Federal Register, Volume 89 Issue 65 (Wednesday, April 3, 2024)

[Federal Register Volume 89, Number 65 (Wednesday, April 3, 2024)]
[Proposed Rules]
[Pages 23146-23224]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-06764]

[[Page 23145]]

Vol. 89

Wednesday,

No. 65

April 3, 2024

Part III

Department of Health and Human Services

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Centers for Medicare & Medicaid Services

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42 CFR Part 412

Medicare Program; FY 2025 Inpatient Psychiatric Facilities Prospective
Payment System--Rate Update; Proposed Rule

Federal Register / Vol. 89, No. 65 / Wednesday, April 3, 2024 /
Proposed Rules

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 412

[CMS-1806-P]
RIN 0938-AV32

Medicare Program; FY 2025 Inpatient Psychiatric Facilities
Prospective Payment System--Rate Update

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

ACTION: Proposed rule.

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SUMMARY: This rulemaking proposes to update the prospective payment
rates, the outlier threshold, and the wage index for Medicare inpatient
hospital services provided by Inpatient Psychiatric Facilities (IPF),
which include psychiatric hospitals and excluded psychiatric units of
an acute care hospital or critical access hospital. This rulemaking
also proposes to revise the patient-level adjustment factors, the
Emergency Department adjustment, and the payment amount for
electroconvulsive therapy. These proposed changes would be effective
for IPF discharges occurring during the fiscal year beginning October
1, 2024 through September 30, 2025 (FY 2025). In addition, this
proposed rule seeks to adopt a new quality measure and modify reporting
requirements under the IPF Quality Reporting Program beginning with the
FY 2027 payment determination. Furthermore, this proposed rule solicits
comments through Requests for Information (RFIs) regarding potential
future revisions to the IPF PPS facility-level adjustments and
regarding the development of a standardized IPF Patient Assessment
Instrument.

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-1806-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 http://www.regulations.gov. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-1806-P, P.O. Box 8010,
Baltimore, MD 21244-8010.
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-1806-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:
Nick Brock (410) 786-5148, for information regarding the inpatient
psychiatric facilities prospective payment system (IPF PPS).
Kaleigh Emerson (470) 890-4141, for information regarding the
inpatient psychiatric facilities quality reporting program (IPFQR).

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: http://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/.

Availability of Certain Tables Exclusively Through the Internet on the
CMS Website

Addendum A to this proposed rule summarizes the proposed FY 2025
Inpatient Psychiatric Facilities Prospective Payment System (IPF PPS)
payment rates, outlier threshold, cost of living adjustment factors for
Alaska and Hawaii, national and upper limit cost-to-charge ratios, and
adjustment factors. In addition, Addendum B to this proposed rule shows
the complete listing of ICD-10 Clinical Modification and Procedure
Coding System codes, the FY 2025 IPF PPS comorbidity adjustment, and
electroconvulsive therapy procedure codes. The A and B Addenda are
available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientPsychFacilPPS/tools.html.
Tables setting forth the FY 2025 Wage Index for Urban Areas Based
on Core-Based Statistical Area Labor Market Areas, the FY 2025 Wage
Index Based on CBSA Labor Market Areas for Rural Areas, and a county-
level crosswalk of the FY 2024 CBSA Labor Market Areas to the FY 2025
CBSA Labor Market Areas are available exclusively through the internet,
on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/IPFPPS/WageIndex.html.

I. Executive Summary

A. Purpose

This proposed rule would update the prospective payment rates, the
outlier threshold, and the wage index for Medicare inpatient hospital
services provided by Inpatient Psychiatric Facilities (IPFs) for
discharges occurring during fiscal year (FY) 2025, (beginning October
1, 2024 through September 30, 2025). We are proposing to adopt the
Core-Based Statistical Area (CBSA) Labor Market Areas for the IPF PPS
wage index as defined in the Office of Management and Budget (OMB)
Bulletin 23-01. In addition, this rule includes a proposal to refine
the patient-level adjustment factors and increase the payment amount
for electroconvulsive therapy (ECT) treatments. We are not proposing
changes to the facility-level adjustment factors for FY 2025; however,
this proposed rule presents the results of our latest analysis and
includes a request for information relating to those results. This rule
also includes a clarification of the eligibility criteria for an IPF to
be approved to file all-inclusive cost reports. In addition, this
proposed rule includes a request for information regarding the creation
of a patient assessment instrument (PAI) as mandated by Section 4125 of
the Consolidated Appropriations Act (CAA), 2023 (hereafter referred to
as CAA, 2023) (Pub. L. 117-328). Lastly, this proposed rule discusses
quality measures and reporting requirements under the Inpatient
Psychiatric

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Facilities Quality Reporting (IPFQR) Program.

B. Summary of the Major Provisions

1. Inpatient Psychiatric Facilities Prospective Payment System (IPF
PPS)
For the IPF PPS, we are:
Proposing to revise the patient-level IPF PPS adjustment
factors and increase the ECT per treatment payment amount.
Proposing to update the IPF PPS wage index to use the
CBSAs defined within OMB Bulletin 23-01.
Clarifying the eligibility criteria for an IPF to be
approved to file all-inclusive cost reports. Only a government-owned or
tribally owned facility will be able to satisfy these criteria and will
be eligible to file its cost report using an all-inclusive rate or no
charge structure.
Soliciting comments to inform elements to be included in
the IPF patient assessment instrument, which the CAA, 2023 requires the
Centers for Medicare & Medicaid Services (CMS) to develop for FY 2028.
Soliciting comments to inform future refinements to the
IPF PPS facility-level adjustment factors.
Making technical rate setting updates: The IPF PPS payment
rates are adjusted annually for inflation, as well as statutory and
other policy factors. This rule proposes to update:
++ The IPF PPS Federal per diem base rate from $895.63 to $874.93.
++ The IPF PPS Federal per diem base rate for providers who failed
to report quality data to $857.89.
++ The ECT payment per treatment from $385.58 to $660.30.
++ The ECT payment per treatment for providers who failed to report
quality data to $647.45.
++ The labor-related share from 78.7 percent to 78.8 percent.
++ The wage index budget neutrality factor to 0.9998. This proposed
rule would apply a refinement standardization factor of 0.9514.
++ The fixed dollar loss threshold amount from $33,470 to $35,590,
to maintain estimated outlier payments at 2 percent of total estimated
aggregate IPF PPS payments.
2. Inpatient Psychiatric Facilities Quality Reporting (IPFQR) Program
For the IPFQR Program, we are proposing to:
Adopt the 30-Day Risk-Standardized All-Cause Emergency
Department (ED) Visit Following an IPF Discharge measure beginning with
the FY 2027 payment determination; and
Modify reporting requirements to require IPFs to submit
patient-level data on a quarterly basis.
We also refer readers to our RFI in which we solicit comments to
inform elements to be included in the IPF patient assessment
instrument, which the CAA, 2023 requires the Centers for Medicare &
Medicaid Services (CMS) to develop and implement for Rate Year (RY)
2028.

C. Summary of Impacts
[GRAPHIC] [TIFF OMITTED] TP03AP24.000

II. Background

A. Overview of the Legislative Requirements of the IPF PPS

Section 124 of the Medicare, Medicaid, and State Children's Health
Insurance Program Balanced Budget Refinement Act of 1999 (BBRA) (Pub.
L. 106-113) required the establishment and implementation of an IPF
PPS. Specifically, section 124 of the BBRA mandated that the Secretary
of the Department of Health and Human Services (the Secretary) develop
a per diem payment perspective system (PPS) for inpatient hospital
services furnished in psychiatric hospitals and excluded psychiatric
units including an adequate patient classification system that reflects
the differences in patient resource use and costs among psychiatric
hospitals and excluded psychiatric units. ``Excluded psychiatric unit''
means a psychiatric unit of an acute care hospital or of a Critical
Access Hospital (CAH), which is excluded from payment under the
Inpatient Prospective Payment System (IPPS) or CAH payment system,
respectively. These excluded psychiatric units will be paid under the
IPF PPS.
Section 405(g)(2) of the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003 (MMA) (Pub. L. 108-173) extended the IPF
PPS to psychiatric distinct part units of CAHs.
Sections 3401(f) and 10322 of the Patient Protection and Affordable
Care Act (Pub. L. 111-148) as amended by section 10319(e) of that Act
and by section 1105(d) of the Health Care and Education Reconciliation
Act of 2010 (Pub. L. 111-152) (hereafter referred to jointly as ``the
Affordable Care Act'') added subsection (s) to section 1886 of the Act.
Section 1886(s)(1) of the Act titled ``Reference to Establishment
and Implementation of System,'' refers to section 124 of the BBRA,
which relates to the establishment of the IPF PPS.
Section 1886(s)(2)(A)(i) of the Act requires the application of the
productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of
the Act to the IPF PPS for the rate year (RY) beginning in 2012 (that
is, a RY that coincides with a FY) and each subsequent RY.
Section 1886(s)(2)(A)(ii) of the Act required the application of an
``other adjustment'' that reduced any update to an IPF PPS base rate by
a percentage point amount specified in section 1886(s)(3) of the Act
for the RY beginning in 2010 through the RY beginning in 2019. As noted
in the FY 2020 Inpatient Psychiatric Facilities Prospective Payment
System and Quality Reporting Updates for fiscal year Beginning October
1, 2019 final rule, for the RY beginning in 2019,

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section 1886(s)(3)(E) of the Act required that the other adjustment
reduction be equal to 0.75 percentage point; that was the final year
the statute required the application of this adjustment. Because FY
2021 was a RY beginning in 2020, FY 2021 was the first year section
1886(s)(2)(A)(ii) of the Act did not apply since its enactment.
Sections 1886(s)(4)(A) through (D) of the Act require that for RY
2014 and each subsequent RY, IPFs that fail to report required quality
data with respect to such a RY will have their annual update to a
standard Federal rate for discharges reduced by 2.0 percentage points.
This may result in an annual update being less than 0.0 for a RY, and
may result in payment rates for the upcoming RY being less than such
payment rates for the preceding RY. Any reduction for failure to report
required quality data will apply only to the RY involved, and the
Secretary will not consider such reduction in computing the payment
amount for a subsequent RY. Additional information about the specifics
of the current IPFQR Program is available in the FY 2020 Inpatient
Psychiatric Facilities Prospective Payment System and Quality Reporting
Updates for fiscal year Beginning October 1, 2019 (FY 2020) final rule
(84 FR 38459 through 38468).
Section 4125 of the Consolidated Appropriations Act, 2023 (CAA,
2023) (Pub. L. 117-328), which amended section 1886(s) of the Act,
requires CMS to revise the Medicare prospective payment system for
psychiatric hospitals and psychiatric units. Specifically, section
4125(a) of the CAA, 2023 added section 1886(s)(5)(A) of the Act to
require the Secretary to collect data and information, as the Secretary
determines appropriate, to revise payments under the IPF PPS. CMS
discussed this data collection last year in the FY 2024 IPF PPS final
rule, as CMS was required to begin collecting this data and information
not later than October 1, 2024. As discussed in that rule, the Agency
has already been collecting data and information consistent with the
types set forth in the CAA, 2023 as part of our extensive and years-
long analyses and consideration of potential payment system
refinements. We refer readers to the FY 2024 Inpatient Psychiatric
Facilities Prospective Payment System--Rate Update (FY 2024 IPF PPS)
final rule (88 FR 51095 through 51098) where we discussed existing data
collection and requested information to inform future IPF PPS
revisions.
In addition, section 1886(s)(5)(D) of the Act, as added by section
4125(a) of the CAA, 2023 requires that the Secretary implement
revisions to the methodology for determining the payment rates under
the IPF PPS for psychiatric hospitals and psychiatric units, effective
for RY 2025 (FY 2025). The revisions may be based on a review of the
data and information collected under section 1886(s)(5)(A) of the Act.
As discussed in section III.C of this FY 2025 IPF PPS proposed rule, we
are proposing revisions to the IPF PPS patient-level adjustment factors
based on a review of cost and claims data.
Section 4125(b) of the CAA, 2023 amended section 1886(s)(4) of the
Act by inserting a new subparagraph (E), which requires IPFs
participating in the IPFQR Program to collect and submit to the
Secretary standardized patient assessment data, using a standardized
patient assessment instrument, for RY 2028 (FY 2028) and each
subsequent rate year. IPFs must submit such data with respect to at
least the admission and discharge of an individual, or more frequently
as the Secretary determines appropriate. For IPFs to meet this new data
collection and reporting requirement for RY 2028 and each subsequent
rate year, the Secretary must implement a standardized patient
assessment instrument that collects data with respect to the following
categories: functional status; cognitive function and mental status;
special services, treatments, and interventions; medical conditions and
comorbidities; impairments; and other categories as determined
appropriate by the Secretary. This patient assessment instrument must
enable comparison of such patient assessment data that IPFs submit
across all such IPFs to which such data are applicable.
Section 4125(b) of the CAA, 2023 further amended section 1886(s) of
the Act by adding a new subparagraph (6) that requires the Secretary to
implement revisions to the methodology for determining the payment
rates for psychiatric hospitals and psychiatric units (that is, payment
rates under the IPF PPS), effective for RY 2031 (FY 2031), as the
Secretary determines to be appropriate, to take into account the
patient assessment data described in paragraph (4)(E)(ii).
To implement and periodically update the IPF PPS, we have published
various proposed and final rules and notices in the Federal Register.
For more information regarding these documents, we refer readers to the
CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientPsychFacilPPS/index.html?redirect=/
InpatientPsychFacilPPS/.

B. Overview of the IPF PPS

On November 15, 2004, we published the RY 2005 IPF PPS final rule
in the Federal Register (69 FR 66922). The RY 2005 IPF PPS final rule
established the IPF PPS, as required by section 124 of the BBRA and
codified at 42 CFR part 412, subpart N. The RY 2005 IPF PPS final rule
set forth the Federal per diem base rate for the implementation year
(the 18-month period from January 1, 2005 through June 30, 2006) and
provided payment for the inpatient operating and capital costs to IPFs
for covered psychiatric services they furnish (that is, routine,
ancillary, and capital costs, but not costs of approved educational
activities, bad debts, and other services or items that are outside the
scope of the IPF PPS). Covered psychiatric services include services
for which benefits are provided under the fee-for-service Part A
(Hospital Insurance Program) of the Medicare program.
The IPF PPS established the Federal per diem base rate for each
patient day in an IPF derived from the national average daily routine
operating, ancillary, and capital costs in IPFs in FY 2002. The average
per diem cost was updated to the midpoint of the first year under the
IPF PPS, standardized to account for the overall positive effects of
the IPF PPS payment adjustments, and adjusted for budget neutrality.
The Federal per diem payment under the IPF PPS is comprised of the
Federal per diem base rate described previously and certain patient-
and facility-level payment adjustments for characteristics that were
found in the regression analysis to be associated with statistically
significant per diem cost differences, with statistical significance
defined as p less than 0.05. A complete discussion of the regression
analysis that established the IPF PPS adjustment factors can be found
in the RY 2005 IPF PPS final rule (69 FR 66933 through 66936).
The patient-level adjustments include age, Diagnosis-Related Group
(DRG) assignment, and comorbidities, as well as adjustments to reflect
higher per diem costs at the beginning of a patient's IPF stay and
lower costs for later days of the stay. Facility-level adjustments
include adjustments for the IPF's wage index, rural location, teaching
status, a cost-of-living adjustment for IPFs located in Alaska and
Hawaii, and an adjustment for the presence of a qualifying emergency
department (ED).
The IPF PPS provides additional payment policies for outlier cases,
interrupted stays, and a per treatment

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payment for patients who undergo ECT. During the IPF PPS mandatory 3-
year transition period, stop-loss payments were also provided; however,
since the transition ended as of January 1, 2008, these payments are no
longer available.

C. Annual Requirements for Updating the IPF PPS

Section 124 of the BBRA did not specify an annual rate update
strategy for the IPF PPS and was broadly written to give the Secretary
discretion in establishing an update methodology. Therefore, in the RY
2005 IPF PPS final rule, we implemented the IPF PPS using the following
update strategy:
Calculate the final Federal per diem base rate to be
budget neutral for the 18- month period of January 1, 2005 through June
30, 2006.
Use a July 1 through June 30 annual update cycle.
Allow the IPF PPS first update to be effective for
discharges on or after July 1, 2006 through June 30, 2007.
The RY 2005 final rule (69 FR 66922) implemented the IPF PPS. In
developing the IPF PPS, and to ensure that the IPF PPS can account
adequately for each IPF's case-mix, we performed an extensive
regression analysis of the relationship between the per diem costs and
certain patient and facility characteristics to determine those
characteristics associated with statistically significant cost
differences on a per diem basis. That regression analysis is described
in detail in our RY 2004 IPF proposed rule (68 FR 66923; 66928 through
66933) and our RY 2005 IPF final rule (69 FR 66933 through 66960). For
characteristics with statistically significant cost differences, we
used the regression coefficients of those variables to determine the
size of the corresponding payment adjustments.
In the RY 2005 IPF final rule, we explained the reasons for
delaying an update to the adjustment factors, derived from the
regression analysis, including waiting until we have IPF PPS data that
yields as much information as possible regarding the patient-level
characteristics of the population that each IPF serves. We indicated
that we did not intend to update the regression analysis and the
patient-level and facility-level adjustments until we complete that
analysis. Until that analysis is complete, we stated our intention to
publish a notice in the Federal Register each spring to update the IPF
PPS (69 FR 66966).
On May 6, 2011, we published a final rule in the Federal Register
titled, ``Inpatient Psychiatric Facilities Prospective Payment System--
Update for Rate Year Beginning July 1, 2011 (RY 2012)'' (76 FR 26432),
which changed the payment rate update period to a RY that coincides
with a FY update. Therefore, final rules are now published in the
Federal Register in the summer to be effective on October 1st. When
proposing changes in IPF payment policy, a proposed rule is issued in
the spring, and the final rule in the summer to be effective on October
1st. For a detailed list of updates to the IPF PPS, we refer readers to
our regulations at 42 CFR 412.428. Beginning October 1, 2012, we
finalized that we would refer to the 12-month period from October 1
through September 30 as a ``fiscal year'' (FY) rather than a RY (76 FR
26435). Therefore, in this final rule we refer to rules that took
effect after RY 2012 by the FY, rather than the RY, in which they took
effect.
The most recent IPF PPS annual update was published in a final rule
on August 2, 2023 in the Federal Register titled, ``Medicare Program;
FY 2024 Inpatient Psychiatric Facilities Prospective Payment System--
Rate Update'' (88 FR 51054), which updated the IPF PPS payment rates
for FY 2024. That final rule updated the IPF PPS Federal per diem base
rates that were published in the FY 2023 IPF PPS Rate Update final rule
(87 FR 46846) in accordance with our established policies.

III. Provisions of the Proposed Regulations

A. Proposed FY 2025 Market Basket Update and Productivity Adjustment
for the IPF PPS

1. Background
Originally, the input price index used to develop the IPF PPS was
the Excluded Hospital with Capital market basket. This market basket
was based on 1997 Medicare cost reports for Medicare-participating
inpatient rehabilitation facilities (IRFs), IPFs, long-term care
hospitals (LTCHs), cancer hospitals, and children's hospitals. Although
``market basket'' technically describes the mix of goods and services
used in providing health care at a given point in time, this term is
also commonly used to denote the input price index (that is, cost
category weights and price proxies) derived from that market basket.
Accordingly, the term ``market basket,'' as used in this document,
refers to an input price index.
Since the IPF PPS inception, the market basket used to update IPF
PPS payments has been rebased and revised to reflect more recent data
on IPF cost structures. We last rebased and revised the IPF market
basket in the FY 2024 IPF PPS rule, where we adopted a 2021-based IPF
market basket, using Medicare cost report data for both Medicare
participating freestanding psychiatric hospitals and psychiatric units.
We refer readers to the FY 2024 IPF PPS final rule for a detailed
discussion of the 2021-based IPF PPS market basket and its development
(88 FR 51057 through 51081). References to the historical market
baskets used to update IPF PPS payments are listed in the FY 2016 IPF
PPS final rule (80 FR 46656).
2. Proposed FY 2025 IPF Market Basket Update
For FY 2025 (beginning October 1, 2024 and ending September 30,
2025), we are proposing to update the IPF PPS payments by a market
basket increase factor with a productivity adjustment as required by
section 1886(s)(2)(A)(i) of the Act. Consistent with historical
practice, we are proposing to estimate the market basket update for the
IPF PPS based on the most recent forecast available at the time of
rulemaking from IHS Global Inc. (IGI). IGI is a nationally recognized
economic and financial forecasting firm with which CMS contracts to
forecast the components of the market baskets and productivity
adjustment. For the proposed rule, based on IGI's fourth quarter 2023
forecast with historical data through the third quarter of 2023, the
2021-based IPF market basket increase factor for FY 2025 is 3.1
percent.
Section 1886(s)(2)(A)(i) 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 (MFP) (as projected by the Secretary for the 10-year
period ending with the applicable FY, year, cost reporting period, or
other annual period) (the ``productivity adjustment''). The United
States Department of Labor's Bureau of Labor Statistics (BLS) publishes
the official measures of productivity for the United States economy. We
note that previously the productivity measure referenced in section
1886(b)(3)(B)(xi)(II) of the Act was published by BLS as private
nonfarm business MFP. Beginning with the November 18, 2021 release of
productivity data, BLS replaced the

[[Page 23150]]

term ``multifactor productivity'' 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 the BLS name change, the
productivity measure referenced in section 1886(b)(3)(B)(xi)(II) of the
Act is now published by BLS as private nonfarm business TFP. However,
as mentioned previously, the data and methods are unchanged. We refer
readers to 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 IPF final rule
(86 FR 42611), 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.
Section 1886(s)(2)(A)(i) of the Act requires the application of the
productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of
the Act to the IPF PPS for the RY beginning in 2012 (a RY that
coincides with a FY) and each subsequent RY. For this proposed rule,
based on IGI's fourth quarter 2023 forecast, the proposed productivity
adjustment for FY 2025 (the 10-year moving average of TFP for the
period ending FY 2025) is projected to be 0.4 percent. Accordingly, we
are proposing to reduce the 3.1 percent IPF market basket increase by
this 0.4 percentage point productivity adjustment, as mandated by the
Act. This results in a proposed FY 2025 IPF PPS payment rate update of
2.7 percent (3.1-0.4 = 2.7). We are also proposing that if more recent
data become available, we would use such data, if appropriate, to
determine the FY 2025 IPF market basket increase and productivity
adjustment for the final rule.
We solicit comment on the proposed IPF market basket increase and
productivity adjustment for FY 2025.
3. Proposed FY 2025 IPF Labor-Related Share
Due to variations in geographic wage levels and other labor-related
costs, we believe that payment rates under the IPF PPS should continue
to be adjusted by a geographic wage index, which would apply to the
labor-related portion of the Federal per diem base rate (hereafter
referred to as the labor-related share). 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 IPF market basket, we are proposing to
continue to include in the labor-related share the sum of the 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 IPF market basket. For more details
regarding the methodology for determining specific cost categories for
inclusion in the labor-related share based on the 2021-based IPF market
basket, we refer readers to the FY 2024 IPF PPS final rule (88 FR 51078
through 51081).
The relative importance reflects the different rates of price
change for these cost categories between the base year (FY 2021) and FY
2025. Based on IGI's fourth quarter 2023 forecast of the 2021-based IPF
market basket, the sum of the FY 2025 relative importance moving
average 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 is 75.7 percent. We are proposing, consistent with
prior rulemaking, 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 6.8 percent of the 2021-based
IPF market basket for FY 2025, we are proposing to take 46 percent of
6.8 percent to determine a labor-related share of Capital-Related costs
for FY 2025 of 3.1 percent. Therefore, we are proposing a total labor-
related share for FY 2025 of 78.8 percent (the sum of 75.7 percent for
the labor-related share of operating costs and 3.1 percent for the
labor-related share of Capital-Related costs). We are also proposing
that if more recent data become available, we would use such data, if
appropriate, to determine the FY 2025 labor-related share for the final
rule. For more information on the labor-related share and its
calculation, we refer readers to the FY 2024 IPF PPS final rule (88 FR
51078 through 51081).
Table 1 shows the proposed FY 2025 labor-related share and the
final FY 2024 labor-related share using the 2021- based IPF market
basket relative importance.

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[GRAPHIC] [TIFF OMITTED] TP03AP24.001

We solicit comment on the proposed labor-related share for FY 2025.

B. Proposed Revisions to the IPF PPS Rates for FY Beginning October 1,
2024

The IPF PPS is based on a standardized Federal per diem base rate
calculated from the IPF average per diem costs and adjusted for budget
neutrality in the implementation year. The Federal per diem base rate
is used as the standard payment per day under the IPF PPS and is
adjusted by the patient-level and facility-level adjustments that are
applicable to the IPF stay. A detailed explanation of how we calculated
the average per diem cost appears in the RY 2005 IPF PPS final rule (69
FR 66926).
1. Determining the Standardized Budget Neutral Federal per Diem Base
Rate
Section 124(a)(1) of the BBRA required that we implement the IPF
PPS in a budget neutral manner. In other words, the amount of total
payments under the IPF PPS, including any payment adjustments, must be
projected to be equal to the amount of total payments that would have
been made if the IPF PPS were not implemented. Therefore, we calculated
the budget neutrality factor by setting the total estimated IPF PPS
payments to be equal to the total estimated payments that would have
been made under the Tax Equity and Fiscal Responsibility Act of 1982
(TEFRA) (Pub. L. 97-248) methodology had the IPF PPS not been
implemented. A step-by-step description of the methodology used to
estimate payments under the TEFRA payment system appears in the RY 2005
IPF PPS final rule (69 FR 66926).
Under the IPF PPS methodology, we calculated the final Federal per
diem base rate to be budget neutral during the IPF PPS implementation
period (that is, the 18-month period from January 1, 2005 through June
30, 2006) using a July 1 update cycle. We updated the average cost per
day to the midpoint of the IPF PPS implementation period (October 1,
2005), and this amount was used in the payment model to establish the
budget neutrality adjustment.
Next, we standardized the IPF PPS Federal per diem base rate to
account for the overall positive effects of the IPF PPS payment
adjustment factors by dividing total estimated payments under the TEFRA
payment system by estimated payments under the IPF PPS. The information
concerning this standardization can be found in the RY 2005 IPF PPS
final rule (69 FR 66932) and the RY 2006 IPF PPS final rule (71 FR
27045). We then reduced the standardized Federal per diem base rate to
account for the outlier policy, the stop loss provision, and
anticipated behavioral changes. A complete discussion of how we
calculated each component of the budget neutrality adjustment appears
in the RY 2005 IPF PPS final rule (69 FR 66932 through 66933) and in
the RY 2007 IPF PPS final rule (71 FR 27044 through 27046). The final
standardized budget neutral Federal per diem base rate established for
cost reporting periods beginning on or after January 1, 2005 was
calculated to be $575.95.
The Federal per diem base rate has been updated in accordance with
applicable statutory requirements and 42 CFR 412.428 through
publication of annual notices or proposed and final rules. A detailed
discussion on the standardized budget neutral Federal per diem base
rate and the ECT payment per treatment appears in the FY 2014 IPF PPS
update notice (78 FR 46738 through 46740). These documents are
available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientPsychFacilPPS/index.html.
As discussed in section III.B.2 of this proposed rule, we are
proposing to revise the patient-level adjustment factors and increase
the ECT payment amount for FY 2025. Section 1866(s)(5)(D)(iii) of the
Act, as added by section 4125(a) of the CAA, 2023, requires that
revisions to the IPF PPS adjustment factors must be made budget-
neutrally. Therefore, as discussed in section III.F of this proposed
rule, we are proposing to apply a standardization factor to the FY 2025
base rate that takes these refinements into account to keep total IPF
PPS payments budget neutral.
2. Proposed Increase in the Electroconvulsive Therapy (ECT) Payment per
Treatment
a. Background
In the RY 2005 IPF PPS final rule (69 FR 66951), we analyzed the
costs of IPF stays that included ECT treatment using the FY 2002 MedPAR
data. based on comments we received on the RY 2005

[[Page 23152]]

IPF PPS proposed rule. Consistent with the comments we received about
ECT, our analysis and review indicated that cases with ECT treatment
are substantially more costly than cases without ECT treatment. Based
on this analysis, in that final rule we finalized an additional payment
for each ECT treatment furnished during the IPF stay. This ECT payment
per treatment is made in addition to the per diem and outlier payments
under the IPF PPS. To receive the payment per ECT treatment, IPFs must
indicate on their claims the revenue code and procedure code for ECT
(Rev Code 901; procedure code 90870) and the number of units of ECT,
that is, the number of ECT treatments the patient received during the
IPF stay.
To establish the ECT per treatment payment, we used the pre-scaled
and pre-adjusted median cost for procedure code 90870 developed for the
Hospital Outpatient Prospective Payment System (OPPS), based on
hospital claims data. We explained in the RY 2005 IPF PPS final rule
that we used OPPS data because after a careful review and analysis of
IPF claims, we were unable to separate out the cost of a single ECT
treatment (69 FR 66922). We used the unadjusted hospital claims data
under the OPPS because we did not want the ECT payment under the IPF
PPS to be affected by factors that are relevant to OPPS, but not
specifically applicable to IPFs. The median cost was then standardized
and adjusted for budget neutrality. We also adjusted the ECT rate for
wage differences in the same manner that we adjust the per diem rate.
Since the ECT payment rate was established in the RY 2005 IPF PPS
rule, it has been updated annually by application of each year's market
basket, productivity adjustment, and wage index budget neutrality
factor to the previous year's ECT payment rate (referred to as our
``standard methodology'' in this section). While the ECT payment rate
has been updated each year by these factors, we have not recalculated
the ECT payment per treatment based on more recent cost data since the
establishment of the IPF PPS.
b. Proposed Increase to the Electroconvulsive Therapy Payment per
Treatment
For this FY 2025 IPF PPS proposed rule, we analyzed data in both
the IPF PPS and the OPPS. In the IPF PPS setting, our analysis of
recent IPF PPS data indicates that IPF costs have increased for stays
that include ECT treatments. As discussed in the next paragraph, our
analysis of these costs leads us to consider whether the current
payment per treatment for ECT is aligned with the additional costs
associated with stays that include ECT treatments. We began by
analyzing IPF stays with ECT treatment using the CY 2022 Medicare
Provider and Analysis Review (MedPAR) data. IPF stays with ECT
treatment comprised about 1.7 percent of all stays, which is a decrease
from the FY 2002 MedPAR data discussed in the RY 2005 IPF PPS final
rule, where stays with ECT treatment were 6.0 percent of all IPF stays.
A total of 288 IPF facilities had stays with ECT treatment in 2022,
with an average 6.7 units of ECT per stay. We compared the total cost
for stays with and without ECT treatment, and found that IPF stays with
ECT treatment were approximately three times more costly than IPF stays
without ECT treatment ($44,687.50 per stay vs. $15,432.30 per stay).
Most of the variance in cost was due to differences in the IPF length
of stay (LOS) (28.00 days for stays with ECT treatment vs. 13.43 days
for stays without ECT treatment). We note that the IPF PPS makes
additional per diem payments for longer lengths of stay, which makes
the total payment larger for a longer stay. However, we also observed
that there are differences in the per-day cost for stays with and
without ECT. We calculated the average cost per day for stays with and
without ECT treatment and found that stays with ECT treatment have an
average cost per day of $1,595.76, while stays without ECT treatment
have an average cost per day of $1,149.51.
Furthermore, as we discuss in section III.C.3.d.(2) of this
proposed rule, our latest regression analysis includes a control
variable to account for the presence of ECT during an IPF stay. That
control variable indicates that, holding all other patient-level and
facility-level factors constant, there is a statistically significant
increase in cost per day for IPF stays that include ECT, further
demonstrating that resource use is higher for IPF stays with ECT than
those without ECT. As we previously noted in the RY 2005 IPF PPS final
rule (69 FR 66922), IPF claims and cost data are not sufficiently
granular to identify the per-treatment cost of ECT. Therefore, we
examined the difference in ancillary costs for IPF stays with and
without ECT treatment. In the CY 2022 MedPAR data, the ancillary costs
per IPF stay with ECT treatment were $7,116.85 higher than ancillary
costs per IPF stay without ECT treatment. The ancillary costs were
calculated as follows: for each ancillary department (for example,
drugs or labs), the charges were multiplied by the department-level
CCR, and those department-level costs were summed across departments
for each stay. The average ancillary costs per stay were calculated
accordingly for stays with and without ECT treatment, revealing that
average ancillary costs per day are three times higher for stays with
ECT treatment: $99.36 for stays without ECT treatment versus $301.77
for stays with ECT treatment. Accounting for differences in length of
stay between stays with and without ECT, the average additional
ancillary cost per ECT unit was approximately $849.72.
Application of our standard methodology for updating the ECT
payment would result in an FY 2025 payment of $377.54 per ECT treatment
(based on the FY 2024 ECT payment amount of $385.58, increased by the
market basket update of 2.7 percent and reduced by the FY 2025 wage
index budget neutrality factor of 0.9998 and a refinement
standardization factor of 0.9536, which is the standardization factor
that would account for all other proposed refinements without
increasing the ECT per treatment). As we noted above, this ECT payment
would be added to the per diem and any applicable outlier payments for
the entire stay. CMS considered this rate in proposing to adjust the
ECT per treatment rate. However, the analysis of ancillary costs for
IPF stays with ECT treatment suggested that a further increase to the
current ECT payment amount per treatment could better align IPF PPS
payments with the increased costs of furnishing ECT. The ancillary cost
data show that costs for furnishing ECT have risen by a factor greater
than the standard methodology for updating the rate would adjust for.
It continues to be the case that, as we discussed in the RY 2005
IPF PPS final rule, current IPF cost and claims data are not
sufficiently granular to identify the per-treatment cost of ECT. We
believe that using the costs in the OPPS setting are the most accurate
for purposes of updating the ECT per treatment rate because we believe
this treatment requires comparable resources when performed in
outpatient and inpatient settings. Thus, we analyzed the most recent
OPPS cost information to consider changes to the ECT payment per
treatment for FY 2025.
The original methodology for determining the ECT payment per
treatment was based on the median cost for procedure code 90870
developed for the OPPS, as discussed in the RY 2005 IPF PPS final rule
(69 FR 66951). Since that time, the OPPS has adopted certain changes to
its methodology for calculating costs. In the CY 2013 OPPS/ASC final
rule with comment period (77

