[Federal Register Volume 89, Number 151 (Tuesday, August 6, 2024)]
[Rules and Regulations]
[Pages 64276-64340]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-16911]



[[Page 64275]]

Vol. 89

Tuesday,

No. 151

August 6, 2024

Part V





Department of Health and Human Services





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Centers for Medicare & Medicaid Services





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42 CFR Part 412





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

  Federal Register / Vol. 89 , No. 151 / Tuesday, August 6, 2024 / 
Rules and Regulations  

[[Page 64276]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 412

[CMS-1804-F]
RIN 0938-AV31


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

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

ACTION: Final action.

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SUMMARY: This final action updates the prospective payment rates for 
inpatient rehabilitation facilities (IRFs) for Federal fiscal year (FY) 
2025. As required by statute, this final action includes the 
classification and weighting factors for the IRF prospective payment 
system's case-mix groups and a description of the methodologies and 
data used in computing the prospective payment rates for FY 2025. We 
are updating the Office of Management and Budget (OMB) market area 
delineations for the IRF prospective payment system (PPS) wage index 
and applying a 3-year phase-out of the rural adjustment. This rule also 
includes updates for the IRF Quality Reporting Program (QRP).

DATES: This final action is effective on October 1, 2024.
    Applicability dates: The updated IRF prospective payment rates are 
applicable for IRF discharges occurring on or after October 1, 2024, 
and on or before September 30, 2025 (FY 2025).

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

I. Executive Summary

A. Purpose

    This final rule updates the prospective payment rates for IRFs for 
FY 2025 (that is, for discharges occurring on or after October 1, 2024, 
and on or before September 30, 2025) as required under section 
1886(j)(3)(C) of the Social Security Act (the Act). As required by 
section 1886(j)(5) of the Act, this final rule includes the 
classification and weighting factors for the IRF PPS's case-mix groups 
(CMGs), a description of the methodologies and data used in computing 
the prospective payment rates for FY 2025, and revised OMB core-based 
statistical area delineations from the July 21, 2023, OMB Bulletin (No. 
23-01) for the IRF PPS wage index.
    For the IRF QRP, this rule finalizes the collection of four new 
items as standardized patient assessment data elements and the 
modification of one item collected as a standardized patient assessment 
data element, in the IRF-Patient Assessment Instrument (IRF-PAI) 
beginning with the FY 2028 IRF QRP. This final rule also finalizes a 
proposal with modification to remove one assessment item from the IRF-
PAI. In addition, this final rule provides a summary of the information 
received on our Request for Information on quality measure concepts for 
the IRF QRP in future years and an IRF star rating system.

B. Summary of Major Provisions

    In this final rule, we use the methods described in the FY 2024 IRF 
PPS final rule (88 FR 50956) to update the prospective payment rates 
for FY 2025 using updated FY 2023 IRF claims and the most recent 
available IRF cost report data, which is FY 2022 IRF cost report data. 
We also use the revised OMB market area delineations from the July 21, 
2023, OMB Bulletin (No. 23-01) for the IRF PPS wage index, and apply a 
3-year phase-out of the rural adjustment for those IRFs changing from 
rural to urban.
    For the IRF QRP, we are finalizing four new items as standardized 
patient assessment data elements that IRFs must collect and submit 
using the IRF-PAI beginning with the FY 2028 IRF QRP: one item for 
Living Situation, two items for Food, and one item for Utilities. We 
are also finalizing our proposal to modify the current Transportation 
item beginning with the FY 2028 IRF QRP. Additionally, we are 
finalizing with modification our proposal to remove Item 14. Admission 
Class from the IRF-PAI. Finally, in the proposed rule, we sought input 
from interested parties on future IRF QRP quality measure concepts and 
an IRF star rating system and are providing a summary of the comment we 
received.

C. Summary of Impact

                        TABLE 1--Cost and Benefit
------------------------------------------------------------------------
           Provision description                   Transfers/costs
------------------------------------------------------------------------
FY 2025 IRF PPS payment rate update.......  The overall economic impact
                                             of this final rule is an
                                             estimated $280 million in
                                             increased payments from the
                                             Federal Government to IRFs
                                             during FY 2025.
FY 2028 IRF QRP changes...................  The overall economic impact
                                             of this final rule is an
                                             estimated increase in cost
                                             to IRFs of $392,113.40
                                             beginning with the FY 2028
                                             IRF QRP.
------------------------------------------------------------------------

II. Background

A. Statutory Basis and Scope for IRF PPS Provisions

    Section 1886(j) of the Act provides for the implementation of a 
per-discharge PPS for inpatient rehabilitation hospitals and inpatient 
rehabilitation units of a hospital (collectively, hereinafter referred 
to as IRFs). Payments under the IRF PPS encompass inpatient operating 
and capital costs of furnishing covered rehabilitation services (that 
is, routine, ancillary, and capital costs), but not direct graduate 
medical education costs, costs of approved nursing and allied health 
education activities, bad debts, and other services or items outside 
the scope of the IRF PPS. A complete discussion of the IRF PPS 
provisions appears in the original FY 2002 IRF PPS final rule (66 FR 
41316) and the FY 2006 IRF PPS final rule (70 FR 47880) and we provided 
a general description of the IRF PPS for FYs 2007 through 2019 in the 
FY 2020 IRF PPS final rule (84 FR 39055 through 39057). A general 
description of the IRF PPS for FYs 2020 through 2024, along with 
detailed background information for various other aspects of the IRF 
PPS, is now available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS.
    Under the IRF PPS from FY 2002 through FY 2005, the prospective 
payment rates were computed across 100 distinct CMGs, as described in 
the FY 2002 IRF PPS final rule (66 FR 41316). We constructed 95 CMGs 
using rehabilitation impairment categories (RICs), functional status 
(both motor and cognitive), and age (in some cases, cognitive status 
and age may not be a

[[Page 64277]]

factor in defining a CMG). In addition, we constructed five special 
CMGs to account for very short stays and for patients who expire in the 
IRF.
    For each of the CMGs, we developed relative weighting factors to 
account for a patient's clinical characteristics and expected resource 
needs. Thus, the weighting factors accounted for the relative 
difference in resource use across all CMGs. Within each CMG, we created 
tiers based on the estimated effects that certain comorbidities would 
have on resource use.
    We established the Federal PPS rates using a standardized payment 
conversion factor (formerly referred to as the budget-neutral 
conversion factor). For a detailed discussion of the budget-neutral 
conversion factor, please refer to our FY 2004 IRF PPS final rule (68 
FR 45684 through 45685). In the FY 2006 IRF PPS final rule (70 FR 
47880), we discussed in detail the methodology for determining the 
standard payment conversion factor.
    We applied the relative weighting factors to the standard payment 
conversion factor to compute the unadjusted prospective payment rates 
under the IRF PPS from FYs 2002 through 2005. Within the structure of 
the payment system, we then made adjustments to account for interrupted 
stays, transfers, short stays, and deaths. Finally, we applied the 
applicable adjustments to account for geographic variations in wages 
(wage index), the percentage of low-income patients, location in a 
rural area (if applicable), and outlier payments (if applicable) to the 
IRFs' unadjusted prospective payment rates.
    For cost reporting periods that began on or after January 1, 2002, 
and before October 1, 2002, we determined the final prospective payment 
amounts using the transition methodology prescribed in section 
1886(j)(1) of the Act. Under this provision, IRFs transitioning into 
the PPS were paid a blend of the Federal IRF PPS rate and the payment 
that the IRFs would have received had the IRF PPS not been implemented. 
This provision also allowed IRFs to elect to bypass this blended 
payment and immediately be paid 100 percent of the Federal IRF PPS 
rate. The transition methodology expired as of cost reporting periods 
beginning on or after October 1, 2002 (FY 2003), and payments for all 
IRFs now consist of 100 percent of the Federal IRF PPS rate.
    Section 1886(j) of the Act confers broad statutory authority upon 
the Secretary to propose refinements to the IRF PPS. In the FY 2006 IRF 
PPS final rule (70 FR 47880) and in correcting amendments to the FY 
2006 IRF PPS final rule (70 FR 57166), we are finalizing a number of 
refinements to the IRF PPS case-mix classification system (the CMGs and 
the corresponding relative weights) and the case-level and facility-
level adjustments. These refinements included the adoption of the 
Office of Management and Budget's (OMB's) Core-Based Statistical Area 
market definitions; modifications to the CMGs, tier comorbidities; and 
CMG relative weights, implementation of a new teaching status 
adjustment for IRFs; rebasing and revising the market basket used to 
update IRF payments, and updates to the rural, low-income percentage 
(LIP), and high-cost outlier adjustments. Beginning with the FY 2006 
IRF PPS final rule (70 FR 47908 through 47917), the market basket used 
to update IRF payments was a market basket reflecting the operating and 
capital cost structures for freestanding IRFs, freestanding inpatient 
psychiatric facilities (IPFs), and long-term care hospitals (LTCHs). 
Any reference to the FY 2006 IRF PPS final rule in this final rule also 
includes the provisions effective in the correcting amendments. For a 
detailed discussion of the final key policy changes for FY 2006, please 
refer to the FY 2006 IRF PPS final rule.
    In response to COVID-19 Public Health Emergency (PHE), we published 
two interim final rules with comment period affecting IRF payment and 
conditions for participation. The interim final rule with comment 
period (IFC) entitled ``Medicare and Medicaid Programs; Policy and 
Regulatory Revisions in Response to the COVID-19 Public Health 
Emergency,'' published on April 6, 2020 (85 FR 19230) (hereinafter 
referred to as the April 6, 2020 IFC), included certain changes to the 
IRF PPS medical supervision requirements at 42 CFR 412.622(a)(3)(iv) 
and 412.29(e) during the PHE for COVID-19. In addition, in the April 6, 
2020 IFC, we removed the post-admission physician evaluation 
requirement at Sec.  412.622(a)(4)(ii) for all IRFs during the PHE for 
COVID-19. In the FY 2021 IRF PPS final rule, to ease documentation and 
administrative burden, we permanently removed the post-admission 
physician evaluation documentation requirement at Sec.  
412.622(a)(4)(ii) beginning in FY 2021.
    A second IFC, entitled ``Medicare and Medicaid Programs, Basic 
Health Program, and Exchanges; Additional Policy and Regulatory 
Revisions in Response to the COVID-19 Public Health Emergency and Delay 
of Certain Reporting Requirements for the Skilled Nursing Facility 
Quality Reporting Program,'' was published on May 8, 2020 (85 FR 27550) 
(hereinafter referred to as the May 8, 2020 IFC). Among other changes, 
the May 8, 2020 IFC included a waiver of the ``3-hour rule'' at Sec.  
412.622(a)(3)(ii) to reflect the waiver required by section 3711(a) of 
the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) 
(Pub. L. 116-136, enacted on March 27, 2020). In the May 8, 2020 IFC, 
we also modified certain IRF coverage and classification requirements 
for freestanding IRF hospitals to relieve acute care hospital capacity 
concerns in States (or regions, as applicable) experiencing a surge 
during the PHE for COVID-19. In addition to the policies adopted in our 
IFCs, we responded to the PHE with numerous blanket waivers \1\ and 
other flexibilities,\2\ some of which are applicable to the IRF PPS. 
CMS finalized these policies in the Calendar Year 2023 Hospital 
Outpatient Prospective Payment and Ambulatory Surgical Center Payment 
Systems final rule with comment period (87 FR 71748). Subsequently, on 
May 11, 2023, the U.S. Department of Health and Human Services 
(``HHS'') declared the expiration of the COVID-19 public health 
emergency. (See https://www.hhs.gov/about/news/2023/02/09/fact-sheet-covid-19-public-health-emergency-transition-roadmap.html.) As a result, 
the ``3-hour rule'' waiver at Sec.  412.622(a)(3)(ii), and other IRF 
flexibilities were terminated.
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    \1\ CMS, ``COVID-19 Emergency Declaration Blanket Waivers for 
Health Care Providers,'' (updated Feb. 19, 2021) (available at 
https://www.cms.gov/files/document/summary-covid-19-emergency-declaration-waivers.pdf).
    \2\ CMS, ``COVID-19 Frequently Asked Questions (FAQs) on 
Medicare Fee-for-Service (FFS) Billing,'' (updated March 5, 2021) 
(available at https://www.cms.gov/files/document/03092020-covid-19-faqs-508.pdf).
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    The regulatory history previously included in each rule or notice 
issued under the IRF PPS, including a general description of the IRF 
PPS for FYs 2007 through 2024, is available on the CMS website at 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS.

