[Federal Register Volume 89, Number 62 (Friday, March 29, 2024)]
[Proposed Rules]
[Pages 22246-22292]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-06550]



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Vol. 89

Friday,

No. 62

March 29, 2024

Part II





 Department of Health and Human Services





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Centers for Medicare & Medicaid Services





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42 CFR Part 412





Medicare Program; Inpatient Rehabilitation Facility Prospective Payment 
System for Federal Fiscal Year 2025 and Updates to the IRF Quality 
Reporting Program; Proposed Rule

  Federal Register / Vol. 89 , No. 62 / Friday, March 29, 2024 / 
Proposed Rules  

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 412

[CMS-1804-P]
RIN 0938-AV31


Medicare Program; Inpatient Rehabilitation Facility Prospective 
Payment System for Federal Fiscal Year 2025 and Updates to the IRF 
Quality Reporting Program

AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of 
Health and Human Services (HHS).

ACTION: Proposed rule.

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SUMMARY: This rule proposes updates to the prospective payment rates 
for inpatient rehabilitation facilities (IRFs) for Federal fiscal year 
(FY) 2025. As required by statute, this proposed 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 2025. We 
are proposing updates to the Office of Management and Budget (OMB) 
market area delineations for the IRF prospective payment system (PPS) 
wage index and proposing to apply a 3-year phase-out of the rural 
adjustment. This rule also includes proposals for the IRF Quality 
Reporting Program (QRP).

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, by May 28, 2024.

ADDRESSES: In commenting, please refer to file code CMS-1804-P.
    Comments, including mass comment submissions, must be submitted in 
one of the following three ways (please choose only one of the ways 
listed):
    1. Electronically. You may submit electronic comments on this 
regulation to https://www.regulations.gov. Follow the ``Submit a 
comment'' instructions.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-1804-P, P.O. Box 8016, 
Baltimore, MD 21244-8016.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address ONLY: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-1804-P, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: 
    Patricia Taft, (410) 786-4561, for general information.
    Kim Schwartz, (410) 786-2571, for information about the IRF payment 
policies, payment rates and coverage policies.
    Ariel Cress, (410) 786-8571, for information about the IRF quality 
reporting program.

SUPPLEMENTARY INFORMATION: 
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following 
website as soon as possible after they have been received: https://www.regulations.gov. Follow the search instructions on that website to 
view public comments. CMS will not post on Regulations.gov public 
comments that make threats to individuals or institutions or suggest 
that the commenter will take actions to harm an individual. CMS 
continues to encourage individuals not to submit duplicative comments. 
We will post acceptable comments from multiple unique commenters even 
if the content is identical or nearly identical to other comments.
    Plain Language Summary: In accordance with 5 U.S.C. 553(b)(4), a 
plain language summary of this rule may be found at https://www.regulations.gov.

I. Executive Summary

A. Purpose

    This proposed rule updates the prospective payment rates for IRFs 
for FY 2025 (that is, for discharges occurring on or after October 1, 
2024, and on or before September 30, 2025) 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 proposed rule includes the 
classification and weighting factors for the IRF PPS's case-mix groups 
(CMGs), a description of the methodologies and data used in computing 
the prospective payment rates for FY 2025, and revised OMB core-based 
statistical area delineations from the July 21, 2023, OMB Bulletin (No. 
23-01) for the IRF PPS wage index. This proposed rule includes three 
proposals for the FY 2028 IRF QRP and two Requests for Information 
(RFIs).
    This proposed rule proposes the collection of four new items as 
standardized patient assessment data elements and the modification of 
one item collected as a standardized patient assessment data element, 
in the IRF-Patient Assessment Instrument (IRF-PAI) beginning with the 
FY 2028 IRF QRP. This proposed rule also proposes to remove one 
assessment item from the IRF-PAI beginning October 1, 2026. In 
addition, this proposed rule requests information on quality measure 
concepts for the IRF QRP in future years and an IRF star rating system.

B. Summary of Major Provisions

    In this proposed rule, we use the methods described in the FY 2024 
IRF PPS final rule (88 FR 50956) to update the prospective payment 
rates for FY 2025 using updated FY 2023 IRF claims and the most recent 
available IRF cost report data, which is FY 2022 IRF cost report data. 
We are also proposing to use the revised OMB market area delineations 
from the July 21, 2023, OMB Bulletin (No. 23-01) for the IRF PPS wage 
index, and to apply a 3-year phase-out of the rural adjustment for 
those IRFs changing from rural to urban.
    Beginning with the FY 2028 IRF QRP, we are proposing four new items 
as standardized patient assessment data elements to be collected and 
submitted using the IRF-PAI: one item for Living Situation, two items 
for Food, and one item for Utilities. Additionally, we are proposing to 
modify the current Transportation item, and to remove one item 
(Admission Class) from the IRF-PAI. Finally, we are seeking input from 
interested parties on future IRF QRP quality measure concepts and an 
IRF star rating system.

C. Summary of Impact

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II. Background

A. Statutory Basis and Scope for IRF PPS Provisions

    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). A general 
description of the IRF PPS for FYs 2020 through 2024, 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.
    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 
Office of Management and Budget's (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 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 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). 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.
    In response to COVID-19 Public Health Emergency (PHE), we published 
two interim final rules with comment period affecting IRF payment and 
conditions for participation. The interim final rule with comment 
period (IFC) 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), included certain changes to the 
IRF PPS medical supervision requirements at 42 CFR 412.622(a)(3)(iv) 
and 412.29(e) during the PHE for COVID-19. In addition, in the April 6, 
2020 IFC, we removed the post-admission physician evaluation 
requirement at Sec.  412.622(a)(4)(ii) for all

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IRFs during the PHE for COVID-19. In the FY 2021 IRF PPS final rule, to 
ease documentation and administrative burden, we permanently removed 
the post-admission physician evaluation documentation requirement at 
Sec.  412.622(a)(4)(ii) beginning in FY 2021.
    A second IFC, entitled ``Medicare and Medicaid Programs, Basic 
Health Program, and Exchanges; 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,'' was published on May 8, 2020 (85 FR 27550) 
(hereinafter referred to as the May 8, 2020 IFC). Among other changes, 
the May 8, 2020 IFC included a waiver of the ``3-hour rule'' at Sec.  
412.622(a)(3)(ii) to reflect the waiver required by section 3711(a) of 
the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) 
(Pub. L. 116-136, enacted on March 27, 2020). In the May 8, 2020 IFC, 
we also modified certain IRF coverage and classification requirements 
for freestanding IRF hospitals to relieve acute care hospital capacity 
concerns in States (or regions, as applicable) experiencing a surge 
during the PHE for COVID-19. In addition to the policies adopted in our 
IFCs, we responded to the PHE with numerous blanket waivers \1\ and 
other flexibilities,\2\ some of which are applicable to the IRF PPS. 
CMS finalized these policies in the Calendar Year 2023 Hospital 
Outpatient Prospective Payment and Ambulatory Surgical Center Payment 
Systems final rule with comment period (87 FR 71748). Subsequently, on 
May 11, 2023, the U.S. Department of Health and Human Services 
(``HHS'') declared the expiration of the COVID-19 public health 
emergency. (See https://www.hhs.gov/about/news/2023/02/09/fact-sheet-covid-19-public-health-emergency-transition-roadmap.html.) As a result, 
the ``3-hour rule'' waiver at Sec.  412.622(a)(3)(ii), and other IRF 
flexibilities were terminated.
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    \1\ CMS, ``COVID-19 Emergency Declaration Blanket Waivers for 
Health Care Providers,'' (updated Feb. 19, 2021) (available at 
https://www.cms.gov/files/document/summary-covid-19-emergency-declaration-waivers.pdf).
    \2\ CMS, ``COVID-19 Frequently Asked Questions (FAQs) on 
Medicare Fee-for-Service (FFS) Billing,'' (updated March 5, 2021) 
(available at https://www.cms.gov/files/document/03092020-covid-19-faqs-508.pdf).
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    The regulatory history previously included in each rule or notice 
issued under the IRF PPS, including a general description of the IRF 
PPS for FYs 2007 through 2024, is available on the CMS website at 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS.

B. Provisions of the Affordable Care Act and the Medicare Access and 
CHIP Reauthorization Act of 2015 (MACRA) Affecting the IRF PPS in FY 
2012 and Beyond

    The Patient Protection and Affordable Care Act (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 Patient Protection and Affordable Care Act, 
was enacted on March 30, 2010. In this proposed rule, we refer to the 
two statutes collectively as the ``Affordable Care Act'' or ``ACA''.
    The ACA 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 ACA also added section 1886(j)(3)(C)(ii)(I) of the Act 
(providing for a ``productivity adjustment'' for FY 2012 and each 
subsequent FY). The productivity adjustment for FY 2025 is discussed in 
section V.D. of this proposed 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.
    Section 3004(b) of the ACA and section 411(b) of the MACRA (Pub. L. 
114-10, enacted on April 16, 2015) also addressed the IRF PPS. Section 
3004(b) of ACA 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 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 lower than 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 the FY 2010 IRF PPS correction notice (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 https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Software.html. The Grouper software is also embedded in the internet 
Quality Improvement and Evaluation System (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

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addition, once a MA patient is discharged, in accordance with the 
Medicare Claims Processing Manual, chapter 3, section 20.3 (Pub. 100-
04), hospitals (including IRFs) must submit to their MAC an 
informational-only bill (type of bill (TOB) 111) that includes 
Condition Code 04. 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 https://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 healthcare providers, to conduct covered 
electronic transactions according to the applicable transaction 
standards. (See the CMS program claim memoranda at https://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).

III. Summary of Provisions of the Proposed Rule

    In the FY 2025 IRF PPS proposed rule, we are proposing to update 
the IRF PPS for FY 2025 and the IRF QRP for FY 2028.
    The proposed policy changes and updates to the IRF prospective 
payment rates for FY 2025 are as follows:
     Update the CMG relative weights and average length of stay 
values for FY 2025, in a budget neutral manner, as discussed in section 
IV.
     Update the IRF PPS payment rates for FY 2025 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 V.
     Update the FY 2025 IRF PPS payment rates by the FY 2025 
wage index, describe the proposed adoption of the revised OMB market 
area delineations, the phase-out of the rural adjustment for those IRFs 
changing from rural to urban, and the labor-related share in a budget-
neutral manner, as discussed in section V.
     Describe the calculation of the IRF standard payment 
conversion factor for FY 2025, as discussed in section V.
     Update the outlier threshold amount for FY 2025, as 
discussed in section VI.
     Update the cost-to-charge ratio (CCR) ceiling and urban/
rural average CCRs for FY 2025, as discussed in section VI.
    We also propose updates to the IRF QRP beginning with the FY 2028 
IRF QRP and request information in section VII. of this proposed rule 
as follows:
     Propose to adopt four items as standardized patient 
assessment data elements and modify one item collected as a 
standardized patient assessment data element in the IRF-PAI.
     Remove the Admission Class item from the IRF-PAI.
     Request information on IRF QRP quality measure and 
concepts.
     Request information on an IRF QRP star rating system.

IV. Proposed Update to the Case-Mix Group (CMG) Relative Weights and 
Average Length of Stay (ALOS) Values for FY 2025

    As specified in Sec.  412.620(b)(1), we calculate a relative weight 
for each CMG that is proportional to the resources needed for an 
average inpatient rehabilitation case in that CMG. For example, cases 
in a CMG with a relative weight of 2, on average, will cost twice as 
much as cases in a CMG with a relative weight of 1. Relative weights 
account for the variance in cost per discharge due to the variance in 
resource utilization among the payment groups, and their use helps to 
ensure that IRF PPS payments support beneficiary access to care, as 
well as provider efficiency.
    In this proposed rule, we propose to update the CMG relative 
weights and ALOS values for FY 2025. Typically, we use the most recent 
available data to update the CMG relative weights and ALOS values. For 
FY 2025, we are proposing to use the FY 2023 IRF claims and FY 2022 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 2023 
IRF cost report data is available for analysis, but the majority of the 
FY 2023 IRF claims data are available for analysis. We are proposing 
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 2025 CMG relative weights and ALOS 
values in the final rule.
    We are proposing to apply these data using the same methodologies 
that we have used to update the CMG relative weights and ALOS values 
each FY since we implemented an update to the methodology. The detailed 
cost to charge ratio (CCR) data from the cost reports of IRF provider 
units of primary acute care hospitals is used for this methodology, 
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 
to calculate the CMG relative weights for this proposed rule is as 
follows:
    Step 1. We estimate the effects that comorbidities have on costs.
    Step 2. We adjust the cost of each Medicare discharge (case) to 
reflect the effects found in Step 1.

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    Step 3. We use the adjusted costs from Step 2 to calculate CMG 
relative weights, using the hospital-specific relative value method.
    Step 4. We normalize the FY 2025 CMG relative weights using a 
normalization factor that results in the average CMG relative weights 
in FY 2025 being the same as the average CMG relative weights in the FY 
2024 IRF PPS final rule (88 FR 50956).
    Consistent with the methodology that we have used to update the IRF 
classification system in each instance in the past, we are proposing to 
update the CMG relative weights for FY 2025 in such a way that total 
estimated aggregate payments to IRFs for FY 2025 are the same with or 
without the changes (that is, in a budget-neutral manner) by applying a 
budget neutrality factor to the standard payment amount. To calculate 
the appropriate budget neutrality factor for use in updating the FY 
2025 CMG relative weights, we use the following steps:
    Step 1. Calculate the estimated total amount of IRF PPS payments 
for FY 2025 (with no changes to the CMG relative weights).
    Step 2. Calculate the estimated total amount of IRF PPS payments 
for FY 2025 by applying the changes to the CMG relative weights (as 
discussed in this proposed rule).
    Step 3. Divide the amount calculated in step 1 by the amount 
calculated in step 2 to determine the budget neutrality factor of 
0.9973 that would maintain the same total estimated aggregate payments 
in FY 2025 with and without the changes to the proposed CMG relative 
weights.
    Step 4. Apply the budget neutrality factor from step 3 to the FY 
2025 IRF PPS standard payment amount after the application of the 
budget-neutral wage adjustment factor.
    In section V. of this proposed rule, we discuss the use of the 
existing methodology to calculate the standard payment conversion 
factor for FY 2025.
    In Table 2, ``Relative Weights and Average Length of Stay Values 
for Case-Mix Groups,'' we present the proposed CMGs, the comorbidity 
tiers, the corresponding relative weights, and the ALOS values for each 
CMG and tier for FY 2025. The ALOS 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.
BILLING CODE 4120-01-P

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[GRAPHIC] [TIFF OMITTED] TP29MR24.020

BILLING CODE 4120-01-C
    Generally, updates to the CMG relative weights result in some 
increases and some decreases to the CMG relative weight values. Table 2 
shows how we estimate that the application of the proposed revisions 
for FY 2025 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 2025 would not be affected 
as a result of the proposed CMG relative weight revisions. However, the 
proposed revisions would affect the distribution of payments within 
CMGs and tiers.

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    As shown in Table 3, 99.2 percent of all IRF cases are in CMGs and 
tiers that would experience less than a 5 percent change (either 
increase or decrease) in the CMG relative weight value as a result of 
the proposed revisions for FY 2025. The proposed changes in the ALOS 
values for FY 2025, compared with the FY 2024 ALOS values, are small 
and do not show any particular trends in IRF length of stay patterns.
    We invite public comment on our proposed updates to the CMG 
relative weights and ALOS values for FY 2025.

V. Proposed FY 2025 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 this proposed rule, 
we are proposing to update the IRF PPS payments for FY 2025 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 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 data for both freestanding and hospital-
based IRFs (80 FR 47049 through 47068). In 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. Beginning with FY 2024, we finalized a rebased and revised IRF 
market basket to reflect a 2021 base year. The FY 2024 IRF PPS final 
rule (88 FR 50966 through 50988) contains a complete discussion of the 
development of the 2021-based IRF market basket.