[[Page 23153]]

FR 68259 through 68270), CMS finalized a methodology for developing the
relative payment weights for Ambulatory Payment Classifications using
geometric mean costs instead of median costs. We explained that
geometric means better capture the range of costs associated with
providing services, including those cases where very efficient
hospitals have provided services at much lower costs. While medians and
geometric means both capture the impact of uniform changes, that is,
those changes that influence all providers, only geometric means
capture cost changes that are introduced slowly into the system on a
case-by-case or hospital-by-hospital basis, allowing us to detect
changes in the cost of services earlier.
We believe the rationale for using geometric mean cost in the OPPS
setting as the underpinning methodology for establishing payments
applies equally to the costs of providing ECT on a per treatment basis
under the IPF PPS. Therefore, in considering changes for the IPF PPS
ECT payment per treatment for FY 2025, we compared the costs observed
in the IPF setting to the geometric mean cost for an ECT treatment
posted as part of the CY 2024 OPPS/ASC update, which is based on CY
2022 outpatient hospital claims. Although we are proposing to increase
the ECT payment with reference to the CY 2024 OPPS ECT geometric mean
cost for FY 2025, we are not proposing to adopt the OPPS rate (which is
distinct from the geometric mean cost) for the ECT payment per
treatment for FY 2025 because the final OPPS rates include policy
decisions and payment rate updates that are specific to the OPPS. We
intend to continue to monitor the costs associated with ECT treatment
and may propose adjustments in the future as needed.
The pre-scaled and pre-adjusted CY 2024 OPPS geometric mean cost
for ECT is $675.93. Comparatively, the FY 2024 IPF ECT payment rate was
$385.58 (88 FR 51054). As discussed in the prior paragraphs, our
analysis of updated ancillary cost data indicates that the IPF PPS ECT
payment rate per treatment, when updated according to the standard
methodology alone, has not kept pace with the cost of furnishing the
treatment in the IPF setting. As we stated previously, we believe this
treatment requires comparable resources when performed in outpatient
and inpatient settings. Therefore, we are proposing to use the pre-
scaled and pre-adjusted CY 2024 OPPS geometric mean cost of $675.93 as
the basis for the IPF PPS ECT payment per treatment in FY 2025, as
discussed below. We are proposing to update $675.93 by the FY 2025 IPF
PPS payment rate update of 2.7 percent (3.1 percent IPF market basket
increase, reduced by the 0.4 percentage point productivity adjustment),
and the wage index budget neutrality factor of 0.9998 for FY 2025, in
alignment with our current standard methodology.
To account for budget neutrality, as discussed in section III.F of
this proposed rule, we are proposing to apply a refinement
standardization factor to the FY 2025 IPF PPS Federal per diem base
rate and to the ECT payment amount per treatment to account for this
proposed change to the ECT payment amount per treatment and all
proposed changes to the patient-level adjustment factors and to the ED
adjustment factor for FY 2025. We note that this proposed increase to
the ECT per treatment amount would be associated with a minor decrease
to the IPF Federal per diem base rate as a result of the refinement
standardization factor (0.9514 instead of 0.9536). We estimate that
this change would increase payments for IPFs that provide ECT, and
would decrease payments for IPFs that do not provide ECT. However, the
decrease in payments associated with this change would be no more than
approximately 0.2 percent, which would be offset by various other
proposed changes such as the proposed wage index changes, proposed
revisions to the IPF PPS patient-level adjustments, and the proposed
market basket increase for FY 2025.
We note that we have monitored the provision of ECT through
analysis of claims data since the beginning of the IPF PPS, and have
not observed any indicators that payment is inappropriately
incentivizing the provision of ECT to IPF patients. We intend to
continue monitoring the provision of ECT through further analysis of
IPF PPS claims data.
A detailed discussion of the distributional impacts of this
proposed change is found in section VIII.C of this proposed rule. We
welcome comments regarding our analysis, including any comments that
could inform our understanding of where ECT costs are allocated in cost
reports in order to potentially inform improved collection of data on
ECT treatment costs in the IPF setting. We also welcome comments on
whether it may be appropriate to collect additional ECT-specific costs
on the hospital cost report. Lastly, we are proposing that if more
recent data become available, we would use such data, if appropriate,
to determine the FY 2025 Federal per diem base rate and ECT payment per
treatment for the FY 2025 IPF PPS final rule.
IPFs must include a valid procedure code for ECT services provided
to IPF beneficiaries to bill for ECT services, as described in our
Medicare Claims Processing Manual, Chapter 3, Section 190.7.3
(available at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c03.pdf). There were no changes to the ECT
procedure codes used on IPF claims in the final update to the ICD-10-
PCS code set for FY 2024. Addendum B to this proposed rule shows the
ECT procedure codes for FY 2025 and is available on the CMS website at
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientPsychFacilPPS/tools.html.
3. Proposed Update of the Federal per Diem Base Rate and
Electroconvulsive Therapy Payment per Treatment
The current (FY 2024) Federal per diem base rate is $895.63 and the
ECT payment per treatment is $385.58. For the proposed FY 2025 Federal
per diem base rate, we applied the payment rate update of 2.7
percent,--that is, the proposed 2021-based IPF market basket increase
for FY 2025 of 3.1 percent reduced by the proposed productivity
adjustment of 0.4 percentage point--the proposed wage index budget
neutrality factor of 0.9998 (as discussed in section III.D.1 of this
proposed rule), and a proposed refinement standardization factor of
0.9514 (as discussed in section III.F of this proposed rule) to the FY
2024 Federal per diem base rate of $895.63, yielding a proposed Federal
per diem base rate of $874.93 for FY 2025. As discussed in section
III.B.2 of this proposed rule, we are proposing to increase the ECT
payment per treatment for FY 2025 in addition to our routine updates to
the rate. We applied the proposed 2.7 percent payment rate update, the
proposed 0.9998 wage index budget neutrality factor, and the proposed
0.9514 refinement standardization factor to the proposed payment per
treatment based on the CY 2024 OPPS geometric mean cost of $675.93,
yielding a proposed ECT payment per treatment of $660.30 for FY 2025.
Section 1886(s)(4)(A)(i) of the Act requires that for RY 2014 and
each subsequent RY, in the case of an IPF that fails to report required
quality data with respect to such RY, the Secretary will reduce any
annual update to a standard Federal rate for discharges during the RY
by 2.0 percentage points. Therefore, we are applying a 2.0 percentage
point reduction to the annual update to the Federal per diem

[[Page 23154]]

base rate and the proposed ECT payment per treatment as follows:
For IPFs that fail to report required data under the IPFQR
Program, we would apply a 0.7 percent payment rate update--that is, the
proposed IPF market basket increase for FY 2025 of 3.1 percent reduced
by the proposed productivity adjustment of 0.4 percentage point for an
update of 2.7 percent, and further reduced by 2.0 percentage points in
accordance with section 1886(s)(4)(A)(i) of the Act. We would also
apply the proposed refinement standardization factor of 0.9514 and the
proposed wage index budget neutrality factor of 0.9998 to the FY 2024
Federal per diem base rate of $895.63, yielding a proposed Federal per
diem base rate of $857.89 for FY 2025.
For IPFs that fail to report required data under the IPFQR
Program, we would apply the proposed 0.7 percent annual payment rate
update, the proposed 0.9514 refinement standardization factor, and the
proposed 0.9998 wage index budget neutrality factor to the proposed
payment per treatment based on the CY 2024 OPPS geometric mean cost of
$675.93, yielding a proposed ECT payment per treatment of $647.45 for
FY 2025.
We are proposing that if more recent data become available, we
would use such data, if appropriate, to determine the FY 2025 Federal
per diem base rate and ECT payment per treatment for the FY 2025 IPF
final rule.

C. Proposed Updates and Revisions to the IPF PPS Patient-Level
Adjustment Factors

1. Overview of the IPF PPS Adjustment Factors and Proposed Revisions
The current (FY 2024) IPF PPS payment adjustment factors were
derived from a regression analysis of 100 percent of the FY 2002
Medicare Provider and Analysis Review (MedPAR) data file, which
contained 483,038 cases. For a more detailed description of the data
file used for the regression analysis, we refer readers to the RY 2005
IPF PPS final rule (69 FR 66935 through 66936).
For FY 2025, we are proposing to implement revisions to the
methodology for determining payment rates under the IPF PPS. As we
noted earlier in this FY 2025 IPF PPS proposed rule, section
1886(s)(5)(D) of the Act, as added by section 4125(a) of the CAA, 2023
requires that the Secretary implement revisions to the methodology for
determining the payment rates under the IPF PPS for psychiatric
hospitals and psychiatric units, effective for RY 2025 (FY 2025). The
revisions may be based on a review of the data and information
collected under section 1886(s)(5)(A) of the Act. Accordingly, we are
proposing to revise the patient-level IPF PPS payment adjustment
factors as discussed in section III.C.4. of this proposed rule,
effective for FY 2025. We have developed proposed adjustment factors
based on a regression analysis of IPF cost and claims data, which is
discussed in greater detail in the following sections of this proposed
rule. The primary sources of this analysis are CY 2019 through 2021
MedPAR files and Medicare cost report data (CMS Form 2552-10, OMB No.
0938-0050) \1\ from the FY 2019 through 2021 Hospital Cost Report
Information System (HCRIS). For each year (2019 through 2021), if a
provider did not have a Medicare cost report for that year, we used the
provider's most recent available Medicare cost report prior to the year
for which a Medicare cost report was missing, going back to as early as
2018. Section III.C.3 of this proposed rule discusses the development
of the proposed revised case-mix adjustment regression.
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\1\ https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202206-0938-017.
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2. History of IPF PPS Cost and Claims Analyses
In the FY 2023 IPF PPS proposed rule (87 FR 19428 through 19429),
we briefly discussed past analyses and areas of interest for future
refinement, about which we previously solicited comments. CMS also
released a technical report posted to the CMS website \2\ accompanying
the rule, summarizing these analyses. In that same proposed rule, we
described the results of the agency's latest analysis of the IPF PPS
and solicited comments on certain topics from the report. We summarized
the considerations and findings related to our analyses of the IPF PPS
adjustment factors in the FY 2023 IPF PPS final rule (46864 through
46865).
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\2\ https://www.cms.gov/files/document/technical-report-medicare-program-inpatient-psychiatric-facilities-prospective-payment-system.pdf.
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In the FY 2024 IPF PPS proposed rule (88 FR 21269 through 21272),
we requested information from the public to inform revisions to the IPF
PPS required by the CAA, 2023. Specifically, we sought information
about which data and information would be most appropriate and useful
for the purposes of refining IPF PPS payments. We requested information
related to the specific types of data and information mentioned in the
CAA, 2023. We also solicited comments on the reporting of ancillary
charges, such as labs and drugs, on IPF claims. Lastly, we presented
and solicited comments on the latest results of our analysis of social
drivers of health (SDOH).
In response to the requests for information, commenters offered a
number of suggestions for further analysis, including recommendations
to consider adjusting payment for patients with sleep apnea, violent
behavior, and patients that transfer from an acute care unit. We
discuss the analysis conducted and our findings, as related to patient-
level adjustment factors, in section III.C.3 of this proposed rule.
The primary goal in refining the IPF PPS payment adjustment factors
is to pay each IPF an appropriate amount for the efficient delivery of
care to Medicare beneficiaries. The system must be able to account
adequately for each IPF's case-mix to allow for both fair distribution
of Medicare payments and access to adequate care for those
beneficiaries who require more costly care. As required by section
1886(s)(5)(D)(iii) of the Act, as added by section 4125(a) of the CAA,
2023, proposed revisions to the IPF PPS adjustment factors must be
budget neutral. As discussed in section III.F of this proposed rule, we
are applying a refinement standardization factor to the proposed IPF
PPS payment rates to maintain budget neutrality for FY 2025.
3. Development of the Proposed Revised Case-Mix Adjustment Regression
To ensure that the IPF PPS continues to account adequately for each
IPF's case-mix, we performed an extensive regression analysis of the
relationship between the per diem costs and both patient and facility
characteristics to identify those characteristics associated with
statistically significant cost differences. We discuss the results of
this regression analysis in section III.C.3.e. of this proposed rule.
We further discuss proposed revisions to the IPF PPS patient-level
adjustment factors based on this regression analysis in section III.C.4
of this proposed rule.
As discussed in greater detail in section III.C.3.c. of this
proposed rule, we computed a per diem cost for each Medicare inpatient
psychiatric stay, including routine operating, ancillary, and capital
components using information from the CY 2019 through CY 2021 MedPAR
files and data from the 2019 through 2021 Medicare cost reports,
backfilling with Medicare cost reports from the most recent prior year
when necessary.
We began with a 100 percent sample of the CY 2019 through CY 2021
MedPAR data files, which contain a

[[Page 23155]]

total of 1,111,459 stays from 1,684 IPFs. As discussed in section
III.C.3.b. of this proposed rule, we applied several data restrictions
and exclusions to obtain the set of data used for our regression
analysis. The MedPAR data files used for this regression analysis
contain a total of 806,611 stays from 1,643 IPFs, which reflect the
removal of 41 providers and 304,848 stays with missing or erroneous
data. To include as many IPFs as possible in the regression, we used
the cost report information for each provider corresponding to the year
of claims, when available, and substituted the most recent prior
available cost report information for routine cost and ancillary cost
to charge ratios if the corresponding year's data was not available.
a. Data Sources
For the regression analysis, we chose to use a combined set of CY
2019 through 2021 MedPAR data. Our analysis showed that using a
combined set of data from multiple years yields the most stable and
consistent result. When we looked at the results for each year
individually, we found that some DRGs and comorbidity categories were
not statistically significant due in part to small sample size. In
addition, during FY 2020, the U.S. healthcare system undertook an
unprecedented response to the Public Health Emergency (PHE) declared by
the Secretary of the Department of Health and Human Services on January
31, 2020 in response to the outbreak of respiratory disease caused by a
novel (new) coronavirus that has been named ``SARS CoV 2'' and the
disease it causes, which has been named ``coronavirus disease 2019''
(abbreviated ``COVID-19''). We believe the aggregated three-year
regression serves to smooth the impact of changes in utilization driven
by the COVID-19 PHE, as well as significant changes in staffing and
labor costs that commenters noted in response to the FY 2023 and FY
2024 IPF PPS proposed rules. As discussed earlier in this proposed
rule, we used 2019 through 2021 Medicare cost report data to retain as
many records as possible for analysis.
We also used several other data sources to identify the IPF
population for analysis and to construct variables in the regression
model:
Provider of Services (POS) File: The POS file contains
facility characteristics including name, address, and types of services
provided.
Provider Specific Data for Public Use Files for the IPF
PPS: The Provider Specific File (PSF) contains data used to calculate
COLA factors and identify the Core-Based Statistical Area (CBSA). CBSA
is used to match providers with corresponding wage index data, which is
used to adjust the calculation of the Federal per diem base rate to
account for geographic differences in costs.
Common Working File (CWF) Inpatient Claims Data: The CWF
contains data regarding ECT treatments provided during an IPF stay.
Among the 1,643 providers included in the regression analysis
sample, the majority had their most recent Medicare cost report
information corresponding to the year of the MedPAR data file.
Specifically, for the CY 2019 MedPAR data file, 99.5 percent (1,551
providers) used FY 2019 Medicare cost reports, and 0.5 percent (8
providers) used FY 2018 Medicare cost reports. For CY 2020, 99.7
percent (1,523 providers) used FY 2020 Medicare cost reports, and 0.3
percent (5 providers) used FY 2019 Medicare cost reports. For CY 2021,
97.6 percent (1,435 providers) used FY 2021 Medicare cost reports, and
2.4 percent (35 providers) used FY 2020 Medicare cost reports. This
approach allowed us to use the most current and relevant cost report
data, ensuring the robustness and accuracy of our analysis.
b. Trims and Assumptions
To identify the IPF population for analysis, we matched MedPAR
records to facility-level information from Medicare cost reports, the
POS file, and the PSF. We included MedPAR stays that met the following
criteria:
Hospital CMS Certification Number (CCN) contains ``40,''
``41,'' ``42,'' ``43,'' or ``44'' in the third and fourth position or a
special unit code of ``S'' or ``M'' for psychiatric unit or psychiatric
unit in a critical access hospital.
Beneficiary primary payer code is equal to ``Z'' or blank,
indicating Medicare is the primary payer.
Group Health Organization (GHO) paid code is equal to zero
or blank, indicating that a GHO has not paid the facility for the stay.
National Claims History (NCH) claim type code is equal to
``60,'' an inpatient claim.
Number of utilization days was greater than zero.
To promote the accuracy and completeness of data included in the
regression model, we completed a series of trimming steps to remove
missing and outlier data. Before any trims or exclusions were applied,
there were 1,684 providers in the MedPAR data file. First, we matched
facilities from the MedPAR dataset to the most recent Medicare cost
report file available from CY 2018 to CY 2021, and excluded facilities
that did not have a Medicare cost report available from 2018 to 2021.
If facilities had more than one Medicare cost report in a given year,
we used the Medicare cost report representing the longest time span. We
identified 1 provider in CY 2019, 5 providers in CY 2020, and 4
providers in CY 2021 that had no available Medicare cost report
information. In total, we excluded data from 5 unique providers that
had no available Medicare cost report information from CY 2019 to CY
2021.
Next, we trimmed facilities with extraordinarily high or low costs
per day. We removed facilities with outlier routine per diem costs,
defined as those falling outside of the range of the mean logarithm of
routine costs per diem plus or minus 3.00 standard deviations. We also
removed stays with outlier total per diem costs, defined as those
falling outside the range of the mean per diem cost by facility type
(psychiatric hospitals and psychiatric units) plus or minus 3.00
standard deviations. The average and standard deviations of the total
per diem cost (routine and ancillary costs) were computed separately
for stays in psychiatric hospitals and psychiatric units because we did
not want to systematically exclude a larger proportion of cases from
one type of facility. In applying these trims across all three data
years used in our regression model, there were 104 providers with
routine per diem costs outside 3.00 standard deviations from the mean,
and 47 providers with total per diem costs outside 3.00 standard
deviations from the mean. Specifically, this includes 24 providers in
CY 2019, 41 providers in CY 2020, and 39 providers in CY 2021 excluded
for outlier routine per diem costs. We identified 25 providers in CY
2019, 1 provider in CY 2020, and 21 providers in CY 2021 that we
excluded for outlier total per diem costs. In total, we excluded data
from 23 unique providers with outlier routine per diem costs and 8
unique providers with outlier total per diem costs.
We also removed stays at providers without a POS file or PSF. There
were 5 providers without a POS file or PSF during the period CY 2019 to
CY 2021; therefore, we are excluding data from these 5 providers. Only
1 unique provider was entirely excluded with no POS file or PSF from CY
2019 to CY 2021. Additionally, 1 provider was excluded because no stays
had one of the recognized IPF PPS DRGs assigned.
In summary, the application of these data preparation steps
resulted in excluding 5 providers because they did not have a cost
report available from 2018 to 2021, 23 providers with routine per diem
costs outside 3.00 standard

[[Page 23156]]

deviations from the mean, and 8 providers with total per diem costs
outside 3.00 standard deviations from the mean. We also excluded 1
provider without a POS file or PSF, 1 provider with no stays with IPF
PPS DRGs, and 3 providers based on IPF stays restrictions. In total,
the exclusion of these 41 providers resulted in the removal of 304,848
stays from our original total of 1,111,459 stays.
We considered trimming stays from facilities where 95 percent or
more of stays had no ancillary charges because we assumed that the cost
data from these facilities were inaccurate or incomplete. This is the
trimming methodology that we applied to the analysis described in the
technical report released along with the FY 2023 IPF PPS proposed rule.
As previously discussed, the IPF PPS regression model uses the sum of
routine and ancillary costs as the dependent variable, and we assumed
that data from facilities without ancillary charge data would be
inadequate to capture variation in costs. When we examined the claims
from 2018, which we used for prior analysis, this trimming step
resulted in removing almost one-quarter of total stays from the
unrestricted 2018 MedPAR dataset (82,491 out of 364,080 total stays).
This trimming step also resulted in disproportionate exclusion of
certain types of facilities, particularly freestanding psychiatric
hospitals that were for-profit or government-operated, as well as all-
inclusive rate providers. Approximately 55 percent of stays from
freestanding facilities would be removed, compared to just 0.3 percent
of stays in psychiatric units. In the analysis described in the FY 2023
IPF PPS proposed rule (87 FR 19429), we attempted to address this
disproportionate removal of stays by facility type by applying weights
by facility type and ownership in the regression model to account for
excluded providers and to avoid biasing the sample towards stays from
providers in psychiatric units.
In response to the analysis described in the FY 2023 IPF PPS
proposed rule (87 FR 19429), commenters raised concerns about the large
number of stays excluded from the regression analysis, and questioned
whether the ancillary charge data were truly missing, as all-inclusive
rate providers are not required to report separate ancillary charges.
We agree that this trimming step reduces the representativeness of the
IPF population used in the regression model and may increase the
potential for bias of the regression coefficients used for payment
adjustments. Furthermore, as discussed in section III.E.4. of this
proposed rule, we are clarifying cost reporting requirements and
implementing operational changes that we believe will increase the
accuracy of the cost information reported in the future. Specifically,
CMS will issue instructions to the MACs and put in place edits for cost
reporting periods beginning on or after October 1, 2024, ensuring that
only government-owned or tribally owned IPF hospitals will be permitted
to file an all-inclusive cost report. All other IPF hospitals would be
required to have a charge structure and to report ancillary costs and
charges on their cost reports. We expect that this proposed change
would support increased accuracy of future payment refinements to the
IPF PPS.
When we examined the claims from CY 2019 to CY 2021, this trimming
step would have resulted in a loss of a significant number of providers
(324 providers in CY 2019, 330 providers in CY 2020, and 336 providers
in CY 2021). Due to the concerns that commenters previously raised
(which we summarized in the FY 2024 IPF PPS final rule (88 FR 51097
through 51098)), and to include as many claims as possible in the
regression analysis, we have not trimmed stays from facilities with
zero or minimal ancillary charges. As a result, we observed a
significant reduction in data loss when comparing our latest regression
model with the model described in the FY 2023 IPF PPS proposed rule. By
including, rather than trimming, facilities with low or no ancillary
charge data, we prevented the loss of 288 providers across the three
years, allowing for a more inclusive analysis. These providers
accounted for approximately 194,673 stays included in our data set.
We present our regression results in section III.C.3.e. of this
proposed rule without the application of any trimming or subsequent
weighting to account for the removal of stays from facilities with zero
or minimal ancillary charges.
c. Calculation of the Dependent Variable
The IPF PPS regression model uses the natural logarithm of per diem
total cost as the dependent variable. We computed a per diem cost for
each Medicare inpatient psychiatric stay, including routine operating,
ancillary, and capital components, using information from the combined
CY 2019 through 2021 MedPAR file and data from the 2018 through 2021
Medicare cost reports. For each MedPAR CY, we examined the
corresponding Medicare cost report, and if a provider's cost-to-charge
ratio was missing from the matching year's cost report, we looked at
the provider's cost report from the prior year to obtain the most
recent cost-to-charge value for the provider. We applied a prior-year
cost-to-charge ratio to 8 providers from the CY 2019 MedPAR claims, 5
providers from the CY 2020 MedPAR claims, and 35 providers from the CY
2021 MedPAR claims.
To calculate the total cost per day for each inpatient psychiatric
stay, routine costs were estimated by multiplying the routine cost per
day from the IPF's Medicare cost report (Worksheet D-1, Part II, column
1, line 38) by the number of Medicare covered days in the MedPAR stay
record. Ancillary costs were estimated by multiplying each departmental
cost-to-charge ratio (calculated by dividing the amount obtained from
Worksheet C, columns 5, by the sum of Worksheet C, columns 6 and 7) by
the corresponding ancillary charges in the MedPAR stay record. The
total cost per day was calculated by summing routine and ancillary
costs for the stay and dividing it by the number of Medicare covered
days for each day of the stay.
To address extreme cost-to-charge ratios, we winsorized the
distributions of the 17 ancillary cost centers from Worksheet C of the
cost report at the 2nd and 98th percentiles. That is, if the cost-to-
charge ratio was missing and there was a charge on the claim, the cost-
to-charge ratio was imputed to the calculated median value for each
respective cost center.
The total cost per day (also referred to as per diem cost) was
adjusted for differences in cost across geographic areas using the FY
2019 through 2021 IPF wage index and COLA corresponding to each MedPAR
data year. We adjusted the labor-related portion of the per diem cost
using the IPF wage index to account for geographic differences in labor
cost and adjusted the non-labor portion of the per diem cost by the
COLA adjustment factors for IPFs in Alaska and Hawaii. We used IPF PPS
labor-related share and non-labor-related share finalized for each
year, FY 2019 through FY 2021, to determine the amount of the per diem
cost that is adjusted by the wage index and the COLA, respectively. We
calculated the adjusted cost using the following formula:

Wage adjusted per diem cost = per diem cost/(wage index * labor-related
share + COLA * (1-labor-related share)).
d. Independent Variables
Independent variables in the regression model are patient-level and
facility-level characteristics that affect

[[Page 23157]]

the dependent variable in the model, which is per diem cost. As
discussed in the following sections, the updated regression model for
this proposed rule includes adjustment-related variables and control
variables. Adjustment related variables are used for adjusting payment,
and as we discuss in section III.C.4 of this proposed rule, we are
proposing to revise the IPF PPS patient-level adjustment factors based
on the regression results for many of the adjustment-related variables
in the model. Control variables are used to account for variation in
the dependent variable that is associated with factors outside the
adjustment factors of the payment model.
(1) Adjustment-Related Variables
Patient-level adjustment-related variables included in the
regression model are variables for DRG assignment, comorbidity
categories, age, and length of stay. We note that facility-level
adjustment-related variables for rural status and teaching status are
also included in the model; however, we are not proposing revisions to
the rural or teaching adjustments for FY 2025. We discuss the latest
results of the regression analysis for facility-level adjustments in
greater detail in section IV.A. of this proposed rule.
(2) Control Variables
The regression model used to determine IPF PPS payment adjustments
in the RY 2005 IPF PPS final rule (69 FR 66922) included control
variables to account for facilities' occupancy rate, a control variable
to indicate if the patient received ECT, and a control variable for
IPFs that do not bill for ancillary charges. In the updated regression
model for this FY 2025 IPF PPS proposed rule, we have removed the
occupancy control variables and the control variable for IPFs that do
not bill for ancillary charges. In addition, we have retained the
control variable for patients receiving ECT and added control variables
for the data year. We also added a control variable for the presence of
ED charges on the claim. We discuss considerations related to these
control variables and others in the following paragraphs.
The 2004 regression model included two control variables for
occupancy rate. One was a continuous variable for the facility's
logarithmic-transformed occupancy rate. The other was a categorical
variable indicating a facility had an occupancy rate below 30 percent.
Both of these variables were found to be associated with statistically
significant increases in cost. In the RY 2005 IPF PPS final rule, we
adopted the structural approach and included these control variables in
the regression. We explained that it was appropriate to control for
variations in the occupancy rate in estimating the effects of the
payment variables on per diem cost to avoid compensating facilities for
inefficiency associated with underutilized fixed costs (69 FR 66934).
As we discussed in the FY 2023 IPF PPS proposed rule, our analysis
found that the occupancy control variables were associated with rural
status. We solicited comments on the potential removal of the occupancy
control variables from the model (87 FR 19429). In response, we
received several comments in support of removing the occupancy control
variables, due to the relationship between these control variables and
the rural adjustment (87 FR 46865). Commenters cited the importance of
rural IPFs as the primary points of care and access for many Medicare
beneficiaries who cannot travel to urban areas for mental health
services. We considered the potential negative impact to rural
facilities of retaining the occupancy control variables in the
regression model. We agree with the commenters who noted the importance
of maintaining stability in payments for rural IPFs; therefore, we did
not include any occupancy control variables in our regression model.
In addition, we considered including a control variable for IPFs
that do not bill for ancillary services. As we discussed in the RY 2005
IPF PPS final rule (69 FR 66936), we included variables in the
regression to control for psychiatric hospitals that do not bill
ancillary costs. However, at that time, the number of IPFs who did not
bill for ancillary costs was relatively small and consisted mostly of
government-operated facilities. As we discuss later in section III.E.4
of this proposed rule, an increasing number of IPFs have stopped
reporting ancillary charges on their claims, which means that ancillary
cost information is not available for stays at these IPFs.
We considered whether to include a control variable for facilities
that do not report ancillary charges. We considered that the inclusion
of a control variable would only account for differences in the level
of cost between IPFs with and without reported ancillary costs and
would not facilitate comparison of costs between all IPFs in our
sample. In addition, we found that facilities that did not report
ancillary charges also tended to have lower routine costs; that is, our
analysis showed that these facilities would have overall lower costs
per day, regardless of whether ancillary costs were considered in the
cost variable. We considered that the inclusion of a control variable
in the regression model would account for these differences in overall
cost, which would impact the size of payment-related adjustment factors
that are correlated with the prevalence of missing ancillary charge
data. For this reason, in developing a regression model for proposing
revisions to the IPF PPS, we did not include a control variable to
account for facilities that report zero or minimal ancillary charges.
As noted earlier, the original model also included a control
variable for the presence of ECT. This is because ECT is paid on a per-
treatment basis under the IPF PPS. As discussed in more detail in
section III.B.2. of this FY 2025 IPF PPS proposed rule, we continue to
observe that IPF stays with ECT have significantly higher costs per
day. We are proposing to continue paying for ECT on a per-treatment
basis; therefore, we included a control variable to account for the
additional costs associated with ECT, which would continue to be paid
for outside the regression model.
Similarly, we included a control variable for stays with emergency
department (ED)-related charges. The original model did not include an
ED control variable, because ED costs were excluded from the dependent
variable of IPF per diem costs. Our regression model for this FY 2025
IPF PPS proposed rule includes all costs associated with each IPF stay,
including ED costs. As discussed in section III.D.4. of this proposed
rule, we are proposing to calculate the ED adjustment in accordance
with our longstanding methodology, separate from the regression model.
However, we included a control variable for stays with ED charges to
control for the additional costs associated with ED admissions, which
are paid under the ED adjustment outside the regression model.
Lastly, we included control variables for the data year. Because
the model used a combined set of data from 3 years, these control
variables are included in the model to account for differences in cost
levels between 2019, 2020, and 2021, which would be driven by economic
inflation and other external factors unrelated to the independent
variables in the regression model.
e. Regression Results
Table 2 presents the results of our regression model. We discuss
these results and our related proposals to

[[Page 23158]]

revise the IPF PPS patient-level adjustment factors in section III.C.4
of this proposed rule.
This regression model includes a total of 806,611 stays, and the r-
squared value of the model is 0.32340, meaning that the independent
variables included in the regression model can explain approximately
32.3 percent of the variation in per diem cost among IPF stays.
Except for the teaching variable, each of the adjustment factors in
Table 2 is the exponentiated regression coefficient of our regression
model, which as we previously noted uses the natural logarithm of per
diem total cost as the dependent variable. We present the exponentiated
regression results, as these most directly translate to the way that
IPF PPS adjustment factors are calculated for payment purposes. That
is, the exponentiated adjustment factors presented below represent a
percentage increase or decrease in per diem cost for IPF stays with
each characteristic. In the case of the teaching variable, the result
in Table 2 is the un-exponentiated regression coefficient. As discussed
in section III.D of this proposed rule, the current IPF PPS teaching
adjustment is calculated as 1 + a facility's ratio of interns and
residents to beds, raised to the power of 0.5150. The coefficient for
teaching status presented in Table 2 can be interpreted in the same
way.
For certain categorical variables, including DRG, age, length of
stay, and the year control variables, results for the reference groups
are not shown in Table 2. The DRG reference group is DRG 885, because
this DRG represents the majority of IPF PPS stays. The age reference
group is the Under 45 category, because this group is associated with
the lowest costs after accounting for all other patient characteristics
in the model. The reference group for length of stay is 10 days, which
corresponds to the reference group used in the original regression
model from the RY 2005 IPF PPS final rule. Lastly, the year control
reference group is CY 2021. Each of these reference groups not shown in
Table 2 effectively has an adjustment factor of 1.00 in the regression
model.
As shown in Column 5 of Table 2, we considered the regression
factors to be statistically significant when the p-value was less than
or equal to the significance level of 0.05 (*), 0.01 (**), and 0.001
(***). Columns 6 and 7 of Table 2 show the lower and upper bounds of
the 95-percent confidence interval (CI).
BILLING CODE 4120-01-P
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BILLING CODE 4120-01-C
4. Proposed Updates and Revisions to the IPF PPS Patient-Level
Adjustments
The IPF PPS includes payment adjustments for the following patient-
level characteristics: Medicare Severity Diagnosis Related Groups (MS-
DRGs) assignment of the patient's principal diagnosis, selected
comorbidities, patient age, and the variable per diem adjustments. As
discussed in section III.C.3. of this proposed rule, we are proposing
to derive updated IPF PPS adjustment factors for FY 2025 using a
regression analysis of data from the CY 2019 through 2021 MedPAR data
files and Medicare cost report data from the 2018 through FY 2021
Hospital Cost Report Information System (HCRIS). However, we have used
more recent claims (specifically, the December, 2023 update of the FY
2023 IPF PPS MedPAR claims) and cost data from the January, 2024 update
of the provider-specific file (PSF) to simulate payments to finalize
the outlier fixed dollar loss threshold amount and to assess the impact
of the IPF PPS updates. More information about the data used for the
impact simulations is found in section VIII.C of this FY 2025 IPF PPS
proposed rule. As discussed in section III.C.3. of this proposed rule,
by adjusting for DRGs, comorbidities, age, and length of the stay,
along with the facility-level variables and control variables in the
model, we were able to explain approximately 32.3 percent of the
variation in per diem cost among IPF stays.
In addition, we are proposing routine coding updates for FY 2025
for our longstanding code first and IPF PPS comorbidities. Furthermore,
as discussed in section III.C.4.a.(2) of this proposed rule, we are
proposing to adopt a sub-regulatory process for future routine coding
updates.
a. Proposed Updated and Revisions to MS-DRG Assignment
(1) Background
We believe it is important to maintain for IPFs the same diagnostic
coding and DRG classification used under the IPPS for providing
psychiatric care. For this reason, when the IPF PPS was implemented for
cost reporting periods beginning on or after January 1, 2005, we
adopted the same diagnostic code set (ICD-9-CM) and DRG patient
classification system (MS-DRGs) that were utilized at the time under
the IPPS. In the RY 2009 IPF PPS notice (73 FR 25709), we discussed
CMS's effort to better recognize resource use and the severity of
illness among patients. CMS adopted the new MS-DRGs for the IPPS in the
FY 2008 IPPS final rule with comment period (72 FR 47130). In the RY
2009 IPF PPS notice (73 FR 25716), we provided a crosswalk to reflect
changes that were made under the IPF PPS to adopt the new MS-DRGs. For
a detailed description of the mapping changes from the original DRG
adjustment categories to the current MS-DRG adjustment categories, we
refer readers to the RY 2009 IPF PPS notice (73 FR 25714).
The IPF PPS includes payment adjustments for designated psychiatric
DRGs assigned to the claim based on the patient's principal diagnosis.
The DRG adjustment factors were expressed relative to the most
frequently reported psychiatric DRG in FY 2002, that is, DRG 430
(psychoses). The coefficient values and adjustment factors were derived
from the regression analysis discussed in detail in the RY 2004 IPF
proposed rule (68 FR 66923; 66928 through 66933) and the RY 2005 IPF
final rule (69 FR 66933 through 66960). Mapping the DRGs to the MS-DRGs
resulted in the current 17 IPF MS-DRGs, instead of the original 15
DRGs, for which the IPF PPS provides an adjustment.
In the FY 2015 IPF PPS final rule published August 6, 2014 in the
Federal Register titled, ``Inpatient Psychiatric Facilities Prospective
Payment System--Update for FY Beginning October 1, 2014 (FY 2015)'' (79
FR 45945 through 45947), we finalized conversions of the ICD-9-CM-based
MS-DRGs to ICD-10-CM/PCS-based MS-DRGs, which were implemented on
October 1, 2015. Further information on the ICD-10-CM/PCS MS-DRG
conversion project can be found on the CMS ICD-10-CM website at https://www.cms.gov/medicare/coding-billing/icd-10-codes/icd-10-ms-drg-conversion-project.