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

    The Patient Protection and Affordable Care Act (Pub. L. 111-148) 
was enacted on March 23, 2010. The Health Care and Education 
Reconciliation Act of 2010 (Pub. L. 111-152), which amended and revised 
several provisions of the Patient Protection and Affordable Care Act, 
was enacted on March 30, 2010. In this final

[[Page 64278]]

rule, we refer to the two statutes collectively as the ``Affordable 
Care Act'' or ``ACA''.
    The ACA included several provisions that affect the IRF PPS in FYs 
2012 and beyond. In addition to what was previously discussed, section 
3401(d) of the ACA also added section 1886(j)(3)(C)(ii)(I) of the Act 
(providing for a ``productivity adjustment'' for FY 2012 and each 
subsequent FY). The productivity adjustment for FY 2025 is discussed in 
section V.D. of this final rule. Section 1886(j)(3)(C)(ii)(II) of the 
Act provides that the application of the productivity adjustment to the 
market basket update may result in an update that is less than 0.0 for 
a FY and in payment rates for a FY being less than such payment rates 
for the preceding FY.
    Section 3004(b) of the ACA and section 411(b) of the MACRA (Pub. L. 
114-10, enacted on April 16, 2015) also addressed the IRF PPS. Section 
3004(b) of ACA reassigned the previously designated section 1886(j)(7) 
of the Act to section 1886(j)(8) of the Act and inserted a new section 
1886(j)(7) of the Act, which contains requirements for the Secretary to 
establish a QRP for IRFs. Under that program, data must be submitted in 
a form and manner and at a time specified by the Secretary. Beginning 
in FY 2014, section 1886(j)(7)(A)(i) of the Act requires the 
application of a 2-percentage point reduction to the market basket 
increase factor otherwise applicable to an IRF (after application of 
paragraphs (C)(iii) and (D) of section 1886(j)(3) of the Act) for a FY 
if the IRF does not comply with the requirements of the IRF QRP for 
that FY. Application of the 2-percentage point reduction may result in 
an update that is less than 0.0 for a FY and in payment rates for a FY 
being lower than payment rates for the preceding FY. Reporting-based 
reductions to the market basket increase factor are not cumulative; 
they only apply for the FY involved. Section 411(b) of the MACRA 
amended section 1886(j)(3)(C) of the Act by adding paragraph (iii), 
which required us to apply for FY 2018, after the application of 
section 1886(j)(3)(C)(ii) of the Act, an increase factor of 1.0 percent 
to update the IRF prospective payment rates.

C. Operational Overview of the Current IRF PPS

    As described in the FY 2002 IRF PPS final rule (66 FR 41316), upon 
the admission and discharge of a Medicare Part A fee-for-service (FFS) 
patient, the IRF is required to complete the appropriate sections of a 
Patient Assessment Instrument (PAI), designated as the IRF-PAI. In 
addition, beginning with IRF discharges occurring on or after October 
1, 2009, the IRF is also required to complete the appropriate sections 
of the IRF-PAI upon the admission and discharge of each Medicare 
Advantage (MA) patient, as described in the FY 2010 IRF PPS final rule 
(74 FR 39762) and the FY 2010 IRF PPS correction notice (74 FR 50712). 
All required data must be electronically encoded into the IRF-PAI 
software product. Generally, the software product includes patient 
classification programming called the Grouper software. The Grouper 
software uses specific IRF-PAI data elements to classify (or group) 
patients into distinct CMGs and account for the existence of any 
relevant comorbidities.
    The Grouper software produces a five-character CMG number. The 
first character is an alphabetic character that indicates the 
comorbidity tier. The last four characters are numeric characters that 
represent the distinct CMG number. A free download of the Grouper 
software is available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Software.html. The Grouper software is also embedded in the internet 
Quality Improvement and Evaluation System (iQIES) User tool available 
in iQIES at https://www.cms.gov/medicare/quality-safety-oversight-general-information/iqies.
    Once a Medicare Part A FFS patient is discharged, the IRF submits a 
Medicare claim as a Health Insurance Portability and Accountability Act 
of 1996 (HIPAA) (Pub. L. 104-191, enacted on August 21, 1996) compliant 
electronic claim or, if the Administrative Simplification Compliance 
Act of 2002 (ASCA) (Pub. L. 107-105, enacted on December 27, 2002) 
permits, a paper claim (a UB-04 or a CMS-1450 as appropriate) using the 
five-character CMG number and sends it to the appropriate Medicare 
Administrative Contractor (MAC). In addition, once a MA patient is 
discharged, in accordance with the Medicare Claims Processing Manual, 
chapter 3, section 20.3 (Pub. 100-04), hospitals (including IRFs) must 
submit to their MAC an informational-only bill (type of bill (TOB) 111) 
that includes Condition Code 04. This will ensure that the MA days are 
included in the hospital's Supplemental Security Income (SSI) ratio 
(used in calculating the IRF LIP adjustment) for FY 2007 and beyond. 
Claims submitted to Medicare must comply with both ASCA and HIPAA.
    Section 3 of the ASCA amended section 1862(a) of the Act by adding 
paragraph (22), which requires the Medicare program, subject to section 
1862(h) of the Act, to deny payment under Part A or Part B for any 
expenses for items or services for which a claim is submitted other 
than in an electronic form specified by the Secretary. Section 1862(h) 
of the Act, in turn, provides that the Secretary shall waive such 
denial in situations in which there is no method available for the 
submission of claims in an electronic form or the entity submitting the 
claim is a small provider. In addition, the Secretary also has the 
authority to waive such denial in such unusual cases as the Secretary 
finds appropriate. For more information, see the ``Medicare Program; 
Electronic Submission of Medicare Claims'' final rule (70 FR 71008). 
Our instructions for the limited number of Medicare claims submitted on 
paper are available at https://www.cms.gov/manuals/downloads/clm104c25.pdf.
    Section 3 of the ASCA operates in the context of the administrative 
simplification provisions of HIPAA, which include, among others, the 
requirements for transaction standards and code sets codified in 45 CFR 
part 160 and part 162, subparts A and I through R (generally known as 
the Transactions Rule). The Transactions Rule requires covered 
entities, including covered healthcare providers, to conduct covered 
electronic transactions according to the applicable transaction 
standards. (See the CMS program claim memoranda at https://www.cms.gov/ElectronicBillingEDITrans/ and listed in the addenda to the Medicare 
Intermediary Manual, Part 3, section 3600.)
    The MAC processes the claim through its software system. This 
software system includes pricing programming called the ``Pricer'' 
software. The Pricer software uses the CMG number, along with other 
specific claim data elements and provider-specific data, to adjust the 
IRF's prospective payment for interrupted stays, transfers, short 
stays, and deaths, and then applies the applicable adjustments to 
account for the IRF's wage index, percentage of low-income patients, 
rural location, and outlier payments. For discharges occurring on or 
after October 1, 2005, the IRF PPS payment also reflects the teaching 
status adjustment that became effective as of FY 2006, as discussed in 
the FY 2006 IRF PPS final rule (70 FR 47880).

