For example, we received several inquiries 
regarding non-verbal communication, and based on that input, we 
modified the IRF-PAI definition in the IRF-PAI Training Manual to 
clarify that both verbal and non-verbal communication are considered in 
coding the item.
    With regard to the comments about different functional items being 
used for payment than those used in the IRF QRP, we refer the reader to 
the discussion in the FY 2016 IRF PPS final rule (80 FR 47086 through 
47120) about the differences between the CARE function items and the 
FIM[supreg] items.
    With regard to the comments related to the data specifications and 
the use of dashes, we post data specifications and errata on the CMS 
Web site so that vendors and providers are able to review and 
understand the valid data codes for all items and the associated 
requirements: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Software.html. We wish to note that upon 
internal review, we believe that the data specifications have been 
misinterpreted by some IRFs based on questions that have been submitted 
to the IRF QRP Help Desk, and we would like to make clear that the 
information and Section 9 (Required/Voluntary IRF-PAI Items) of the 
IRF-PAI Training Manual is correct.
    Comment: We received several comments related to the burden 
associated with the IRF-PAI. Although we did not solicit feedback on 
the burden associated with the measures finalized in the FY 2016 IRF 
PPS final rule (80 FR 47100 through 47120), including functional status 
measures, or the FY 2017 IRF PPS final rule (81 FR 52080 through 
52135), we received several comments about the increase in the length 
of the IRF-PAI over the last several releases, particularly since the 
IMPACT Act of 2014. Commenters noted that additions and changes to the 
IRF-PAI require extensive staff training time and operational 
procedures that impose a significant burden on providers. Some 
commenters were concerned that additional IRF-PAI requirements would 
take away from patient care time, especially in facilities with 
multiple admissions and discharges per day.
    One commenter appreciated the advanced release of the proposed item 
sets and specification documents for review, while another stated that 
these documents were difficult to locate on the Web site.
    Response: We recognize the commenter's concerns pertaining to 
burden being added to the IRF QRP in fulfillment of the requirements of 
the IMPACT Act. At every step of the process of standardizing the IRF-
PAI with other PAC assessment instruments in order to meet the 
requirements of the IMPACT Act, CMS has been keenly aware of the need 
to minimize additional burden on providers. We make efforts to offset 
or decrease burden, as evidenced by the 5 minute reduction of items 
related to pressure ulcer assessment that we believe are duplicative or 
no longer necessary.
    We are sensitive to the issue of burden associated with data 
collection and acknowledge the commenters' concerns about taking away 
from patient care time. In ongoing item development work to identify 
and test standardized patient assessment data elements, we are seeking 
data elements that will capture the unique environment of the IRF PAC 
setting. This includes data elements that can help establish the 
required amount of provider time at the bedside, and intensive nature 
of patient care provided in IRFs, and help IRFs make care decisions 
that are uniquely tailored to each patient. Ideal data elements would 
leverage information that is already collected or documented

[[Page 36303]]