[[Page 23162]]

(2) Proposal To Adopt Sub-Regulatory Process for Publication of Coding
Changes
As discussed in the FY 2015 IPF PPS proposed rule (79 FR 26047)
every year, changes to the ICD-10-CM and the ICD-10-PCS coding system
have been addressed in the IPPS proposed and final rules. The changes
to the codes are effective October 1 of each year and must be used by
acute care hospitals as well as other providers to report diagnostic
and procedure information. In accordance with Sec. 412.428(e), we have
historically described in the IPF PPS proposed and final rules the ICD-
10-CM coding changes and DRG classification changes that have been
discussed in the annual proposed and final hospital IPPS regulations.
This has typically involved a discussion in the proposed rule about
coding updates to be effective October 1 of each year, with a summary
of comments in the final rule along with a description of additional
finalized codes for October.
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 44950 through
44956), we adopted an April 1 implementation date for ICD-10-CM
diagnosis and ICD-10-PCS procedure code updates in addition to the
annual October 1 update of ICD-10-CM diagnosis and ICD-10-PCS procedure
codes, beginning with April 1, 2022. In that rule, we noted the intent
of this April 1 implementation date is to allow flexibility in the ICD-
10 code update process. Currently, as noted earlier in this proposed
rule, the IPF PPS uses the IPPS DRG assignments, which are applied to
IPF PPS claims; these DRG assignments reflect the change in process
that the IPPS adopted for FY 2022. To maintain consistency with IPPS
policy, we are proposing to follow the same process beginning in FY
2025. This means that for routine coding updates that incorporate new
or revised codes, we are proposing to adopt these changes through a
sub-regulatory process. Beginning in FY 2025, we would operationalize
such coding changes in a Transmittal/Change Request, which would align
with the way coding changes are announced under the IPPS.
For example, we are proposing that for April 2025, we would adopt
routine coding updates for the IPF PPS comorbidity categories, code
first policy, ECT code list, and DRG assignment via sub-regulatory
guidance. These coding updates would take effect April 1, 2025. In
accordance with Sec. 412.428(e), we would describe these coding
changes, along with any coding updates that would be effective for
October 1, 2025, in the FY 2026 IPF PPS proposed rule. We would
summarize and respond to any comments on these April and October coding
changes in the FY 2026 IPF PPS final rule.
The proposed update aims to allow flexibility in the ICD-10 code
update process for the IPF PPS and reduces the lead time for making
routine coding updates to the IPF PPS code first list, comorbidities,
and ECT coding categories. In addition, the IPPS sub-regulatory process
continues to manage DRG assignment changes which apply to the DRG
assignments used in the IPF PPS. Finally, we are clarifying that we
would only apply this sub-regulatory process for routine coding
updates. Any future substantive revisions to the IPF PPS DRG
adjustments, comorbidities, code first policy, or ECT payment policy
would be proposed through notice and comment rulemaking. We solicit
public comments on this proposal.
(3) Routine Coding Updates for DRG Assignments
The diagnoses for each IPF MS-DRG will be updated as of October 1,
2024, using the final IPPS FY 2025 ICD-10-CM/PCS code sets. The FY 2025
IPPS/LTCH PPS final rule will include tables of the changes to the ICD-
10-CM/PCS code sets that underlie the proposed FY 2025 IPF MS-DRGs.
Both the FY 2025 IPPS final rule and the tables of final changes to the
ICD-10-CM/PCS code sets, which underlie the FY 2025 MS-DRGs, will be
available on the CMS IPPS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps.
(4) Code First
As discussed in the ICD-10-CM Official Guidelines for Coding and
Reporting, certain conditions have both an underlying etiology and
multiple body system manifestations due to the underlying etiology. For
such conditions, the ICD-10-CM has a coding convention that requires
the underlying condition be sequenced first, followed by the
manifestation. Wherever such a combination exists, there is a ``use
additional code'' note at the etiology code, and a ``code first'' note
at the manifestation code. These instructional notes indicate the
proper sequencing order of the codes (etiology followed by
manifestation). In accordance with the ICD-10-CM Official Guidelines
for Coding and Reporting, when a primary (psychiatric) diagnosis code
has a code first note, the provider will follow the instructions in the
ICD-10-CM Tabular List. The submitted claim goes through the CMS
processing system, which will identify the principal diagnosis code as
non-psychiatric and search the secondary codes for a psychiatric code
to assign a DRG code for adjustment. The system will continue to search
the secondary codes for those that are appropriate for comorbidity
adjustment. For more information on the code first policy, we refer
readers to the RY 2005 IPF PPS final rule (69 FR 66945). We also refer
readers to sections I.A.13 and I.B.7 of the FY 2020 ICD-10-CM Coding
Guidelines, which is available at https://www.cdc.gov/nchs/data/icd/10cmguidelinesFY2020_final.pdf. In the FY 2015 IPF PPS final rule, we
provided a code first table for reference that highlights the same or
similar manifestation codes where the code first instructions apply in
ICD-10-CM that were present in ICD-10-CM (79 FR 46009). In FY 2018, FY
2019, and FY 2020, there were no changes to the final ICD-10-CM codes
in the IPF Code First table. For FY 2021 and FY 2022, there were 18
ICD-10-CM codes deleted from the final IPF Code First table. For FY
2023, there were 2 ICD-10-CM codes deleted and 48 ICD-10-CM codes added
to the IPF Code First table. For FY 2024, there were no proposed
changes to the Code First Table.
We are proposing to continue our existing code first policy. As
outlined in our proposal to incorporate a sub-regulatory process for
the publication of coding changes, we are proposing to adopt a sub-
regulatory approach to handle the coding updates, which removes the
requirement to discuss coding updates in the Federal Register during
regulatory updates prior to implementation, which would mirror the
approach taken by the IPPS. The proposed FY 2025 Code First table is
shown in Addendum B on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-forServicePayment/InpatientPsychFacilPPS/tools.html.
(5) Proposed Revisions to MS-DRG Adjustment Factors
For FY 2025, we are proposing to revise the payment adjustments for
designated psychiatric DRGs assigned to the claim based on the
patient's principal diagnosis, following our longstanding policy of
using the ICD-10-CM/PCS-based MS-DRG system. As discussed in the
following paragraphs, we are proposing to maintain DRG adjustments for
15 of the existing 17 IPF MS-DRGs for which we currently adjust payment
in FY 2024. We are proposing to replace two existing DRGs with two new
DRGs to reflect changes in coding practices over time and proposing to
add two DRGs that are associated with poisoning. We are also proposing
to

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revise the adjustment factors for the DRG adjustments as described in
Table 3, based on the results of our latest regression analysis
described in Section III.C.3 of this proposed rule. Addendum A is
available on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/inpatient-psychiatric-facility/tools-and-worksheets. The website includes the proposed DRG adjustment factors
for FY 2025. In accordance with our longstanding policy, we are
proposing that psychiatric principal diagnoses that do not group to one
of the 19 proposed designated MS-DRGs would still receive the Federal
per diem base rate and all other applicable adjustments; however, the
payment would not include an MS-DRG adjustment.
(a) Proposed Replacement of DRGs
We are proposing to remove DRGs 080 (Nontraumatic stupor & coma w
MCC) and 081 (Nontraumatic stupor & coma w/o MCC), and to replace these
with DRGs 947 (Signs and Symptoms w MCC) and 948 (Signs and Symptoms w/
out MCC). As previously discussed, we observed that the number of cases
in DRGs 080 and 081 have decreased significantly since 2004. We
selected DRGs 947 and 948 as the most clinically appropriate
replacements, because most of the ICD-10-CM codes that previously
grouped to DRGs 080 or 081 now group to DRGs 947 or 948. Table 3
compares the current adjustment factors for DRGs 080 and 081 to the
regression-derived adjustment factors for DRGs 947 and 948. As shown in
Table 3, the proposed adjustment factors for DRGs 947 and 948 would
each be greater than the current DRG adjustment for DRGs 080 and 081.
Therefore, we are proposing that claims with DRGs 080 or 081 would
still receive the Federal per diem base rate and all other applicable
adjustments; however, the payment would not include an MS-DRG
adjustment.
As discussed in section III.F of this proposed rule, we are
proposing to implement this revision to the DRG adjustments budget-
neutrally. A detailed discussion of the distributional impacts of this
proposed change is found in section VIII.C of this proposed rule.
Lastly, we are proposing that if more recent data become available, we
would use such data, if appropriate, to determine the FY 2025 DRG
adjustment factors.
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(b) Proposed Additions of DRGs
We are proposing to recognize DRG adjustments for two DRGs
associated with poisoning; specifically, DRG 917 (Poisoning and toxic
effects of drugs w MCC) and 918 (Poisoning and toxic effects of drugs
w/out MCC). As discussed earlier in this proposed rule, we have
identified that a small but increasing number of IPF stays contain
these poisoning-related DRG assignments, and that stays with these DRGs
have increased costs per day that are statistically significant. Table
4 summarizes the frequency of these stays and the proposed adjustment
factors for FY 2025. As discussed in section III.F of this proposed
rule, we are proposing to implement this revision to the DRG
adjustments budget-neutrally. A detailed discussion of the
distributional impacts of this proposed change is found in section
VIII.C of this proposed rule.
Lastly, we are proposing that if more recent data become available,
we would use such data, if appropriate, to determine the FY 2025 DRG
adjustment factors.

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(c) Proposed Revisions to Adjustment Factors for Existing DRG
Adjustments
We are proposing to revise the adjustment factors for the remaining
15 of the existing 17 DRGs that currently receive a DRG adjustment in
FY 2024. These proposed revisions are based on the results of our
latest regression analysis described in section III.C.3 of this
proposed rule.
As previously discussed, our analysis found that some of the
adjustment factors in the regression model for DRGs that currently
receive an adjustment are no longer statistically significant.
Specifically, we found that the adjustment factors for DRG 882
(Neuroses except depressive), DRG 887 (Other mental disorder
diagnoses), and DRG 896 (Alcohol, Drug Abuse or Dependence w/out rehab
therapy w MCC) were not statistically significant. For each of these
DRGs, we examined whether the current adjustment factor falls within
the confidence interval for our latest regression analysis. The current
adjustment for DRG 882 is 1.02, and this falls within the confidence
interval of 0.96798 to 1.07811 for the latest regression model
discussed in section III.C.3 of this proposed rule. We believe it would
be appropriate to maintain the current adjustment factor of 1.02 for
DRG 882, because the latest regression results indicate that the
current adjustment factor would be a reasonable approximation of the
increased costs associated with DRG 882. For DRGs 887 and 896; however,
the current adjustment factors (0.92 and 0.88, respectively) do not
fall within the confidence interval for each of these DRGs. Therefore,
we are proposing to apply an adjustment factor of 1.00 for IPF stays
with these DRGs.
Table 5 summarizes the frequency of these stays and the proposed
adjustment factors for FY 2025. As discussed in section III.F of this
proposed rule, we are proposing to implement this revision to the DRG
adjustments budget-neutrally. A detailed discussion of the
distributional impacts of this proposed change is found in section
VIII.C of this proposed rule.
Lastly, we are proposing that if more recent data become available,
we would use such data, if appropriate, to determine the FY 2025 DRG
adjustment factors.
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BILLING CODE 4120-01-C
b. Proposed Payment for Comorbid Conditions
(1) Proposed Revisions to Comorbidity Adjustments
The intent of the comorbidity adjustments is to recognize the
increased costs associated with comorbid conditions by providing
additional payments for certain existing medical or psychiatric
conditions that are expensive to treat.
Comorbidities are specific patient conditions that are secondary to
the patient's principal diagnosis and that require treatment during the
stay. Diagnoses that relate to an earlier episode of care and have no
bearing on the current hospital stay are excluded and must not be
reported on IPF claims. Comorbid conditions must exist at the time of
admission or develop subsequently, and affect the treatment received,
LOS, or both treatment and LOS.
The current comorbidity adjustments were determined based on the
regression analysis using the diagnoses reported by IPFs in FY 2002.
The principal diagnoses were used to establish the DRG adjustments and
were not accounted for in establishing the comorbidity category
adjustments, except where ICD-9-CM code first instructions applied. In
a code first situation, the submitted claim goes through the CMS
processing system, which identifies the principal diagnosis code as
non-psychiatric and searches the secondary codes for a psychiatric code
to assign an MS-DRG code for adjustment. The system continues to search
the secondary codes for those that are appropriate for a comorbidity
adjustment.
In our RY 2012 IPF PPS final rule (76 FR 26451 through 26452), we
explained that the IPF PPS includes 17 comorbidity categories and
identified the new, revised, and deleted ICD-9-CM diagnosis codes that
generate a comorbid condition payment adjustment under the IPF PPS for
RY 2012 (76 FR 26451).
As discussed in section C.4.a.(1) of this proposed rule, it is our
policy to

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maintain the same diagnostic coding set for IPFs that is used under the
IPPS for providing the same psychiatric care. The 17 comorbidity
categories formerly defined using ICD-9-CM codes were converted to ICD-
10-CM/PCS in our FY 2015 IPF PPS final rule (79 FR 45947 through
45955). The goal for converting the comorbidity categories is referred
to as replication, meaning that the payment adjustment for a given
patient encounter is the same after ICD-10-CM implementation as it
would be if the same record had been coded in ICD-9-CM and submitted
prior to ICD-10-CM/PCS implementation on October 1, 2015. All
conversion efforts were made with the intent of achieving this goal.
For each claim, an IPF may receive only one comorbidity adjustment
within a comorbidity category, but it may receive an adjustment for
more than one comorbidity category. Current billing instructions for
discharge claims, on or after October 1, 2015, require IPFs to enter
the complete ICD-10-CM codes for up to 24 additional diagnoses if they
co-exist at the time of admission, or develop subsequently and impact
the treatment provided.
As previously discussed in section III.C.4.a.(2) of this proposed
rule, we are proposing to adopt an April 1 implementation date for ICD-
10-CM diagnosis and ICD-10-PCS procedure code updates, in addition to
the annual October 1 update, beginning with April 1, 2025 for the IPF
PPS. For FY 2025 and future years, coding updates related to the IPF
PPS comorbidity categories would be adopted following a sub-regulatory
process as discussed earlier in this proposed rule.
For FY 2025, we are proposing to revise the comorbidity adjustment
factors based on the results of the 2019 through 2021 regression
analysis described in section III.C.3.e. of this proposed rule. We are
also proposing additions and changes to the comorbidity categories for
which we adjust payment based on our analysis of ICD-10-CM codes
currently included in each category as well as public comments received
in response to the FY 2022 and FY 2023 IPF PPS proposed rules.
Based on analysis of the ICD-10-CM codes, we considered the
statistical significance of the adjustment factor and whether the
current (FY 2024) adjustment factor fell within the confidence interval
in the 2019 through 2021 regression to determine the FY 2025 IPF PPS
proposed comorbidity categories and adjustment factors. As previously
discussed for the DRG adjustment factors, when the regression factor is
not statistically significant, but the current adjustment factor is
within the confidence interval, we are proposing to maintain the
current adjustment factor. When a regression factor is not
statistically significant and the current adjustment factor is not
within the confidence interval, we are proposing to remove the
comorbidity category.
Specifically, we are proposing to increase the adjustment factors
for the Gangrene, Severe Protein Malnutrition, Oncology Treatment,
Poisoning, and Tracheostomy comorbidity categories based on the
adjustment factors derived from the regression analysis discussed in
section III.C.3 of this proposed rule. For these comorbidity
categories, the regression results produced a statistically significant
increase in the adjustment factors.
We are proposing to remove the comorbidity categories for the
Coagulation Factor Deficit, Drug/Alcohol Induced Mental Disorders, and
Infectious Diseases adjustment factors because the regression factor
for the ICD-10-CM codes associated with Coagulation Factor Deficit and
Infectious Diseases were not statistically significant, and the current
adjustment factors did not fall within the confidence intervals in the
2019 through 2021 regression.
The current adjustment factor for Drug/Alcohol Induced Mental
Disorders is 1.03; however, the adjustment factor derived from our
latest regression results was statistically significant at 0.96084,
meaning payments would be reduced if we applied the regression-derived
adjustment factor as a comorbidity adjustment for this category. In
order to understand the drivers of changing costs for the Drug/Alcohol
Induced Mental Disorders comorbidity category, we examined a subset of
ICD-10-CM codes within the comorbidity category associated with opioid
disorders which make up the majority of stays that qualify for the
current Drug/Alcohol Induced Mental Disorders comorbidity adjustment.
These opioid disorder codes are listed in Table 6. When we separately
analyzed these codes associated with opioid disorder, the results
suggested that patients with opioid disorder are significantly less
expensive than patients without opioid disorder. Because stays with
opioid disorders make up the majority of stays in the Drug/Alcohol
Induced Mental Disorders comorbidity category, we observe a
statistically-significant negative adjustment factor for the
comorbidity category overall. The application of a comorbidity
adjustment derived from our latest regression analysis would result in
reduced payments for all stays in this comorbidity category. We do not
believe it is appropriate to apply negative adjustment factors (that
is, adjustment factors less than 1.00) for comorbidities because that
would result in reduced rather than increased payments. Although we
apply adjustment factors less than 1.00 for DRGs, this is because the
DRG adjustment reflects the cost of stays relative to stays with the
baseline DRG 885. In contrast, comorbidity adjustments reflect the cost
relative to a stay with no comorbidities. A negative payment adjustment
would not be consistent with the intent of a comorbidity adjustment,
which is intended to provide additional payments to providers to
account for the costs of treating patients with comorbid conditions.
Therefore, we have not historically included any negative adjustment
factors for comorbid conditions.
Therefore, we are proposing to remove the Drug/Alcohol Induced
Mental Disorders comorbidity category beginning in FY 2025. IPF stays
that include these codes as a non-principal diagnosis would no longer
receive the current Drug/Alcohol Induced Mental Disorders comorbidity
category adjustment factor of 1.03; nor would they receive a reduction
in payment. However, many IPF stays that include these ICD-10-CM
diagnosis codes as a principal diagnosis would continue to receive a
DRG adjustment. We refer readers to section III.C.3.a of this proposed
rule for a detailed discussion of proposed DRG adjustments under the
IPF PPS.
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BILLING CODE 4120-01-C
We believe removal of the Drug/Alcohol Induced Mental Disorders
comorbidity category under the IPF PPS would more appropriately align
payment with resource use, as reflected in the latest regression
results. As previously discussed in section III.F of this proposed
rule, all of these proposed revisions would be applied budget-
neutrally. Therefore, we believe the removal of the Drug/Alcohol
Induced Mental Disorders comorbidity adjustment would appropriately
increase the IPF PPS Federal per diem base rate and thereby increase
payment for IPF stays that are costlier. However, we are soliciting
comments on whether a lack of ancillary charge data may be contributing
to the results of our regression analysis as it relates to opioid
disorders. We note that our analysis of the ICD-10-CM codes associated
with opioid disorder also indicates that there is significant overlap
between facility characteristics and stays including opioid disorder
diagnoses. In particular, for-profit freestanding IPFs were found to
serve the majority of patients with opioid disorders. As discussed in
section III.E.4 of this proposed rule, our ongoing analysis has found
an increase in the number of for-profit freestanding IPFs that are
consistently reporting no ancillary charges or very minimal ancillary
charges on their cost report. As a result, we have previously noted
that data that is necessary for accurate Medicare ratesetting is
excluded from the information these facilities are reporting.
As stated previously, the regression factor for Drug/Alcohol
Induced Mental Disorders was statistically significant, but is less
than 1, meaning payments would be reduced if we applied it as a
comorbidity adjustment. We are interested in understanding whether
there is data and information that could better inform our
understanding of the costs of treating these conditions. In addition,
we are interested in understanding whether commenters believe it may be
more appropriate to maintain the existing Drug/Alcohol Induced Mental
Disorders comorbidity category adjustment factor of 1.03, given that
many providers that treat these patients also report minimal or no
ancillary charges on their claims and cost reports. We note that if we
were to maintain the adjustment factor of 1.03 for these IPF stays, we
expect it would have a negative impact on the refinement
standardization factor, thereby slightly reducing the IPF PPS Federal
per diem base rate and ECT per treatment amount.
We are also proposing to modify the Eating and Conduct Disorders
comorbidity category and redesignate it as the Eating Disorders
comorbidity category. That is, we are proposing to remove conduct
disorders from the codes eligible for a comorbidity adjustment. When we
separately analyzed the ICD-10-CM codes for eating disorders
(specifically, F5000 Anorexia nervosa, unspecified, F5001

[[Page 23168]]

Anorexia nervosa, restricting type, F5002 Anorexia nervosa, binge
eating/purging type, and F509 Eating disorder, unspecified) and conduct
disorders (F631 Pyromania, F6381 Intermittent explosive disorder, and
F911 Conduct disorder, childhood-onset type), our regression results
identified a positive, statistically significant adjustment factor
associated with eating disorders. In contrast, conduct disorders had a
negative and non-significant factor. These results suggest that eating
disorders are associated with an increased level of resource use
compared to conduct disorders, and that only eating disorders have an
increase resource use at a level that is statistically significant.
Based on these findings, we are proposing to remove conduct disorders
from the proposed newly designated Eating Disorders comorbidity
category.
In addition, we are proposing to modify the Chronic Obstructive
Pulmonary Disease comorbidity category to include ICD-10-CM codes
associated with sleep apnea (specifically, G4733 Obstructive sleep
apnea (adult) (pediatric), 5A09357 Assistance with Respiratory
Ventilation, <24 Hrs, CPAP, Z9981 Dependence on supplemental oxygen,
and Z9989 Dependence on other enabling machines and devices). In
response to the FY 2023 and FY 2024 IPF PPS proposed rules, commenters
requested that CMS analyze the additional cost associated with patients
with sleep apnea. Patients with sleep apnea often need to use a
continuous positive airway pressure (CPAP) machine with a cord to
manage their condition. Based on the clinical expertise of CMS Medical
Officers, we determined that patients with sleep apnea in the IPF
setting would have increased ligature risk (that is, anything that
could be used to attach a cord, rope, or other material for the purpose
of hanging or strangulation), similar to the risk associated with
patients in the IPF setting that have chronic obstructive pulmonary
disease. We expect the additional staffing resources involved in
treating IPF patients with sleep apnea would be similar to the
resources involved in treating IPF patients with chronic obstructive
pulmonary disease, as patients with chronic obstructive pulmonary
disease may also require the presence of an additional device with a
cord in the patient's room, such as a bilevel positive airway pressure
(BiPAP) machine. We evaluated adding codes associated with sleep apnea
to our regression model, on the basis of our expectation that we would
observe higher costs associated with these codes that would be
comparable to the costs associated with chronic obstructive pulmonary
disease. The results of our 2019 through 2021 regression model suggest
that sleep apnea is in fact associated with an increased level of
resource use. Therefore, we are proposing to redesignate the Chronic
Obstructive Pulmonary Disease category as the Chronic Obstructive
Pulmonary Disease and Sleep Apnea comorbidity category.
Further, we analyzed costs associated with the ICD-10-CM codes in
Table 7 that indicate high-risk behavior. In response to the FY 2023
and FY 2024 IPF PPS proposed rules, commenters requested that CMS
analyze the additional cost associated with patients exhibiting violent
behavior during their stay in an IPF. We considered these comments in
coordination with CMS Medical Officers, and determined that patients
exhibiting violent behavior would require more intensive management
during an IPF stay. We determined that certain ICD-10-CM codes could
describe the types of high-risk behaviors that require intensive
management during an IPF stay. These could include patients exhibiting
violent behavior as well as other high-risk, non-violent behaviors. We
examined ICD-10-CM codes in the R45 code family (Symptoms and Signs
Related to Emotional State) that could indicate high-risk behavior
during an IPF stay, which would lead to increased resource use. The
regression analysis found that several codes, R451 Restlessness and
agitation, R454 Irritability and anger, and R4584 Anhedonia codes are
associated with a statistically significant adjustment factor. In other
words, patients presenting with restlessness and agitation,
irritability and anger, or anhedonia are more costly than patients who
do not present these conditions. Therefore, we are proposing to add a
new comorbidity category recognizing the costs associated with
Intensive Management for High-Risk Behavior.
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Lastly, we are proposing to maintain the adjustment factors for the
Developmental Disabilities and Uncontrolled Diabetes comorbidity
categories. Based on the regression analysis, the Developmental
Disabilities comorbidity category adjustment factor was not
statistically significant; however, the current adjustment factor is
within the confidence interval. As discussed in section III.C.3.a of
this proposed rule, a non-statistically significant adjustment factor
within the confidence interval indicates that the current adjustment
factor would be a reasonable approximation of the increased costs. The
Uncontrolled Diabetes comorbidity category adjustment factor did not
change from the current adjustment factor based on the 2019 through
2021 regression.
We are also proposing to decrease the adjustment factors for the
following comorbidity categories: Renal Failure--Acute, Artificial
Openings--Digestive & Urinary, Cardiac conditions, Renal Failure--
Chronic, Chronic Obstructive Pulmonary Disease, Infectious Diseases,
and Severe Musculoskeletal & Connective Tissue Diseases.
The regression analysis found the Renal Failure--Acute, Artificial
Openings--Digestive & Urinary, Cardiac conditions, Renal Failure--
Chronic, Chronic Obstructive Pulmonary Disease, Infectious Diseases,
and Severe Musculoskeletal & Connective Tissue Diseases comorbidity
categories resulted in a statistically significant adjustment factor.
While payment would still be increased when the claim includes one of
these comorbidity categories, the proposed adjustment factors for FY
2025 would be less than the current adjustment factors for these
categories. The proposed FY 2025 comorbidity adjustment factors are
displayed in Table 8, and can be found in Addendum A, available on the
CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/inpatient-psychiatric-facility/tools-and-worksheets.