[[Page 64279]]

III. Summary of Provisions of the Final Rule

    In this FY 2025 IRF PPS final rule, we are finalizing our proposal 
to update the IRF PPS for FY 2025 and the IRF QRP for FY 2028.
    The finalized policy changes and updates to the IRF prospective 
payment rates for FY 2025 will be as follows:
     Update the CMG relative weights and average length of stay 
values for FY 2025, in a budget neutral manner, as discussed in section 
IV.
     Update the IRF PPS payment rates for FY 2025 by the market 
basket increase factor, based upon the most current data available, 
with a productivity adjustment required by section 1886(j)(3)(C)(ii)(I) 
of the Act, as described in section V.
     Update the FY 2025 IRF PPS payment rates by the FY 2025 
wage index, describe the adoption of the revised OMB market area 
delineations, the phase-out of the rural adjustment for those IRFs 
changing from rural to urban, and the labor related share in a budget-
neutral manner, as discussed in section V.
     Describe the calculation of the IRF standard payment 
conversion factor for FY 2025, as discussed in section V.
     Update the outlier threshold amount for FY 2025, as 
discussed in section VI.
     Update the cost-to-charge ratio (CCR) ceiling and urban/
rural average CCRs for FY 2025, as discussed in section VI.
    The finalized policy changes and updates to the IRF QRP for FY 2028 
will be as follows:
     Adoption of four items as standardized patient assessment 
data elements and modification of one item currently collected as a 
standardized patient assessment data element in the IRF-PAI.
     Remove Item 14. Admission Class item from the IRF-PAI.
     Summarize comments received on the request for information 
on IRF QRP quality measure and concepts.
     Summarize comments received on the request for information 
on an IRF QRP star rating system.

IV. Analysis of and Responses to Public Comments

    We received 44 timely responses from the public, many of which 
contained multiple comments on the FY 2025 IRF PPS proposed rule (89 FR 
22246). We received comments from various trade associations, inpatient 
rehabilitation facilities, individual physicians, therapists, 
clinicians, health care industry organizations, and health care 
consulting firms. The following sections, arranged by subject area, 
include a summary of the public comments that we received, and our 
responses.

A. General Comments on the FY 2025 IRF PPS Proposed Rule

    In addition to the comments we received on specific proposals 
contained within the proposed rule (which we address later in this 
final rule), commenters also submitted more general observations on the 
IRF PPS and IRF care generally.
    Comment: We received several comments that were outside the scope 
of the FY 2025 IRF PPS proposed rule. Specifically, we received 
comments regarding updates to the facility-level adjustments (for 
example, teaching, LIP, and rural); the removal of physician-centric 
language from regulatory text; the inclusion of recreational therapy in 
the IRF intensity of therapy requirement; the consequences of increased 
Medicare Advantage participation for IRFs and Medicare Advantage (MA) 
payment adjustments; disclosures of ownership and additional 
disclosable parties' information in the skilled nursing facility 
setting; and applicability of the IPPS low wage index policy for the 
IRF PPS wage index.
    Response: We thank the commenters for bringing these issues to our 
attention, and we will take these comments into consideration for 
potential policy refinements or direct the comments to the appropriate 
subject matter experts.

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

    As specified in Sec.  412.620(b)(1), we calculate a relative weight 
for each CMG that is proportional to the resources needed for an 
average inpatient rehabilitation case in that CMG. For example, cases 
in a CMG with a relative weight of 2, on average, will cost twice as 
much as cases in a CMG with a relative weight of 1. Relative weights 
account for the variance in cost per discharge due to the variance in 
resource utilization among the payment groups, and their use helps to 
ensure that IRF PPS payments support beneficiary access to care, as 
well as provider efficiency.
    In this final rule, we update the CMG relative weights and ALOS 
values for FY2025. Typically, we use the most recent available data to 
update the CMG relative weights and ALOS values. For FY 2025, we are 
using the FY 2023 IRF claims and FY 2022 IRF cost report data. These 
data are the most current and complete data available at this time. 
Currently, only a small portion of the FY 2023 IRF cost report data is 
available for analysis, but the majority of the FY 2023 IRF claims data 
are available for analysis.
    In the FY 2025 IRF PPS proposed rule, we proposed that if more 
recent data became available after the publication of the proposed rule 
and before the publication of the final rule, we would use such data to 
determine the FY 2025 CMG relative weights and ALOS values in this 
final rule.
    We proposed to apply these data using the same methodologies that 
we have used to update the CMG relative weights and ALOS values each FY 
since we implemented an update to the methodology. The detailed cost to 
charge ratio (CCR) data from the cost reports of IRF provider units of 
primary acute care hospitals is used for this methodology, instead of 
CCR data from the associated primary care hospitals, to calculate IRFs' 
average costs per case, as discussed in the FY 2009 IRF PPS final rule 
(73 FR 46372). In calculating the CMG relative weights, we use a 
hospital-specific relative value method to estimate operating (routine 
and ancillary services) and capital costs of IRFs. The process to 
calculate the CMG relative weights for this final rule is as follows:
    Step 1. We estimate the effects that comorbidities have on costs.
    Step 2. We adjust the cost of each Medicare discharge (case) to 
reflect the effects found in Step 1.
    Step 3. We use the adjusted costs from Step 2 to calculate CMG 
relative weights, using the hospital-specific relative value method.
    Step 4. We normalize the FY 2025 CMG relative weights using a 
normalization factor that results in the average CMG relative weights 
in FY 2025 being the same as the average CMG relative weights in the FY 
2024 IRF PPS final rule (88 FR 50956).
    Consistent with the methodology that we have used to update the IRF 
classification system in each instance in the past, we are updating the 
CMG relative weights for FY 2025 in such a way that total estimated 
aggregate payments to IRFs for FY 2025 are the same with or without the 
changes (that is, in a budget-neutral manner) by applying a budget 
neutrality factor to the standard payment amount. To calculate the 
appropriate budget neutrality factor for use in updating the FY 2025 
CMG relative weights, we use the following steps:
    Step 1. Calculate the estimated total amount of IRF PPS payments 
for FY

[[Page 64280]]

2025 (with no changes to the CMG relative weights).
    Step 2. Calculate the estimated total amount of IRF PPS payments 
for FY 2025 by applying the changes to the CMG relative weights (as 
discussed in this final rule).
    Step 3. Divide the amount calculated in Step 1 by the amount 
calculated in Step 2 to determine the budget neutrality factor of 
0.9976 that would maintain the same total estimated aggregate payments 
in FY 2025 with and without the changes to the final CMG relative 
weights.
    Step 4. Apply the budget neutrality factor from Step 3 to the FY 
2025 IRF PPS standard payment amount after the application of the 
budget-neutral wage adjustment factor.
    In section V. of this final rule, we discuss the use of the 
existing methodology to calculate the standard payment conversion 
factor for FY 2025.
    In Table 2, ``Relative Weights and Average Length of Stay Values 
for Case Mix Groups,'' we present the CMGs, the comorbidity tiers, the 
corresponding relative weights, and the ALOS values for each CMG and 
tier for FY 2025. The ALOS for each CMG is used to determine when an 
IRF discharge meets the definition of a short stay transfer, which 
results in a per diem case level adjustment.

[[Page 64281]]

[GRAPHIC] [TIFF OMITTED] TR06AU24.094


[[Page 64282]]


[GRAPHIC] [TIFF OMITTED] TR06AU24.095


[[Page 64283]]


[GRAPHIC] [TIFF OMITTED] TR06AU24.096

    Generally, updates to the CMG relative weights result in some 
increases and some decreases to the CMG relative weight values. Table 2 
shows how we estimate that the application of the revisions for FY 2025 
would affect

[[Page 64284]]

particular CMG relative weight values, which would affect the overall 
distribution of payments within CMGs and tiers. We note that, because 
we implement the CMG relative weight revisions in a budget-neutral 
manner (as previously described), total estimated aggregate payments to 
IRFs for FY 2025 would not be affected as a result of the proposed CMG 
relative weight revisions. However, the revisions would affect the 
distribution of payments within CMGs and tiers.

   TABLE 3--Distributional Effects of the Changes to the CMG Relative
                                 Weights
------------------------------------------------------------------------
                                                           Percentage of
    Percentage change in CMG relative        Number of    cases affected
                 weights                  cases affected        (%)
------------------------------------------------------------------------
Increased by 15% or more................               6             0.0
Increased by between 5% and 15%.........           1,875             0.5
Changed by less than 5%.................         406,808            99.2
Decreased by between 5% and 15%.........           1,468             0.4
Decreased by 15% or more................              28             0.0
------------------------------------------------------------------------

