[Federal Register Volume 85, Number 154 (Monday, August 10, 2020)]
[Rules and Regulations]
[Pages 48424-48463]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-17209]



[[Page 48423]]

Vol. 85

Monday,

No. 154

August 10, 2020

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 2021; Final Rule

  Federal Register / Vol. 85, No. 154 / Monday, August 10, 2020 / Rules 
and Regulations  

[[Page 48424]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 412

[CMS-1729-F]
RIN 0938-AU05


Medicare Program; Inpatient Rehabilitation Facility Prospective 
Payment System for Federal Fiscal Year 2021

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) 
2021. As required by statute, this final rule includes the 
classification and weighting factors for the IRF prospective payment 
system's case-mix groups and a description of the methodologies and 
data used in computing the prospective payment rates for FY 2021. This 
final rule adopts more recent Office of Management and Budget 
statistical area delineations and applies a 5 percent cap on any wage 
index decreases compared to FY 2020 in a budget neutral manner. This 
final rule also amends the IRF coverage requirements to remove the 
post-admission physician evaluation requirement and codifies existing 
documentation instructions and guidance. In addition, this final rule 
amends the IRF coverage requirements to allow, beginning with the 
second week of admission to the IRF, a non-physician practitioner who 
is determined by the IRF to have specialized training and experience in 
inpatient rehabilitation to conduct 1 of the 3 required face-to-face 
visits with the patient per week, provided that such duties are within 
the non-physician practitioner's scope of practice under applicable 
state law.

DATES: These regulations are effective on October 1, 2020.
    Applicability dates: The updated IRF prospective payment rates are 
applicable for IRF discharges occurring on or after October 1, 2020, 
and on or before September 30, 2021 (FY 2021).

FOR FURTHER INFORMATION CONTACT: Gwendolyn Johnson, (410) 786-6954, for 
general information.
    Catie Cooksey, (410) 786-0179, for information about the IRF 
payment policies and payment rates.
    Kadie Derby, (410) 786-0468, for information about the IRF coverage 
policies.

SUPPLEMENTARY INFORMATION:

Availability of Certain Information Through the Internet on the CMS 
Website

    The IRF PPS Addenda along with other supporting documents and 
tables referenced in this final rule are available through the internet 
on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS.
    We note that in previous years, each rule or notice issued under 
the IRF PPS has included a detailed reiteration of the various 
regulatory provisions that have affected the IRF PPS over the years. 
That discussion, along with detailed background information for various 
other aspects of the IRF PPS, is now available on the CMS website at 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS.

I. Executive Summary

A. Purpose

    This final rule updates the prospective payment rates for IRFs for 
FY 2021 (that is, for discharges occurring on or after October 1, 2020, 
and on or before September 30, 2021) as required under section 
1886(j)(3)(C) of the Social Security Act (the Act). As required by 
section 1886(j)(5) of the Act, this final rule includes the 
classification and weighting factors for the IRF PPS's case-mix groups 
(CMGs) and a description of the methodologies and data used in 
computing the prospective payment rates for FY 2021. This final rule 
adopts more recent Office of Management and Budget (OMB) statistical 
area delineations and applies a 5 percent cap on any wage index 
decreases compared to FY 2020 in a budget neutral manner. This final 
rule also amends the IRF coverage requirements to remove the post-
admission physician evaluation requirement and codifies existing 
documentation instructions and guidance. In addition, this final rule 
amends the IRF coverage requirements to allow, beginning with the 
second week of admission to the IRF, a non-physician practitioner who 
is determined by the IRF to have specialized training and experience in 
inpatient rehabilitation to conduct 1 of the 3 required face-to-face 
visits with the patient per week, provided that such duties are within 
the non-physician practitioner's scope of practice under applicable 
state law. There are no updates in this final rule to the IRF Quality 
Reporting Program (QRP).

B. Waiver of the 60-Day Delayed Effective Date for the Final Rule

    The United States is responding to an outbreak of respiratory 
disease caused by a novel (new) coronavirus that has now been detected 
in more than 190 locations internationally, including in all 50 States 
and the District of Columbia. The virus has been named ``SARS-CoV-2'' 
and the disease it causes has been named ``coronavirus disease 2019'' 
(abbreviated ``COVID-19'').
    Due to CMS prioritizing efforts in support of containing and 
combatting the COVID-19 PHE, and devoting significant resources to that 
end, as discussed and for the reasons discussed in section XIII. of 
this final rule, we are hereby waiving the 60-day requirement and 
determining that the IRF PPS final rule will take effect 55 days after 
issuance.

C. Summary of Major Provisions

    In this final rule, we use the methods described in the FY 2020 IRF 
PPS final rule (84 FR 39054) to update the prospective payment rates 
for FY 2021 using updated FY 2019 IRF claims and the most recent 
available IRF cost report data, which is FY 2018 IRF cost report data. 
This final rule adopts more recent OMB statistical area delineations 
and applies a 5 percent cap on any wage index decreases compared to FY 
2020 in a budget neutral manner. This final rule also amends the IRF 
coverage requirements to remove the post-admission physician evaluation 
requirement and codifies existing documentation instructions and 
guidance. In addition, this final rule amends the IRF coverage 
requirements to allow non-physician practitioners to perform some of 
the weekly visits, provided that such duties are within the non-
physician practitioner's scope of practice under applicable state law.

D. Summary of Impact

[[Page 48425]]



                        Table 1--Cost and Benefit
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    Provision description                      Transfers
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FY 2021 IRF PPS payment rate   The overall economic impact of this final
 update.                        rule is an estimated $260 million in
                                increased payments from the Federal
                                Government to IRFs during FY 2021.
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II. Background

A. Statutory Basis and Scope

    Section 1886(j) of the Act provides for the implementation of a 
per-discharge 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. 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), and we 
provided a general description of the IRF PPS for FYs 2007 through 2019 
in the FY 2020 IRF PPS final rule (84 FR 39055 through 39057).
    Under the IRF PPS from FY 2002 through FY 2005, the prospective 
payment rates were computed across 100 distinct 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.
    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), 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 OMB's 
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; rebasing and revising the 
market basket index used to update IRF payments, and updates to the 
rural, low-income percentage (LIP), and high-cost outlier adjustments. 
Beginning with the FY 2006 IRF PPS final rule (70 FR 47908 through 
47917), the market basket index used to update IRF payments was a 
market basket reflecting the operating and capital cost structures for 
freestanding IRFs, freestanding inpatient psychiatric facilities 
(IPFs), and long-term care hospitals (LTCHs) (hereinafter referred to 
as the rehabilitation, psychiatric, and long-term care (RPL) market 
basket). Any reference to the FY 2006 IRF PPS final rule in this final 
rule also includes the provisions effective in the correcting 
amendments. For a detailed discussion of the final key policy changes 
for FY 2006, please refer to the FY 2006 IRF PPS final rule.
    The regulatory history previously included in each rule or notice 
issued under the IRF PPS is available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/index?redirect=/InpatientRehabFacPPS/.

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

    The Patient Protection and Affordable Care Act (PPACA) (Pub. L. 
111-148) was enacted on March 23, 2010. The Health Care and Education 
Reconciliation Act of 2010 (Pub. L. 111-152), which amended and revised 
several provisions of the PPACA, was enacted on March 30, 2010. In this 
final rule, we refer to the two statutes collectively as the ``Patient 
Protection and Affordable Care Act'' or ``PPACA''.
    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) of 
the Act (providing for a ``productivity adjustment'' for fiscal year 
(FY) 2012 and each subsequent FY). The productivity adjustment for FY 
2021 is discussed in section VI.B. of this final rule. Section 
1886(j)(3)(C)(ii)(II) of the Act provides that the application of the 
productivity adjustment to the market basket update may result in an 
update that is less than 0.0 for a FY and in payment rates for a FY 
being less than such payment rates for the preceding FY.

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    Sections 3004(b) of the PPACA and section 411(b) of the Medicare 
Access and CHIP Reauthorization Act of 2015 (Pub. L. 114-10, enacted on 
April 16, 2015) (MACRA) also addressed the IRF PPS. Section 3004(b) of 
PPACA reassigned the previously designated section 1886(j)(7) of the 
Act to section 1886(j)(8) of the Act and inserted a new section 
1886(j)(7) of the Act, which contains requirements for the Secretary to 
establish a quality reporting program (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 to the market basket increase factor otherwise 
applicable to an IRF (after application of paragraphs (C)(iii) and (D) 
of section 1886(j)(3) of the Act) for a FY if the IRF does not comply 
with the requirements of the IRF QRP for that FY. Application of the 2 
percentage point reduction may result in an update that is less than 
0.0 for a FY and in payment rates for a FY being less than such payment 
rates for the preceding FY. Reporting-based reductions to the market 
basket increase factor are not cumulative; they only apply for the FY 
involved. Section 411(b) of the MACRA amended section 1886(j)(3)(C) of 
the Act by adding paragraph (iii), which required us to apply for FY 
2018, after the application of section 1886(j)(3)(C)(ii) of the Act, an 
increase factor of 1.0 percent to update the IRF prospective payment 
rates.

C. Operational Overview of the Current IRF PPS

    As described in the FY 2002 IRF PPS final rule (66 FR 41316), upon 
the admission and discharge of a Medicare Part A fee-for-service (FFS) 
patient, the IRF is required to complete the appropriate sections of a 
Patient Assessment Instrument (PAI), designated as the IRF-PAI. In 
addition, beginning with IRF discharges occurring on or after October 
1, 2009, the IRF is also required to complete the appropriate sections 
of the IRF-PAI upon the admission and discharge of each Medicare 
Advantage (MA) patient, as described in the FY 2010 IRF PPS final rule 
(74 FR 39762 and 74 FR 50712). 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 five-character CMG number. The 
first character is an alphabetic character that indicates the 
comorbidity tier. The last four characters are numeric characters that 
represent the distinct CMG number. A free download of the Grouper 
software is available on the CMS website at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Software.html. The Grouper software is also embedded in the iQIES User 
tool available in iQIES at https://www.cms.gov/medicare/quality-safety-oversight-general-information/iqies.
    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 (HIPAA) (Pub. L. 104-191, enacted on August 21, 1996)--
compliant electronic claim or, if the Administrative Simplification 
Compliance Act of 2002 (ASCA) (Pub. L. 107-105, enacted on December 27, 
2002) 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. L. 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 FY 2007 and beyond. Claims submitted to Medicare must 
comply with both ASCA and HIPAA.
    Section 3 of the ASCA amended 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 
part 160 and part 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 
interoperable health information technology and to promote nationwide 
health information exchange to improve health care and patient access 
to their health information. The Office of the National Coordinator for 
Health Information Technology (ONC) and CMS work collaboratively to 
advance interoperability across settings of care, including post-acute 
care.
    To further interoperability in post-acute care settings, CMS 
continues to explore opportunities to advance electronic exchange of 
patient information across payers, providers and with patients, 
including developing systems that use nationally recognized health IT 
standards such as the Logical Observation Identifiers Names and Codes 
(LOINC), the Systematized

[[Page 48427]]

Nomenclature of Medicine (SNOMED), and the Fast Healthcare 
Interoperability Resources (FHIR). In addition, CMS and ONC established 
the Post-Acute Care Interoperability Workgroup (PACIO) to facilitate 
collaboration with industry stakeholders to develop FHIR standards that 
could support the exchange and reuse of patient assessment data derived 
from the minimum data set (MDS), inpatient rehabilitation facility 
patient assessment instrument (IRF-PAI), long term care hospital 
continuity assessment record and evaluation (LCDS), outcome and 
assessment information set (OASIS) and other sources.
    The Data Element Library (DEL) continues to be updated and serves 
as the authoritative resource for PAC assessment data elements and 
their associated mappings to health IT standards. The DEL furthers CMS' 
goal of data standardization and interoperability. These interoperable 
data elements can reduce provider burden by allowing the use and 
exchange of healthcare data, support provider exchange of electronic 
health information for care coordination, person-centered care, and 
support real-time, data driven, clinical decision making. Standards in 
the Data Element Library (https://del.cms.gov/DELWeb/pubHome) can be 
referenced on the CMS website and in the ONC Interoperability Standards 
Advisory (ISA). The 2020 ISA is available at https://www.healthit.gov/isa.
    In the September 30, 2019 Federal Register, CMS published a final 
rule, ``Medicare and Medicaid Programs; Revisions to Requirements for 
Discharge Planning'' (84 FR 51836) (``Discharge Planning final rule''), 
that revises the discharge planning requirements that hospitals 
(including psychiatric hospitals, long-term care hospitals, and 
inpatient rehabilitation facilities), critical access hospitals (CAHs), 
and home health agencies, must meet to participate in Medicare and 
Medicaid programs. The rule supports CMS' interoperability efforts by 
promoting the exchange of patient information between health care 
settings, and by ensuring that a patient's necessary medical 
information is transferred with the patient after discharge from a 
hospital, CAH, or post-acute care services provider. For more 
information on the Discharge planning requirements, please visit the 
final rule at https://www.federalregister.gov/documents/2019/09/30/2019-20732/medicare-and-medicaid-programs-revisions-to-requirements-for-discharge-planning-for-hospitals.
    On May 1 2020, ONC and CMS published the final rules, ``21st 
Century Cures Act: Interoperability, Information Blocking, and the ONC 
Health IT Certification Program,'' \1\ (85 FR 25642) and ``Patient 
Access and Interoperability'' \2\ (85 FR 25510) to promote secure and 
more immediate access to health information for patients and healthcare 
providers through the use of standards-based application programming 
interfaces (APIs) that enable easier access to electronic health 
information. The CMS Interoperability and Patient Access rule also 
finalizes a new regulation under the Conditions of Participation for 
hospitals (85 FR 25584), including CAHs and psychiatric hospitals, 
which will require these providers to send electronic patient event 
notifications of a patient's admission, discharge, and/or transfer to 
appropriate recipients, including applicable post-acute care providers 
and suppliers. These notifications can help alert post-acute care 
providers and suppliers when a patient has been seen in the ED or 
admitted to the hospital, supporting more effective care coordination 
across settings. We invite providers to learn more about these 
important developments and how they are likely to affect IRFs.
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    \1\ https://www.govinfo.gov/content/pkg/FR-2020-05-01/pdf/2020-07419.pdf.
    \2\ https://www.govinfo.gov/content/pkg/FR-2020-05-01/pdf/2020-05050.pdf.
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III. Summary of Provisions of the Proposed Rule

    In the FY 2021 IRF PPS proposed rule, we proposed to update the IRF 
prospective payment rates for FY 2021. We also proposed to adopt more 
recent Office of Management and Budget statistical area delineations 
and apply a 5 percent cap on any wage index decreases compared to FY 
2020 in a budget neutral manner. We also proposed to amend the IRF 
coverage requirements to remove the post-admission physician evaluation 
requirement and codify existing documentation instructions and 
guidance. Additionally, we proposed to amend the IRF coverage 
requirements to allow non-physician practitioners to perform certain 
requirements that are currently required to be performed by a 
rehabilitation physician.
    The proposed policy changes and updates to the IRF prospective 
payment rates for FY 2021 are as follows:
     Update the CMG relative weights and average length of stay 
values for FY 2021, in a budget neutral manner, as discussed in section 
IV. of the FY 2021 IRF PPS proposed rule (85 FR 22065, 22069 through 
22073).
     Update the IRF PPS payment rates for FY 2021 by the 
proposed market basket increase factor, based upon the most current 
data available, with a proposed productivity adjustment required by 
section 1886(j)(3)(C)(ii)(I) of the Act, as described in section V. of 
the FY 2021 IRF PPS proposed rule (85 FR 22065, 22073 through 22075).
     Adopt the revised OMB delineations, the proposed IRF wage 
index transition, and the proposed update to the labor-related share 
for FY 2021 in a budget-neutral manner, as described in section V. of 
the FY 2021 IRF PPS proposed rule (85 FR 22065, 22075 through 22080).
     Describe the calculation of the IRF standard payment 
conversion factor for FY 2021, as discussed in section V. of the FY 
2021 IRF PPS proposed rule (85 FR 22065, 22080 through 22081).
     Update the outlier threshold amount for FY 2021, as 
discussed in section VI. of the FY 2021 IRF PPS proposed rule (85 FR 
22065, 22084 through 22085).
     Update the cost-to-charge ratio (CCR) ceiling and urban/
rural average CCRs for FY 2021, as discussed in section VI. of the FY 
2021 IRF PPS proposed rule (85 FR 22065, 22085 through 22086).
     Amend the IRF coverage requirements to remove the post-
admission physician evaluation requirement as discussed in section VII. 
of the FY 2021 IRF PPS proposed rule (85 FR 22065, 22086 through 
22087).
     Amend the IRF coverage requirements to codify existing 
documentation instructions and guidance as discussed in section VIII. 
of the FY 2021 IRF PPS proposed rule (85 FR 22065, 22087 through 
22088).
     Amend the IRF coverage requirements to allow non-physician 
practitioners to perform certain requirements that are currently 
required to be performed by a rehabilitation physician, if permitted 
under state law, as discussed in section IX. of the FY 2021 IRF PPS 
proposed rule (85 FR 22065, 22088 through 22090).
     Describe the method for applying the reduction to the FY 
2021 IRF increase factor for IRFs that fail to meet the quality 
reporting requirements as discussed in section X. of the FY 2021 IRF 
PPS proposed rule (85 FR 22065, 22090).

IV. Analysis of and Responses to Public Comments

    We received 2,668 timely responses from the public, many of which 
contained multiple comments on the FY

[[Page 48428]]

2021 IRF PPS proposed rule (85 FR 22065). We received comments from 
various trade associations, inpatient rehabilitation facilities, 
individual physicians, therapists, clinicians, health care industry 
organizations, health care consulting firms, individual beneficiaries, 
and beneficiary groups. The following sections, arranged by subject 
area, include a summary of the public comments that we received, and 
our responses.

V. Update to the Case-Mix Group (CMG) Relative Weights and Average 
Length of Stay Values for FY 2021

    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.
    We proposed to update the CMG relative weights and average length 
of stay values for FY 2021. 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 2021, we proposed to use the FY 2019 
IRF claims and FY 2018 IRF cost report data. These data are the most 
current and complete data available at this time. Currently, only a 
small portion of the FY 2019 IRF cost report data are available for 
analysis, but the majority of the FY 2019 IRF claims data are available 
for analysis. We also proposed that if more recent data become 
available after the publication of the proposed rule and before the 
publication of the final rule, we would use such data to determine the 
FY 2021 CMG relative weights and average length of stay values in the 
final 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 FY since we implemented an update to the methodology 
to use the more detailed CCR data from the cost reports of IRF provider 
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.
    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 2021 CMG relative weights to the same 
average CMG relative weight from the CMG relative weights implemented 
in the FY 2020 IRF PPS final rule (84 FR 39054).
    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 2021 in such a way that total 
estimated aggregate payments to IRFs for FY 2021 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. We note that, 
as we typically do, we updated our data between the FY 2021 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 2019 and additional cost 
report data for FY 2018. To calculate the appropriate budget neutrality 
factor for use in updating the FY 2021 CMG relative weights, we use the 
following steps:
    Step 1. Calculate the estimated total amount of IRF PPS payments 
for FY 2021 (with no changes to the CMG relative weights).
    Step 2. Calculate the estimated total amount of IRF PPS payments 
for FY 2021 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 of 
0.9970 that would maintain the same total estimated aggregate payments 
in FY 2021 with and without the changes to the CMG relative weights.
    Step 4. Apply the budget neutrality factor from step 3 to the FY 
2021 IRF PPS standard payment amount after the application of the 
budget-neutral wage adjustment factor.
    In section VI.D. of this final rule, we discuss the use of the 
existing methodology to calculate the standard payment conversion 
factor for FY 2021.
    In Table 2, ``Relative Weights and Average Length of Stay Values 
for Revised 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 2021. 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 2--Relative Weights and Average Length of Stay Values for the Revised Case-Mix Groups
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             Relative weight                           Average length of stay
                                                             -------------------------------------------------------------------------------------------
            CMG              CMG description (M = motor, A =                                        No                                            No
                                          age)                  Tier 1     Tier 2     Tier 3   comorbidity    Tier 1     Tier 2     Tier 3   comorbidity
                                                                                                   tier                                          tier
--------------------------------------------------------------------------------------------------------------------------------------------------------
0101......................  Stroke M >=72.50................     1.0314     0.8818     0.8182       0.7830         10         10         10            9
0102......................  Stroke M >=63.50 and M <72.50...     1.3174     1.1262     1.0451       1.0001         13         13         12           11
0103......................  Stroke M >=50.50 and M <63.50...     1.6846     1.4401     1.3363       1.2789         15         16         15           14
0104......................  Stroke M >=41.50 and M <50.50...     2.1886     1.8710     1.7361       1.6615         19         19         18           18
0105......................  Stroke M <41.50 and A >=84.50...     2.4829     2.1226     1.9696       1.8850         23         23         21           20
0106......................  Stroke M <41.50 and A <84.50....     2.8525     2.4385     2.2628       2.1655         26         24         23           23
0201......................  Traumatic brain injury M >=73.50     1.1495     0.9399     0.8443       0.7891         10         11         10           10
0202......................  Traumatic brain injury M >=61.50     1.4440     1.1807     1.0606       0.9913         12         14         12           12
                             and M <73.50.
0203......................  Traumatic brain injury M >=49.50     1.7411     1.4235     1.2787       1.1952         15         15         14           14
                             and M <61.50.
0204......................  Traumatic brain injury M >=35.50     2.1669     1.7718     1.5915       1.4876         20         19         17           16
                             and M <49.50.
0205......................  Traumatic brain injury M <35.50.     2.7369     2.2377     2.0101       1.8788         32         24         21           18
0301......................  Non-traumatic brain injury M         1.2263     0.9941     0.9185       0.8514         11         11         10           10
                             >=65.50.
0302......................  Non-traumatic brain injury M         1.5711     1.2737     1.1768       1.0908         14         14         13           12
                             >=52.50 and M <65.50.

[[Page 48429]]

 
0303......................  Non-traumatic brain injury M         1.8808     1.5247     1.4087       1.3058         16         16         15           14
                             >=42.50 and M <52.50.
0304......................  Non-traumatic brain injury M         2.1101     1.7105     1.5805       1.4650         19         18         16           16
                             <42.50 and A >=78.50.
0305......................  Non-traumatic brain injury M         2.3049     1.8685     1.7264       1.6002         21         20         17           17
                             <42.50 and A <78.50.
0401......................  Traumatic spinal cord injury M       1.3684     1.1612     1.0460       0.9718         12         12         12           11
                             >=56.50.
0402......................  Traumatic spinal cord injury M       1.7807     1.5110     1.3611       1.2646         16         16         14           15
                             >=47.50 and M <56.50.
0403......................  Traumatic spinal cord injury M       2.1371     1.8135     1.6336       1.5177         20         20         18           17
                             >=41.50 and M <47.50.
0404......................  Traumatic spinal cord injury M       3.6185     3.0706     2.7660       2.5698         29         35         32           26
                             <31.50 and A <61.50.
0405......................  Traumatic spinal cord injury M       2.7444     2.3288     2.0978       1.9490         25         26         22           21
                             >=31.50 and M <41.50.
0406......................  Traumatic spinal cord injury M       3.5969     3.0522     2.7494       2.5544         34         31         28           28
                             >=24.50 and M <31.50 and A
                             >=61.50.
0407......................  Traumatic spinal cord injury M       4.1070     3.4850     3.1394       2.9166         46         36         32           32
                             <24.50 and A >=61.50.
0501......................  Non-traumatic spinal cord injury     1.3097     1.0178     0.9609       0.8875         13         12         11           10
                             M >=60.50.
0502......................  Non-traumatic spinal cord injury     1.6273     1.2646     1.1939       1.1028         14         14         13           12
                             M >=53.50 and M <60.50.
0503......................  Non-traumatic spinal cord injury     1.8899     1.4687     1.3866       1.2807         16         16         15           14
                             M >=48.50 and M <53.50.
0504......................  Non-traumatic spinal cord injury     2.2506     1.7491     1.6513       1.5252         21         19         18           17
                             M >=39.50 and M <48.50.
0505......................  Non-traumatic spinal cord injury     2.9362     2.2819     2.1543       1.9899         28         24         22           21
                             M <39.50.
0601......................  Neurological M >=64.50..........     1.3673     1.0293     0.9649       0.8770         12         11         10           10
0602......................  Neurological M >=52.50 and M         1.7016     1.2809     1.2008       1.0915         14         13         12           12
                             <64.50.
0603......................  Neurological M >=43.50 and M         2.0214     1.5216     1.4264       1.2965         16         15         15           14
                             <52.50.
0604......................  Neurological M <43.50...........     2.3456     1.7657     1.6552       1.5045         20         18         17           16
0701......................  Fracture of lower extremity M        1.2473     1.0115     0.9585       0.8811         11         12         11           10
                             >=61.50.
0702......................  Fracture of lower extremity M        1.5595     1.2647     1.1985       1.1016         14         14         13           12
                             >=52.50 and M <61.50.
0703......................  Fracture of lower extremity M        1.8956     1.5373     1.4568       1.3390         17         16         15           15
                             >=41.50 and M <52.50.
0704......................  Fracture of lower extremity M        2.1660     1.7566     1.6646       1.5300         19         18         17           17
                             <41.50.
0801......................  Replacement of lower-extremity       1.1268     0.9068     0.8121       0.7564         10         10          9            9
                             joint M >=63.50.
0802......................  Replacement of lower-extremity       1.3248     1.0661     0.9548       0.8893         12         11         11           10
                             joint M >=57.50 and M <63.50.
0803......................  Replacement of lower-extremity       1.4799     1.1909     1.0666       0.9934         12         13         12           11
                             joint M >=51.50 and M <57.50.
0804......................  Replacement of lower-extremity       1.7056     1.3726     1.2293       1.1449         14         15         13           13
                             joint M >=42.50 and M <51.50.
0805......................  Replacement of lower-extremity       1.9874     1.5994     1.4324       1.3341         17         17         15           14
                             joint M <42.50.
0901......................  Other orthopedic M >=63.50......     1.2111     0.9651     0.9133       0.8273         11         11         10           10
0902......................  Other orthopedic M >=51.50 and M     1.5078     1.2015     1.1371       1.0301         13         13         12           12
                             <63.50.
0903......................  Other orthopedic M >=44.50 and M     1.7744     1.4139     1.3382       1.2122         15         15         14           14
                             <51.50.
0904......................  Other orthopedic M <44.5........     2.0373     1.6235     1.5365       1.3918         17         17         16           15
1001......................  Amputation lower extremity M         1.2960     1.0863     0.9748       0.9004         12         13         11           11
                             >=64.50.
1002......................  Amputation lower extremity M         1.6010     1.3419     1.2042       1.1123         14         15         13           13
                             >=55.50 and M <64.50.
1003......................  Amputation lower extremity M         1.8708     1.5681     1.4072       1.2997         16         17         15           14
                             >=47.50 and M <55.50.
1004......................  Amputation lower extremity M         2.2049     1.8481     1.6585       1.5318         18         19         17           16
                             <47.50.
1101......................  Amputation non-lower extremity M     1.2999     1.1583     1.0117       0.9810         12         11         11           13
                             >=58.50.
1102......................  Amputation non-lower extremity M     1.7367     1.5476     1.3517       1.3107         14         13         14           14
                             >=52.50 and M <58.50.
1103......................  Amputation non-lower extremity M     1.9515     1.7390     1.5188       1.4728         17         13         15           14
                             <52.50.
1201......................  Osteoarthritis M >=61.50........     1.4251     0.9495     0.9495       0.8718         11         10         10           10
1202......................  Osteoarthritis M >=49.50 and M       1.7907     1.1930     1.1930       1.0954         13         14         13           12
                             <61.50.
1203......................  Osteoarthritis M <49.50 and A        2.0815     1.3867     1.3867       1.2734         15         14         16           14
                             >=74.50.
1204......................  Osteoarthritis M <49.50 and A        2.1877     1.4575     1.4575       1.3383         15         15         15           15
                             <74.50.
1301......................  Rheumatoid other arthritis M         1.1277     0.9311     0.8839       0.7847          9         11         10            9
                             >=62.50.
1302......................  Rheumatoid other arthritis M         1.5429     1.2740     1.2094       1.0737         12         13         13           12
                             >=51.50 and M <62.50.
1303......................  Rheumatoid other arthritis M         1.7786     1.4686     1.3941       1.2377         14         15         14           14
                             >=44.50 and M <51.50 and A
                             >=64.50.
1304......................  Rheumatoid other arthritis M         2.0617     1.7024     1.6161       1.4347         14         17         16           16
                             <44.50 and A >=64.50.
1305......................  Rheumatoid other arthritis M         2.0876     1.7237     1.6363       1.4527         15         16         16           16
                             <51.50 and A <64.50.
1401......................  Cardiac M >=68.50...............     1.1456     0.9392     0.8477       0.7585         10         10         10            9
1402......................  Cardiac M >=55.50 and M <68.50..     1.4391     1.1799     1.0650       0.9529         13         13         11           11
1403......................  Cardiac M >=45.50 and M <55.50..     1.7474     1.4326     1.2931       1.1570         15         15         13           13
1404......................  Cardiac M <45.50................     2.0524     1.6827     1.5188       1.3590         18         17         16           14
1501......................  Pulmonary M >=68.50.............     1.2905     1.0335     0.9655       0.9262         11         11         10           10
1502......................  Pulmonary M >=56.50 and M <68.50     1.5913     1.2744     1.1906       1.1421         13         13         12           12
1503......................  Pulmonary M >=45.50 and M <56.50     1.8476     1.4796     1.3823       1.3261         16         14         13           13
1504......................  Pulmonary M <45.50..............     2.1421     1.7154     1.6027       1.5375         22         16         15           14