B. Proposed FY 2025 Market Basket Update and Productivity Adjustment

1. Proposed FY 2025 Market Basket Update
    For FY 2025 (that is, beginning October 1, 2024, and ending 
September 30, 2025), we are proposing 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 2025, we are proposing to use 
the same methodology described in the FY 2024 IRF PPS final rule (88 FR 
50982 through 50984).
    Consistent with historical practice, we are proposing to estimate 
the market basket update for the IRF PPS for FY 2025 based on IHS 
Global Inc.'s (IGI's) forecast using the most recent available data. 
Based on IGI's fourth quarter 2023 forecast with historical data 
through the third quarter of 2023, the proposed 2021-based IRF market 
basket increase factor for FY 2025 is projected to be 3.2 percent. We 
are also proposing that if more recent data become available after the 
publication of the proposed rule and before the publication of the 
final rule (for example, a more recent estimate of the market basket 
update or productivity adjustment), we would use such data, if 
appropriate, to determine the FY 2025 market basket update in the final 
rule.
2. Proposed FY 2025 Productivity Adjustment
    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 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 multifactor productivity 
(as projected by the Secretary for the 10-year period ending with the 
applicable FY, year, cost reporting period, or other annual period) 
(the ``productivity adjustment''). The U.S. Department of Labor's 
Bureau of Labor Statistics (BLS) publishes the official measures of 
productivity for the U.S. economy. We note that previously the 
productivity measure referenced in section 1886(b)(3)(B)(xi)(II) of the 
Act, was referred to by BLS as private nonfarm business multifactor 
productivity. Beginning with the November 18, 2021, release of 
productivity data, BLS replaced the term multifactor productivity (MFP) 
with total factor productivity (TFP). BLS noted that this is a change 
in terminology only and will not affect the data or methodology. As a 
result of this change, the productivity measure referenced in section 
1886(b)(3)(B)(xi)(II) is now published by BLS as private nonfarm 
business total factor productivity. However, as mentioned above, the 
data and methods are unchanged. Please see www.bls.gov for the BLS 
historical published TFP data. A complete description of IGI's TFP 
projection methodology is available on the CMS website at https://www.cms.gov/data-research/statistics-trends-and-reports/medicare-program-rates-statistics/market-basket-research-and-information. In 
addition, in the FY 2022 IRF final rule (86 FR 42374), we noted that 
effective with FY 2022 and forward, CMS changed the name of this 
adjustment to refer to it as the productivity adjustment rather than 
the MFP adjustment.
    Using IGI's fourth quarter 2023 forecast, the 10-year moving 
average

[[Page 22256]]

growth of TFP for FY 2025 is projected to be 0.4 percent. In accordance 
with section 1886(j)(3)(C) of the Act, we are proposing to base the FY 
2025 market basket update, which is used to determine the applicable 
percentage increase for the IRF payments, on IGI's fourth quarter 2023 
forecast of the 2021-based IRF market basket. We are proposing to then 
reduce the market basket percentage increase by the estimated 
productivity adjustment for FY 2025 of 0.4 percentage point (the 10-
year moving average growth of TFP for the period ending FY 2025 based 
on IGI's fourth quarter 2023 forecast). Therefore, the proposed FY 2025 
IRF update is equal to 2.8 percent (3.2 percent market basket 
percentage increase reduced by the 0.4 percentage point productivity 
adjustment). Furthermore, we are proposing that if more recent data 
become available after the publication of the proposed rule and before 
the publication of the final rule (for example, a more recent estimate 
of the market basket percentage increase and/or productivity 
adjustment), we would use such data, if appropriate, to determine the 
FY 2025 market basket percentage increase and productivity adjustment 
in the final rule.
    For FY 2025, the Medicare Payment Advisory Commission (MedPAC) 
recommends that we reduce IRF PPS payment rates by 5 percent.\3\ As 
discussed, and in accordance with sections 1886(j)(3)(C) and 
1886(j)(3)(D) of the Act, the Secretary is proposing to update the IRF 
PPS payment rates for FY 2025 by the proposed IRF market basket update 
of 2.8 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 2025.
---------------------------------------------------------------------------

    \3\ https://www.medpac.gov/wp-content/uploads/2025/03/Mar25_MedPAC_ReportToCongress_SEC.pdf.
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    We invite public comment on our proposals for the FY 2025 market 
basket percentage increase and productivity adjustment.

C. Proposed Labor-Related Share for FY 2025

    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 that 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 are proposing 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 2021-based IRF market basket, we are proposing to 
calculate the labor-related share for FY 2025 as the sum of the FY 2025 
relative importance of Wages and Salaries, Employee Benefits, 
Professional Fees: Labor-Related, Administrative and Facilities Support 
Services, Installation, Maintenance, and Repair Services, All Other: 
Labor-Related Services, and a portion of the Capital-Related relative 
importance from the 2021-based IRF market basket. For more details 
regarding the methodology for determining specific cost categories for 
inclusion in the 2021-based IRF labor-related share, see the FY 2024 
IRF PPS final rule (88 FR 50985 through 50988).
    The relative importance reflects the different rates of price 
change for these cost categories between the base year (2021) and FY 
2025. We calculate the labor-related relative importance from the IRF 
market basket, and it approximates the labor-related portion of the 
total costs after taking into account historical and projected price 
changes between the base year and FY 2025. The price proxies that move 
the different cost categories in the market basket do not necessarily 
change at the same rate, and the relative importance captures these 
changes. Based on IGI's fourth quarter 2023 forecast of the 2021-based 
IRF market basket, the sum of the FY 2025 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 
70.5 percent. We are proposing 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 8.1 percent 
of the 2021-based IRF market basket for FY 2025, we are proposing to 
take 46 percent of 8.1 percent to determine the labor-related share of 
Capital-Related costs for FY 2025 of 3.7 percent. Therefore, we are 
proposing a total labor-related share for FY 2025 of 74.2 percent (the 
sum of 70.5 percent for the proposed labor-related share of operating 
costs and 3.7 percent for the proposed labor-related share of Capital-
Related costs). We are proposing that if more recent data become 
available after publication of the proposed rule and before the 
publication of the final rule (for example, a more recent estimate of 
the labor-related share), we would use such data, if appropriate, to 
determine the FY 2025 IRF labor-related share in the final rule.
    Table 4 shows the current estimate of the proposed FY 2025 labor-
related share and the FY 2024 final labor-related share using the 2021-
based IRF market basket relative importance.

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    We invite public comments on the proposed labor-related share for 
FY 2025.

D. Wage Adjustment for FY 2025

1. Background
    Section 1886(j)(6) of the Act requires the Secretary to adjust the 
proportion of rehabilitation facilities' costs attributable to wages 
and wage-related costs (as estimated by the Secretary from time to 
time) by a factor (established by the Secretary) reflecting the 
relative hospital wage level in the geographic area of the 
rehabilitation facility compared to the national average wage level for 
those facilities. The Secretary is required to update the IRF PPS wage 
index on the basis of information available to the Secretary on the 
wages and wage-related costs to furnish rehabilitation services. Any 
adjustment or updates made under section 1886(j)(6) of the Act for a FY 
are made in a budget-neutral manner.
    In the FY 2023 IRF PPS final rule (87 FR 47054 through 47056) we 
finalized a policy to apply a 5-percent cap on any decrease to a 
provider's wage index from its wage index in the prior year, regardless 
of the circumstances causing the decline. We amended IRF PPS 
regulations at Sec.  412.624(e)(1)(ii) to reflect this permanent cap on 
wage index decreases. Additionally, we finalized a policy that a new 
IRF would be paid the wage index for the area in which it is 
geographically located for its first full or partial FY with no cap 
applied because a new IRF would not have a wage index in the prior FY. 
A full discussion of the adoption of this policy is found in the FY 
2023 IRF PPS final rule.
    For FY 2025, we propose to maintain the policies and methodologies 
described in the FY 2024 IRF PPS final rule (88 FR 50956) related to 
the labor market area definitions and the wage index methodology for 
areas with wage data. Thus, we propose to use the core based 
statistical areas (CBSAs) labor market area definitions and the FY 2025 
pre-reclassification and pre-floor hospital wage index data. In 
accordance with section 1886(d)(3)(E) of the Act, the FY 2025 pre-
reclassification and pre-floor hospital wage index is based on data 
submitted for hospital cost reporting periods beginning on or after 
October 1, 2020, and before October 1, 2021 (that is, FY 2021 cost 
report data).
    The labor market designations made by the OMB include some 
geographic areas where there are no hospitals and, thus, no hospital 
wage index data on which to base the calculation of the IRF PPS wage 
index. We propose to continue to use the same methodology discussed in 
the FY 2008 IRF PPS final rule (72 FR 44299) to address those 
geographic areas where there are no hospitals and, thus, no hospital 
wage index data on which to base the calculation for the FY 2025 IRF 
PPS wage index. For FY 2025, the only rural area without wage index 
data available is North Dakota. We have determined that the borders of 
18 rural counties are local and contiguous with 8 urban counties. 
Therefore, under this methodology, the wage indexes for the counties of 
Burleigh/Morton/Oliver (CBSA 13900: 0.9020), Cass (CBSA 22020: 0.8763), 
Grand Forks (CBSA 24220: 0.7865), and McHenry/Renville/Ward (CBSA 
33500: 0.7686) are averaged, resulting in an imputed rural wage index 
of 0.8334 for rural North Dakota for FY 2025. In past years for rural 
Puerto Rico, we did not apply this methodology due to the distinct 
economic circumstances there; due to the close proximity of almost all 
of Puerto Rico's various urban and non-urban areas, this methodology 
would produce a wage index for rural Puerto Rico that is higher than 
that in half of its urban areas. However, because rural Puerto Rico now 
has hospital wage index data on which to base an area wage adjustment, 
we will not apply this policy for FY 2025. For urban areas without 
specific hospital wage index data, we will continue using the average 
wage indexes of all urban areas within the State to serve as a 
reasonable proxy for the wage index of that urban CBSA as proposed and 
finalized in FY 2006 (70 FR 47927). For FY 2025, the only urban area 
without wage index data available is CBSA 25980, Hinesville-Fort 
Stewart, GA.
    We invite public comment on our proposal regarding the Wage 
Adjustment for FY 2025.
2. Core-Based Statistical Areas (CBSAs) for the FY 2025 IRF Wage Index
    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 CBSA 
delineations (which were implemented

[[Page 22258]]

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. Additionally, OMB 
occasionally issues updates and revisions to the statistical areas in 
between decennial censuses 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.
    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.
    To this end, as discussed in the FY 2021 IRF PPS proposed (85 FR 
22075 through 22079) and final (85 FR 48434 through 48440) rules, we 
adopted the revised OMB delineations identified in OMB Bulletin No. 18-
04 (available at https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf) beginning October 1, 2020, including a 1-year 
transition for FY 2021 under which we applied a 5-percent cap on any 
decrease in an IRF's wage index compared to its wage index for the 
prior fiscal year (FY 2020). The updated OMB delineations more 
accurately reflect the contemporary urban and rural nature of areas 
across the country, and the use of such delineations allows us to 
determine more accurately the appropriate wage index and rate tables to 
apply under the IRF PPS. OMB issued further revised CBSA delineations 
in OMB Bulletin No. 20-01, on March 6, 2020 (available on the web at 
https://www.whitehouse.gov/wp-content/uploads/2020/03/Bulletin-20-01.pdf). However, we determined that the changes in OMB Bulletin No. 
20-01 do not impact the CBSA-based labor market area delineations 
adopted in FY 2021. Therefore, we did not propose to adopt the revised 
OMB delineations identified in OMB Bulletin No. 20-01 for FY 2022 
through FY 2024.
    On July 21, 2023, OMB issued OMB Bulletin No. 23-01 (available at 
https://www.whitehouse.gov/wp-content/uploads/2023/07/OMB-Bulletin-23-01.pdf) which updates and supersedes OMB Bulletin No. 20-01 based upon 
the 2020 Standards for Delineating Core Based Statistical Areas (``the 
2020 Standards'') published by the Office of Management and Budget 
(OMB) on July 16, 2021 (86 FR 37770). OMB Bulletin No. 23-01 revised 
CBSA delineations which are comprised of counties and equivalent 
entities (for example, boroughs, a city and borough, and a municipality 
in Alaska, planning regions in Connecticut, parishes in Louisiana, 
municipios in Puerto Rico, and independent cities in Maryland, 
Missouri, Nevada, and Virginia). For FY 2025, we propose to adopt the 
revised OMB delineations identified in OMB Bulletin No. 23-01.
a. Urban Counties Becoming Rural
    As previously discussed, we are proposing to implement the new OMB 
statistical area delineations (based upon the 2020 decennial Census 
data) beginning in FY 2025 for the IRF PPS wage index. Our analysis 
shows that a total of 54 counties (and county equivalents) that are 
currently considered part of an urban CBSA would be considered located 
in a rural area, for IRF PPS payment beginning in FY 2025, if we adopt 
the new OMB delineations. Table 5 lists the 54 urban counties that 
would be rural if we finalize our proposal to implement the new OMB 
delineations.
BILLING CODE 4120-01-P

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[[Page 22260]]


[GRAPHIC] [TIFF OMITTED] TP29MR24.024

    We are proposing that the wage data for all hospitals located in 
the counties listed in Table 5 now be considered rural when their 
respective State's rural wage index value is calculated. This rural 
wage index value would be used under the IRF PPS.
b. Rural Counties Becoming Urban
    Analysis of the new OMB delineations (based upon the 2020 decennial 
Census data) shows that a total of 54 counties (and county equivalents) 
that are currently located in rural areas would be in urban areas if we 
finalize our proposal to implement the new OMB delineations. Table 6 
lists the 54 rural counties that would be urban if we finalize this 
proposal.

[[Page 22261]]

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[[Page 22262]]


[GRAPHIC] [TIFF OMITTED] TP29MR24.026

    We are proposing that when calculating the area wage index, the 
wage data for hospitals located in these counties would be included in 
their new respective urban CBSAs.
c. Urban Counties Moving to a Different Urban CBSA
    In addition to rural counties becoming urban and urban counties 
becoming rural, several urban counties would shift from one urban CBSA 
to another urban CBSA under our proposal to adopt the new OMB 
delineations. In other cases, if we adopt the new OMB delineations, 
counties would shift between existing and new CBSAs, changing the 
constituent makeup of the CBSAs.
    In one type of change, an entire CBSA would be subsumed by another 
CBSA. For example, CBSA 31460 (Madera, CA) currently is a single county 
(Madera, CA) CBSA. Madera County would be a part of CBSA 23420 (Fresno, 
CA) under the new OMB delineations.
    In another type of change, some CBSAs have counties that would 
split off to become part of, or to form, entirely new labor market 
areas. For example, CBSA 29404 (Lake County-Kenosha County, IL-WI) 
currently is comprised of two counties (Lake County, IL and Kenosha 
County, WI). Under the new OMB delineations, Kenosha County would split 
off and form the new CBSA 28450 (Kenosha, WI), while Lake County would 
remain in CBSA 29404.
    Finally, in some cases, a CBSA would lose counties to another 
existing CBSA if we adopt the new OMB delineations. For example, Meade 
County, KY, would move from CBSA 21060 (Elizabethtown-Fort Knox, KY) to 
CBSA 31140 (Louisville/Jefferson County, KY-IN). CBSA 21060 would still 
exist in the new labor market delineations with fewer constituent 
counties. Table 7 lists the urban counties that would move from one 
urban CBSA to another urban CBSA under the new OMB delineations.

[[Page 22263]]

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[[Page 22264]]


[GRAPHIC] [TIFF OMITTED] TP29MR24.028

    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.