in IRFs as part of standard clinical practice, while providing valuable 
information to inform care planning, clinical decision-making, care 
transitions and resource utilization.
    With regard to the burden added to IRF-PAI versions finalized in 
previous rules, we refer the reader to our discussion of burden due to 
data set revisions, data collection, or training of staff due to the 
revisions to the IRF-PAI in the FY 2016 IRF PPS final rule (80 FR 47129 
through 47131), and in the FY 2017 IRF PPS final rule (81 FR 52133 
through 52135).
    Though we recognize that new IRF-PAI items will require additional 
activities and efforts by providers, we would like to clarify that 
burden estimates are intended to reflect only the time needed to 
complete IRF-PAI items, independent of clinical time spent assessing 
the patient. Similarly, burden estimates are not intended to reflect 
costs of training and operational processes; these are considered part 
of the operating costs for an IRF. It should be noted that with each 
assessment release, we provide free software to our providers that 
allows for the completion and submission of any required assessment 
data. Free downloads of the Inpatient Rehabilitation Validation and 
Entry (IRVEN) software product are available on the CMS Web site at 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Software.html.
    With regard to the posting of the proposed item set and 
specifications, we strive to be transparent and consistent in posting 
item set information to the IRF-PAI and IRF QRP Manual Page at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/IRF-PAI-and-IRF-QRP-Manual.html, and 
posting specifications to the IRF QRP Measures Information Page at 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/IRF-Quality-Reporting-Program-Measures-Information-.html. We encourage the reader to check the IRF 
QRP Spotlight and Announcement page for updates at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/Spotlights-Announcements.html.
    Comment: One commenter commended CMS for ensuring robust and 
accurate quality reporting, but had concerns that many IRF providers do 
not have effective EHRs and that the proposed revisions to the IRF-PAI 
would require extra staff to collect, process, and transmit the 
necessary data. The commenter suggested that CMS did not provide an 
easy mechanism to collect, process and transmit the necessary data.
    Response: While we support the use of EHRs, we do not require that 
providers use EHRs to populate assessment data. We disagree with the 
commenter's suggestion that CMS does not provide a mechanism for 
collecting, processing and transmitting data, and we note that with 
each assessment release, we provide free software to providers that 
allows for the completion and submission of any required assessment 
data. Free downloads of the Inpatient Rehabilitation Validation and 
Entry (IRVEN) software product are available on the CMS Web site at 
http://www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/InpatientRehabFacPPS/Software.html.
    Comment: One commenter had concerns about smaller units in rural 
areas, suggesting that they would be unable to increase staff to 
accommodate for increased data collection.
    Response: We appreciate the concern about the increase in staff to 
accommodate for increased data collection in rural areas, and are 
sensitive to the challenges that small and rural facilities face. 
Taking into consideration the increase in burden that additional data 
collection may place on all facilities, we have decided to delay the 
adoption of the standardized patient assessment data elements to 
fulfill the requirements of the IMPACT Act in the categories of 
cognitive function and mental status, special services, treatments, and 
interventions, and impairments. However, we note that high quality care 
should be provided wherever patient services are administered.
    As noted in section XIII.J in this final rule, after consideration 
of public comments, we will not be finalizing the proposals that would 
add standardized patient assessment data elements related to the 
categories of cognitive function; special services, treatments and 
interventions; and impairments to the IRF-PAI effective October 1, 
2018. The data elements that satisfy the categories of functional 
status and medical conditions and comorbidities are already being 
collected on the IRF-PAI and do not add burden.
    Therefore, given the 5.5-minute reduction in burden for items being 
removed from the IRF-PAI, the burden related to the IRF QRP is reduced 
by $2,255.26 per IRF annually, or $2,564,229.74 for all IRFs annually.

XVII. Regulatory Impact Statement

    We have examined the impact of this rule as required by Executive 
Order 12866 on Regulatory Planning and Review (September 30, 1993), 
Executive Order 13563 on Improving Regulation and Regulatory Review 
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 
1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, 
section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 
1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August 4, 
1999), the Congressional Review Act (5 U.S.C. 804(2)), and Executive 
Order 13771 on Reducing Regulation and Controlling Regulatory Costs 
(January 30, 2017).
    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). A 
regulatory impact analysis (RIA) must be prepared for major rules with 
economically significant effects ($100 million or more in any 1 year). 
This rule does not reach the economic threshold and thus is not 
considered a major rule.
    The RFA requires agencies to analyze options for regulatory relief 
of small entities. For purposes of the RFA, small entities include 
small businesses, nonprofit organizations, and small governmental 
jurisdictions. Most hospitals and most other providers and suppliers 
are small entities, either by nonprofit status or by having revenues of 
less than $7.5 million to $38.5 million 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 (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. We estimate 
that the net revenue impact of this final rule on all IRFs is to 
increase estimated payments