[[Page 48430]]

 
1601......................  Pain syndrome M >=65.50.........     0.9889     0.9889     0.8919       0.8028          9         10         11            9
1602......................  Pain syndrome M >=58.50 and M        1.1078     1.1078     0.9991       0.8992         10         11         11           11
                             <65.50.
1603......................  Pain syndrome M >=43.50 and M        1.3538     1.3538     1.2209       1.0989         12         14         13           13
                             <58.50.
1604......................  Pain syndrome M <43.50..........     1.7201     1.7201     1.5513       1.3963         13         15         17           15
1701......................  Major multiple trauma without        1.3910     1.0912     0.9919       0.9032         12         13         11           11
                             brain or spinal cord injury M
                             >=57.50.
1702......................  Major multiple trauma without        1.6988     1.3328     1.2115       1.1031         15         14         13           13
                             brain or spinal cord injury M
                             >=50.50 and M <57.50.
1703......................  Major multiple trauma without        2.0140     1.5799     1.4362       1.3077         18         16         15           15
                             brain or spinal cord injury M
                             >=41.50 and M <50.50.
1704......................  Major multiple trauma without        2.2279     1.7478     1.5888       1.4466         17         19         17           16
                             brain or spinal cord injury M
                             >=36.50 and M <41.50.
1705......................  Major multiple trauma without        2.4447     1.9179     1.7434       1.5873         23         20         18           17
                             brain or spinal cord injury M
                             <36.50.
1801......................  Major multiple trauma with brain     1.2381     0.9821     0.8820       0.8180         14         13         10           10
                             or spinal cord injury M >=67.50.
1802......................  Major multiple trauma with brain     1.5767     1.2506     1.1232       1.0418         13         15         12           12
                             or spinal cord injury M >=55.50
                             and M <67.50.
1803......................  Major multiple trauma with brain     1.9345     1.5344     1.3781       1.2782         17         17         15           14
                             or spinal cord injury M >=45.50
                             and M <55.50.
1804......................  Major multiple trauma with brain     2.2183     1.7596     1.5803       1.4657         22         19         17           16
                             or spinal cord injury M >=40.50
                             and M <45.50.
1805......................  Major multiple trauma with brain     2.6487     2.1010     1.8869       1.7501         28         23         20           19
                             or spinal cord injury M >=30.50
                             and M <40.50.
1806......................  Major multiple trauma with brain     3.4119     2.7063     2.4305       2.2543         37         29         22           25
                             or spinal cord injury M <30.50.
1901......................  Guillain-Barr[eacute] M >=66.50.     1.2031     0.9356     0.9226       0.8738         14         12         13           10
1902......................  Guillain-Barr[eacute] M >=51.50      1.6292     1.2670     1.2493       1.1832         18         14         14           14
                             and M <66.50.
1903......................  Guillain-Barr[eacute] M >=38.50      2.5939     2.0172     1.9890       1.8838         25         21         21           21
                             and M <51.50.
1904......................  Guillain-Barr[eacute] M <38.50..     3.8189     2.9699     2.9284       2.7735         44         31         29           29
2001......................  Miscellaneous M >=66.50.........     1.2118     0.9833     0.9005       0.8282         11         11         10            9
2002......................  Miscellaneous M >=55.50 and M        1.4899     1.2090     1.1072       1.0182         13         13         12           11
                             <66.50.
2003......................  Miscellaneous M >=46.50 and M        1.7634     1.4309     1.3105       1.2052         15         15         14           13
                             <55.50.
2004......................  Miscellaneous M <46.50 and A         1.9847     1.6104     1.4749       1.3564         18         17         15           15
                             >=77.50.
2005......................  Miscellaneous M <46.50 and A         2.1338     1.7315     1.5858       1.4583         19         18         16           15
                             <77.50.
2101......................  Burns M >=52.50.................     1.8033     1.3711     1.1272       1.1272         17         13         13           14
2102......................  Burns M <52.50..................     2.4055     1.8289     1.5036       1.5036         20         21         15           15
5001......................  Short-stay cases, length of stay  .........  .........  .........       0.1643  .........  .........  .........            2
                             is 3 days or fewer.
5101......................  Expired, orthopedic, length of    .........  .........  .........       0.7262  .........  .........  .........            8
                             stay is 13 days or fewer.
5102......................  Expired, orthopedic, length of    .........  .........  .........       1.8015  .........  .........  .........           19
                             stay is 14 days or more.
5103......................  Expired, not orthopedic, length   .........  .........  .........       0.8454  .........  .........  .........            8
                             of stay is 15 days or fewer.
5104......................  Expired, not orthopedic, length   .........  .........  .........       2.0896  .........  .........  .........           20
                             of stay is 16 days or more.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Generally, updates to the CMG relative weights result in some 
increases and some decreases to the CMG relative weight values. Table 3 
shows how we estimate that the application of the revisions for FY 2021 
would affect particular CMG relative weight values, which would affect 
the overall distribution of payments within CMGs and tiers. We note 
that, because we implement the CMG relative weight revisions in a 
budget-neutral manner (as previously described), total estimated 
aggregate payments to IRFs for FY 2021 are not affected as a result of 
the CMG relative weight revisions. However, the revisions affect the 
distribution of payments within CMGs and tiers.

   Table 3--Distributional Effects of the Changes to the CMG Relative
                                 Weights
------------------------------------------------------------------------
                                                 Number  of   Percentage
   Percentage change in CMG relative weights       cases       of cases
                                                  affected     affected
------------------------------------------------------------------------
Increased by 15% or more......................           64          0.0
Increased by between 5% and 15%...............        1,830          0.4
Changed by less than 5%.......................      404,940         99.3
Decreased by between 5% and 15%...............        1,029          0.3
Decreased by 15% or more......................           11          0.0
------------------------------------------------------------------------

    As shown in Table 3, 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 2021. The

[[Page 48431]]

changes in the average length of stay values for FY 2021, compared with 
the FY 2020 average length of stay values, are small and do not show 
any particular trends in IRF length of stay patterns.
    The comments we received on our proposal to update the CMG relative 
weights and average length of stay values for FY 2021 are summarized 
below.
    Comment: One commenter expressed concern about the decreases in 
some of the CMG relative weights and average length of stay values from 
the proposed updates, and questioned whether the FY 2019 data used to 
update these values for FY 2021 are reliable and valid. This commenter 
suggested that CMS freeze the CMG relative weights and average length 
of stay values at FY 2020 levels. This commenter also requested that 
CMS provide patient level data to allow stakeholders to analyze and 
model IRF payments and requested that CMS convene regularly scheduled 
TEPs to discuss and review payment model analyses. Additionally, this 
commenter also suggested that CMS should modify Table 3 to reflect the 
payment impacts of updating the CMG relative weights and requested that 
CMS provide actual changes in payment instead of changes in 
percentages, as this would provide more transparency related to the 
actual changes that IRFs may experience.
    Response: The annual updates to the CMG relative weights, which 
include both increases and decreases to the CMG relative weights, are 
intended to ensure that IRF payments are aligned as closely as possible 
with the current costs of care. The relative weights for each of the 
CMGs and tiers represent the relative costliness of patients in those 
CMGs and tiers compared with patients in other CMGs and tiers. 
Additionally, the average length of stay values are only used to 
determine which cases qualify for the short-stay transfer policy and 
are not used to determine payments for the non-short-stay transfer 
cases.
    We do not agree that it would be appropriate to freeze the CMG 
relative weights and average length of stay values at FY 2020 levels 
because this would require us to base them on older data. Updating 
these values based on the most recent available data ensures that the 
IRF case mix system is as reflective as possible of recent changes in 
IRF utilization and case mix, thereby ensuring that IRF payments 
appropriately reflect the relative costs of caring for IRF patients. 
Freezing these values at FY 2020 levels does not allow us to reflect 
any changes in IRF utilization and case mix that might have occurred 
over time. As stated in the FY 2021 IRF PPS proposed rule, the FY 2019 
data is the most current and complete data available for updating 
payments.
    We are confident that the data is valid and reliable for use in 
setting IRF PPS payment rates. CMS's contractor (Research Triangle 
Institute (RTI)) analyzed 2 year's worth of these data (FYs 2017 and 
2018) to determine the extent to which the data could predict resource 
use in the IRF setting. RTI produced two reports containing their 
analyses and findings, ``Analyses to Inform the Potential use of 
Standardized Patient Assessment Data Elements in the Inpatient 
Rehabilitation Facility Prospective Payment System (PDF)'' (April 2018) 
and ``Analyses to Inform the Use of Standardized Patient Assessment 
Data Elements in the Inpatient Rehabilitation Facility Prospective 
Payment System (PDF)'' (March 2019). These reports are both available 
for download from the IRF PPS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Research.
    As most recently discussed in detail in the FY 2020 IRF PPS final 
rule (84 FR 39054), we believe that these data accurately reflect the 
severity of the IRF patient population and the associated costs of 
caring for these patients in the IRF setting. Therefore, we believe it 
is appropriate to use the FY 2019 data to update the CMG relative 
weights and average length of stay values for FY 2021 to ensure the 
case mix system is as reflective as possible of recent changes in IRF 
utilization and case mix.
    With regard to the request for patient-level data, we are unable to 
make patient assessment and claims data publicly available on the CMS 
website because these data contain information that can be used to 
identify individual Medicare beneficiaries. However, stakeholders may 
obtain these data through the standard CMS data acquisition and Data 
Use Agreement (DUA) processes. More information on CMS data acquisition 
process can be found on the CMS website at https://www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/FilesForOrderGenInfo/index.
    In addition, with regard to the request for the regularly scheduled 
TEPs to obtain stakeholder input on the routine annual updates to the 
CMG relative weights and average length of stay values, we provide the 
methodology for these updates in the IRF PPS proposed rules each year 
to enable stakeholders to comment on the methodology and provide any 
suggestions for updating this methodology. Furthermore, we rarely make 
changes to this methodology, so we believe that stakeholders have had 
ample opportunity to comment on this methodology over the years, and we 
do not believe that there would be added value to convening a TEP to 
discuss this well-established methodology.
    With regard to the comment regarding Table 3, we do not agree with 
the commenter's suggestion that utilizing changes in payment would more 
adequately project changes in the CMG relative weight values than 
examining changes in the relative weight values themselves. We would 
also like to note that the data files published in conjunction with 
each proposed and final rule contain estimated facility level payment 
impacts for each IRF in our analysis file to support transparency and 
assist providers in determining the payment implications of the policy 
updates contained in each rule. However, we appreciate the commenter's 
suggested revisions to Table 3 and will take this comment under 
advisement for future consideration.
    After consideration of the comments we received, we are finalizing 
our proposal to update the CMG relative weights and average length of 
stay values for FY 2021, as shown in Table 2 of this final rule. These 
updates are effective for FY 2021, that is, for discharges occurring on 
or after October 1, 2020 and on or before September 30, 2021.

VI. FY 2021 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 for which payment is 
made under the IRF PPS. 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 the productivity adjustment described in 
section 1886(b)(3)(B)(xi)(II) of the Act. Thus, in the FY 2021 IRF PPS 
proposed rule (85 FR 22073 through 22074), we proposed to update the 
IRF PPS payments for FY 2021 by a market basket increase factor as 
required by section 1886(j)(3)(C) of the Act based upon the most 
current data available, with a productivity adjustment as required by 
section 1886(j)(3)(C)(ii)(I) of the Act.
    We have utilized various market baskets through the years in the 
IRF PPS. For a discussion of these market

[[Page 48432]]

baskets, we refer readers to the FY 2016 IRF PPS final rule (80 FR 
47046).
    In FY 2016, we finalized the use of a 2012-based IRF market basket, 
using Medicare cost report (MCR) data for both freestanding and 
hospital-based IRFs (80 FR 47049 through 47068). Beginning with FY 
2020, we finalized a rebased and revised IRF market basket to reflect a 
2016 base year. The FY 2020 IRF PPS final rule (84 FR 39071 through 
39086) contains a complete discussion of the development of the 2016-
based IRF market basket.

B. FY 2021 Market Basket Update and Productivity Adjustment

    For FY 2021 (that is, beginning October 1, 2020 and ending 
September 30, 2021), we proposed to update the IRF PPS payments by a 
market basket increase factor as required by section 1886(j)(3)(C) of 
the Act, with a productivity adjustment as required by section 
1886(j)(3)(C)(ii)(I) of the Act. For FY 2021, we proposed to use the 
same methodology described in the FY 2020 IRF PPS final rule (84 FR 
39085) to compute the FY 2021 market basket increase factor to update 
the IRF PPS base payment rate.
    Consistent with historical practice, we proposed to estimate the 
market basket update for the IRF PPS based on IHS Global Inc.'s (IGI's) 
forecast using the most recent available data. IGI is a nationally-
recognized economic and financial forecasting firm with which we 
contract to forecast the components of the market baskets and 
multifactor productivity (MFP). Based on IGI's fourth quarter 2019 
forecast with historical data through the third quarter of 2019, the 
2016-based IRF market basket increase factor for FY 2021 was projected 
to be 2.9 percent. Therefore, we proposed that the 2016-based IRF 
market basket increase factor for FY 2021 would be 2.9 percent. We 
proposed that if more recent data became available after the 
publication of the proposed rule and before the publication of this 
final rule (for example, a more recent estimate of the market basket 
update), we would use such data to determine the FY 2021 market basket 
update in this final rule.
    According to section 1886(j)(3)(C)(i) of the Act, the Secretary 
shall establish an increase factor based on an appropriate percentage 
increase in a market basket of goods and services. Section 
1886(j)(3)(C)(ii) of the Act then requires that, after establishing the 
increase factor for a FY, the Secretary shall reduce such increase 
factor for FY 2012 and each subsequent FY, by the productivity 
adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act. 
Section 1886(b)(3)(B)(xi)(II) of the Act sets forth the definition of 
this productivity adjustment. The statute defines the productivity 
adjustment to be equal to the 10-year moving average of changes in 
annual economy-wide, private nonfarm business MFP (as projected by the 
Secretary for the 10-year period ending with the applicable FY, year, 
cost reporting period, or other annual period) (the ``MFP 
adjustment''). The U.S. Department of Labor's Bureau of Labor 
Statistics (BLS) publishes the official measure of private nonfarm 
business MFP. Please see http://www.bls.gov/mfp for the BLS historical 
published MFP data. A complete description of the MFP projection 
methodology is available on the CMS website at https://www.cms.gov/Research-Statistics-Dataand-Systems/Statistics-Trends-andReports/MedicareProgramRatesStats/MarketBasketResearch.html.
    Using IGI's fourth quarter 2019 forecast, the 10-year moving 
average growth of MFP for FY 2021 was projected to be 0.4 percentage 
point. Thus, in accordance with section 1886(j)(3)(C) of the Act, we 
proposed to base the FY 2021 market basket update, which is used to 
determine the applicable percentage increase for the IRF payments, on 
IGI's fourth quarter 2019 forecast of the 2016-based IRF market basket. 
We proposed to then reduce this percentage increase by the estimated 
MFP adjustment for FY 2021 of 0.4 percentage point (the 10-year moving 
average growth of MFP for the period ending FY 2021 based on IGI's 
fourth quarter 2019 forecast). Therefore, the proposed FY 2021 IRF 
update was equal to 2.5 percent (2.9 percent market basket update less 
0.4 percentage point MFP adjustment). Furthermore, we proposed that if 
more recent data became available after the publication of the proposed 
rule and before the publication of this final rule (for example, a more 
recent estimate of the market basket and/or MFP), we would use such 
data to determine the FY 2021 market basket update and MFP adjustment 
in this final rule.
    Based on the more recent data available for this FY 2021 IRF final 
rule (that is, IGI's second quarter 2020 forecast of the 2016-based IRF 
market basket rate-of-increase with historical data through the first 
quarter of 2020), we estimate that the FY 2021 market basket update is 
2.4 percent. We note that the fourth quarter 2019 forecast was 
developed prior to the economic impacts of the Coronavirus disease 2019 
(COVID-19) pandemic. This lower update (2.4 percent) for FY 2021 
relative to the proposed rule (2.9 percent) is primarily driven by 
slower anticipated compensation growth for both health-related and 
other occupations as labor markets are expected to be significantly 
impacted during the recession that started in February 2020 and 
throughout the anticipated recovery.
    Based on the more recent data available for this FY 2021 IRF final 
rule, the current estimate of the 10-year moving average growth of MFP 
for FY 2021 is -0.1 percentage point. This MFP is based on the most 
recent macroeconomic outlook from IGI at the time of rulemaking 
(released June 2020) in order to reflect more current historical 
economic data. IGI produces monthly macroeconomic forecasts, which 
include projections of all of the economic series used to derive MFP. 
In contrast, IGI only produces forecasts of the more detailed price 
proxies used in the 2016-based IRF market basket on a quarterly basis. 
Therefore, IGI's second quarter 2020 forecast is the most recent 
forecast of the 2016-based IRF market basket update.
    We note that it has typically been our practice to base the 
projection of the market basket price proxies and MFP in the final rule 
on the second quarter IGI forecast. For this FY 2021 IRF PPS final 
rule, we are using the IGI June macroeconomic forecast for MFP because 
it is a more recent forecast, and it is important to use more recent 
data during this period when economic trends, particularly employment 
and labor productivity, are notably uncertain because of the COVID-19 
pandemic. Historically, the MFP adjustment based on the second quarter 
IGI forecast has been very similar to the MFP adjustment derived with 
IGI's June macroeconomic forecast. Substantial changes in the 
macroeconomic indicators in between monthly forecasts are atypical.
    Given the unprecedented economic uncertainty as a result of the 
COVID-19 pandemic, the change in the IGI macroeconomic series used to 
derive MFP between the IGI second quarter 2020 IGI forecast and the IGI 
June 2020 macroeconomic forecast is significant. Therefore, we believe 
it is technically appropriate to use IGI's more recent June 2020 
macroeconomic forecast to determine the MFP adjustment for the final 
rule as it reflects more current historical data. For comparison 
purposes, the 10-year moving average growth of MFP for FY 2021 is 
projected to be -0.1 percentage point based on IGI's June 2020 
macroeconomic forecast compared to a FY 2021 projected 10-year moving 
average growth of MFP of 0.7 percentage point based on IGI's second 
quarter 2020 forecast. Mechanically subtracting the negative

[[Page 48433]]

10-year moving average growth of MFP from the IRF market basket 
increase factor using the data from the IGI June 2020 macroeconomic 
forecast would have resulted in a 0.1 percentage point increase in the 
FY 2021 IRF increase factor. However, under sections 
1886(b)(3)(B)(xi)(II) and 1886(j)(3)(C) of the Act, the Secretary is 
required to reduce (not increase) the IRF market basket increase factor 
by changes in economy-wide productivity. Accordingly, we will be 
applying a 0.0 percentage point MFP adjustment to the IRF market basket 
increase factor. Therefore, the current estimate of the FY 2021 IRF 
increase factor is equal to 2.4 percent.
    For FY 2021, 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, the Secretary is required to update the IRF 
PPS payment rates for FY 2021 by an adjusted market basket increase 
factor which, based on the most recently available data, is 2.4 
percent. Section 1886(j)(3)(C) of the Act does not provide the 
Secretary with the authority to apply a different update factor to IRF 
PPS payment rates for FY 2021.
    The comments we received on the proposed market basket update and 
productivity adjustment are summarized below.
    Comment: One commenter (MedPAC) stated 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 2021. The commenter appreciated that CMS cited MedPAC's 
recommendation, even while noting that the Secretary does not have the 
authority to deviate from statutorily mandated updates.
    Response: We appreciate MedPAC's interest in the IRF increase 
factor. However, we are required to update IRF PPS payments by the 
market basket update adjusted for productivity, as directed by section 
1886(j)(3)(C) of the Act.
    Comment: A few commenters supported the proposal to update the 
market basket and productivity amounts using the latest available data, 
and encouraged CMS to update these factors using the latest available 
data as part of the release of the IRF PPS Final Rule. One commenter 
stated that they were pleased to see an increase in payments to IRFs 
and further increases to rural providers.
    Response: We appreciate the commenters' support for the proposed 
IRF annual payment update. As noted in the proposed rule, the final 
update would be based on a more recent forecast of the market basket 
and MFP adjustment if available. Therefore, incorporating an updated 
estimate of the market basket update and productivity adjustment in the 
final rule is consistent with what we have done historically for the 
IRF PPS as well as other Medicare PPSs as it reflects more current 
historical data as well as a revised outlook on the forecasted price 
pressures faced by providers for FY 2021 and inclusive of economic 
assumptions regarding the expected impacts from the COVID-19 pandemic.
    Comment: Several commenters expressed concern about the continued 
application of the productivity adjustment to IRFs. One commenter 
stated that while they understand that CMS is bound by statute to 
reduce the market basket update by a productivity adjustment factor in 
accordance with the PPACA, they continue to be concerned that IRFs will 
not have the ability to generate additional productivity gains at a 
pace matching the productivity of the economy at large on an ongoing, 
consistent basis as contemplated by the PPACA. In addition, the 
commenter stated that the recent developments related to the public 
health emergency due to COVID-19 have resulted in further productivity 
challenges for IRFs. The commenter respectfully requested that CMS 
carefully monitor the impact that these productivity adjustments will 
have on the rehabilitation hospital sector, provide feedback to 
Congress as appropriate, and reduce the productivity adjustment. A few 
commenters recommended that CMS continue to research productivity 
factors for health care providers and hospitals, and partner with 
Congress to implement a more appropriate, health care specific 
productivity adjustment.
    Response: We acknowledge the commenters' concerns regarding 
productivity growth at the economy-wide level and its application to 
IRFs. As the commenter acknowledges, 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. We will continue to monitor the 
impact of the payment updates on IRF Medicare payment adequacy as well 
as beneficiary access to care.
    As stated in the FY 2020 IRF PPS final rule (84 FR 39087), we would 
be very interested in better understanding IRF-specific productivity; 
however, the data elements required to estimate IRF specific multi-
factor productivity are not produced at the level of detail that would 
allow this analysis. We have estimated hospital-sector multi-factor 
productivity and have published the findings on the CMS website at 
https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/Downloads/ProductivityMemo2016.pdf.
    Comment: One commenter stated that while they appreciate this 
modest increase to the payment rate, it is insufficient to offset the 
impact of cost inflation, sequestration, and the financial impact IRFs 
are facing due to COVID-19. The commenter encouraged CMS to consider 
these additional impacts in the final rule.
    Response: Since the publication of the FY 2021 IRF PPS proposed 
rule, we have incorporated more current historical data and revised 
forecasts provided by IGI that factor in expected impacts on price and 
wage pressures from the COVID-19 pandemic. By incorporating the most 
recent estimates available of the market basket update and productivity 
adjustment, we believe these data reflect the best available projection 
of input price inflation faced by IRFs for FY 2021, adjusted for 
economy-wide productivity, which is required by statute.
    After consideration of the comments we received, we are finalizing 
a FY 2021 IRF update equal to 2.4 percent based on the most recent data 
available.

C. Labor-Related Share for FY 2021

    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 IRFs' costs which are attributable to wages and wage-related costs, 
of the prospective payment rates computed under section 1886(j)(3) of 
the Act 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 proposed to 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 2016-based IRF market basket, we proposed to 
calculate the labor-related share for FY 2021 as the sum of the FY 2021 
relative importance of Wages and Salaries, Employee Benefits, 
Professional Fees: Labor-related,

[[Page 48434]]

Administrative and Facilities Support Services, Installation, 
Maintenance, and Repair Services, All Other: Labor-related Services, 
and a portion of the Capital-Related relative importance from the 2016-
based IRF market basket. For more details regarding the methodology for 
determining specific cost categories for inclusion in the 2016-based 
IRF labor-related share, see the FY 2020 IRF PPS final rule (84 FR 
39087 through 39089).
    The relative importance reflects the different rates of price 
change for these cost categories between the base year (2016) and FY 
2021. Based on IGI's fourth quarter 2019 forecast of the 2016-based IRF 
market basket, the sum of the FY 2021 relative importance for Wages and 
Salaries, Employee Benefits, Professional Fees: Labor-related, 
Administrative and Facilities Support Services, Installation 
Maintenance & Repair Services, and All Other: Labor-related Services 
was 69.0 percent. We proposed that the portion of Capital-Related costs 
that are influenced by the local labor market is 46 percent. Since the 
relative importance for Capital-Related costs was 8.5 percent of the 
2016-based IRF market basket for FY 2021, we proposed to take 46 
percent of 8.5 percent to determine the labor-related share of Capital-
Related costs for FY 2021 of 3.9 percent. Therefore, we proposed a 
total labor-related share for FY 2021 of 72.9 percent (the sum of 69.0 
percent for the labor-related share of operating costs and 3.9 percent 
for the labor-related share of Capital-Related costs). We proposed that 
if more recent data became available after publication of the proposed 
rule and before the publication of this final rule (for example, a more 
recent estimate of the labor-related share), we would use such data to 
determine the FY 2021 IRF labor-related share in this final rule.
    Based on IGI's second quarter 2020 forecast of the 2016-based IRF 
market basket, the sum of the FY 2021 relative importance for Wages and 
Salaries, Employee Benefits, Professional Fees: Labor-related, 
Administrative and Facilities Support Services, Installation 
Maintenance & Repair Services, and All Other: Labor-related Services is 
69.1 percent. We proposed that the portion of Capital-Related costs 
that are influenced by the local labor market is 46 percent. Since the 
relative importance for Capital-Related costs is 8.5 percent of the 
2016-based IRF market basket for FY 2021, we take 46 percent of 8.5 
percent to determine the labor-related share of Capital-Related costs 
for FY 2021 of 3.9 percent. Therefore, the current estimate of the 
total labor-related share for FY 2021 is equal to 73.0 percent (the sum 
of 69.1 percent for the labor-related share of operating costs and 3.9 
percent for the labor-related share of Capital-Related costs). Table 4 
shows the current estimate of the FY 2021 labor-related share and the 
FY 2020 final labor-related share using the 2016-based IRF market 
basket relative importance.