[[Page 22265]]

    In other cases, adopting the revised OMB delineations would involve 
a change only in CBSA name and/or number, while the CBSA continues to 
encompass the same constituent counties. For example, CBSA 19430 
(Dayton-Kettering, OH) would experience a change to its name and become 
CBSA 19430 (Dayton-Kettering-Beavercreek, OH), while all of its three 
constituent counties would remain the same. We consider these proposed 
changes (where only the CBSA name and/or number would change) to be 
inconsequential changes with respect to the IRF PPS wage index. Table 8 
sets forth a list of such CBSAs where there would be a change in CBSA 
name and/or number only if we adopt the revised OMB delineations.
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[[Page 22267]]


[GRAPHIC] [TIFF OMITTED] TP29MR24.031

BILLING CODE 4120-01-C
d. Change to County-Equivalents in the State of Connecticut
    The June 6, 2022 Census Bureau Notice (87 FR 34235--34240), OMB 
Bulletin No. 23-01 replaced the 8 counties in Connecticut with 9 new 
``Planning Regions.'' Planning regions now serve as county-equivalents 
within the CBSA system. We are proposing to adopt the planning regions 
as county equivalents for wage index purposes. We believe it is 
necessary to adopt this migration from counties to planning region 
county-equivalents in order to maintain consistency with OMB updates. 
We are providing the following crosswalk with the current and proposed 
FIPS county and county-equivalent codes and CBSA assignments.
[GRAPHIC] [TIFF OMITTED] TP29MR24.032

3. Transition Policy for FY 2025 Wage Index Changes
    Overall, we believe that implementing the new OMB delineations 
would result in wage index values being more representative of the 
actual costs of labor in a given area. We recognize that some providers 
(10 percent) would have a higher wage index due to our proposed 
implementation of the new labor market area delineations. However, we 
also recognize that more providers (16 percent) would experience 
decreases in wage index values as a result of our proposed 
implementation of the new labor market area delineations. Our analysis 
for the FY 2025 proposed rule indicates that 16 IRFs will experience a 
change in either rural or urban designations. Of these, 8 facilities 
designated as rural in FY 2024 would be designated as urban in FY 2025. 
Based upon the CBSA delineations, those rural IRFs that change from 
rural to urban would lose the 14.9 percent rural adjustment. To 
mitigate the financial impacts of this loss, we are proposing a 
transition for these facilities, as discussed further below.
    CMS recognizes that IRFs in certain areas may experience reduced 
payments due to the proposed adoption of the revised OMB delineations 
and has finalized transition policies to mitigate negative financial 
impacts and provide stability to year-to-year wage index variations. In 
the FY 2021 final rule (85 FR 48434), CMS finalized a wage index 
transition policy to apply a 5 percent cap for IRFs that may experience 
decreases in their final wage index from the prior fiscal year. In FY 
2023, the 5 percent cap policy was made permanent. This 5 percent cap 
on reductions policy is discussed in further detail in FY 2023 final 
rule at 87 FR 47054 through 47056. It is CMS's long held opinion that 
revised labor market delineations should be adopted as soon as is 
possible to maintain the integrity of the wage index system. We believe 
the 5- percent cap policy will sufficiently mitigate significant 
disruptive financial impacts on hospitals negatively affected by the 
proposed adoption of the revised OMB delineations. Besides the rural 
adjustment transition discussed immediately below, we do not believe 
any additional transition is necessary

[[Page 22268]]

considering that the current cap on wage index decreases, which was not 
in place when implementing prior decennial census updates in FY 2006 
and FY 2015, ensures that an IRFs wage index would not be less than 95 
percent of its final wage index for the prior year.
    Consistent with the transition policy adopted in FY 2006 (70 FR 
47923 \4\ through 47927 \5\), we considered the appropriateness of 
applying a 3-year phase-out of the rural adjustment for IRFs located in 
rural counties that would become urban under the new OMB delineations, 
given the potentially significant payment impacts for these facilities. 
We continue to believe, as discussed in the FY 2006 IRF final rule (70 
FR 47880 \6\), that the phase-out of the rural adjustment transition 
period for these facilities specifically is appropriate because, as a 
group, we expect these IRFs would experience a steeper and more abrupt 
reduction in their payments compared to other IRFs. Therefore, we are 
proposing a budget neutral three-year phase-out of the rural adjustment 
for existing FY 2024 rural IRFs that will become urban in FY 2025 and 
that experience a loss in payments due to changes from the new CBSA 
delineations. Accordingly, the incremental steps needed to reduce the 
impact of the loss of the FY 2024 rural adjustment of 14.9 percent will 
be phased out over FYs 2025, 2026 and 2027. This policy will allow 
rural IRFs which would be classified as urban in FY 2025 to receive 
two-thirds of the 2024 rural adjustment for FY 2025. For FY 2026, these 
IRFs will receive the full FY 2026 wage index and one-third of the FY 
2024 rural adjustment. For FY 2027, these IRFs will receive the full FY 
2027 wage index without a rural adjustment. We believe a three-year 
budget-neutral phase-out of the rural adjustment for IRFs that 
transition from rural to urban status under the new CBSA delineations 
would best accomplish the goals of mitigating the loss of the rural 
adjustment for existing FY 2024 rural IRFs. The purpose of the gradual 
phase-out of the rural adjustment for these facilities is to alleviate 
the significant payment implications for existing rural IRFs that may 
need time to adjust to the loss of their FY 2024 rural payment 
adjustment or that experience a reduction in payments solely because of 
this redesignation. As stated, this policy is specifically for rural 
IRFs that become urban in FY 2025 and that experience a loss in 
payments due to changes from the new CBSA delineations. Thus, we are 
not implementing a transition policy for urban facilities that become 
rural in FY 2025 because these IRFs will receive the full rural 
adjustment of 14.9 percent beginning October 1, 2024.
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    \4\ https://www.federalregister.gov/citation/70-FR-47923.
    \5\ https://www.federalregister.gov/citation/70-FR-47927.
    \6\ https://www.federalregister.gov/citation/70-FR-47880.
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    We invite comments on our proposed implementation of revised labor 
market area delineations and on the proposed transition policy for 
rural IRFs that would be designated as urban under the new CBSA 
delineations. The proposed wage index applicable to FY 2025 is set 
forth in Table A available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/IRF-Rules-and-Related-Files.html. Table A provides a crosswalk between the 
FY 2024 wage index for a provider using the current OMB delineations in 
effect in FY 2024 and the FY 2025 wage index using the proposed revised 
OMB delineations.
4. IRF Budget-Neutral Wage Adjustment Factor Methodology
    To calculate the wage-adjusted facility payment for the proposed 
payment rates set forth in this proposed rule, we multiply the 
unadjusted Federal payment rate for IRFs by the FY 2025 labor-related 
share based on the 2021-based IRF market basket relative importance 
(74.2 percent) to determine the labor-related portion of the standard 
payment amount. (A full discussion of the calculation of the labor-
related share appears in section VI.E. of this proposed rule.) We would 
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 
calculate a budget-neutral wage adjustment factor as established in the 
FY 2004 IRF PPS final rule (68 FR 45689) and codified at Sec.  
412.624(e)(1), as described in the steps below. We use the listed steps 
to ensure that the FY 2025 IRF standard payment conversion factor 
reflects the update to the wage indexes (based on the FY 2021 hospital 
cost report data) 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 2024 (as 
published in the FY 2024 IRF PPS final rule (88 FR 50956)).
    Step 2. Calculate the total amount of estimated IRF PPS payments 
using the FY 2025 wage index values (based on updated hospital wage 
data and considering the permanent cap on wage index decreases policy) 
and the FY 2025 proposed labor-related share of 74.2 percent.
    Step 3. Divide the amount calculated in step 1 by the amount 
calculated in step 2. The resulting quotient is the FY 2025 budget-
neutral wage adjustment factor of 0.9928.
    Step 4. Apply the budget neutrality factor from step 3 to the FY 
2025 IRF PPS standard payment amount after the application of the 
increase factor to determine the FY 2025 standard payment conversion 
factor.
    We discuss the calculation of the standard payment conversion 
factor for FY 2025 in section VI.G. of this proposed rule.
    We invite public comment on our proposals regarding the Wage 
Adjustment for FY 2025.

G. Description of the Proposed IRF Standard Payment Conversion Factor 
and Payment Rates for FY 2025

    To calculate the proposed standard payment conversion factor for FY 
2025, as illustrated in Table 10, we begin by applying the proposed 
increase factor for FY 2025, as adjusted in accordance with sections 
1886(j)(3)(C) of the Act, to the standard payment conversion factor for 
FY 2024 ($18,541). Applying the proposed 2.8 payment update for FY 2025 
to the standard payment conversion factor for FY 2024 of $18,541 yields 
a standard payment amount of $19,060. Then, we apply the proposed 
budget neutrality factor for the FY 2025 wage index (taking into 
account the policy placing a permanent cap on decreases in the wage 
index), and labor-related share of 0.9928, which results in a standard 
payment amount of $18,923. We next apply the proposed budget neutrality 
factor for the CMG relative weights of 0.9973, which results in the 
proposed standard payment conversion factor of $18,872 for FY 2025.
    We invite public comment on the proposed FY 2025 standard payment 
conversion factor.

[[Page 22269]]

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    We then apply the proposed CMG relative weights described in 
section IV. of this proposed rule to the FY 2025 standard payment 
conversion factor ($18,872), to determine the unadjusted IRF 
prospective payment rates for FY 2025. The unadjusted prospective 
payment rates for FY 2025 are shown in Table 11.
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H. Example of the Methodology for Adjusting the Prospective Payment 
Rates

    Table 12 illustrates the methodology for adjusting the proposed 
prospective payments (as described in section V. of this proposed 
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 11.
    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 0.8693, 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 0.9106, and a teaching status adjustment of 
0.0784.

[[Page 22272]]

    To calculate each IRF's labor and non-labor portion of the proposed 
prospective payment, we begin by taking the proposed FY 2025 unadjusted 
prospective payment rate for CMG 0104 (without comorbidities) from 
Table 11. Then, we multiply the proposed labor-related share for FY 
2025 (74.2 percent) described in section VI. of this proposed rule by 
the unadjusted prospective payment rate. To determine the non-labor 
portion of the proposed prospective payment rate, we subtract the labor 
portion of the Federal payment from the proposed unadjusted prospective 
payment.
    To compute the wage-adjusted prospective payment, we multiply the 
labor portion of the proposed 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 proposed Federal payment.
    Adjusting the proposed 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 12 illustrates the components of the 
adjusted payment calculation.
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    Thus, the proposed adjusted payment for Facility A would be 
$30,728.61, and the proposed adjusted payment for Facility B would be 
$30,597.28.

VI. Proposed Update to Payments for High-Cost Outliers Under the IRF 
PPS for FY 2025

A. Update to the Outlier Threshold Amount for FY 2025

    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 2024 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, 84 FR 
39054, 85 FR 48444, 86 FR 42362, 87 FR 47038, and 88 FR 50956 
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

[[Page 22273]]

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 2025, we propose 
to use FY 2023 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 41362 through 41363), which is also the same methodology that we 
used to update the outlier threshold amounts for FYs 2006 through 2024. 
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 2025, we 
estimated the amount of FY 2025 IRF PPS aggregate and outlier payments 
using the most recent claims available (FY 2023) and the proposed FY 
2025 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 3.2 
percent in FY 2024. Therefore, we propose to update the outlier 
threshold amount from $10,423 for FY 2024 to $12,158 for FY 2025 to 
maintain estimated outlier payments at approximately 3 percent of total 
estimated aggregate IRF payments for FY 2025.
    We note that, as we typically do, we will update our data between 
the FY 2025 IRF PPS proposed and final rules to ensure that we use the 
most recent available data in calculating IRF PPS payments.
    We invite public comment on the proposed update to the IRF outlier 
threshold for FY 2025.

B. Proposed Update to the IRF Cost-to-Charge Ratio Ceiling and Urban/
Rural Averages for FY 2025

    CCRs are used to adjust charges from Medicare claims to costs and 
are computed annually 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 FR45692 through 45694), we propose to apply a ceiling to IRFs' 
CCRs. Using the methodology described in that final rule, we propose to 
update the national urban and rural CCRs for IRFs, as well as the 
national CCR ceiling for FY 2025, based on analysis of the most recent 
data 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 2025, as discussed below in this section.
     Other IRFs for which accurate data to calculate an overall 
CCR are not available.
    Specifically, for FY 2025, we propose to estimate a national 
average CCR of 0.492 for rural IRFs, which we calculated by taking an 
average of the CCRs for all rural IRFs using their most recently 
submitted cost report data. Similarly, we propose to estimate a 
national average CCR of 0.406 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 proposed rule, we have 
used the most recent available cost report data (FY 2022). This 
includes all IRFs whose cost reporting periods begin on or after 
October 1, 2021, and before October 1, 2022. If, for any IRF, the FY 
2022 cost report was missing or had an ``as submitted'' status, we used 
data from a previous FY's (that is, FY 2004 through FY 2021) 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 2022 cost report data for this proposed 
rule, we estimate a national average CCR of 0.492 for rural IRFs, and a 
national average CCR of 0.406 for urban IRFs.
    In accordance with past practice, we propose to set the national 
CCR ceiling at 3 standard deviations above the mean CCR. Using this 
method, we proposed a national CCR ceiling of 1.52 for FY 2025. This 
means that, if an individual IRF's CCR were to exceed this ceiling of 
1.52 for FY 2025, 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.
    We also propose that if more recent data become available after the 
publication of this proposed rule and before the publication of the 
final rule, we would use such data to determine the FY 2025 national 
average rural and urban CCRs and the national CCR ceiling in the final 
rule. Using the FY 2022 cost report data for this proposed rule, we 
estimate a national average CCR ceiling of 1.52, using the same 
methodology.
    We invite public comment on the proposed update to IRF CCR ceiling 
and the urban/rural averages for FY 2025.

VII. Inpatient Rehabilitation Facility (IRF) Quality Reporting Program 
(QRP)

A. Background and Statutory Authority

    The Inpatient Rehabilitation Facility Quality Reporting Program 
(IRF QRP) is authorized by section 1886(j)(7) of the Act, and it 
applies to freestanding IRFs, as well as inpatient rehabilitation units 
of hospitals or Critical Access Hospitals (CAHs) paid by Medicare under 
the IRF PPS. Section 1886(j)(7)(A)(i) of the Act requires the Secretary 
to reduce by 2 percentage points the annual increase factor for 
discharges occurring during a FY for any IRF that does not submit data 
in accordance with the IRF QRP requirements set forth in subparagraphs 
(C) and (F) of section 1886(j)(7) of the Act. We have codified our 
program requirements in our regulations at Sec.  412.634.
    We are proposing to require IRFs to report four new items to the 
IRF-Patient Assessment Instrument (PAI) and modify one item on the IRF-
PAI as described in section VII.C. of this proposed rule. We are also 
proposing to remove an item from the IRF-PAI as described in section 
VII.F.3. Finally, we are seeking information on future measure concepts 
for the IRF QRP and on an IRF star rating system.

[[Page 22274]]

B. General Considerations Used for the Selection of Measures for the 
IRF QRP

    For a detailed discussion of the considerations we use for the 
selection of IRF QRP quality, resource use, or other measures, we refer 
readers to the FY 2016 IRF PPS final rule (80 FR 47083 through 47084).
1. Quality Measures Currently Adopted for the IRF QRP
    The IRF QRP currently has 18 adopted measures, which are listed in 
Table 13. For a discussion of the factors used to evaluate whether a 
measure should be removed from the IRF QRP, we refer readers to Sec.  
412.634(b)(2).
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BILLING CODE 4120-01-C
    We are not proposing to adopt any new measures for the IRF QRP.