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BILLING CODE 4120-01-C
As discussed in section III.F of this proposed rule, we are
proposing to implement revisions to the comorbidity category
adjustments budget-neutrally. A detailed discussion of the
distributional impacts of these proposed changes is found in section
VIII.C of this proposed rule.
We solicit comments on these proposed revisions to the comorbidity
category adjustment factors. Lastly, we are proposing that if more
recent data become available, we would use such data, if appropriate,
to determine the final FY 2025 comorbidity category adjustment factors.
(2) Proposed Coding Updates for FY 2025
For FY 2025, we are proposing to add 2 ICD-10-CM/PCS codes to the
Oncology Treatment comorbidity category. The proposed FY 2025
comorbidity codes are shown in Addenda B, available on the CMS website
at https://www.cms.gov/medicare/payment/prospective-payment-systems/inpatient-psychiatric-facility/tools-and-worksheets.
In accordance with the policy established in the FY 2015 IPF PPS
final rule (79 FR 45949 through 45952), we reviewed all new FY 2025
ICD-10-CM codes to remove codes that were site ``unspecified'' in terms
of laterality from the FY 2023 ICD-10-CM/PCS codes in instances where
more specific codes are available. As we stated in the FY 2015 IPF PPS
final rule, we believe that specific diagnosis codes that narrowly
identify anatomical sites where disease, injury, or a condition exists
should be used when coding patients' diagnoses whenever these codes are
available. We finalized in the FY 2015 IPF PPS rule, that we would
remove site ``unspecified'' codes from the IPF PPS ICD-10-CM/PCS codes
in instances when laterality codes (site specified codes) are
available, as the clinician should be able to identify a more specific
diagnosis based on clinical assessment at the medical encounter. There
were no proposed changes to the FY 2025 ICD-10-CM/PCS codes, therefore,
we are not proposing to remove any of the new codes.
c. Proposed Patient Age Adjustments
As explained in the RY 2005 IPF PPS final rule (69 FR 66922), we
analyzed the impact of age on per diem cost by examining the age
variable (range of ages) for payment adjustments. In general, we found
that the cost per day increases with age. The older age groups are
costlier than the under 45 age group, the differences in per diem cost
increase for each successive age group, and the differences are
statistically significant. While our regression analysis of CY 2019
through CY 2021 data supports maintaining a payment adjustment factor
based on age as was established in the RY 2005 IPF PPS final rule, the
results suggest that revisions to the adjustment factor for age are
warranted.
For FY 2025, we are proposing to revise the patient age adjustments
as shown in Addendum A of this proposed rule, which is available on the
CMS website at (see https://www.cms.gov/medicare/payment/prospective-payment-systems/inpatient-psychiatric-facility/tools-and-worksheets).
We are proposing to adopt the patient age adjustments derived from the
regression

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model using a blended set of 2019 through 2021 data, as discussed in
section III.C.3 of this proposed rule. Table 9 summarizes the current
and proposed patient age adjustment factors for FY 2025. As discussed
in section III.F of this proposed rule, we are proposing to implement
this revision to the patient age adjustments budget-neutrally. A
detailed discussion of the distributional impacts of this proposed
change is found in section VIII.C of this proposed rule.
We solicit comment on these proposed revisions to the patient age
adjustment factors. Lastly, we are proposing that if more recent data
become available, we would use such data, if appropriate, to determine
the final FY 2025 patient age adjustment factors.
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d. Proposed Variable Per Diem Adjustments
We explained in the RY 2005 IPF PPS final rule (69 FR 66946) that
the regression analysis indicated that per diem cost declines as the
LOS increases. The variable per diem adjustments to the Federal per
diem base rate account for ancillary and administrative costs that
occur disproportionately in the first days after admission to an IPF.
As discussed in the RY 2005 IPF PPS final rule, where a complete
discussion of the variable per diem adjustments can be found, we used a
regression analysis to estimate the average differences in per diem
cost among stays of different lengths (69 FR 66947 through 66950). As a
result of this analysis, we established variable per diem adjustments
that begin on day 1 and decline gradually until day 21 of a patient's
stay. For day 22 and thereafter, the variable per diem adjustment
remains the same each day for the remainder of the stay. However, the
adjustment applied to day 1 depends upon whether the IPF has a
qualifying ED. If an IPF has a qualifying ED, it receives a 1.31
adjustment factor for day 1 of each stay. If an IPF does not have a
qualifying ED, it receives a 1.19 adjustment factor for day 1 of the
stay. The ED adjustment is explained in more detail in section III.D.4
of this proposed rule.
For FY 2025, we are proposing to revise the variable per diem
adjustment factors as indicated in the table below, and shown in
Addendum A to this rule, which is available on the CMS website at
https://www.cms.gov/medicare/payment/prospective-payment-systems/inpatient-psychiatric-facility/tools-and-worksheets. We are proposing
to increase the adjustment factors for days 1 through 9. As shown in
Table 10, the results of the latest regression analysis indicate that
there is not a statistically significant decrease in cost per day after
day 10; therefore, we are proposing that days 10 and above would
receive a 1.00 adjustment. Table 10 summarizes the current and proposed
variable per diem adjustment factors for FY 2025. As discussed in
section III.F of this proposed rule, we are proposing to implement this
revision to the variable per diem adjustments budget-neutrally. A
detailed discussion of the distributional impacts of this proposed
change is found in section VIII.C of this proposed rule.
We solicit comments on these proposed revisions to the variable per
diem adjustment factors. Lastly, we are proposing that if more recent
data become available, we would use such data, if appropriate, to
determine the

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final FY 2025 variable per diem adjustment factors.
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D. Proposed Updates to the IPF PPS Facility-Level Adjustments

The IPF PPS includes facility-level adjustments for the wage index,
IPFs located in rural areas, teaching IPFs, cost of living adjustments
for IPFs located in Alaska and Hawaii, and IPFs with a qualifying ED.
We are proposing to use the existing regression-derived facility-level
adjustment factors established in the RY 2005 IPF final rule for FY
2025.
As previously discussed, in section I.A of this proposed rule, we
are proposing to revise the methodology for determining payments under
the IPF PPS as required by the CAA, 2023. We are not proposing changes
to the facility-level adjustment factors for rural location and
teaching status for FY 2025; however, section IV.A of this proposed
rule includes a request for information regarding potential future
updates to these facility-level adjustments. We are particularly
interested in comments on the results of our updated regression
analysis as they apply to facility-level adjustors.
1. Wage Index Adjustment
a. Background
As discussed in the RY 2007 IPF PPS final rule (71 FR 27061), and
the RY 2009 IPF PPS (73 FR 25719) and RY 2010 IPF PPS notices (74 FR
20373), to provide an adjustment for geographic wage levels, the labor-
related portion of an IPF's payment is adjusted using an appropriate
wage index. Currently, an IPF's geographic wage index value is
determined based on the actual location of the IPF in an urban or rural
area, as defined in Sec. 412.64(b)(1)(ii)(A) and (C).
Due to the variation in costs and because of the differences in
geographic wage levels, in the RY 2005 IPF PPS final rule, we required
that payment rates under the IPF PPS be adjusted by a geographic wage
index. We proposed and finalized a policy to use the unadjusted, pre-
floor, pre-reclassified IPPS hospital wage index to account for
geographic differences in IPF labor costs. We implemented use of the
pre-floor, pre-reclassified IPPS hospital wage data to compute the IPF
wage index since there was not an IPF-specific wage index available. We
believe that IPFs generally compete in the same labor market as IPPS
hospitals therefore, the pre-floor, pre-reclassified IPPS hospital wage
data should be reflective of labor costs of IPFs. We believe this pre-
floor, pre-reclassified IPPS hospital wage index to be the best
available data to use as proxy for an IPF-specific wage index. As
discussed in the RY 2007 IPF PPS final rule (71FR 27061 through 27067),
under the IPF PPS, the wage index is calculated using the IPPS wage
index for the labor market area in which the IPF is located, without
considering geographic reclassifications, floors, and other adjustments
made to the wage index under the IPPS. For a complete description of
these IPPS wage index adjustments, we refer readers to the FY 2019
IPPS/LTCH PPS final rule (83 FR 41362 through 41390). Our wage index
policy at Sec. 412.424(a)(2) provides that we use the best Medicare
data available to estimate costs per day, including an appropriate wage
index to adjust for wage differences.
When the IPF PPS was implemented in the RY 2005 IPF PPS final rule,
with

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an effective date of January 1, 2005, the pre-floor, pre-reclassified
IPPS hospital wage index that was available at the time was the FY 2005
pre-floor, pre-reclassified IPPS hospital wage index. Historically, the
IPF wage index for a given RY has used the pre-floor, pre-reclassified
IPPS hospital wage index from the prior FY as its basis. This has been
due in part to the pre-floor, pre-reclassified IPPS hospital wage index
data that were available during the IPF rulemaking cycle, where an
annual IPF notice or IPF final rule was usually published in early May.
This publication timeframe was relatively early compared to other
Medicare payment rules because the IPF PPS follows a RY, which was
defined in the implementation of the IPF PPS as the 12-month period
from July 1 to June 30 (69 FR 66927). Therefore, the best available
data at the time the IPF PPS was implemented was the pre-floor, pre-
reclassified IPPS hospital wage index from the prior FY (for example,
the RY 2006 IPF wage index was based on the FY 2005 pre-floor, pre-
reclassified IPPS hospital wage index).
In the RY 2012 IPF PPS final rule, we changed the reporting year
timeframe for IPFs from a RY to FY, which begins October 1 and ends
September 30 (76 FR 26434 through 26435). In that FY 2012 IPF PPS final
rule, we continued our established policy of using the pre-floor, pre-
reclassified IPPS hospital wage index from the prior year (that is,
from FY 2011) as the basis for the FY 2012 IPF wage index. This policy
of basing a wage index on the prior year's pre-floor, pre-reclassified
IPPS hospital wage index has been followed by other Medicare payment
systems, such as hospice and inpatient rehabilitation facilities. By
continuing with our established policy, we remained consistent with
other Medicare payment systems.
In FY 2020, we finalized the IPF wage index methodology to align
the IPF PPS wage index with the same wage data timeframe used by the
IPPS for FY 2020 and subsequent years. Specifically, we finalized the
use of the pre-floor, pre-reclassified IPPS hospital wage index from
the FY concurrent with the IPF FY as the basis for the IPF wage index.
For example, the FY 2020 IPF wage index was based on the FY 2020 pre-
floor, pre-reclassified IPPS hospital wage index rather than on the FY
2019 pre-floor, pre-reclassified IPPS hospital wage index.
We explained in the FY 2020 proposed rule (84 FR 16973), that using
the concurrent pre-floor, pre-reclassified IPPS hospital wage index
will result in the most up-to-date wage data being the basis for the
IPF wage index. We noted that it would also result in more consistency
and parity in the wage index methodology used by other Medicare payment
systems. We indicated that the Medicare skilled nursing facility (SNF)
PPS already used the concurrent IPPS hospital wage index data as the
basis for the SNF PPS wage index. We proposed and finalized similar
policies to use the concurrent pre-floor, pre-reclassified IPPS
hospital wage index data in other Medicare payment systems, such as
hospice and inpatient rehabilitation facilities. Thus, the wage
adjusted Medicare payments of various provider types are based upon
wage index data from the same timeframe. For FY 2025, we are proposing
to continue to use the concurrent pre-floor, pre-reclassified IPPS
hospital wage index as the basis for the IPF wage index.
In the FY 2023 IPF PPS final rule (87 FR 46856 through 46859), we
finalized a permanent 5-percent cap on any decrease to a provider's
wage index from its wage index in the prior year, and we stated that we
would apply this cap in a budget neutral manner. In addition, we
finalized a policy that a new IPF 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 IPF would not have a wage
index in the prior FY. We amended the IPF PPS regulations at Sec.
412.424(d)(1)(i) to reflect this permanent cap on wage index decreases.
We refer readers to the FY 2023 IPF PPS final rule for a more detailed
discussion about this policy.
We are proposing to apply the IPF wage index adjustment to the
labor-related share of the national IPF PPS base rate and ECT payment
per treatment. The proposed labor-related share of the IPF PPS national
base rate and ECT payment per treatment is 78.8 percent in FY 2025.
This percentage reflects the labor-related share of the 2021-based IPF
market basket for FY 2025 and is 0.1 percentage point higher than the
FY 2024 labor-related share (see section III.A.3 of this proposed
rule).
b. Office of Management and Budget (OMB) Bulletins
(1) Background
The wage index used for the IPF PPS is calculated using the
unadjusted, pre-reclassified and pre-floor IPPS wage index data and is
assigned to the IPF based on the labor market area in which the IPF is
geographically located. IPF labor market areas are delineated based on
the Core-Based Statistical Area (CBSAs) established by the OMB.
Generally, OMB issues major revisions to statistical areas every 10
years, based on the results of the decennial census. However, OMB
occasionally issues minor updates and revisions to statistical areas in
the years between the decennial censuses through OMB Bulletins. These
bulletins contain information regarding CBSA changes, including changes
to CBSA numbers and titles. OMB bulletins may be accessed online at
https://www.whitehouse.gov/omb/information-for-agencies/bulletins/. In
accordance with our established methodology, the IPF PPS has
historically adopted any CBSA changes that are published in the OMB
bulletin that corresponds with the IPPS hospital wage index used to
determine the IPF wage index and, when necessary and appropriate, has
proposed and finalized transition policies for these changes.
In the RY 2007 IPF PPS final rule (71 FR 27061 through 27067), we
adopted the changes discussed in the OMB Bulletin No. 03-04 (June 6,
2003), which announced revised definitions for Metropolitan Statistical
Areas (MSAs), and the creation of Micropolitan Statistical Areas and
Combined Statistical Areas. In adopting the OMB CBSA geographic
designations in RY 2007, we did not provide a separate transition for
the CBSA-based wage index since the IPF PPS was already in a transition
period from TEFRA payments to PPS payments.
In the RY 2009 IPF PPS notice, we incorporated the CBSA
nomenclature changes published in the most recent OMB bulletin that
applied to the IPPS hospital wage index used to determine the current
IPF wage index and stated that we expected to continue to do the same
for all the OMB CBSA nomenclature changes in future IPF PPS rules and
notices, as necessary (73 FR 25721).
Subsequently, CMS adopted the changes that were published in past
OMB bulletins in the FY 2016 IPF PPS final rule (80 FR 46682 through
46689), the FY 2018 IPF PPS rate update (82 FR 36778 through 36779),
the FY 2020 IPF PPS final rule (84 FR 38453 through 38454), and the FY
2021 IPF PPS final rule (85 FR 47051 through 47059). We direct readers
to each of these rules for more information about the changes that were
adopted and any associated transition policies.
As discussed in the FY 2023 IPF PPS final rule, we did not adopt
OMB Bulletin 20-01, which was issued March 6, 2020, because we
determined this bulletin had no material impact on

[[Page 23174]]

the IPF PPS wage index. This bulletin creates only one Micropolitan
statistical area, and Micropolitan areas are considered rural for the
IPF PPS wage index. That is, the constituent county of the new
Micropolitan area was considered rural effective as of FY 2021 and
would continue to be considered rural if we adopted OMB Bulletin 20-01.
Finally, on July 21, 2023, OMB issued Bulletin 23-01, which revises
the CBSA delineations based on the latest available data from the 2020
census. This bulletin contains information regarding updates of
statistical area changes to CBSA titles, numbers, and county or county
equivalents.
(2) Proposed Implementation of New Labor Market Area Delineations
We believe it is important for the IPF PPS to use, as soon as is
reasonably possible, the latest available labor market area
delineations to maintain a more accurate and up-to-date payment system
that reflects the reality of population shifts and labor market
conditions. We believe that using the most current delineations would
increase the integrity of the IPF PPS wage index system by creating a
more accurate representation of geographic variations in wage levels.
We have carefully analyzed the impacts of adopting the new OMB
delineations and find no compelling reason to delay implementation.
Therefore, we are proposing to implement the new OMB delineations as
described in the July 21, 2023, OMB Bulletin No. 23-01, effective
beginning with the FY 2025 IPF PPS wage index. We are proposing to
adopt the updates to the OMB delineations announced in OMB Bulletin No.
23-01 effective for FY 2025 under the IPF PPS.
As previously discussed, we finalized a 5-percent permanent cap on
any decrease to a provider's wage index from its wage index in the
prior year. For more information on the permanent 5-percent cap policy,
we refer readers to the FY 2023 IPF PPS final rule (87 FR 46856 through
46859). In addition, we are proposing to phase out the rural adjustment
for IPFs that are transitioning from rural to urban based on these CBSA
revisions, as discussed in section III.D.1.c. of this proposed rule.
(a) Micropolitan Statistical Areas
OMB defines a ``Micropolitan Statistical Area'' as a CBSA
associated with at least one urban cluster that has a population of at
least 10,000, but less than 50,000 (75 FR 37252). We refer to these as
Micropolitan Areas. After extensive impact analysis, consistent with
the treatment of these areas under the IPPS as discussed in the FY 2005
IPPS final rule (69 FR 49029 through 49032), we determined the best
course of action would be to treat Micropolitan Areas as ``rural'' and
include them in the calculation of each state's IPF PPS rural wage
index. We refer readers to the FY 2007 IPF PPS final rule (71 FR 27064
through 27065) for a complete discussion regarding treating
Micropolitan Areas as rural. We are not proposing any changes to this
policy for FY 2025.
(b) Change to County-Equivalents in the State of Connecticut
The June 6, 2022 Census Bureau Notice (87 FR 34235 through 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 have evaluated the changes and
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 to maintain
consistency with OMB updates. We are providing the following crosswalk
for each county in Connecticut with the current and proposed FIPS
county and county-equivalent codes and CBSA assignments.
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(c) Urban Counties That Would Become Rural Under the Revised OMB
Delineations
As previously discussed, we are proposing to implement the new OMB
labor market area delineations (based upon OMB Bulletin No. 23-01)
beginning in FY 2025. Our analysis shows that a total of 53 counties
(and county equivalents) and 15 providers are located in areas that
were previously considered part of an urban CBSA but would be
considered rural beginning in FY 2025 under these revised OMB
delineations. Table 12 lists the 53 urban counties that would be rural
if we finalize our proposal to implement the revised OMB delineations.
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We are proposing that the wage data for all providers located in
the counties listed above would now be considered rural, beginning in
FY 2025, when calculating their respective state's rural wage index.
This rural wage index value would also be used under the IPF PPS. We
recognize that rural areas typically have lower area wage index values
than urban areas, and providers located in these counties may
experience a negative impact in their IPF payment due to the proposed
adoption of the revised OMB delineations. However, as discussed in
section III.D.1.c of this proposed rule, providers located in these
counties would receive a rural adjustment beginning in FY 2025, which
would mitigate the impact of decreases to the wage index for these
providers. In addition, the permanent 5-percent cap on wage index
decreases under the IPF PPS would further mitigate large wage index
decreases for providers in these areas.
(d) Rural Counties That Would Become Urban Under the Revised OMB
Delineations
As previously discussed, we are proposing to implement the new OMB
labor market area delineations (based upon OMB Bulletin No. 23-01)
beginning in FY 2025. Analysis of these OMB labor market area
delineations shows that a total of 54 counties (and county equivalents)
and 10 providers are located in areas that were previously considered
rural but would now be considered urban under the revised OMB
delineations. Table 13 lists the 54 rural counties that would be urban
if we finalize our proposal to implement the revised OMB delineations.

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We are proposing that when calculating the area wage index,
beginning with FY 2025, the wage data for providers located in these
counties would be included in their new respective urban CBSAs.
Typically, providers located in an urban area receive a wage index
value higher than or equal to providers located in their state's rural
area. We also note that providers located in these areas would no
longer be considered rural beginning in FY 2025. We refer readers to
section III.D.1.c of this proposed rule for a discussion of the
proposed policy to phase out the payment of the rural adjustment for
providers in these areas.
(e) Urban Counties That Would Move to a Different Urban CBSA Under the
New OMB Delineations
In certain cases, adopting the new 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 10540
(Albany-Lebanon, OR) would experience a change to its name, and become
CBSA 10540 (Albany, OR), while its one constituent county would remain
the same. Table 14 shows the current CBSA code and our proposed CBSA
code where we are proposing to change either the name or CBSA number
only. We are not discussing further in this section these proposed
changes because they are inconsequential changes with respect to the
IPF PPS wage index.

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In some cases, if we adopt the new OMB delineations, counties would
shift between existing and new CBSAs, changing the constituent makeup
of the CBSAs. We consider this type of change, where CBSAs are split
into multiple new CBSAs, or a CBSA loses one or more counties to
another urban CBSA to be significant modifications.

[[Page 23181]]

Table 15 lists the urban counties that would move from one urban
CBSA to another newly proposed or modified CBSA if we adopted the new
OMB delineations.
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BILLING CODE 4120-01-C
We have identified 68 IPF providers located in the affected
counties listed in Table 15. If providers located in these counties
move from one CBSA to another under the revised OMB delineations, there
may be impacts, either negative or positive, upon their specific wage
index values.
c. Proposed Adjustment for Rural Location
In the RY 2005 IPF PPS final rule, (69 FR 66954), we provided a 17-
percent payment adjustment for IPFs located in a rural area. This
adjustment was based on the regression analysis, which indicated that
the per diem cost of rural facilities was 17-percent higher than that
of urban facilities after accounting for the influence of the other
variables included in the regression. This 17-percent adjustment has
been part of the IPF PPS each year since the inception of the IPF PPS.
As discussed earlier in this rule, we are proposing a number of
revisions to the patient-level adjustment factors as well as changes to
the CBSA

[[Page 23188]]

delineations. In order to minimize the scope of changes that would
impact providers in any single year, we are proposing to use the
existing regression-derived adjustment factor, which was established in
RY 2005, for FY 2025 for IPFs located in a rural area as defined at
Sec. 412.64(b)(1)(ii)(C). See 69 FR 66954 for a complete discussion of
the adjustment for rural locations. However, as discussed in the
section IV.A of this FY 2025 IPF PPS proposed rule, we have completed
analysis of more recent cost and claims information and are soliciting
comments on those results.
As proposed earlier in this proposed rule, the adoption of OMB
Bulletin No. 23-01 in accordance with our established methodology would
determine whether a facility is classified as urban or rural for
purposes of the rural payment adjustment in the IPF PPS. Overall, we
believe implementing updated OMB delineations would result in the rural
payment adjustment being applied where it is appropriate to adjust for
higher costs incurred by IPFs in rural locations. However, we recognize
that implementing these changes would have distributional effects among
IPF providers, and that some providers would experience a loss of the
rural payment adjustment because of our proposals. Therefore, we
believe it would be appropriate to consider, as we have in the past,
whether a transition period should be used to implement these proposed
changes.
Prior changes to the CBSA delineations have included a phase-out
policy for the rural adjustment for IPFs transitioning from rural to
urban status. On February 28, 2013, OMB issued OMB Bulletin No. 13-01,
which 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. We
adopted these new OMB CBSA delineations in the FY 2016 IPF final rule
(80 FR 46682 through 46689), and identified 105 counties and 37 IPFs
that would move from rural to urban status due to the new CBSA
delineations. To reduce the impact of the loss of the 17-percent rural
adjustment, we adopted a budget-neutral 3-year phase-out of the rural
adjustment for existing FY 2015 rural IPFs that became urban in FY 2016
and that experienced a loss in payments due to changes from the new
CBSA delineations. These IPFs received two-thirds of the rural
adjustment for FY 2016 and one-third of the rural adjustment in FY
2017. For FY 2018, these IPFs did not receive a rural adjustment.
For subsequent adoptions of OMB Bulletin No. 15-01 for FY 2018 (82
FR 36779 through 36780), OMB Bulletin 17-01 for FY 2020 (84 FR 38453
through 38454), and OMB Bulletin 18-04 for FY 2021 (85 FR 47053 through
47059), we identified that fewer providers were affected by these
changes than by the changes relating to the adoption of OMB Bulletin
13-01. We did not phase out the rural adjustment when adopting these
delineation changes.
For facilities located in a county that transitioned from rural to
urban in Bulletin 23-01, we considered whether it would be appropriate
to phase out the rural adjustment for affected providers consistent
with our past practice of using transition policies to help mitigate
negative impacts on hospitals of OMB Bulletin proposals that have a
material effect on a number of IPFs. Adoption of the updated CBSAs in
Bulletin 23-01 will change the status of 10 IPF providers currently
designated as ``rural'' to ``urban'' for FY 2025 and subsequent fiscal
years. As such, these 10 newly urban providers will no longer receive
the 17-percent rural adjustment. Consistent with the transition policy
adopted for IPFs in FY 2016 (80 FR 46682 through 4668980 FR 46682
through 46689), we are proposing a 3-year budget neutral phase-out of
the rural adjustment for IPFs located in the 54 rural counties that
will become urban under the new OMB delineations, given the potentially
significant payment impacts for these IPFs. We believe that a phase-out
of the rural adjustment transition period for these 10 IPFs
specifically is appropriate because we expect these IPFs will
experience a steeper and more abrupt reduction in their payments
compared to other IPFs. Therefore, we are proposing to phase out the
rural adjustment for these providers to reduce the impact of the loss
of the FY 2024 rural adjustment of 17-percent over FYs 2025, 2026, and
2027. This policy would allow IPFs that are classified as rural in FY
2024 and would be classified as urban in FY 2025 to receive two-thirds
of the rural adjustment for FY 2025. For FY 2026, these IPFs would
receive one-third of the rural adjustment. For FY 2027, these IPFs
would not receive a rural adjustment. We believe a 3-year budget-
neutral phase-out of the rural adjustment for IPFs 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 IPFs. The purpose of the gradual phase-out of
the rural adjustment for these providers is to mitigate potential
payment reductions and promote stability and predictability in payments
for existing rural IPFs 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 re-designation. This policy would be
specifically for rural IPFs that become urban in FY 2025. We are not
proposing a transition policy for urban IPFs that become rural in FY
2025 because these IPFs will receive the full rural adjustment of 17-
percent beginning October 1, 2024. We solicit comments on this proposed
policy.
d. Proposed Wage Index Budget Neutrality Adjustment
Changes to the wage index are made in a budget neutral manner so
that updates do not increase expenditures. Therefore, for FY 2025, we
are proposing to continue to apply a budget neutrality adjustment in
accordance with our existing budget neutrality policy. This policy
requires us to update the wage index in such a way that total estimated
payments to IPFs 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 IPF PPS rates. We are proposing to use the following
steps to ensure that the rates reflect the FY 2025 update to the wage
indexes (based on the FY 2021 hospital cost report data) and the labor-
related share in a budget neutral manner:
Step 1: Simulate estimated IPF PPS payments, using the FY 2024 IPF
wage index values (available on the CMS website) and labor-related
share (as published in the FY 2024 IPF PPS final rule (88 FR 51054).
Step 2: Simulate estimated IPF PPS payments using the proposed FY
2025 IPF wage index values (available on the CMS website), and the
proposed FY 2025 labor-related share (based on the latest available
data as discussed previously).
Step 3: Divide the amount calculated in step 1 by the amount
calculated in step 2. The resulting quotient is the proposed FY 2025
budget neutral wage adjustment factor of 0.9995.
Step 4: Apply the FY 2025 budget neutral wage adjustment factor
from step 3 to the FY 2024 IPF PPS Federal per diem base rate after the
application of the IPF market basket increase reduced by the
productivity adjustment described in section III.A of this proposed
rule to determine the FY 2025 IPF PPS Federal per diem base rate. As
discussed in section III.F of this proposed rule, we are also proposing
to apply a refinement standardization

[[Page 23189]]

factor to determine the FY 2025 IPF PPS Federal per diem base rate.
2. Proposed Teaching Adjustment
Background
In the RY 2005 IPF PPS final rule, we implemented regulations at
Sec. 412.424(d)(1)(iii) to establish a facility-level adjustment for
IPFs that are, or are part of, teaching hospitals. The teaching
adjustment accounts for the higher indirect operating costs experienced
by hospitals that participate in graduate medical education (GME)
programs. The payment adjustments are made based on the ratio of the
number of fulltime equivalent (FTE) interns and residents training in
the IPF and the IPF's average daily census.
Medicare makes direct GME payments (for direct costs such as
resident and teaching physician salaries, and other direct teaching
costs) to all teaching hospitals including those paid under a PPS and
those paid under the TEFRA rate-of-increase limits. These direct GME
payments are made separately from payments for hospital operating costs
and are not part of the IPF PPS. The direct GME payments do not address
the estimated higher indirect operating costs teaching hospitals may
face.
The results of the regression analysis of FY 2002 IPF data
established the basis for the payment adjustments included in the RY
2005 IPF PPS final rule. The results showed that the indirect teaching
cost variable is significant in explaining the higher costs of IPFs
that have teaching programs. We calculated the teaching adjustment
based on the IPF's ``teaching variable,'' which is (1 + [the number of
FTE residents training in the IPF's average daily census]). The
teaching variable is then raised to the 0.5150 power to result in the
teaching adjustment. This formula is subject to the limitations on the
number of FTE residents, which are described in this section of this
proposed rule.
We established the teaching adjustment in a manner that limited the
incentives for IPFs to add FTE residents for the purpose of increasing
their teaching adjustment. We imposed a cap on the number of FTE
residents that may be counted for purposes of calculating the teaching
adjustment. The cap limits the number of FTE residents that teaching
IPFs may count for the purpose of calculating the IPF PPS teaching
adjustment, not the number of residents teaching institutions can hire
or train. We calculated the number of FTE residents that trained in the
IPF during a ``base year'' and used that FTE resident number as the
cap. An IPF's FTE resident cap is ultimately determined based on the
final settlement of the IPF's most recent cost report filed before
November 15, 2004 (69 FR 66955). A complete discussion of the temporary
adjustment to the FTE cap to reflect residents due to hospital closure
or residency program closure appears in the RY 2012 IPF PPS proposed
rule (76 FR 5018 through 5020) and the RY 2012 IPF PPS final rule (76
FR 26453 through 26456).
In the regression analysis that informed the FY 2004 IPF PPS final
rule, the logarithm of the teaching variable had a coefficient value of
0.5150. We converted this cost effect to a teaching payment adjustment
by treating the regression coefficient as an exponent and raising the
teaching variable to a power equal to the coefficient value. We note
that the coefficient value of 0.5150 was based on the regression
analysis holding all other components of the payment system constant. A
complete discussion of how the teaching adjustment was calculated
appears in the RY 2005 IPF PPS final rule (69 FR 66954 through 66957)
and the RY 2009 IPF PPS notice (73 FR 25721).
We are proposing to retain the coefficient value of 0.5150 for the
teaching adjustment to the Federal per diem base rate as we are not
proposing refinements to the facility-level payment adjustments for
rural location or teaching status for FY 2025. As noted earlier, given
the scope of changes to the wage index and patient-level adjustment
factors, we believe this will minimize the total impacts to providers
in any given year.
3. Proposed Cost of Living Adjustment for IPFs Located in Alaska and
Hawaii
The IPF PPS includes a payment adjustment for IPFs located in
Alaska and Hawaii based upon the area in which the IPF is located. As
we explained in the RY 2005 IPF PPS final rule, the FY 2002 data
demonstrated that IPFs in Alaska and Hawaii had per diem costs that
were disproportionately higher than other IPFs. As a result of this
analysis, we provided a COLA in the RY 2005 IPF PPS final rule. We
refer readers to the FY 2024 IPF PPS final rule for a complete
discussion of the currently applicable COLA factors (88 FR 51088
through 51089).
We adopted a new methodology to update the COLA factors for Alaska
and Hawaii for the IPF PPS in the FY 2015 IPF PPS final rule (79 FR
45958 through 45960). For a complete discussion, we refer readers to
the FY 2015 IPF PPS final rule.
We also specified that the COLA updates would be determined every 4
years, in alignment with the IPPS market basket labor-related share
update (79 FR 45958 through 45960). Because the labor-related share of
the IPPS market basket was updated for FY 2022, the COLA factors were
updated in FY 2022 IPPS/LTCH rulemaking (86 FR 45547). As such, we also
finalized an update to the IPF PPS COLA factors to reflect the updated
COLA factors finalized in the FY 2022 IPPS/LTCH rulemaking effective
for FY 2022 through FY 2025 (86 FR 42621 through 42622). This is
reflected in Table 16 below. We are proposing to maintain the COLA
factors in Table 16 for FY 2025 in alignment with the policy described
in this paragraph.

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The proposed IPF PPS COLA factors for FY 2025 are also shown in
Addendum A to this proposed rule, which is available on the CMS website
at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientPsychFacilPPS/tools.html.
4. Proposed Adjustment for IPFs With a Qualifying ED
The IPF PPS includes a facility-level adjustment for IPFs with
qualifying EDs. As defined in Sec. 412.402, qualifying emergency
department means an emergency department that is staffed and equipped
to furnish a comprehensive array of emergency services and meets the
requirements of 42 CFR 489.24(b) and Sec. 413.65.
We provide an adjustment to the Federal per diem base rate to
account for the costs associated with maintaining a full-service ED.
The adjustment is intended to account for ED costs incurred by a
psychiatric hospital with a qualifying ED, or an excluded psychiatric
unit of an IPPS hospital or a critical access hospital (CAH), and the
overhead cost of maintaining the ED. This payment applies to all IPF
admissions (with one exception which we describe in this section),
regardless of whether the patient was admitted through the ED. The ED
adjustment is made on every qualifying claim except as described in
this section of this proposed rule. As specified at Sec.
412.424(d)(1)(v)(B), the ED adjustment is not made when a patient is
discharged from an IPPS hospital or CAH, and admitted to the same IPPS
hospital's or CAH's excluded psychiatric unit. We clarified in the RY
2005 IPF PPS final rule (69 FR 66960) that an ED adjustment is not made
in this case because the costs associated with ED services are
reflected in the DRG payment to the IPPS hospital or through the
reasonable cost payment made to the CAH.
a. Proposed Update for FY 2025
For FY 2025, we are proposing to update the adjustment factor from
1.31 to 1.53 for IPFs with qualifying EDs using the same methodology
used to determine ED adjustments in prior years. Thus, we are proposing
to use the following steps, as used in prior years, to calculate the
updated ED adjustment factor. (A complete discussion of the steps
involved in the calculation of the ED adjustment factors can be found
in the RY 2005 IPF PPS final rule (69 FR 66959 through 66960) and the
RY 2007 IPF PPS final rule (71 FR 27070 through 27072).)
Step 1: Estimate the proportion by which the ED costs of a stay
would increase the cost of the first day of the stay. Using the IPFs
with ED admissions in years 2019 through 2021, we divided the average
ED cost per stay when admitted through the ED ($519.97) by the average
cost per day ($1,338.93), which equals 0.39.
Step 2: Adjust the factor estimated in step 1 to account for the
fact that we would pay the higher first day adjustment for all cases in
the qualifying IPFs, not just the cases admitted through the ED. Since
on average, 66 percent of the cases in IPFs with ED admissions are
admitted through the ED, we multiplied 0.39 by 0.66, which equals 0.26.
Step 3: Add the adjusted factor calculated in the previous 2 steps
to the variable per diem adjustment derived from the regression
equation that we used to derive our other payment adjustment factors.
As discussed in section III.C.4.d. of this proposed rule, the proposed
first day payment factor for FY 2025 is 1.27. Adding 0.26, we obtained
a first day variable per adjustment for IPFs with a qualifying ED equal
to 1.53.
The ED adjustment is incorporated into the variable per diem
adjustment for the first day of each stay for IPFs with a qualifying
ED. We are proposing that those IPFs with a qualifying ED would receive
an adjustment factor of 1.53 as the variable per diem adjustment for
day 1 of each patient stay. If an IPF does not have a qualifying ED, we
are proposing that it would receive an adjustment factor of 1.27 as the
variable per diem adjustment for day 1 of each patient stay, as
discussed in section III.C.4.d. of this proposed rule. As discussed in
section III.F of this proposed rule, we are proposing to implement this
revision to the ED adjustment budget--neutrally by applying a
refinement standardization factor. A detailed discussion of the
distributional impacts of this proposed change is found in section
VIII.C of this proposed rule.
We solicit comment on this proposal. Lastly, we are proposing that
if more recent data become available, we would use such data, if
appropriate, to determine the FY 2025 ED adjustment factor.
b. Alternatives Considered
In response to the FY 2023 IPF PPS proposed rule (87 FR 19428
through 19429) comment solicitation on our technical report describing
the analysis of IPF PPS adjustments, two

[[Page 23191]]

commenters requested that we conduct further analysis related to the
exception for the ED adjustment. These commenters indicated that
patients transferred to an IPF from an acute care unit or hospital
often have higher costs per stay than patients with similar
comorbidities admitted from the community. Commenters requested that
CMS analyze data related to source of admission and consider a payment
adjustment to account for the resources used by these patients. In
response to these comments, we conducted a regression analysis to
investigate whether the source of admission is a statistically
significant variable in the cost of a patient's care in an IPF. We
analyzed the following sources of admission: clinic referral, transfer
from hospital (different facility), transfer from a SNF or Intermediate
Care Facility (ICF), transfer from another health care facility, court/
law enforcement, information not available, transfer from hospital
inpatient in the same facility, transfer from ambulatory surgical
center, and transfer from hospice. In this context, it is important to
note that the source of admission indicator ``court/law enforcement''
is not the equivalent of an involuntary admission; we do not currently
collect data on involuntary admissions.
The regression analysis found that the source of admission was not
a statistically significant factor in the cost of care. The results for
the two source of admission variables that indicate higher costs
(transfer from hospital inpatient in the same facility and transfer
from ambulatory surgical center) are accounted for by the known
difference in cost structures between hospital psychiatric units and
freestanding psychiatric hospitals. We considered the results of our
analysis, as well as the potential that adjusting payment based on
source of admission could inadvertently create incentives for IPFs to
prioritize certain admissions over others. Based on these
considerations, we are not proposing to add additional payment
adjustments based on source of admission (other than the existing
adjustment for a qualifying ED) to the IPF PPS in FY 2025.