 Table 4--FY 2021 IRF Labor-Related Share and FY 2020 IRF Labor-Related
                                  Share
------------------------------------------------------------------------
                                          FY 2021 labor-   FY 2020 final
                                           related share   labor related
                                                \1\          share \2\
------------------------------------------------------------------------
Wages and Salaries......................            48.6            48.1
Employee Benefits.......................            11.4            11.4
Professional Fees: Labor-Related \3\....             5.0             5.0
Administrative and Facilities Support                0.7             0.8
 Services...............................
Installation, Maintenance, and Repair                1.6             1.6
 Services...............................
All Other: Labor-Related Services.......             1.8             1.8
Subtotal................................            69.1            68.7
Labor-related portion of Capital-Related             3.9             4.0
 (46%)..................................
                                         -------------------------------
    Total Labor-Related Share...........            73.0            72.7
------------------------------------------------------------------------
\1\ Based on the 2016-based IRF market basket relative importance, IGI
  2nd quarter 2020 forecast.
\2\ Based on the 2016-based IRF market basket relative importance as
  published in the Federal Register (84 FR 39089).
\3\ Includes all contract advertising and marketing costs and a portion
  of accounting, architectural, engineering, legal, management
  consulting, and home office contract labor costs.

    The comment we received on the proposed labor related share for FY 
2021 is summarized below.
    Comment: One commenter opposed the proposed increase in the labor 
related share because it penalizes any facility that has a wage index 
less than 1.0. The commenter stated that across the country, there is a 
growing disparity between high-wage and low-wage states and stated that 
this proposal will continue to exacerbate that disparity and further 
harm hospitals in many rural and underserved communities. Unless there 
is sufficient data to support the labor related share increase, the 
commenter requested that the percentage from 2020 should carry forward 
into 2021.
    Response: We appreciate the commenter's concern over the increase 
in the labor-related share; however, we believe it is technically 
appropriate to use the 2016-based IRF market basket relative importance 
to determine the labor-related share for FY 2021 as it is based on more 
recent data regarding price pressures and cost structure of IRFs. Our 
policy to use the most recent market basket to determine the labor-
related share is a policy we have regularly adopted for the IRF PPS, 
(such as for the FY 2020 IRF PPS final rule (84 FR 39089)), as well as 
for other PPSs including but not limited to the Inpatient Psychiatric 
Facility PPS (84 FR 38446) and the Long-term care hospital PPS (84 FR 
42642).
    After consideration of the comment we received, we are finalizing 
the use of the sum of the FY 2021 relative importance for the labor-
related cost categories based on the most recent forecast (IGI's second 
quarter 2020 forecast) of the 2016-based IRF market basket labor-
related share cost weights as proposed.

D. Wage Adjustment for FY 2021

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

[[Page 48435]]

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 2021, we proposed to maintain the policies and methodologies 
described in the FY 2020 IRF PPS final rule (84 FR 39090) 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 2021 pre-reclassification and pre-floor 
hospital wage index data. In accordance with section 1886(d)(3)(E) of 
the Act, the FY 2021 pre-reclassification and pre-floor hospital wage 
index is based on data submitted for hospital cost reporting periods 
beginning on or after October 1, 2016, and before October 1, 2017 (that 
is, FY 2017 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 2021 IRF 
PPS wage index.
    The comments we received on these proposals are summarized below.
    Comment: One commenter recommended that CMS repeal the existing 
hospital wage index and recommended a number of changes to existing 
wage index policies, but acknowledged that legislative action may be 
necessary to accomplish some or all of the recommended changes.
    Response: We appreciate the commenter's recommendations on 
implementing wage index reform and the recommended modifications to the 
IRF PPS wage index polices. We believe that such recommendations should 
be part of a broader discussion on wage index reform across Medicare 
payment systems. These recommendations will be taken into consideration 
while we continue to explore potential wage index alternatives in the 
future.
    Comment: Some commenters who were supportive of using the 
concurrent year's IPPS wage data requested that CMS adopt IPPS wage 
index polices under the IRF PPS, including geographic reclassification, 
the imposition of a rural floor, and adjustments that address wage 
disparities between high and low wage index hospitals. Additionally, 
some commenters suggested that discrepancies in wage index policies 
between the IRF PPS and IPPS settings may impact access to care and 
competition for labor and requested that CMS ensure parity between wage 
index policies for all hospitals.
    Response: We appreciate the commenters' support for the continued 
use of the concurrent year's IPPS wage data. However, we note that the 
IRF PPS does not account for geographic reclassification under sections 
1886(d)(8) and (d)(10) of the Act, and does not apply the ``rural 
floor'' under section 4410 of the Balanced Budget Act of 1997 (BBA) 
(Pub. L. 105-33, enacted on August 5, 1997). Furthermore, as we do not 
have an IRF-specific wage index, we are unable to determine the degree, 
if any, to which a geographic reclassification adjustment or a rural 
floor policy under the IRF PPS would be appropriate. The rationale for 
our current wage index policies is fully described in the FY 2006 IRF 
PPS final rule (70 FR 47880, 47926 through 47928).
    With regard to the comments requesting that we adopt similar 
adjustments to address wage disparities between high and low wage index 
IPPS hospitals under the IRF PPS, we would like to note that the IRF 
wage index is derived from IPPS wage data. As such, any effects of this 
policy on the wage data of IPPS hospitals will be extended to the IRF 
setting, as this data will be used to establish the wage index for IRFs 
in the future.
    We appreciate the commenters' concerns regarding beneficiary access 
to care and competition for labor resulting from different applicable 
wage index policies across different settings of care. While CMS and 
other stakeholders have explored potential alternatives to the current 
wage index system in the past, no consensus has been achieved regarding 
how best to implement a replacement system. These concerns will be 
taken into consideration while we continue to explore potential wage 
index reforms and monitor IRF wage index policies. After consideration 
of the comments we received, we are finalizing our proposed policies as 
discussed above relating to the wage index.
2. Core-Based Statistical Areas (CBSAs) for the FY 2021 IRF Wage Index
a. Background
    The wage index used for the IRF PPS is calculated using the pre-
reclassification and pre-floor inpatient PPS (IPPS) 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. 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 based on the 2010 Census, and provided guidance on the 
use of the delineations of these statistical areas using standards 
published in the June 28, 2010 Federal Register (75 FR 37246 through 
37252). We refer readers to the FY 2016 IRF PPS final rule (80 FR 47068 
through 47076) for a full discussion of our implementation of the OMB 
labor market area delineations beginning with the FY 2016 wage index.
    Generally, OMB issues major revisions to statistical areas every 10 
years, based on the results of the decennial census. However, OMB 
occasionally issues updates and revisions to the statistical areas to 
reflect the recognition of new areas or the addition of counties to 
existing areas. In some instances, these updates merge formerly 
separate areas, transfer components of an area from one area to 
another, or drop components from an area. 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.
    In the FY 2018 IRF PPS final rule (82 FR 36250 through 36251), we 
adopted the updates set forth in OMB Bulletin No. 15-01 effective 
October 1, 2017, beginning with the FY 2018 IRF wage index. For a 
complete discussion of the adoption of the updates set forth in OMB 
Bulletin No. 15-01, we refer readers to the FY 2018 IRF PPS final rule. 
In the FY 2019 IRF PPS final rule (83 FR 38527), we continued to use 
the OMB delineations that were adopted beginning with FY 2016 to 
calculate the area wage indexes, with updates set forth in OMB Bulletin 
No. 15-01 that we adopted beginning with the FY 2018 wage index.

[[Page 48436]]

    On August 15, 2017, OMB issued OMB Bulletin No. 17-01, which 
provided updates to and superseded OMB Bulletin No. 15-01 that was 
issued on July 15, 2015. The attachments to OMB Bulletin No. 17-01 
provide detailed information on the update to statistical areas since 
July 15, 2015, and are based on the application of the 2010 Standards 
for Delineating Metropolitan and Micropolitan Statistical Areas to 
Census Bureau population estimates for July 1, 2014 and July 1, 2015. 
In the FY 2020 IRF PPS final rule (84 FR 39090 through 39091), we 
adopted the updates set forth in OMB Bulletin No. 17-01 effective 
October 1, 2019, beginning with the FY 2020 IRF wage index.
    On April 10, 2018, OMB issued OMB Bulletin No. 18-03, which 
superseded the August 15, 2017 OMB Bulletin No. 17-01, and on September 
14, 2018, OMB issued OMB Bulletin No. 18-04, which superseded the April 
10, 2018 OMB Bulletin No. 18-03. These bulletins established revised 
delineations for Metropolitan Statistical Areas, Micropolitan 
Statistical Areas, and Combined Statistical Areas, and provided 
guidance on the use of the delineations of these statistical areas. A 
copy of this bulletin may be obtained at https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf. We note that on March 6, 
2020 OMB issued OMB Bulletin 20-01 (available on the web at https://www.whitehouse.gov/wp-content/uploads/2020/03/Bulletin-20-01.pdf), but 
it was not issued in time for development of this rule.
    While OMB Bulletin No. 18-04 is not based on new census data, there 
were some material changes based on the revised OMB delineations. The 
revisions OMB published on September 14, 2018 contain a number of 
significant changes. For example, under the new OMB delineations, there 
would be new CBSAs, urban counties that would become rural, rural 
counties that would become urban, and existing CBSAs that would be 
split apart. We discuss these changes in more detail in section 
VI.D.2.b. of this final rule. We proposed to adopt the updates to the 
OMB delineations announced in OMB Bulletin No. 18-04 effective 
beginning with FY 2021 under the IRF PPS. As noted previously, the 
March 6, 2020 OMB Bulletin 20-01 was not issued in time for development 
of this rule. While we do not believe that the minor updates included 
in OMB Bulletin 20-01 will impact the updates to the CBSA-based labor 
market area delineations, if appropriate, we will propose any updates 
from this bulletin in the FY 2022 IRF PPS proposed rule.
b. Implementation of New Labor Market Area Delineations
    We believe 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. We 
further believe that using the most current delineations possible will 
increase the integrity of the IRF PPS wage index system by creating a 
more accurate representation of geographic variations in wage levels. 
Therefore, we proposed to adopt the new OMB delineations as described 
in the September 14, 2018 OMB Bulletin No. 18-04, effective beginning 
with the FY 2021 IRF PPS wage index. We proposed to use these new 
delineations to calculate area wage indexes in a manner that is 
generally consistent with the CBSA-based methodologies. As the adoption 
of the new OMB delineations may have significant negative impacts on 
the wage index values for certain geographic areas, we also proposed to 
apply a 5 percent cap on any decrease in an IRF's wage index from the 
IRF's wage index from the prior FY. This transition is discussed in 
more detail in section VI.D.3. of this final rule.
(1) Micropolitan Statistical Areas
    OMB defines a ``Micropolitan Statistical Area'' as a CBSA 
associated with at least one urban cluster that has a population of at 
least 10,000, but less than 50,000 (75 FR 37252). We refer to these 
areas as Micropolitan Areas. Since FY 2006, we have treated 
Micropolitan Areas as rural and include hospitals located in 
Micropolitan Areas in each State's rural wage index. We refer the 
reader to the FY 2006 IRF PPS final rule for a complete discussion 
regarding treating Micropolitan Areas as rural. Therefore, in 
conjunction with our proposal to implement the new OMB labor market 
delineations beginning in FY 2021 and consistent with the treatment of 
Micropolitan Areas under the IPPS, we proposed to continue to treat 
Micropolitan Areas as ``rural'' and to include Micropolitan Areas in 
the calculation of the state's rural wage index.
(2) Urban Counties That Would Become Rural Under the New OMB 
Delineations
    As previously discussed, we proposed to implement the new OMB labor 
market area delineations (based upon the 2010 Decennial Census data) 
beginning in FY 2021. Our analysis shows that a total of 34 counties 
(and county equivalents) that are currently considered part of an urban 
CBSA would be considered located in a rural area, beginning in FY 2021, 
under these new OMB delineations. Table 5 lists the 34 urban counties 
that will be rural with the implementation of the new OMB delineations.

                        Table 5--Counties That Will Transition From Urban to Rural Status
----------------------------------------------------------------------------------------------------------------
                               County/county
     FIPS county code            equivalent              State         Current CBSA        Current CBSA name
----------------------------------------------------------------------------------------------------------------
01127....................  Walker...............  AL                           13820  Birmingham-Hoover, AL.
12045....................  Gulf.................  FL                           37460  Panama City, FL.
13007....................  Baker................  GA                           10500  Albany, GA.
13235....................  Pulaski..............  GA                           47580  Warner Robins, GA.
15005....................  Kalawao..............  HI                           27980  Kahului-Wailuku-Lahaina,
                                                                                       HI.
17039....................  De Witt..............  IL                           14010  Bloomington, IL.
17053....................  Ford.................  IL                           16580  Champaign-Urbana, IL.
18143....................  Scott................  IN                           31140  Louisville/Jefferson
                                                                                       County, KY-IN.
18179....................  Wells................  IN                           23060  Fort Wayne, IN.
19149....................  Plymouth.............  IA                           43580  Sioux City, IA-NE-SD.
20095....................  Kingman..............  KS                           48620  Wichita, KS.
21223....................  Trimble..............  KY                           31140  Louisville/Jefferson
                                                                                       County, KY-IN.
22119....................  Webster..............  LA                           43340  Shreveport-Bossier City,
                                                                                       LA.
26015....................  Barry................  MI                           24340  Grand Rapids-Wyoming, MI.
26159....................  Van Buren............  MI                           28020  Kalamazoo-Portage, MI.
27143....................  Sibley...............  MN                           33460  Minneapolis-St. Paul-
                                                                                       Bloomington, MN-WI.

[[Page 48437]]

 
28009....................  Benton...............  MS                           32820  Memphis, TN-MS-AR.
29119....................  Mc Donald............  MO                           22220  Fayetteville-Springdale-
                                                                                       Rogers, AR-MO.
30037....................  Golden Valley........  MT                           13740  Billings, MT.
31081....................  Hamilton.............  NE                           24260  Grand Island, NE.
38085....................  Sioux................  ND                           13900  Bismarck, ND.
40079....................  Le Flore.............  OK                           22900  Fort Smith, AR-OK.
45087....................  Union................  SC                           43900  Spartanburg, SC.
46033....................  Custer...............  SD                           39660  Rapid City, SD.
47081....................  Hickman..............  TN                           34980  Nashville-Davidson-
                                                                                       Murfreesboro-Franklin,
                                                                                       TN.
48007....................  Aransas..............  TX                           18580  Corpus Christi, TX.
48221....................  Hood.................  TX                           23104  Fort Worth-Arlington, TX.
48351....................  Newton...............  TX                           13140  Beaumont-Port Arthur, TX.
48425....................  Somervell............  TX                           23104  Fort Worth-Arlington, TX.
51029....................  Buckingham...........  VA                           16820  Charlottesville, VA.
51033....................  Caroline.............  VA                           40060  Richmond, VA.
51063....................  Floyd................  VA                           13980  Blacksburg-Christiansburg-
                                                                                       Radford, VA.
53013....................  Columbia.............  WA                           47460  Walla Walla, WA.
53051....................  Pend Oreille.........  WA                           44060  Spokane-Spokane Valley,
                                                                                       WA.
----------------------------------------------------------------------------------------------------------------

    We proposed that the wage data for all hospitals located in the 
counties listed above would now be considered rural, beginning in FY 
2021, when calculating their respective State's rural wage index. This 
rural wage index value would also be used under the IRF PPS. We refer 
readers to section VI.D.3. of this final rule for a discussion of the 
wage index transition policy due to these changes.
(3) Rural Counties That Will Become Urban Under the New OMB 
Delineations
    As previously discussed, we are implementing the new OMB labor 
market area delineations (based upon the 2010 Decennial Census data) 
beginning in FY 2021. Analysis of these OMB labor market area 
delineations shows that a total of 47 counties (and county equivalents) 
that are currently considered located in rural areas will now be 
considered located in urban areas under the new OMB delineations. Table 
6 lists the 47 rural counties that will be urban with the 
implementation of the new OMB delineations.

                        Table 6--Counties That Will Transition From Rural to Urban Status
----------------------------------------------------------------------------------------------------------------
                               County/county                           Proposed CBSA
     FIPS county code            equivalent              State             code           Proposed CBSA name
----------------------------------------------------------------------------------------------------------------
01063....................  Greene...............  AL                           46220  Tuscaloosa, AL.
01129....................  Washington...........  AL                           33660  Mobile, AL.
05047....................  Franklin.............  AR                           22900  Fort Smith, AR-OK.
12075....................  Levy.................  FL                           23540  Gainesville, FL.
13259....................  Stewart..............  GA                           17980  Columbus, GA-AL.
13263....................  Talbot...............  GA                           17980  Columbus, GA-AL.
16077....................  Power................  ID                           38540  Pocatello, ID.
17057....................  Fulton...............  IL                           37900  Peoria, IL.
17087....................  Johnson..............  IL                           16060  Carbondale-Marion, IL.
18047....................  Franklin.............  IN                           17140  Cincinnati, OH-KY-IN.
18121....................  Parke................  IN                           45460  Terre Haute, IN.
18171....................  Warren...............  IN                           29200  Lafayette-West Lafayette,
                                                                                       IN.
19015....................  Boone................  IA                           11180  Ames, IA.
19099....................  Jasper...............  IA                           19780  Des Moines-West Des
                                                                                       Moines, IA.
20061....................  Geary................  KS                           31740  Manhattan, KS.
21043....................  Carter...............  KY                           26580  Huntington-Ashland, WV-KY-
                                                                                       OH.
22007....................  Assumption...........  LA                           12940  Baton Rouge, LA.
22067....................  Morehouse............  LA                           33740  Monroe, LA.
25011....................  Franklin.............  MA                           44140  Springfield, MA.
26067....................  Ionia................  MI                           24340  Grand Rapids-Kentwood, MI.
26155....................  Shiawassee...........  MI                           29620  Lansing-East Lansing, MI.
27075....................  Lake.................  MN                           20260  Duluth, MN-WI.
28031....................  Covington............  MS                           25620  Hattiesburg, MS.
28051....................  Holmes...............  MS                           27140  Jackson, MS.
28131....................  Stone................  MS                           25060  Gulfport-Biloxi, MS.
29053....................  Cooper...............  MO                           17860  Columbia, MO.
29089....................  Howard...............  MO                           17860  Columbia, MO.
30095....................  Stillwater...........  MT                           13740  Billings, MT.
37007....................  Anson................  NC                           16740  Charlotte-Concord-
                                                                                       Gastonia, NC-SC.
37029....................  Camden...............  NC                           47260  Virginia Beach-Norfolk-
                                                                                       Newport News, VA-NC.
37077....................  Granville............  NC                           20500  Durham-Chapel Hill, NC.
37085....................  Harnett..............  NC                           22180  Fayetteville, NC.
39123....................  Ottawa...............  OH                           45780  Toledo, OH.

[[Page 48438]]

 
45027....................  Clarendon............  SC                           44940  Sumter, SC.
47053....................  Gibson...............  TN                           27180  Jackson, TN.
47161....................  Stewart..............  TN                           17300  Clarksville, TN-KY.
48203....................  Harrison.............  TX                           30980  Longview, TX.
48431....................  Sterling.............  TX                           41660  San Angelo, TX.
51097....................  King And Queen.......  VA                           40060  Richmond, VA.
51113....................  Madison..............  VA                           47894  Washington-Arlington-
                                                                                       Alexandria, DC-VA-MD-WV.
51175....................  Southampton..........  VA                           47260  Virginia Beach-Norfolk-
                                                                                       Newport News, VA-NC.
51620....................  Franklin City........  VA                           47260  Virginia Beach-Norfolk-
                                                                                       Newport News, VA-NC.
54035....................  Jackson..............  WV                           16620  Charleston, WV.
54065....................  Morgan...............  WV                           25180  Hagerstown-Martinsburg, MD-
                                                                                       WV.
55069....................  Lincoln..............  WI                           48140  Wausau-Weston, WI.
72001....................  Adjuntas.............  PR                           38660  Ponce, PR.
72083....................  Las Marias...........  PR                           32420  Mayag[uuml]ez, PR.
----------------------------------------------------------------------------------------------------------------

    We proposed that when calculating the area wage index, beginning 
with FY 2021, the wage data for hospitals located in these counties 
would be included in their new respective urban CBSAs. Typically, 
providers located in an urban area receive a higher wage index value 
than or equal to providers located in their State's rural area. We 
refer readers to section VI.D.3. of this final rule for a discussion of 
the wage index transition policy.
(4) Urban Counties That Will Move to a Different Urban CBSA Under the 
New OMB Delineations
    In certain cases, adopting the new OMB delineations involves a 
change only in CBSA name and/or number, while the CBSA continues to 
encompass the same constituent counties. For example, CBSA 19380 
(Dayton, OH) will experience both a change to its number and its name, 
and become CBSA 19430 (Dayton-Kettering, OH), while all of its three 
constituent counties will remain the same. In other cases, only the 
name of the CBSA will be modified, and none of the currently assigned 
counties will be reassigned to a different urban CBSA. Table 7 shows 
the current CBSA code and our proposed CBSA code where we proposed to 
change either the name or CBSA number only. We are not discussing 
further in this section these changes because they are inconsequential 
changes with respect to the IRF PPS wage index.

                           Table 7--Current CBSAs That Will Change CBSA Code or Title
----------------------------------------------------------------------------------------------------------------
                                                                  Current CBSA
      Proposed CBSA code              Proposed CBSA title             code              Current CBSA title
----------------------------------------------------------------------------------------------------------------
10540.........................  Albany-Lebanon, OR.............           10540  Albany, OR.
11500.........................  Anniston-Oxford, AL............           11500  Anniston-Oxford-Jacksonville,
                                                                                  AL.
12060.........................  Atlanta-Sandy Springs-                    12060  Atlanta-Sandy Springs-Roswell,
                                 Alpharetta, GA.                                  GA.
12420.........................  Austin-Round Rock-Georgetown,             12420  Austin-Round Rock, TX.
                                 TX.
13460.........................  Bend, OR.......................           13460  Bend-Redmond, OR.
13980.........................  Blacksburg-Christiansburg, VA..           13980  Blacksburg-Christiansburg-
                                                                                  Radford, VA.
14740.........................  Bremerton-Silverdale-Port                 14740  Bremerton-Silverdale, WA.
                                 Orchard, WA.
15380.........................  Buffalo-Cheektowaga, NY........           15380  Buffalo-Cheektowaga-Niagara
                                                                                  Falls, NY.
19430.........................  Dayton-Kettering, OH...........           19380  Dayton, OH.
24340.........................  Grand Rapids-Kentwood, MI......           24340  Grand Rapids-Wyoming, MI.
24860.........................  Greenville-Anderson, SC........           24860  Greenville-Anderson-Mauldin,
                                                                                  SC.
25060.........................  Gulfport-Biloxi, MS............           25060  Gulfport-Biloxi-Pascagoula, MS.
25540.........................  Hartford-East Hartford-                   25540  Hartford-West Hartford-East
                                 Middletown, CT.                                  Hartford, CT.
25940.........................  Hilton Head Island-Bluffton, SC           25940  Hilton Head Island-Bluffton-
                                                                                  Beaufort, SC.
28700.........................  Kingsport-Bristol, TN-VA.......           28700  Kingsport-Bristol-Bristol, TN-
                                                                                  VA.
31860.........................  Mankato, MN....................           31860  Mankato-North Mankato, MN.
33340.........................  Milwaukee-Waukesha, WI.........           33340  Milwaukee-Waukesha-West Allis,
                                                                                  WI.
34940.........................  Naples-Marco Island, FL........           34940  Naples-Immokalee-Marco Island,
                                                                                  FL.
35660.........................  Niles, MI......................           35660  Niles-Benton Harbor, MI.
36084.........................  Oakland-Berkeley-Livermore, CA.           36084  Oakland-Hayward-Berkeley, CA.
36500.........................  Olympia-Lacey-Tumwater, WA.....           36500  Olympia-Tumwater, WA.
38060.........................  Phoenix-Mesa-Chandler, AZ......           38060  Phoenix-Mesa-Scottsdale, AZ.
39150.........................  Prescott Valley-Prescott, AZ...           39140  Prescott, AZ.
23224.........................  Frederick-Gaithersburg-                   43524  Silver Spring-Frederick-
                                 Rockville, MD.                                   Rockville, MD.
44420.........................  Staunton, VA...................           44420  Staunton-Waynesboro, VA.
44700.........................  Stockton, CA...................           44700  Stockton-Lodi, CA.
45940.........................  Trenton-Princeton, NJ..........           45940  Trenton, NJ.
46700.........................  Vallejo, CA....................           46700  Vallejo-Fairfield, CA.
47300.........................  Visalia, CA....................           47300  Visalia-Porterville, CA.
48140.........................  Wausau-Weston, WI..............           48140  Wausau, WI.
48424.........................  West Palm Beach-Boca Raton-               48424  West Palm Beach-Boca Raton-
                                 Boynton Beach, FL.                               Delray Beach, FL.
----------------------------------------------------------------------------------------------------------------


[[Page 48439]]

    In some cases, counties will shift between existing and new CBSAs, 
changing the constituent makeup of the CBSAs. We consider this type of 
change, where CBSAs are split into multiple new CBSAs, or a CBSA loses 
one or more counties to another urban CBSA, to be significant 
modifications.
    Table 8 lists the urban counties that will move from one urban CBSA 
to another or to a newly proposed or modified CBSA due to the 
implementation of the new OMB delineations.