C. Proposal To Collect Four New Items as Standardized Patient 
Assessment Data Elements and Modify One Item Collected as a 
Standardized Patient Assessment Data Element Beginning With the FY 2028 
IRF QRP

    In this proposed rule, we are proposing to require IRFs to report 
the following four new items \7\ to be collected as standardized 
patient assessment data elements in the IRF-PAI under the social 
determinants of health (SDOH) category under the IRF QRP: one item for 
Living Situation; two items for Food; and one item for Utilities. We 
are also proposing to modify one of the current items collected as 
standardized patient assessment data under the SDOH category (the 
Transportation item), as described in section VII.C.5. of this proposed 
rule.
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    \7\ Items may also be referred to as ``data elements.''
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1. Definition of Standardized Patient Assessment Data
    Section 1886(j)(7)(F)(ii) of the Act requires IRFs to submit 
standardized patient assessment data required under section 1899B(b)(1) 
of the Act. Section 1899B(b)(1)(A) of the Act requires post-acute care 
(PAC) providers to submit standardized patient assessment data under 
applicable reporting provisions (which, for IRFs, is the IRF QRP) with 
respect to the admission and discharge of an individual (and more 
frequently as the Secretary deems appropriate) using a standardized 
patient assessment instrument. Section 1899B(a)(1)(C) of the Act 
requires, in part, the Secretary to modify the PAC assessment 
instruments in order for PAC providers, including IRFs, to submit 
standardized patient assessment data under the Medicare program. IRFs 
are currently required to report standardized patient assessment data 
through the patient assessment instrument, referred to as the Inpatient 
Rehabilitation Facility-Patient Assessment Instrument (IRF-PAI). 
Section 1899B(b)(1)(B) of the Act describes standardized patient 
assessment data as data required for at least the quality measures 
described in section 1899B(c)(1) of the Act and that is with respect to 
the following categories: (1) functional status, such as mobility and 
self-care at admission to a PAC provider and before discharge from a 
PAC provider; (2) cognitive function, such as ability to express ideas 
and to understand, and mental status, such as depression and dementia; 
(3) special services, treatments, and interventions, such as need for 
ventilator use, dialysis, chemotherapy, central line placement, and 
total parenteral nutrition; (4) medical conditions and comorbidities, 
such as diabetes, congestive heart failure, and pressure ulcers; (5) 
impairments, such as incontinence and an impaired ability to hear, see, 
or swallow, and (6) other categories deemed necessary and appropriate 
by the Secretary.
2. Social Determinants of Health Collected as Standardized Patient 
Assessment Data Elements
    Section 1899B(b)(1)(B)(vi) of the Act authorizes the Secretary to 
collect standardized patient assessment data elements with respect to 
other categories deemed necessary and appropriate. Accordingly, we 
finalized the creation of the SDOH category of standardized patient 
assessment data elements in the FY 2020 IRF PPS final rule (84 FR 39149 
through 39161), and defined SDOH as the socioeconomic, cultural, and 
environmental circumstances in which individuals live that impact their 
health.\8\ According to the World Health Organization, research shows 
that the SDOH can be more important than health care or lifestyle 
choices in influencing health, accounting for between 30-55% of health 
outcomes.\9\ This is a part of a growing body of research that 
highlights the importance of SDOH on health outcomes. Subsequent to the 
FY 2020 IRF PPS final rule, we expanded our definition of SDOH: SDOH 
are the conditions in the environments where people are born, live, 
learn, work, play, worship, and age that affect a wide range of health, 
functioning, and quality-of-life outcomes and risks.10 11 12 
This update will align our definition of SDOH with the definition used 
by HHS agencies, including OASH, the Centers for Disease Control and 
Prevention (CDC), and the White House Office of Science and Technology 
Policy.13 14 We currently collect seven items in this SDOH 
category of standardized patient assessment data elements: ethnicity, 
race, preferred language, interpreter services, health literacy, 
transportation, and social isolation (84 FR 39149 through 39161).\15\
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    \8\ Office of the Assistant Secretary for Planning and 
Evaluation (ASPE). Second Report to Congress on Social Risk and 
Medicare's Value-Based Purchasing Programs. June 28, 2020. Available 
at: https://aspe.hhs.gov/reports/second-report-congress-social-risk-medicares-value-based-purchasing-programs.
    \9\ World Health Organization. Social determinants of health. 
Available at: https://www.who.int/health-topics/social-determinants-of-health#tab=tab_1.
    \10\ Using Z Codes: The Social Determinants of Health (SDOH). 
Data Journey to Better Outcomes. https://www.cms.gov/files/document/zcodes-infographic.pdf.
    \11\ Improving the Collection of Social Determinants of Health 
(SDOH) Data with ICD-10-CM Z Codes. https://www.cms.gov/files/document/cms-2023-omh-z-code-resource.pdf.
    \12\ CMS.gov. Measures Management System (MMS). CMS Focus on 
Health Equity. Health Equity Terminology and Quality Measures. 
https://mmshub.cms.gov/about-quality/quality-at-CMS/goals/cms-focus-on-health-equity/health-equity-terminology.
    \13\ Centers for Disease Control and Prevention. Social 
Determinants of Health (SDOH) and PLACES Data. https://www.cdc.gov/places/social-determinants-of-health-and-places-data/.
    \14\ ``U.S. Playbook To Address Social Determinants Of Health'' 
from the White House Office Of Science And Technology Policy 
(November 2023).
    \15\ These SDOH data are also collected for purposes outlined in 
section 2(d)(2)(B) of the Improving Medicare Post-Acute Care 
Transitions Act (IMPACT Act). For a detailed discussion on SDOH data 
collection under section 2(d)(2)(B) of the IMPACT Act, see the FY 
2020 IRF PPS final rule (84 FR 39149 through 39161).
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    In accordance with our authority under section 1899B(b)(1)(B)(vi) 
of the Act, we similarly finalized the creation of the SDOH category of 
standardized patient assessment data elements for Skilled Nursing 
Facilities (SNFs) in the FY 2020 SNF PPS final rule (84 FR 38805 
through 38817), for Long-Term Care Hospitals (LTCHs) in the FY 2020 
Inpatient Prospective Payment System (IPPS)/LTCH PPS final rule (84 FR 
42577 through 42588), and for Home Health Agencies (HHAs) in the 
Calendar Year (CY) 2020 HH PPS final rule (84 FR 60597 through 60608). 
We also collect the same seven SDOH items in these PAC providers' 
respective patient/resident assessment instruments (84 FR 38817, 84 FR 
42590, and 84 FR 60610, respectively).
    Access to standardized data relating to SDOH on a national level 
permits us to conduct periodic analyses, and to assess their 
appropriateness as risk adjustors or in future quality measures. Our 
ability to perform these analyses and to make adjustments relies on 
existing data collection of SDOH items from PAC settings. We adopted 
these SDOH items using common standards and definitions across the four 
PAC providers to promote interoperable exchange of longitudinal 
information among these PAC providers, including IRFs, and other 
providers. We believe this information may facilitate coordinated care, 
continuity in care planning, and the discharge planning process from 
PAC settings.
    We noted in our FY 2020 IRF PPS final rule that each of the items 
was identified in the 2016 National Academies of Sciences, Engineering,

[[Page 22276]]

and Medicine (NASEM) report as impacting care use, cost, and outcomes 
for Medicare beneficiaries (84 FR 39150 through 39151). At that time, 
we acknowledged that other items may also be useful to understand. The 
SDOH items we are proposing to adopt as standardized patient assessment 
data elements under the SDOH category in this proposed rule were also 
identified in the 2016 NASEM report \16\ or the 2020 NASEM report \17\ 
as impacting care use, cost, and outcomes for Medicare beneficiaries. 
The items have the capacity to take into account treatment preferences 
and care goals of patients and their caregivers, to inform our 
understanding of patient complexity and SDOH that may affect care 
outcomes and ensure that IRFs are in a position to impact through the 
provision of services and supports, such as connecting patients and 
their caregivers with identified needs with social support programs.
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    \16\ Social Determinants of Health. Healthy People 2020. https://www.healthypeople.gov/2020/topics-objectives/topic/social-determinants-of-health. (February 2019).
    \17\ National Academies of Sciences, Engineering, and Medicine. 
2020. Leading Health Indicators 2030: Advancing Health, Equity, and 
Well-Being. Washington, DC: The National Academies Press. https://doi.org/10.17226/25682.
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    Health-related social needs (HRSNs) are the resulting effects of 
SDOH, which are individual-level, adverse social conditions that 
negatively impact a person's health or health care.\18\ Examples of 
HRSNs include lack of access to food, housing, or transportation, and 
have been associated with poorer health outcomes, greater use of 
emergency departments and hospitals, and higher health care costs.\19\ 
Certain HRSNs can lead to unmet social needs that directly influence an 
individual's physical, psychosocial, and functional status. This is 
particularly true for food security, housing stability, utilities 
security, and access to transportation.\20\
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    \18\ Centers for Medicare & Medicaid Services. ``A Guide to 
Using the Accountable Health Communities Health-Related Social Needs 
Screening Tool: Promising Practices and Key Insights.'' August 2022. 
Available at: https://www.cms.gov/priorities/innovation/media/document/ahcm-screeningtool-companion.
    \19\ Berkowitz, S.A., T.P. Baggett, and S.T. Edwards, 
``Addressing Health-Related Social Needs: Value-Based Care or 
Values-Based Care?'' Journal of General Internal Medicine, vol. 34, 
no. 9, 2019, pp. 1916-1918, https://doi.org/10.1007/s11606-019-05087-3.
    \20\ Hugh Alderwick and Laura M. Gottlieb, ``Meanings and 
Misunderstandings: A Social Determinants of Health Lexicon for 
Health Care Systems: Milbank Quarterly,'' Milbank Memorial Fund, 
November 18, 2019, https://www.milbank.org/quarterly/articles/meanings-and-misunderstandings-a-social-determinants-of-health-lexicon-for-health-care-systems/.
---------------------------------------------------------------------------

    We are proposing to require IRFs collect and submit four new items 
in the IRF-PAI as standardized patient assessment data elements under 
the SDOH category because these items would collect information not 
already captured by the current SDOH items. Specifically, we believe 
the ongoing identification of SDOH would have three significant 
benefits. First, promoting screening for SDOH could serve as evidence-
based building blocks for supporting healthcare providers in 
actualizing their commitment to address disparities that 
disproportionately impact underserved communities. Second, screening 
for SDOH improves health equity through identifying potential social 
needs so the IRF may address those with the patient, their caregivers, 
and community partners during the discharge planning process, if 
indicated.\21\ Third, these SDOH items could support our ongoing IRF 
QRP initiatives by providing data with which to stratify IRFs' 
performance on measures and or in future quality measures.
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    \21\ American Hospital Association. (2020). Health Equity, 
Diversity & Inclusion Measures for Hospitals and Health System 
Dashboards. December 2020. Accessed: January 18, 2022. Available at: 
https://ifdhe.aha.org/system/files/media/file/2020/12/ifdhe_inclusion_dashboard.pdf.
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    Additional collection of SDOH items would permit us to continue 
developing the statistical tools necessary to maximize the value of 
Medicare data and improve the quality of care for all beneficiaries. 
For example, we recently developed and released the Health Equity 
Confidential Feedback Reports, which provided data to IRFs on whether 
differences in quality measure outcomes are present for their patients 
by dual-enrollment status and race and ethnicity.\22\ We note that 
advancing health equity by addressing the health disparities that 
underlie the country's health system is one of our strategic pillars 
\23\ and a Biden-Harris Administration priority.\24\
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    \22\ In October 2023, we released two new annual Health Equity 
Confidential Feedback Reports to IRFs: The Discharge to Community 
(DTC) Health Equity Confidential Feedback Report and the Medicare 
Spending Per Beneficiary (MSPB) Health Equity Confidential Feedback 
Report. The PAC Health Equity Confidential Feedback Reports 
stratified the DTC and MSPB measures by dual-enrollment status and 
race/ethnicity. For more information on the Health Equity 
Confidential Feedback Reports, please refer to the Education and 
Outreach materials available on the IRF QRP Training web page at 
https://www.cms.gov/medicare/quality-initiatives-patient-assessment-instruments/irf-quality-reporting/irf-quality-reporting-training.
    \23\ Brooks-LaSure, C. (2021). My First 100 Days and Where We Go 
from Here: A Strategic Vision for CMS. Centers for Medicare & 
Medicaid. Available at: https://www.cms.gov/blog/my-first-100-days-and-where-we-go-here-strategic-vision-cms.
    \24\ The Biden-Harris Administration's strategic approach to 
addressing health related social needs can be found in The U.S. 
Playbook to Address Social Determinants of Health (SDOH) (2023): 
https://www.whitehouse.gov/wp-content/uploads/2023/11/SDOH-Playbook-3.pdf.
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3. Proposal To Collect Four New Items as Standardized Patient 
Assessment Data Elements Beginning With the FY 2028 IRF QRP
    We are proposing to require IRFs to collect and submit four new 
items as standardized patient assessment data elements under the SDOH 
category using the IRF-PAI: one item for Living Situation, as described 
in section VII.3.(a) of this proposed rule; two items for Food, as 
described in section VII.3.(b) of this proposed rule; and one item for 
Utilities, as described in VII.3.(c) of this proposed rule.
    We selected the proposed SDOH items from the Accountable Health 
Communities (AHC) HRSN Screening Tool developed for the AHC Model. The 
AHC HRSN Screening Tool is a universal, comprehensive screening for 
HRSNs that addresses five core domains as follows: (1) housing 
instability (for example, homelessness, poor housing quality), (2) food 
insecurity, (3) transportation difficulties, (4) utility assistance 
needs, and (5) interpersonal safety concerns (for example, intimate-
partner violence, elder abuse, child maltreatment).\25\
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    \25\ More information about the AHC HRSN Screening Tool is 
available on the website at https://innovation.cms.gov/Files/worksheets/ahcm-screeningtool.pdf.
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    We believe that requiring IRFs to report new items that are 
currently included in the AHC HRSN Screening Tool would further 
standardize the screening of SDOH across quality programs. For example, 
our proposal would align, in part, with the requirements of the 
Hospital Inpatient Quality Reporting (IQR) Program and the Inpatient 
Psychiatric Facility Quality Reporting (IPFQR) Program. As of January 
2024, hospitals are required to report whether they have screened 
patients for the standardized SDOH categories of housing instability, 
food insecurity, utility difficulties, transportation needs, and 
interpersonal safety to meet the Hospital IQR Program requirements.\26\ 
Additionally, beginning January 2025, IPFs will also be required