E. Other Proposed Payment Adjustments and Policies

1. Outlier Payment Overview
The IPF PPS includes an outlier adjustment to promote access to IPF
care for those patients who require expensive care and to limit the
financial risk of IPFs treating unusually costly patients. In the RY
2005 IPF PPS final rule, we implemented regulations at Sec.
412.424(d)(3)(i) to provide a per case payment for IPF stays that are
extraordinarily costly. Providing additional payments to IPFs for
extremely costly cases strongly improves the accuracy of the IPF PPS in
determining resource costs at the patient and facility level. These
additional payments reduce the financial losses that would otherwise be
incurred in treating patients who require costlier care; therefore,
reduce the incentives for IPFs to under-serve these patients. We make
outlier payments for discharges in which an IPF's estimated total cost
for a case exceeds a fixed dollar loss threshold amount (multiplied by
the IPF's facility-level adjustments) plus the federal per diem payment
amount for the case.
In instances when the case qualifies for an outlier payment, we pay
80 percent of the difference between the estimated cost for the case
and the adjusted threshold amount for days 1 through 9 of the stay
(consistent with the median LOS for IPFs in FY 2002), and 60 percent of
the difference for day 10 and thereafter. The adjusted threshold amount
is equal to the outlier threshold amount adjusted for wage area,
teaching status, rural area, and the COLA adjustment (if applicable),
plus the amount of the Medicare IPF payment for the case. We
established the 80 percent and 60 percent loss sharing ratios because
we were concerned that a single ratio established at 80 percent (like
other Medicare PPSs) might provide an incentive under the IPF per diem
payment system to increase LOS to receive additional payments.
After establishing the loss sharing ratios, we determined the
current fixed dollar loss threshold amount through payment simulations
designed to compute a dollar loss beyond which payments are estimated
to meet the 2 percent outlier spending target. Each year when we update
the IPF PPS, we simulate payments using the latest available data to
compute the fixed dollar loss threshold so that outlier payments
represent 2 percent of total estimated IPF PPS payments.
2. Proposed Update to the Outlier Fixed Dollar Loss Threshold Amount
In accordance with the update methodology described in Sec.
412.428(d), we are proposing to update the fixed dollar loss threshold
amount used under the IPF PPS outlier policy. Based on the regression
analysis and payment simulations used to develop the IPF PPS, we
established a 2 percent outlier policy, which strikes an appropriate
balance between protecting IPFs from extraordinarily costly cases while
ensuring the adequacy of the federal per diem base rate for all other
cases that are not outlier cases. We are proposing to maintain the
established 2 percent outlier policy for FY 2025.
Our longstanding methodology for updating the outlier fixed dollar
loss threshold involves using the best available data, which is
typically the most recent available data. We note that for FY 2022 and
FY 2023 only, we made certain methodological changes to our modeling of
outlier payments, and we discussed the specific circumstances that led
to those changes for those years (86 FR 42623 through 42624; 87 FR
46862 through 46864). We direct readers to the FY 2022 and FY 2023 IPF
PPS proposed and final rules for a more complete discussion.
We are proposing to update the IPF outlier threshold amount for FY
2025 using FY 2023 claims data and the same methodology that we have
used to set the initial outlier threshold amount each year beginning
with the RY 2007 IPF PPS final rule (71 FR 27072 and 27073). For this
FY 2025 IPF PPS rulemaking, consistent with our longstanding practice,
based on an analysis of the latest available data (the December 2023
update of FY 2023 IPF claims) and rate increases, we believe it is
necessary to update the fixed dollar loss threshold amount to maintain
an outlier percentage that equals 2 percent of total estimated IPF PPS
payments. Based on an analysis of these updated data, we estimate that
IPF outlier payments as a percentage of total estimated payments are
approximately 2.1 percent in FY 2024. Therefore, we are proposing to
update the outlier threshold amount to $35,590 to maintain estimated
outlier payments at 2 percent of total estimated aggregate IPF payments
for FY 2025. This proposed rule update is an increase from the FY 2024
threshold of $33,470.
Lastly, we are proposing that if more recent data become available
for the FY 2025 IPF PPS final rule, we would use such data as
appropriate to determine the final outlier fixed dollar loss threshold
amount for FY 2025.
3. Proposed Update to IPF Cost-to-Charge Ratio Ceilings
Under the IPF PPS, an outlier payment is made if an IPF's cost for
a stay exceeds a fixed dollar loss threshold amount plus the IPF PPS
amount. To establish an IPF's cost for a particular case, we multiply
the IPF's reported charges on the discharge bill by its overall cost-
to-charge ratio (CCR). This approach to determining an IPF's cost is
consistent with the approach

[[Page 23192]]

used under the IPPS and other PPSs. In the FY 2004 IPPS final rule (68
FR 34494), we implemented changes to the IPPS policy used to determine
CCRs for IPPS hospitals, because we became aware that payment
vulnerabilities resulted in inappropriate outlier payments. Under the
IPPS, we established a statistical measure of accuracy for CCRs to
ensure that aberrant CCR data did not result in inappropriate outlier
payments.
As indicated in the RY 2005 IPF PPS final rule (69 FR 66961), we
believe that the IPF outlier policy is susceptible to the same payment
vulnerabilities as the IPPS; therefore, we adopted a method to ensure
the statistical accuracy of CCRs under the IPF PPS. Specifically, we
adopted the following procedure in the RY 2005 IPF PPS final rule:
Calculated two national ceilings, one for IPFs located in
rural areas and one for IPFs located in urban areas.
Computed the ceilings by first calculating the national
average and the standard deviation of the CCR for both urban and rural
IPFs using the most recent CCRs entered in the most recent Provider
Specific File (PSF) available.
For FY 2025, we are proposing to continue following this
methodology. To determine the rural and urban ceilings, we multiplied
each of the standard deviations by 3 and added the result to the
appropriate national CCR average (either rural or urban). The proposed
upper threshold CCR for IPFs in FY 2025 is 2.3362 for rural IPFs, and
1.8600 for urban IPFs, based on current CBSA-based geographic
designations. If an IPF's CCR is above the applicable ceiling, the
ratio is considered statistically inaccurate, and we assign the
appropriate national (either rural or urban) median CCR to the IPF.
We apply the national median CCRs to the following situations:
New IPFs that have not yet submitted their first Medicare
cost report. We continue to use these national median CCRs until the
facility's actual CCR can be computed using the first tentatively or
final settled cost report.
IPFs whose overall CCR is in excess of three standard
deviations above the corresponding national geometric mean (that is,
above the ceiling).
Other IPFs for which the Medicare Administrative
Contractor (MAC) obtains inaccurate or incomplete data with which to
calculate a CCR.
We are proposing to update the FY 2025 national median and ceiling
CCRs for urban and rural IPFs based on the CCRs entered in the latest
available IPF PPS PSF.
Specifically, for FY 2025, to be used in each of the three
situations listed previously, using the most recent CCRs entered in the
CY 2023 PSF, we provide an estimated national median CCR of 0.5720 for
rural IPFs and a national median CCR of 0.4200 for urban IPFs. These
calculations are based on the IPF's location (either urban or rural)
using the current CBSA-based geographic designations. A complete
discussion regarding the national median CCRs appears in the RY 2005
IPF PPS final rule (69 FR 66961 through 66964).
Lastly, we are proposing that if more recent data become available,
we would use such data to calculate the rural and urban national median
and ceiling CCRs for FY 2025.
4. Requirements for Reporting Ancillary Charges and All-Inclusive
Status Eligibility Under the IPF PPS
a. Background
As discussed in section III.E.4.b of this proposed rule, to analyze
variation in cost between patients with different characteristics, it
is crucial for us to have complete cost information about each patient,
including data on ancillary services provided. Currently, IPFs and
psychiatric units are required to report ancillary charges on cost
reports. As specified at 42 CFR 413.20, hospitals are required to file
cost reports on an annual basis and maintain sufficient financial
records and statistical data for proper determination of costs payable
under the Medicare program.
However, our ongoing analysis has found a notable increase in the
number of IPFs, specifically for-profit freestanding IPFs, that appear
to be erroneously identifying on form CMS-2552-10, Worksheet S-2, Part
I, line 115, as eligible for filing all-inclusive cost reports. These
hospitals identifying as eligible for filing all-inclusive cost reports
(indicating that they have one charge covering all services) are
consistently reporting no ancillary charges or very minimal ancillary
charges and are not using charge information to apportion costs in
their cost report. Generally, based on the nature of IPF services and
the conditions of participation applicable to IPFs, we expect to see
ancillary services and correlating charges, such as labs and drugs, on
most IPF claims.\3\
---------------------------------------------------------------------------

\3\ IPFs are subject to all hospital conditions of
participation, including 42 CFR 482.25, which specifies that ``The
hospital must have pharmaceutical services that meet the needs of
the patients,'' and 482.27, which specifies that ``The hospital must
maintain, or have available, adequate laboratory services to meet
the needs of its patients.''
---------------------------------------------------------------------------

In the FY 2016 IPF PPS final rule (80 FR 46693 through 46694), we
discussed analysis conducted to better understand IPF industry
practices for future IPF PPS refinements. This analysis revealed that
in 2012 to 2013, over 20 percent of IPF stays show no reported
ancillary charges, such as laboratory and drug charges, on claims. In
the FY 2016 IPF PPS final rule (80 FR 46694), FY 2017 IPF PPS final
rule (81 FR 50513), FY 2018 IPF PPS final rule (82 FR 36784), FY 2019
IPF PPS final rule (83 FR 38588), and FY 2020 IPF PPS final rule (84 FR
38458), we reminded providers that we only pay the IPF for services
furnished to a Medicare beneficiary who is an inpatient of that IPF,
except for certain professional services, and payments are considered
to be payments in full for all inpatient hospital services provided
directly or under arrangement (see 42 CFR 412.404(d)), as specified in
42 CFR 409.10.
On November 17, 2017, we issued Transmittal 12, which made changes
to the hospital cost report form CMS-2552-10 (OMB No. 0938-0050) and
included cost report level 1 edit 10710S, effective for cost reporting
periods ending on or after August 31, 2017. Edit 10710S required that
cost reports from psychiatric hospitals include certain ancillary costs
or the cost report will be rejected. On January 30, 2018, we issued
Transmittal 13, which changed the implementation date for Transmittal
12 to be for cost reporting periods ending on or after September 30,
2017. CMS suspended edit 10710S effective April 27, 2018, pending
evaluation of the application of the edit to all-inclusive rate
providers. We issued Transmittal 15 on October 19, 2018, reinstating
the requirement that cost reports from psychiatric hospitals, except
all-inclusive rate providers, include certain ancillary costs. This
requirement is still currently in place. For details, we refer readers
to see these Transmittals, which are available on the CMS website at
https://www.cms.gov/medicare/regulations-guidance/transmittals.
Under IPF PPS regulations at 42 CFR 412.404(e), all inpatient
psychiatric facilities paid under the IPF PPS must meet the
recordkeeping and cost reporting requirements as specified at Sec.
413.24. Historically, in accordance with Sec. 413.24(a)(1), most
hospitals that were approved to file all-inclusive cost reports were
Indian Health Services (IHS) hospitals, government-owned psychiatric
and acute care hospitals, and nominal charge hospitals. Although IPFs
are no longer reimbursed on the basis of reasonable costs, we continue
to expect that most IPFs, other than government-owned or tribally owned

[[Page 23193]]

IPFs, should report cost data that is based on an approved method of
cost finding and on the accrual basis of accounting. The option to
elect to file an all-inclusive rate cost report is limited to providers
that do not have a charge structure and that, therefore, must use an
alternative statistic to apportion costs associated with services
rendered to Medicare beneficiaries.
Current cost reporting rules allow hospitals that do not have a
charge structure to file an all-inclusive cost report using an
alternative cost allocation method. We refer readers to the Provider
Reimbursement Manual (PRM) 15-1; chapter 22, Sec. 2208 for detailed
information on the requirements to file an alternative method.
b. Challenges Related to Missing IPF Ancillary Cost Data
In general, most providers allocate their Medicare costs using
costs and charges as described at Sec. 413.53(a)(1)(i) and referred to
as the Departmental Method, which is the ratio of beneficiary charges
to total patient charges for the services of each ancillary department.
For cost reporting periods beginning on or after October 1, 1982, the
cost report uses the Departmental Method to apportion the cost of the
department to the Medicare program. Added to this amount is the cost of
routine services for Medicare beneficiaries, determined based on a
separate average cost per diem for all patients for general routine
patient care areas as required at Sec. 413.53(a)(1)(i) and (e); and
15-1, chapter 22, Sec. 2200.1.\4\
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\4\ IPFs are subject to all hospital conditions of
participation, including 42 CFR 482.25, which specifies that ``The
hospital must have pharmaceutical services that meet the needs of
the patients,'' and 482.27, which specifies that ``The hospital must
maintain, or have available, adequate laboratory services to meet
the needs of its patients.''
---------------------------------------------------------------------------

We use cost-to-charge ratios (CCRs) from Medicare cost reports as
the method of establishing reasonable costs for hospital services and
as the basis for ratesetting for several hospital prospective payment
systems. In general, detailed ancillary cost and charge information is
necessary for accurate Medicare ratesetting. When hospitals identify as
all-inclusive, they are excluded from ratesetting because they do not
have CCRs but use an alternative basis for apportioning costs. When
hospitals erroneously identify as all-inclusive but have a charge
structure, data that is necessary for accurate Medicare ratesetting is
improperly excluded.
Since the issuance of Transmittal 15, we have continued to identify
an increase in the number of IPFs, specifically for-profit freestanding
IPFs, that appear to be erroneously identifying on form CMS- 2552-10,
Worksheet S-2, Part I, line 115, as filing all-inclusive cost reports.
In conjunction with the FY 2023 IPF PPS proposed rule (87 FR 19428
through 19429), we posted a report on the CMS website that summarizes
the results of the latest analysis of more recent IPF cost and claim
information for potential IPF PPS adjustments and requested comments
about the results summarized in the report. The report showed that
approximately 23 percent of IPF stays were trimmed from the data set
used in that analysis because they were stays at facilities where fewer
than 5 percent of their stays had ancillary charges. The report is
available on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/inpatient-psychiatric-facility/ipf-reports-and-educational-resources.
Section 4125 of the CAA, 2023 authorizes the Secretary to collect
data and information, specifically including charges related to
ancillary services, as appropriate to inform revisions to the IPF PPS.
In the FY 2024 IPF PPS proposed rule (88 FR 21270 through 21272),
we included a request for information (RFI) related to the reporting of
charges for ancillary services, such as labs and drugs, on IPF claims.
We were interested in better understanding IPF industry practices
pertaining to the billing and provision of ancillary services to inform
statutorily mandated IPF PPS refinements. We stated that we were
considering whether to require charges for ancillary services to be
reported on claims and potentially reject claims if no ancillary
services are reported, and whether to consider payment for such claims
to be inappropriate or erroneous and subject to recoupment.
In response to the comment solicitation, we received a comment from
MedPAC regarding facilities that do not report ancillary charges on
most or any of their claims. MedPAC stated that it is not known:
whether IPFs fail to report ancillary charges separately because they
were appropriately bundled with all other charges into an all-inclusive
per diem rate; if no ancillary charges were incurred because the IPF
cares for a patient mix with lower care needs or inappropriately fails
to furnish the kinds of care reflected in ancillary charges when
medically necessary; or if ancillary charges for services furnished
during the IPF stay are inappropriately billed outside of the IPF base
rate (unbundling). MedPAC recommended CMS conduct further investigation
into the lack of certain ancillary charges and whether IPFs are
providing necessary care and appropriately billing for inpatient
psychiatric services under the IPF PPS.
MedPAC also encouraged CMS to require the reporting of ancillary
charges and clarify the requirements related to IPFs' ``all-inclusive-
rate'' hospital status. MedPAC noted that it observed in cost report
data that IPFs that previously were not all-inclusive-rate hospitals
have recently changed to an all-inclusive-rate status. MedPAC noted
that the timing of many of these changes appears to correspond to CMS's
transmittals requiring ancillary services to be reported on cost
reports for IPFs that do not have an all-inclusive rate.
Other commenters, including IPFs and hospital associations,
responded to the RFI stating that the lack of ancillary charges on
claims does not indicate a lack of services being provided. The
commenters strongly opposed any claim-level editing and stated that
reporting ancillary charges at the claim level would be inefficient and
burdensome, particularly for government and IHS all-inclusive
hospitals.
c. Clarification of Eligibility Criteria for the Option To Elect To
File an All-Inclusive Cost Report
After taking into consideration the feedback we received from both
MedPAC and IPF providers, for FY 2025 we are clarifying the eligibility
criteria to be approved to file all-inclusive cost reports. Only
government-owned or tribally owned facilities are able to satisfy these
criteria, and thus only these facilities will be permitted to file an
all-inclusive cost report for cost reporting periods beginning on or
after October 1, 2024.
We remind readers that in order to be approved to file an all-
inclusive cost report, hospitals must either have an all-inclusive rate
(one charge covering all services) or a no-charge structure.\5\ We are
clarifying that this does not mean any hospital can elect to have an
all-inclusive rate or no-charge structure. Our longstanding policy as
discussed in the PRM 15-1, chapter 22, Sec. 2208.1, only allows a
hospital to use an all-inclusive rate or no charge structure if it has
never had a charge structure in place. In addition, we are clarifying
that our expectation is that any new IPF would have the ability to have
a charge structure under which it could allocate

[[Page 23194]]

costs and charges. As previously stated, only a government-owned or
tribally owned facility will be able to satisfy these criteria and will
be eligible to file its cost report using an all-inclusive rate or no
charge structure.
---------------------------------------------------------------------------

\5\ PRM 15-1, chapter 22, Sec. 2208.1.
---------------------------------------------------------------------------

For cost reporting periods beginning on or after October 1, 2024,
we will issue instructions to the MACs and put in place edits to
operationalize our longstanding policy that only government-owned or
tribally owned IPF hospitals are permitted to file an all-inclusive
cost report. All other IPF hospitals must have a charge structure and
must report ancillary costs and charges on their cost reports. IPFs
that have previously filed an all-inclusive cost report erroneously
will no longer be able to do so. We further note that to the extent
government-owned or tribally owned hospitals can report ancillary
charges on their cost reports, we strongly encourage them to do so to
allow CMS to review and analyze complete and accurate data.
We believe clarifying the current eligibility criteria to be
approved to file all-inclusive cost reports and implementing these
operational changes will appropriately require freestanding IPFs with
the ability to have a charge structure, that is, all IPFs other than
those which are government-owned or tribally owned, to track and report
ancillary charge information. In addition, we expect that more IPFs
reporting ancillary charge information will result in an increase of
IPFs having a CCR, which will in turn result in an increased number of
IPFs being included in ratesetting. Therefore, we believe these
operational changes will improve the quality of data reported, which
will result in increased accuracy of future payment refinements to the
IPF PPS.
Furthermore, we believe collecting charges of ancillary services
from freestanding IPFs supports the directive for competition under the
Executive Order on Promoting Competition in the American Economy as it
facilitates accurate payment, cost efficiency, and transparency.\6\
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\6\ https://www.whitehouse.gov/briefing-room/presidential-actions/2021/07/09/executive-order-on-promoting-competition-in-the-american-economy/.
---------------------------------------------------------------------------

F. Refinement Standardization Factor

Section 1886(s)(5)(D)(iii) of the Act, as added by section 4125(a)
of the CAA, 2023, states that revisions in payment implemented pursuant
to section 1886(s)(5)(D)(i) for a rate year shall result in the same
estimated amount of aggregate expenditures under this title for
psychiatric hospitals and psychiatric units furnished in the rate year
as would have been made under this title for such care in such rate
year if such revisions had not been implemented. We interpret this to
mean that revisions in payment adjustments implemented for FY 2025 (and
for any subsequent fiscal year) must be budget neutral.
Historically, we have maintained budget neutrality in the IPF PPS
using the application of a standardization factor, which is codified in
our regulations at Sec. 412.424(c)(5) to account for the overall
positive effects resulting from the facility-level and patient-level
adjustments. As discussed in section III.B.1 of this proposed rule,
section 124(a)(1) of the BBRA required that we implement the IPF PPS in
a budget neutral manner. In other words, the amount of total payments
under the IPF PPS, including any payment adjustments, must be projected
to be equal to the amount of total payments that would have been made
if the IPF PPS were not implemented. Therefore, we calculated the
standardization factor by setting the total estimated IPF PPS payments,
taking into account all of the adjustment factors under the IPF PPS, to
be equal to the total estimated payments that would have been made
under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA)
(Pub. L. 97-248) methodology had the IPF PPS not been implemented. A
step-by-step description of the methodology used to estimate payments
under the TEFRA payment system appears in the RY 2005 IPF PPS final
rule (69 FR 66926).
We believe the budget neutrality requirement of section 4125(a) of
the CAA, 2023 is consistent with our longstanding methodology for
maintaining budget neutrality under the IPF PPS. Therefore, for FY
2025, we are proposing to apply a refinement standardization factor in
accordance with our existing policy at Sec. 412.424(c)(5). This policy
requires us to update IPF PPS patient-level adjustment factors, ED
adjustment, and ECT per treatment amount as proposed in this FY 2025
IPF PPS proposed rule, in such a way that total estimated payments to
IPFs for FY 2025 are the same with or without the changes (that is, in
a budget neutral manner) by applying a refinement standardization
factor to the IPF PPS rates. We are proposing to use the following
steps to ensure that the rates reflect the FY 2025 update to the
patient-level adjustment factors (as previously discussed in section
III.C and III.D of this proposed rule, and summarized in Addendum A) in
a budget neutral manner:
Step 1: Simulate estimated IPF PPS payments using the FY 2024 IPF
patient-level and facility-level adjustment factor values and FY 2024
ECT payment per treatment (available on the CMS website).
Step 2: Simulate estimated IPF PPS payments using the proposed FY
2025 IPF patient-level and facility-level adjustment factor values (see
Addendum A of this proposed rule, which is available on the CMS
website) and ECT per treatment amount based on the CY 2022 geometric
mean cost for ECT under the OPPS.
Step 3: Divide the amount calculated in step 1 by the amount
calculated in step 2. The resulting quotient is the proposed FY 2025
refinement standardization factor of 0.9514.
Step 4: Apply the FY 2025 refinement standardization factor from
step 3 to the FY 2024 IPF PPS Federal per diem base rate and ECT per
treatment amount (based on the CY 2022 geometric mean cost for ECT
under the OPPS), after the application of the wage index budget
neutrality factor and the IPF market basket increase reduced by the
productivity adjustment described in section III.A of this proposed
rule to determine the FY 2025 IPF PPS Federal per diem base rate and FY
2025 ECT payment amount per treatment.

IV. Requests for Information (RFI) To Inform Future Revisions to the
IPF PPS in Accordance With the CAA, 2023

As discussed in the following sections, we are requesting
information on two main topics to inform future revisions to the IPF
PPS, in accordance with the CAA, 2023. First, we are requesting
information regarding potential revisions to the IPF PPS facility-level
adjustments. Second, we are requesting information regarding the
development of a patient assessment instrument under the IPFQR program.
Please note, each of these sections is a request for information
(RFI) only. In accordance with the implementing regulations of the
Paperwork Reduction Act of 1995 (PRA), specifically 5 CFR 1320.3(h)(4),
this general solicitation is exempt from the PRA. Facts or opinions
submitted in response to general solicitations of comments from the
public, published in the Federal Register or other publications,
regardless of the form or format thereof, provided that no person is
required to supply specific information pertaining to the commenter,
other than that necessary for self-identification, as a condition of
the agency's full consideration, are not generally considered
information collections and therefore not subject to the PRA.

[[Page 23195]]

Respondents are encouraged to provide complete but concise responses.
This RFI is issued solely for information and planning purposes; it
does not constitute a Request for Proposal (RFP), applications,
proposal abstracts, or quotations. This RFI does not commit the U.S.
Government to contract for any supplies or services or make a grant
award. Further, CMS is not seeking proposals through this RFI and will
not accept unsolicited proposals. Responders are advised that the U.S.
Government will not pay for any information or administrative costs
incurred in response to this RFI; all costs associated with responding
to this RFI will be solely at the interested party's expense. Not
responding to this RFI does not preclude participation in any future
procurement, if conducted. It is the responsibility of the potential
responders to monitor this RFI announcement for additional information
pertaining to this request. Please note that CMS will not respond to
questions about the policy issues raised in this RFI. CMS may or may
not choose to contact individual responders. Such communications would
only serve to further clarify written responses. Contractor support
personnel may be used to review RFI responses. Responses to this notice
are not offers and cannot be accepted by the U.S. Government to form a
binding contract or issue a grant. Information obtained as a result of
this RFI may be used by the U.S. Government for program planning on a
non-attribution basis. Respondents should not include any information
that might be considered proprietary or confidential. This RFI should
not be construed as a commitment or authorization to incur cost for
which reimbursement would be required or sought. All submissions become
U.S. Government property and will not be returned. CMS may publicly
post the comments received, or a summary thereof.

A. Request for Information Regarding Revisions to IPF PPS Facility-
Level Adjustments

The CAA, 2023 added section 1886(s)(5)(D) to require CMS to revise
the IPF PPS methodology for determining payment rates for FY 2025, and
for any subsequent FY as determined appropriate by the Secretary. As
detailed in sections III.C and III.D of this proposed rule, we are
proposing to revise the patient-level payment adjustments in FY 2025
and retain the current facility-level payment adjustments for rural
location and teaching status. We have also conducted analysis of the
IPF PPS facility-level adjustments using an updated regression analysis
of cost and claims data for CY 2019 through 2021, as discussed in
section III.C.3. of this proposed rule. The updated analysis identified
potential changes in the regression factors for rural location and
teaching status and suggests there may be value in including a new
facility-level variable for safety net patient population, based on the
Medicare Safety Net Index (MSNI) methodology developed by MedPAC for
the IPPS. We note that the analysis of MSNI builds on prior analysis
that CMS conducted regarding the applicability of an adjustment for
disproportionate share intensity. Our review is ongoing and may be used
to inform future rulemaking.
In the following sections, we describe the results of our latest
analysis and request public comment on them. We are interested in
comments regarding whether it would be appropriate to consider
proposing revisions to the IPF PPS facility-level adjustments in the
future based on the results of our latest regression analysis in future
years.
1. Adjustment for Rural Location
In our MedPAR data set, which included data from CY 2019 through CY
2021, 101,483 stays, or 12.6 percent of all stays, were at rural IPFs.
Our analysis shows that the regression coefficient for rural stays is
1.19. This means that holding all other variables constant and
controlling for area wage differences, stays at rural IPFs have
approximately 19-percent higher cost per day than stays at urban IPFs.
As previously discussed, we did not include control variables in our
regression model to account for occupancy rate. However, we note that
if we included these control variables, we estimate the rural
adjustment in the regression would decrease to approximately 1.13.
In addition, as discussed later in section IV.A.3 of this proposed
rule, we evaluated the potential inclusion of a new variable for
facilities' safety net patient population, as measured by the MSNI
ratio. We observe that the inclusion of the MSNI ratio in the
regression model would have an impact on the rural adjustment factor.
In the regression model that includes the MSNI ratio, the rural
adjustment factor is 1.16. In other words, if we were to adopt an MSNI
payment adjustment, our FY 2025 regression model indicates that the
rural adjustment factor would decrease relative to the rural adjustment
factor calculated without the MSNI variable. However, for rural
facilities with a high level of safety net patients, the combined
effect of the rural adjustment and a safety net adjustment would
increase payments. These results are presented in Table 17, and we are
seeking public comments on these results.
[GRAPHIC] [TIFF OMITTED] TP03AP24.028

We have modeled informational impacts reflecting the potential
change in payments, as discussed in section IV.A.4 of this proposed
rule, though we note future additional data and analysis may produce
results that differ from those presented in this proposed rule.
2. Teaching Adjustment
In the IPF PPS payment methodology, the teaching status for each
facility is calculated as one plus the facility's ratio of intern and
resident FTEs to the average daily census (69 FR 66954 through 66955).
The teaching variable used in the regression is the natural log of each
facility's teaching status, resulting in a continuous variable with a
distribution ranging from 0.0000 to 1.6079. The payment adjustment for
teaching status, as explained in section III.D.2 of this proposed rule,
is calculated by raising a facility's teaching ratio to the power of
the teaching status coefficient derived from the regression analysis.
In our updated regression analysis of data for CY 2019 through CY
2021, there

[[Page 23196]]

were 155,458 stays in teaching facilities, comprising 19.3 percent of
IPF stays for the time period. As previously discussed in this proposed
rule, we found that the occupancy variables used in the original IPF
PPS regression model were correlated with rural status, and have been
removed in this updated model. We note that if we were to include
occupancy control variables in the regression model, the adjustment for
teaching status would increase to 1.0087.
The teaching status variable continues to be statistically
significant at the 0.001 level in all of our updated models; in other
words, we found that a facility's teaching status explains differences
in costs between IPF stays. As shown in Table 18, the teaching status
coefficient would increase in either updated regression model compared
to its current value.
[GRAPHIC] [TIFF OMITTED] TP03AP24.029

As discussed in section IV.A.4. of this proposed rule, we have
modeled informational impacts reflecting the potential change in
payments from these adjustment factors. We are seeking public comment
on these results. We note that future additional data and analysis may
produce results that differ from those presented in this proposed rule.
3. Adjustment for Safety Net Patient Population
a. Prior Analysis of Disproportionate Share Hospital Status
In contrast to other Medicare hospital payment systems, the IPF PPS
does not have an adjustment that recognizes disproportionate share
intensity. Section 1886(s) of the Act does not require any specific
adjustment of this type, nor does it require the use of any particular
methodology. In the past, we have explored the application of the
disproportionate share hospital (DSH) variable used in other Medicare
prospective payment systems (that is, the sum of the proportion of
Medicare days of care provided to recipients of Supplemental Security
Income and the proportion of the total days of care provided to
Medicaid beneficiaries) for the IPF PPS. We refer readers to the RY
2005 IPF PPS final rule (69 FR 66958 through 66959) and the FY 2023 IPF
PPS final rule (87 FR 46865). For psychiatric units, both proportions
are specific to the unit and not the entire hospital.
In the RY 2005 IPF PPS final rule, we explained that the DSH
variable was highly significant in our cost regressions; however, we
found that facilities with higher DSH had lower per diem costs. We note
that the previously cited study for the American Psychiatric
Association also found the same results. The relationship of high DSH
with lower costs cannot be attributed to downward bias in the Medicaid
proportion due to the IMD exclusion. This is because public psychiatric
hospitals already have lower costs on average than other types of IPFs.
Therefore, if we had proposed a DSH adjustment based on the regression
analysis, IPFs with high DSH shares would have been paid lower per diem
rates (69 FR 66958).
In the FY 2023 IPF PPS proposed rule, we summarized and discussed
the results of more recent analysis using data from 2018 (87 FR 19428
through 19429). In response to that proposed rule, commenters
encouraged CMS to continue evaluating ways to increase IPF PPS payments
for disproportionate share intensity. MedPAC recommended that we
consider the applicability of the MSNI, which has previously been
discussed in the context of the IPPS, to the IPF PPS. As discussed in
the following paragraphs, we have conducted analysis of the MSNI and
are soliciting comments on our findings.
b. Analysis of the Medicare Safety Net Index in the IPF PPS
(1) Background
MSNI is an index that MedPAC developed as its recommended
alternative to the current statutorily required methodology for
disproportionate share payments to IPPS hospitals. In their March 2023
Report to Congress, MedPAC recommend that MSNI would better target
scarce Medicare resources to support hospitals that are key sources of
care for low-income Medicare beneficiaries and may be at risk of
closure.\7\ For further discussion of this safety net index in the
context of the Medicare program, we refer readers to the FY 2024 IPPS
final rule (88 FR 58640), which includes a discussion of how MSNI could
be calculated for acute care hospitals and an RFI on the potential use
of MSNI or other safety net indicators in the IPPS, such as the area
deprivation index (ADI) or Social Deprivation Index (SDI).
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\7\ Medicare Payment Advisory Commission. (2023). Report to the
Congress: Medicare Payment Policy. Available at: https://www.medpac.gov/wp-content/uploads/2023/03/Ch3_Mar23_MedPAC_Report_To_Congress_SEC_v2.pdf. Accessed on January
22, 2024.
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For our analysis, we constructed an MSNI for each IPF in our data
set, which we calculated as the sum of three ratios:
The low-income subsidy (LIS) volume ratio, which is the
ratio of total stays for low-income beneficiaries to a facility's total
stays for Medicare beneficiaries. For our analysis, low-income
beneficiaries are identified based on dual-enrollment or enrollment in
Part D low-income subsidies, and stays are identified from MedPAR
claims. This ratio was defined the same way in the FY 2024 IPPS final
rule's discussion of MSNI (88 FR 59306).
The proportion of revenue spent on uncompensated care
(UCC), defined the same way as it was in the FY 2024 IPPS final rule's
discussion of MSNI (88 FR 59306). UCC and total revenue are available
data elements from the hospital cost report, but only for the acute
care hospital. These elements are not currently detailed at the level
of the IPF unit.
The Medicare dependency ratio, which is a hospital's total
covered days for Medicare patients divided by its total patient days.
This information comes from the hospital cost report. We have also
defined this ratio in the same way as it was defined in the FY 2024
IPPS final rule's discussion of MSNI (88 FR 59306).
The final MSNI score is calculated as: LIS Volume Ratio +
Proportion of Revenue Spent on UCC ratio + 0.5 * Medicare Dependency
Ratio. This formula follows MedPAC's methodology based on its analysis
of data for the IPPS hospital setting. As discussed in its

[[Page 23197]]

March 2023 Report to Congress, the Medicare Dependency Ratio is
multiplied by 0.5 because MedPAC's prior analysis of costs in the IPPS
setting found that the Medicare Dependency Ratio had approximately half
the effect on cost as the other two components of MSNI.
(2) Regression Analysis Results
The adjusted r-square, a measure of how much of the variation in
costs between stays our model can explain, increases by approximately
2.8 percent when we add the variable for MSNI to the updated model
analyzing cost and claims data for CY 2019 through CY 2021. The
adjusted r-square for the model without the MSNI variable is 0.32340,
while the adjusted r-square for the model with the MSNI variable is
0.33250. Our regression analysis indicates an MSNI coefficient of
0.5184, which is statistically significant at the .001 level.
[GRAPHIC] [TIFF OMITTED] TP03AP24.030