    As shown in Table 3, 99.2 percent of all IRF cases are in CMGs and 
tiers that would experience less than a 5 percent change (either 
increase or decrease) in the CMG relative weight value as a result of 
the revisions for FY 2025. The changes in the ALOS values for FY 2025, 
compared with the FY 2024 ALOS values, are small and do not show any 
particular trends in IRF length of stay patterns.
    We invited public comment on our proposed updates to the CMG 
relative weights and ALOS values for FY 2025.
    The following is a summary of the public comments received on the 
proposed revisions to update the CMG relative weights and ALOS values 
for FY 2025 and our responses:
    Comment: Public comments generally supported CMS' update to the CMG 
relative weights and average length of stay values and encouraged CMS 
to use the latest available data to update these values in the final 
rule. However, one commenter advocated for meaningful increases to the 
CMG weights for cases that include the 13 conditions used to identify 
qualifying facilities under the 60 percent rule in order to help 
payment increases match the cost of care. Another commenter recommended 
that CMS consider using an average-cost weighting method, rather than 
the current hospital-specific relative value method (HSRV), for 
calculating the CMG relative weights, to improve the relationship 
between costs and payments and increase the uniformity of profitability 
across IRF cases.
    Response: We appreciate these commenters' support for updating the 
relative weights and ALOS values for FY 2025. We have updated our data 
between the FY 2025 IRF PPS proposed and this final rule to ensure that 
we use the most recent available data in calculating IRF PPS payments.
    The methodology that we use to update the CMG relative weights uses 
the most recent cost data reported by IRFs to compute relative weights 
that reflect the relative costliness of different IRF cases. We 
increase or decrease relative weights of the CMGs annually, including 
for those CMGs associated with the 13 conditions that qualify for the 
60 percent rule, under 42 CFR 412.29(b)(2), based only on the cost data 
reported to us by IRFs each year.
    We believe that these data accurately reflect the severity of the 
IRF patient population and the associated costs of caring for these 
patients in the IRF setting. The CMG relative weights are updated each 
year based on the most recent available data for the full population of 
IRF Medicare fee-for-service beneficiaries. This ensures that the IRF 
case mix system is as reflective as possible of changes in the IRF 
patient populations and the associated coding practices and ensures 
that IRF payments appropriately reflect the relative costs of caring 
for all types of IRF patients.
    We appreciate commenters' feedback and suggestions for refinements 
to current methodologies. We recognize commenters' desire for increased 
weights for cases that include the 13 qualifying conditions. However, 
the 13 qualifying conditions reflect those conditions that were treated 
in IRFs when IRFs were first excluded from payment under the IPPS in 
1983. These conditions have been used to define IRFs as distinct from 
IPPS hospitals in terms of the types of patients treated and the types 
of services provided to these patients. They are not necessarily 
supposed to be more costly in the IRF to treat than other conditions, 
just more likely to make up the bulk of patients in the IRF setting.
    Also, as stated in section V. of this final rule, the weight 
calculated for each CMG is proportional to the resources needed for an 
average case in that CMG. These weights are relative to one another, 
for example, cases in a CMG with a relative weight of 2, on average, 
will cost twice as much as cases in a CMG with a relative weight of 1. 
The weights are empirically derived, based entirely on the data that 
IRFs report to us on their claims and cost reports, and we do not 
believe it would be appropriate for us to manipulate these data to 
increase certain relative weights.
    Furthermore, we did not propose any changes to the current HSRV 
method used to assign payment weights for FY 2025 and believe that a 
careful evaluation of the advantages and disadvantages of moving to an 
average-cost weighting method is essential, given the major 
distributional shifts that would be associated with such a change. The 
purpose of the HSRV method is, in part, to place a greater emphasis on 
more efficient IRF providers (that treat complex IRF patients at lower 
costs). Moving to an average-cost weighting method places more emphasis 
on high cost IRF providers, which could have higher costs because they 
are operating less efficiently. We will continue evaluating the effects 
of changing from HSRV weighting to average-cost weighting. The results 
of this analysis will inform future rulemaking.
    After consideration of the comments we received, we are finalizing 
our proposal to update the CMG relative weights and ALOS values for FY 
2025 using the same methodologies that we have used to update the CMG 
relative weights and ALOS values each FY since we implemented an update 
to the methodology in FY 2009, as shown in Table 2 of this final rule. 
These updates are effective for FY 2025, that is, for discharges 
occurring on or after October 1, 2024, and on or before September 30, 
2025.

VI. FY 2025 IRF PPS Payment Update

A. Background

    Section 1886(j)(3)(C) of the Act requires the Secretary to 
establish an increase factor that reflects changes over

[[Page 64285]]

time in the prices of an appropriate mix of goods and services for 
which payment is made under the IRF PPS. According to section 
1886(j)(3)(A)(i) of the Act, the increase factor shall be used to 
update the IRF prospective payment rates for each FY. Section 
1886(j)(3)(C)(ii)(I) of the Act requires the application of the 
productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of 
the Act. Thus, in this final rule, we are updating the IRF PPS payments 
for FY 2025 by a market basket increase factor as required by section 
1886(j)(3)(C) of the Act based upon the most current data available, 
with a productivity adjustment as required by section 
1886(j)(3)(C)(ii)(I) of the Act.
    We have utilized various market baskets through the years in the 
IRF PPS. For a discussion of these market baskets, we refer readers to 
the FY 2016 IRF PPS final rule (80 FR 47046).
    In FY 2016, we finalized the use of a 2012-based IRF market basket, 
using Medicare cost report data for both freestanding and hospital-
based IRFs (80 FR 47049 through 47068). In FY 2020, we finalized a 
rebased and revised IRF market basket to reflect a 2016 base year. The 
FY 2020 IRF PPS final rule (84 FR 39071 through 39086) contains a 
complete discussion of the development of the 2016-based IRF market 
basket. Beginning with FY 2024, we finalized a rebased and revised IRF 
market basket to reflect a 2021 base year. The FY 2024 IRF PPS final 
rule (88 FR 50966 through 50988) contains a complete discussion of the 
development of the 2021-based IRF market basket.

B. FY 2025 Market Basket Update and Productivity Adjustment

1. FY 2025 Market Basket Update
    For FY 2025 (that is, beginning October 1, 2024, and ending 
September 30, 2025), we proposed to update the IRF PPS payments by a 
market basket increase factor as required by section 1886(j)(3)(C) of 
the Act, with a productivity adjustment as required by section 
1886(j)(3)(C)(ii)(I) of the Act. For FY 2025, we proposed to use the 
same methodology described in the FY 2024 IRF PPS final rule (88 FR 
50982 through 50984).
    Consistent with historical practice, we proposed to estimate the 
market basket update for the IRF PPS for FY 2025 based on IHS Global 
Inc.'s (IGI's) forecast using the most recent available data. Based on 
IGI's fourth quarter 2023 forecast with historical data through the 
third quarter of 2023, the proposed 2021-based IRF market basket 
increase factor for FY 2025 was projected to be 3.2 percent. We also 
proposed that if more recent data became available after the 
publication of the proposed rule and before the publication of the 
final rule (for example, a more recent estimate of the market basket 
percentage increase or productivity adjustment), we would use such 
data, if appropriate, to determine the FY 2025 market basket update in 
this final rule.
    Based on IGI's second quarter 2024 forecast with historical data 
through the first quarter of 2024, the 2021-based IRF market basket 
percentage increase for FY 2025 is 3.5 percent.
2. FY 2025 Productivity Adjustment
    According to section 1886(j)(3)(C)(i) of the Act, the Secretary 
shall establish an increase factor based on an appropriate percentage 
increase in a market basket of goods and services. Section 
1886(j)(3)(C)(ii) of the Act requires that, after establishing the 
increase factor for a FY, the Secretary shall reduce such increase 
factor for FY 2012 and each subsequent FY, by the productivity 
adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act. 
Section 1886(b)(3)(B)(xi)(II) of the Act sets forth the definition of 
this productivity adjustment. The statute defines the productivity 
adjustment to be equal to the 10-year moving average of changes in 
annual economy-wide, private nonfarm business multifactor productivity 
(as projected by the Secretary for the 10-year period ending with the 
applicable FY, year, cost reporting period, or other annual period) 
(the ``productivity adjustment''). The U.S. Department of Labor's 
Bureau of Labor Statistics (BLS) publishes the official measures of 
productivity for the U.S. economy. We note that previously the 
productivity measure referenced in section 1886(b)(3)(B)(xi)(II) of the 
Act, was referred to by BLS as private nonfarm business multifactor 
productivity. Beginning with the November 18, 2021, release of 
productivity data, BLS replaced the term multifactor productivity (MFP) 
with total factor productivity (TFP). BLS noted that this is a change 
in terminology only and will not affect the data or methodology. As a 
result of this change, the productivity measure referenced in section 
1886(b)(3)(B)(xi)(II) is now published by BLS as private nonfarm 
business total factor productivity. However, as mentioned above, the 
data and methods are unchanged. Please see www.bls.gov for the BLS 
historical published TFP data. A complete description of IGI's TFP 
projection methodology is available on the CMS website at https://www.cms.gov/data-research/statistics-trends-and-reports/medicare-program-rates-statistics/market-basket-research-and-information. In 
addition, in the FY 2022 IRF final rule (86 FR 42374), we noted that 
effective with FY 2022 and forward, CMS changed the name of this 
adjustment to refer to it as the productivity adjustment rather than 
the MFP adjustment.
    Using IGI's fourth quarter 2023 forecast, the 10-year moving 
average growth of TFP for FY 2025 was projected to be 0.4 percent. In 
accordance with section 1886(j)(3)(C) of the Act, we proposed to base 
the FY 2025 market basket update, which is used to determine the 
applicable percentage increase for the IRF payments, on IGI's fourth 
quarter 2023 forecast of the 2021-based IRF market basket. We proposed 
to then reduce the market basket percentage increase by the estimated 
productivity adjustment for FY 2025 of 0.4 percentage point (the 10-
year moving average growth of TFP for the period ending FY 2025 based 
on IGI's fourth quarter 2023 forecast). Therefore, the proposed FY 2025 
IRF update was equal to 2.8 percent (3.2 percent market basket 
percentage increase reduced by the 0.4 percentage point productivity 
adjustment). Furthermore, we proposed that if more recent data became 
available after the publication of the proposed rule and before the 
publication of the final rule (for example, a more recent estimate of 
the market basket percentage increase and/or productivity adjustment), 
we would use such data, if appropriate, to determine the FY 2025 market 
basket percentage increase and productivity adjustment in the final 
rule.
    Using IGI's second quarter 2024 forecast, the 10-year moving 
average growth of TFP for FY 2025 is projected to be 0.5 percent. Thus, 
in accordance with section 1886(j)(3)(C) of the Act, the FY 2025 market 
basket percentage increase, which is used to determine the applicable 
percentage increase for the IRF payments, is equal to 3.5 percent using 
IGI's second quarter 2024 forecast of the 2021-based IRF market basket. 
We then reduce this percentage increase by the estimated productivity 
adjustment for FY 2025 of 0.5 percentage point (the 10-year moving 
average growth of TFP for the period ending FY 2025 based on IGI's 
second quarter 2024 forecast). Therefore, the FY 2025 IRF update is 
equal to 3.0 percent (3.5 percent market basket percentage increase 
reduced by the 0.5 percentage point productivity adjustment).
    CMS recognizes that the Medicare Payment Advisory Commission 
(MedPAC) recommends that we reduce IRF PPS payment rates by 5 percent 
for

[[Page 64286]]