                                       Table 8--Urban Counties that Will Move to a Newly Proposed or Modified CBSA
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                Proposed CBSA
    FIPS county code           County name             State         Current CBSA       Current CBSA name           code           Proposed CBSA name
--------------------------------------------------------------------------------------------------------------------------------------------------------
17031...................  Cook.................  IL                          16974  Chicago-Naperville-                 16984  Chicago-Naperville-
                                                                                     Arlington Heights, IL.                     Evanston, IL.
17043...................  Du Page..............  IL                          16974  Chicago-Naperville-                 16984  Chicago-Naperville-
                                                                                     Arlington Heights, IL.                     Evanston, IL.
17063...................  Grundy...............  IL                          16974  Chicago-Naperville-                 16984  Chicago-Naperville-
                                                                                     Arlington Heights, IL.                     Evanston, IL.
17093...................  Kendall..............  IL                          16974  Chicago-Naperville-                 20994  Elgin, IL.
                                                                                     Arlington Heights, IL.
17111...................  Mc Henry.............  IL                          16974  Chicago-Naperville-                 16984  Chicago-Naperville-
                                                                                     Arlington Heights, IL.                     Evanston, IL.
17197...................  Will.................  IL                          16974  Chicago-Naperville-                 16984  Chicago-Naperville-
                                                                                     Arlington Heights, IL.                     Evanston, IL.
34023...................  Middlesex............  NJ                          35614  New York-Jersey City-               35154  New Brunswick-Lakewood,
                                                                                     White Plains, NY-NJ.                       NJ.
34025...................  Monmouth.............  NJ                          35614  New York-Jersey City-               35154  New Brunswick-Lakewood,
                                                                                     White Plains, NY-NJ.                       NJ.
34029...................  Ocean................  NJ                          35614  New York-Jersey City-               35154  New Brunswick-Lakewood,
                                                                                     White Plains, NY-NJ.                       NJ.
34035...................  Somerset.............  NJ                          35084  Newark, NJ-PA............           35154  New Brunswick-Lakewood,
                                                                                                                                NJ.
36027...................  Dutchess.............  NY                          20524  Dutchess County-Putnam              39100  Poughkeepsie-Newburgh-
                                                                                     County, NY.                                Middletown, NY.
36071...................  Orange...............  NY                          35614  New York-Jersey City-               39100  Poughkeepsie-Newburgh-
                                                                                     White Plains, NY-NJ.                       Middletown, NY.
36079...................  Putnam...............  NY                          20524  Dutchess County-Putnam              35614  New York-Jersey City-
                                                                                     County, NY.                                White Plains, NY-NJ.
47057...................  Grainger.............  TN                          28940  Knoxville, TN............           34100  Morristown, TN.
54043...................  Lincoln..............  WV                          26580  Huntington-Ashland, WV-KY-          16620  Charleston, WV.
                                                                                     OH.
72055...................  Guanica..............  PR                          38660  Ponce, PR................           49500  Yauco, PR.
72059...................  Guayanilla...........  PR                          38660  Ponce, PR................           49500  Yauco, PR.
72111...................  Penuelas.............  PR                          38660  Ponce, PR................           49500  Yauco, PR.
72153...................  Yauco................  PR                          38660  Ponce, PR................           49500  Yauco, PR.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    If providers located in these counties move from one CBSA to 
another under the new OMB delineations, there may be impacts, both 
negative and positive, upon their specific wage index values. We refer 
readers to section VI.D.3. of this final rule for a discussion of the 
wage index transition policy due to these changes.
    We believe the revisions to the CBSA-based labor market area 
delineations as established in OMB Bulletin 18-04 would ensure that the 
IRF PPS area wage level adjustment most appropriately accounts for and 
reflects the relative wage levels in the geographic area of the IRF. 
Therefore, we proposed to adopt the revisions to the CSBA based labor 
market area delineations under the IRF PPS, effective October 1, 2020. 
Accordingly, the proposed FY 2021 IRF PPS wage index values (which are 
available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/IRF-Rules-and-Related-Files.html) reflect the proposed revisions to the CBSA-based labor 
market area delineations.
    Furthermore, consistent with the requirement at Sec.  412.624(e)(1) 
that changes to area wage level adjustment are made in a budget neutral 
manner, we proposed to adopt these revisions to the CSBA based labor 
market area delineations in a budget neutral manner. The methodology 
for calculating the budget neutrality factor is discussed in section 
VI.D.4. of this final rule.
    The comments we received on the proposal to adopt the new OMB 
delineations, effective beginning with the FY 2021 IRF PPS wage index 
are summarized below.
    Comment: Commenters were generally supportive of the adoption of 
the new delineations; however, two commenters disagreed with the 
creation of the new ``New Brunswick-Lakewood, NJ'' CBSA and requested 
that CMS delay implementing these revisions to the CBSAs until after 
the 2020 decennial census data is available.
    Response: We appreciate the commenters' concerns regarding the 
impact of implementing the New Brunswick-Lakewood, NJ CBSA designation 
on their specific counties. While we understand the commenters' concern 
regarding the potential financial impact, we believe that implementing 
the revised OMB delineations will create more accurate representations 
of labor market areas and result in IRF wage index values being more 
representative of the actual costs of labor in a given area. Moreover, 
to the extent that providers exist in a labor market area experiencing 
a decline in relation to the revised OMB delineations, this would mean 
that these providers were previously being paid in excess of what their 
reported wage and labor data would suggest is appropriate. We believe 
that the OMB standards for delineating Metropolitan and Micropolitan 
Statistical Areas are

[[Page 48440]]

appropriate for determining wage area differences and that the values 
computed under the revised delineations will result in more appropriate 
payments to providers by more accurately accounting for and reflecting 
the differences in area wage levels. Therefore, we believe that it is 
appropriate to implement the new OMB delineations without delay.
    After consideration of the comments we received, we are finalizing 
our proposal to adopt the revised OMB delineations contained in OMB 
Bulletin 18-04.
3. Transition Policy
    Overall, we believe that our proposal to adopt the revised OMB 
delineations for FY 2021 would result in wage index values being more 
representative of the actual costs of labor in a given area. However, 
we also recognize that approximately 5 percent of IRFs would experience 
decreases in their area wage index values as a result of our proposal 
to adopt the revised OMB delineations. We also realize that many IRFs 
would have higher area wage index values under our proposal.
    To mitigate the potential impacts of revisions to the OMB 
delineations on IRFs, we have in the past provided for transition 
periods when adopting changes that have significant payment 
implications, particularly large negative impacts. For example, we 
proposed and finalized budget neutral transition policies to help 
mitigate negative impacts on IRFs following the adoption of the new 
CBSA delineations based on the 2010 decennial census data in the FY 
2016 IRF PPS final rule (80 FR 47035). Specifically, we implemented a 
1-year blended wage index for all IRFs due to our adoption of the 
revised delineations. This required calculating and comparing two wage 
indexes for each IRF since that blended wage index was computed as the 
sum of 50 percent of the FY 2016 IRF PPS wage index values under the FY 
2015 CBSA delineations and 50 percent of the FY 2016 IRF PPS wage index 
values under the FY 2016 new OMB delineations. While we believe that 
using the new OMB delineations would create a more accurate payment 
adjustment for differences in area wage levels, we also recognize that 
adopting such changes may cause some short-term instability in IRF PPS 
payments, in particular for IRFs that would be negatively impacted by 
the proposed adoption of the updates to the OMB delineations. For 
example, IRF's currently located in CBSA 35614 (New York-Jersey City-
White Plains, NY-NJ) that would be located in new CBSA 35154 (New 
Brunswick-Lakewood, NJ) under the proposed changes to the CBSA-based 
labor market area delineations would experience a nearly 17 percent 
decrease in the wage index as a result of the proposed change. 
Therefore, consistent with past practice we proposed a transition 
policy to help mitigate any significant negative impacts that IRFs may 
experience due to our proposal to adopt the revised OMB delineations 
under the IRF PPS. Specifically, for FY 2021 as a transition, we 
proposed to apply a 5 percent cap on any decrease in an IRF's wage 
index from the IRF's wage index from the prior FY. This transition 
would allow the effects of our proposed adoption of the revised OMB 
delineations to be phased in over 2 years, where the estimated 
reduction in an IRF's wage index would be capped at 5 percent in FY 
2021 (that is, no cap would be applied to any reductions in the wage 
index for the second year (FY 2022)). We believe a 5 percent cap on the 
overall decrease in an IRF's wage index value would be an appropriate 
transition as it would effectively mitigate any significant decreases 
in an IRF's wage index for FY 2021.
    Furthermore, consistent with the requirement at Sec.  412.624(e)(1) 
that changes to area wage level adjustment are made in a budget neutral 
manner, we proposed that this transitional wage index would not result 
in any change in estimated aggregate IRF PPS payments by applying a 
budget neutrality factor to the standard payment conversion factor. Our 
proposed methodology for calculating this budget neutrality factor is 
discussed in section VI.D.4. of this final rule.
    The comments we received on our proposed transition methodology to 
utilize a 5 percent cap on wage index decreases for FY 2021 are 
summarized below.
    Comment: Commenters were generally supportive of the proposed 5 
percent cap transition policy to mitigate the impact of changes to the 
wage index values. A few commenters suggested the limit should apply to 
both increases and decreases in the wage index. Commenters also 
suggested a cap should be applied every year. One commenter requested 
that CMS incorporate a blended wage index into the transition, 
consisting of 50 percent of the FY 2020 delineations and 50 percent of 
the FY 2021 delineations.
    Response: We appreciate the comments supporting this transition 
methodology. Further, we appreciate the commenters' suggestion that the 
cap on wage index movements of more than 5 percent should also be 
applied to increases in the wage index. However, as we discussed in the 
proposed rule, the purpose of the proposed transition policy, as well 
as those we have implemented in the past, is to help mitigate the 
significant negative impacts of certain wage index changes, not to 
curtail the positive impacts of such changes, and thus we do not 
believe it would be appropriate to apply the 5 percent cap on wage 
index increases as well. Additionally, we believe that implementing a 
cap on wage index values each year would undermine the goal of the wage 
index, which is to improve the accuracy of IRF payments, and would only 
serve to further delay improving the accuracy of IRF payments. 
Therefore, while we believe that a transition is necessary to help 
mitigate some of the negative impact from the revised OMB delineations, 
we also believe this mitigation must be balanced against the importance 
of ensuring accurate payments.
    Additionally, the use of a 50/50 blended wage index transition 
would affect all IRF providers. We believe it would be more appropriate 
to allow IRFs that would experience an increase in their wage index 
value to receive the full benefit of their increased wage index value, 
which is intended to reflect accurately the higher labor costs in that 
area. The utilization of a cap on negative impacts restricts the 
transition to only those with negative impacts and allows providers who 
would experience positive impacts to receive the full amount of their 
wage index increase. As such, we believe a 5 percent cap on the overall 
decrease in an IRF's wage index value would be an appropriate 
transition as it would effectively mitigate any significant decreases 
in an IRF's wage index for FY 2021.
    Comment: One commenter requested that CMS provide the data used to 
calculate the new wage indices.
    Response: The hospital wage data used to derive the IRF PPS wage 
index are available from the CMS IPPS wage index websites for each 
respective FY, which can be accessed from https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index. After 
consideration of the comments we received, we are finalizing the 
proposed transition methodology, which applies a 5 percent cap on any 
decrease in an IRF's wage index for FY 2021 from the IRF's wage index 
in FY 2020. This transitional wage index will not result in any change 
in estimated aggregate IRF PPS payments by applying a budget neutrality 
factor to the standard payment conversion factor. The methodology for 
calculating this budget

[[Page 48441]]

neutrality factor is discussed in section VI.D.4. of this final rule.
4. Wage Adjustment
    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 2021 labor-related share based on the 
2016-based IRF market basket relative importance (73.0 percent) to 
determine the labor-related portion of the standard payment amount. A 
full discussion of the calculation of the labor-related share is 
located in section VI.C. of this final rule. We then multiply the 
labor-related portion by the applicable IRF wage index. The wage index 
tables are available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/IRF-Rules-and-Related-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 2021 IRF standard payment 
conversion factor reflects the update to the wage indexes (based on the 
FY 2017 hospital cost report data and taking into account the revisions 
to the OMB delineations and the transition policy) and the update to 
the labor-related share, in a budget-neutral manner:
    Step 1. Calculate the total amount of estimated IRF PPS payments 
using the labor-related share and the wage indexes from FY 2020 (as 
published in the FY 2020 IRF PPS final rule (84 FR 39054)).
    Step 2. Calculate the total amount of estimated IRF PPS payments 
using the FY 2021 wage index values (based on updated hospital wage 
data and taking into account the changes to geographic labor market 
area delineations and the transition policy) and the FY 2021 labor-
related share of 73.0 percent.
    Step 3. Divide the amount calculated in step 1 by the amount 
calculated in step 2. The resulting quotient is the FY 2021 budget-
neutral wage adjustment factor of 1.0013.
    Step 4. Apply the budget neutrality factor from step 3 to the FY 
2021 IRF PPS standard payment amount after the application of the 
increase factor to determine the FY 2021 standard payment conversion 
factor.
    We discuss the calculation of the standard payment conversion 
factor for FY 2021 in section VI.E. of this final rule.
    We did not receive any comments on the proposed budget-neutral wage 
adjustment factor for FY 2021. Therefore, we are finalizing a budget-
neutral wage adjustment factor of 1.0013 for FY 2021.

E. Description of the IRF Standard Payment Conversion Factor and 
Payment Rates for FY 2021

    To calculate the standard payment conversion factor for FY 2021, as 
illustrated in Table 5, we begin by applying the increase factor for FY 
2021, as adjusted in accordance with sections 1886(j)(3)(C) of the Act, 
to the standard payment conversion factor for FY 2020 ($16,489). 
Applying the 2.4 percent increase factor for FY 2021 to the standard 
payment conversion factor for FY 2020 of $16,489 yields a standard 
payment amount of $16,885. Then, we apply the budget neutrality factor 
for the FY 2021 wage index (taking into account the revisions to the 
CBSA delineations and the transition policy), and labor-related share 
of 1.0013, which results in a standard payment amount of $16,907. We 
next apply the budget neutrality factor for the CMG relative weights of 
0.9970, which results in the standard payment conversion factor of 
$16,856 for FY 2021.
    We did not receive any comments on the proposed calculation of the 
standard payment conversion factor for FY 2021. Therefore, we are 
finalizing the IRF standard payment conversion factor of $16,856 for FY 
2021.

     Table 9--Calculations To Determine the FY 2021 Standard Payment
                            Conversion Factor
------------------------------------------------------------------------
               Explanation for adjustment                  Calculations
------------------------------------------------------------------------
Standard Payment Conversion Factor for FY 2020..........         $16,489
Market Basket Increase Factor for FY 2021 (2.4 percent),         x 1.024
 reduced by 0.0 percentage point for the productivity
 adjustment as required by section 1886(j)(3)(C)(ii)(I)
 of the Act.............................................
Budget Neutrality Factor for the Updates to the Wage            x 1.0013
 Index and Labor-Related Share..........................
Budget Neutrality Factor for the Revisions to the CMG           x 0.9970
 Relative Weights.......................................
FY 2020 Standard Payment Conversion Factor..............        = 16,856
------------------------------------------------------------------------

    After the application of the CMG relative weights described in 
section V. of this final rule to the FY 2021 standard payment 
conversion factor ($16,856), the resulting unadjusted IRF prospective 
payment rates for FY 2021 are shown in Table 10.

                                         Table 10--FY 2021 Payment Rates
----------------------------------------------------------------------------------------------------------------
                                                   Payment rate    Payment rate    Payment rate    Payment rate
                       CMG                            tier 1          tier 2          tier 3      no comorbidity
----------------------------------------------------------------------------------------------------------------
0101............................................     $ 17,385.28     $ 14,863.62     $ 13,791.58     $ 13,198.25
0102............................................       22,206.09       18,983.23       17,616.21       16,857.69
0103............................................       28,395.62       24,274.33       22,524.67       21,557.14
0104............................................       36,891.04       31,537.58       29,263.70       28,006.24
0105............................................       41,851.76       35,778.55       33,199.58       31,773.56
0106............................................       48,081.74       41,103.36       38,141.76       36,501.67
0201............................................       19,375.97       15,842.95       14,231.52       13,301.07
0202............................................       24,340.06       19,901.88       17,877.47       16,709.35
0203............................................       29,347.98       23,994.52       21,553.77       20,146.29
0204............................................       36,525.27       29,865.46       26,826.32       25,074.99
0205............................................       46,133.19       37,718.67       33,882.25       31,669.05
0301............................................       20,670.51       16,756.55       15,482.24       14,351.20

[[Page 48442]]

 
0302............................................       26,482.46       21,469.49       19,836.14       18,386.52
0303............................................       31,702.76       25,700.34       23,745.05       22,010.56
0304............................................       35,567.85       28,832.19       26,640.91       24,694.04
0305............................................       38,851.39       31,495.44       29,100.20       26,972.97
0401............................................       23,065.75       19,573.19       17,631.38       16,380.66
0402............................................       30,015.48       25,469.42       22,942.70       21,316.10
0403............................................       36,022.96       30,568.36       27,535.96       25,582.35
0404............................................       60,993.44       51,758.03       46,623.70       43,316.55
0405............................................       46,259.61       39,254.25       35,360.52       32,852.34
0406............................................       60,629.35       51,447.88       46,343.89       43,056.97
0407............................................       69,227.59       58,743.16       52,917.73       49,162.21
0501............................................       22,076.30       17,156.04       16,196.93       14,959.70
0502............................................       27,429.77       21,316.10       20,124.38       18,588.80
0503............................................       31,856.15       24,756.41       23,372.53       21,587.48
0504............................................       37,936.11       29,482.83       27,834.31       25,708.77
0505............................................       49,492.59       38,463.71       36,312.88       33,541.75
0601............................................       23,047.21       17,349.88       16,264.35       14,782.71
0602............................................       28,682.17       21,590.85       20,240.68       18,398.32
0603............................................       34,072.72       25,648.09       24,043.40       21,853.80
0604............................................       39,537.43       29,762.64       27,900.05       25,359.85
0701............................................       21,024.49       17,049.84       16,156.48       14,851.82
0702............................................       26,286.93       21,317.78       20,201.92       18,568.57
0703............................................       31,952.23       25,912.73       24,555.82       22,570.18
0704............................................       36,510.10       29,609.25       28,058.50       25,789.68
0801............................................       18,993.34       15,285.02       13,688.76       12,749.88
0802............................................       22,330.83       17,970.18       16,094.11       14,990.04
0803............................................       24,945.19       20,073.81       17,978.61       16,744.75
0804............................................       28,749.59       23,136.55       20,721.08       19,298.43
0805............................................       33,499.61       26,959.49       24,144.53       22,487.59
0901............................................       20,414.30       16,267.73       15,394.58       13,944.97
0902............................................       25,415.48       20,252.48       19,166.96       17,363.37
0903............................................       29,909.29       23,832.70       22,556.70       20,432.84
0904............................................       34,340.73       27,365.72       25,899.24       23,460.18
1001............................................       21,845.38       18,310.67       16,431.23       15,177.14
1002............................................       26,986.46       22,619.07       20,298.00       18,748.93
1003............................................       31,534.20       26,431.89       23,719.76       21,907.74
1004............................................       37,165.79       31,151.57       27,955.68       25,820.02
1101............................................       21,911.11       19,524.30       17,053.22       16,535.74
1102............................................       29,273.82       26,086.35       22,784.26       22,093.16
1103............................................       32,894.48       29,312.58       25,600.89       24,825.52
1201............................................       24,021.49       16,004.77       16,004.77       14,695.06
1202............................................       30,184.04       20,109.21       20,109.21       18,464.06
1203............................................       35,085.76       23,374.22       23,374.22       21,464.43
1204............................................       36,875.87       24,567.62       24,567.62       22,558.38
1301............................................       19,008.51       15,694.62       14,899.02       13,226.90
1302............................................       26,007.12       21,474.54       20,385.65       18,098.29
1303............................................       29,980.08       24,754.72       23,498.95       20,862.67
1304............................................       34,752.02       28,695.65       27,240.98       24,183.30
1305............................................       35,188.59       29,054.69       27,581.47       24,486.71
1401............................................       19,310.23       15,831.16       14,288.83       12,785.28
1402............................................       24,257.47       19,888.39       17,951.64       16,062.08
1403............................................       29,454.17       24,147.91       21,796.49       19,502.39
1404............................................       34,595.25       28,363.59       25,600.89       22,907.30
1501............................................       21,752.67       17,420.68       16,274.47       15,612.03
1502............................................       26,822.95       21,481.29       20,068.75       19,251.24
1503............................................       31,143.15       24,940.14       23,300.05       22,352.74
1504............................................       36,107.24       28,914.78       27,015.11       25,916.10
1601............................................       16,668.90       16,668.90       15,033.87       13,532.00
1602............................................       18,673.08       18,673.08       16,840.83       15,156.92
1603............................................       22,819.65       22,819.65       20,579.49       18,523.06
1604............................................       28,994.01       28,994.01       26,148.71       23,536.03
1701............................................       23,446.70       18,393.27       16,719.47       15,224.34
1702............................................       28,634.97       22,465.68       20,421.04       18,593.85
1703............................................       33,947.98       26,630.79       24,208.59       22,042.59
1704............................................       37,553.48       29,460.92       26,780.81       24,383.89
1705............................................       41,207.86       32,328.12       29,386.75       26,755.53
1801............................................       20,869.41       16,554.28       14,866.99       13,788.21
1802............................................       26,576.86       21,080.11       18,932.66       17,560.58
1803............................................       32,607.93       25,863.85       23,229.25       21,545.34
1804............................................       37,391.66       29,659.82       26,637.54       24,705.84
1805............................................       44,646.49       35,414.46       31,805.59       29,499.69

[[Page 48443]]

 
1806............................................       57,510.99       45,617.39       40,968.51       37,998.48
1901............................................       20,279.45       15,770.47       15,551.35       14,728.77
1902............................................       27,461.80       21,356.55       21,058.20       19,944.02
1903............................................       43,722.78       34,001.92       33,526.58       31,753.33
1904............................................       64,371.38       50,060.63       49,361.11       46,750.12
2001............................................       20,426.10       16,574.50       15,178.83       13,960.14
2002............................................       25,113.75       20,378.90       18,662.96       17,162.78
2003............................................       29,723.87       24,119.25       22,089.79       20,314.85
2004............................................       33,454.10       27,144.90       24,860.91       22,863.48
2005............................................       35,967.33       29,186.16       26,730.24       24,581.10
2101............................................       30,396.42       23,111.26       19,000.08       19,000.08
2102............................................       40,547.11       30,827.94       25,344.68       25,344.68
5001............................................               -               -               -        2,769.44
5101............................................               -               -               -       12,240.83
5102............................................               -               -               -       30,366.08
5103............................................               -               -               -       14,250.06
5104............................................               -               -               -       35,222.30
----------------------------------------------------------------------------------------------------------------

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

    Table 11 illustrates the methodology for adjusting the prospective 
payments (as described in section VI. of this final rule). The 
following examples are based on two hypothetical Medicare 
beneficiaries, both classified into CMG 0104 (without comorbidities). 
The unadjusted prospective payment rate for CMG 0104 (without 
comorbidities) appears in Table 10.
    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 0.8354, 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 0.8697, 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 0104 (without comorbidities) from Table 10. Then, 
we multiply the labor-related share for FY 2021 (73.0 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 the applicable wage index table. This table is available on 
the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/IRF-Rules-and-Related-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 of the Federal payment.
    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 11 illustrates the components of the adjusted 
payment calculation.

                       Table 11--Example of Computing the FY 2021 IRF Prospective Payment
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
Steps                           ........................   Rural facility A (Spencer
                                                                   Co., IN)
                                 Urban facility B (Harrison Co., IN)
----------------------------------------------------------------------------------------------------------------
1.............................  Unadjusted Payment......                  $28,006.24                  $28,006.24
2.............................  Labor Share.............          x            0.730          x            0.730
3.............................  Labor Portion of Payment          =       $20,444.56          =       $20,444.56
4.............................  CBSA-Based Wage Index\..          x           0.8354          x           0.8697
5.............................  Wage-Adjusted Amount....          =       $17,079.38          =       $17,780.63
6.............................  Non-Labor Amount........          +        $7,561.68          +        $7,561.68
7.............................  Wage-Adjusted Payment...          =       $24,641.06          =       $25,342.31
8.............................  Rural Adjustment........          x            1.149          x            1.000
9.............................  Wage- and Rural-Adjusted          =       $28,312.58          =       $25,342.31
                                 Payment.
10............................  LIP Adjustment..........          x           1.0156          x           1.0454
11............................  Wage-, Rural- and LIP-            =       $28,754.25          =       $26,492.85
                                 Adjusted Payment.
12............................  Wage- and Rural-Adjusted                  $28,312.59                  $25,342.31
                                 Payment.
13............................  Teaching Status                   x                0          x           0.0784
                                 Adjustment.
14............................  Teaching Status                   =            $0.00          =        $1,986.84
                                 Adjustment Amount.
15............................  Wage-, Rural-, and LIP-           +       $28,754.25          +       $26,492.85
                                 Adjusted Payment.
16............................  Total Adjusted Payment..          =       $28,754.25          =       $28,479.69
----------------------------------------------------------------------------------------------------------------


[[Page 48444]]

    Thus, the adjusted payment for Facility A would be $28,754.25, and 
the adjusted payment for Facility B would be $28,479.69.

VII. Update to Payments for High-Cost Outliers Under the IRF PPS for FY 
2021

A. Update to the Outlier Threshold Amount for FY 2021

    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 FY 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 2020 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, 77 FR 44618, 78 FR 47860, 
79 FR 45872, 80 FR 47036, 81 FR 52056, 82 FR 36238, 83 FR 38514, and 84 
FR 39054, 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 2021, we proposed 
to use FY 2019 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 2020. The outlier threshold is calculated by 
simulating aggregate payments and using an iterative process to 
determine a threshold that results in outlier payments being equal to 3 
percent of total payments under the simulation. To determine the 
outlier threshold for FY 2021, we estimate the amount of FY 2021 IRF 
PPS aggregate and outlier payments using the most recent claims 
available (FY 2019) and the proposed FY 2021 standard payment 
conversion factor, labor-related share, and wage indexes, incorporating 
any applicable budget-neutrality adjustment factors. The outlier 
threshold is adjusted either up or down in this simulation until the 
estimated outlier payments equal 3 percent of the estimated aggregate 
payments. Based on an analysis of the preliminary data used for the 
proposed rule, we estimated that IRF outlier payments as a percentage 
of total estimated payments would be approximately 2.6 percent in FY 
2020. Therefore, we proposed to update the outlier threshold amount 
from $9,300 for FY 2020 to $8,102 for FY 2021 to maintain estimated 
outlier payments at approximately 3 percent of total estimated 
aggregate IRF payments for FY 2021.
    We note that, as we typically do, we updated our data between the 
FY 2021 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 2019. Based on our 
analysis using this updated data, we continue to estimate that IRF 
outlier payments as a percentage of total estimated payments are 
approximately 2.6 percent in FY 2020. Therefore, we will update the 
outlier threshold amount from $9,300 for FY 2020 to $7,906 for FY 2021 
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 2021.
    The comments we received on the update to the FY 2021 outlier 
threshold amount to maintain estimated outlier payments at 
approximately 3 percent of total estimated IRF payments are summarized 
below.
    Comment: Commenters were generally supportive of the update to the 
outlier threshold. One commenter noted support for expanding the 
outlier pool from 3 percent to 5 percent of aggregate IRF payments, 
while other commenters stated that we should reduce the outlier pool 
below 3 percent and still others supported us maintaining the pool at 3 
percent.
    Response: We thank the commenters for their support of the update 
to the outlier threshold. We continue to believe that maintaining the 
outlier pool at 3 percent of aggregate IRF payments optimizes the 
extent to which we can reduce 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 refer readers to the FY 2002 IRF 
PPS final rule (66 FR 41316, 41362 through 41363) for more information 
regarding 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.
    Comment: Commenters suggested that CMS pay the full 3 percent 
outlier pool each year and recommended that CMS include historical 
outlier reconciliation dollars in the calculation of the fixed loss 
threshold under the IRF PPS. Additionally, a commenter requested that 
CMS establish a new outlier threshold baseline to be updated by the 
market basket while other commenters suggested that CMS should cap the 
overall outlier payments an IRF can receive.
    Response: We appreciate the commenters' suggestions regarding 
changes to the methodology used to establish an outlier threshold for 
IRF PPS payments. However, as we did not propose changes to this 
methodology, these comments are outside the scope of this final rule. 
We will continue to monitor our IRF outlier policies to ensure that 
they continue to compensate IRFs appropriately.
    After consideration of the comments received and also taking into 
account the most recent available data, we are finalizing the outlier 
threshold amount of $7,906 to maintain estimated outlier payments at 
approximately 3 percent of total estimated aggregate IRF payments for 
FY 2021.