[[Page 36304]]

by approximately 1.0 percent. The rates and policies set forth in this 
final 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. We are not preparing an analysis for the RFA because we have 
determined, and the Secretary certifies, that this rule will not have a 
significant economic impact on a substantial number of small entities.
    In addition, section 1102(b) of the Act requires us to prepare a 
RIA 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 for Medicare 
payment regulations and has fewer than 100 beds. We are not preparing 
an analysis for section 1102(b) of the Act because we have determined, 
and the Secretary certifies, that this final rule will not have a 
significant impact on the operations of a substantial number of small 
rural hospitals.
    Section 202 of the Unfunded Mandates Reform Act of 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 2017, that 
threshold is approximately $148 million. This final rule will impose no 
mandates on state, local, or tribal governments or on the private 
sector.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it issues a proposed rule (and subsequent final 
rule) that imposes substantial direct requirement costs on State and 
local governments, preempts State law, or otherwise has Federalism 
implications. Since this regulation does not impose any costs on State 
or local governments, the requirements of Executive Order 13132 are not 
applicable.
    Executive Order 13771, titled Reducing Regulation and Controlling 
Regulatory Costs, was issued on January 30, 2017. This final rule is 
considered an EO 13771 deregulatory action. Details on the $2.6 million 
estimated net cost savings of this rule can be found in the preceding 
and subsequent analyses.
Regulatory Review Costs
    If regulations impose administrative costs on private entities, 
such as the time needed to read and interpret this final rule, we 
should estimate the cost associated with regulatory review. Due to the 
uncertainty involved with accurately quantifying the number of entities 
that will review the rule, we assume that the total number of unique 
commenters on the published proposed rule will be the number of 
reviewers of this final rule. We acknowledge that this assumption may 
understate or overstate the costs of reviewing this final rule. It is 
possible that not all commenters reviewed the proposed rule in detail, 
and it is also possible that some reviewers chose not to comment on the 
proposed rule. For these reasons we thought that the number of comments 
received on the proposed rule would be a fair estimate of the number of 
reviewers of this final rule.
    We also recognize that different types of entities are in many 
cases affected by mutually exclusive sections of this final rule, and 
therefore for the purposes of our estimate we assume that each reviewer 
reads approximately 50 percent of the rule.
    Using the wage information from the BLS for medical and health 
service managers (Code 11-9111), we estimate that the cost of reviewing 
this rule is $105.16 per hour, including overhead and fringe benefits 
https://www.bls.gov/oes/current/oes_nat.htm. Assuming an average 
reading speed, we estimate that it would take approximately 3 hours for 
the staff to review half of this final rule. For each IRF that reviews 
the rule, the estimated cost is approximately $315 (3 hours x $105.16). 
Therefore, we estimate that the total cost of reviewing this regulation 
is $23,940 ($315 x 76 reviewers).
Accounting Statement
    As required by OMB Circular A-4 (available at https://www.whitehouse.gov/omb/circulars_a004_a-4), in Table 14, we have 
prepared an accounting statement showing the classification of the 
expenditures associated with the provisions of this final rule. Table 
14 provides our best estimate of the increase in Medicare payments 
under the IRF PPS as a result of the updates presented in this final 
rule based on the data for 1,137 IRFs in our database. In addition, 
Table 14 presents the costs associated with the new IRF QRP 
requirements for FY 2018.

Table 14--Accounting Statement: Classification of Estimated Expenditures
------------------------------------------------------------------------
                 Category                             Transfers
------------------------------------------------------------------------
  Change in Estimated Transfers from FY 2017 IRF PPS to FY 2018 IRF PPS
------------------------------------------------------------------------
Annualized Monetized Transfers............  $75 million.
From Whom to Whom?                          Federal Government to IRF
                                             Medicare Providers.
------------------------------------------------------------------------
         FY 2018 Cost to Updating the Quality Reporting Program
------------------------------------------------------------------------
Cost for IRFs to Submit Data for the        Reduction of $2.6 million.
 Quality Reporting Program. *
------------------------------------------------------------------------
* Costs associated with the submission of data for the quality reporting
  program will occur in 2018 and likely continue in the future years.

    In accordance with the provisions of Executive Order 12866, this 
regulation 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 amends 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, sec.112 of Pub. L. 113-93, 
and sec. 231 of Pub. L. 114-113.


0
2. Section 412.614 is amended by revising paragraphs (d) heading, 
(d)(1), and (e) to read as follows:


Sec.  412.614  Transmission of patient assessment data.