FY 2025.\3\ As discussed, and in accordance with sections 1886(j)(3)(C) 
and 1886(j)(3)(D) of the Act, the Secretary proposed to update the IRF 
PPS payment rates for FY 2025 by the proposed productivity-adjusted IRF 
market basket increase factor of 2.8 percent.
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    \3\ https://www.medpac.gov/wp-content/uploads/2025/03/Mar25_MedPAC_ReportToCongress_SEC.pdf.
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    Based on more recent data, the current estimate of the 
productivity-adjusted IRF market basket increase factor for FY 2025 is 
3.0 percent. Section 1886(j)(3)(C) of the Act does not provide the 
Secretary with the authority to apply a different update factor to IRF 
PPS payment rates for FY 2025.
    We invited public comment on the proposed FY 2025 market basket 
percentage increase and productivity adjustment. The following is a 
summary of the public comments received and our responses:
    Comment: Several commenters agreed with the general approach of 
increasing the standard payment conversion factor, but many commenters 
stated concerns that the proposed increase is inadequate. Commenters 
cited that the proposed payment increase does not keep pace with the 
higher increases in costs faced by IRFs such as labor, drug, medical 
supplies, personal protective equipment, and capital investment costs. 
Commenters also stated other challenges that could impact costs such as 
staffing shortages, supply chain disruptions, rising need for 
cybersecurity investment, higher administrative costs due to MA and 
commercial plan practices, high patient volumes and rising acuity, and 
unprecedented high inflation.
    Some commenters argued that the increased discrepancy between 
payment inflation and cost inflation is causing a material financial 
hardship on hospitals and that increases in hospital costs have 
dramatically decreased hospital profit margins. One commenter stated 
that in calendar year 2022, half of U.S. hospitals reported negative 
profit margins and through the first 10 months of 2023, IRF operating 
margins were down by 12 percent compared to 2022 and down by 25 percent 
compared to 2021.
    Several commenters stated that labor shortages and higher than 
typical cost inflation are expected to continue and must be met with 
correspondingly higher payment rates, especially as some public health 
emergency resources have concluded. Other commenters stated that the 
proposed increase factor was too small and called on CMS to increase 
its proposed market basket percentage in the final rule, with some 
stating that this increase should be higher than the increase in FY 
2024. Some commenters requested that CMS account for the effects of the 
true inflationary cost using the latest available data in the final 
rule and other commenters requested that CMS recalculate the market 
basket update using data that more accurately reflects the growth in 
input prices. In the absence of such data, some commenters urged CMS to 
consider an alternative approach to better align the market basket 
increases with the rising cost of treating patients.
    Several commenters expressed concern that CMS' market basket 
forecast process relies on generalized hospital goods and services, 
which would not recognize the specialized training and experience IRFs 
require of their therapists, nurses, and other clinicians. The 
commenter also noted that IRFs typically pay higher costs for advanced 
rehabilitation technologies and specialized drugs that are likely not 
properly captured in the market basket.
    Many commenters requested that CMS reexamine the current 
forecasting approach for determining the IRF PPS market basket update 
as well as the underlying construction of the market basket. Some 
commenters urged CMS to consider whether adjustments are necessary in 
its approach to annual market basket updates. Specifically, the 
commenters claimed that since the COVID-19 public health emergency, 
IGI's forecasted growth for the IRF market basket has shown a 
consistent trend of under-forecasting actual market basket growth. The 
commenters noted that while they are cognizant of the fact that 
forecasts will always be imperfect, in the past, they have been more 
balanced. However, the commenters argued that with four straight years 
of under-forecasts, they were concerned that there is a more systemic 
issue with IGI's forecasting. Therefore, the commenters stated that 
absent action from CMS, these missed forecasts are permanently 
established in the standard payment rate for IRFs and will continue to 
compound. In addition, the commenters claimed that these underpayments 
also influence other payments, including the growing Medicare Advantage 
patient population, as well as commercial insurer payment rates. The 
commenters further stated that in addition to inaccurate forecasts, the 
underlying market basket itself may have shortcomings that fail to 
properly capture growth. The commenters stated that it is confounding 
how hospitals, and especially labor-intensive IRFs, could have a change 
in the market basket that is significantly below general inflation. The 
commenters provided an example of one such factor may be CMS' use of 
the Employment Cost Index (ECI) to measure changes in labor 
compensation in the market basket. The commenters stated that the ECI 
may not be adequately capturing growth in the costs of employment and 
labor. However, the commenters claimed that this is just one example of 
a potential issue and encouraged CMS to thoroughly reexamine the market 
basket and its recent shortcomings to identify other potential areas 
for refinement. The commenters stated their support to work with CMS to 
assist with such an endeavor.
    Response: We acknowledge and appreciate commenters' concerns 
regarding recent trends in inflation. We are required to update IRF PPS 
payments by the market basket update adjusted for productivity, as 
directed by section 1886(j)(3)(C) of the Act. Specifically, section 
1886(j)(3)(C)(i) states that the increase factor shall be based on an 
appropriate percentage increase in a market basket of goods and 
services comprising services for which payment is made. In the FY 2024 
IRF PPS final rule, we rebased the IRF market basket to reflect a 2021 
base year (88 FR 50966 through 50982). We believe the increase in the 
2021-based IRF market basket adequately reflects the average change in 
the price of goods and services hospitals purchase in order to provide 
IRF medical services and is technically appropriate to use as the IRF 
payment update factor.
    The IRF market basket is a fixed-weight, Laspeyres-type index that 
measures the change in price over time of the same mix of goods and 
services purchased by IRFs in the base period. As we discussed in 
response to similar comments in the FY 2024 IRF PPS final rule (88 FR 
50983), the IRF market basket update would reflect the prospective 
price pressures described by the commenters as increasing during a high 
inflation period but would inherently not reflect other factors that 
might increase the level of costs, such as the quantity of labor used. 
We note that cost changes (that is, the product of price and 
quantities) would only be reflected when a market basket is rebased, 
and the base year weights are updated to a more recent time period. 
Therefore, we believe the 2021-based IRF market basket appropriately 
reflects IRF cost structures.
    To reflect expected price growth for each of the cost categories in 
the IRF market basket, we rely on impartial economic forecasts of the 
price proxies

[[Page 64287]]

used in the market basket from IGI. We have consistently used the IGI 
economic price proxy forecasts in the market baskets used to update the 
IRF PPS payments since the implementation of the IRF PPS. For example, 
to measure price growth for IRF wages and salaries costs in the IRF 
market basket, since IRF-specific information is unavailable, we use 
the ECI for Wages and Salaries for All Civilian workers in Hospitals. 
As stated in the FY 2024 IRF final rule (88 FR 50978), we believe that 
this ECI is the best available price proxy to account for the 
occupational skill mix within IRFs and in the absence of an IRF-
specific ECI, we believe that the highly skilled hospital workforce 
captured by the ECI for Wages and Salaries for All Civilian workers in 
Hospitals (inclusive of therapists, nurses, other clinicians, etc.) is 
a reasonable proxy for the compensation component of the IRF market 
basket.
    IGI is a nationally recognized economic and financial forecasting 
firm with which CMS contracts to forecast the components of the market 
baskets. At the time of the FY 2025 IRF PPS proposed rule, based on 
IGI's fourth quarter 2023 forecast with historical data through the 
third quarter of 2023, the 2021-based IRF market basket update was 
forecasted to be 3.2 percent for FY 2025, reflecting forecasted 
compensation price growth of 3.7 percent (by comparison, compensation 
price growth in the IRF market basket averaged 2.8 percent from 2014 
through 2023). We also note that when developing its forecast for labor 
prices, IHS Global Inc. considers overall labor market conditions 
(including rise in contract labor employment due to tight labor market 
conditions) as well as trends in contract labor wages, which both have 
an impact on wage pressures for workers employed directly by the 
hospital.
    As is our general practice, in the FY 2025 IRF PPS proposed rule, 
we proposed that if more recent data became available, we would use 
such data, if appropriate, to derive the final FY 2025 IRF market 
basket update for the final rule. For this final rule, we now have an 
updated forecast of the price proxies underlying the market basket that 
incorporates more recent historical data and reflects a revised outlook 
regarding the U.S. economy and expected price inflation for FY 2025. 
Based on IGI's second quarter 2024 forecast with historical data 
through the first quarter of 2024, we are projecting a FY 2025 IRF 
market basket update of 3.5 percent (reflecting forecasted compensation 
price growth of 4.0 percent) and a productivity adjustment of 0.5 
percentage point. Therefore, for FY 2025 a final IRF productivity-
adjusted market basket update of 3.0 percent (3.5 percent less 0.5 
percentage point) will be applicable, compared to the 2.8 percent 
market basket update that was proposed.
    Furthermore, we acknowledge that while the projected IRF hospital 
market basket updates for FY 2021 through FY 2023 were under forecast 
(actual increases less forecasted increases were positive), this was 
largely due to unanticipated inflationary and labor market pressures as 
the economy emerged from the COVID-19 PHE. In addition, forecast errors 
have been both positive and negative. Only considering the forecast 
error for years when the IRF market basket update was lower than the 
actual market basket update does not consider the full experience and 
impact of forecast error.
    Finally, we acknowledge the commenter's recommendation that we 
thoroughly reexamine the market basket to identify other potential 
areas for refinement. We continue to monitor any recent data on IRF 
cost structures, historical price growth, as well as updated forecasts 
of price pressures faced by IRFs. Any changes to the IRF market basket 
would be proposed in future rulemaking.
    Comment: Many commenters expressed concern about the continued 
application of the productivity adjustment to IRFs. Commenters 
requested that CMS temporarily suspend the productivity adjustment to 
the IRF market basket due to recent declines in hospital productivity. 
One commenter urged CMS to use its ``special exceptions and 
adjustments'' authority to eliminate the productivity cut for FY 2025 
and another commenter urged CMS to consider its regulatory authority to 
modify the productivity adjustment or make a PHE and inflation related 
exception in its application for the FY 2025 update. One commenter 
stated that due to the imbalance between the economy-wide productivity 
measure and IRFs, they encouraged CMS to explore all available avenues 
to provide additional financial relief for IRFs, working within the 
agency's existing authority under the statute. Other commenters 
respectfully requested CMS to carefully monitor the impact that these 
productivity adjustments will have on the rehabilitation hospital 
sector, provide feedback to Congress as appropriate, and reduce the 
productivity adjustment.
    Response: Section 1886(j)(3)(C)(ii)(I) of the Act requires the 
application of the productivity adjustment, described in section 
1886(b)(3)(xi)(II) of the Act, to the IRF PPS market basket increase 
factor. As required by statute, the FY 2025 productivity adjustment is 
derived based on the 10-year moving average growth in economy-wide 
productivity for the period ending FY 2025. We recognize the concerns 
of the commenters regarding the appropriateness of the productivity 
adjustment; however, we are required pursuant to section 
1886(j)(3)(C)(ii)(I) of the Act to apply the specific productivity 
adjustment described here.
    Comment: Many commenters urged CMS to explore all available options 
to update IRF PPS payments to ensure there are no disruptions in access 
to IRF services for Medicare beneficiaries. One commenter encouraged 
CMS to consider additional funding opportunities in the final rule 
either through an updated market basket or other allowable means.
    One commenter requested CMS consider other methods and data sources 
to calculate the final rule ``base'' (before additional adjustments) 
market basket update that better reflects the rapidly increasing input 
prices facing IRFs. Specifically, the commenter requested that CMS 
consider using the average growth rate in allowable Medicare costs per 
risk adjusted discharge for IRF hospitals from IRF cost reports (both 
freestanding and sub-providers of an acute care hospital) for FY 2022 
to calculate the FY 2025 final rule market basket update. The commenter 
stated that this growth rate will capture the increased cost of 
contract labor, unlike the proxy for labor cost growth currently used 
in the proposed market basket update. Based on their analysis, the 
commenter claimed that this would yield an unadjusted market basket 
update of 4.08 percent. The commenter stated that a net market basket 
update of 3.68 percent for FY 2025 better reflects the actual input 
price inflation hospitals anticipate facing in the coming year, rather 
than the 2.8 percent net market basket update proposed by CMS.
    Another commenter requested that CMS apply a retrospective payment 
adjustment to account for the differences between the FY 2022 through 
2024 market basket updates and the actual market basket. They stated 
that CMS is not required to use IHS Global Inc. data, or solely such 
data, as the basis for the IRF PPS increase factor and stated that CMS 
has the discretion to adjust the market basket update in order to 
account for any increased labor costs incurred by providers not 
currently reflected in a market basket data source(s). The commenter 
stated that CMS incorrectly dismissed the option of applying a special 
payment