B. Update to the IRF Cost-to-Charge Ratio Ceiling and Urban/Rural 
Averages for FY 2021

    Cost-to-charge ratios (CCRs) are used to adjust charges from 
Medicare claims to costs and are computed annually

[[Page 48445]]

from facility-specific data obtained from MCRs. IRF specific CCRs are 
used in the development of the CMG relative weights and the calculation 
of outlier payments under the IRF PPS. In accordance with the 
methodology stated in the FY 2004 IRF PPS final rule (68 FR 45674, 
45692 through 45694), we propose to apply a ceiling to IRFs' CCRs. 
Using the methodology described in that final rule, we proposed to 
update the national urban and rural CCRs for IRFs, as well as the 
national CCR ceiling for FY 2021, 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 MCR.
     IRFs whose overall CCR is in excess of the national CCR 
ceiling for FY 2021, as discussed below in this section.
     Other IRFs for which accurate data to calculate an overall 
CCR are not available.
    Specifically, for FY 2021, we proposed to estimate a national 
average CCR of 0.490 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 0.400 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 2018). This includes all 
IRFs whose cost reporting periods begin on or after October 1, 2017, 
and before October 1, 2018. If, for any IRF, the FY 2018 cost report 
was missing or had an ``as submitted'' status, we used data from a 
previous FY's (that is, FY 2004 through FY 2017) 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 2018 cost report data for this final rule, we estimate 
a national average CCR of 0.493 for rural IRFs, and a national average 
CCR of 0.398 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 1.33 for FY 2021. This 
means that, if an individual IRF's CCR were to exceed this ceiling of 
1.33 for FY 2021, we will 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 2018 cost report data for this final rule, we 
estimate a national average CCR ceiling of 1.34, using the same 
methodology.
    We did not receive any comments on the proposed update to the IRF 
CCR ceiling and urban/rural averages for FY 2021. Therefore, we are 
finalizing the national average urban CCR at 0.398, the national 
average rural CCR at 0.493, and the national average CCR ceiling at 
1.34 for FY 2021.

VIII. Removal of the Post-Admission Physician Evaluation Requirement 
From the IRF Coverage Requirements

    We are committed to transforming the health care delivery system, 
and the Medicare program, by putting an additional focus on patient-
centered care and working with providers and clinicians to improve 
patient outcomes. We refer to this transformation as ``Patients Over 
Paperwork.'' That is, CMS recognizes it is imperative that we develop 
and implement policies that allow providers and clinicians to focus the 
majority of their time treating patients rather than completing 
paperwork. Moreover, we believe it is essential for us to reexamine 
current regulations and administrative requirements to ensure that we 
are not placing unnecessary burden on providers.
    In the FY 2018 IRF PPS proposed rule (82 FR 20743), we included a 
request for information (RFI) to solicit comments from stakeholders 
requesting information on CMS flexibilities and efficiencies. The 
purpose of the RFI was to receive feedback regarding ways in which we 
could reduce burden for hospitals and clinicians, improve quality of 
care, decrease costs and ensure that patients receive the best care. We 
received comments from IRF industry associations, state and national 
hospital associations, industry groups representing hospitals, and 
individual IRF providers in response to the solicitation. In the FY 
2019 IRF PPS final rule (83 FR 38549 through 38553), we finalized 
several changes to the regulatory requirements that we believed were 
responsive to stakeholder feedback and helpful to providers in reducing 
administrative burden.
    Patients over Paperwork has continued to be a priority for the 
agency, as we target ways in which we can reduce paperwork burden for 
hospitals and clinicians while improving quality of care for patients. 
Therefore, we are proposing to revise the current IRF coverage 
criteria. Specifically, we are focused on reducing medical record 
documentation requirements that we believe are no longer necessary.
    IRF care is only considered by Medicare to be reasonable and 
necessary under section 1862(a)(1) of the Act if the patient meets all 
of the IRF coverage requirements outlined in Sec.  412.622(a)(3), (4), 
and (5). Failure to meet the IRF coverage criteria in a particular case 
will result in denial of the IRF claim. Under Sec.  412.622(a)(4)(ii), 
to document that each patient for whom the IRF seeks payment is 
reasonably expected to meet all of the requirements in Sec.  
412.622(a)(3) at the time of admission, the patient's medical record at 
the IRF must contain a post-admission physician evaluation that meets 
ALL of the following requirements:
     It is completed by the rehabilitation physician within 24 
hours of the patient's admission to the IRF.
     It documents the patient's status on admission to the IRF, 
includes a comparison with the information noted in the preadmission 
screening documentation, and serves as the basis for the development of 
the overall individualized plan of care.
     It is retained in the patient's medical record at the IRF.
    Before the current IRF coverage criteria were implemented in 
January 1, 2010, Medicare permitted ``trial'' IRF admissions (HCFAR 85-
2-4 through 85-2-5). A ``trial'' IRF admission meant that patients were 
sometimes admitted to IRFs for 3 to 10 days to assess whether the 
patients would benefit significantly from treatment in the IRF or other 
settings. Therefore, if it was determined during a ``trial'' admission

[[Page 48446]]

that a patient was not appropriate for IRF level services, their claims 
for items and services provided during the trial period could not be 
denied for failure to meet IRF coverage criteria. Over time, we 
concluded that IRFs had developed a better ability and were more 
capable of recognizing if a patient was appropriate for IRF services 
prior to being admitted. Therefore, the concept of a ``trial'' IRF 
admission was eliminated when we rescinded HCFA Ruling 85-2 through a 
Federal Register notice titled ``Medicare Program; Criteria for 
Medicare Coverage of Inpatient Hospital Rehabilitation Services'' (74 
FR 54835), effective January 1, 2010. We discussed our intent to 
rescind HCFA Ruling 85-2 in detail in the FY 2010 IRF PPS final rule 
(74 FR 39797 through 39798).
    In addition, the Medicare Benefit Policy Manual, chapter 1, section 
110.1.2 (Pub. L. 100-02), which can be downloaded from the CMS website 
at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/internet-Only-Manuals-IOMs.html), states, ``In most cases, the clinical 
picture of the patient that emerges from the post-admission physician 
evaluation will closely resemble the information documented in the 
preadmission screening. However, for a variety of reasons, the 
patient's condition at the time of admission may occasionally not match 
the description of the patient's condition on the preadmission 
screening. If this occurs, the IRF must immediately begin the discharge 
process. It may take a day or more for the IRF to find placement for 
the patient in another setting of care. MACs will therefore allow the 
patient to continue receiving treatment in the IRF until placement in 
another setting can be found.'' It further states that in these 
particular cases, ``Medicare authorizes its MACs to permit the IRF 
claim to be paid at the appropriate CMG for IRF patient stays of 3 days 
or less.''
    At this time, we believe that IRFs are more knowledgeable in 
determining prior to admission, whether a patient meets the coverage 
criteria for IRF services than they were when the IRF coverage 
requirements were initially implemented. Over time, we have analyzed 
the data regarding the number of above-mentioned cases described in 
chapter 1, section 110.1.2, of the Medicare Benefit Policy Manual, and 
it has trended downward since the IRF coverage requirements were 
initially implemented. In FY 2019, the payment was utilized 4 times 
across all 1,117 Medicare certified IRFs. Additionally, we believe that 
if IRFs are doing their due diligence while completing the pre-
admission screening as required in Sec.  412.622(a)(4)(i) by making 
sure each prospective IRF patient meets all of the requirements to be 
admitted to the IRF, then the post-admission physician evaluation is 
unnecessary.
    Finally, we have removed the post-admission physician evaluation 
requirement during the public health emergency for the COVID-19 
pandemic in the interim final rule with comment entitled, ``Medicare 
and Medicaid Programs; Policy and Regulatory Revisions in Response to 
the COVID-19 Public Health Emergency'', published on April 6, 2020 (85 
FR 19230) (hereinafter referred to as the April 6, 2020 IFC). We 
believe that this will provide us with experience to determine whether 
this requirement can be removed permanently to reduce paperwork burden 
for hospitals and clinicians while continuing to provide adequate 
quality of care for patients.
    Therefore, we proposed to remove the post-admission physician 
evaluation documentation requirement at Sec.  412.622(a)(4)(ii) 
beginning with FY 2021, that is, for all IRF discharges beginning on or 
after October 1, 2020. Accordingly, we proposed to amend Sec.  
412.622(a)(3)(iv) to remove the reference to Sec.  412.622(a)(4)(ii). 
We would also rescind the above-mentioned policy described in chapter 
1, section 110.1.2, of the Medicare Benefit Policy Manual.
    We note that removal of the post-admission physician evaluation 
does not preclude an IRF patient from being evaluated within the first 
24 hours of admission if the IRF believes that the patient's condition 
warrants such an evaluation. We merely proposed that a post-admission 
physician evaluation would no longer be an IRF documentation 
requirement for IRF discharges occurring on and after October 1, 2020. 
Moreover, removal of the post-admission physician evaluation does not 
remove one of the required rehabilitation physician visits in the first 
week of the patient's stay in the IRF as specified in Sec.  
412.622(a)(3)(iv). IRFs will need to continue to meet the requirements 
at Sec.  412.622(a)(3)(iv) as they always have.
    While removal of the post-admission physician evaluation does not 
attribute to any direct savings for Medicare Part-A or Part-B, we do 
believe that removing it will reduce administrative and paperwork 
burden for both IRF providers and MACs.
    The comments we received on our proposal to remove the post-
admission physician evaluation documentation requirement at Sec.  
412.622(a)(4)(ii) beginning with FY 2021, that is, for all IRF 
discharges beginning on or after October 1, 2020; our proposed 
conforming amendments to Sec.  412.622(a)(3)(iv) to remove the 
reference to Sec.  412.622(a)(4)(ii); and on rescinding the above-
mentioned policy described in chapter 1, sections 110.1.2, of the 
Medicare Benefit Policy Manual are summarized below.
    Comment: The commenters unanimously supported CMS' proposal. Many 
commenters agreed that the information contained in the post-admission 
physician evaluation is redundant, since the majority of the 
information required in the post-admission physician evaluation is 
already being captured in the IRF patient's history and physical. Many 
commenters stated that not only would the proposal to remove the post-
admission physician evaluation remove redundant documentation 
requirements, but it would also remove the added burden of it being a 
time sensitive requirement.
    Response: We appreciate the commenters' support for the proposal. 
We agree that finalizing this proposal will ease administrative and 
documentation burden in the IRF setting.
    After consideration of the comments we received, we are finalizing 
our proposal to remove the post-admission physician evaluation 
documentation requirement at Sec.  412.622(a)(4)(ii) beginning with FY 
2021, that is, for all IRF discharges beginning on or after October 1, 
2020; our proposed conforming amendments to Sec.  412.622(a)(3)(iv) to 
remove the reference to Sec.  412.622(a)(4)(ii); and on rescinding the 
above-mentioned policy described in chapter 1, sections 110.1.2, of the 
Medicare Benefit Policy Manual.

IX. Revisions to Certain IRF Coverage Documentation Requirements

A. Codification of Existing Preadmission Screening Documentation 
Instructions and Guidance

    Another way in which CMS has continued to explore burden reduction 
for providers and clinicians, while keeping patient centered care a 
priority, is by reviewing subregulatory guidance to identify any 
longstanding policies, instructions, or guidance that would be 
appropriate to codify through notice and comment rulemaking.
    Specifically, in regards to the IRF PPS payment requirements, we 
conducted a detailed review of the Medicare Benefit Policy Manual, 
chapter 1, section 110.1.2 (Pub. L. 100-02), as well as the IRF PPS 
website (https://www.cms.gov/Medicare/Medicare-Fee-for-Service-

[[Page 48447]]

Payment/InpatientRehabFacPPS/index), to identify any such policies.
    Currently, Sec.  412.622(a)(4)(i) requires that a comprehensive 
preadmission screening must meet ALL of the following requirements:
     It is conducted by a licensed or certified clinician(s) 
designated by a rehabilitation physician described in Sec.  
412.622(a)(3)(iv) within the 48 hours immediately preceding the IRF 
admission.
     It includes a detailed and comprehensive review of each 
patient's condition and medical history.
     It serves as the basis for the initial determination of 
whether or not the patient meets the requirements for an IRF admission 
to be considered reasonable and necessary in Sec.  412.622(a)(3).
     It is used to inform a rehabilitation who reviews and 
comments his or her concurrence with the findings and results of the 
preadmission screening.
     It is retained in the patient's medical record at the IRF.
    When the pre-admission screening documentation requirements were 
finalized (74 FR 39790 through 39792), we did not specify any 
individual elements as being required for the pre-admission screening 
documentation to be considered detailed and comprehensive in accordance 
with Sec.  412.622(a)(4)(i)(B). In addition, we did not specify at 
Sec.  412.622(a)(4)(i)(D) that the rehabilitation physician must review 
and concur with the preadmission screening prior to the IRF admission. 
The Medicare Benefit Policy Manual, chapter 1, section 110.1.1 (Pub. L. 
100-02) provides a more detailed description of what elements the 
preadmission screening should include and clarifies that the 
rehabilitation physician should review and concur with the preadmission 
screening prior to the patient being admitted to the IRF.
    In chapter 1, section 110.1.1 of the Medicare Benefit Policy Manual 
currently, we state, ``The preadmission screening documentation must 
indicate the patient's prior level of function (prior to the event or 
condition that led to the patient's need for intensive rehabilitation 
therapy), expected level of improvement, and the expected length of 
time necessary to achieve that level of improvement. It must also 
include an evaluation of the patient's risk for clinical complications, 
the conditions that caused the need for rehabilitation, the treatments 
needed (that is, physical therapy, occupational therapy, speech-
language pathology, or prosthetics/orthotics), expected frequency and 
duration of treatment in the IRF, anticipated discharge destination, 
any anticipated post-discharge treatments, and other information 
relevant to the care needs of the patient.'' Additionally, we state, 
``All findings of the preadmission screening must be conveyed to a 
rehabilitation physician prior to the IRF admission. In addition, the 
rehabilitation physician must document that he or she has reviewed and 
concurs with the findings and results of the preadmission screening 
prior to the IRF admission.'' These have been our documentation 
instructions and guidance since the implementation of the IRF coverage 
requirements on January 1, 2010.
    We believe that codifying these longstanding instructions and 
guidance would improve clarity and reduce administrative burden on both 
IRF providers and MACs. With patient centered care being such a high 
priority in today's healthcare climate, we want to mitigate, as much as 
possible, tasks that take away from time spent directly with the 
patient. Lastly, we believe IRF providers and MACs will appreciate all 
preadmission screening documentation requirements being located in the 
same place for ease of reference.
    Thus, in the interest of reducing administrative burden and being 
able to locate all preadmission screening documentation requirements in 
the same place for ease of reference, we proposed to make the following 
regulatory amendments:
     At Sec.  412.622(a)(4)(i)(B), to provide that the 
comprehensive preadmission screening must include a detailed and 
comprehensive review of each patient's condition and medical history, 
including the patient's level of function prior to the event or 
condition that led to the patient's need for intensive rehabilitation 
therapy, expected level of improvement, and the expected length of time 
necessary to achieve that level of improvement; an evaluation of the 
patient's risk for clinical complications; the conditions that caused 
the need for rehabilitation; the treatments needed (that is, physical 
therapy, occupational therapy, speech-language pathology, or 
prosthetics/orthotics); expected frequency and duration of treatment in 
the IRF; anticipated discharge destination; and anticipated post-
discharge treatments; and
     At Sec.  412.622(a)(4)(i)(D), to provide that the 
comprehensive preadmission screening must be used to inform a 
rehabilitation physician who must then review and document his or her 
concurrence with the findings and results of the preadmission screening 
prior to the IRF admission.
    The comments we received on our proposal to amend Sec.  
412.622(a)(4)(i)(B) and (D) to codify our longstanding documentation 
instructions and guidance of the preadmission screening in regulation 
text, are summarized below.
    Comment: The majority of commenters supported codifying the 
existing preadmission screening documentation requirements to the 
extent that it makes no substantive policy changes from the 
requirements described in the MDPM, chapter 1, section 110.1.1. 
Commenters stated that CMS' decision to codify these longstanding 
instructions and guidance would improve clarity and reduce 
administrative burden on both IRF providers and MACs. With patient-
centered care being such a high priority in today's health care 
climate, commenters stated that they appreciated CMS' efforts to reduce 
tasks that take away from time spend directly with the patient. 
Commenters also stated that they agree with CMS that IRF providers and 
MACs will benefit from all documentation requirements being located in 
the same place in the regulations for ease of reference.
    Response: We appreciate the commenters' support for the proposal. 
We agree that finalizing this proposal will reduce administrative 
burden on both IRF providers and MACs and allow more time to be spent 
in direct patient care.
    Comment: Some commenters did not support codifying the existing 
preadmission screening documentation requirements, stating that the 
proposal did not align with CMS' Patients over Paperwork initiative. 
These commenters suggested that instead of codifying the existing 
requirements, we should allow IRF rehabilitation physicians to rely on 
their training and experience to determine which information best 
supports the appropriateness of the IRF admission. These commenters 
stated that such an approach would reduce documentation burden, and 
facilitate timely patient admissions to IRFs.
    Response: We appreciate the commenters' concerns. However, we 
respectfully disagree that it would be better not to specify basic 
elements to include in the pre-admission screening documentation, as we 
believe that this would lead to excessive ambiguity in the regulations 
and create unnecessary confusion. Codifying the current preadmission 
screening requirements into regulation text does not change the amount 
of documentation that is required. We did not propose any new required 
elements to be completed on the pre-admission screening. Therefore, the 
information being collected and the time it takes to collect the 
information

[[Page 48448]]

remain the same. Additionally, we agree with the commenters that IRF 
rehabilitation physicians should have the freedom to document the 
information that best supports their decision to admit the patient in 
the preadmission screening documentation. For this reason, we require a 
detailed and comprehensive preadmission screening in which we allow 
rehabilitation physicians to include any additional information they 
deem necessary to the preadmission screening, in addition to the 
required elements. However, we believe that it is necessary to specify 
the basic minimum elements that we expect to see in a detailed and 
comprehensive pre-admission screening to eliminate confusion and 
ambiguity in the requirement.
    Comment: Several commenters suggested that if CMS finalizes the 
proposal to codify the pre-admission screening requirements into 
regulation text, CMS should also consider amending the timing of this 
requirement (which is currently required to be completed within the 48 
hours immediately preceding the IRF admission). Additionally, several 
commenters suggested that CMS should allow rehabilitation physicians to 
give a verbal approval of the preadmission screening instead of 
requiring them to review and concur with the findings and results of 
the pre-admission screening prior to admission to the IRF.
    Response: We appreciate the commenters' suggestions regarding other 
ways to reduce burden associated with the pre-admission screening. 
However, since we only solicited comments regarding the elements of the 
preadmission screening documentation in the proposed rule (85 FR 22065, 
22088), any additional changes to the preadmission screening 
requirements are beyond the scope of this final rule. Therefore, we 
will take these suggestions into consideration for future rulemaking.
    Comment: A few commenters were concerned that codifying the 
preadmission screening requirements into regulation text might increase 
the amount of technical denials of IRF claims whenever one or more of 
the elements is missing from the preadmission screening documentation.
    Response: We respectfully disagree with the commenters suggesting 
that codifying the requirements into regulation text will increase the 
amount of technical denials of IRF claims. We did not propose to add 
any new requirements to the pre-admission screening. Therefore, we do 
not believe that merely codifying these existing requirements in 
regulation will increase technical denials. We expect that IRFs will 
continue to complete the preadmission screening documentation as they 
always have.
    Comment: Some commenters suggested that codifying the required 
elements of the pre-admission screening that are duplicative with other 
portions of the patient medical record does not alleviate documentation 
burden. These commenters suggested that CMS should consider removing 
some of the preadmission screening elements that duplicate data already 
included in other parts of the patient's IRF medical record (such as 
the history and physical and the individualized overall plan of care). 
A few commenters suggested that CMS should consider removing the 
preadmission screening documentation requirements altogether.
    Response: We do not agree with the commenters who suggested that we 
remove the pre-admission screening requirement altogether, as we 
continue to believe that the pre-admission screening is an integral 
part of determining if a patient can tolerate and benefit from IRF 
level services. However, we do agree with commenters who suggested that 
we should not codify all of the current required elements of the pre-
admission screening, as some of the elements duplicate data that is 
already included in other parts of the patients IRF medical record 
(such as the history and physical and the individualized overall plan 
of care). We are addressing the concerns of the current required 
elements of the preadmission screening in section IX. of this final 
rule.
    Comment: Many commenters stated that removing some of the pre-
admission screening elements that were duplicative of data collected in 
various other documents in the patient's IRF medical record (such as 
the history and physical and the individualized overall plan of care) 
would reduce burden. Several commenters suggested removing the pre-
admission screening elements that require IRF clinicians to predict 
what will happen during the IRF stay, as this information frequently 
changes during the IRF stay and thereby becomes inaccurate and 
unnecessary.
    Response: We appreciate the suggestions that commenters submitted 
in response to our solicitation of comments regarding what elements of 
the pre-admission screening should be removed in order to reduce burden 
on rehabilitation physicians. With the assistance of CMS medical 
officers, as well as the responses we received from the IRF industry, 
we are finalizing removal of the following elements from the pre-
admission screening:

 Expected frequency and duration of treatment in the IRF
 Any anticipated post-discharge treatments
 Other information relevant to the patient's care needs

    We believe that the elements noted above are duplicative 
requirements that will be captured in other medical documentation, such 
as the history and physical or the individualized overall plan of care, 
and require the rehabilitation physician to predict what will happen 
during and after the IRF admission, which often changes during the IRF 
stay. We believe that by removing the above mentioned elements, we are 
not only reducing provider burden, but we are continuing to align with 
the agency's Patients over Paperwork initiative without diminishing the 
quality of care patients receive.
    We are, therefore, keeping the following key elements of the pre-
admission screening documentation:

 Prior level of function
 Expected level of improvement
 Expected length of time to achieve that level of improvement
 Risk for clinical complications
 Conditions that caused the need for rehabilitation
 Combinations of treatments needed
 Anticipated discharge destination

    We believe that the elements above demonstrate not only the 
anticipated functional progress of the patient and the therapeutic 
disciplines that will be utilized to reach those goals, but also the 
need for medical supervision by a physician and supports the need for 
an intensive inpatient rehabilitation program instead of a lower level 
of care. Since IRF patients are more medically complex than ever 
before, often suffering from chronic illnesses or disabilities, and/or 
recovering from devastating physical trauma, we believe that these 
elements are essential in determining if the patient can tolerate and 
benefit from IRF level care. They require a higher level of care and 
more intense therapy and physician supervision than patients in other 
post-acute care settings. Therefore, properly managing a patient's 
medical complexities while developing an informative and, to the extent 
possible, an all-inclusive pre-admission screening is of utmost 
importance. We continue to believe that having as much pertinent 
information about the patient as possible prior to the IRF admission 
improves the quality of care the patient receives in the IRF. 
Additionally,

[[Page 48449]]

discharge planning in IRFs should begin on the day of admission, so 
while it may appear that some pre-admission screening elements are 
better discussed after the patient is admitted, we want to continue to 
encourage IRFs to begin planning for the patient's discharge upon 
admission. Discharge coordination often involves not only the patient, 
but family members, caregivers, etc. and it can sometimes take weeks 
for all of the discharge details to be sorted out. We want to ensure 
that upon discharge, patients are set up for continued success in their 
recovery.
    Comment: One commenter suggested that we should specify the 
requirements for a ``detailed and comprehensive review'' of the 
patient's condition and medical history in the pre-admission screening.
    Response: As noted above, we believe that it is appropriate for the 
rehabilitation physician to use his or her training and experience when 
determining what information best supports his or her decision to admit 
the patient to the IRF to include in the pre-admission screening. For 
this reason, we require a detailed and comprehensive pre-admission 
screening in which we allow rehabilitation physicians to include any 
additional information, outside of the required elements, they deem 
necessary to the pre-admission screening.
    After consideration of the comments we received, we are finalizing 
our proposal to amend Sec.  412.622(a)(4)(i)(B) and (D) to codify 
certain elements of our longstanding documentation instructions and 
guidance of the preadmission screening in regulation text. 
Specifically, we are finalizing the following elements of the pre-
admission screening requirements prior to codifying the pre-admission 
screening elements at Sec.  412.622(a)(4)(i):

 Prior level of function
 Expected level of improvement
 Expected length of time to achieve that level of improvement
 Risk for clinical complications
 Conditions that caused the need for rehabilitation
 Combinations of treatments needed
 Anticipated discharge destination

    These changes will become effective for all IRF discharges on or 
after Oct. 1, 2020. We are not finalizing the following elements of the 
pre-admission screening documentation:

 Expected frequency and duration of treatment in the IRF
 Any anticipated post-discharge treatments
 Other information relevant to the patient's care needs

    These elements will be removed from chapter 1, section 110.1.1 of 
the Medicare Benefit Policy Manual.