* * * * *
    (d) Failure to submit complete and timely IRF-PAI data, as required 
under paragraph (c) of this section--(1) Medicare Part-A fee-for-
service. (i) A given Medicare Part-A fee-for-service IRF claim will not 
be accepted and processed for payment until a corresponding IRF-PAI has 
been received and accepted by CMS.

[[Page 36305]]

    (ii) [Reserved]
* * * * *
    (e) Exemption to the consequences for transmitting the IRF-PAI data 
late for Medicare Part C (Medicare Advantage) patients. CMS may waive 
the consequences of failure to submit complete and timely IRF-PAI data 
specified in paragraph (d) of this section when, due to an 
extraordinary situation that is beyond the control of an inpatient 
rehabilitation facility, the inpatient rehabilitation facility is 
unable to transmit the patient assessment data in accordance with 
paragraph (c) of this section. Only CMS can determine if a situation 
encountered by an inpatient rehabilitation facility is extraordinary 
and qualifies as a situation for waiver of the forfeiture specified in 
paragraph (d)(2) of this section. An extraordinary situation may be due 
to, but is not limited to, fires, floods, earthquakes, or similar 
unusual events that inflect extensive damage to an inpatient facility. 
An extraordinary situation may be one that produces a data transmission 
problem that is beyond the control of the inpatient rehabilitation 
facility, as well as other situations determined by CMS to be beyond 
the control of the inpatient rehabilitation facility. An extraordinary 
situation must be fully documented by the inpatient rehabilitation 
facility.


Sec.  412.624   [Amended]

0
3. In Sec.  412.624--
0
a. Amend paragraph (d)(4) by removing the reference ``paragraph (e)(2), 
(e)(3), (e)(4) and (e)(7), of this section,'' and adding in its place 
the reference ``paragraph (e)(2), (3), (4) and (6) of this section,'';
0
b. Remove paragraph (e)(6);
0
c. Redesignate paragraph (e)(7) as paragraph (e)(6);
0
d. Amend newly redesignated paragraph (e)(6)(ii) by removing the 
reference ``paragraph (e)(7)(i)(A) and (e)(7)(i)(B) of this section'' 
and adding in its place the reference ``paragraph (e)(6)(i)(A) and (B) 
of this section''; and
0
e. Amend paragraph (f)(2)(v) by removing the reference ``paragraphs 
(e)(1), (e)(2), (e)(3), (e)(4), and (e)(7) of this section'' and adding 
in its place the reference ``paragraphs (e)(1), (2), (3), (4), and (6) 
of this section''.

0
4. Section 412.634 is amended by revising paragraphs (b)(1), (c)(1), 
(f)(1) and (2) to read as follows:


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

* * * * *
    (b) * * *
    (1) IRFs must submit to CMS data on measures specified under 
section 1886(j)(7)(D), 1899B(c)(1), and 1899B(d)(1) of the Act, as 
applicable. Such data must be submitted in the form and manner, and at 
a time, specified by CMS.
* * * * *
    (c) * * *
    (1) An IRF may request and CMS may grant exceptions or extensions 
to the measures data or standardized patient assessment data reporting 
requirements, for one or more quarters, when there are certain 
extraordinary circumstances beyond the control of the IRF.
* * * * *
    (f) * * *
    (1) IRFs must meet or exceed two separate data completeness 
thresholds: One threshold set at 95 percent for completion of required 
quality measures data and standardized patient assessment data 
collected using the IRF-PAI submitted through the QIES, and a second 
threshold set at 100 percent for measures data collected and submitted 
using the CDC NHSN.
    (2) These thresholds (95 percent for completion of required quality 
measures data and standardized patient assessment data on the IRF-PAI; 
100 percent for CDC NHSN data) will apply to all measures and 
standardized patient assessment data requirements adopted into the IRF 
QRP.
* * * * *

    Dated: July 26, 2017.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
    Dated: July 27, 2017.
Thomas E. Price,
Secretary, Department of Health and Human Services.
[FR Doc. 2017-16291 Filed 7-31-17; 4:15 pm]
 BILLING CODE 4120-01-P