[[Page 22277]]

to report whether they have screened patients for the same set of SDOH 
categories.\27\ As we continue to standardize data collection across 
PAC settings, we believe using common standards and definitions for new 
items is important to promote interoperable exchange of longitudinal 
information between IRFs and other providers to facilitate coordinated 
care, continuity in care planning, and the discharge planning process.
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    \26\ Centers for Medicare & Medicaid Services, FY2023 IPPS/LTCH 
PPS final rule (87 FR 49191 through 49194).
    \27\ Centers for Medicare & Medicaid Services, FY2024 Inpatient 
Psychiatric Prospective Payment System--Rate Update (88 FR 51107 
through 51121).
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    Below we describe each of the four proposed items in more detail.
(a) Living Situation
    Healthy People 2030 prioritizes economic stability as a key SDOH, 
of which housing stability is a component.28 29 Lack of 
housing stability encompasses several challenges, such as having 
trouble paying rent, overcrowding, moving frequently, or spending the 
bulk of household income on housing.\30\ These experiences may 
negatively affect one's physical health and access to health care. 
Housing instability can also lead to homelessness, which is housing 
deprivation in its most severe form.\31\ On a single night in 2023, 
roughly 653,100 people, or 20 out of every 10,000 people in the United 
States, were experiencing homelessness.\32\ Studies also found that 
people who are homeless have an increased risk of premature death and 
experience chronic disease more often than among the general 
population.\33\
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    \28\ https://health.gov/healthypeople/priority-areas/social-determinants-health.
    \29\ Healthy People 2030 is a long-term, evidence-based effort 
led by the U.S. Department of Health and Human Services (HHS) that 
aims to identify nationwide health improvement priorities and 
improve the health of all Americans.
    \30\ Kushel, M.B., Gupta, R., Gee, L., & Haas, J.S. (2006). 
Housing instability and food insecurity as barriers to health care 
among low-income Americans. Journal of General Internal Medicine, 
21(1), 71-77. doi: https://doi.org/10.1111/j.1525-1497.2005.00278.x.
    \31\ Homelessness is defined as ``lacking a regular nighttime 
residence or having a primary nighttime residence that is a 
temporary shelter or other place not designed for sleeping.'' 
Crowley, S. (2003). The affordable housing crisis: Residential 
mobility of poor families and school mobility of poor children. 
Journal of Negro Education, 72(1), 22-38. doi: https://doi.org/10.2307/3211288.
    \32\ The 2023 Annual Homeless Assessment Report (AHAR) to 
Congress. The U.S. Department of Housing and Urban Development 2023. 
https://www.huduser.gov/portal/sites/default/files/pdf/2023-AHAR-Part-1.pdf.
    \33\ Baggett, T.P., Hwang, S.W., O'Connell, J.J., Porneala, 
B.C., Stringfellow, E.J., Orav, E.J., Singer, D.E., & Rigotti, N.A. 
(2013). Mortality among homeless adults in Boston: Shifts in causes 
of death over a 15-year period. JAMA Internal Medicine, 173(3), 189-
195. doi: https://doi.org/10.1001/jamainternmed.2013.1604. Schanzer, 
B., Dominguez, B., Shrout, P.E., & Caton, C.L. (2007). Homelessness, 
health status, and health care use. American Journal of Public 
Health, 97(3), 464-469. doi: https://doi.org/10.2105/ajph.2005.076190.
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    We believe that IRFs can use information obtained from the Living 
Situation item during a patient's discharge planning. For example, IRFs 
could work in partnership with community care hubs and community-based 
organizations to establish new care transition workflows, including 
referral pathways, contracting mechanisms, data sharing strategies, and 
implementation training that can track HRSNs to ensure unmet needs, 
such as housing, are successfully addressed through closed loop 
referrals and follow-up.\34\ IRFs could also take action to help 
alleviate a patient's other related costs of living, like food, by 
referring the patient to community-based organizations that would allow 
the patient's additional resources to be allocated towards housing 
without sacrificing other needs.\35\ Finally, IRFs could use the 
information obtained from the Living Situation item to better 
coordinate with other healthcare providers, facilities, and agencies 
during transitions of care, so that referrals to address a patient's 
housing stability are not lost during vulnerable transition periods.
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    \34\ U.S. Department of Health & Human Services (HHS), Call to 
Action, ``Addressing Health Related Social Needs in Communities 
Across the Nation.'' November 2023. https://aspe.hhs.gov/sites/default/files/documents/3e2f6140d0087435cc6832bf8cf32618/hhs-call-to-action-health-related-social-needs.pdf.
    \35\ Henderson, K.A., Manian, N., Rog, D.J., Robison, E., Jorge, 
E., AlAbdulmunem, M. ``Addressing Homelessness Among Older Adults'' 
(Final Report). Washington, DC: Office of the Assistant Secretary 
for Planning and Evaluation, U.S. Department of Health and Human 
Services. October 26, 2023.
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    Due to the potential negative impacts housing instability can have 
on a patient's health, we are proposing to adopt the Living Situation 
item as a new standardized patient assessment data element under the 
SDOH category. This proposed Living Situation item is based on the 
Living Situation item currently collected in the AHC HRSN Screening 
Tool,36 37 and was adapted from the Protocol for Responding 
to and Assessing Patients' Assets, Risks, and Experiences (PRAPARE) 
tool.\38\ The proposed Living Situation item asks, ``What is your 
living situation today?'' The proposed response options are: (1) I have 
a steady place to live; (2) I have a place to live today, but I am 
worried about losing it in the future; (3) I do not have a steady place 
to live; (7) Patient declines to respond; and (8) Patient unable to 
respond. A draft of the proposed Living Situation item to be adopted as 
a standardized patient assessment data element under the SDOH category 
can be found in the Downloads section of the IRF-PAI and IRF-PAI Manual 
web page at https://www.cms.gov/medicare/quality/inpatient-rehabilitation-facility/irf-pai-and-irf-qrp-manual.
---------------------------------------------------------------------------

    \36\ More information about the AHC HRSN Screening Tool is 
available on the website at https://innovation.cms.gov/Files/worksheets/ahcm-screeningtool.pdf.
    \37\ The AHC HRSN Screening Tool Living Situation item includes 
two questions. In an effort to limit IRF burden, we are only 
proposing the first question.
    \38\ National Association of Community Health Centers and 
Partners, National Association of Community Health Centers, 
Association of Asian Pacific Community Health Organizations, 
Association OPC, Institute for Alternative Futures. ``PRAPARE.'' 
2017. https://prapare.org/the-prapare-screening-tool/.
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(b) Food
    The U.S. Department of Agriculture, Economic Research Service 
defines a lack of food security as a household-level economic and 
social condition of limited or uncertain access to adequate food.\39\ 
Adults who are food insecure may be at an increased risk for a variety 
of negative health outcomes and health disparities. For example, a 
study found that food-insecure adults may be at an increased risk for 
obesity.\40\ Another study found that food-insecure adults have a 
significantly higher probability of death from any cause or 
cardiovascular disease in long-term follow-up care, in comparison to 
adults that are food secure.\41\
---------------------------------------------------------------------------

    \39\ U.S. Department of Agriculture, Economic Research Service. 
(n.d.). Definitions of food security. Retrieved March 10, 2022, from 
https://www.ers.usda.gov/topics/food-nutrition-assistance/food-security-in-the-u-s/definitions-of-food-security/.
    \40\ Hernandez, D.C., Reesor, L.M., & Murillo, R. (2017). Food 
insecurity and adult overweight/obesity: Gender and race/ethnic 
disparities. Appetite, 117, 373-378.
    \41\ Banerjee, S., Radak, T., Khubchandani, J., & Dunn, P. 
(2021). Food Insecurity and Mortality in American Adults: Results 
From the NHANES-Linked Mortality Study. Health promotion practice, 
22(2), 204-214. https://doi.org/10.1177/1524839920945927.
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    While having enough food is one of many predictors for health 
outcomes, a diet low in nutritious foods is also a factor.\42\ The 
United States Department of Agriculture (USDA) defines nutrition 
security as ``consistent and equitable access to healthy, safe, 
affordable foods essential to optimal health and well-

[[Page 22278]]

being.'' \43\ Nutrition security builds on and complements long 
standing efforts to advance food security. Studies have shown that 
older adults struggling with food insecurity consume fewer calories and 
nutrients and have lower overall dietary quality than those who are 
food secure, which can put them at nutritional risk.\44\ Older adults 
are also at a higher risk of developing malnutrition, which is 
considered a state of deficit, excess, or imbalance in protein, energy, 
or other nutrients that adversely impacts an individual's own body 
form, function, and clinical outcomes.\45\ About 50 percent of older 
adults are affected by malnutrition, which is further aggravated by a 
lack of food security and poverty.\46\ These facts highlight why the 
Biden-Harris Administration launched the White House Challenge to End 
Hunger and Build Health Communities.\47\
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    \42\ National Center for Health Statistics. (2022, September 6). 
Exercise or Physical Activity. Retrieved from Centers for Disease 
Control and Prevention: https://www.cdc.gov/nchs/fastats/exercise.htm.
    \43\ Ziliak, J.P., & Gundersen, C. (2019). The State of Senior 
Hunger in America 2017: An Annual Report. Prepared for Feeding 
America. Available at https://www.feedingamerica.org/research/senior-hunger-research/senior.
    \44\ Ziliak, J.P., & Gundersen, C. (2019). The State of Senior 
Hunger in America 2017: An Annual Report. Prepared for Feeding 
America. Available at: https://www.feedingamerica.org/research/senior-hunger-research/senior.
    \45\ The Malnutrition Quality Collaborative. (2020). National 
Blueprint: Achieving Quality Malnutrition Care for Older Adults, 
2020 Update. Washington, DC: Avalere Health and Defeat Malnutrition 
Today. Available at: https://defeatmalnutrition.today/advocacy/blueprint/.
    \46\ Food Research & Action Center (FRAC). ``Hunger is a Health 
Issue for Older Adults: Food Security, Health, and the Federal 
Nutrition Programs.'' December 2019. https://frac.org/wp-content/uploads/hunger-is-a-health-issue-for-older-adults-1.pdf.
    \47\ The White House Challenge to End Hunger and Build Health 
Communities (Challenge) was a nationwide call-to-action released on 
March 24, 2023, to stakeholders across all of society to make 
commitments to advance President Biden's goal to end hunger and 
reduce diet-related diseases by 2030--all while reducing 
disparities. More information on the White House Challenge to End 
Hunger and Build Health Communities can be found: https://www.whitehouse.gov/briefing-room/statements-releases/2023/03/24/fact-sheet-biden-harris-administration-launches-the-white-house-challenge-to-end-hunger-and-build-healthy-communities-announces-new-public-private-sector-actions-to-continue-momentum-from-hist/.
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    We believe that adopting items to collect and analyze information 
about a patient's food security at home could provide additional 
insight to their health complexity and help facilitate coordination 
with other healthcare providers, facilities, and agencies during 
transitions of care, so that referrals to address a patient's food 
security are not lost during vulnerable transition periods. For 
example, an IRF's dietitian or other clinically qualified nutrition 
professional could work with the patient and their caregiver to plan 
healthy, affordable food choices prior to discharge.\48\ IRFs could 
also refer a patient that indicates lack of food security to government 
initiatives such as the Supplemental Nutrition Assistance Program 
(SNAP) and food pharmacies (programs to increase access to healthful 
foods by making them affordable), two initiatives that have been 
associated with lower health care costs and reduced hospitalization and 
emergency department visits.\49\
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    \48\ Schroeder K., Smaldone A., Food Insecurity: A Concept 
Analysis. Nurse Forum. 2015 Oct-Dec; 50(4):274-84. doi: 10.1111/
nuf.12118. Epub 2015 Jan 21. PMID: 25612146; PMCID: PMC4510041.
    \49\ Tsega M., Lewis C., McCarthy D., Shah T., Coutts K., Review 
of Evidence for Health-Related Social Needs Interventions. July 
2019. The Commonwealth Fund. https://www.commonwealthfund.org/sites/default/files/2019-07/COMBINED_ROI_EVIDENCE_REVIEW_7.15.19.pdf.
---------------------------------------------------------------------------

    We are proposing to adopt two Food items as new standardized 
patient assessment data elements under the SDOH Category. These 
proposed items are based on the Food items currently collected in the 
AHC HRSN Screening Tool, and were adapted from the USDA 18-item 
Household Food Security Survey (HFSS).\50\ The first proposed Food item 
states, ``Within the past 12 months, you worried that your food would 
run out before you got money to buy more.'' The second proposed Food 
item states, ``Within the past 12 months, the food you bought just 
didn't last and you didn't have money to get more.'' We propose the 
same response options for both items: (1) Often true; (2) Sometimes 
true; (3) Never True; (7) Patient declines to respond; and (8) Patient 
unable to respond. A draft of the proposed Food items to be adopted as 
standardized patient assessment data elements under the SDOH category 
can be found in the Downloads section of the IRF-PAI and IRF-PAI Manual 
web page at https://www.cms.gov/medicare/quality/inpatient-rehabilitation-facility/irf-pai-and-irf-qrp-manual.
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    \50\ More information about the HFSS tool can be found at 
https://www.ers.usda.gov/topics/food-nutrition-assistance/food-security-in-the-u-s/survey-tools/.
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(c) Utilities
    A lack of energy (utility) security can be defined as an inability 
to adequately meet basic household energy needs.\51\ According to the 
United States Department of Energy, one in three households in the U.S. 
are unable to adequately meet basic household energy needs.\52\ The 
consequences associated with a lack of utility security are represented 
by three primary dimensions: economic, physical, and behavioral. 
Patients with low incomes are disproportionately affected by high 
energy costs, and they may be forced to prioritize paying for housing 
and food over utilities.\53\ Some patients may face limited housing 
options and therefore are at increased risk of living in lower-quality 
physical conditions with malfunctioning heating and cooling systems, 
poor lighting, and outdated plumbing and electrical systems.\54\ 
Patients with a lack of utility security may use negative behavioral 
approaches to cope, such as using stoves and space heaters for 
heat.\55\ In addition, data from the Department of Energy's U.S. Energy 
Information Administration confirm that a lack of energy security 
disproportionately affects certain populations, such as low-income and 
African American households.\56\ The effects of a lack of utility 
security include vulnerability to environmental exposures such as 
dampness, mold, and thermal discomfort in the home, which have a direct 
impact on a person's health.\57\ For example, research has shown 
associations between a lack of energy security and respiratory 
conditions as well as mental health-related disparities and poor sleep 
quality in vulnerable populations such as the elderly, children, the 
socioeconomically disadvantaged, and the medically vulnerable.\58\
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    \51\ Hern[aacute]ndez D., Understanding `energy insecurity' and 
why it matters to health. Soc Sci Med. 2016 Oct; 167:1-10. Doi: 
10.1016/j.socscimed.2016.08.029. Epub 2016 Aug 21. PMID: 27592003; 
PMCID: PMC5114037.
    \52\ U.S. Energy Information Administration. ``One in Three U.S. 
Households Faced Challenges in Paying Energy Bills in 2015.'' 2017 
Oct 13. https://www.eia.gov/consumption/residential/reports/2015/energybills/.
    \53\ Hern[aacute]ndez D., ``Understanding `energy insecurity' 
and why it matters to health.'' Soc Sci Med. 2016; 167:1-10.
    \54\ Hern[aacute]ndez D., Understanding 'energy insecurity' and 
why it matters to health. Soc Sci Med. 2016 Oct; 167:1-10. doi: 
10.1016/j.socscimed.2016.08.029. Epub 2016 Aug 21. PMID: 27592003; 
PMCID: PMC5114037.
    \55\ Hern[aacute]ndez D., ``What `Merle' Taught Me About Energy 
Insecurity and Health.'' Health Affairs, VOL.37, NO.3: Advancing 
Health Equity Narrative Matters. March 2018. https://doi.org/10.1377/hlthaff.2017.1413.
    \56\ U.S. Energy Information Administration. ``One in Three U.S. 
Households Faced Challenges in Paying Energy Bills in 2015.'' 2017 
Oct 13. https://www.eia.gov/consumption/residential/reports/2015/energybills/.
    \57\ Hern[aacute]ndez D., Understanding 'energy insecurity' and 
why it matters to health. Soc Sci Med. 2016 Oct; 167:1-10. doi: 
10.1016/j.socscimed.2016.08.029. Epub 2016 Aug 21. PMID: 27592003; 
PMCID: PMC5114037.
    \58\ Hern[aacute]ndez D., Siegel E., Energy insecurity and its 
ill health effects: A community perspective on the energy-health 
nexus in New York City. Energy Res Soc Sci. 2019 Jan; 47:78-83. doi: 
10.1016/j.erss.2018.08.011. Epub 2018 Sep 8. PMID: 32280598; PMCID: 
PMC7147484.
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    We believe adopting an item to collect information upon a patient's 
admission to an IRF about their utility security