B. Definition of a ``Week''

    In Sec.  412.622(a)(3)(ii) we state that in certain well-documented 
cases, this intensive rehabilitation therapy program might instead 
consist of at least 15 hours of intensive rehabilitation therapy within 
a 7 consecutive day period, beginning with the date of admission to the 
IRF. This language is also used many times throughout the IRF Services 
section of the Medicare Benefit Policy Manual. For more information, we 
refer readers to the Medicare Benefit Policy Manual, chapter 1, section 
110.1.2 (Pub. L. 100-02), which can be downloaded from the CMS website 
at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/internet-Only-Manuals-IOMs.html.
    However, we understand there is some question as to whether the 
term ``Week'' may be construed as a different period (for example, 
Monday through Sunday). To provide clarity and reduce administrative 
burden for stakeholders regarding several of the IRF coverage 
requirements, we proposed to amend our regulation text to clarify that 
we define a ``Week'' as ``a 7 consecutive calendar day period'' for 
purposes of the IRF coverage requirements.
    Therefore, we proposed to amend Sec.  412.622(c) to clarify our 
definition of a ``Week'' as a period of ``7 consecutive calendar days 
beginning with the date of admission to the IRF.'' We also proposed to 
make conforming amendments to Sec.  412.622(a)(3)(ii) by replacing ``7 
consecutive day period, beginning with the date of admission to the 
IRF'' with ``Week''.
    The comments we received on our proposals to Sec. Sec.  412.622(c) 
and 412.622(a)(3)(ii) are summarized below.
    Comment: The majority of commenters support CMS' proposal to 
clarify the definition of ``Week.'' Commenters stated that CMS' efforts 
to clarify this period of time and utilize consistent language 
throughout the regulatory text will improve clarity and reduce 
administrative burden on both IRF providers and MACs.
    Response: We appreciate the commenters' support for the proposal. 
We agree that finalizing this proposal will reduce administrative 
burden on both IRF providers and MACs.
    Comment: One commenter expressed concern that codifying the 
definition of a ``Week'' would cause greater provider burden, as IRF 
providers would need to independently track each patient's admission 
date to ensure that other requirements were being met timely.
    Response: We appreciate the commenter's concern, but the proposed 
definition was always the definition that we used for the IRF 
requirements in Sec.  412.622. We simply proposed to add the word 
``calendar'' to help clarify the definition and eliminate any possible 
confusion.
    Comment: One commenter suggested that CMS should instead define a 
``week'' as a 7 consecutive calendar day period starting on the day 
after admission rather than on the day of admission. The commenter 
suggested that because some IRF patients are admitted late in the day, 
IRF therapists are unable to provide therapy services on the day of 
admission. Therefore, according to this commenter, therapists often 
only have 6 days to meet the minimum of 15 hours of intensive therapy 
requirement during the patient's first week of admission.
    Response: We respectfully disagree with the commenter's suggested 
modification to the definition of ``week.'' We believe that an IRF 
patient's stay should be tracked beginning with the day of admission as 
it always has. We believe that the suggested modification would create 
unnecessary confusion as to what the actual day of admission is for 
other documentation purposes in the IRF medical record. Additionally, 
IRFs have shown that they are able to meet the minimum of 15 hours of 
intensive therapy requirement, even if the patient is admitted late in 
the day.
    After consideration of the comments we received, we are finalizing 
our proposal to amend Sec.  412.622(c) to clarify the definition of a 
``Week'' as a ``7 consecutive calendar days beginning with the date of 
admission to the IRF.'' We are also finalizing our proposal to make 
conforming amendments to Sec.  412.622(a)(3)(ii) by replacing ``7 
consecutive day period, beginning with the date of admission to the 
IRF'' with ``Week''.

C. Solicitation of Comments Regarding Further Changes to the 
Preadmission Screening Documentation Requirements

    As noted in section VIII. of this final rule, we are considering 
ways in which we can continue to help reduce administrative burden on 
IRF providers. Specifically, we have been reviewing the pre-admission 
screening documentation requirements under Sec.  412.622(a)(4)(i) and 
are considering whether we could remove some of the requirements, but 
still maintain an IRF patient's clinical history, as well as 
documentation of their medical and functional needs in sufficient 
detail to

[[Page 48450]]

adequately describe and support the patient's need for IRF services.
    To assist us in balancing the needs of the patient with the desire 
to reduce the regulatory burden on rehabilitation physicians, we 
solicited feedback from stakeholders in the proposed rule about 
potentially removing some of the preadmission screening documentation 
requirements. Specifically, we requested feedback regarding:
     What aspects of the preadmission screening do stakeholders 
believe are most or least critical and useful for supporting the 
appropriateness of an IRF admission, and why?
    We appreciate the commenters' responses to this solicitation. We 
have summarized and responded to those comments in section IX.A. of 
this final rule.

X. Amendment To Allow Non-physician Practitioners To Perform Some of 
the Weekly Visits That Are Currently Required To Be Performed by a 
Rehabilitation Physician

    In October 2019, Executive Order 13890, entitled ``Protecting and 
Improving Medicare for Our Nation's Seniors,'' available at https://www.whitehouse.gov/presidential-actions/executive-order-protecting-improving-medicare-nations-seniors/, was issued by the President of the 
United States instructing the Secretary to, among other things, propose 
a regulation under the Medicare program that would eliminate regulatory 
billing and other such requirements that are more stringent than 
applicable Federal or State laws and that limit professionals from 
practicing within their full scope of practice.
    In responding to this Executive Order, CMS has begun to review any 
IRF coverage requirements at Sec.  412.622(a) where we explicitly state 
the requirement must be completed by a rehabilitation physician to see 
if, when appropriate, some of these requirements could be fulfilled by 
non-physician practitioners (physician assistants, nurse practitioners, 
and licensed practical nurses).
    Several of the IRF coverage requirements at Sec.  412.622(a)(3), 
(4), and (5) explicitly state that a requirement must be completed by a 
rehabilitation physician, defined at Sec.  412.622(c) as a licensed 
physician who is determined by the IRF to have specialized training and 
experience in inpatient rehabilitation. For example, under Sec.  
412.622(a)(3)(iv), for an IRF claim to be considered reasonable and 
necessary under section 1862(a)(1) of the Act, there must be a 
reasonable expectation at the time of the patient's admission to the 
IRF that the patient requires physician supervision by a rehabilitation 
physician. The requirement for medical supervision means that the 
rehabilitation physician must conduct face-to-face visits with the 
patient at least 3 days per week throughout the patient's stay in the 
IRF to assess the patient both medically and functionally, as well as 
to modify the course of treatment as needed to maximize the patient's 
capacity to benefit from the rehabilitation process. For more 
information, please refer to the Medicare Benefit Policy Manual, 
chapter 1, section 110.2.4 (Pub. L. 100-02), which can be downloaded 
from the CMS website at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/internet-Only-Manuals-IOMs.html.
    In addition, under Sec.  412.622(a)(4)(ii), to document that each 
patient for whom the IRF seeks payment is reasonably expected to meet 
all of the requirements in Sec.  412.622(a)(3) at the time of 
admission, the patient's medical record at the IRF must contain a post-
admission physician evaluation that must, among other requirements, be 
completed by a rehabilitation physician within 24 hours of the 
patient's admission to the IRF. For more information, we refer readers 
to the Medicare Benefit Policy Manual, chapter 1, section 110.1.2 (Pub. 
L. 100-02), which can be downloaded from the CMS website at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/internet-Only-Manuals-IOMs.html.
    In response to the RFI in the FY 2018 IRF PPS proposed rule (82 FR 
20742 through 20743), we received comments suggesting that we consider 
amending the requirements in Sec.  412.622(a)(3)(iv) and (a)(4)(ii) to 
allow non-physician practitioners to fulfill some of the requirements 
that rehabilitation physicians are currently required to complete. The 
commenters suggested that expanding the use of non-physician 
practitioners in meeting some of the IRF coverage requirements would 
ease the documentation burden on rehabilitation physicians.
    We solicited additional comments in the FY 2019 proposed rule (83 
FR 20998 through 20999) on potentially allowing non-physician 
practitioners to fulfill some of the requirements in Sec.  
412.622(a)(3), (4), and (5) that rehabilitation physicians are 
currently required to complete. Specifically, we sought feedback from 
the industry and asked:
     Does the IRF industry believe non-physician practitioners 
have the specialized training in rehabilitation that they need to have 
to appropriately assess IRF patients both medically and functionally?
     How would the non-physician practitioner's credentials be 
documented and monitored to ensure that IRF patients are receiving high 
quality care?
     Do stakeholders believe that utilizing non-physician 
practitioners to fulfill some of the requirements that are currently 
required to be completed by a rehabilitation physician would have an 
impact of the quality of care for IRF patients?
    We received significant feedback in response to our solicitation of 
comments on allowing non-physician practitioners to fulfill the 
requirements at Sec.  412.622(a)(3), (4) and (5). However, the comments 
from stakeholders were conflicting. Some commenters expressed concern 
with allowing non-physician practitioners to fulfill some or all of the 
requirements that rehabilitation physicians are currently required to 
meet. These commenters generally raised the following specific 
concerns:
     The first concern was that IRF patients would not continue 
receiving the hospital level and quality of care that is necessary to 
treat such complex conditions in an IRF if being treated only by a non-
physician practitioner.
     The second concern was that non-physician practitioners 
have no specialized training in inpatient rehabilitation that would 
enable them to adequately assess the interaction between patients' 
medical and functional care needs in an IRF.
    Conversely, we also received comments from industry stakeholders 
stating that non-physician practitioners do have the necessary 
education and are qualified to provide the same level of care currently 
being provided to IRF patients by rehabilitation physicians. These 
commenters stated that non-physician practitioners are capable of 
performing the same tasks that the rehabilitation physicians currently 
must perform in IRFs. These commenters stated that non-physician 
practitioners have a history of treating complex patients across all 
settings, and are already doing so in IRFs. They also stated that the 
types of patient assessments that they would be required to do in the 
IRFs are the same types of assessments they are currently authorized to 
provide in other settings, such as inpatient hospitals, skilled nursing 
facilities, hospice, and outpatient rehabilitation centers. 
Additionally, commenters stated that because non-physician 
practitioners practice in conjunction with

[[Page 48451]]

rehabilitation physicians in IRFs already, time spent practicing with 
rehabilitation physicians has provided many non-physician practitioners 
with direct rehabilitation experience to provide quality of care and 
services to IRF patients. Lastly, several commenters stated that non-
physician practitioner educational programs include didactic and 
clinical experiences to prepare graduates for advanced clinical 
practice. These commenters stated that current accreditation 
requirements and competency-based standards ensure that non-physician 
practitioners are equipped to provide safe, high level quality care.
    Additionally, several commenters stated that allowing non-physician 
practitioners to practice to the full extent of their education, 
training, and scope of practice will increase the number of available 
health care providers able to work in the post-acute care setting 
resulting in lower costs and improved quality of care. Allowing the use 
of non-physician practitioners, authorized to provide care to the full 
extent of their states scope of practice, would also help offset 
deficiencies in physician supply, especially in rural areas. Physician 
burnout is also something that commenters suggested can occur overtime, 
and they commented that allowing the use of non-physician practitioners 
could potentially help decrease the rate at which physicians move on 
from providing care in IRFs.
    After carefully reviewing and taking all feedback that we received 
to our solicitation of comments into consideration, we proposed to 
allow the use of non-physician practitioners to perform the IRF 
services and documentation requirements currently required to be 
performed by the rehabilitation physician in Sec.  412.622(a)(3), (4), 
and (5). In the FY 2021 IRF PPS proposed rule, we stated that we agreed 
with commenters that non-physician practitioners have the training and 
experience to perform the IRF requirements, and believe that allowing 
IRFs to utilize non-physician practitioners practicing to their full 
scope of practice under applicable state law will increase access to 
post-acute care services specifically in rural areas, where 
rehabilitation physicians are often in short supply. We stated that we 
believed that alleviating access barriers to post-acute care services 
will improve the quality of care and lead to better patient outcomes in 
rural areas. We also agreed with commenters that non-physician 
practitioners have the appropriate education and are capable of 
providing hospital level quality of care to complex IRF patients. 
Lastly, we stated that we believed that it continues to be the IRF's 
responsibility to exercise their best judgment regarding who has 
appropriate specialized training and experience, provided that these 
duties are within the practitioner's scope of practice under applicable 
state law.
    We proposed to mirror our current definition of a rehabilitation 
physician with the proposed definition of a non-physician practitioner 
in that we expect the IRF to determine whether the non-physician 
practitioner has specialized training and experience in inpatient 
rehabilitation and thus may perform any of the duties that are required 
to be performed by a rehabilitation physician, provided that the duties 
are within the non-physician practitioner's scope of practice under 
applicable state law.
    Therefore, we proposed to add new Sec.  412.622(d) providing that 
for purposes of Sec.  412.622, a non-physician practitioner who is 
determined by the IRF to have specialized training and experience in 
inpatient rehabilitation may perform any of the duties that are 
required to be performed by a rehabilitation physician, provided that 
the duties are within the non-physician practitioner's scope of 
practice under applicable state law.
    Additionally, we noted that if an IRF believes in any given 
situation a rehabilitation physician should have sole responsibility, 
or shared responsibility with non-physician practitioners, for 
overseeing a patient's care, the IRF should make that decision. 
Furthermore, IRFs are required to meet the hospital Conditions of 
Participation in section 1861(e) of the Act and in the regulations in 
part 482. Under section 1861(e)(4) of the Act and Sec.  482.12(c), 
every Medicare patient is generally required to be under the care of a 
physician.
    Our proposal did not preclude IRFs from making decisions regarding 
the role of rehabilitation physicians or non-physician practitioners. 
We merely proposed to allow non-physician practitioners to perform the 
IRF coverage requirements at Sec.  412.622(a)(3), (4), and (5) that are 
currently required to be performed by a rehabilitation physician, 
provided that these duties are within the practitioner's scope of 
practice under applicable state law.
    We invited public comment on this proposal. In particular, we 
invited commenters to provide feedback on whether they believed that 
utilizing non-physician practitioners to fulfill some of the 
requirements that are currently required to be completed by a 
rehabilitation physician would have an impact on the quality of care 
for IRF patients. We also requested information from IRFs regarding 
whether or not their facilities would allow non-physician practitioners 
to complete all of the requirements at Sec.  412.622(a)(3), (4), and 
(5), some of these requirements at Sec.  412.622(a)(3), (4), and (5), 
or none of the requirements at Sec.  412.622(a)(3), (4), and (5). We 
stated that this information would assist us in refining our estimates 
of the changes in Medicare payment that may result from the proposal.
    The comments we received on our proposal to allow non-physician 
practitioners to perform the IRF coverage requirements at Sec.  
412.622(a)(3), (4), and (5) that are currently required to be performed 
by a rehabilitation physician, provided that these duties are within 
the practitioner's scope of practice under applicable state law, are 
summarized below.
    Comment: Some commenters expressed support for the proposal to 
allow non-physician practitioners to perform the IRF coverage 
requirements. Some commenters stated that non-physician practitioners 
are qualified, prepared, and experienced at performing and documenting 
mandatory assessments such as those of IRF patients, as well as 
providing the high quality of care these patients require. 
Additionally, the commenters suggested that authorizing non-physician 
practitioners, who have a long history of providing safe, high quality 
care to their patients, to treat patients would improve the care for 
IRF patients by reducing the burdens of the patient's clinical care 
team, thus enabling facilities to utilize their staff in the most 
efficient way possible. One of the commenters suggested that non-
physician practitioners were an important part of the IRF team already 
assisting with many consults, admissions, and daily patient visits. 
Therefore, extending their ability to perform the proposed duties and 
sign documentation under the supervision and guidance of a board 
certified rehabilitation physician would provide additional assistance 
to IRF treatment teams. A few commenters that supported CMS' proposal 
stated that given ongoing staffing challenges that many providers face, 
including physician burnout, particularly in certain geographic areas, 
allowing non-physician practitioners to practice to the top of their 
license and use their full skill set would help lower health care costs 
and increase access to care. Lastly, a few commenters stated that it 
would be helpful if CMS would clearly define the role of non-physician 
practitioners in IRFs as there are clinical differences

[[Page 48452]]

between nurse practitioners and physician assistants, and state scope 
of practice laws differ.
    Response: We appreciate the commenters' support for the proposal to 
allow non-physician practitioners to perform the IRF coverage 
requirements at Sec.  412.622(a)(3), (4), and (5) that are currently 
required to be performed by a rehabilitation physician, provided that 
these duties are within the practitioner's scope of practice under 
applicable state law. We continue to believe that non-physician 
practitioners have an important role in treating IRF patients. We agree 
with commenters that non-physician practitioners have training and 
experience in caring for complex patient populations, and that they can 
provide much-needed help to rehabilitation physicians. However, given 
the overall nature of the comments that we received in response to this 
proposal, we believe it is prudent at this time to take a more measured 
approach to expanding the role of non-physician practitioners in the 
IRF setting to ensure that the vulnerable IRF populations will continue 
to receive the highest quality of care for their post-acute 
rehabilitation needs. Therefore, we are finalizing a portion of the 
proposed policy by amending Sec.  412.622(a)(3)(iv) to allow non-
physician practitioners to conduct one of the three required 
rehabilitation physician visits in every week of the IRF stay, with the 
exception of the first week, if permitted under state law. In the first 
week of the IRF stay, we continue to require the rehabilitation 
physician to visit patients a minimum of three times to ensure that the 
patient's plan of care is fully established and optimized to the 
patient's care needs in the IRF.
    Comment: The majority of commenters urged CMS not to finalize this 
proposal, expressing concerns that the change would have negative 
impacts on the health, quality of care, and recovery success rate of 
IRF patients. These commenters stated that the role and judgment of 
rehabilitation physicians in IRFs is central to the successful outcomes 
of complex IRF patients, and a key element in what separates IRFs from 
other lesser intensive post-acute care settings. The commenters stated 
that rehabilitation physicians are specifically trained to handle the 
distinctive needs of highly complex medical rehabilitation patients 
such as spinal cord injury patients, brain injury patients, and complex 
wound issues seen in mobility-impaired patients. Additionally, 
commenters suggested that rehabilitation physicians are better trained 
to manage the comorbidities and medication needs of IRF patients and 
evaluate and order durable medical equipment for patients with new 
onset of disabilities. Commenters suggested that substituting non-
physician practitioners for rehabilitation physicians in the IRF is 
likely to result in worse clinical outcomes for patients and an 
increase in medical complications, readmission, acute transfers, and 
emergency room utilization. Commenters noted that the costs of these 
outcomes--both to the Medicare program and to individual patients--
would more than offset any projected savings tied to the substitution 
of non-physician practitioners. Lastly, commenters stated that allowing 
non-physician practitioners to perform specific clinical and patient 
care functions that currently can only be satisfied by rehabilitation 
physicians is inconsistent with Medicare's benefit structure for 
rehabilitation hospitals and post-acute care benefits. These commenters 
indicated that the IRF benefit structure explicitly requires that each 
patient requires physician supervision by a rehabilitation physician, 
as specified at Sec.  412.622(a)(3)(iv).
    Response: We appreciate the commenters' feedback regarding the 
proposal to allow non-physician practitioners to perform the IRF 
coverage requirements at Sec.  412.622(a)(3), (4), and (5) that are 
currently required to be performed by a rehabilitation physician, 
provided that these duties are within the practitioner's scope of 
practice under applicable state law. Given the strong concerns that 
many commenters noted over this proposed policy, we believe that the 
prudent approach at this time is to finalize only a portion of the 
proposed policy. Thus, we are finalizing a portion of the proposed 
policy by amending Sec.  412.622(a)(3)(iv) to allow non-physician 
practitioners to conduct one of the three required rehabilitation 
physician visits in every week of the IRF stay, with the exception of 
the first week, if permitted under state law. We believe that this 
approach mitigates many of the concerns expressed by commenters, 
because it preserves the existing benefit structure of the IRF setting, 
ensures the quality of care for IRF patients by continuing the 
rehabilitation physician's close involvement in the establishment of 
the patient's plan of care and the initial implementation of the plan 
of care, and allows non-physician practitioners to assist in 
implementing the plan of care once it has been fully established. We 
believe that this balanced approach maintains the central role and 
judgment of the rehabilitation physician in the patient's plan of care, 
while also allowing for the expanded role of non-physician 
practitioners. We believe this approach takes full advantage of the 
extensive training and knowledge that rehabilitation physicians bring 
to the care of IRF patients, but also allows patients to benefit from 
the training that non-physician practitioners have in caring for 
complex patients. We believe that this measured approach may result in 
improved outcomes for patients, as it takes full advantage of the 
skills of both non-physician practitioners and rehabilitation 
physicians. We do not estimate the savings from this expansion of the 
role of non-physician practitioners in IRFs to be significant, but we 
also do not anticipate that this measured approach will increase costs 
to the Medicare program, as suggested by commenters, because 
rehabilitation physicians will still be directly involved in 
establishing and implementing the patient's IRF plan of care. Non-
physician practitioners can add significant expertise to the patient 
care team, including recognizing emergent issues that, if left 
unaddressed, could lead to unplanned readmissions to the acute care 
hospitals.
    Comment: The majority of commenters suggested that non-physician 
practitioners do not have the adequate training and experience to 
fulfill the preadmission screening, individualized overall plan of 
care, 3 weekly face-to-face visits, and interdisciplinary team meeting 
requirements. Many of the commenters stated that physicians, by nature 
of their medical training and education, are the only types of health 
care providers that should make decisions tied to a patient's 
admission. Therefore, the majority of commenters stated that they did 
not believe that non-physician practitioners should be conducting the 
pre-admission screening, as it is the initial evaluation and review of 
the patient's condition and need for rehabilitation therapy and medical 
treatment. Commenters also stated that having a rehabilitation 
physician make the admission decisions would significantly reduce 
erroneous claim reviews and denials.
    Many commenters suggested that, while non-physician practitioners 
can play a vital role in supporting the rehabilitation physician in 
coordinating the patient's medical needs with his or her functional 
rehabilitation needs, they do not have the adequate training and 
experience to play a direct role in the execution of the individualized 
overall plan of care for IRF patients.

[[Page 48453]]

    Commenters noted that the complexity of patients in IRFs has been 
increasing, and it would be illogical, and particularly ill-timed in 
light of the COVID-19 public health emergency, to allow a non-physician 
practitioner to synthesize and approve all of the elements of the 
individualized overall plan of care for IRF patients.
    Many commenters stated that CMS' proposal to allow non-physician 
practitioners to administer the three weekly face-to-face visits was 
particularly concerning because the physician visits with patients 
significantly inform the course of patients' treatment and overall 
plans of care. In these visits, physicians modify patients' course of 
treatment as needed, so that the patient's capacity to benefit is 
maximized. Commenters also suggested that a patient's ability to 
benefit from the IRF care is diminished if lesser trained clinicians 
are tasked with treating the patients. Additionally, commenters 
suggested that some states would not permit (under their current laws) 
non-physician practitioners to engage in these visits because such 
services are only intended to be performed by a licensed physician with 
the skillset that allows them to assess the patient or make 
modifications to treatment plans, both medically and functionally.
    Lastly, commenters stated that all recommendations made by the 
interdisciplinary team are directly related to the prognosis and 
oversight of the patient's care and should be authorized only by a 
rehabilitation physician, as the complex nature of the patient in IRFs, 
combined with the delivery of an intensive course of therapy, requires 
skills and expertise that far exceed those held by a non-physician 
practitioner.
    Response: We appreciate the commenters' feedback. While we continue 
to believe that non-physician practitioners are well-trained to care 
for complex patient populations, the concerns that commenters brought 
to our attention on this proposal have led us to believe that we need 
to take a more measured approach to expanding the role of non-physician 
practitioners in the IRF setting without diminishing the quality of 
care. We understand that IRF beneficiaries are a vulnerable population 
that require the highest quality of care and we want to ensure that the 
policies we finalize provide just that. Thus, we are finalizing a 
portion of the proposed policy by amending Sec.  412.622(a)(3)(iv) to 
allow non-physician practitioners to conduct one of the three required 
rehabilitation physician visits in every week of the IRF stay, with the 
exception of the first week, if permitted under state law. We believe 
that this measured approach responds to the concerns expressed by 
commenters by preserving the rehabilitation physician's training and 
judgment at the center of the patient's care plan in the IRF, while 
also allowing non-physician practitioners to take an expanded role in 
the care of patients. We believe that this approach will allow non-
physician practitioners to play a vital role in supporting the 
rehabilitation physician by coordinating the patient's medical needs 
with his or her functional rehabilitation needs once the rehabilitation 
physician has fully established the patient's plan of care in the first 
week. This approach also maintains the rehabilitation physician's 
direct involvement in other aspects of the patient's care.
    After consideration of the comments we received, we are finalizing 
a portion of our proposed policy changes by amending Sec.  
412.622(a)(3)(iv) to allow, beginning with the second week of admission 
to the IRF, a non-physician practitioner who is determined by the IRF 
to have specialized training and experience in inpatient rehabilitation 
to conduct 1 of the 3 required face-to-face visits with the patient per 
week, provided that such duties are within the non-physician 
practitioner's scope of practice under applicable state law. To be 
clear, in the first week of the IRF stay, we continue to require the 
rehabilitation physician to visit patients a minimum of three times to 
ensure that the patient's plan of care is fully established and 
optimized to the patient's care needs in the IRF. In the second, third, 
fourth weeks of the stay, and beyond, we will continue to require 
Medicare fee-for-services beneficiaries in IRFs to receive a minimum of 
three rehabilitation physicians visits per week, but will amend Sec.  
412.622(a)(3)(iv) to allow non-physician practitioners to independently 
conduct one of these three minimum required visits per week. We believe 
that this measured approach to expanding the role of non-physician 
practitioners in IRFs balances the commenters' concerns about 
maintaining the rehabilitation physician at the core of the patient's 
plan of care in the IRF with the benefits of expanding the role of non-
physician practitioners, who play an important role in the 
interdisciplinary team and the care of complex patients. We are also 
making conforming changes to Sec.  412.29(e) to allow, beginning with 
the second week of admission to the IRF, a non-physician practitioner 
who is determined by the IRF to have specialized training and 
experience in inpatient rehabilitation to conduct 1 of the 3 required 
face-to-face visits with the patient per week, provided that such 
duties are within the non-physician practitioner's scope of practice 
under applicable state law.

XI. Method for Applying the Reduction to the FY 2021 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 payments for discharges occurring 
during such FY for IRFs that fail to comply with the quality data 
submission requirements. In accordance with Sec.  412.624(c)(4)(i), we 
apply a 2-percentage point reduction to the applicable FY 2021 market 
basket increase factor in calculating an adjusted FY 2021 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 FY and in payment rates for a FY 
being less than such payment rates for the preceding FY. Also, 
reporting-based reductions to the market basket increase factor are not 
cumulative; they only apply for the FY involved.
    Table 12 shows the calculation of the proposed adjusted FY 2021 
standard payment conversion factor that would be used to compute IRF 
PPS payment rates for any IRF that failed to meet the quality reporting 
requirements for the applicable reporting period.