There are also a number of key differences between our analysis and
the way that MedPAC has recommended that MSNI be applied to payments in
the IPPS setting. For the IPPS, MedPAC recommends to the Congress in
their March 2023 report that they create an MSNI pool of funds for MSNI
add-on payments of about $2 billion, which could be increased each year
by the market basket update. MedPAC contemplates hospitals choosing
between an MSNI payment and other special payment rates designed to
protect access, for example, in rural areas, or the adoption of a
percentage-based cap on all special payment rates.\8\ In contrast, our
modeling of an MSNI payment adjustment in the IPF PPS, assumes that
IPFs could be eligible for both an MSNI payment and the payment
adjustment for rural location, for example, without a cap imposed. Our
modeling also assumes that an MSNI payment adjustment would be budget
neutral; in other words, the payment would not be an add-on. In
contrast to the recommended approach for the IPPS, which would come
from a new funding pool, we estimate that the application of an MSNI
adjustment would affect the Federal IPF PPS per diem base rate. As a
result, the MSNI payment in our model would represent a redistribution
of funds within the IPF PPS, as is

[[Page 23198]]

statutorily required under section 4125(a) of the CAA, 2023.
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\8\ Medicare Payment Advisory Commission. (2023). Report to the
Congress: Medicare Payment Policy. Available at: https://www.medpac.gov/wp-content/uploads/2023/03/Ch3_Mar23_MedPAC_Report_To_Congress_SEC_v2.pdf. Accessed on January
22, 2024.
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We constructed the MSNI variable in our regression model similarly
to the construction of the teaching adjustment (that is, as the natural
log of a facility's MSNI ratio plus 1). Consequently, a payment
adjustment derived from our regression results would work like the
teaching status adjustment: the MSNI adjustment factor is expressed in
an un-exponentiated form. A provider's MSNI factor plus one would be
raised to the power of the MSNI adjustment factor to calculate the
facility's MSNI payment adjustment.
We are considering the potential operational changes that would be
necessary to implement an adjustment for MSNI in the future. For
example, we anticipate the need to periodically recalculate facilities'
MSNI ratios, which could potentially correspond to a facility's cost
report settlement process. We also anticipate the need to develop a
reconciliation process, should such an adjustment for MSNI be
implemented in the future. Further, we expect that because a facility's
LIS ratio would not be an available data element on the hospital cost
report, we may need to develop and publish a facility-level file with
this information or consider collecting additional data on the hospital
cost report. As discussed in the following section, we are seeking
public comment on our regression results, as well as our methodology
used to construct the MSNI variable for IPFs, and on the operational
considerations we have noted. We note that future additional data and
analysis produce results that differ from those presented in this
proposed rule.
(3) Request for Information
We are particularly seeking comment on the following questions:
Should we consider adjusting payment using MedPAC's MSNI
formula with adaptations, as described above? What, if any, changes to
the methodology should we consider for the IPF setting? For example,
should we develop a separate payment adjustment for each component
(that is, the low-income ratio, uncompensated care ratio, and Medicare
dependency ratio)?
We note that our construction of the MSNI did not scale or
index facility-level variables to a national standard or median value.
We anticipate that doing so would result in less of a change to the IPF
Federal per diem base rate but would still result in comparable
distributional impacts (that is, IPFs with lower MSNIs would receive
lower payments, and IPFs with higher MSNIs would receive higher
payments). Should we consider scaling or indexing the MSNI to a
national average MSNI for all IPFs?
Is MedPAC's MSNI formula, as adapted, an accurate and
appropriate measure of the extent to which an IPF acts as a safety-net
hospital for Medicare beneficiaries?
Should additional data be collected through the cost
report to improve the calculation of MSNI, such as collecting UCC and
revenue at the IPF unit level?
Is the current cost report data submitted by IPFs
sufficiently valid and complete to support the implementation of an
MSNI payment? We note our concerns about the low or non-existent
amounts reported for uncompensated care for freestanding IPFs and the
use of hospital-level UCC and revenue amounts to calculate the UCC
ratio for IPF units.
What administrative burden or challenges might providers
face in reporting their UCC and low-income patient stays?
Would IPFs have the information necessary to report their
low-income patient stays to CMS for the purpose of the MSNI
calculation? What challenges might IPFs face in gathering and reporting
this information?
In the FY 2023 IPPS proposed rule, CMS noted that, when
calculating the MSNI, the following circumstances may be encountered:
new hospitals (for example, hospitals that begin participation in the
Medicare program after the available audited cost report data),
hospital mergers, hospitals with multiple cost reports and/or cost
reporting periods that are shorter or longer than 365 days, cost
reporting periods that span fiscal years, and potentially aberrant
data. How should CMS consider addressing these circumstances when
calculating the MSNI for IPFs?
4. Informational Impacts of Potential Facility-Level Revisions on IPF
PPS Payments
We estimate that an MSNI payment adjustment in concert with the
potential rural payment adjustment and teaching adjustments detailed in
this section would have a refinement standardization factor of 0.7202.
In other words, adoption of these facility-level payment adjustments as
described in this section of this proposed rule would decrease the
Federal per diem base rate by $244.81. In contrast, we estimate that
updating only the rural and teaching adjustments without MSNI would
have a refinement standardization factor of 0.9926, which would
decrease the Federal per diem base rate by $6.48.
Estimates of distributional impacts by facility type, location,
ownership, teaching status, and region are detailed in Table 21. We are
seeking public comment on these informational impacts to potentially
inform future rulemaking.
To illustrate the impacts of these potential changes to the IPF PPS
facility-level adjustments, our analysis begins with the same FY 2023
IPF PPS claims (based on the 2023 MedPAR claims, December 2023 update)
as discussed in section VIII.C of this proposed rule. We begin with
estimated FY 2025 IPF PPS payments using these 2023 claims, the
proposed FY 2025 IPF PPS Federal per diem base rate and ECT per
treatment amount, the proposed refinements to the FY 2025 IPF PPS
patient and facility level adjustment factors, and the proposed FY 2025
IPF PPS wage index. At each stage, total outlier payments are
maintained at 2 percent of total estimated FY 2025 IPF PPS payments.
Each of the following changes is added incrementally to this
baseline model in order for us to isolate the effects of each change:
The potential updates to the IPF teaching adjustment and
rural adjustment, without the addition of an adjustment for MSNI.
Adding an adjustment for MSNI and reducing the IPF rural
adjustment and teaching adjustment as shown in the third column of
Tables 17 and 18 of this proposed rule.
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[[Page 23200]]

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B. Request for Information (RFI)--Patient Assessment Instrument Under
IPFQR Program (IPF PAI) To Improve the Accuracy of the PPS

Section 4125(b)(1) of CAA, 2023 amended section 1886(s)(4) of the
Act, by inserting a new paragraph (E), to require IPFs participating in
the IPFQR Program to collect and submit to the Secretary certain
standardized patient assessment data, using a standardized patient
assessment instrument (PAI) developed by the Secretary, for RY 2028 (FY
2028) and each subsequent rate year. IPFs must submit such data with
respect to at least the admission to and discharge of an individual
from the IPF, or more frequently as the Secretary determines
appropriate. For IPFs to meet this new data collection and reporting
requirement for RY 2028 and each subsequent rate year, the Secretary
must implement a standardized PAI that collects data with respect to
the following categories: functional status; cognitive function and
mental status; special services, treatments, and interventions for
psychiatric conditions; medical conditions and comorbidities;
impairments; and other categories as determined appropriate by the
Secretary. This IPF-PAI must enable comparison of the patient
assessment data across all IPFs which submit these data. In other
words, the data must be standardized such that data from IPFs
participating in the IPFQR Program can be compared; the IPF-PAI each
IPF administers must be made up of identical questions and identical
sets of response options to which identical standards and definitions
apply.
As we develop the IPF-PAI, in accordance with these new statutory
requirements, we seek to collect information that will help us achieve
the following goals: (1) improve the quality of care in IPFs, (2)
improve the accuracy of the IPF PPS in accordance with section
4125(b)(2) of CAA, 2023, and (3) improve health equity.\9\ In this
Request for Information (RFI), we are soliciting comments for
development of this IPF-PAI, in accordance with these new statutory
requirements, and to achieve these goals.
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\9\ For more information on our strategic goals to improve
health equity by expanding the collection, reporting, and analysis
of standardized data, we refer readers to Priority 1 of our
Framework for Health Equity at https://www.cms.gov/priorities/health-equity/minority-health/equity-programs/framework.
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This RFI consists of four sections. The first section discusses a
general framework or set of principles for development of the IPF-PAI.
The second section outlines potential approaches that could be used to
develop the items or data elements that

[[Page 23201]]

make up the PAI. This section also discusses patient assessment data
elements in use in PAIs for skilled nursing facilities and other
healthcare settings that could potentially be adapted for use in the
IPF-PAI. The third section outlines potential approaches that could be
used to collect patient assessment data. Finally, the fourth section
solicits public comment on the principles and approaches listed in the
first three sections and seeks other input regarding the IPF-PAI.
1. Framework for Development of the IPF-PAI
We considered similar legislatively derived PAIs previously
implemented for certain post-acute care (PAC) providers to inform the
goals and guiding principles for the IPF-PAI because of similarities of
section 4125(b) of CAA, 2023 to the Improving Medicare Post-Acute Care
Transformation Act of 2014 (IMPACT Act) (Pub. L. 113-185, October 6,
2014), codified at section 1899B of the Act. Similar to section 4125(b)
of CAA, 2023, section 1899B of the Act requires certain PAC providers,
specifically home health agencies (HHAs), skilled nursing facilities
(SNFs), inpatient rehabilitation facilities (IRFs), and long-term care
hospitals (LTCHs), to submit certain standardized patient assessment
data (as set forth at section 1899B(b)(1)(B)) using a standardized PAI
under the PAC providers' respective quality reporting programs. While
IPFs are acute care providers and not PAC providers, given the
similarities between the CAA, 2023 and section 1899B of the Act, we
considered the goals and guiding principles that we followed to
implement section 1899B of the Act for certain PAC providers and
examined their applicability and appropriateness for IPFs.
We previously identified four key considerations when assessing
Standardized Patient Assessment Data Elements for the PAC PAIs to
collect: (1) Overall clinical relevance; (2) Interoperable exchange to
facilitate care coordination during transitions in care; (3) Ability to
capture medical complexity and risk factors that can inform both
payment and quality; and (4) Scientific reliability and validity,
general consensus agreement for its usability.\10\ For the reasons
discussed in the following subsections, we believe that these
considerations are also appropriate for the development of the IPF-PAI.
In addition, we seek to balance the need to collect meaningful patient
data to improve care with the need to minimize administrative burden.
The remainder of this section describes each of these considerations in
the context of the IPF-PAI. As we discuss in section IV.B.4.a of this
proposed rule, we are soliciting comment on these considerations.
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\10\ We refer readers to the Prospective Payment System and
Consolidated Billing for Skilled Nursing Facilities; Updates to the
Quality Reporting Program and Value-Based Purchasing Program for
Federal fiscal year 2020 final rule (84 FR 38767); the Medicare
Program; Inpatient Rehabilitation Facility (IRF) Prospective Payment
System for Federal fiscal year 2020 and Updates to the IRF Quality
Reporting Program final rule (84 FR 39110), the Medicare and
Medicaid Programs; CY 2020 Home Health Prospective Payment System
Rate Update; Home Health Value-Based Purchasing Model; Home Health
Quality Reporting Requirements; and Home Infusion Therapy
Requirements CY 2020 final rule (84 FR 60567), and the Medicare
Program; Hospital Inpatient Prospective Payment Systems for Acute
Care Hospitals and the Long-Term Care Hospital Prospective Payment
System and Policy Changes and fiscal year 2020 Rates; Quality
Reporting Requirements for Specific Providers; Medicare and Medicaid
Promoting Interoperability Programs Requirements for Eligible
Hospitals and Critical Access Hospitals final rule (84 FR 42537).
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a. Overall Clinical Relevance
In each category of assessment required by section
1886(s)(4)(E)(ii), as added by section 4125(b) of CAA, 2023,
(functional status; cognitive function and mental status; special
services, treatments, and interventions for psychiatric conditions;
medical conditions and comorbidities; impairments, and other categories
as determined appropriate by the Secretary), we seek to establish
Standardized Patient Assessment Data Elements that providers can use to
support high quality care and outcomes in the IPF setting. As we
evaluate Standardized Patient Assessment Data Elements in PAIs designed
for other care settings, we intend to work with CMS Medical Officers,
including psychiatrists, to consider the clinical relevance for IPF
patients as a determining factor in whether an item merits inclusion in
the IPF-PAI. For an example of a PAI in use in another setting, we
refer readers to the IRF-PAI instrument available at https://www.cms.gov/files/document/irf-pai-version-40-eff-10012022-final.pdf.
We are particularly interested in learning about specific instruments
and tools in each area of assessment that have high clinical relevance
in the IPF setting and welcome comments regarding Standardized Patient
Assessment Data Elements that may not be clinically relevant to the IPF
setting.
To ensure the clinical relevance of the instrument across a diverse
group of IPF patients, we are considering structuring the assessment
with conditional questions, so that certain sets of questions are only
indicated if the questions are relevant to the patient. Furthermore, we
note that some data elements may only be appropriate for collection at
certain times during the patient's stay (for example, only at admission
or only at discharge). We solicit comments regarding the most effective
structure to employ in the development of the IPF-PAI.
b. Interoperability
Interoperability is a key priority and initiative at CMS. Across
the organization, we aim to promote the secure exchange, access, and
use of electronic health information to support better informed
decision making and a more efficient healthcare system. As a part of
this effort, we make interoperability a priority for standardized data
collection. We intend to ensure that the IPF-PAI meets Health Level
7[supreg] (HL7[supreg]) Fast Healthcare Interoperability
Resources[supreg] (FHIR[supreg]) standards.
As part of our interoperability considerations, we are interested
in whether Standardized Patient Assessment Data Elements already in use
in the CMS Data Element Library (DEL) are appropriate and clinically
relevant for the IPF setting. In CY 2021, approximately 8,000
admissions to IPFs were individuals transferred from SNFs or IRFs. We
are interested in whether Standardized Patient Assessment Data Elements
already used in the DEL can be used to better support interoperability
between providers, given the high number of transfers.
c. Ability To Capture Medical Complexity and Risk Factors
We intend to expand our efforts to refine the IPF PPS to increase
the accuracy of the payment system by better identifying patient
characteristics that best predict resource use during an IPF stay. To
identify Standardized Patient Assessment Data Elements that would help
predict resource use, we intend to evaluate Standardized Patient
Assessment Data Elements for their ability to explain medical
complexity, the need for special services and treatments, and to
measure case-mix differences that impact costs. It is our expectation
that an IPF-PAI that effectively differentiates treatment needs between
patients will also help IPFs plan and distribute their resources. Our
hope is that the IPF-PAI can therefore integrate with IPFs' business
practices. In addition, Standardized Patient Assessment Data Elements
that capture patient risk factors can

[[Page 23202]]

contribute to quality of care and patient safety.
d. Scientific Reliability and Validity
Standardized Patient Assessment Data Elements considered for
inclusion in the IPF-PAI must be scientifically reliable and valid in
IPF settings. We intend to draw on our significant experience in
development of quality measures in the IPFQR Program and development of
Standardized Patient Assessment Data Elements for other PAIs, such as
the IRF-PAI and the Minimum Data Set (MDS) (the PAI for SNFs), in our
development of Standardized Patient Assessment Data Elements for the
IPF-PAI.\11\ It is important to note that the statutorily required
timeframe for implementation of the IPF-PAI for RY 2028 limits our
ability to develop and test a full battery of new Standardized Patient
Assessment Data Elements for the launch of the IPF-PAI. We anticipate
the need and opportunity for incremental revisions to the IPF-PAI in
the future.
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\11\ For more information on other PAIs, we refer readers to
https://www.cms.gov/medicare/payment/prospective-payment-systems/inpatient-rehabilitation/pai (for the IRF-PAI), to https://www.cms.gov/medicare/quality/home-health/oasis-data-sets (for the
OASIS data set for HHAs), to https://www.cms.gov/medicare/quality/long-term-care-hospital/ltch-care-data-set-ltch-qrp-manual (for the
CARE data set for LTCHs), and to https://www.cms.gov/medicare/quality/nursing-home-improvement/resident-assessment-instrument-manual (for the Minimum Data Set (MDS) Resident Assessment
Instrument (RAI)).
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We anticipate that our development process for new Standardized
Patient Assessment Data Elements will include working with teams of
researchers for each category including a group of advisors made up of
clinicians and academic researchers for each team with expertise in
IPFs. We expect to convene a Technical Expert Panel (TEP) to provide
expert input on new and existing Standardized Patient Assessment Data
Elements that merit consideration for inclusion and testing, including
environmental scans and reviews of scientific literature. In an ideal
scenario, Standardized Patient Assessment Data Elements would be tested
in a representative sample of IPFs for appropriateness in different IPF
settings and across a range of patients. Standardized Patient
Assessment Data Elements would be tested for inter-rater (that is,
consistency in results regardless of who is administering the
assessment) and inter-organizational reliability, for validity in all
IPF settings, for internal consistency, and for breadth of application
among a range of IPF patients. We anticipate that Standardized Patient
Assessment Data Elements would also need to be tested for their ability
to detect differences among patients and costs of treatment. Due to the
constraints of the statutorily required implementation timeframe, it
may not be possible to complete all testing before launching the IPF-
PAI.
The process for scientifically testing each question and set of
responses is lengthy and resource-intensive. This process is based on
the steps for quality measure development described in the Blueprint
Measure Lifecycle,\12\ developed by the CMS Measures Management System.
These steps include literature review and environmental scanning;
various levels of field testing to understand the ``real world''
performance of the data elements; and iterative expert and interested
parties engagement to include broader perspectives on topics, candidate
data elements, and interpretation of testing results. If appropriate,
using data currently collected by IPFs or Standardized Patient
Assessment Data Elements that have been tested and validated for use in
other clinical settings can reduce these timeframes because test data
are already available.
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\12\ https://mmshub.cms.gov/blueprint-measure-lifecycle-overview.
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e. Administrative Burden
In evaluating Standardized Patient Assessment Data Elements for
inclusion in the IPF-PAI, we are considering the burden of data
collection through the PAI and aiming to minimize additional burden by
considering whether any data that is currently collected through IPFQR
Program measures or on IPF claims could be collected as Standardized
Patient Assessment Data Elements to avoid duplication of data that IPFs
are already reporting. We are also considering how collecting some data
for some IPFQR Program measures through the IPF-PAI and collecting
other data through the Hospital Quality Reporting (HQR) system would
affect the reporting burden for participating IPFs. Licensing,
permissions costs, or copyright restrictions that would add to
administrative costs and burdens are also a consideration as we
evaluate existing PAIs and mechanisms or tools for submitting IPF-PAI
data.
As we develop the IPF-PAI, we are interested in receiving
information about how to find a balance between collecting the most
relevant and useful information and the administrative burden of
administering the assessment and submitting the assessment data.
2. Elements of the IPF-PAI
Section 1886(s)(4)(E)(ii) of the Act, added by section
4125(b)(1)(C) of the CAA, 2023, requires that the standardized patient
assessment data to be collected in the IPF-PAI must be with respect to
six enumerated categories.
a. Functional Status
The first enumerated category of data for the IPF-PAI is functional
status. Section 1886(s)(4)(E)(ii)(I) of the Act provides that
functional status may include mobility and self-care at admission to a
psychiatric hospital or unit and before discharge from a psychiatric
hospital or unit. We note that information in this category is
generally found in a patient's discharge summary and are interested in
learning about standardized elements that correspond to functional
status as relevant to IPFs. We are interested in what assessments may
be currently in use in the IPF setting and meet criteria for inclusion
in the IPF-PAI.
b. Cognitive Function and Mental Status
The second enumerated category of data for the IPF-PAI is cognitive
function and mental status. Section 1886(s)(4)(E)(ii)(II) of the Act
provides that cognitive function may include the ability to express
ideas and to understand, and mental status may include depression and
dementia. We note that in the IPF setting, a patient's diagnoses, which
can be abstracted from their medical chart, provide some information
related to this category. We are aware that IPFs may be currently
assessing cognitive function using existing instruments. We are
interested in hearing from IPFs about which instruments are currently
in use to measure cognitive function in IPFs and which have high
clinical relevance for the IPF setting.
c. Special Services, Treatments, and Interventions
The third enumerated category of data for the IPF-PAI is special
services, treatments, and interventions for psychiatric conditions.
Section 1886(s)(4)(E)(ii)(III) of the Act neither addresses what these
terms mean nor provides any illustrative examples. As discussed in
section V.C. of this rule, the IPFQR Program already collects
information about the use of restraint and seclusion through quality
measures (Hospital Based Inpatient Psychiatric Services (HBIPS)-2,
Hours of Physical Restraint, and HBIPS-3, Hours of Seclusion Use),
while claims include information about ECT treatments provided. Other
areas of interest in this

[[Page 23203]]

category may include high-cost medications, use of chemical restraints,
one-to-one observation, and high-cost technologies. We are interested
in whether these or any other special services, treatments, or
interventions should be considered for inclusion in the IPF-PAI.
d. Medical Conditions and Comorbidities
The fourth enumerated category of data for the IPF-PAI is medical
conditions and comorbidities. Section 1886(s)(4)(E)(ii)(IV) of the Act
provides that medical conditions and comorbidities may include
diabetes, congestive heart failure, and pressure ulcers. We note that
IPF claims record a significant number of medical conditions and
comorbidities to receive the payment adjustment for comorbidities in
the IPF PPS and conditions that are relevant to the IPF stay. In
reviewing Standardized Patient Assessment Data Elements listed in this
category in PAIs in use in PAC settings, we observed that these PAIs
include Standardized Patient Assessment Data Elements regarding pain
interference in this category, such as the effect of pain on sleep,
pain interference with therapy activities, and pain interference with
day-to-day activities. We are interested in learning from commenters
whether these existing data elements from the PAC settings would be
clinically relevant for inclusion in this category for the IPF-PAI.
e. Impairments
The fifth enumerated category of data for the IPF-PAI is
impairments. Section 1886(s)(4)(E)(ii)(V) of the Act provides that
impairments may include incontinence and an impaired ability to hear,
see, or swallow. PAIs in use in other settings include Standardized
Patient Assessment Data Elements regarding hearing and vision (for
example, Section B, ``Hearing, Speech, and Vision'' of the IRF-PAI
Version 4.2 (Effective October 1, 2024)).\13\ We are interested both in
whether Standardized Patient Assessment Data Elements regarding
additional impairments merit consideration for the IPF-PAI, and whether
the Standardized Patient Assessment Data Elements regarding hearing and
vision included in the IRF-PAI are appropriate for the IPF setting. We
note that the Standardized Patient Assessment Data Element categories
are not intended to be duplicative, so we would seek to avoid any
overlap in measuring cognitive deficits in the Cognitive Function
category with the Impairments category.
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\13\ https://www.cms.gov/files/document/irf-pai-version-42-effective-10-01-24.pdf.
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f. Other Categories Deemed Appropriate
The sixth enumerated category of data for the IPF-PAI is other
categories as determined appropriate by the Secretary. We believe this
provision allows for flexibility to include additional areas in the
IPF-PAI.
One of our strategic priorities, as laid out in the CMS Strategic
Plan,\14\ reflects our deep commitment to improvements in health equity
by addressing the health disparities that underlie our health system.
In line with that strategic priority, we are interested in Standardized
Patient Assessment Data Elements that would provide insight about any
demographic factors (for example, race, national origin, primary
language, ethnicity, sexual orientation, and gender identity) as well
as SDOH (for example, housing status and food security) associated with
underlying inequities. We are also interested in whether there are
Standardized Patient Assessment Data Elements that would provide
insight into special interventions that IPFs are providing to support
patients after discharge which could serve to potentially reduce the
incidence of readmissions.
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\14\ The CMS Strategic Plan. Available at https://www.cms.gov/about-cms/what-we-do/cms-strategic-plan. Accessed February 20, 2024.
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We note that, beginning with mandatory reporting of CY 2025 data
for FY 2027 payment determination, the IPFQR Program includes the
Screening for SDOH measure, which assesses the percentage of patients,
aged 18 years and over at the time of admission, who are screened for
five specific health-related social needs (HRSNs)--food insecurity,
housing instability, transportation needs, utility difficulties, and
interpersonal safety, but which does not require reporting of that
information at the patient-level (88 FR 51117). Furthermore, we note
that PAIs adopted for the PAC settings discussed previously include
collection of SDOH data under section 1899B(b)(1)(B)(vi) of the Act,
which contains a similar provision for other categories deemed
appropriate by the Secretary.\15\
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\15\ For further information detailing the rationale for
adopting SDOH Standardized Patient Assessment Data Elements in these
settings, we refer readers to the Prospective Payment System and
Consolidated Billing for Skilled Nursing Facilities; Updates to the
Quality Reporting Program and Value-Based Purchasing Program for
Federal fiscal year 2020 final rule (84 FR 38805 through 38817); the
Medicare Program; Inpatient Rehabilitation Facility (IRF)
Prospective Payment System for Federal fiscal year 2020 and Updates
to the IRF Quality Reporting Program final rule (84 FR 39149 through
38161), the Medicare and Medicaid Programs; CY 2020 Home Health
Prospective Payment System Rate Update; Home Health Value-Based
Purchasing Model; Home Health Quality Reporting Requirements; and
Home Infusion Therapy Requirements CY 2020 final rule (84 FR 60597
through 60608), and the Medicare Program; Hospital Inpatient
Prospective Payment Systems for Acute Care Hospitals and the Long-
Term Care Hospital Prospective Payment System and Policy Changes and
fiscal year 2020 Rates; Quality Reporting Requirements for Specific
Providers; Medicare and Medicaid Promoting Interoperability Programs
Requirements for Eligible Hospitals and Critical Access Hospitals
final rule (84 FR 42577 through 42588).
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We note that, if we deem it appropriate to add a SDOH category for
the IPF-PAI and these SDOH data are included as Standardized Patient
Assessment Data Elements in the PAI, they could potentially be used to
risk adjust or stratify measures collected for the IPFQR Program. We
are interested in learning whether using some of these SDOH data
adopted in other PAIs to risk adjust or stratify these measures would
make the measures in the IPFQR Program more meaningful.
3. Implementation of the PAI--Data Submission
We plan to develop flexible methods for providers to submit IPF-PAI
data to CMS, including batch uploads in specified formats and a portal
for submission of files. We welcome public comment on tools and methods
for submission of data that balance administrative burden and ease of
use.
4. Request for Information on IPF-PAI
In this proposed rule, we are requesting information from the
public to inform the selection of Standardized Patient Assessment Data
Elements to be collected on the IPF-PAI and the implementation process.
We are seeking information about PAIs IPFs currently use upon admission
and discharge, as well as information about how IPFs estimate resource
needs to determine capacity before a patient is admitted. We are also
seeking information about methods for IPFs to submit patient assessment
data and the potential administrative burden on IPFs, MACs, and CMS.
Finally, we are seeking input on the relationship between the IPF-PAI
and the measures within the IPFQR Program.
We solicit comment on the following topics:
a. Principles for Selecting Standardized Patient Assessment Data
Elements
To what extent do you agree with the principles for
selecting and developing Standardized Patient Assessment Data Elements
for the IPF-PAI?
What, if any, principles should CMS eliminate from the
Standardized

[[Page 23204]]

Patient Assessment Data Element selection criteria?
What, if any, principles should CMS add to the
Standardized Patient Assessment Data Element selection criteria?
b. Patient Assessments Recommended for Use in the IPF-PAI
Are there PAIs currently available for use, or that could
be adapted or developed for use in the IPF-PAI, to assess patients':
(1) functional status; (2) cognitive function and mental status; (3)
special services, treatments, and interventions for psychiatric
conditions; (4) medical conditions and comorbidities; (5) impairments;
(6) health disparities; or (7) other areas not mentioned in this RFI?
c. Functional Status Standardized Patient Assessment Data Elements
What aspects of function are most predictive of medical
complexity or increased resource needs to treat a patient in the IPF
setting?
Which of the Standardized Patient Assessment Data Elements
related to mobility (that is, the ability to toilet transfer, walk 10
feet, car transfer, walk 10 feet on an uneven surface, 1 step up (that
is, a curb), 4 steps up, 12 steps up, and pick up an object) currently
collected by PAC settings in their respective PAIs are clinically
relevant in the IPF setting? Do they otherwise meet the principles for
inclusion in the IPF-PAI?
d. Cognitive Function and Mental Status Standardized Patient Assessment
Data Elements
What aspects of cognitive function and mental status are
most predictive of medical complexity or increased resource needs to
treat a patient in the IPF setting?
What components or instruments are used to assess
cognitive function, mental status, or a combination thereof upon
admission? What, if any, differences are there between assessments
administered at admission and at discharge? What are the components of
the mental status assessments administered at admission and discharge?
e. Special Services, Treatments, and Interventions for Psychiatric
Conditions Standardized Patient Assessment Data Elements
What special services, treatments, and interventions are
most predictive of increased resource intensity during an IPF stay?
Do data currently collected as part of the IPFQR Program
related to special services and treatments (such as HBIPS-2 Hours of
Physical Restraint Use and HBIPS-3 Hours of Seclusion Use) meet the
criteria for inclusion in the IPF-PAI?
f. Medical Conditions and Comorbidities Standardized Patient Assessment
Data Elements
Is the Standardized Patient Assessment Data Element
regarding pain interference (effect on sleep, interference with therapy
activities, interference with day-to-day activities) currently
collected by PAC settings in their respective PAIs clinically relevant
in the IPF setting? Does it otherwise meet the criteria for inclusion
in the IPF-PAI?
Do the medical conditions and comorbidities coded on IPF
claims meet the criteria for inclusion in the IPF-PAI?
g. Impairments Standardized Patient Assessment Data Elements
Are Standardized Patient Assessment Data Elements related
to impairments (that is, the ability to hear and see in adequate light)
currently collected PAC settings in their respective PAIs clinically
relevant in the IPF setting? Do they otherwise meet the principles for
inclusion in the IPF-PAI?
What impairments are most predictive of increased resource
intensity during an IPF stay?
h. Other Categories of Standardized Patient Assessment Data Elements
What other assessment elements would contribute to the
clinical utility of the IPF-PAI?
What other assessment elements would best capture medical
complexity in the interest of refining and improving the accuracy of
the IPF PPS?
What other assessment elements would inform CMS's
understanding of health equity for IPF patients?
Are there special interventions that IPFs provide which
support patients after discharge, and which could serve to reduce the
incidence of hospital readmissions for psychiatric conditions? What, if
any, assessment elements would inform CMS's understanding of such
interventions?
i. Implementation
We anticipate that IPFs will need to make changes to
systems and processes and train staff in order to administer the
assessment and submit assessment data by the implementation date. What
operational or practical limitations would IPFs face in making those
necessary changes? Are there particular categories of Standardized
Patient Assessment Data Elements that would be more or less feasible
for IPFs to operationalize? We are particularly interested in impacts
to facilities of varying sizes and ownership characteristics.
What forms of training and guidance would be most useful
for CMS to provide to support IPFs in the implementation of the IPF-
PAI?
j. Relationship to the IPFQR Program
Would having some measures which require data submission
through the HQR system and having other measures, which require data
collection and submission through the IPF-PAI increase operational
complexity or administrative burden? If so, how would you recommend
mitigating this complexity or burden?
Would any of the current chart-abstracted measures be
easier to report through the IPF-PAI? If so, which measures?
Would any of the current measures in the program be more
meaningful if they were stratified or risk-adjusted using data from the
required patient assessment categories or other categories not
specified by the CAA, 2023 that should be added to the IPF-PAI?
What new measure concepts, which would use data collected
through Standardized Patient Assessment Data Elements in the IPF-PAI,
should we consider?