[[Page 22279]]

would facilitate the identification of patients who may not have 
utility security and who may benefit from engagement efforts. For 
example, IRFs may be able to use the information on utility security to 
help connect some patients in need to programs that can help older 
adults pay for their home energy (heating/cooling) costs, like the Low-
Income Home Energy Assistance Program (LIHEAP).\59\ IRFs may also be 
able to partner with community care hubs and community-based 
organizations to assist the patient in applying for these and other 
local utility assistance programs, as well as helping them navigate the 
enrollment process.\60\
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    \59\ https://www.fcc.gov/broadbandbenefit.
    \60\ National Council on Aging (NCOA). ``How to Make It Easier 
for Older Adults to Get Energy and Utility Assistance.'' Promising 
Practices Clearinghouse for Professionals. Jan 13, 2022. https://www.ncoa.org/article/how-to-make-it-easier-for-older-adults-to-get-energy-and-utility-assistance.
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    We are proposing to adopt a new item, Utilities, as a new 
standardized patient assessment data element under the SDOH category. 
This proposed item is based on the Utilities item currently collected 
in the AHC HRSN Screening Tool and was adapted from the Children's 
Sentinel Nutrition Assessment Program (C-SNAP) survey.\61\ The proposed 
Utilities item asks, ``In the past 12 months, has the electric, gas, 
oil, or water company threatened to shut off services in your home?'' 
The proposed response options are: (1) Yes; (2) No; (3) Already shut 
off; (7) Patient declines to respond; and (8) Patient unable to 
respond. A draft of the proposed Utilities item to be adopted as a 
standardized patient assessment data element under the SDOH category 
can be found in the Downloads section of the IRF-PAI and IRF-PAI Manual 
web page at https://www.cms.gov/medicare/quality/inpatient-rehabilitation-facility/irf-pai-and-irf-qrp-manual.
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    \61\ This validated survey was developed as a clinical indicator 
of household energy security among pediatric caregivers. Cook, J.T., 
D.A. Frank., P.H. Casey, R. Rose-Jacobs, M.M. Black, M. Chilton, S. 
Ettinger de Cuba, et al. ``A Brief Indicator of Household Energy 
Security: Associations with Food Security, Child Health, and Child 
Development in US Infants and Toddlers.'' Pediatrics, vol. 122, no. 
4, 2008, pp. e874-e875. https://doi.org/10.1542/peds.2008-0286.
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4. Stakeholder Input
    We developed our proposal to add these items after considering 
feedback we received in response to our Health Equity Update in the FY 
2024 IRF PPS final rule. While there were commenters who urged CMS to 
balance reporting requirements so as not to create undue administrative 
burden and avoid making generalizations about differences in health and 
health care on certain data elements, it was also suggested CMS 
incentivize collection of data on SDOH such as housing stability and 
food security. Two commenters emphasized that any additional 
stratification of quality measures, including social risk factors and 
SDOH, would be of value to PAC providers, including IRFs. The FY 2024 
IRF PPS final rule (88 FR 51037 through 51039) includes a summary of 
the public comments that we received in response to the Health Equity 
Update and our responses to those comments.
    Additionally, we considered feedback we received when we proposed 
the creation of the SDOH category of standardized patient assessment 
data elements in the FY 2020 IRF PPS proposed rule (84 FR 17319 through 
17326). Commenters were generally in favor of the concept of collecting 
SDOH items and stated that if implemented appropriately the data could 
be useful in identifying and addressing health care disparities, as 
well as refining the risk adjustment of outcome measures. One commenter 
specifically recommended CMS consider including data collection of 
housing status, since unmet housing needs can put patients at higher 
risk for readmission. The FY 2020 IRF PPS final rule (84 FR 39149 
through 39161) includes a summary of the public comments that we 
received and our responses to those comments. We incorporated this 
input into the development of this proposal.
    We invite comment on the proposal to adopt four new items as 
standardized patient assessment data elements in the IRF-PAI under the 
SDOH category beginning with the FY 2028 IRF QRP: one Living Situation 
item; two Food items; and one Utilities item.
5. Proposal To Modify the Transportation Item Beginning With the FY 
2028 IRF QRP
    Beginning October 1, 2022, IRFs began collecting seven items 
adopted as standardized patient assessment data elements under the SDOH 
category on the IRF-PAI.\62\ One of these items, A1250. Transportation, 
collects data on whether a lack of transportation has kept a patient 
from getting to and from medical appointments, meetings, work, or from 
getting things they need for daily living. This item was adopted as a 
standardized patient assessment data element under the SDOH category in 
the FY 2020 IRF PPS final rule (84 FR 39160 through 39161). As we 
discussed in the FY 2020 IRF PPS final rule (84 FR 39158), we continue 
to believe that access to transportation for ongoing health care and 
medication access needs, particularly for those with chronic diseases, 
is essential to successful chronic disease management and the 
collection of a Transportation item would facilitate the connection to 
programs that can address identified needs.
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    \62\ The seven SDOH items are ethnicity, race, preferred 
language, interpreter services, health literacy, transportation, and 
social isolation (84 FR 39149 through 39161).
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    As part of our routine item and measure monitoring work, we 
continually assess the implementation of the new SDOH items. We have 
identified an opportunity to improve the data collection for A1250. 
Transportation in the IRF-PAI by aligning it with the Transportation 
category collected in our other programs.63 64 Specifically, 
we are proposing to modify the current Transportation item in the IRF-
PAI so that it aligns with a Transportation item collected on the AHC 
HRSN Screening Tool available to the IPFQR and Hospital IQR Programs.
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    \63\ Centers for Medicare & Medicaid Services, FY2024 Inpatient 
Psychiatric Prospective Payment System--Rate Update (88 FR 51107 
through 51121).
    \64\ Centers for Medicate & Medicaid Services, FY2023 IPPS/LTCH 
PPS Final rule (87 FR 49202 through 49215).
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    A1250. Transportation currently collected in the IRF-PAI asks: 
``Has lack of transportation kept you from medical appointments, 
meetings, work, or from getting things needed for daily living?'' The 
response options are: (A) Yes, it has kept me from medical appointments 
or from getting my medications; (B) Yes, it has kept me from non-
medical meetings, appointments, work, or from getting things that I 
need; (C) No; (X) Patient unable to respond; and (Y) Patient declines 
to respond. The Transportation item collected in the AHC HRSN Screening 
Tool asks, ``In the past 12 months, has lack of reliable transportation 
kept you from medical appointments, meetings, work or from getting 
things needed for daily living?'' The two response options are: (1) 
Yes; and (2) No. Consistent with the AHC HRSN Screening Tool, we are 
proposing to modify the A1250. Transportation item currently collected 
in the IRF-PAI in two ways: (1) revise the look-back period for when 
the patient experienced lack of reliable transportation; and (2) 
simplify the response options.
    First, the proposed modification of the Transportation item would 
use a defined 12-month look back period, while the current 
Transportation item uses a look back period of six to 12 months. We 
believe the distinction of a 12-month look back period would reduce 
ambiguity for both patients and

[[Page 22280]]

clinicians, and therefore improve the validity of the data collected. 
Second, we are proposing to simplify the response options. Currently, 
IRFs separately collect information on whether a lack of transportation 
has kept the patient from medical appointments or from getting 
medications, and whether a lack of transportation has kept the patient 
from non-medical meetings, appointments, work, or from getting things 
they need. Although transportation barriers can directly affect a 
person's ability to attend medical appointments and obtain medications, 
a lack of transportation can also affect a person's health in other 
ways, including accessing goods and services, obtaining adequate food 
and clothing, and social activities.\65\ The proposed modified 
Transportation item would collect information on whether a lack of 
reliable transportation has kept the patient from medical appointments, 
meetings, work, or from getting things needed for daily living, rather 
than collecting the information separately. As discussed previously, we 
believe reliable transportation services are fundamental to a person's 
overall health, and as a result, the burden of collecting this 
information separately outweighs its potential benefit.
---------------------------------------------------------------------------

    \65\ Centers for Medicare & Medicaid Services, FY2024 Inpatient 
Psychiatric Prospective Payment System--Rate Update (88 FR 51107 
through 51121).
---------------------------------------------------------------------------

    For the reasons stated previously, we are proposing to modify 
A1250. Transportation based on the Transportation item adopted for use 
in the AHC HRSN Screening Tool and adapted from the PRAPARE tool. The 
proposed Transportation item asks, ``In the past 12 months, has a lack 
of reliable transportation kept you from medical appointments, 
meetings, work or from getting things needed for daily living?'' The 
proposed response options are: (0) Yes; (1) No; (7) Patient declines to 
respond; and (8) Patient unable to respond. A draft of the proposed 
modified Transportation item can be found in the Downloads section of 
the IRF-PAI and IRF-PAI Manual web page at https://www.cms.gov/medicare/quality/inpatient-rehabilitation-facility/irf-pai-and-irf-qrp-manual.
    We invite comment on the proposal to modify the current 
Transportation item previously adopted as a standardized patient 
assessment data element under the SDOH category beginning with the FY 
2028 IRF QRP.

D. IRF QRP Quality Measure Concepts Under Consideration for Future 
Years--Request for Information (RFI)

    We are seeking input on the importance, relevance, appropriateness, 
and applicability of each of the concepts under consideration listed in 
Table 13 for future years in the IRF QRP. In the FY 2024 IRF PPS 
proposed rule (88 FR 21000 through 21003), we published a request for 
information (RFI) on a set of principles for selecting and prioritizing 
IRF QRP measures, identifying measurement gaps, and suitable measures 
for filling these gaps. Within this proposed rule, we also sought input 
on data available to develop measures, approaches for data collection, 
perceived challenges or barriers, and approaches for addressing 
identified challenges. We refer readers to the FY 2024 IRF PPS final 
rule (88 FR 51036 through 51037) for a summary of the public comments 
we received in response to the RFI.
    Subsequently, our measure development contractor convened a 
Technical Expert Panel (TEP) on December 15, 2023 to obtain expert 
input on the future measure concepts that could fill the measurement 
gaps identified in our FY 2024 RFI.\66\ The TEP discussed the alignment 
of PAC and Hospice measures with CMS' ``Universal Foundation'' of 
quality measures.\67\ The Universal Foundation aims to focus provider 
attention, reduce burden, identify disparities in care, prioritize 
development of interoperable, digital quality measures, allow for 
comparisons across programs, and help identify measurement gaps.
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    \66\ The Post-Acute Care (PAC) and Hospice Quality Reporting 
Program Cross-Setting TEP summary report will be published in early 
summer or as soon as technically feasible. IRFs can monitor the 
Partnership for Quality Measurement website at https://mmshub.cms.gov/get-involved/technical-expert-panel/updates for 
updates.
    \67\ Centers for Medicare & Medicaid Services. Aligning Quality 
Measures Across CMS--the Universal Foundation. November 17, 2023. 
https://www.cms.gov/aligning-quality-measures-across-cms-universal-foundation.
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    In consideration of the feedback, we have received from interested 
parties through these activities, we are seeking input on three 
concepts for the IRF QRP. One is a composite of vaccinations,\68\ which 
could represent overall immunization status of patients such as the 
Adult Immunization Status measure \69\ in the Universal Foundation. A 
second concept on which we are seeking feedback is the concept of 
depression for the IRF QRP, which may be similar to the Clinical 
Screening for Depression and Follow-up measure \70\ in the Universal 
Foundation. Finally, we are seeking feedback on the concept of pain 
management.
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    \68\ A composite measure can summarize multiple measures through 
the use of one value or piece of information. More information can 
be found at https://www.cms.gov/medicare/quality-initiatives-patient-assessment-instruments/mms/downloads/composite-measures.pdf.
    \69\ CMS Measures Inventory Tool. Adult immunization status 
measure found at https://cmit.cms.gov/cmit/#/FamilyView?familyId=26.
    \70\ CMS Measures Inventory Tool. Clinical Depression Screening 
and Follow-Up measure found at https://cmit.cms.gov/cmit/#/FamilyView?familyId=672.
[GRAPHIC] [TIFF OMITTED] TP29MR24.038


[[Page 22281]]


    While we will not be responding to specific comments in response to 
this RFI in the FY 2025 IRF PPS final rule, we intend to use this input 
to inform our future measure development efforts.

E. Future IRF Star Rating System: Request for Information (RFI)

    Section 1886(j)(7)(E) of the Act requires that the Secretary 
establish procedures for making data submitted under the IRF QRP 
available to the public. Such procedures must ensure the IRFs 
participating in the IRF QRP have the opportunity to review the IRF-
submitted data prior to such data being made public. The Secretary must 
publicly report quality measures that relate to services furnished in 
IRFs on the CMS website. We currently publicly report data we receive 
on measures under the IRF QRP on our Care Compare website.\71\
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    \71\ Centers for Medicare & Medicaid Services (CMS). Care 
Compare. 2023. https://www.medicare.gov/care-compare.
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    Care Compare displays star ratings for many provider types, 
specifically: doctors and clinicians, hospitals, nursing homes, home 
health, hospice, and dialysis facilities. Rating methodologies vary by 
provider type. Star ratings summarize performance using symbols to help 
consumers quickly and easily understand quality of care information. 
Star ratings are designed to enhance and supplement existing publicly 
reported quality information, and also serve to spotlight differences 
in health care quality and identify areas for improvement.\72\ Some 
providers receive ``overall star ratings,'' which are a composite score 
calculated using different data sources, such as quality measures or 
survey results. Others receive ``patient survey star ratings,'' a 
composite score derived from patient experience of care surveys. 
Depending on the provider type, some utilize one--or both--of these 
rating methodologies.
---------------------------------------------------------------------------

    \72\ Centers for Medicare & Medicaid Services (CMS). Home Health 
Star Ratings. 2023. https://www.cms.gov/medicare/quality/home-health/home-health-star-ratings.
---------------------------------------------------------------------------

    Star ratings serve an important function for patients, caregivers, 
and families, helping them to more quickly comprehend complex 
information about a health care providers' care quality and to easily 
assess differences among providers. This transparency serves an 
important educational function, while also helping to promote 
competition in health care markets. Informed patients and consumers are 
more empowered to select among health care providers, fostering 
continued quality improvement. CMS' commitment to establishing star 
ratings systems across health care settings is consistent with the 
Biden-Harris Administration's goal to promote an open, transparent, and 
competitive economy as outlined in Executive Order 14036, Promoting 
Competition in the American Economy (86 FR 36987, July 14, 2021).\73\
---------------------------------------------------------------------------

    \73\ The White House. Executive Order on Promoting Competition 
in the American Economy. 2023. https://www.whitehouse.gov/briefing-room/presidential-actions/2021/07/09/executive-order-on-promoting-competition-in-the-american-economy/.
---------------------------------------------------------------------------

    We are seeking feedback on the development of a five-star 
methodology for IRFs that can meaningfully distinguish between quality 
of care offered by IRFs. Star ratings for IRFs would be designed to 
help consumers quickly identify differences in quality when selecting a 
provider. We are committed to developing a well-tested, data-driven 
methodology that encourages continuous quality improvement. We plan to 
engage with the IRF community and provide multiple opportunities for 
IRFs and other interested parties to give input on the development of a 
star rating system for IRFs. We note that IRFs would have the ability 
to preview their own facility's quality data before public posting of 
the IRF's star rating on the Care Compare website in accordance with 
section 1886(j)(7)(E) of the Act.
    Specifically, we invite public comment on the following questions:
    1. Are there specific criteria CMS should use to select measures 
for an IRF star rating system?
    2. How should CMS present IRF star ratings information in a way 
that it is most useful to consumers?
    While we will not be responding to specific comments in response to 
this RFI in the FY 2025 IRF PPS final rule, we intend to use this input 
to inform our future star rating development efforts. We intend to 
consider how a rating system would determine an IRF's star rating, the 
methods used for such calculations, and an anticipated timeline for 
implementation. We will consider comments in response to this RFI for 
future rulemaking.