[[Page 64288]]

adjustment for IRFs in the FY 2023 IRF PPS Final Rule and the FY 2024 
IRF PPS Final Rule. The commenter claimed that CMS' position is 
essentially that because the forecast was relatively accurate prior to 
the COVID-19 pandemic, it is acceptable to penalize IRFs with a less 
accurate payment update for the periods during and after the pandemic. 
However, the commenter claimed that the FY 2024 IRF final rule did not 
discuss the difference between the forecast and actual market basket 
update for periods after FY 2020, when the forecasted market basket 
update used for rate setting has consistently fallen far short of the 
actual market basket update.
    A few commenters stated that considering this once-in-a-generation 
convergence of inflationary pressures and pandemic forces, they 
respectfully urged CMS to consider a one-time adjustment to the market 
basket update to account for forecast errors made during and after the 
PHE to ensure that the FY 2025 annual rate update is applied to a base 
rate that more accurately reflects the cost of IRF care and actual 
inflation experienced since the beginning of the pandemic. 
Specifically, a few commenters requested CMS adopt a one-time forecast 
error adjustment of 3.7 percentage point to the FY 2025 update based on 
the difference in the IRF PPS market basket percentage increase in FYs 
2021, 2022, and 2023. Another commenter requested that CMS make a one-
time 3.5 percentage points adjustment to the IRF market basket 
percentage increase in FY 2025 to account for the underpayments that 
occurred in FYs 2022 through 2024. One commenter requested an 
adjustment similar to the forecast error adjustments proposed in the FY 
2025 SNF and IPPS Capital Input Price Index rules and requested that 
CMS apply this adjustment to a proposed FY 2025 IRF market basket 
update of 4.08 percent to result in a 7.78 percent update, prior to 
application of the 0.4 percent ACA productivity adjustment. The 
commenter claimed that nothing in Section 1886(j)(3) of the Act, that 
specifically precludes the use of a forecast error adjustment and that 
the word ``prospective'' is not used in Section 1886(j)(3)(C)(i) of the 
Act, to describe or modify the IRF ``increase factor'', just that it is 
noted that the section requires that the factor be based on an 
``appropriate percentage increase.'' One commenter also urged CMS to 
increase the market basket percentage increase when CMS determines 
actual market basket exceeds the forecasted market basket.
    Response: As most recently discussed in the FY 2024 IRF PPS final 
rule, the IRF PPS market basket updates are set prospectively, which 
means that the market basket update relies on a mix of both historical 
data for part of the period for which the update is calculated and 
forecasted data for the remainder. For instance, the FY 2025 market 
basket update in this final rule reflects historical data through the 
first quarter of CY 2024 and forecasted data through the third quarter 
of CY 2025. While there is no precedent to adjust for market basket 
forecast error in the IRF payment update, a forecast error can be 
calculated by comparing the actual market basket increase for a given 
year less the forecasted market basket increase. Due to the uncertainty 
regarding future price trends, forecast errors can be both positive and 
negative. The cumulative forecast error since IRF PPS inception (FY 
2003 to FY 2023) for the years where the payment update was not 
mandated by statute is 0.5 percent (cumulative forecasted increase was 
slightly lower than actual increase) and over the last ten years the 
cumulative forecast error is -0.1 percent (cumulative forecasted 
increase was slightly higher than actual increase). Though it is still 
too soon to know what the final IRF market basket forecast error is for 
FY 2024, so far it is 0.3 percent. Only considering the forecast error 
for years when the IRF market basket update was lower than the actual 
market basket update does not consider the full experience and impact 
of forecast error.
    After careful consideration of public comments, we are finalizing a 
FY 2025 IRF productivity-adjusted market basket increase of 3.0 percent 
based on the most recent data available.

C. Labor-Related Share for FY 2025

    Section 1886(j)(6) of the Act specifies that the Secretary is to 
adjust the proportion (as estimated by the Secretary from time to time) 
of IRFs' costs that are attributable to wages and wage-related costs, 
of the prospective payment rates computed under section 1886(j)(3) of 
the Act, for area differences in wage levels by a factor (established 
by the Secretary) reflecting the relative hospital wage level in the 
geographic area of the rehabilitation facility compared to the national 
average wage level for such facilities. The labor-related share is 
determined by identifying the national average proportion of total 
costs that are related to, influenced by, or vary with the local labor 
market. We proposed to continue to classify a cost category as labor-
related if the costs are labor-intensive and vary with the local labor 
market.
    Based on our definition of the labor-related share and the cost 
categories in the 2021-based IRF market basket, we proposed to 
calculate the labor-related share for FY 2025 as the sum of the FY 2025 
relative importance of Wages and Salaries, Employee Benefits, 
Professional Fees: Labor-Related, Administrative and Facilities Support 
Services, Installation, Maintenance, and Repair Services, All Other: 
Labor-Related Services, and a portion of the Capital-Related relative 
importance from the 2021-based IRF market basket. For more details 
regarding the methodology for determining specific cost categories for 
inclusion in the 2021-based IRF labor-related share, see the FY 2024 
IRF PPS final rule (88 FR 50985 through 50988).
    The relative importance reflects the different rates of price 
change for these cost categories between the base year (2021) and FY 
2025. We proposed to calculate the labor-related relative importance 
from the IRF market basket, and it approximates the labor-related 
portion of the total costs after taking into account historical and 
projected price changes between the base year and FY 2025. The price 
proxies that move the different cost categories in the market basket do 
not necessarily change at the same rate, and the relative importance 
captures these changes. Based on IGI's fourth quarter 2023 forecast of 
the 2021-based IRF market basket, the sum of the FY 2025 relative 
importance for Wages and Salaries, Employee Benefits, Professional 
Fees: Labor-Related, Administrative and Facilities Support Services, 
Installation Maintenance & Repair Services, and All Other: Labor-
Related Services was 70.5 percent. We proposed that the portion of 
Capital-Related costs that are influenced by the local labor market is 
46 percent. Since the relative importance for Capital-Related costs was 
8.1 percent of the 2021-based IRF market basket for FY 2025, we 
proposed to take 46 percent of 8.1 percent to determine the labor-
related share of Capital-Related costs for FY 2025 of 3.7 percent. 
Therefore, we proposed a total labor-related share for FY 2025 of 74.2 
percent (the sum of 70.5 percent for the proposed labor-related share 
of operating costs and 3.7 percent for the proposed labor-related share 
of Capital-Related costs). We also proposed that if more recent data 
became available after publication of the proposed rule and before the 
publication of the final rule (for example, a more recent estimate of 
the labor-related share), we would use such