V. Inpatient Psychiatric Facility Quality Reporting (IPFQR) Program

A. Background and Statutory Authority

The Inpatient Psychiatric Facility Quality Reporting (IPFQR)
Program is authorized by section 1886(s)(4) of the Act, and it applies
to psychiatric hospitals and psychiatric units paid by Medicare under
the IPF PPS (see section II.A. of this proposed rule for a detailed
discussion of entities covered under the IPF PPS). Section
1886(s)(4)(A)(i) requires the Secretary to reduce by 2 percentage
points the annual update to the standard Federal rate for discharges
occurring during such rate year \16\ for

[[Page 23205]]

any IPF that does not comply with quality data submission requirements
under IPFQR program, set forth in section 1886(s)(4)(C) of the Act,
with respect to an applicable rate year.
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\16\ We note that the statute uses the term ``rate year'' (RY).
However, beginning with the annual update of the inpatient
psychiatric facility prospective payment system (IPF PPS) that took
effect on July 1, 2011 (RY 2012), we aligned the IPF PPS update with
the annual update of the ICD codes, effective on October 1 of each
year. This change allowed for annual payment updates and the ICD
coding update to occur on the same schedule and appear in the same
Federal Register document, promoting administrative efficiency. To
reflect the change to the annual payment rate update cycle, we
revised the regulations at 42 CFR 412.402 to specify that, beginning
October 1, 2012, the IPF PPS RY means the 12-month period from
October 1 through September 30, which we refer to as a ``fiscal
year'' (FY) (76 FR 26435). Therefore, with respect to the IPFQR
Program, the terms ``rate year,'' as used in the statute, and
``fiscal year'' as used in the regulation, both refer to the period
from October 1 through September 30. For more information regarding
this terminology change, we refer readers to section III of the RY
2012 IPF PPS final rule (76 FR 26434 through 26435).
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Section 1886(s)(4)(C) of the Act requires IPFs to submit to the
Secretary data on quality measures specified by the Secretary under
section 1886(s)(4)(D) of the Act. Except as provided in section
1886(s)(4)(D)(ii) of the Act, section 1886(s)(4)(D)(i) of the Act
requires that any measure specified by the Secretary must have been
endorsed by the consensus-based entity (CBE) with a contract under
section 1890(a) of the Act. Section 1886(s)(4)(D)(ii) of the Act
provides that, in the case of a specified area or medical topic
determined appropriate by the Secretary for which a feasible and
practical measure has not been endorsed by the CBE with a contract
under section 1890(a) of the Act, the Secretary may specify a measure
that is not endorsed as long as due consideration is given to measures
that have been endorsed or adopted by a consensus organization
identified by the Secretary.
Section 4125(b)(1) of CAA, 2023 amended section 1886(s)(4) of the
Act, by inserting a new paragraph (E), to require IPFs participating in
the IPFQR Program to collect and submit to the Secretary certain
standardized patient assessment data, using a standardized patient
assessment instrument (PAI) developed by the Secretary, for RY 2028 (FY
2028) and each subsequent rate year. We refer readers to section IV.B
of this proposed rule in which we solicit public comment on the
development of this PAI.
We refer readers to the FY 2019 IPF PPS final rule (83 FR 38589)
for a discussion of the background and statutory authority of the IPFQR
Program. We have codified procedural requirements and reconsideration
and appeals procedures for IPFQR Program decisions in our regulations
at 42 CFR 412.433 and 412.434. Consistent with previous IPFQR Program
regulations, we refer to both inpatient psychiatric hospitals and
psychiatric units as ``facilities'' or ``IPFs.'' This usage follows the
terminology in our IPF PPS regulations at Sec. 412.402.
For additional information on procedural requirements related to
statutory authority, participation and withdrawal, data submission,
quality measure retention and removal, extraordinary circumstances
exceptions, and public reporting we refer readers to 42 CFR 412.433
Procedural requirements under the IPFQR Program.
For the IPFQR Program, we refer to the year in which an IPF would
receive the 2-percentage point reduction to the annual update to the
standard Federal rate as the payment determination year. An IPF
generally meets IPFQR Program requirements by submitting data on
specified quality measures in a specified time and manner during a data
submission period that occurs prior to the payment determination year.
These data reflect a period prior to the data submission period during
which the IPF furnished care to patients; this period is known as the
performance period. For example, for a measure for which CY 2025 is the
performance period which is required to be submitted in CY 2026 and
affects FY 2027 payment determination, if an IPF did not submit the
data for this measure as specified during CY 2026 (and meets all other
IPFQR Program requirements for the FY 2027 payment determination) we
would reduce by 2-percentage points that IPF's update for the FY 2027
payment determination year.

B. Measure Adoption

We strive to put patients and caregivers first, ensuring they are
empowered to partner with their clinicians in their healthcare decision
making using information from data driven insights that are
increasingly aligned with meaningful quality measures. We support
technology that reduces burden and allows clinicians to focus on
providing high-quality healthcare for their patients. We also support
innovative approaches to improve quality, accessibility, and
affordability of care while paying particular attention to improving
clinicians' and beneficiaries' experiences when interacting with our
programs. In combination with other efforts across HHS, we believe the
IPFQR Program helps to incentivize IPFs to improve healthcare quality
and value while giving patients and providers the tools and information
needed to make the best individualized decisions. Consistent with these
goals, our objective in selecting quality measures for the IPFQR
Program is to balance the need for information on the full spectrum of
care delivery and the need to minimize the burden of data collection
and reporting. We have primarily focused on measures that evaluate
critical processes of care that have significant impact on patient
outcomes and support CMS and HHS priorities for improved quality and
efficiency of care provided by IPFs. When possible, we also propose to
incorporate measures that directly evaluate patient outcomes and
experience. We refer readers to the CMS National Quality Strategy,\17\
the Behavioral Health Strategy,\18\ the Framework for Health
Equity,\19\ and the Meaningful Measures Framework \20\ for information
related to our priorities in selecting quality measures.
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\17\ Schreiber, M, Richards, A, et al. (2022). The CMS National
Quality Strategy: A Person-Centered Approach to Improving Quality.
Available at: https://www.cms.gov/blog/cms-national-quality-strategy-person-centered-approach-improving-quality.
\18\ CMS. (2022). CMS Behavioral Health Strategy. Available at
https://www.cms.gov/cms-behavioral-health-strategy.
\19\ CMS. (2022). CMS Framework for Health Equity 2022-2032.
Available at https://www.cms.gov/files/document/cms-framework-health-equity-2022.pdf.
\20\ CMS. (2023). Meaningful Measures 2.0: Moving from Measure
Reduction to Modernization. Available at https://www.cms.gov/medicare/quality/meaningful-measures-initiative/meaningful-measures-20. Accessed on March 20, 2024.
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1. Measure Selection Process
Section 1890A(a) of the Act requires that the Secretary establish
and follow a pre-rulemaking process, in coordination with the CBE
contracted under 1890(a) of the Act, to solicit input from multi-
stakeholder groups on the selection of quality and efficiency measures
for the IPFQR Program. Before being proposed for inclusion in the IPFQR
Program, measures are placed on a list of Measures Under Consideration
(MUC list), which is published annually. Following publication on the
MUC list, a multi-stakeholder group convened by the CBE reviews the
measures under consideration for the IPFQR Program, among other federal
programs, and provides input on those measures to the Secretary. Under
the Partnership for Quality Measurement (PQM), which is convened by the
entity which currently holds the contract under 1890(a) of the Act,
this process is known as the Pre-Rulemaking Measure Review (PRMR). We
consider the input and recommendations provided by this multi-
stakeholder group in selecting all measures for the IPFQR Program,
including the 30-Day Risk-Standardized All-Cause Emergency Department
(ED) Visit Following an IPF Discharge measure discussed in this
proposed rule.

[[Page 23206]]

2. Proposal To Adopt the 30-Day Risk-Standardized All-Cause ED Visit
Following an IPF Discharge Measure Beginning With the CY 2025
Performance Period/FY 2027 Payment Determination
a. Background
We have consistently stated our commitment to identifying measures
that examine the care continuum for patients with mental health
conditions and substance use disorders and to quantify outcomes
following IPF-discharge (see for example, the adoption of the
Medication Continuation Following Hospitalization in an IPF measure in
the FY 2020 IPF PPS Final Rule, 84 FR 38460 through 38462). Post-
discharge outcomes are an important part of our measurement strategy
because patient-centered discharge planning and coordination of care
for patients with any combination of mental health conditions and
substance use disorders improves long-term outcomes, including reducing
readmissions and other post-discharge acute care
services.^{21 22}
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\21\ Nelson, E.A. Maruish, M.E., Axler, J.L. Effects of
Discharge Planning with Outpatient Appointments on Readmission
Rates. https://ps.psychiatryonline.org/doi/10.1176/appi.ps.51.7.885.
\22\ Steffen S, K[ouml]sters M, Becker T, Puschner B. Discharge
planning in mental health care: a systematic review of the recent
literature. Acta Psychiatr Scand. 2009 Jul;120(1):1-9. doi: 10.1111/
j.1600-0447.2009.01373.x. Epub 2009 Apr 8. PMID: 19486329.
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Although not all post-discharge acute care visits are preventable,
there are actions that the IPF can take to maximize the chance for
patients' successful community reintegration.\23\ For example, care
transition models to reduce the need for additional acute care
following an inpatient stay have been adapted to the inpatient
psychiatric setting. To implement these models, IPFs may need to
consider how to include the patient and their caregivers, including
family, in discharge planning, how to communicate with post-discharge
providers, and how to ensure whole-person care for patients during and
following their discharge.\24\ Specifically, IPFs may need to assist
patients in connecting with outpatient providers, such as coordinating
with the patient and their caregiver to schedule the patient's first
post-discharge follow-up appointment, arranging for the patient's
intensive outpatient (IOP) care, or connecting to peer support
services. Additionally, IPFs may need to identify and address barriers
patients may face in accessing medications and adhering to scheduled
post-discharge follow-up appointments. Barriers may include financial
factors, transportation, and childcare, which may necessitate support
from social services, beginning during hospitalization and continuing
after discharge.^{25 26} Barriers may also include the
patient's concerns regarding the stigmatization associated with seeking
care post-discharge. This can be addressed through treatment provided
during the IPF stay.^{27 28} Improvements in patient experience
of care and patient-centeredness of care have been associated with
improved follow-up post-discharge and a reduction in patients requiring
post-discharge acute care.^{29 30} In summary, by proactively
addressing potential barriers to post-charge care, improving patient
experience of care and patient-centeredness of care, and implementing
care transition models, IPFs can reduce the need for post-discharge
acute care.
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\23\ Haselden, M., Corbeil, T., Tang, F., Olfson, M., Dixon,
L.B., Essock, S.M., Wall, M.M., Radigan, M., Frimpong, E., Wang, R.,
Lamberti, S., Schneider, M., & Smith, T.E. (2019). Family
Involvement in Psychiatric Hospitalizations: Associations With
Discharge Planning and Prompt Follow-Up Care. Psychiatric Services,
70(10), 860-866. https://doi.org/10.1176/appi.ps.201900028.
\24\ Pincus, Harold, Care Transition Interventions to Reduce
Psychiatric Re-Hospitalizations. National Association of State
Mental Health Program Directors. 2015. Available at https://nasmhpd.org/sites/default/files/Assessment%20%233_Care%20Transitions%20Interventions%20toReduce%20Psychiatric%20Rehospitalization.pdf. Accessed on January 23, 2024.
\25\ Allen, E.M., Call, K.T., Beebe, T.J., McAlpine, D.D., &
Johnson, P.J. (2017). Barriers to Care and Healthcare Utilization
among the Publicly Insured. Medical Care, 55(3), 207-214.
doi:10.1097/MLR.0000000000000644.
\26\ Mutschler, C., Lichtenstein, S., Kidd, S.A., & Davidson, L.
(2019). Transition experiences following psychiatric
hospitalization: A systematic review of the literature. Community
Mental Health Journal, 55(8), 1255-1274. doi:10.1007/s10597-019-
00413-9.
\27\ Allen, E.M., Call, K.T., Beebe, T.J., McAlpine, D.D., &
Johnson, P.J. (2017). Barriers to Care and Healthcare Utilization
among the Publicly Insured. Medical Care, 55(3), 207-214.
doi:10.1097/MLR.0000000000000644.
\28\ Mutschler, C., Lichtenstein, S., Kidd, S.A., & Davidson, L.
(2019). Transition experiences following psychiatric
hospitalization: A systematic review of the literature. Community
Mental Health Journal, 55(8), 1255-1274. doi:10.1007/s10597-019-
00413-9.
\29\ Donisi V, Tedeschi F, Wahlbeck K, Haaramo P, Amaddeo F.
Pre-discharge factors predicting readmissions of psychiatric
patients: a systematic review of the literature. BMC Psychiatry.
2016 Dec 16;16(1):449. doi: 10.1186/s12888-016-1114-0. PMID:
27986079; PMCID: PMC5162092.
\30\ Morgan C Shields, Mara A G Hollander, Alisa B Busch, Zohra
Kantawala, Meredith B Rosenthal, Patient-centered inpatient
psychiatry is associated with outcomes, ownership, and national
quality measures, Health Affairs Scholar, Volume 1, Issue 1, July
2023, qxad017, https://doi.org/10.1093/haschl/qxad017.
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The IPFQR Program currently has three measures that assess post-
discharge outcomes: (1) Follow-up After Psychiatric Hospitalization
(FAPH); (2) Medication Continuation Following Inpatient Psychiatric
Discharge; and (3) Thirty Day All-Cause Unplanned Readmission Following
Psychiatric Hospitalization (CBE #2860, the IPF Unplanned Readmission
measure). Each of these measures serves a unique role in assessing care
coordination and post-discharge outcomes.
The FAPH measure, which we adopted in the FY 2022 IPF PPS Final
Rule (86 FR 42640 through 42645), uses Medicare FFS claims to determine
the percentage of inpatient discharges from an IPF stay for which the
patient received a follow-up visit for treatment of mental illness. The
FAPH measure represents an important component of post-discharge care
coordination, specifically the transition of care to an outpatient
provider. However, this measure does not quantify patient outcomes.
The Medication Continuation Following Inpatient Psychiatric
Discharge measure, which we adopted in FY 2020 IPF PPS Final Rule (84
FR 38460 through 38465), assesses whether patients admitted to IPFs
with diagnoses of Major Depressive Disorder (MDD), schizophrenia, or
bipolar disorder filled at least one evidence-based medication prior to
discharge or during the post-discharge period. Medication continuation
is important for patients discharged from the IPF setting with these
disorders because of significant negative outcomes associated with non-
adherence to medication regimes. However, this measure does not
quantify patient outcomes with respect to the use of acute care
services post-discharge.
The IPF Unplanned Readmission measure, which we adopted in the FY
2017 IPPS/LTCH PPS final rule (81 FR 57241 through 57246), assesses
outcomes associated with worsening condition, potentially due to
insufficient discharge planning and post-discharge care coordination,
by assessing post-discharge use of acute care. The IPF Unplanned
Readmission measure estimates the incidence of unplanned, all-cause
readmissions to IPFs or short-stay acute care hospitals following
discharge from an eligible IPF index admission. A readmission is
defined as any admission that occurs within 3 to 30 days after the
discharge date from an eligible index admission to an IPF, except those
considered planned.\31\ However, this measure does not quantify the
proportion of patients 18 and older with an ED visit, without

[[Page 23207]]

subsequent admission, within 30 days of discharge from an IPF. Without
collecting this information in a measure, we believe there is a gap in
our understanding regarding patients' successful reintegration into
their communities following their IPF discharge.
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\31\ https://p4qm.org/measures/2860.
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To further understand this gap, we analyzed post-discharge outcomes
using claims data. In this analysis, we determined that, for patients
discharged from IPFs, the risk-adjusted rate of ED visits after an IPF
discharge between June 1, 2019 and July 31, 2021 (excluding the first
two quarters of 2020 due to the COVID-19 public health emergency) was
20.7 percent. The rate of readmissions captured under the IPF Unplanned
Readmission measure for this same period was 20.1 percent.\32\ This
means that approximately 40 percent of patients discharged from an IPF
had either an ED visit or an unplanned readmission within 30-days of
IPF discharge, but only about half of those visits are being captured
in the publicly reported IPF Unplanned Readmission measure. Visits to
an ED within 30 days of discharge from an IPF (regardless of whether
that visit results in a hospital readmission, observation stay,
discharge, or patient leaving without being seen) often indicate
deteriorating or heightened mental or physical health needs. That is,
these visits often represent a patient seeking care for symptoms that
were present during the patient's stay in the IPF, regardless of
whether the symptom was the reason for the admission, that have become
worse for the patient in the time since discharge. Therefore, we
believe that IPFs and the public would benefit from having these data
made publicly available to inform care decisions and quality
improvement efforts. Specifically, members of the public could use
these data to inform care decisions and IPFs could use these data to
compare their performance to that of similar IPFs. For example, by
having these data publicly reported IPFs could compare their
performance with that of other IPFs with similar patient populations, a
comparison which is not possible without this measure. If IPFs
identified that other IPFs with similar patient populations had better
rates of post-discharge ED visits (that is, other IPFs had fewer
patients seek care in an ED within 30 days of discharge from the IPF),
the IPF could identify a need to evaluate discharge planning and post-
discharge care coordination to identify process changes which could
improve outcomes.
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\32\ As depicted in the April 2023 file available at https://data.cms.gov/provider-data/archived-data/hospitals.
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To address this gap, we developed and are proposing the inclusion
of the new, claims-based 30-Day Risk-Standardized All-Cause ED Visit
Following an IPF Discharge measure (the IPF ED Visit measure) in the
IPFQR program beginning with the CY 2025 performance period/FY 2027
payment determination. This proposed IPF ED Visit measure aims to
provide information to patients, caregivers, other members of the
public, and IPFs about the proportion of patients who seek care in ED
in the 30 days following discharge from an IPF, but are not admitted as
an inpatient to an acute care hospital or IPF. This proposed measure
would assess the proportion of patients 18 and older with an ED visit,
including observation stays, for any cause, within 30 days of discharge
from an IPF, without subsequent admission.
We recognize that not all post-discharge ED visits are preventable,
nor are all post-discharge ED visits associated with the initial IPF
admission. However, we developed an all-cause ED visit rate, as opposed
to a more narrowly focused measure of ED admissions for mental health
or substance use concerns, for three primary reasons. First, such a
measure aligns most closely with the IPF Unplanned Readmission measure
as this measure is also an all-cause measure. Second, an all-cause
measure emphasizes the importance of whole-person care for patients.
Whole-person care, during the inpatient stay and through referral at
discharge, includes addressing the conditions that may jeopardize a
patient's health, but are not the reason for admission to the IPF, if
the IPF has reason to identify these conditions during the course of
treatment. For example, if an IPF were to identify through metabolic
screening that a patient has diabetes, it would be appropriate for that
IPF to recommend appropriate follow-up for that patient, such as with a
primary care provider, endocrinologist, or dietician. Such post-
discharge coordination of care could prevent the patient from seeking
acute care after discharge from the IPF for complications of diabetes,
such as diabetic ketoacidosis. Third, this measure includes ED visits
for all conditions because patients visiting the ED may do so for
physical symptoms associated with a mental health condition or
substance use disorder. An example is a patient with anxiety that
presents to the ED with chest pain and shortness of breath. If the
clinician documents the primary diagnosis as chest pain (R07.9) or
shortness of breath (R06.02), the patient would not be included in a
mental health and substance use-specific IPF ED Visit measure, despite
their history of anxiety (F41.9), a potential contributor to their
presenting symptoms at the ED. We recognize that it is possible that
such a visit may not be related to the patient's anxiety. However,
while not all acute care visits after discharge from an IPF are
preventable or necessarily related to the quality of care provided by
the IPF, there is evidence that improvements in the quality of care for
patients in the IPF setting can reduce rates of patients seeking acute
care after discharge from an IPF, representing an improved outcome for
patients.\33\
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\33\ See for instance Chung, D.T., Ryan, C.J., Hadzi-Pavlovic,
D., Singh, S.P., Stanton, C., & Large, M.M. (2017). Suicide rates
after discharge from psychiatric facilities: A systematic review and
meta-analysis. JAMA Psychiatry, 74(7), 694-702. https://doi.org/10.1001/jamapsychiatry.2017.1044 or Durbin, J., Lin, E., Layne, C.,
et al. (2007). Is readmission a valid indicator of the quality of
inpatient psychiatric care? Journal of Behavioral Health Services
Research, 34, 137-150. doi:10.1007/s11414- 007-9055-5.
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Additionally, we considered whether 30 days was an appropriate
timeframe for this measure. That is, we sought to identify whether a
measure that assessed post-discharge ED visits over a period shorter or
longer than 30 days would be more appropriate. Because IPFs are already
familiar with interpreting data for the 30-day period in the IPF
Unplanned Readmission measure, we determined that it would be
appropriate to maintain the 30-day period for the IPF ED Visit measure.
Additionally, by maintaining the same timeframe as the IPF Unplanned
Readmission measure, we can provide IPFs and patients with a more
complete picture of acute care among IPF patients after discharge from
the IPF.
Pursuant to the Meaningful Measures 2.0 Framework (a CMS initiative
that identifies priority domains for measures within CMS Programs
\34\), this measure addresses the ``Seamless Care Coordination'' and
the ``Person-Centered Care'' quality domains by encouraging facilities
to provide patient-centric discharge planning and support post-
discharge care transitions. The IPF ED Visit measure also aligns with
the CMS National Quality Strategy Goals \35\ of ``Engagement'' and
``Outcomes and Alignment.'' It supports outcomes and

[[Page 23208]]

alignment because this measure provides a quantified estimate of one
post-discharge outcome that patients may experience, that is a post-
discharge acute care visit that does not result in an admission. It
also supports the Behavioral Health Strategy \36\ domains of ``Quality
of Care'' and ``Equity and Engagement'' because engaging patients to
improve post-discharge outcomes is an element of providing quality
care. Furthermore, similar to the Meaningful Measures domain of
``Person-Centered Care,'' this measure supports the Universal
Foundation domain of ``Person-Centered Care.''
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\34\ https://www.cms.gov/medicare/quality/meaningful-measures-initiative/meaningful-measures-20.
\35\ Schreiber, M, Richards, A, et al. (2022). The CMS National
Quality Strategy: A Person-Centered Approach to Improving Quality.
Available at: https://www.cms.gov/blog/cms-national-quality-strategy-person-centered-approach-improving-quality.
\36\ CMS. (2022). CMS Behavioral Health Strategy. Available at
https://www.cms.gov/cms-behavioral-health-strategy.
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b. Overview of Measure
The IPF ED Visit measure was developed with input from clinicians,
patients, and policy experts; the measure was subject to the pre-
rulemaking process required by section 1890A of the Act, as discussed
further in section V.B.1 of this rule. Consistent with the CMS key
elements of the CMS Measure Development Lifecycle,\37\ we began with
measure conceptualization during which we performed a targeted
literature review and solicited input from a behavioral health
technical expert panel (TEP). This allowed us to ensure that this topic
addresses a gap that is important to interested parties. After
confirming this, we developed the measure specifications for the IPF ED
Visit measure. With these specifications, we issued a 30-day call for
public comment in the Federal Register and performed empirical testing
using claims data, including modeling for risk-adjustment. After
refining the measure specifications based on testing and public
comment, we performed an equity analysis in which we tested the risk-
adjustment methodology to ensure that the measure does not reflect
access issues related to patient demographics instead of quality of
care. By following steps in accordance with the Measure Development
Lifecycle, we sought to ensure that this is a vetted, valid, reliable,
and ready-to-implement claims-based measure which would assess the
proportion of patients 18 and older with an ED visit, including
observation stays, for any cause, within 30 days of discharge from an
IPF, without subsequent admission. By using the same definitions of
index admission and patient populations as those used in the IPF
Unplanned Readmission measure, we have designed the IPF ED Visit
measure to complement the IPF Unplanned Readmission measure to the
extent possible. We have also sought to minimize administrative burden
by developing this as a claims-based measure so that it adds no
information collection burden to clinicians and staff working in the
IPF setting.
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\37\ https://mmshub.cms.gov/blueprint-measure-lifecycle-overview.
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(1) Measure Calculation
The focus population for this measure is adult Medicare FFS
patients with a discharge from an IPF. The measure is based on all
eligible index admissions from the focus population. An eligible index
admission is defined as any IPF admission for which the patient meets
the following criteria: (1) age 18 or older at admission; (2)
discharged alive from an IPF; (3) enrolled in Medicare FFS Parts A and
B during the 12 months before the admission date, the month of
admission, and at least one month after the month of discharge from the
index admission (that is, the original stay in an IPF); and (4)
discharged with a principal diagnosis that indicates a psychiatric
disorder. Excluded from the measure are patients discharged against
medical advice (AMA) from the IPF index admission (because the IPF may
not have had the opportunity to conduct full discharge planning for
these patients); patients with unreliable data regarding death
demographics or a combination thereof in their claims record (because
these data are unreliable, they may lead to inaccuracies in the measure
calculation); patients who expired during the IPF stay (because post-
discharge care is not applicable to these patients); patients with a
discharge resulting in a transfer to another care facility (because the
receiving care facility would be responsible for discharge planning for
these patients); and patients discharged but readmitted within 3 days
of discharge, also known as an interrupted stay (because interrupted
stays are often reflective of patient needs outside of the IPF, such as
treatment for another condition).
To calculate the measure, we would use the following data sources
which are all available from Medicare administrative records and data
submitted by providers through the claims process: (1) Medicare
beneficiary and coverage files, which provide information on patient
demographic, enrollment, and vital status information to identify the
measure population and certain risk factors; (2) Medicare FFS Part A
records, which contain final action claims submitted by acute care and
critical access hospitals, IPFs, home health agencies, and skilled
nursing facilities to identify the measure population, readmissions,
and certain risk factors; and (3) Medicare FFS Part B records, which
contain final action claims submitted by physicians, physician
assistants, clinical social workers, nurse practitioners, and other
outpatient providers to identify certain risk factors. To ensure that
diagnoses result from encounters with providers trained to establish
diagnoses, this measure would not use claims for services such as
laboratory tests, medical supplies, or other ambulatory services. Index
admissions and ED visits would be identified in the Medicare FFS Part A
records. Comorbid conditions for risk-adjustment would be identified in
the Medicare Part A and Part B records in the 12 months prior to
admission, including the index admission. Demographic and FFS
enrollment data would be identified in the Medicare beneficiary and
coverage files.
To calculate the IPF ED Visit measure, CMS would: (1) identify all
IPF admissions in the one-year performance period; (2) apply inclusion
and exclusion criteria to identify index admissions; (3) identify ED
visits and observation stays within 30 days of discharge from each
index admission; (4) identify risk factors in the 12 months prior to
index admission and during the index admission; and (5) run
hierarchical logistic regression to compute the risk-standardized ED
visit rate for each IPF.\38\ This hierarchical logistic regression
would allow us to apply the risk-adjustment factors developed in
measure testing to ensure that measure results are comparable across
IPFs regardless of the clinical complexity of each IPF's patient
population.
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\38\ For an example of the hierarchal logistic risk-adjustment
algorithm, we refer readers to the algorithm for the IPF Unplanned
Readmission measure at https://www.cms.gov/medicare/quality-initiatives-patient-assessment-instruments/hospitalqualityinits/downloads/inpatient-psychiatric-facility-readmission-measure.zip.
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(2) Pre-Rulemaking Measure Review and Measure Endorsement
As required under section 1890A of the Act, the CBE established the
Partnership for Quality Measurement (PQM) to convene clinicians,
patients, measure experts, and health information technology
specialists to participate in the pre-rulemaking process and the
measure endorsement process. The pre-rulemaking process, also called
the Pre-Rulemaking Measure Review (PRMR), includes a review of measures
published on the publicly available list of Measures Under
Consideration (MUC List) by one of several committees convened by the
PQM for the purpose

[[Page 23209]]

of providing multi-stakeholder input to the Secretary on the selection
of quality and efficiency measures under consideration for use in
certain Medicare quality programs, including the IPFQR Program. The
PRMR process includes opportunities for public comment through a 21-day
public comment period, as well as public listening sessions. The PQM
posts the compiled comments and listening session inputs received
during the public comment period and the listening sessions within five
days of the close of the public comment period.\39\ More details
regarding the PRMR process may be found in the CBE's Guidebook of
Policies and Procedures for Pre-Rulemaking Measure Review and Measure
Set Review, including details of the measure review process in Chapter
3.\40\
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\39\ These materials are available at the PRMR section of the
PQM website: https://p4qm.org/PRMR.
\40\ https://p4qm.org/sites/default/files/2023-09/Guidebook-of-Policies-and-Procedures-for-Pre-Rulemaking-Measure-Review-%28PRMR%29-and-Measure-Set-Review-%28MSR%29-Final_0.pdf.
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The CBE-established PQM also conducts the measure endorsement and
maintenance (E&M) process to ensure measures submitted for endorsement
are evidence-based, reliable, valid, verifiable, relevant to enhanced
health outcomes, actionable at the caregiver-level, feasible to collect
and report, and responsive to variations in patient characteristics,
such as health status, language capabilities, race or ethnicity, and
income level, and are consistent across types of health care providers,
including hospitals and physicians (see section 1890(b)(2) of the Act).
The PQM convenes several E&M project groups twice yearly, formally
called E&M Committees, each comprised of an E&M Advisory Group and an
E&M Recommendations Group, to vote on whether a measure meets certain
quality measure criteria. More details regarding the E&M process may be
found in the E&M Guidebook, including details of the measure
endorsement process in the section titled, ``Endorsement and Review
Process.'' \41\
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\41\ The Partnership for Quality Measurement. (October 2023).
Endorsement and Maintenance (E&M) Guidebook. Available at: https://p4qm.org/sites/default/files/2023-12/Del-3-6-Endorsement-and-Maintenance-Guidebook-Final__0.pdf.
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As part of the PRMR process, the IPF ED Visit measure was reviewed
during the PRMR Hospital Recommendation Group meeting on January 18,
2024. For the voting procedures of the PRMR and E&M process, the PQM
utilized the Novel Hybrid Delphi and Nominal Group (NHDNG) multi-step
process, which is an iterative consensus-building approach aimed at a
minimum of 75 percent agreement among voting members, rather than a
simple majority vote, and supports maximizing the time spent to build
consensus by focusing discussion on measures where there is
disagreement. For example, the PRMR Hospital Recommendation Group can
reach consensus and have the following voting results: (A) Recommend,
(B) Recommend with conditions (with 75 percent of the votes cast as
recommend with conditions or 75 percent between recommend and recommend
with conditions), and (C) Do not recommend. If no voting category
reaches 75 percent or greater (including the combined [A] Recommend and
[B] Recommend with conditions) the PRMR Hospital Recommendation Group
did not come to consensus and the voting result is ``Consensus not
reached.'' Consensus not reached signals continued disagreement amongst
the committee despite being presented with perspectives from public
comment, committee member feedback and discussion, and highlights the
multi-faceted assessments of quality measures. More details regarding
the PRMR voting procedures may be found in Chapter 4 of the PQM
Guidebook of Policies and Procedures for Pre-Rulemaking Measure Review
and Measure Set Review.\42\ More details regarding the E&M voting
procedures may be found in the PQM Endorsement and Maintenance (E&M)
Guidebook.\43\ The PRMR Hospital Recommendation Group \44\ reached
consensus and recommended including this measure in the IPFQR Program
with conditions.
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\44\ We note that the PRMR Hospital Recommendation Group was
previously the Measure Applications Partnership (MAP) Hospital
Workgroup under the pre-rulemaking process followed by the previous
CBE.
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Seven members of the group recommended adopting the measure into
the IPFQR program without conditions; eleven members recommended
adoption with conditions; and one committee member voted not to
recommend the measure for adoption. Taken together, 94.73 percent of
the votes were between recommend & recommend with conditions.
The conditions specified by the PRMR Hospital Recommendation Group
were: (1) that the measure be considered for endorsement by a
consensus-based entity; and (2) further consideration of how the
measure addresses 72-hour transfers to the ED. We have taken those
considerations into account and are proposing this measure for adoption
because we believe we have adequately addressed the concerns raised by
those considerations.
To address the first condition, we have submitted the measure to
the CBE for consideration. For more information on submission to and
consideration by the CBE we refer readers to section V.B.2.b.(3) of
this rule.
The second voting condition requested that we further consider how
the measure addresses 72-hour transfers to the ED because of concerns
that IPFs may appear to have worse performance if ``interrupted stays''
are not excluded from the measure. An ``interrupted stay'' occurs when
a patient is discharged from an IPF and readmitted to the same IPF
within 72 hours. This frequently occurs when a patient needs medical
treatment that is beyond the scope of the IPF, such as care in an ED
for an emergent health issue. We believe that this concern is
sufficiently addressed in the ED Visit measure's specifications because
these ``interrupted stays'' are excluded from the measure, as described
in section V.B.2.b.(1) of this rule. This exclusion is defined as an
index admission with a readmission on Days 0, 1, or 2 post-discharge.
In other words, patients transferred to the ED and subsequently
readmitted to the IPF within 72 hours are excluded from the measure.
Therefore ``interrupted stays'' are excluded from the measure as per
the group's recommendation.
(3) CBE Endorsement
Section 1886(s)(4)(D)(i) of the Act generally requires that
measures specified by the Secretary shall be endorsed by the entity
with a contract under section 1890(a) of the Act (that is, the CBE).
After a measure has been submitted to the CBE, the committee
responsible for reviewing the measure evaluates the measure on five
domains: (1) Importance; (2) Feasibility; (3) Scientific Acceptability
(that is, reliability and validity); (4) Equity; and (5) Use and
Usability. Committee members evaluate whether the measure the domain is
``Met'', ``Not Met but Addressable'' or ``Not Met'' for each domain
using a set of criteria provided by the CBE.\45\ When a measure is
submitted it is assigned to one of the CBE's projects based on where in
the patient's healthcare experience the measure has the most relevance.
The five projects are (1) Primary Prevention; (2) Initial Recognition
and Management; (3) Management of Acute Events, Chronic Disease,
Surgery, Behavioral Health; (4) Advanced Illness and Post-Acute Care;
and (5) Cost and Efficiency.
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\45\ https://p4qm.org/EM.
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The measure developer submitted the measure for CBE endorsement
consideration in the Fall 2023 review

[[Page 23210]]

cycle. The measure was assigned to the Cost and Efficiency Project. The
CBE Cost and Efficiency Endorsement committee met on January 31, 2024
and did not reach consensus regarding the IPF ED Visit measure, with
60.6 percent voting in favor of endorsement or endorsement with
conditions and the remaining members voting to not endorse, which is
below the 75 percent threshold necessary for the endorsement of the
measure, as described in V.B.2.b. During the Cost and Efficiency
Endorsement committee's meeting, members of the committee discussed
whether an all-cause measure was appropriate and whether IPFs are able
to implement interventions to reduce post-discharge acute care.\46\
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\46\ For information about the Cost and Efficiency endorsement
review we refer readers to the meeting summary, available at https://p4qm.org/sites/default/files/Cost%20and%20Efficiency/material/EM-Cost-and-Efficiency-Fall2023-Endorsement-Meeting-Summary.pdf.
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As discussed in section V.B.2.a of this proposed rule, an all-cause
measure would complement the IPF Unplanned Readmission measure, would
emphasize whole-person care, and would capture visits to the ED for
patients with physical symptoms associated with mental health
conditions. Additionally, evidence shows that there are interventions
that reduce post-discharge acute care. These include adopted care
transition models, proactively connecting patients with post-discharge
providers, identifying and addressing patients' barriers to post-
discharge care, and focusing on providing patient-centered care and
improving patient experience of care.
Although section 1886(s)(4)(D)(i) of the Act generally requires
that measures specified by the Secretary shall be endorsed by the
entity with a contract under section 1890(a) of the Act, section
1886(s)(4)(D)(ii) of the Act states that, in the case of a specified
area or medical topic determined appropriate by the Secretary for which
a feasible and practical measure has not been endorsed by the entity
with a contract under section 1890(a) of the Act, the Secretary may
specify a measure that is not so endorsed as long as due consideration
is given to a measure that has been endorsed or adopted by a consensus
organization identified by the Secretary.
We have determined that this is an appropriate topic for the
adoption of a measure absent CBE endorsement because where possible we
focus on measures that assess patient outcomes. Unplanned use of acute
care after discharge from an IPF is often associated with worsening
condition, potentially due to insufficient discharge planning and post-
discharge care coordination. While the IPFQR Program currently has a
measure that assesses unplanned readmissions after discharge from an
IPF, there is a gap in the measure set with respect to unplanned ED
visits without a subsequent admission to an acute care hospital or IPF.
The IPF ED Visit measure fills that gap. We also reviewed CBE-endorsed
measures and were unable to identify any other CBE-endorsed measures
that assess outcomes that solely result in a patient's ED visit after
the patient's discharge from an IPF. The only endorsed measure that we
identified that addresses an IPF patient seeking acute care after
discharge is the IPF Unplanned Readmission measure. As we discussed
previously, the IPF Unplanned Readmission measure does not assess ED
visits that do not result in an admission. Therefore, we believe that
the IPF ED Visit measure is an important complement to the IPF
Unplanned Readmission measure. We did not find any other measures that
assess post-discharge ED visits without a subsequent admission, and
therefore the exception in section 1886(s)(4)(D)(ii) of the Act
applies.
c. Data Collection, Submission, and Reporting
Because all files used to calculate the IPF ED Visit measure are
available on Medicare claims, this measure requires no additional data
collection or submission by IPFs. We are proposing a reporting period
beginning with data from CY 2025 performance period/FY 2027 payment
determination year.