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

1. Background
    We refer readers to the regulatory text at Sec.  412.634(b)(1) for 
information regarding the current policies for reporting specified data 
for the IRF QRP.
2. Proposed Reporting Schedule for the Submission of Proposed New Items 
as Standardized Patient Assessment Data Elements and the Transportation 
Item Beginning With the FY 2028 IRF QRP
    As discussed in sections VII.C.3. and VII.C.5. of this proposed 
rule, we are proposing to adopt four new items as standardized patient 
assessment data elements under the SDOH category (one Living Situation 
item, two Food items, and one Utilities item) and to modify the 
Transportation standardized patient assessment data element previously 
adopted under the SDOH category beginning with the FY 2028 IRF QRP.
    We are proposing that IRFs would be required to report these new 
items and the transportation item using the IRF-PAI beginning with 
patients admitted on October 1, 2026, for purposes of the FY 2028 IRF 
QRP. Starting in CY 2027, IRFs would be required to submit data for the 
entire calendar year with the FY 2029 IRF QRP.
    We are also proposing that IRFs that submit the Living Situation, 
Food, and Utilities items proposed for adoption as standardized patient 
assessment data elements under the SDOH category with respect to 
admission only would be deemed to have submitted those items with 
respect to both admission and discharge. We propose that IRFs would be 
required to submit these items at admission only (and not at discharge) 
because it is unlikely that the assessment of those items at admission 
would differ from the assessment of the same item at discharge. This 
would align the data collection for these proposed items with other 
SDOH items (that is, Race, Ethnicity, Preferred Language, and 
Interpreter Services) which are only collected at admission.\74\ A 
draft of the proposed items is available in the Downloads section of 
the IRF-PAI and IRF-PAI Manual web page at https://www.cms.gov/medicare/quality/inpatient-rehabilitation-facility/irf-pai-and-irf-qrp-manual.
---------------------------------------------------------------------------

    \74\ FY 2020 IRF PPS final rule (84 FR 39161 through 39162).
---------------------------------------------------------------------------

    As we noted in section VII.C.5. of this proposed rule, we 
continually assess the implementation of the new SDOH items, including 
A1250. Transportation, as part of our routine item and measure 
monitoring work. We received feedback from stakeholders in response to 
the FY 2020 IRF PPS proposed rule (84 FR 39149 through 39161) noting 
their concern with the burden of collecting the Transportation item at 
admission and discharge. Specifically, commenters stated that a 
patient's access to transportation is unlikely to change between 
admission and discharge (84

[[Page 22282]]

FR 39159). We analyzed the data IRFs reported from October 1, 2022, 
through June 30, 2023 (Quarter 4 CY 2022 through Quarter 2 CY 2023), 
and found that patient responses do not significantly change from 
admission to discharge.\75\ Specifically, the proportion of patients 
\76\ who responded ``Yes'' to the Transportation item at admission 
versus at discharge differed by only 0.19 percentage points during this 
period. We find these results convincing, and therefore are proposing 
to require IRFs to collect and submit the proposed modified 
standardized patient assessment data element, Transportation, at 
admission only.
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    \75\ Due to data availability of IRF SDOH standardized patient 
assessment data elements, this is based on three quarters of 
Transportation data.
    \76\ The analysis is limited to patients who responded to the 
Transportation item at both admission and discharge.
---------------------------------------------------------------------------

    We invite public comment on our proposal to collect data on the 
following items proposed as standardized patient assessment data 
elements under the SDOH category at admission beginning October 1, 2026 
with the FY 2028 IRF QRP: (1) Living Situation as described in section 
VII.C.3.(a) of this proposed rule; (2) Food as described in section 
VII.C.3.(b) of this proposed rule; and (3) Utilities as described in 
section VII.C.3.(c) of this proposed rule. We also invite comment on 
our proposal to submit the proposed modified standardized patient 
assessment data element, Transportation, at admission only beginning 
October 1, 2026, with the FY 2028 IRF QRP as described in section 
VII.C.5. of this proposed rule.
3. Proposal To Remove the Admission Class Item From the IRF-PAI 
Beginning October 1, 2026
(a) Background
    In the CY 2002 PPS for IRFs final rule (66 FR 41324 through 41342), 
we finalized the use of the IRF-PAI, through which IRFs are now 
required to collect and electronically submit patient data for all 
Medicare Part A FFS and Medicare Part C (Medicare Advantage) patients 
admitted and discharged from an IRF through September 30, 2024 \77\ and 
for all patients regardless of payer beginning October 1, 2024.\78\ 
Item 14-Admission Class has been included on the IRF-PAI since the IRF-
PAI was first implemented and is completed only at admission. The most 
recent version of the IRF-PAI is available for reference on the IRF-PAI 
and IRF QRP Manual web page at https://www.cms.gov/medicare/quality/inpatient-rehabilitation-facility/irf-pai-and-irf-qrp-manual. Item 14, 
Admission Class, includes the following response options: (i) Initial 
Rehab; (iii) Readmission; (iv) Unplanned Discharge; and (v) Continuing 
Rehabilitation.
---------------------------------------------------------------------------

    \77\ In the FY 2010 IRF PPS final rule (74 FR 39798 through 
39800), CMS revised the regulation text in Sec. Sec.  412.604, 
412.606, 412.610, 412.614, and 412.618 to require that all IRFs 
submit IRF-PAI data on all of their Medicare Part C patients.
    \78\ In the FY 2023 IRF PPS final rule (87 FR 47073 through 
47092), CMS revised the regulation text in Sec. Sec.  412.604, 
412.606, 412.610, 412.614, and 412.618 to require that all IRFs 
submit IRF-PAI data on each patient receiving care in an IRF, 
regardless of payer.
---------------------------------------------------------------------------

(b) Removal of Item
    We routinely review item sets for redundancies and identify 
opportunities to simplify data submission requirements. We propose to 
remove Item 14 entirely from the IRF-PAI, beginning October 1, 2026. We 
have identified this item is currently not used in the calculation of 
quality measures already adopted in the IRF QRP. It is also not used 
for previously established purposes unrelated to the IRF QRP, such as 
payment, survey, or care planning.
    We invite public comment on our proposal to remove Item 14-
Admission Class from the IRF-PAI, effective October 1, 2026.

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

    We are not proposing any new policies regarding the public display 
of measure data at this time. For a more detailed discussion about our 
policies regarding public display of IRF QRP measure data and 
procedures for the opportunity to review and correct data and 
information, we refer readers to the FY 2017 IRF PPS final rule (81 FR 
52125 through 52131).

VIII. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 60-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. In 
order to fairly evaluate whether an information collection should be 
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act 
of 1995 requires that we solicit comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    This proposed rule refers to associated information collections 
that are not discussed in the regulation text contained in this 
document.

A. Requirements for Updates Related to the IRF QRP Beginning With the 
FY 2028 IRF QRP

    An IRF that does not meet the requirements of the IRF QRP for a 
fiscal year will receive a 2-percentage point reduction to its 
otherwise applicable annual increase factor for that fiscal year.
    In section VII.C. of the proposed rule, we are proposing to adopt 
four items as standardized patient assessment data elements and modify 
one item collected as a standardized patient assessment data element 
beginning with the FY 2028 IRF QRP. In section VII.F.3. of the proposed 
rule, we are proposing to remove one item, Admission Class, from the 
IRF-PAI.
    As stated in sections VII.C.3. and VII.C.5. of the preamble of this 
proposed rule, we are proposing to adopt four items as standardized 
patient assessment data elements and modify one item collected as a 
standardized patient assessment data element beginning with the FY 2028 
IRF QRP. The proposed and modified items would be collected using the 
IRF-PAI. The IRF-PAI, in its current form, has been approved under OMB 
control number 0938-0842.\79\ Four items would need to be added to the 
IRF-PAI at admission to allow for collection of these data, and one 
item would be modified. Additionally, as stated in section VII.F.2. of 
this proposed rule, we are proposing that IRFs would submit the four 
new items and one modified item at admission only. The net result of 
collecting four new items at admission, modifying one item currently 
collected at admission, and removing the collection of one item at 
discharge is an increase of 0.9 minutes or 0.015 hour of clinical staff 
time at admission [(4 items x 0.005 hour) minus (1 item x 0.005 hour)]. 
We identified the staff type based on past IRF burden calculations, and 
our assumptions are based on the categories generally necessary to 
perform an assessment. We believe that the items would be completed 
equally by a Registered Nurse (RN) (50 percent of the time) and a 
Licensed Practical and Licensed Vocational Nurse (LPN/LVN) (50 percent 
of the time). However, IRFs determine the staffing resources necessary.
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    \79\ https://www.reginfo.gov/public/do/DownloadNOA?requestID=494186.

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[[Page 22283]]

    For the purposes of calculating the costs associated with the 
collection of information requirements, we obtained median hourly wages 
for these staff from the U.S. Bureau of Labor Statistics' (BLS) May 
2022 National Occupational Employment and Wage Estimates.\80\ To 
account for other indirect costs and fringe benefits, we doubled the 
hourly wage. These amounts are detailed in Table 15. We established a 
composite cost estimate using our adjusted wage estimates. The 
composite estimate of $65.31/hr was calculated by weighting each 
adjusted hourly wage equally (that is, 50%) [($78.10/hr x 0.5) + 
($52.52/hr x 0.5) = $65.31].
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    \80\ U.S. Bureau of Labor Statistics' (BLS) May 2022 National 
Occupational Employment and Wage Estimates. https://www.bls.gov/oes/current/oes_nat.htm.
[GRAPHIC] [TIFF OMITTED] TP29MR24.039

    We estimate that the burden and cost for IRFs for complying with 
requirements of the FY 2028 IRF QRP would increase under this proposal. 
Using FY 2023 data, we estimate a total of 571,151 admissions to and 
512,677 planned discharges from 1,154 IRFs annually for an increase of 
8,859.64 hours in burden for all IRFs [(571,151 x 0.02 hour) 
admissions-(512,677 x 0.005 hour) planned discharges]. Given 0.02 hour 
at $65.31 per hour to complete an average of 500 IRF-PAI admission 
assessments per IRF per year minus 0.005 at $65.31 per hour to complete 
an average of 449 IRF-PAI Planned Discharge assessments per IRF per 
year, we estimate the total cost would be increased by $501.41 per IRF 
annually, or $578,622.76 for all IRFs annually.
    In section VII.F.3. of this proposed rule, we are proposing to 
remove one item, Admission Class, from the IRF-PAI beginning October 1, 
2026. We believe that the removal of Admission Class will result in a 
decrease of 18 seconds (0.3 minutes or 0.005 hours) of clinical staff 
time at admission beginning with the FY 2028 IRF QRP. We believe the 
IRF-PAI item, Admission Class, is completed equally by a Registered 
Nurse (RN) and a Licensed Practical and Licensed Vocational Nurse (LPN/
LVN). Individual IRFs determine the staffing resources necessary.
    We estimate that the burden and cost for IRFs for complying with 
requirements of the FY 2028 IRF QRP would decrease under this proposal 
in section VII.F.3. Specifically, we believe that there will be a 2.47 
hour decrease in clinical staff time to report data for each IRF-PAI 
completed at admission. Using data from FY 2023, we estimate 571,151 
admission assessments from 1,154 IRFs annually. This equates to a 
decrease of 2,855.76 hours in burden at admission for all IRFs (0.005 
hour x 571,151 admissions). Given 0.005 hour at $65.31 per hour to 
complete an average of 500 IRF-PAI admission assessments per IRF per 
year, we estimate the total cost will be decreased by $161.62 
($186,509.36 total decrease/1,154 IRFs) per IRF annually, or 
$186,509.36 for all IRFs annually, based on the proposal to remove one 
item from the IRF-PAI.
    In summary, under OMB control number 0938-0842, the changes to the 
IRF QRP will result in a burden increase of $339.79 per IRF 
($392,113.40/1,154 IRFs). The total cost increase related to this 
proposed information collection is approximately $392,113.40 and is 
summarized in Table 16.

[[Page 22284]]

[GRAPHIC] [TIFF OMITTED] TP29MR24.040

    We invite public comments on the proposed information collection 
requirements.

IX. Regulatory Impact Analysis

A. Statement of Need

    This proposed rule updates the IRF prospective payment rates for FY 
2025 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 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 proposed rule would also implement section 
1886(j)(3)(C) of the Act, which requires the Secretary to apply a 
productivity adjustment to the market basket percentage increase for FY 
2012 and subsequent years.
    Furthermore, this proposed rule proposes to adopt policy changes to 
the IRF QRP under the statutory discretion afforded to the Secretary 
under section 1886(j)(7) of the Act. This rule proposes updates to the 
IRF QRP requirements beginning with the FY 2028 IRF QRP.

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), Executive Order 14094 on Modernizing Regulatory 
Review (April 6, 2023), the Regulatory Flexibility Act (RFA) (September 
19, 1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, 
section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 
1995; Pub. L. 104-4), and Executive Order 13132 on Federalism (August 
4, 1999).
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 14094 (Modernizing Regulatory Review) amends section 3(f)(1) of 
Executive Order 12866 (Regulatory Planning and Review). The amended 
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 $200 million or more in 
any 1 year (adjusted every 3 years by the Administrator of OMB's Office 
of Information and Regulatory Affairs (OIRA) for changes in gross 
domestic product), or adversely affect in a material way the economy, a 
sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local, territorial, or 
Tribal governments or communities; (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) raise legal or policy issues for which 
centralized review would meaningfully further the President's 
priorities or the principles set forth in the Executive order, as 
specifically authorized in a timely manner by the Administrator of OIRA 
in each case.
    A regulatory impact analysis (RIA) must be prepared for major rules 
with significant regulatory action/s and/or with significant effects as 
per section 3(f)(1) ($200 million or more in any 1 year). We estimate 
the total impact of the policy updates described in this proposed rule 
by comparing the estimated payments in FY 2025 with those in FY 2024. 
This analysis results

[[Page 22285]]

in an estimated $255 million increase for FY 2025 IRF PPS payments. 
Additionally, we estimate that costs associated with updating the 
reporting requirements under the IRF QRP result in an estimated 
$392,113.40 additional cost for IRFs in FY 2026 for purposes of meeting 
the FY 2028 IRF QRP. Based on our estimates, OMB's Office of 
Information and Regulatory Affairs has determined this rulemaking is 
significant per section 3(f)(1) as measured by the $200 million or more 
in any 1 year, and hence also a major rule under Subtitle E of the 
Small Business Regulatory Enforcement Fairness Act of 1996 (also known 
as the Congressional Review Act). 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 $ 9.0 
million to $ 47.0million 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 1,154 IRFs, of which approximately 50 
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 17, we estimate that the net 
revenue impact of the proposed rule on all IRFs is to increase 
estimated payments by approximately 2.5 percent. The rates and policies 
proposed in this rule would not have a significant impact (not greater 
than 5 percent) on a substantial number of small entities. The 
estimated impact on small entities is shown in Table 17. 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 603 of the RFA. For purposes of section 
1102(b) of the Act, we define a small rural hospital as a hospital that 
is located outside of a Metropolitan Statistical Area and has fewer 
than 100 beds. As shown in Table 17, we estimate that the net revenue 
impact of this proposed rule on rural IRFs is to increase estimated 
payments by approximately 4.6 percent based on the data of the 130 
rural units and 13 rural hospitals in our database of 1,154 IRFs for 
which data were available. We estimate an overall impact for rural IRFs 
in all areas between 0.8 percent and 10.4 percent. As a result, we 
anticipate that this proposed rule will not have a significant negative 
impact on a substantial number of small entities.
    Section 202 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 
104-04, enacted 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 2024, that threshold is 
approximately $183 million. This proposed 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 proposed rule will not have a substantial 
effect on State and local governments, preempt State law, or otherwise 
have a federalism implication.
2. Detailed Economic Analysis
    This rule proposes updates to the IRF PPS rates contained in the FY 
2024 IRF PPS final rule (88 FR 509564). Specifically, this proposed 
rule proposes updates to the CMG relative weights and ALOS values, the 
wage index, and the outlier threshold for high-cost cases. This 
proposed rule would apply a productivity adjustment to the FY 2025 IRF 
market basket percentage increase in accordance with section 
1886(j)(3)(C)(ii)(I) of the Act.
    We estimate that the impact of the changes and updates described in 
this proposed rule would be a net estimated increase of $255 million in 
payments to IRFs. The impact analysis in Table 17 of this proposed rule 
represents the projected effects of the proposed updates to IRF PPS 
payments for FY 2025 compared with the estimated IRF PPS payments in FY 
2024. We determine the effects by estimating payments while holding all 
other payment variables constant. We use the best data available, but 
we do not attempt to predict behavioral responses to these changes, and 
we do not make adjustments for future changes in such variables as 
number of discharges or case-mix.
    We note that certain events may combine to limit the scope or 
accuracy of our impact analysis, because such an analysis is future-
oriented and, thus, susceptible to forecasting errors because of other 
changes in the forecasted impact time period. Some examples could be 
legislative changes made by the Congress to the Medicare program that 
would impact program funding, or changes specifically related to IRFs. 
Although some of these changes may not necessarily be specific to the 
IRF PPS, the nature of the Medicare program is such that the changes 
may interact, and the complexity of the interaction of these changes 
could make it difficult to predict accurately the full scope of the 
impact upon IRFs.
    In updating the rates for FY 2025, we are proposing to implement 
the standard annual revisions described in this proposed rule (for 
example, the update to the wage index and market basket percentage 
increase used to adjust the Federal rates). We are also reducing the FY 
2025 IRF market basket percentage increase by a productivity adjustment 
in accordance with section 1886(j)(3)(C)(ii)(I) of the Act. We propose 
the estimate of the total increase in payments to IRFs in FY 2025, 
relative to FY 2024, would be approximately $255 million.
    This estimate is derived from the application of the FY 2025 IRF 
market basket percentage increase, 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 $280 
million. However, there is an estimated $25 million decrease in 
aggregate payments to IRFs due to the update to the outlier threshold 
amount. Therefore,