    Table 12--Calculations To Determine the Adjusted FY 2021 Standard
   Payment Conversion Factor for IRFs That Failed To Meet the Quality
                          Reporting Requirement
------------------------------------------------------------------------
             Explanation for adjustment                  Calculations
------------------------------------------------------------------------
Standard Payment Conversion Factor for FY 2020......            $ 16,489

[[Page 48454]]

 
Market Basket Increase Factor for FY 2021 (2.4                   x 1.004
 percent), reduced by 0.0 percentage point for the
 productivity adjustment as required by section
 1886(j)(3)(C)(ii)(I) 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 Updates to the Wage            x 1.0013
 Index and Labor-Related Share......................
Budget Neutrality Factor for the Revisions to the               x 0.9970
 CMG Relative Weights...............................
Adjusted FY 2021 Standard Payment Conversion Factor.          = $ 16,527
------------------------------------------------------------------------

XII. Miscellaneous Comments

    Comment: Several commenters recommended that CMS evaluate how the 
public health emergency will impact future reimbursement under current 
practices and encouraged CMS to work with stakeholders to make 
adjustments to the case-mix system in the future.
    Response: We recognize the impact that the public health emergency 
is having on all providers and we intend to examine the effects of this 
emergency in available Medicare data. We will propose any modifications 
to the existing methodologies used to update reimbursements in future 
rulemaking if and when appropriate. We value transparency in our 
processes and will continue to engage stakeholders in future 
development of payment policies.
    Comment: We received several comments on the IRF QRP. Several 
commenters noted that the status of IRF-PAI 4.0 is unknown along with 
the adoption of additional standardized patient assessment data element 
items that are being added to IRF-PAI 4.0. Several commenters thanked 
CMS for efforts taken to reduce data reporting burden, such as delaying 
the release of IRF-PAI 4.0, and granting an exception to the IRF QRP 
reporting requirements for Quarter 1 and Quarter 2 of 2020. One 
commenter requested that the exemption be extended for all affected 
quarters. One commenter requested that measure reliability analyses be 
performed and shared to ensure the accuracy of measure calculations in 
light of truncated, incomplete, or COVID-19 affected data.
    Several commenters also provided recommendations for additions and 
modifications of IRF QRP measures. One commenter suggested CMS collect 
and stratify patient and caregiver data based on key variables of 
inequities in patient care within population segments and other 
communities of belonging, such as race and ethnicity, for all types of 
measures.
    One commenter recommended that CMS exercise flexibility regarding 
the non-compliance payment penalty. Another commenter requested that 
CMS lower the IRF QRP APU minimum submission threshold from 95 percent 
to 80 percent, for consistency with the SNF QRP and LTCH QRP.
    Response: We consider these comments to be outside the scope of the 
current rulemaking. We refer providers to the interim final rule with 
comment entitled, ``Additional Policy and Regulatory Revisions in 
Response to the COVID-19 Public Health Emergency and Delay of Certain 
Reporting Requirements for the Skilled Nursing Facility Quality 
Reporting Program'' (85 FR 27595 through 27596) regarding the delay in 
the compliance date for the Transfer of Health Information quality 
measures and certain standardized patient assessment data elements 
(SPADEs). We also refer providers to our June 23, 2020 announcement at 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/Spotlights-Announcements that, 
effective July 1, 2020, IRFs must resume reporting their quality data.
    We received several additional comments that were outside the scope 
of the FY 2021 IRF PPS proposed rule. Specifically, we received 
comments regarding the facility-level adjustment factors, cognitive 
function and resource use in IRFs, the motor score, the reliability and 
validity of IRF data collection, modifications to the 60 percent rule, 
IRF regulatory burden reduction, the use of recreational therapy, 
IMPACT Act data availability, COVID-19 health pandemic, post-acute care 
payment reform, and the PAC PPS prototype among other topics. We thank 
the commenters for bringing these issues to our attention, and will 
take these comments into consideration for potential policy 
refinements.

XIII. Waiver of the 60-Day Delayed Effective Date for the Final Rule

    We ordinarily provide a 60-day delay in the effective date of final 
rules after the date they are issued in accord with the Congressional 
Review Act (CRA) (5 U.S.C. 801(a)(3)). However, section 808(2) of the 
CRA provides that, if an agency finds good cause that notice and public 
procedure are impracticable, unnecessary, or contrary to the public 
interest, the rule shall take effect at such time as the agency 
determines. The United States is responding to an outbreak of 
respiratory disease caused by a novel (new) coronavirus that has now 
been detected in more than 190 locations internationally, including in 
all 50 States and the District of Columbia. The virus has been named 
``SARS-CoV-2'' and the disease it causes has been named ``coronavirus 
disease 2019'' (abbreviated ``COVID-19'').
    On January 30, 2020, the International Health Regulations Emergency 
Committee of the World Health Organization (WHO) declared the outbreak 
a ``Public Health Emergency of international concern.'' On January 31, 
2020, Health and Human Services Secretary, Alex M. Azar II, declared a 
public health emergency (PHE) for the United States to aid the nation's 
healthcare community in responding to COVID-19. On March 11, 2020, the 
WHO publicly characterized COVID-19 as a pandemic. On March 13, 2020, 
the President of the United States declared the COVID-19 outbreak a 
national emergency.
    Due to CMS prioritizing efforts in support of containing and 
combatting the COVID-19 PHE, and devoting significant resources to that 
end, it was impracticable for CMS to complete the work needed on the 
IRF PPS final rule in accordance with our usual schedule for this 
rulemaking, which aims for a publication date providing for at least 60 
days of public notice before the start of the fiscal year to which it 
applies. The IRF PPS final rule is necessary to annually review and 
update the payment system, and it is critical to ensure that the 
payment policies for this payment system are effective on the first day 
of the fiscal year to which they are intended to apply. Therefore, in 
light of the COVID-19 PHE and the resulting strain on CMS's resources, 
it was impracticable for CMS to publish the IRF PPS final rule 60 days 
before the effective date, and we are hereby waiving the 60-day 
requirement and determining that the IRF PPS final rule

[[Page 48455]]

will take effect 55 days after issuance; it would be contrary to the 
public interest for CMS to do otherwise.

XIV. Provisions of the Final Regulations

    In this final rule, we are adopting the provisions set forth in the 
FY 2021 IRF PPS proposed rule (85 FR 22065), specifically:
     We will update the CMG relative weights and average length 
of stay values for FY 2021, in a budget neutral manner, as discussed in 
section V. of this final rule.
     We will update the IRF PPS payment rates for FY 2021 by 
the market basket increase factor, based upon the most current data 
available, with a productivity adjustment required by section 
1886(j)(3)(C)(ii)(I) of the Act, as described in section VI. of this 
final rule.
     We will adopt the revised OMB delineations, the IRF wage 
index transition, and the update to the labor-related share for FY 2021 
in a budget-neutral manner, as described in section VI. of this final 
rule.
     We will calculate the final IRF standard payment 
conversion factor for FY 2021, as discussed in section VI. of this 
final rule.
     We will update the outlier threshold amount for FY 2021, 
as discussed in section VII. of this final rule.
     We will update the CCR ceiling and urban/rural average 
CCRs for FY 2021, as discussed in section VII. of this final rule.
     We will amend the IRF coverage requirements to remove the 
post-admission physician evaluation requirement as discussed in section 
VIII. of this final rule.
     We will amend the IRF coverage requirements to codify 
existing documentation instructions and guidance as discussed in 
section IX. of this final rule.
     We will amend the IRF coverage requirements to allow non-
physician practitioners to conduct one of the three minimum required 
rehabilitation physician visits every week of the IRF stay, except for 
the first week, if permitted under state law, as discussed in section 
X. of this final rule.
     We will apply the reduction to the FY 2021 IRF increase 
factor for IRFs that fail to meet the quality reporting requirements as 
discussed in section XI. of this final rule.

XV. Collection of Information Requirements

    As discussed in section IX. of this final rule, we are amending 
Sec.  412.622(a)(4)(i)(B) and (D) to codify our longstanding 
documentation instructions and guidance of the preadmission screening 
in regulation text. As per our discussion in the FY 2010 IRF PPS final 
rule (74 CR 39803), we do not believe that there is any burden 
associated with this requirement. The burden associated with this 
requirement is the time and effort put forth by the rehabilitation 
physician to document his or her concurrence with the pre-admission 
findings and the results of the pre-admission screening and retain the 
information in the patient's medical record. The burden associated with 
this requirement is in keeping with the ``Conditions of Participation: 
Medical record services,'' that are already applicable to Medicare 
participating hospitals. Therefore, we believe that this requirement 
reflects customary and usual business and medical practice. Thus, in 
accordance with section 1320.3(b)(2) of the Act, the burden is not 
subject to the PRA.
    As discussed in section VIII. of this final rule, we are removing 
the post-admission physician evaluation requirement at Sec.  
412.622(a)(4)(ii) beginning with FY 2021, that is, for all IRF 
discharges beginning on or after October 1, 2020. Accordingly, we are 
amending Sec.  412.622(a)(3)(iv) to remove the reference to Sec.  
412.622(a)(4)(ii). We discuss any potential cost savings from this 
revision in the Overall Impact section of this final rule.

XVI. Regulatory Impact Analysis

A. Statement of Need

    This final rule updates the IRF prospective payment rates for FY 
2021 as required under section 1886(j)(3)(C) of the Act and in 
accordance with section 1886(j)(5) of the Act, which requires the 
Secretary to publish in the Federal Register on or before the August 1 
before each FY, the classification and weighting factors for CMGs used 
under the IRF PPS for such FY and a description of the methodology and 
data used in computing the prospective payment rates under the IRF PPS 
for that FY. This final rule also implements section 1886(j)(3)(C) of 
the Act, which requires the Secretary to apply a MFP adjustment to the 
market basket increase factor for FY 2012 and subsequent years.
    Furthermore, this final rule adopts policy changes under the 
statutory discretion afforded to the Secretary under section 1886(j) of 
the Act. We are finalizing our proposal to adopt more recent OMB 
statistical area delineations and apply a 5 percent cap on any wage 
index decreases compared to FY 2020 in a budget neutral manner. We are 
also finalizing our proposal to amend the IRF coverage requirements to 
remove the post-admission physician evaluation requirement and codify 
existing documentation instructions and guidance.

B. Overall Impact

    We have examined the impacts 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 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). Section 
3(f) of Executive Order 12866 defines a ``significant regulatory 
action'' as an action that is likely to result in a rule: (1) Having an 
annual effect on the economy of $100 million or more in any 1 year, or 
adversely and materially affecting a sector of the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or state, local or tribal governments or communities (also 
referred to as ``economically significant''); (2) creating a serious 
inconsistency or otherwise interfering with an action taken or planned 
by another agency; (3) materially altering the budgetary impacts of 
entitlement grants, user fees, or loan programs or the rights and 
obligations of recipients thereof; or (4) raising novel legal or policy 
issues arising out of legal mandates, the President's priorities, or 
the principles set forth in Executive Order 12866.
    A regulatory impact analysis (RIA) must be prepared for major rules 
with economically significant effects ($100 million or more in any 1 
year). We estimate the total impact of the policy updates described in 
this final rule by comparing the estimated payments in FY 2021 with 
those in FY 2020. This analysis results in an estimated $260 million 
increase for FY 2021 IRF PPS payments. We estimate that this

[[Page 48456]]

rulemaking is ``economically significant'' as measured by the $100 
million threshold, and hence also a major rule under the Congressional 
Review Act. Also, the rule has been reviewed by OMB. Accordingly, we 
have prepared an RIA that, to the best of our ability, presents the 
costs and benefits of the rulemaking.

C. Anticipated Effects

1. Effects on IRFs
    The RFA requires agencies to analyze options for regulatory relief 
of small entities, if a rule has a significant impact on a substantial 
number of small entities. For purposes of the RFA, small entities 
include small businesses, nonprofit organizations, and small 
governmental jurisdictions. Most IRFs and most other providers and 
suppliers are small entities, either by having revenues of $8.0 million 
to $41.5 million or less in any 1 year depending on industry 
classification, or by being nonprofit organizations that are not 
dominant in their markets. (For details, see the Small Business 
Administration's final rule that set forth size standards for health 
care industries, at 65 FR 69432 at https://www.sba.gov/sites/default/files/2019-08/SBA%20Table%20of%20Size%20Standards_Effective%20Aug%2019%2C%202019_Rev.pdf, effective January 1, 2017 and updated on August 19, 2019.) 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 1,120 IRFs, of which approximately 55 
percent are nonprofit facilities) are considered small entities and 
that Medicare payment constitutes the majority of their revenues. HHS 
generally uses a revenue impact of 3 to 5 percent as a significance 
threshold under the RFA. As shown in Table 13, we estimate that the net 
revenue impact of this final rule on all IRFs is to increase estimated 
payments by approximately 2.8 percent. However, we find that certain 
categories of IRF providers will be expected to experience revenue 
impacts in the 3 to 5 percent range. We estimate a 3.0 percent overall 
impact for rural IRFs. Additionally, we estimate a 3.1 percent overall 
impact for teaching IRFs with a resident to average daily census ratio 
of less than 10 percent, a 3.4 percent overall impact for teaching IRFs 
with resident to average daily census ratio of 10 to 19 percent, and a 
3.1 percent overall impact for teaching IRFs with a resident to average 
daily census ratio greater than 19 percent. Also, we estimate a 3.2 
percent overall impact for IRFs with a DSH patient percentage of 0 
percent and a 3.1 percent overall impact for IRFs with a DSH patient 
percentage greater than 20 percent. As a result, we anticipate this 
final rule will have a positive impact on a substantial number of small 
entities. MACs are not considered to be small entities. Individuals and 
states are not included in the definition of a small entity.
    In addition, section 1102(b) of the Act requires us to prepare an 
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 and has fewer 
than 100 beds. As shown in Table 13, we estimate that the net revenue 
impact of this final rule on rural IRFs is to increase estimated 
payments by approximately 3.0 percent based on the data of the 132 
rural units and 11 rural hospitals in our database of 1,118 IRFs for 
which data were available. We estimate an overall impact for rural IRFs 
in all areas except Rural South Atlantic and Rural East South Central 
of between 3.0 percent and 5.0 percent. As a result, we anticipate this 
final rule would have a positive impact on a substantial number of 
small rural hospitals.
    Section 202 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 
104-04, enacted on March 22, 1995) (UMRA) 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 2020, that threshold is 
approximately $156 million. This final rule does not mandate any 
requirements for State, local, or tribal governments, or for 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. As stated, this final rule will not have a substantial 
effect on state and local governments, preempt state law, or otherwise 
have a federalism implication.
    Executive Order 13771, titled Reducing Regulation and Controlling 
Regulatory Costs, was issued on January 30, 2017 and requires that the 
costs associated with significant new regulations ``shall, to the 
extent permitted by law, be offset by the elimination of existing costs 
associated with at least two prior regulations.'' It has been 
determined that this final rule is a transfer rule that does not impose 
more than de minimis costs and thus is not a regulatory action for the 
purposes of Executive Order 13771.
2. Detailed Economic Analysis
    This final rule will update the IRF PPS rates contained in the FY 
2020 IRF PPS final rule (84 FR 39054). Specifically, this final rule 
will update the CMG relative weights and average length of stay values, 
the wage index, and the outlier threshold for high-cost cases. This 
final rule will apply a MFP adjustment to the FY 2021 IRF market basket 
increase factor in accordance with section 1886(j)(3)(C)(ii)(I) of the 
Act. In addition, it adopts more recent OMB statistical area 
delineations and applies a transition wage index under the IRF PPS. We 
are also amending the IRF coverage requirements to remove the post-
admission physician evaluation requirement and codify existing 
documentation instructions and guidance.
    We estimate that the impact of the changes and updates described in 
this final rule will be a net estimated increase of $260 million in 
payments to IRF providers. This estimate does not include the 
implementation of the required 2 percentage point reduction of the 
market basket increase factor for any IRF that fails to meet the IRF 
quality reporting requirements (as discussed in section XI. of this 
final rule). The impact analysis in Table 13 of this final rule 
represents the projected effects of the updates to IRF PPS payments for 
FY 2021 compared with the estimated IRF PPS payments in FY 2020. We 
determine the effects by estimating payments while holding all other 
payment variables constant. We use the best data available, but we do 
not attempt to predict behavioral responses to these changes, and we do 
not make adjustments for future changes in such variables as number of 
discharges or case-mix.
    We note that certain events may combine to limit the scope or 
accuracy of our impact analysis, because such an analysis is future-
oriented and, thus, susceptible to forecasting errors because of other 
changes in the forecasted impact time period. Some examples could be 
legislative changes made by the Congress to the Medicare program that 
would impact program funding, or changes specifically related to IRFs. 
Although some of these changes may not necessarily be specific to the 
IRF

[[Page 48457]]

PPS, the nature of the Medicare program is such that the changes may 
interact, and the complexity of the interaction of these changes could 
make it difficult to predict accurately the full scope of the impact 
upon IRFs.
    In updating the rates for FY 2021, we are implementing standard 
annual revisions described in this final rule (for example, the update 
to the wage index and market basket increase factor used to adjust the 
Federal rates). We are also implementing a productivity adjustment to 
the FY 2021 IRF market basket increase factor in accordance with 
section 1886(j)(3)(C)(ii)(I) of the Act. We estimate the total increase 
in payments to IRFs in FY 2021, relative to FY 2020, would be 
approximately $260 million.
    This estimate is derived from the application of the FY 2021 IRF 
market basket increase factor, as reduced by a productivity adjustment 
in accordance with section 1886(j)(3)(C)(ii)(I) of the Act which yields 
an estimated increase in aggregate payments to IRFs of $220 million. 
Furthermore, there is an additional estimated $40 million increase in 
aggregate payments to IRFs due to the update to the outlier threshold 
amount. Therefore, summed together, we estimate that these updates will 
result in a net increase in estimated payments of $260 million from FY 
2020 to FY 2021.
    The effects of the updates that impact IRF PPS payment rates are 
shown in Table 13. The following updates that affect the IRF PPS 
payment rates are discussed separately below:
     The effects of the update to the outlier threshold amount, 
from approximately 2.6 percent to 3.0 percent of total estimated 
payments for FY 2021, consistent with section 1886(j)(4) of the Act.
     The effects of the annual market basket update (using the 
IRF market basket) to IRF PPS payment rates, as required by sections 
1886(j)(3)(A)(i) and (j)(3)(C) of the Act, including a productivity 
adjustment in accordance with section 1886(j)(3)(C)(i)(I) of the Act.
     The effects of applying the budget-neutral labor-related 
share and wage index adjustment, as required under section 1886(j)(6) 
of the Act.
     The effects of the budget neutral changes to the wage 
index due to the OMB delineation revisions and the transition wage 
index policy.
     The effects of the budget-neutral changes to the CMG 
relative weights and average LOS values under the authority of section 
1886(j)(2)(C)(i) of the Act.
     The total change in estimated payments based on the FY 
2021 payment changes relative to the estimated FY 2020 payments.
3. Description of Table 13
    Table 13 shows the overall impact on the 1,118 IRFs included in the 
analysis.
    The next 12 rows of Table 13 contain IRFs categorized according to 
their geographic location, designation as either a freestanding 
hospital or a unit of a hospital, and by type of ownership; all urban, 
which is further divided into urban units of a hospital, urban 
freestanding hospitals, and by type of ownership; and all rural, which 
is further divided into rural units of a hospital, rural freestanding 
hospitals, and by type of ownership. There are 975 IRFs located in 
urban areas included in our analysis. Among these, there are 684 IRF 
units of hospitals located in urban areas and 291 freestanding IRF 
hospitals located in urban areas. There are 143 IRFs located in rural 
areas included in our analysis. Among these, there are 132 IRF units of 
hospitals located in rural areas and 11 freestanding IRF hospitals 
located in rural areas. There are 394 for-profit IRFs. Among these, 
there are 361 IRFs in urban areas and 33 IRFs in rural areas. There are 
610 non-profit IRFs. Among these, there are 521 urban IRFs and 89 rural 
IRFs. There are 114 government-owned IRFs. Among these, there are 93 
urban IRFs and 21 rural IRFs.
    The remaining four parts of Table 13 show IRFs grouped by their 
geographic location within a region, by teaching status, and by DSH 
patient percentage (PP). First, IRFs located in urban areas are 
categorized for their location within a particular one of the nine 
Census geographic regions. Second, IRFs located in rural areas are 
categorized for their location within a particular one of the nine 
Census geographic regions. In some cases, especially for rural IRFs 
located in the New England, Mountain, and Pacific regions, the number 
of IRFs represented is small. IRFs are then grouped by teaching status, 
including non-teaching IRFs, IRFs with an intern and resident to 
average daily census (ADC) ratio less than 10 percent, IRFs with an 
intern and resident to ADC ratio greater than or equal to 10 percent 
and less than or equal to 19 percent, and IRFs with an intern and 
resident to ADC ratio greater than 19 percent. Finally, IRFs are 
grouped by DSH PP, including IRFs with zero DSH PP, IRFs with a DSH PP 
less than 5 percent, IRFs with a DSH PP between 5 and less than 10 
percent, IRFs with a DSH PP between 10 and 20 percent, and IRFs with a 
DSH PP greater than 20 percent.
    The estimated impacts of each policy described in this rule to the 
facility categories listed are shown in the columns of Table 13. The 
description of each column is as follows:
     Column (1) shows the facility classification categories.
     Column (2) shows the number of IRFs in each category in 
our FY 2021 analysis file.
     Column (3) shows the number of cases in each category in 
our FY 2021 analysis file.
     Column (4) shows the estimated effect of the adjustment to 
the outlier threshold amount.
     Column (5) shows the estimated effect of the update to the 
IRF labor-related share and wage index, in a budget-neutral manner.
     Column (6) shows the estimated effect of the revisions to 
the CBSA delineations and the transition wage index, in a budget-
neutral manner.
     Column (7) shows the estimated effect of the update to the 
CMG relative weights and average LOS values, in a budget-neutral 
manner.
     Column (8) compares our estimates of the payments per 
discharge, incorporating all of the policies reflected in this final 
rule for FY 2021 to our estimates of payments per discharge in FY 2020.
    The average estimated increase for all IRFs is approximately 2.8 
percent. This estimated net increase includes the effects of the IRF 
market basket increase factor for FY 2021 of 2.4 percent, reduced by a 
productivity adjustment of 0.0 percentage point in accordance with 
section 1886(j)(3)(C)(ii)(I) of the Act. It also includes the 
approximate 0.4 percent overall increase in estimated IRF outlier 
payments from the update to the outlier threshold amount. Since we are 
making the updates to the IRF wage index, labor-related share and the 
CMG relative weights in a budget-neutral manner, they will not be 
expected to affect total estimated IRF payments in the aggregate. 
However, as described in more detail in each section, they will be 
expected to affect the estimated distribution of payments among 
providers.

[[Page 48458]]



                                                         Table 13--IRF Impact Table for FY 2021
                                                           [Columns 4 through 8 in percentage]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                    FY 21 wage
                                                                Number  of   Number  of               FY 21  wage   index new                   Total
                   Facility classification                         IRFs        cases       Outlier      index and    CBSA and   CMG weights    percent
                                                                                                      labor share     5% cap                  change \1\
(1)                                                                    (2)          (3)          (4)          (5)          (6)          (7)          (8)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total........................................................        1,118      410,883          0.4          0.0          0.0          0.0          2.8
Urban unit...................................................          684      161,642          0.7          0.1          0.0          0.0          3.2
Rural unit...................................................          132       20,758          0.7          0.0          0.1          0.0          3.2
Urban hospital...............................................          291      223,421          0.2          0.0          0.0          0.0          2.5
Rural hospital...............................................           11        5,062          0.0          0.0         -0.2          0.0          2.2
Urban For-Profit.............................................          361      218,350          0.2          0.0          0.0          0.0          2.5
Rural For-Profit.............................................           33        8,487          0.3          0.0          0.0          0.0          2.6
Urban Non-Profit.............................................          521      145,259          0.7          0.1          0.0          0.0          3.2
Rural Non-Profit.............................................           89       14,171          0.8          0.0          0.0          0.0          3.2
Urban Government.............................................           93       21,454          0.7         -0.1          0.2          0.0          3.2
Rural Government.............................................           21        3,162          0.4          0.0          0.0          0.1          3.0
Urban........................................................          975      385,063          0.4          0.0          0.0          0.0          2.8
Rural........................................................          143       25,820          0.6          0.0          0.0          0.0          3.0
Urban by region:
    Urban New England........................................           29       16,117          0.4         -0.6          0.0         -0.1          2.1
    Urban Middle Atlantic....................................          132       48,820          0.5          0.4         -0.3          0.1          3.0
    Urban South Atlantic.....................................          153       78,375          0.3          0.1          0.0          0.0          2.8
    Urban East North Central.................................          159       50,217          0.5          0.2          0.0          0.0          3.1
    Urban East South Central.................................           56       28,428          0.2          0.1          0.0          0.0          2.6
    Urban West North Central.................................           73       21,136          0.5         -0.6          0.0          0.0          2.1
    Urban West South Central.................................          188       85,336          0.3          0.1          0.1          0.1          3.0
    Urban Mountain...........................................           87       30,648          0.4         -0.4          0.0         -0.1          2.3
    Urban Pacific............................................           98       25,986          0.8         -0.3          0.3         -0.1          3.2
Rural by region:
    Rural New England........................................            5        1,347          0.5          0.6          0.0         -0.2          3.3
    Rural Middle Atlantic....................................           11        1,189          1.1          0.4          0.0          0.0          4.0
    Rural South Atlantic.....................................           16        3,796          0.4         -0.3         -0.3          0.0          2.2
    Rural East North Central.................................           23        4,068          0.5          0.4          0.1          0.0          3.4
    Rural East South Central.................................           21        4,442          0.3          0.0          0.0         -0.1          2.6
    Rural West North Central.................................           20        3,047          0.8         -0.1          0.2          0.0          3.2
    Rural West South Central.................................           39        7,005          0.5         -0.2          0.1          0.2          3.0
    Rural Mountain...........................................            5          563          1.2         -0.2          0.0          0.1          3.5
    Rural Pacific............................................            3          363          1.8          0.7          0.0          0.0          5.0
Teaching status:
    Non-teaching.............................................        1,012      363,781          0.4          0.0          0.0          0.0          2.8
    Resident to ADC less than 10%............................           60       32,585          0.5          0.0          0.2          0.0          3.1
    Resident to ADC 10%-19%..................................           34       12,988          0.8          0.3         -0.1          0.1          3.4
    Resident to ADC greater than 19%.........................           12        1,529          0.4          0.1          0.2          0.1          3.1
Disproportionate share patient percentage (DSH PP):
    DSH PP = 0%..............................................           33        4,715          0.6          0.2          0.0          0.0          3.2
    DSH PP <5%...............................................          142       60,645          0.3          0.1         -0.3          0.0          2.5
    DSH PP 5%-10%............................................          294      127,295          0.3          0.1         -0.1          0.0          2.8
    DSH PP 10%-20%...........................................          393      147,404          0.4         -0.1          0.1          0.0          2.8
    DSH PP greater than 20%..................................          256       70,824          0.6         -0.1          0.1          0.0          3.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ This column includes the impact of the updates in columns (4), (5), (6), and (7) above, and of the IRF market basket update for FY 2021 (2.4
  percent), reduced by 0.0 percentage point for the productivity adjustment as required by section 1886(j)(3)(C)(ii)(I) of the Act.