[[Page 64289]]

data, if appropriate, to determine the FY 2025 IRF labor-related share 
in the final rule.
    Based on IGI's second quarter 2024 forecast for the 2021-based IRF 
market basket, the sum of the FY 2025 relative importance for Wages and 
Salaries, Employee Benefits, Professional Fees: Labor-related, 
Administrative and Facilities Support Services, Installation 
Maintenance & Repair Services, and All Other: Labor-Related Services is 
70.7 percent. The portion of Capital-Related costs that is influenced 
by the local labor market is estimated to be 46 percent, which is the 
same percentage applied to the 2016-based IRF market basket (84 FR 
39088 through 39089). Since the relative importance for Capital is 8.1 
percent of the 2021-based IRF market basket in FY 2025, we took 46 
percent of 8.1 percent to determine the labor-related share of Capital-
Related costs for FY 2025 of 3.7 percent. Therefore, the total labor-
related share for FY 2025 based on more recent data is 74.4 percent 
(the sum of 70.7 percent for the operating costs and 3.7 percent for 
the labor-related share of Capital-Related costs).
    We invited public comment on the proposed labor-related share for 
FY 2025. The following is a summary of the public comments received and 
our responses:
    Comment: One commenter appreciated that CMS only proposed to 
increase the labor-related share from 74.1 percent in FY 2024 to 74.2 
percent in FY 2025. The commenter stated that although there is not a 
material increase in the wage percentage each increase to the labor-
related share percentage penalizes any facility that has a wage index 
less than 1.0. The commenter stated that across the country, there is a 
growing disparity between high-wage and low-wage States that harms 
hospitals in many rural and underserved communities; limiting the 
increase in the labor-related share helps mitigate that growing 
disparity. However, another commenter believed that the 0.1 percentage 
point increase in the labor-related share update is inadequate and does 
not reflect the many challenges faced by health care facilities.
    Response: We proposed to use the FY 2025 relative importance values 
for the labor-related cost categories from the 2021-based IRF market 
basket because it accounts for more recent data regarding price 
pressures and cost structure of IRFs. This methodology is consistent 
with the determination of the labor-related share since the 
implementation of the IRF PPS. As stated in the FY 2025 IRF proposed 
rule, we also proposed that if more recent data became available, we 
would use such data, if appropriate, to determine the FY 2025 labor-
related share for the final rule. Based on IHS Global Inc.'s second 
quarter 2024 forecast with historical data through the first quarter of 
2024, the FY 2025 labor-related share for the final rule is 74.4 
percent.
    After consideration of the public comments, we are finalizing a FY 
2025 labor-related share of 74.4 percent. Table 4 shows the current 
estimate of the FY 2025 labor-related share and the FY 2024 final 
labor-related share using the 2021-based IRF market basket relative 
importance.

 TABLE 4--FY 2025 IRF Labor-Related Share and FY 2024 IRF Labor-Related
                                  Share
------------------------------------------------------------------------
                                                         FY 2024 Final
                                      FY 2025 Labor-     labor-related
                                    related share \1\      share \2\
------------------------------------------------------------------------
Wages and Salaries................               49.4               49.0
Employee Benefits.................               11.8               11.8
Professional Fees: Labor-Related                  5.5                5.5
 \3\..............................
Administrative and Facilities                     0.7                0.7
 Support Services.................
Installation, Maintenance, and                    1.5                1.5
 Repair Services..................
All Other: Labor-Related Services.                1.8                1.8
                                   -------------------------------------
    Subtotal......................               70.7               70.3
------------------------------------------------------------------------
Labor-related portion of Capital-                 3.7                3.8
 Related (46%)....................
                                   -------------------------------------
    Total Labor-Related Share.....               74.4               74.1
------------------------------------------------------------------------
\1\ Based on the 2021-based IRF market basket relative importance, IGI
  2nd quarter 2024 forecast.
\2\ Based on the 2021-based IRF market basket relative importance as
  published in the Federal Register (88 FR 50987).
\3\ Includes all contract advertising and marketing costs and a portion
  of accounting, architectural, engineering, legal, management
  consulting, and home office contract labor costs.

D. Wage Adjustment for FY 2025

1. Background
    Section 1886(j)(6) of the Act requires the Secretary to adjust the 
proportion of rehabilitation facilities' costs attributable to wages 
and wage-related costs (as estimated by the Secretary from time to 
time) by a factor (established by the Secretary) reflecting the 
relative hospital wage level in the geographic area of the 
rehabilitation facility compared to the national average wage level for 
those facilities. The Secretary is required to update the IRF PPS wage 
index on the basis of information available to the Secretary on the 
wages and wage-related costs to furnish rehabilitation services. Any 
adjustment or updates made under section 1886(j)(6) of the Act for a FY 
are made in a budget-neutral manner.
    In the FY 2023 IRF PPS final rule (87 FR 47054 through 47056) we 
finalized a policy to apply a 5-percent cap on any decrease to a 
provider's wage index from its wage index in the prior year, regardless 
of the circumstances causing the decline. We amended IRF PPS 
regulations at Sec.  412.624(e)(1)(ii) to reflect this permanent cap on 
wage index decreases. Additionally, we finalized a policy that a new 
IRF would be paid the wage index for the area in which it is 
geographically located for its first full or partial FY with no cap 
applied because a new IRF would not have a wage index in the prior FY. 
A full discussion of the adoption of this policy is found in the FY 
2023 IRF PPS final rule.
    For FY 2025, we maintained the policies and methodologies described 
in the FY 2024 IRF PPS final rule (88 FR 50956) related to the labor 
market area definitions and the wage index methodology for areas with 
wage data. Thus, we use the core based statistical

[[Page 64290]]

areas (CBSAs) labor market area definitions and the FY 2025 pre-
reclassification and pre-floor hospital wage index data. In accordance 
with section 1886(d)(3)(E) of the Act, the FY 2025 pre-reclassification 
and pre-floor hospital wage index is based on data submitted for 
hospital cost reporting periods beginning on or after October 1, 2020, 
and before October 1, 2021 (that is, FY 2021 cost report data).
    The labor market designations made by the Office of Management and 
Budget (OMB) include some geographic areas where there are no hospitals 
and, thus, no hospital wage index data on which to base the calculation 
of the IRF PPS wage index. We continue to use the same methodology 
discussed in the FY 2008 IRF PPS final rule (72 FR 44299) to address 
those geographic areas where there are no hospitals and, thus, no 
hospital wage index data on which to base the calculation for the FY 
2025 IRF PPS wage index. For FY 2025, the only rural area without wage 
index data available is in North Dakota. We have determined that the 
borders of 18 rural counties are local and contiguous with 8 urban 
counties. Therefore, under this methodology, the wage indexes for the 
counties of Burleigh/Morton/Oliver (CBSA 13900: 0.9020), Cass (CBSA 
22020: 0.8763), Grand Forks (CBSA 24220: 0.7865), and McHenry/Renville/
Ward (CBSA 33500: 0.7686) are averaged, resulting in an imputed rural 
wage index of 0.8334 for rural North Dakota for FY 2025. In past years 
for rural Puerto Rico, we did not apply this methodology due to the 
distinct economic circumstances there; due to the proximity of almost 
all of Puerto Rico's various urban and nonurban areas, this methodology 
would produce a wage index for rural Puerto Rico that is higher than 
that in half of its urban areas. However, because rural Puerto Rico now 
has hospital wage index data on which to base an area wage adjustment, 
we will not apply this policy for FY 2025. For urban areas without 
specific hospital wage index data, we will continue using the average 
wage indexes of all urban areas within the State to serve as a 
reasonable proxy for the wage index of that urban CBSA as proposed and 
finalized in FY 2006 (70 FR 47927). For FY 2025, the only urban area 
without wage index data available is CBSA 25980, Hinesville Fort 
Stewart, GA.
    We invited public comment on the proposed Wage Adjustment for FY 
2025. The following is a summary of the public comments received on the 
proposed revisions to the Wage Adjustment for FY 2025:
    Comment: Several commenters suggested changes to the wage index 
methodology. Generally, commenters recommended that CMS use the same 
wage index adjustments for providers paid under the IPPS and under the 
IRF PPS in the same area. These recommendations were aimed at 
increasing parity between IPPS and IRF PPS hospitals. Most comments on 
this topic expressed concern over comparisons of shared labor markets. 
One commenter also voiced concerns that IPPS hospitals that have 
benefited from IPPS-specific geographic reclassification or other wage 
adjustments no longer put the same resources into the completion of 
Occupational Mix Surveys.
    Several commenters specifically expressed support for the IPPS low 
wage index hospital policy, wherein wage index values are increased for 
the lowest quartile of the wage index values across all hospitals. 
These commenters urged CMS to develop and apply a corresponding low 
wage index hospital policy for IRFs. Commentors expressed concerns that 
the disparity in policy puts IRFs at a competitive disadvantage within 
shared labor markets and believed that extending the low wage index 
policy to IRFs would help maintain parity and ensure that low wage 
index and rural IRFs would have adequate resources to continue to 
provide access to care. Several commentors argued that this low wage 
index hospital policy to IRFs should be implemented without applying a 
budget neutrality adjustment.
    Additionally, several commenters found the continued use of the 
pre-reclassification and pre-floor IPPS wage index unreasonable and 
urged CMS to revise its policy and apply the post-classification and 
post-floor hospital IPPS wage index to all IRFs, but especially the 
hospital-based distinct part units (DPUs). Like others, these 
commentors expressed concerns related to shared labor markets. 
Commenters believed that the current policy places inpatient hospital-
based IRFs and other DPUs at a disadvantage in the labor markets in 
which they must compete with acute-care hospitals for staff. 
Additionally, several commenters suggested that CMS could leverage 
existing data to evaluate the policy change using the CMS Form 2552-96, 
Worksheet S-3, which captures ``excluded area'' salaries and wage-
related costs.
    Response: We appreciate the commenters' suggestion to adopt the 
IPPS low wage index hospital policy, post-classification and post-floor 
hospital IPPS wage index, and other IPPS wage index adjustments for the 
IRF wage index. We also acknowledge and appreciate the commenters' 
concerns regarding competition for labor resulting from different 
applicable wage index policies across different settings of care. While 
CMS and other interested parties have explored potential alternatives 
to the current wage index system in the past, no consensus has been 
achieved regarding how best to implement a replacement system that is 
evidence-based and data-driven. These concerns will be taken into 
consideration while we continue to explore potential wage index reforms 
and monitor IRF wage index policies.
    As most recently discussed in the FY 2024 IRF PPS final rule (88 FR 
50956), we would like to note that the IRF wage index is derived from 
IPPS wage data, that is, the pre-reclassification and pre-floor 
inpatient PPS (IPPS) wage index discussed in section D. of this final 
rule. Thus, to the extent that increasing wage index values under the 
IPPS for low wage index hospitals results in those hospitals increasing 
employee compensation, this increase would be reflected in the IPPS 
wage data that the IRF wage index is derived from and likely would 
result in higher wage indices for these areas under the IRF PPS. As 
such, any effects of this policy on the wage data of IPPS hospitals 
would be extended to the IRF setting, as this data would be used to 
establish the wage index for IRFs in the future. We note that IPPS wage 
index values are based on historical data and typically lag by four 
years.
    As stated in prior years, as we do not have an IRF-specific wage 
index, we are unable to determine the degree, if any, to which these 
IPPS policies under the IRF PPS would be appropriate. However, CMS 
acknowledges that commenters have suggested that such data may be 
available in CMS Form 2552-96, Worksheet S-3 and will take this under 
consideration. Data pertaining to any IPPS policies that are applied to 
the pre-reclassification/pre-floor wage index is available in the FY 
2024 IPPS proposed rule at https://www.cms.gov/medicare/medicare-fee-for-service-payment/acuteinpatientpps. The rationale for our current 
wage index policies was most recently published in the FY 2022 IRF PPS 
final rule (86 FR 42377 through 42378) and fully described in the FY 
2006 IRF PPS final rule (70 FR 47880, 47926 through 47928).
    Comment: Several commenters voiced specific concerns about rising 
reliance on contract labor. The commenters stated that, as contract 
labor is generally not tied to the local economy, the local