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we estimate that these proposed updates would result in a net increase 
in estimated payments of $255 million from FY 2024 to FY 2025.
    The effects of the proposed updates that impact IRF PPS payment 
rates are shown in Table 17. The following proposed updates that affect 
the IRF PPS payment rates are discussed separately below:
     The effects of the proposed update to the outlier 
threshold amount, from approximately 3.2 percent to 3.0 percent of 
total estimated payments for FY 2025, consistent with section 
1886(j)(4) of the Act.
     The effects of the proposed annual market basket update 
(using the 2021-based 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)(ii)(I) of the Act.
     The effects of applying the proposed budget-neutral labor-
related share and wage index adjustment, as required under section 
1886(j)(6) of the Act, accounting for the permanent cap on wage index 
decreases when applicable.
     The effects of the proposed budget-neutral changes to the 
CMG relative weights and ALOS values under the authority of section 
1886(j)(2)(C)(i) of the Act.
     The total change in proposed estimated payments based on 
the FY 2025 payment changes relative to the estimated FY 2024 payments.
3. Description of Table 17
    Table 17 shows the overall impact on the 1,154 IRFs included in the 
analysis.
    The next 12 rows of Table 17 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 1,011 IRFs located in 
urban areas included in our analysis. Among these, there are 651 IRF 
units of hospitals located in urban areas and 360 freestanding IRF 
hospitals located in urban areas. There are 143 IRFs located in rural 
areas included in our analysis. Among these, there are 130 IRF units of 
hospitals located in rural areas and 13 freestanding IRF hospitals 
located in rural areas. There are 494 for-profit IRFs. Among these, 
there are 459 IRFs in urban areas and 35 IRFs in rural areas. There are 
564 non-profit IRFs. Among these, there are 475 urban IRFs and 89 rural 
IRFs. There are 96 government-owned IRFs. Among these, there are 77 
urban IRFs and 19 rural IRFs.
    The remaining four parts of Table 17 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 proposed 
rule to the facility categories listed are shown in the columns of 
Table 17. 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 2025 analysis file.
     Column (3) shows the number of cases in each category in 
our FY 2025 analysis file.
     Column (4) shows the estimated effect of the adjustment to 
the outlier threshold amount.
     Column (5a) shows the estimated effect of the FY 2025 
update to the IRF labor-related share, the FY 2024 CBSA delineations, 
and FY 2025 wage index with the 5 percent cap, in a budget-neutral 
manner.
     Column (5b) shows the estimated effect of the update to 
the IRF labor-related share, FY2025 CBSA delineations and wage index 
with the 5 percent cap, in a budget-neutral manner.
     Column (6) shows the estimated effect of the update to the 
CMG relative weights and ALOS values, in a budget-neutral manner.
     Column (7) compares our estimates of the payments per 
discharge, incorporating all of the policies reflected in this proposed 
rule for FY 2025 to our estimates of payments per discharge in FY 2024.
    The average estimated increase for all IRFs is approximately 2.5 
percent. This estimated net increase includes the effects of the IRF 
market basket update for FY 2025 of 2.8 percent, which is based on a 
IRF market basket percentage increase of 3.2 percent, less a 0.4 
percentage point productivity adjustment, as required by section 
1886(j)(3)(C)(ii)(I) of the Act. It also includes the approximate 0.2 
percent overall decrease in estimated IRF outlier payments from the 
update to the outlier threshold amount. Since we are proposing to make 
updates to the IRF wage index, labor-related share and the CMG relative 
weights in a budget-neutral manner, we estimate there is no expected 
impact to total estimated IRF payments in aggregate. However, as 
described in more detail in each section, we estimate there will be 
expected impacts to the estimated distribution of payments among 
providers.
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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 17.
    For the FY 2025 proposed rule, we used FY 2023 IRF claims data and 
based on that analysis, we estimated that IRF outlier payments as a 
percentage of total estimated IRF payments would be 3.2 percent in FY 
2024. Thus, we are adjusting the outlier threshold amount in this 
proposed rule to maintain total estimated outlier payments equal to 3 
percent of total estimated payments in FY 2025.
    The estimated change in total IRF payments for FY 2025, therefore, 
includes an approximate 0.2 percentage point decrease in payments 
because the estimated outlier portion of total payments is estimated to 
decrease from approximately 3.2 percent to 3.0 percent.
    The impact of this update to the outlier threshold amount (as shown 
in column 4 of Table 17) is to decrease estimated overall payments to 
IRFs by 0.2 percentage point.
5. Impact of the Wage Index, Labor-Related Share, and Wage Index Cap
    In column 5a of Table 17, we present the effects of the budget-
neutral update of the wage index and labor-related share, taking into 
account the permanent 5 percent cap on wage index decreases when 
applicable, without taking into account the updated FY2025 CBSA 
delineations, which are presented separately in the next column. 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.E. of this 
proposed rule, we update the FY 2025 labor-related share from 74.1 
percent in FY 2024 to 74.2 percent in FY 2025.
6. Impact of the Updated CBSA Delineations
    In column 5b of Table 17, we present the effects of the revised 
FY2025 CBSA delineations. In aggregate, we do not estimate that these 
updates will affect overall estimated payments to IRFs. However, we do 
expect these updates to have small distributional effects. We estimate 
the largest decrease in payment from the update to the FY 2025 CBSA 
delineation and wage index and labor-related share (column 5b of Table 
17) to be a 1.0 percent decrease for IRFs in the Rural Middle Atlantic 
and the largest increase in payment to be a 1.6 percent increase for 
IRFs in the Rural South Atlantic.
7. Impact of the Update to the CMG Relative Weights and ALOS Values
    In column 6 of Table 17, we present the effects of the budget-
neutral update of the CMG relative weights and ALOS 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 between -0.1 to 0.1.
8. Effects of Requirements for the IRF QRP Beginning With the FY 2028 
IRF QRP
    In accordance with section 1886(j)(7)(A) of the Act, the Secretary 
must reduce by 2 percentage points the annual market basket increase 
factor otherwise applicable to an IRF for a fiscal year if the IRF does 
not comply with the requirements of the IRF QRP for that fiscal year. 
In section IX.A. of the proposed rule, we discussed the method for 
applying the 2 percentage points reduction to IRFs that fail to meet 
the IRF QRP requirements.
    As discussed in sections VII.C.3. and VII.C.5. of the preamble of 
this proposed rule, we are proposing to adopt four new items as 
standardized patient assessment data elements under the SDOH category 
and to modify one item currently collected as a standardized patient 
assessment data element. Although the proposed increase in burden will 
be accounted for in a revised information collection request under OMB 
control number (0938-0842), we are providing impact information. We 
believe the proposed items would be completed equally by a Registered 
Nurse (RN) (50 percent of the time) and a Licensed Practical and 
Vocational Nurses (LPN/LVN) (50 percent of the time). For the purposes 
of calculating the costs associated with the collection of information 
requirements, we obtained median hourly wages for these staff from the 
U.S. Bureau of Labor Statistics' (BLS) May 2022 National Occupational 
Employment and Wage

[[Page 22290]]

Estimates.\81\ To account for other indirect costs and fringe benefits, 
we doubled the hourly wage. These amounts are detailed in Table 18.
---------------------------------------------------------------------------

    \81\ U.S. Bureau of Labor Statistics' (BLS) May 2022 National 
Occupational Employment and Wage Estimates. https://www.bls.gov/oes/current/oes_nat.htm.
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    With 571,151 admissions from 1,154 IRFs annually, we estimated an 
annual burden increase of 8,859.64 hours [(571,151 x 0.02 hour) 
admissions-(512,677 x 0.005 hour) planned discharges] and an increase 
of $578,622.76 [8,859.64 hours x $65.31/hr)]. For each IRF, we estimate 
an annual burden increase of 7.68 hours (8,859.64 hours/1,154 IRFs) for 
an annual increase of $501.41 ($578,622.76/1,154 IRFs).
    As discussed in section VII.F.3. of this proposed rule, we are 
proposing to remove one item, Admission Class, from the IRF-PAI 
beginning October 1, 2026. We estimate the removal of this item would 
result in a decrease of 0.005 hour of clinical staff time beginning 
with admission assessments completed on October 1, 2026. Although the 
proposed decrease in burden will be accounted for in a revised 
information collection request under OMB control number 0938-0842, we 
are providing impact information. We estimate this item is completed 
equally by an RN (50 percent of the time) and by an LPN/LVN (50 percent 
of the time). For the purposes of calculating the costs associated with 
the collection of information requirements, we obtained median hourly 
wages for these staff from the U.S. Bureau of Labor Statistics' (BLS) 
May 2022 National Occupational Employment and Wage Estimates.\82\ To 
account for other indirect costs and fringe benefits, we doubled the 
hourly wage. These amounts are detailed in Table 18. With 571,151 
admissions from 1,154 IRFs annually, we estimate an annual burden 
decrease of 2,855.76 hours (571,151 admissions x 0.005 hour) and a 
decrease of $186,509.36 [2,855.76 hours x $65.31/hr)]. For each IRF we 
estimate an annual burden decrease of 2.47 hours (2,855.76 hours/1,154 
IRFs) for an annual decrease of $161.62 ($186,509.36/1,154 IRFs).
---------------------------------------------------------------------------

    \82\ U.S. Bureau of Labor Statistics' (BLS) May 2022 National 
Occupational Employment and Wage Estimates. https://www.bls.gov/oes/current/oes_nat.htm.
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    In summary, under OMB control number 0938-0842, the proposed 
changes to the IRF QRP would result in an estimated increase in 
programmatic burden for 1,154 IRFs. The total burden increase is 
approximately $392,113.40 for all IRFs and $339.79 per IRF and is 
summarized in Table 19.

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    We invite public comments on the overall impact of the IRF QRP 
proposals for FY 2028.

D. Alternatives Considered

    The following is a discussion of the alternatives considered for 
the IRF PPS updates contained in this proposed rule.
    As noted previously in the proposed rule, section 1886(j)(3)(C) of 
the Act requires the Secretary to update the IRF PPS payment rates by 
an increase factor that reflects changes over time in the prices of an 
appropriate mix of goods and services included in the covered IRF 
services and section 1886(j)(3)(C)(ii)(I) of the Act requires the 
Secretary to apply a productivity adjustment to the market basket 
percentage increase for FY 2025. Thus, in accordance with section 
1886(j)(3)(C) of the Act, we are updating the IRF prospective payments 
in this proposed rule by 2.8 percent (which equals the 3.2 percent 
proposed IRF market basket percentage increase for FY 2025 reduced by a 
proposed 0.4 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 2025. However, in light of 
recently available data and our desire to ensure that the CMG relative 
weights and average length of stay values are as reflective as possible 
of recent changes in IRF utilization and case mix, we believe that it 
is appropriate to propose updates to the CMG relative weights and 
average length of stay values at this time to ensure that IRF PPS 
payments continue to reflect as accurately as possible the current 
costs of care in IRFs.
    We considered maintaining the existing outlier threshold amount for 
FY 2025. However, analysis of updated FY 2024 data indicates that 
estimated outlier payments would be more than 3 percent of total 
estimated payments for FY 2025, unless we updated the outlier threshold 
amount. Consequently, we are proposing to adjust the outlier threshold 
amount to maintain estimated outlier payments at 3 percent of estimated 
aggregate payments in FY 2025.
    With regard to the proposal to collect four new items as 
standardized patient assessment data elements under the SDOH category 
and modify one item collected as a standardized patient assessment data 
element under the SDOH category beginning with the FY 2028 IRF QRP, we 
believe these proposals would advance the CMS National Quality Strategy 
Goals of equity and engagement. We considered the alternative of 
delaying the proposal to collect these assessment items but given the 
fact they would encourage meaningful collaboration among healthcare 
providers, caregivers, and community-based organizations to address 
SDOH prior to discharge from the IRF, we believe further delay is 
unwarranted.
    With regard to the proposal to remove one item, Admission Class, 
from the IRF-PAI, we routinely review the IRF-PAI for redundancies and 
opportunities to simplify data submission requirements. We have 
identified that this item is currently not used in the calculation of 
quality measures already adopted in the IRF QRP, payment, survey, or 
care planning, and therefore no alternatives were considered.

E. Regulatory Review Costs

    If regulations impose administrative costs on private entities, 
such as the time needed to read and interpret this proposed 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 2025 IRF PPS proposed rule will be the number of 
reviewers of last year's proposed rule. We acknowledge that this 
assumption may understate or overstate the costs of reviewing this 
proposed rule. It is possible that not all commenters reviewed the FY 
2024 IRF PPS proposed rule in detail, and it is also possible that some 
reviewers chose not to comment

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on the FY 2024 proposed rule. For these reasons, we thought that the 
number of commenters would be a fair estimate of the number of 
reviewers of this proposed rule.
    We also recognize that different types of entities are in many 
cases affected by mutually exclusive sections of this proposed rule, 
and therefore, for the purposes of our estimate we assume that each 
reviewer reads approximately 50 percent of the rule.
    Using the national mean hourly wage data from the May 2022 BLS for 
Occupational Employment Statistics (OES) for medical and health service 
managers (SOC 11-9111), we estimate that the cost of reviewing this 
rule is $123.06 per hour, including overhead and fringe benefits 
(https://www.bls.gov/oes/current/oes_nat.htm). Assuming an average 
reading speed, we estimate that it would take approximately 3 hours for 
the staff to review half of proposed rule. For each reviewer of the 
rule, the estimated cost is $369.18 (3 hours x $123.06). Therefore, we 
estimate that the total cost of reviewing this regulation is $16,613.10 
($369.18 x 45 reviewers).

F. Accounting Statement and Table

    As required by OMB Circular A-4 (available at https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/circulars/A4/a-4.pdf), in Table 20 we have prepared an accounting 
statement showing the classification of the expenditures associated 
with the provisions of this proposed rule. Table 20 provides our best 
estimate of the increase in Medicare payments under the IRF PPS as a 
result of the updates presented in this proposed rule based on the data 
for 1,154 IRFs in our database.
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G. Conclusion

    Overall, the estimated payments per discharge for IRFs in FY 2025 
are projected to increase by 2.5 percent, compared with the estimated 
payments in FY 2024, as reflected in column 7 of Table 17.
    IRF payments per discharge are estimated to increase by 2.4 percent 
in urban areas and 4.6 percent in rural areas, compared with estimated 
FY 2024 payments. Payments per discharge to rehabilitation units are 
estimated to increase 1.8 percent in urban areas and 4.6 percent in 
rural areas. Payments per discharge to freestanding rehabilitation 
hospitals are estimated to increase 2.8 percent in urban areas and 4.7 
percent in rural areas.
    Overall, IRFs are estimated to experience a net increase in 
payments as a result of the policies in this proposed rule. The largest 
payment increase is estimated to be a 10.4 percent increase for IRFs 
located in the Rural Middle Atlantic 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.
    Chiquita Brooks-LaSure, Administrator of the Centers for Medicare & 
Medicaid Services, approved this document on March 19, 2024.

Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2024-06550 Filed 3-27-24; 4:15 pm]
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