4. Impact of the Update to the Outlier Threshold Amount
    The estimated effects of the update to the outlier threshold 
adjustment are presented in column 4 of Table 13. In the FY 2020 IRF 
PPS final rule (84 FR 39095 through 39097), we used FY 2018 IRF claims 
data (the best, most complete data available at that time) to set the 
outlier threshold amount for FY 2020 so that estimated outlier payments 
will equal 3 percent of total estimated payments for FY 2020.
    For the FY 2021 IRF PPS proposed rule, we used preliminary FY 2019 
IRF claims data, and, based on that preliminary analysis, we estimated 
that IRF outlier payments as a percentage of total estimated IRF 
payments would be 2.6 percent in FY 2020. As we typically do between 
the proposed and final rules each year, we updated our FY 2019 IRF 
claims data to ensure that we are using the most recent available data 
in setting IRF payments. Therefore, based on updated analysis of the 
most recent IRF claims data for this final rule, we continue to 
estimate that IRF outlier payments as a percentage of total estimated 
IRF payments are 2.6 percent in FY 2021. Thus, we are adjusting the 
outlier threshold amount in this final rule to maintain total estimated 
outlier payments equal to 3 percent of total estimated payments in FY 
2021. The estimated change in total IRF payments for FY 2021, 
therefore, includes an approximate 0.4 percent increase in payments 
because the estimated outlier portion of total payments is estimated to

[[Page 48459]]

increase from approximately 2.6 percent to 3 percent.
    The impact of this outlier adjustment update (as shown in column 4 
of Table 13) is to increase estimated overall payments to IRFs by 0.4 
percent.
5. Impact of the Wage Index and Labor-Related Share
    In column 5 of Table 13, we present the effects of the budget-
neutral update of the wage index and labor-related share. The changes 
to the wage index and the labor-related share are discussed together 
because the wage index is applied to the labor-related share portion of 
payments, so the changes in the two have a combined effect on payments 
to providers. As discussed in section VI.C. of this final rule, we are 
updating the labor-related share from 72.7 percent in FY 2020 to 73.0 
percent in FY 2021.
6. Impact of the Revisions to the OMB Delineations and the 5 Percent 
Cap Transition Policy
    In column 6 of Table 13, we present the effects of the budget-
neutral update of the geographic labor-market area designations under 
the IRF PPS and the application of the 5 percent cap on any decrease in 
an IRF's wage index for FY 2021 from the prior FY. As discussed in 
section VI.D.2. of this final rule, we are implementing the new OMB 
delineations as described in the September 14, 2018 OMB Bulletin No. 
18-04, effective beginning with the FY 2021 IRF PPS wage index. 
Additionally, as discussed in section VI.D.3. of this final rule, we 
are applying a 5 percent cap on any decrease in an IRF's wage index 
from the prior FY to help mitigate any significant negative impacts 
that IRFs may experience due to our adoption of the revised OMB 
delineations under the IRF PPS.
7. Impact of the Update to the CMG Relative Weights and Average LOS 
Values
    In column 7 of Table 13, we present the effects of the budget-
neutral update of the CMG relative weights and average LOS values. In 
the aggregate, we do not estimate that these updates will affect 
overall estimated payments of IRFs. However, we do expect these updates 
to have small distributional effects.
8. Effects of the Removal of the Post-Admission Physician Evaluation
    As discussed in section VIII. of this final rule, we are removing 
Sec.  412.622(a)(4)(ii) that requires an IRF to complete a post-
admission physician evaluation for all patients admitted to the IRF, 
beginning with FY 2021, that is, for all IRF discharges beginning on or 
after October 1, 2020.
    We do not estimate that there will be a cost savings associated 
with our removal of the post-admission physician evaluation, as 
discussed in section VIII. of this final rule. While we are removing 
the post-admission physician requirement at Sec.  412.622(a)(4)(ii), we 
are not removing any of the required face-to-face visits in Sec.  
412.622(a)(3)(iv). Thus, the rehabilitation physician or non-physician 
practitioners, as described in section X. of this final rule, will 
still be required to conduct face-to-face visits with the patient at 
least 3 days per week throughout the patient's stay in the IRF. Since 
this change does not decrease the amount of times the physician is 
required to visit and assess the patient, we do not estimate any cost 
savings to the IRF with this change.
9. Effects of the Amendment To Allow Non-Physician Practitioners To 
Perform Some of the Weekly Visits That Are Currently Required To Be 
Performed by a Rehabilitation Physician
    As discussed in section X. of this final rule, we are amending the 
regulations at Sec.  412.622(a)(3)(iv) to allow, beginning with the 
second week of admission to the IRF, a non-physician practitioner who 
is determined by the IRF to have specialized training and experience in 
inpatient rehabilitation to conduct 1 of the 3 required face-to-face 
visits with the patient per week, provided that such duties are within 
the non-physician practitioner's scope of practice under applicable 
state law. We believe this final rule represents a decrease in 
administrative burden to rehabilitation physicians and providers 
beginning in FY 2021, that is, for all IRF discharges on or after 
October 1, 2020. We estimate the cost savings associated with this 
change in the following way.
    The requirement at Sec.  412.622(a)(3)(iv) must currently be 
fulfilled by a rehabilitation physician; therefore, to estimate the 
burden reduction of these changes, we obtained the hourly wage rate for 
a physician (there was not a specific wage rate for a rehabilitation 
physician) from the Bureau of Labor Statistics (http://www.bls.gov/ooh/healthcare/home.htm), which is $100.00. The hourly wage rate including 
fringe benefits and overhead is $200.00. We also obtained the average 
hourly wage rate for a non-physician practitioner. As discussed in 
section X. of this final rule, we defer to each state's scope of 
practice in determining who is recognized as a non-physician 
practitioner; however, for the purposes of this burden reduction 
estimation, we used a combined average wage from the Bureau of Labor 
Statistics for a nurse practitioner and a physician's assistant, as 
E.O. 13890 specifically identifies both of these practitioners, which 
is $53.50. The hourly wage rate including fringe benefits and overhead 
is $107.00.
    We estimate that the required face-to-face physician visits at 
Sec.  412.622(a)(3)(iv) take, on average, 30 minutes each to complete. 
In FY 2019, we estimate that there were approximately 1,117 total IRFs 
and on average 366 discharges per IRF annually. A patient's average 
length of stay in an IRF is 13 days. Therefore, we can estimate that on 
average, each patient receives at least six physician visits during 
their IRF admission. If each IRF has approximately 366 patients per 
year, and on average each patient receives at least six face-to-face 
visits with a rehabilitation physician that take an estimated 30 
minutes each, annually the rehabilitation physician spends an estimated 
1098 hours (366 patients x 6 visits x 0.5 hours) completing the 
required face-to-face physician visits. Allowing a non-physician 
practitioner to complete one of the required face-to-face visits for 
each patient beginning with the patient's second week of admission and 
estimating the patient's average length of stay is 13 days, we estimate 
a reduction of 183 hours for rehabilitation physicians per IRF annually 
(366 patients x 0.5 hours). We estimate a reduction of 204,411 hours 
for rehabilitation physicians across all IRFs annually (1,117 IRFs x 
183 hours).
    To estimate the total cost savings per IRF annually, assuming the 
IRF was able and willing to take full advantage of this regulatory 
provision, we multiply 183 hours by $200.00 (average physician's salary 
doubled to account for fringe and overhead costs) which equals $36,600. 
We then multiply 183 hours by $107.00 (average non-physician 
practitioners salary doubled to account for fringe and overhead costs) 
which equals $19,581. The total estimated cost savings per IRF is 
$17,019 ($36,600-$19,581). Therefore, we can estimate the total cost 
savings across all IRFs annually for non-physician practitioners to 
conduct one of the 3 required face-to-face visits in a patient's 
average length of stay of 13 days would be $1.9 million ($17,019 x 
1,117).
    Please note that the $1.9 million in burden reduction described 
above will not solely be savings to the Medicare Trust Fund. We note 
that all of the cost savings reflected in this estimate will occur on 
the Medicare Part B side, in the form of reduced Part B payments to 
physicians under the Medicare Physician Fee Schedule (MPFS). Physician 
services provided in an IRF

[[Page 48460]]

are billed directly to Part B; therefore, IRFs do not pay physicians 
for their services. Therefore, the Medicare Trust Fund will be saving 
80 percent of the overall cost savings and 20 percent of the savings 
will be to beneficiaries due to the coinsurance requirement generally 
applicable to Medicare Part B services. We estimate that if 100 percent 
of IRFs allowed non-physician practitioners to fulfill some of the 
requirement at Sec.  412.622(a)(3)(iv) the overall savings to Medicare 
Part B would be $1.5 million. However, we are unsure if all IRFs will 
adopt this change. We are estimating that IRFs will adopt this change 
for about 50 percent of the services provided. Therefore, we estimate 
that the overall savings to the Medicare Trust Fund for allowing non-
physician practitioners to fulfill some of the requirement at Sec.  
412.622(a)(3)(iv) would be $750,000.
    We have also estimated the impacts of this change using the MPFS 
regarding what a physician would bill for these services versus what a 
non-physician practitioner would bill. The MPFS provides more than 
10,000 physician services, the associated relative value units, a fee 
schedule state indicator and various payment policy indicators needed 
for payment adjustment. The MPFS pricing amounts are adjusted to 
reflect the variation in practice costs from area to area. For 
additional information regarding how to use the MPFS please visit the 
website at https://www.cms.gov/apps/physician-fee-schedule/search/search-criteria.aspx.
    The face-to-face physician visits are considered separately payable 
services for physicians. Therefore, we can use the active pricing paid 
in calendar year 2020 for a national base payment.
    There are different evaluation and management codes depending on 
the complexity of the patient and the duration of the visit. The 
current evaluation and management codes for the face-to-face visit in a 
facility are 99231 ($40.06), 99232 ($73.62), or 99233 ($106.10). 
Therefore, we estimate that the average national pricing which is a 
standard reference payment amount for the physicians without geographic 
adjustment for one of the face-to-face visits in a facility is $73.26. 
During a patient's average length of stay of 13 days, the 
rehabilitation physician is currently required to see the patient a 
minimum of six times. The current estimated total that physicians are 
currently billing per IRF patient for 6 face-to-face visits is $439.56 
($73.26 x 6 visits). In FY 2019, we estimate that there were 
approximately 1,117 total IRFs and on average 366 discharges per IRF 
annually. Therefore, we estimate that on average each year physicians 
are billing $179 million for these services ($439.56 x 366 patients x 
1117 IRFs). For the purposes of this estimation, if we allow non-
physician practitioners to conduct one of the three face-to-face visits 
beginning with the second week during a patient's admission with an 
average length of stay of 13 days, the rehabilitation would complete 
only 5 face-to-face visits during the patient's IRF admission. 
Therefore, the estimated total that a physician would bill per IRF 
patient for 5 face-to-face visits is $366.30 ($73.26 x 5 visits). We 
estimate that on average each year physicians across all IRFs are 
billing $149 million for these services ($366.30 x 366 patients x 1,117 
IRFs).
    According to the Medicare Benefit Policy Manual, chapter 15, 
section 80 (Pub. L. 100-02), as well as, the IRF PPS website (https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c15.pdf), non-physician practitioners are able to bill 80 percent 
of what physicians bill. Therefore, we estimate that on average non-
physician practitioners will bill $58.61 per face-to-face visit. Per 
IRF patient with an average length of stay of 13 days, the non-
physician practitioner will bill an estimated $58.61. Therefore, we 
estimate that on average each year a non-physician practitioner will 
bill $24 million for these services ($58.61 x 366 x 1,117).
    We estimate that if 100 percent of IRFs allowed non-physician 
practitioners to fulfill some of the requirement at Sec.  
412.622(a)(3)(iv) the overall savings to Medicare Part B would be $6 
million. However, we are unsure that IRFs will adopt this change. 
Commenters suggested that states do not have scope of practice laws 
that are IRF specific and at least as focused on the clinical training 
as necessitated through CMS requirements for a physician to practice in 
an IRF. States have developed scope of practice laws around acute care 
hospitals, rather than IRFs specifically, to allow NPPs to perform 
visits to admitted patients. Also, since the average length of stay for 
an IRF patient is 13 days, there would be limited opportunities for the 
NPP visit to occur. Considering the broad permissibility under scope of 
practice laws and average length of stays, we felt it was appropriate 
to pick a midpoint in formulating our estimation. Therefore, we are 
estimating that IRFs will adopt this change 50 percent of the time. To 
obtain more information on which to base our estimates, we solicited 
feedback from commenters to determine:
     How many IRFs would substitute non-physician practitioners 
for physicians; and
     Among the IRFs that do substitute non-physician 
practitioners for physicians, whether it will be for all requirements 
or only for specific requirements.
    We did not receive any comments regarding this request for 
feedback. Therefore, we are finalizing our projected savings for the 
portion of the proposal that we are finalizing. In the absence of 
specific information on which to base a specific estimate of how much 
IRFs would be expected to substitute non-physician practitioners for 
one of the required physician visits at Sec.  412.622(a)(3)(iv) 
beginning the second week of the patient's admission, we are assuming 
that IRFs will adopt this change about 50 percent of the time. Thus, 
the estimated overall savings to Medicare Part B will be $3 million. We 
are estimating that 80 percent of that will remain in the Medicare 
Trust Fund and 20 percent will be a savings to beneficiaries. 
Therefore, we estimate $2.4 million in savings to the Medicare program 
and $600,000 in savings to beneficiaries.

D. Alternatives Considered

    The following is a discussion of the alternatives considered for 
the IRF PPS updates contained in this final rule.
    Section 1886(j)(3)(C) of the Act requires the Secretary to update 
the IRF PPS payment rates by an increase factor that reflects changes 
over time in the prices of an appropriate mix of goods and services 
included in the covered IRF services.
    As noted previously in this final rule, section 
1886(j)(3)(C)(ii)(I) of the Act requires the Secretary to apply a 
productivity adjustment to the market basket increase factor for FY 
2021. Thus, in accordance with section 1886(j)(3)(C) of the Act, we 
update the IRF prospective payments in this final rule by 2.4 percent 
(which equals the 2.4 percent estimated IRF market basket increase 
factor for FY 2021 reduced by a 0.0 percentage point productivity 
adjustment as determined under section 1886(b)(3)(B)(xi)(II) of the Act 
(as required by section 1886(j)(3)(C)(ii)(I) of the Act)).
    We considered maintaining the existing CMG relative weights and 
average length of stay values for FY 2021. However, in light of 
recently available data and our desire to ensure that the CMG relative 
weights and average length of stay values are as reflective as possible 
of recent changes in IRF utilization and case mix, we believe that it 
is appropriate to update

[[Page 48461]]

the CMG relative weights and average length of stay values at this time 
to ensure that IRF PPS payments continue to reflect as accurately as 
possible the current costs of care in IRFs.
    We considered not implementing the new OMB delineations for 
purposes of calculating the wage index under the IRF PPS; however, we 
believe implementing the new OMB delineations will result in wage index 
values being more representative of the actual costs of labor in a 
given area.
    We considered having no transition period and fully implementing 
the revisions to the OMB delineations as described in section VI.D. of 
this final rule. However, this would not provide any time for IRF 
providers to adapt to their new wage index values. Thus, we believe 
that it is appropriate to provide for a transition period to mitigate 
any significant decreases in wage index values and to provide time for 
IRFs to adjust to their new labor market area delineations.
    We considered using a blended wage index for all providers that 
would be computed using 50 percent of the FY 2021 IRF PPS wage index 
values under the FY 2020 CBSA delineations and 50 percent of the FY 
2021 IRF PPS wage index values under the FY 2021 OMB delineations as 
was utilized in FY 2016 when we adopted the new CBSA delineations based 
on the 2010 decennial census. However, the revisions to the CBSA 
delineations announced in the latest OMB bulletin are not based on new 
census data; they are updates of the CBSA delineations adopted in FY 
2016 based on the 2010 census data. As such, we do not believe it is 
necessary to implement the multifaceted 50/50 blended wage index 
transition that we established for the adoption of the new OMB 
delineations based on the decennial census data in FY 2016.
    We considered transitioning the wage index to the revised OMB 
delineations over a number of years to minimize the impact of the wage 
index changes in a given year. However, we also believe this must be 
balanced against the need to ensure the most accurate payments 
possible, which argues for a faster transition to the revised OMB 
delineations. As discussed above in section VI.D. of this final rule, 
we believe that using the most current OMB delineations will increase 
the integrity of the IRF PPS wage index by creating a more accurate 
representation of geographic variation in wage levels. As such, we 
believe it will be appropriate to utilize a 5 percent cap on any 
decrease in an IRF's wage index from the IRF's final wage index in FY 
2020 to allow the effects of our policies to be phased in over 2 years.
    We considered maintaining the existing outlier threshold amount for 
FY 2021. However, analysis of updated FY 2019 data indicates that 
estimated outlier payments would be less than 3 percent of total 
estimated payments for FY 2021, by approximately 0.4 percent, unless we 
updated the outlier threshold amount. Consequently, we are adjusting 
the outlier threshold amount in this final rule to reflect a 0.4 
percent increase thereby setting the total outlier payments equal to 3 
percent, instead of 2.6 percent, of aggregate estimated payments in FY 
2021.
    We considered not removing the post-admission physician evaluation 
requirement at Sec.  412.622(a)(3)(iv). However, we believe that IRFs 
are more than capable of determining whether a patient meets the 
coverage criteria for IRF services prior to admission. Additionally, we 
believe that if IRFs are doing their due diligence while completing the 
pre-admission screening by making sure each IRF candidate meets all of 
the requirements to be admitted to the IRF, then the post-admission 
physician evaluation is unnecessary.
    We considered not amending Sec.  412.622(a)(4)(i)(B) and (D) to 
codify our longstanding documentation instructions and guidance of the 
preadmission screening in regulation text. However, we believe for the 
ease of administrative burden and being able to locate the required 
elements of the preadmission screening documentation and the review and 
concurrence of a rehabilitation physician prior to the IRF admission 
needed for the basis of IRF payment in a timely fashion, we are should 
make the technical codifications in regulation text. Additionally, we 
considered codifying all of our longstanding required elements of the 
pre-admission screening documentation. However, as discussed in section 
IX. of this final rule, we believe that removing some of the pre-
admission screening elements that were duplicative of data collected in 
various other documents in the patient's IRF medical record (such as 
the history and physical and the individualized overall plan of care) 
would reduce provider burden.
    We considered not amending Sec. Sec.  412.622(a)(3)(iv) and 
412.29(e) to allow, beginning with the second week of admission to the 
IRF, a non-physician practitioner who is determined by the IRF to have 
specialized training and experience in inpatient rehabilitation to 
conduct 1 of the 3 required face-to-face visits with the patient per 
week, provided that such duties are within the non-physician 
practitioner's scope of practice under applicable state law. However, 
we believe that it is critical, especially in light of the significant 
changes in health care that have occurred as a result of the PHE for 
the COVID-19 pandemic, for Medicare to recognize and expand the 
valuable role that non-physician practitioners play in assisting the 
rehabilitation physicians in implementing patients' plan of care in the 
IRF. We intend to monitor the quality of care in IRFs closely to ensure 
that the regulatory changes we are implementing improve care provided 
to vulnerable IRF patients.
    In addition, we considered amending Sec.  412.622(a)(3), (4), and 
(5) to allow non-physician practitioners to perform all of the IRF 
coverage requirements that are currently required to be performed by 
rehabilitation physicians, provided that these duties are within the 
practitioner's scope of practice under applicable state law. However, 
as discussed in section X. of this final rule, we received many 
comments from stakeholders expressing significant concerns about the 
quality of care that the vulnerable IRF patients would receive if we no 
longer required the rehabilitation physician to lead the care of the 
patients. Thus, we determined that it would be prudent to finalize only 
a portion of the proposed policy at this time. Based on extensive 
clinical input by CMS's medical officers and after careful 
consideration of these issues, we believe that the measured approach 
that we are finalizing in this final rule balances the commenters' 
concerns about maintaining the rehabilitation physician at the core of 
the patient's plan of care in the IRF with the benefits of expanding 
the role of non-physician practitioners, who play an important role in 
the interdisciplinary team and the care of complex patients.

E. 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 FY 2021 IRF PPS 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 FY 2021 IRF PPS proposed 
rule in detail, and it is also possible that some

[[Page 48462]]

reviewers chose not to comment on the proposed rule. For these reasons 
we thought that the number of past commenters 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. We sought comments 
on this assumption.
    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 $110.74 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 2 hours for 
the staff to review half of this final rule. For each IRF that reviews 
the rule, the estimated cost is $221.48 (2 hours x $110.74). Therefore, 
we estimate that the total cost of reviewing this regulation is 
$590,908.64 ($221.48 x 2,668 reviewers).

F. Accounting Statement and Table

    As required by OMB Circular A-4 (available at https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf), in Table 14, we have prepared an accounting statement showing 
the classification of the expenditures associated with the provisions 
of this final rule. Table 14 provides our best estimate of the increase 
in Medicare payments under the IRF PPS as a result of the updates 
presented in this final rule based on the data for 1,118 IRFs in our 
database.

 Table 14--Accounting Statement: Classification of Estimated Expenditure
------------------------------------------------------------------------
                                    Category              Transfers
                             -------------------------------------------
     Change in estimated      Annualized monetized      $260 million
 transfers from FY 2020 IRF         transfers      ---------------------
   PPS to FY 2021 IRF PPS    ----------------------  Federal government
                                                       to IRF Medicare
                               From whom to whom?         providers
------------------------------------------------------------------------
Change in Estimated Costs:
------------------------------------------------------------------------
                     Category                       Costs
------------------------------------------------------------------------
Annualized monetized cost in FY 2021 for IRFs due   Reduction of <= $3
 to the amendment of certain IRF coverage            million.
 requirements
------------------------------------------------------------------------

G. Conclusion

    Overall, the estimated payments per discharge for IRFs in FY 2021 
are projected to increase by 2.8 percent, compared with the estimated 
payments in FY 2020, as reflected in column 8 of Table 13.
    IRF payments per discharge are estimated to increase by 2.8 percent 
in urban areas and 3.0 percent in rural areas, compared with estimated 
FY 2020 payments. Payments per discharge to rehabilitation units are 
estimated to increase 3.2 percent in urban areas and 3.2 percent in 
rural areas. Payments per discharge to freestanding rehabilitation 
hospitals are estimated to increase 2.5 percent in urban areas and 
increase 2.2 percent in rural areas.
    Overall, IRFs are estimated to experience a net increase in 
payments as a result of the proposed policies in this final rule. The 
largest payment increase is estimated to be a 5.0 percent increase for 
rural IRFs located in the Pacific region. The analysis above, together 
with the remainder of this preamble, provides an RIA.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by OMB.

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:  42 U.S.C. 1302 and 1395hh.


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


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

* * * * *
    (e) Except for care furnished to patients in a freestanding IRF 
hospital solely to relieve acute care hospital capacity in a state (or 
region, as applicable) that is experiencing a surge, as defined in 
Sec.  412.622, during the Public Health Emergency, as defined in Sec.  
400.200 of this chapter, have in effect a procedure to ensure that 
patients receive close medical supervision, as evidenced by at least 3 
face-to-face visits per week by a licensed physician with specialized 
training and experience in inpatient rehabilitation to assess the 
patient both medically and functionally, as well as to modify the 
course of treatment as needed to maximize the patient's capacity to 
benefit from the rehabilitation process except that during the Public 
Health Emergency, as defined in Sec.  400.200 of this chapter, for the 
COVID-19 pandemic such visits may be conducted using telehealth 
services (as defined in section 1834(m)(4)(F) of the Act). Beginning 
with the second week, as defined in Sec.  412.622, of admission to the 
IRF, a non-physician practitioner who is determined by the IRF to have 
specialized training and experience in inpatient rehabilitation may 
conduct 1 of the 3 required face-to-face visits with the patient per 
week, provided that such duties are within the non-physician 
practitioner's scope of practice under applicable state law.
* * * * *

0
3. Section 412.622 is amended--
0
a. By revising paragraphs (a)(3)(ii) and (iv) and (a)(4)(i)(B) and (D);
0
b. By removing paragraph (a)(4)(ii);
0
c. By redesignating paragraph (a)(4)(iii) as paragraph (a)(4)(ii); and
0
d. In paragraph (c) by adding the definition of ``Week'' in 
alphabetical order.
    The revisions and addition read as follows:


Sec.  412.622  Basis of payment.

    (a) * * *
    (3) * * *

[[Page 48463]]

    (ii) Except during the emergency period described in section 
1135(g)(1)(B) of the Act, generally requires and can reasonably be 
expected to actively participate in, and benefit from, an intensive 
rehabilitation therapy program. Under current industry standards, this 
intensive rehabilitation therapy program generally consists of at least 
3 hours of therapy (physical therapy, occupational therapy, speech-
language pathology, or prosthetics/orthotics therapy) per day at least 
5 days per week. In certain well-documented cases, this intensive 
rehabilitation therapy program might instead consist of at least 15 
hours of intensive rehabilitation therapy per week. Benefit from this 
intensive rehabilitation therapy program is demonstrated by measurable 
improvement that will be of practical value to the patient in improving 
the patient's functional capacity or adaptation to impairments. The 
required therapy treatments must begin within 36 hours from midnight of 
the day of admission to the IRF.
* * * * *
    (iv) Except for care furnished to patients in a freestanding IRF 
hospital solely to relieve acute care hospital capacity in a state (or 
region, as applicable) that is experiencing a surge during the Public 
Health Emergency, as defined in Sec.  400.200 of this chapter, requires 
physician supervision by a rehabilitation physician. The requirement 
for medical supervision means that the rehabilitation physician must 
conduct face-to-face visits with the patient at least 3 days per week 
throughout the patient's stay in the IRF to assess the patient both 
medically and functionally, as well as to modify the course of 
treatment as needed to maximize the patient's capacity to benefit from 
the rehabilitation process, except that during a Public Health 
Emergency, as defined in Sec.  400.200 of this chapter, such visits may 
be conducted using telehealth services (as defined in section 
1834(m)(4)(F) of the Act). Beginning with the second week of admission 
to the IRF, a non-physician practitioner who is determined by the IRF 
to have specialized training and experience in inpatient rehabilitation 
may conduct 1 of the 3 required face-to-face visits with the patient 
per week, provided that such duties are within the non-physician 
practitioner's scope of practice under applicable state law.
    (4) * * *
    (i) * * *
    (B) It includes a detailed and comprehensive review of each 
patient's condition and medical history, including the patient's level 
of function prior to the event or condition that led to the patient's 
need for intensive rehabilitation therapy, expected level of 
improvement, and the expected length of time necessary to achieve that 
level of improvement; an evaluation of the patient's risk for clinical 
complications; the conditions that caused the need for rehabilitation; 
the treatments needed (that is, physical therapy, occupational therapy, 
speech-language pathology, or prosthetics/orthotics); and anticipated 
discharge destination.
* * * * *
    (D) It is used to inform a rehabilitation physician who reviews and 
documents his or her concurrence with the findings and results of the 
preadmission screening prior to the IRF admission.
* * * * *
    (c) * * *
    Week means a period of 7 consecutive calendar days beginning with 
the date of admission to the IRF.

    Dated: July 23, 2020.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.

    Dated: July 29, 2020.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2020-17209 Filed 8-4-20; 4:15 pm]
BILLING CODE 4120-01-P