C. Summary of IPFQR Program Measures for the FY IPFQR Program

We are proposing one new measure for the FY 2027 IPFQR Program. If
we finalize adoption of this measure, the FY 2027 IPFQR Program measure
set would include 16 mandatory and one voluntary measure. Table 22 sets
forth the measures in the FY 2027 IPFQR Program.
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[GRAPHIC] [TIFF OMITTED] TP03AP24.034

BILLING CODE 4120-01-C

D. Proposal To Modify Data Submission Requirements for the FY 2027
Payment Determination and Subsequent Years

Section 1886(s)(4)(C) of the Act requires the submission of quality
data in a form and manner, and at a time, specified by the Secretary.
In the Medicare Program; Hospital Inpatient Prospective Payment Systems
for Acute Care Hospitals and the Long-Term Care Hospital Prospective
Payment System and fiscal year 2013 Rates; Hospitals' Resident Caps for
Graduate Medical Education Payment Purposes; Quality Reporting
Requirements for Specific Providers and for Ambulatory Surgical Centers
(FY 2013 IPPS/LTCH PPS) final rule (77 FR 53655), we specified that
data must be submitted between July 1 and August 15 of the calendar
year preceding a given payment determination year (for example, data
were required to be submitted between July 1, 2015 and August 15, 2015
for the FY 2016 payment determination). In the Medicare Program;
Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals
and the Long-Term Care Hospital Prospective Payment System and fiscal
year 2014 Rates; Quality Reporting Requirements for Specific Providers;
Hospital Conditions of Participation; Payment Policies Related to
Patient Status (FY 2014 IPPS/LTCH PPS) final rule (78 FR 50899), we
clarified that this policy applied to all future years of data
submission for the IPFQR Program unless we changed the policy through
future rulemaking.
In the FY 2018 IPF PPS final rule (82 FR 38472 through 38473) we
updated this policy by stating that the data submission period will be
a 45-day period beginning at least 30 days

[[Page 23212]]

following the end of the data collection period and that we will
provide notification of the exact dates through subregulatory means.
In the FY 2022 IPF PPS Final Rule (86 FR 42658 through 42661), we
finalized voluntary patient-level data reporting for the FY 2023
payment determination and mandatory patient-level data reporting for
chart-abstracted measures within the IPFQR Program beginning with FY
2024 payment determination and subsequent years. The measures currently
in the IPFQR Program affected by this requirement are set forth in
Table 23.
[GRAPHIC] [TIFF OMITTED] TP03AP24.035

As we have gained experience with patient-level data submission for
the IPFQR program, during the voluntary data submission period for FY
2023 (which occurred in CY 2022) and the first mandatory data
submission period for FY 2024 (which occurred in CY 2023), we have
observed that annual data submission periods require IPFs to store
large volumes of patient data to prepare for transmission to CMS.
Furthermore, the volume of data associated with all IPFs reporting a
full year of patient-level data during one data submission period
creates the risk that systems will be unable to handle the volume of
data.
We have reviewed how other quality reporting programs that require
patient-level data submission address these concerns and determined
that the Hospital Inpatient Quality Reporting (IQR) Program (78 FR
50811) and the Hospital Outpatient Quality Reporting (OQR) Program (72
FR 66872) both require quarterly submission of patient-level data. As
we considered requiring quarterly reporting for the IPFQR Program, we
also determined that increasing the frequency of data submission would
allow additional analysis of measure trends over time. We believe that
having additional data points (from additional quarters of data) could
allow for more nuanced analyses of the IPFQR Program's measures.
Specifically, we would be able to better identify quarterly highs or
lows that may be less apparent when data are combined over a full year.
We recognize that, if we update data reporting requirements to require
reporting four times per year instead of once per year, then IPFs would
need to meet four incremental deadlines instead of one deadline, and
that this increases the risk that an individual IPF may fail to submit
data specified for the measures and not receive its full market basket
update. However, we believe that this risk is low because IPFs already
have experience submitting some data required by the IPFQR Program on a
more frequent basis. Specifically, the COVID-19 Healthcare Personnel
(HCP) Vaccination Measure is currently reported into the CDC's National
Healthcare Safety Network (NHSN) for one week per month resulting in a
quarterly measure result (as originally adopted in the FY 2022 IPF PPS
final rule (86 FR 42636) and restated in the FY 2024 IPF PPS final rule
(88 FR 51131 through 51132). In addition, if this proposal for
quarterly data submission is finalized, data submission for each
calendar quarter would be required during a period of at least 45 days
beginning three months after the end of the calendar quarter. Table 24
summarizes these proposed deadlines for the CY 2025 and CY 2026
performance periods:

[[Page 23213]]

[GRAPHIC] [TIFF OMITTED] TP03AP24.036

Furthermore, we are proposing that all data which continue to be
reported on an annual basis (that is, non-measure data, aggregate
measures, and attestations) would be required to be reported
concurrently with the data from the fourth quarter of the applicable
year. For example, data reflecting the entirety of CY 2025 (that is,
non-measure data, aggregate measures, and attestations) would be
required by the Q4 2025 submission deadline (that is, May 15, 2026).
We welcome comments on this proposal.

VI. Collection of Information Requirements

Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et
seq.), 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. For the purposes of the PRA and this section
of the preamble, collection of information is defined under 5 CFR
1320.3(c) of the PRA's implementing regulations.
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.
We are soliciting public comment (see section VI.C of this proposed
rule) on each of these issues for the following sections of this
document that contain information collection requirements. Comments, if
received, will be responded to within the subsequent final rule.
The following changes will be submitted to OMB for review under
control number 0938-1171 (CMS-10432). We are not proposing any changes
that would change any of the data collection instruments that are
currently approved under that control number.
In section VI.2 of this proposed rule, we restate our currently
approved burden estimates. In section VI.3 of this proposed rule, we
estimate the changes in burden associated with update more recent wage
rates. Then in section VI.4 of this proposed rule, we estimate the
changes in burden associated with the policies proposed in this
proposed rule.

A. Wage Estimates

In the FY 2024 IPF PPS final rule, we utilized the median hourly
wage rate for Medical Records Specialists, in accordance with the
Bureau of Labor Statistics (BLS), to calculate our burden estimates for
the IPFQR Program (88 FR 51145). While the most recent data from the
BLS reflects a mean hourly wage of $24.56 per hour for all medical
records specialists, $26.06 is the mean hourly wage for ``general
medical and surgical hospitals,'' which is an industry within medical
records specialists.\47\ We believe the industry of ``general medical
and surgical hospitals'' is more specific to the IPF setting for use in
our calculations than other industries that fall under medical records
specialists, such as ``office of physicians'' or ``nursing care
facilities (skilled nursing facilities).'' We calculated the cost of
indirect costs, including fringe benefits, at 100 percent of the median
hourly wage, consistent with previous years. This is necessarily a
rough adjustment, both because fringe benefits and other indirect costs
vary significantly by employer and methods of estimating these costs
vary widely in the literature. Nonetheless, we believe that doubling
the hourly wage rate ($26.06 x 2 = $52.12) to estimate total cost is a
reasonably accurate estimation method. Accordingly, unless otherwise
specified, we will calculate cost burden to IPFs using a wage plus
benefits estimate of $52.12 per hour throughout the discussion in this
section of this rule for the IPFQR Program.
---------------------------------------------------------------------------

\47\ Medical Records Specialists (bls.gov).
---------------------------------------------------------------------------

Some of the activities previously finalized for the IPFQR Program
require beneficiaries to undertake tasks such as responding to survey
questions on their own time. In the FY 2024 IPF PPS final rule, we
estimated the hourly wage rate for these activities to be $20.71/hr (88
FR 51145). We are updating that estimate to a post-tax wage of $24.04/
hr.

[[Page 23214]]

The Valuing Time in U.S. Department of Health and Human Services
Regulatory Impact Analyses: Conceptual Framework and Best Practices
identifies the approach for valuing time when individuals undertake
activities on their own time.\48\ To derive the costs for
beneficiaries, we used a measurement of the usual weekly earnings of
wage and salary workers of $1,118, divided by 40 hours to calculate an
hourly pre-tax wage rate of $27.95/hr.\49\ This rate is adjusted
downwards by an estimate of the effective tax rate for median income
households of about 14 percent calculated by comparing pre- and post-
tax income,\50\ resulting in the post-tax hourly wage rate of $24.04/
hr. Unlike our State and private sector wage adjustments, we are not
adjusting beneficiary wages for fringe benefits and other indirect
costs since the individuals' activities, if any, would occur outside
the scope of their employment.
---------------------------------------------------------------------------

\48\ https://aspe.hhs.gov/reports/valuing-time-us-department-health-human-services-regulatory-impact-analyses-conceptual-framework.
\49\ https://www.bls.gov/news.release/pdf/wkyeng.pdf. Accessed
January 1, 2024.
\50\ https://www.census.gov/library/stories/2023/09/median-household-income.html. Accessed January 2, 2024.
---------------------------------------------------------------------------

B. Previously Finalized IPFQR Estimates

We are finalizing provisions that impact policies beginning with
the FY 2027 payment determination. For the purposes of calculating
burden, we attribute the costs to the year in which the costs begin.
Under our previously finalized policies, data submission for the
measures that affect the FY 2027 payment determination occurs during CY
2026 and generally reflects care provided during CY 2025. If we
finalize our proposal to switch to quarterly reporting in section XX.X
of this proposed rule, data submission for the FY 2027 payment
determination would begin during CY 2025. Our currently approved burden
for CY 2025 is set forth in Table 25.
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C. Updates Due to More Recent Information

In section VI.A of this proposed rule, we described our updated
wage rates which increase from $44.86/hr to $52.12/hr (an increase of
$7.26/hr) for activities performed by Medical Records Specialists and
from $20.71/hr to $24.04/hr (an increase of $3.33/hr) for activities
performed by individuals. The effects of these updates are set forth in
Table 26.
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D. Updates Due to Proposals in This Proposed Rule

In section V.B.2 of this proposed rule, we are proposing to adopt
the 30-Day Risk-Standardized All-Cause ED Visit Following an IPF
Discharge measure beginning with the CY 2025 performance period/FY 2027
payment determination. As described in section V.B.2.c. of this
preamble, we will calculate the 30-Day Risk-Standardized All-Cause ED
Visit Following an Inpatient Psychiatric Facility Discharge measure
using Medicare claims that IPFs and other providers submit for payment.
Since this is a claims-based measure there is no additional burden
outside of submitting a claim. The claim submission is approved by OMB
under control number 0938-0050 (CMS-2552-10). This rule does not
warrant any changes under that control number.
In Section V.D. of this proposed rule, we are proposing to require
IPFs to submit data on chart-abstracted measures quarterly. In CY 2025,
this would equate to one additional data submission period (that is,
the reporting period which would close on November 15, 2025 as set
forth in Table 27). In CY 2026, there would be an additional two data
submission periods (for a total of four annually). We estimate that the

[[Page 23217]]

increase in burden associated with the increase in data submission
periods is approximately equal to the burden of reporting one
attestation measure because both of these activities require logging
into and interacting with user interfaces within the CMS data reporting
system (that is, the Hospital Quality System--HQS). The effects of this
increase on the IPFQR Program for CY 2025 are set forth in Table 27.
The effects of this increase on the IPFQR Program for CY 2026 are set
forth in Table 28.
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E. Consideration of Burden Related to Clarification of Eligibility
Criteria for the Option To Elect To File an All-Inclusive Cost Report

As discussed in section III.E.4 of this proposed rule, we are
clarifying the eligibility criteria to be approved to file all-
inclusive cost reports. Only government-owned and tribally owned
facilities are able to satisfy these criteria, and thus only these
facilities will be permitted to file an all-inclusive cost report for
cost reporting periods beginning on or after October 1, 2024.
We do not estimate any change in the burden associated with the
hospital cost report (CMS-2552-10) OMB control number 0938-0050. We
anticipate that IPFs which are currently filing all-inclusive cost
reports, but are not government-owned or tribally owned, would not
incur additional burden related to the submission of the cost report.
The approved burden estimate associated with the submission of the
hospital cost report includes the same amount of burden for the
submission of an all-inclusive cost report as for the submission of a
cost report with a charge structure.
We recognize that these IPFs would be required to track ancillary
costs and charges using a charge structure; however, we expect that any
burden associated with this tracking would be part of the normal course
of a hospital's activities.

F. Submission of PRA-Related Comments

We have submitted a copy of this proposed rule's information
collection requirements to OMB for their review. The requirements are
not effective until they have been approved by OMB.
To obtain copies of the supporting statement and any related forms
for the proposed collections discussed above, please visit the CMS
website at https://www.cms.gov/regulationsand-guidance/legislation/paperworkreductionactof1995/pra-listing, or call the Reports Clearance
Office at 410-786-1326.
We invite public comments on these potential information collection
requirements. If you wish to comment, please submit your comments
electronically as specified in the DATES and ADDRESSES sections of this
proposed rule and identify the rule (CMS-1806-P), the ICR's CFR
citation, and OMB control number.

VII. Response to Comments

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

VIII. Regulatory Impact Analysis

A. Statement of Need

This rule proposes updates to the prospective payment rates for
Medicare inpatient hospital services provided by IPFs for discharges
occurring during FY 2025 (October 1, 2024 through September 30, 2025).
We are proposing to apply the 2021-based IPF market basket increase of
3.1 percent, reduced by the productivity adjustment of 0.4 percentage
point as required by 1886(s)(2)(A)(i) of the Act for a proposed total
FY 2025 payment rate update of 2.7 percent. In this proposed rule, we

[[Page 23218]]

are proposing to update the outlier fixed dollar loss threshold amount,
update the IPF labor-related share, adopt new CBSA delineations based
on OMB Bulletin 23-01, and update the IPF wage index to reflect the FY
2025 hospital inpatient wage index. Section 1886(s)(4) of the Act
requires IPFs to report data in accordance with the requirements of the
IPFQR Program for purposes of measuring and making publicly available
information on health care quality; and links the quality data
submission to the annual applicable percentage increase.

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). Section
3(f) of Executive Order 12866, as amended by Executive Order 14094,
defines a ``significant regulatory action'' as an action that is likely
to result in a rule that may: (1) have an annual effect on the economy
of $200 million or more (adjusted every 3 years by the Administrator of
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) create a
serious inconsistency or otherwise interfere with an action taken or
planned by another agency; (3) materially alter the budgetary impacts
of entitlements, 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 Executive Order 12866. In
accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
A regulatory impact analysis (RIA) must be prepared for regulatory
actions that are significant under section 3(f)(1) of Executive Order
12866. We estimate that the total impact of these changes for FY 2025
payments compared to FY 2024 payments will be a net increase of
approximately $70 million. This reflects a $75 million increase from
the update to the payment rates (+$85 million from the 4th quarter 2023
IGI forecast of the 2021-based IPF market basket of 3.1 percent, and -
$10 million for the productivity adjustment of 0.4 percentage point),
as well as a $5 million decrease as a result of the update to the
outlier threshold amount. Outlier payments are estimated to change from
2.1 percent in FY 2024 to 2.0 percent of total estimated IPF payments
in FY 2025.
Based on our estimates, OMB's Office of Information and Regulatory
Affairs has determined that this rulemaking is ``significant,'' though
not significant under section 3(f)(1) of Executive Order 12866.
Nevertheless, because of the potentially substantial impact to IPF
providers, we have prepared a Regulatory Impact Analysis that to the
best of our ability presents the costs and benefits of the rulemaking.
OMB has reviewed these proposed regulations, and the Departments have
provided the following assessment of their impact.
Nevertheless, because of the potentially substantial impact to IPF
providers, we have prepared a Regulatory Impact Analysis that to the
best of our ability presents the costs and benefits of the rulemaking.
Based on our estimates, OMB's Office of Information and Regulatory
Affairs has determined that this rulemaking is ``significant.''
Therefore, OMB has reviewed these proposed regulations, and the
Departments have provided the following assessment of their impact.

C. Detailed Economic Analysis

In this section, we discuss the historical background of the IPF
PPS and the impact of this proposed rule on the Federal Medicare budget
and on IPFs.
1. Budgetary Impact
As discussed in the RY 2005 and RY 2007 IPF PPS final rules, we
applied a budget neutrality factor to the Federal per diem base rate
and ECT payment per treatment to ensure that total estimated payments
under the IPF PPS in the implementation period would equal the amount
that would have been paid if the IPF PPS had not been implemented. This
budget neutrality factor included the following components: outlier
adjustment, stop-loss adjustment, and the behavioral offset. As
discussed in the RY 2009 IPF PPS notice (73 FR 25711), the stop-loss
adjustment is no longer applicable under the IPF PPS.
As discussed in section III.D.1.d of this proposed rule, we are
proposing to update the wage index and labor-related share, as well as
update the CBSA delineations based on OMB Bulletin 23-01, in a budget
neutral manner by applying a wage index budget neutrality factor to the
Federal per diem base rate and ECT payment per treatment. In addition,
as discussed in section III.F of this proposed rule, we are proposing
to apply a refinement standardization factor to the Federal per diem
base rate and ECT payment per treatment to account for the proposed
revisions to the ECT per treatment amount, ED adjustment, and patient-
level adjustment factors (as previously discussed in sections III.B,
III.C, and III.D of this proposed rule, and summarized in Addendum A),
which must be made budget-neutrally. Therefore, the budgetary impact to
the Medicare program of this proposed rule would be due to the proposed
market basket update for FY 2025 of 3.1 percent (see section III.A.2 of
this proposed rule) reduced by the productivity adjustment of 0.4
percentage point required by section 1886(s)(2)(A)(i) of the Act and
the update to the outlier fixed dollar loss threshold amount.
We estimate that the FY 2025 impact would be a net increase of $70
million in payments to IPF providers. This reflects an estimated $75
million increase from the update to the payment rates and a $5 million
decrease due to the update to the outlier threshold amount to set total
estimated outlier payments at 2.0 percent of total estimated payments
in FY 2025. This estimate does not include the implementation of the
required 2.0 percentage point reduction of the productivity-adjusted
market basket update factor for any IPF that fails to meet the IPF
quality reporting requirements (as discussed in section III.B.2. of
this proposed rule).
2. Impact on Providers
To show the impact on providers of the changes to the IPF PPS
discussed in this proposed rule, we compare estimated payments under
the proposed IPF PPS rates and factors for FY 2025 versus those under
FY 2024. We determined the percent change in the estimated FY 2025 IPF
PPS payments compared to the estimated FY 2024 IPF PPS payments for
each category of IPFs.

[[Page 23219]]

In addition, for each category of IPFs, we have included the estimated
percent change in payments resulting from the proposed update to the
outlier fixed dollar loss threshold amount; the proposed revisions to
the patient-level adjustment factors, ED adjustment, and ECT per
treatment amount; the updated wage index data including the proposed
labor-related share and the proposed changes to the CBSA delineations;
and the proposed market basket increase for FY 2025, as reduced by the
proposed productivity adjustment according to section 1886(s)(2)(A)(i)
of the Act.
To illustrate the impacts of the proposed FY 2025 changes in this
proposed rule, our analysis begins with FY 2023 IPF PPS claims (based
on the 2023 MedPAR claims, December 2023 update). We estimate FY 2024
IPF PPS payments using these 2023 claims, the finalized FY 2024 IPF PPS
Federal per diem base rate and ECT per treatment amount, and the
finalized FY 2024 IPF PPS patient and facility level adjustment factors
(as published in the FY 2024 IPF PPS final rule (88 FR 51054)). We then
estimate the FY 2024 outlier payments based on these simulated FY 2024
IPF PPS payments using the same methodology as finalized in the FY 2024
IPF PPS final rule (88 FR 51090 through 51092) where total outlier
payments are maintained at 2 percent of total estimated FY 2024 IPF PPS
payments.
Each of the following changes is added incrementally to this
baseline model in order for us to isolate the effects of each change:
The proposed update to the outlier fixed dollar loss
threshold amount.
The proposed revisions to patient-level adjustment
factors, ED adjustment, and the ECT per treatment amount.
The proposed FY 2025 IPF wage index, the proposed changes
to the CBSA delineations, and the proposed FY 2025 labor-related share
(LRS).
The proposed market basket increase for FY 2025 of 3.1
percent reduced by the proposed productivity adjustment of 0.4
percentage point in accordance with section 1886(s)(2)(A)(i) of the Act
for a payment rate update of 2.7 percent.
Our proposed column comparison in Table 29 illustrates the percent
change in payments from FY 2024 (that is, October 1, 2023, to September
30, 2024) to FY 2025 (that is, October 1, 2024, to September 30, 2025)
including all the proposed payment policy changes.
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3. Impact Results
Table 30 displays the results of our analysis. The table groups
IPFs into the categories listed here based on characteristics provided
in the Provider of Services file, the IPF PSF, and cost report data
from the Healthcare Cost Report Information System:
Facility Type.
Location.
Teaching Status Adjustment.
Census Region.
Size.
The top row of the table shows the overall impact on the 1,430 IPFs
included in the analysis. In column 2, we present the number of
facilities of each type that had information available in the PSF, had
claims in the MedPAR dataset for FY 2023. We note that providers are
assigned urban or rural status in Table 30 based on the current CBSA
delineations for FY 2024.
In column 3, we present the effects of the update to the outlier
fixed dollar loss threshold amount. We estimate that IPF outlier
payments as a percentage of total IPF payments are 2.1 percent in FY
2024. Therefore, we are proposing to adjust the outlier threshold
amount to set total estimated outlier payments equal to 2.0 percent of
total payments in FY 2025. The estimated change in total IPF payments
for FY 2025, therefore, includes an approximate 0.1 percent decrease in
payments because we would expect the outlier portion of total payments
to decrease from approximately 2.1 percent to 2.0 percent.

[[Page 23222]]

The overall impact of the estimated decrease to payments due to
updating the outlier fixed dollar loss threshold (as shown in column 3
of Table 30), across all hospital groups, is a 0.1 percent decrease.
The largest decrease in payments due to this change is estimated to be
0.2 percent for urban government IPF units, IPFs with more than 30
percent interns and residents to beds, and IPF units with 76+ beds.
In column 4, we present the effects of the proposed revisions to
the patient-level adjustment factors, ED adjustment, and ECT per
treatment amount and the application of the refinement standardization
factor that is discussed in section III.F of this proposed rule. We
estimate the largest payment increases would be for rural freestanding
government-owned IPFs. Conversely, we estimate that for-profit IPF
hospitals in rural areas would experience the largest payment decrease.
Payments to IPF units in urban areas would increase by 0.4 percent, and
payments to IPF units in rural areas would increase by 0.3 percent.
In column 5, we present the effects of the proposed budget-neutral
update to the IPF wage index, the proposed LRS, and the proposed
changes to the CBSA delineations for FY 2025. In addition, this column
includes the application of the 5-percent cap on any decrease to a
provider's wage index from its wage index in the prior year as
finalized in the FY 2023 IPF PPS final rule (87 FR 46856 through
46859). The change in this column represents the effect of using the
concurrent hospital wage data as discussed in section III.D.1.a of this
proposed rule. That is, the impact represented in this column reflects
the proposed update from the FY 2024 IPF wage index to the proposed FY
2025 IPF wage index, which includes basing the FY 2025 IPF wage index
on the FY 2025 pre-floor, pre-reclassified IPPS hospital wage index
data, applying a 5-percent cap on any decrease to a provider's wage
index from its wage index in the prior year, and updating the LRS from
78.7 percent in FY 2024 to 78.8 percent in FY 2025. We note that there
is no projected change in aggregate payments to IPFs, as indicated in
the first row of column 5; however, there would be distributional
effects among different categories of IPFs. For example, we estimate
the largest increase in payments to be 2.9 percent for freestanding
rural for-profit IPFs, and the largest decrease in payments to be 1.6
percent for IPFs located in the Pacific region.
Overall, IPFs are estimated to experience a net increase in
payments of 2.6 percent as a result of the updates in this proposed
rule. IPF payments are therefore estimated to increase by 2.4 percent
in urban areas and 4.0 percent in rural areas. The largest payment
increase is estimated at 5.0 percent for IPFs located in the East South
Central region.
4. Effect on Beneficiaries
Under the FY 2025 IPF PPS, IPFs will continue to receive payment
based on the average resources consumed by patients for each day. Our
longstanding payment methodology reflects the differences in patient
resource use and costs among IPFs, as required under section 124 of the
BBRA. We expect that updating IPF PPS rates in this rule will improve
or maintain beneficiary access to high quality care by ensuring that
payment rates reflect the best available data on the resources involved
in inpatient psychiatric care and the costs of these resources. We
continue to expect that paying prospectively for IPF services under the
FY 2025 IPF PPS will enhance the efficiency of the Medicare program.
As discussed in sections V.B.2 of this proposed rule, we expect
that the proposed additional IPFQR Program measure will support
improving discharge planning and care coordination to decrease the
likelihood that a patient will need to seek emergency care within 30
days of discharge from an IPF.
5. Effects of the Updates to the IPFQR Program
In section V.B.2. of this rule, we are proposing the 30-Day Risk-
Standardized All-Cause ED Visit Following an Inpatient Psychiatric
Facility Discharge measure beginning with data from the CY 2025
performance period for the FY 2027 payment determination. We do not
believe this update would impact providers' workflows or information
systems to collect or report the data because this measure is
calculated by CMS using information that IPFs already submit as part of
the claims process. There may be some effects of this measure on IPF
workflows and clinical processes to improve care coordination and
discharge planning to improve performance on the measure.
We are also proposing to adopt a quarterly data submission
requirement for measures for which we require patient-level data. We
believe there may be some non-recurrent costs associated with training
staff and updating processes to submit these data more frequently. We
believe that the recurring costs of these updates will be an increase
of 800 hours across all IPFs, equating to change of $41,696.
In accordance with section 1886(s)(4)(A) of the Act, we will apply
a 2-percentage point reduction to the FY 2025 market basket update for
IPFs that have failed to comply with the IPFQR Program requirements for
FY 2025, including reporting on the mandatory measures. For the FY 2024
payment determination, of the 1,568 IPFs eligible for the IPFQR
Program, 194 IPFs did not receive the full market basket update because
of the IPFQR Program; 42 of these IPFs chose not to participate and 152
did not meet the requirements of the program.
We intend to closely monitor the effects of the IPFQR Program on
IPFs and help facilitate successful reporting outcomes through ongoing
education, national trainings, and a technical help desk.
6. 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 be directly impacted and will review this proposed rule, we
assume that the total number of unique commenters on the most recent
IPF proposed rule will be the number of reviewers of this proposed
rule. For this FY 2025 IPF PPS proposed rule, the most recent IPF
proposed rule was the FY 2024 IPF PPS proposed rule, and we received
2,506 unique comments on this 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 IPF proposed rule in detail, and it is also possible that some
reviewers chose not to comment on that proposed rule. For these
reasons, we thought that the number of commenters would be a fair
estimate of the number of reviewers who are directly impacted by this
proposed rule. We are soliciting comments on this assumption.
We also recognize that different types of entities are in many
cases affected by mutually exclusive sections of this proposed rule;
therefore, for the purposes of our estimate, we assume that each
reviewer reads approximately 50 percent of this proposed rule.
Using the May, 2022 mean (average) wage information from the BLS
for medical and health service managers (Code 11-9111), we estimate
that the cost of reviewing this proposed rule is $123.06 per hour,
including other indirect costs https://www.bls.gov/oes/current/oes119111.htm. Assuming an

[[Page 23223]]

average reading speed of 250 words per minute, we estimate that it
would take approximately 112 minutes (1.87 hours) for the staff to
review half of this proposed rule, which contains a total of
approximately 56,000 words. For each IPF that reviews the proposed
rule, the estimated cost is (1.87 x $123.06) or $230.12. Therefore, we
estimate that the total cost of reviewing this proposed rule is
$576,680.72 ($230.12 x 2,506 reviewers).

D. Alternatives Considered

The statute gives the Secretary discretion in establishing an
update methodology to the IPF PPS. We continue to believe it is
appropriate to routinely update the IPF PPS so that it reflects the
best available data about differences in patient resource use and costs
among IPFs, as required by the statute. Therefore, we are proposing to:
update the IPF PPS using the methodology published in the RY 2005 IPF
PPS final rule (our ``standard methodology'') pre-floor, pre-
reclassified IPPS hospital wage index as its basis, along with the
proposed changes to the CBSA delineations. Additionally, we apply a 5-
percent cap on any decrease to a provider's wage index from its wage
index in the prior year. Lastly, we are proposing to revise the
patient-level adjustment factors, ED adjustment, and to increase the
ECT per treatment amount for FY 2025 (reflecting the pre-scaled and
pre-adjusted CY 2024 OPPS geometric mean cost).

E. Accounting Statement

As required by OMB Circular A-4 (available at www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf ), in Table 30, we
have prepared an accounting statement showing the classification of the
expenditures associated with the updates to the IPF wage index and
payment rates in this proposed rule. Table 30 provides our best
estimate of the increase in Medicare payments under the IPF PPS as a
result of the changes presented in this proposed rule and based on the
data for 1,430 IPFs with data available in the PSF, with claims in our
FY 2023 MedPAR claims dataset. Lastly, Table 30 also includes our best
estimate of the costs of reviewing and understanding this proposed
rule.
[GRAPHIC] [TIFF OMITTED] TP03AP24.043

F. Regulatory Flexibility Act

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. The great majority of hospitals and most
other health care providers and suppliers are small entities, either by
being nonprofit organizations or by meeting the Small Business
Administration (SBA) definition of a small business (having revenues of
less than $47 million in any 1 year).
According to the SBA's website at http://www.sba.gov/content/small-business-size-standards, IPFs falls into the North American Industrial
Classification System (NAICS) code 622210, Psychiatric and Substance
Abuse hospitals. The SBA defines small Psychiatric and Substance Abuse
hospitals as businesses having less than $47 million.
Because we lack data on individual hospital receipts, we cannot
determine the number of small proprietary IPFs or the proportion of
IPFs' revenue derived from Medicare payments. Therefore, we assume that
all IPFs are considered small entities.
The Department of Health and Human Services generally uses a
revenue impact of 3 to 5 percent as a significance threshold under the
RFA. As shown in Table 30, we estimate that the overall revenue impact
of this proposed rule on all IPFs is to increase estimated Medicare
payments by approximately 2.6 percent. As a result, since the estimated
impact of this proposed rule is a net increase in revenue across almost
all categories of IPFs, the Secretary has determined that this proposed
rule will have a positive revenue impact on a substantial number of
small entities.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 603 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a metropolitan
statistical area and has fewer than 100 beds. As discussed in section
VIII.C.2 of this proposed rule, the rates and policies set forth in
this proposed rule will not have an adverse impact on the rural
hospitals based on the data of the 199 rural excluded psychiatric units
and 60 rural psychiatric hospitals in our database of 1,430 IPFs for
which data were available. Therefore, the Secretary has determined that
this proposed rule will not have a significant impact on the operations
of a substantial number of small rural hospitals.

[[Page 23224]]

G. Unfunded Mandate Reform Act (UMRA)

Section 202 of the Unfunded Mandates Reform Act of 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 2023, 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. This proposed rule would not impose a mandate
that will result in the expenditure by state, local, and tribal
governments, in the aggregate, or by the private sector, of more than
$183 million in any 1 year.

H. Federalism

Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule that imposes
substantial direct requirement costs on state and local governments,
preempts state law, or otherwise has Federalism implications. This
proposed rule does not impose substantial direct costs on state or
local governments or preempt state law.
In accordance with the provisions of Executive Order 12866, this
proposed regulation was reviewed by the Office of Management and
Budget.
Chiquita Brooks-LaSure, Administrator of the Centers for Medicare &
Medicaid Services, approved this document on March 22, 2024.

Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2024-06764 Filed 3-28-24; 4:15 pm]
BILLING CODE 4120-01-P