[[Page 64291]]

wage index is less and less reflective of the actual costs incurred by 
hospitals as the use of contract labor grows. Concerns about the rising 
use of contract labor were tied to concerns about workforce shortages, 
increasingly competitive labor markets, and the lack of parity between 
IRFs and IPPS hospitals in shared labor markets.
    To address these challenges, several commentors encouraged CMS to 
explore how geographic differences in market wide labor costs and the 
increased use of contract labor impacts costs, and to make 
corresponding adjustments in policy.
    Response: CMS acknowledges commenters' concerns that the current 
wage index policies may not capture or keep up with actual costs of 
care as well as specific concerns related to the cost of contract 
labor. As noted in the FY 2024 IRF PPS final rule (42 CFR 412), an 
analysis of Medicare cost report data for IPPS hospitals shows that 
contract labor hours accounted for about 4 percent of total 
compensation hours (reflecting employed and contract labor staff) in 
2021. We will continue to monitor the trends in the increased use of 
contract labor.
    Comment: Many commenters supported the existing 5 percent wage 
index cap and expressed appreciation of having a policy to cap and 
phase in the wage index changes that a provider can experience in a 
given year. However, at least one commenter remarked that, while they 
appreciate the cap policy, they believe that it does not do enough to 
correct the widening range in wage index amounts. Another commenter 
expressed frustration that the wage index values of the hospitals 
subject to the cap differ from the currently published tables and urged 
CMS to release wage index tables in the final rule that incorporate the 
cap on CBSAs that meet the 5 percent decrease criteria.
    Response: We appreciate the commenters' support of the permanent 
cap on wage index decreases. We realize that the 5-percent cap on 
annual decreases in the wage index values does not entirely eliminate 
the effects of annual changes in the wage index, but we believe that it 
does substantially reduce the financial impact on IRFs of these annual 
changes. The wage index tables for IRF PPS are provided at the CBSA 
level. The 5-percent cap policy is applied at the provider level. 
Hence, when the 5-percent cap is applicable, each IRF should work 
directly with its MAC to understand how the 5-percent cap is applied. 
MACs have more detailed information about the location of each IRF and 
the applicability of the 5-percent cap to each IRFs situation, and CMS 
has provided careful instructions to the MACs on applying the 5-percent 
cap policy (see publication 100-04 Medicare Claims Processing Manual, 
Chapter 3).
    After consideration of the comments we received, we are finalizing 
our proposals regarding the wage adjustment for FY 2025.
2. Core-Based Statistical Areas (CBSAs) for the FY 2025 IRF Wage Index
    The wage index used for the IRF PPS is calculated using the pre-
reclassification and pre-floor inpatient PPS (IPPS) wage index data and 
is assigned to the IRF on the basis of the labor market area in which 
the IRF is geographically located. IRF labor market areas are 
delineated based on the CBSAs established by the OMB. The CBSA 
delineations (which were implemented for the IRF PPS beginning with FY 
2016) are based on revised OMB delineations issued on February 28, 
2013, in OMB Bulletin No. 13-01. OMB Bulletin No. 13-01 established 
revised delineations for Metropolitan Statistical Areas, Micropolitan 
Statistical Areas, and Combined Statistical Areas in the United States 
and Puerto Rico based on the 2010 Census and provided guidance on the 
use of the delineations of these statistical areas using standards 
published in the June 28, 2010, Federal Register (75 FR 37246 through 
37252). We refer readers to the FY 2016 IRF PPS final rule (80 FR 47068 
through 47076) for a full discussion of our implementation of the OMB 
labor market area delineations beginning with the FY 2016 wage index.
    Generally, OMB issues major revisions to statistical areas every 10 
years, based on the results of the decennial census. Additionally, OMB 
occasionally issues updates and revisions to the statistical areas in 
between decennial censuses to reflect the recognition of new areas or 
the addition of counties to existing areas. In some instances, these 
updates merge formerly separate areas, transfer components of an area 
from one area to another or drop components from an area. On July 15, 
2015, OMB issued OMB Bulletin No. 15-01, which provides minor updates 
to and supersedes OMB Bulletin No. 13-01 that was issued on February 
28, 2013. The attachment to OMB Bulletin No. 15-01 provides detailed 
information on the update to statistical areas since February 28, 2013. 
The updates provided in OMB Bulletin No. 15-01 are based on the 
application of the 2010 Standards for Delineating Metropolitan and 
Micropolitan Statistical Areas to Census Bureau population estimates 
for July 1, 2012, and July 1, 2013.
    In the FY 2018 IRF PPS final rule (82 FR 36250 through 36251), we 
adopted the updates set forth in OMB Bulletin No. 15-01 effective 
October 1, 2017, beginning with the FY 2018 IRF wage index. For a 
complete discussion of the adoption of the updates set forth in OMB 
Bulletin No. 15-01, we refer readers to the FY 2018 IRF PPS final rule. 
In the FY 2019 IRF PPS final rule (83 FR 38527), we continued to use 
the OMB delineations that were adopted beginning with FY 2016 to 
calculate the area wage indexes, with updates set forth in OMB Bulletin 
No. 15-01 that we adopted beginning with the FY 2018 wage index.
    On August 15, 2017, OMB issued OMB Bulletin No. 17-01, which 
provided updates to and superseded OMB Bulletin No. 15-01 that was 
issued on July 15, 2015. The attachments to OMB Bulletin No. 17-01 
provide detailed information on the update to statistical areas since 
July 15, 2015, and are based on the application of the 2010 Standards 
for Delineating Metropolitan and Micropolitan Statistical Areas to 
Census Bureau population estimates for July 1, 2014, and July 1, 2015. 
In the FY 2020 IRF PPS final rule (84 FR 39090 through 39091), we 
adopted the updates set forth in OMB Bulletin No. 17-01 effective 
October 1, 2019, beginning with the FY 2020 IRF wage index.
    On April 10, 2018, OMB issued OMB Bulletin No. 18-03, which 
superseded the August 15, 2017, OMB Bulletin No. 17-01, and on 
September 14, 2018, OMB issued OMB Bulletin No. 18-04, which superseded 
the April 10, 2018 OMB Bulletin No. 18-03. These bulletins established 
revised delineations for Metropolitan Statistical Areas, Micropolitan 
Statistical Areas, and Combined Statistical Areas, and provided 
guidance on the use of the delineations of these statistical areas. A 
copy of this bulletin may be obtained at https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf.
    To this end, as discussed in the FY 2021 IRF PPS proposed (85 FR 
22075 through 22079) and final (85 FR 48434 through 48440) rules, we 
adopted the revised OMB delineations identified in OMB Bulletin No. 18-
04 (available at https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf) beginning October 1, 2020, including a 1-year 
transition for FY 2021 under which we applied a 5-percent cap on any 
decrease in an IRF's wage index compared to its wage index for the 
prior fiscal year (FY 2020). The updated OMB delineations more

[[Page 64292]]

accurately reflect the contemporary urban and rural nature of areas 
across the country, and the use of such delineations allows us to 
determine more accurately the appropriate wage index and rate tables to 
apply under the IRF PPS. OMB issued further revised CBSA delineations 
in OMB Bulletin No. 20-01, on March 6, 2020 (available on the web at 
https://www.whitehouse.gov/wp-content/uploads/2020/03/Bulletin-20-01.pdf). However, we determined that the changes in OMB Bulletin No. 
20-01 do not impact the CBSA-based labor market area delineations 
adopted in FY 2021. Therefore, we did not propose to adopt the revised 
OMB delineations identified in OMB Bulletin No. 20-01 for FY 2022 
through FY 2024.
    On July 21, 2023, OMB issued OMB Bulletin No. 23-01 (available at 
https://www.whitehouse.gov/wp-content/uploads/2023/07/OMB-Bulletin-23-01.pdf) which updates and supersedes OMB Bulletin No. 20-01 based upon 
the 2020 Standards for Delineating Core Based Statistical Areas (``the 
2020 Standards'') published by OMB on July 16, 2021 (86 FR 37770). OMB 
Bulletin No. 23-01 revised CBSA delineations which are comprised of 
counties and equivalent entities (for example, boroughs, a city and 
borough, and a municipality in Alaska, planning regions in Connecticut, 
parishes in Louisiana, municipios in Puerto Rico, and independent 
cities in Maryland, Missouri, Nevada, and Virginia). For FY 2025, we 
proposed to adopt the revised OMB delineations identified in OMB 
Bulletin No. 23-01.
a. Urban Counties Becoming Rural
    As previously discussed, we are implementing the new OMB 
statistical area delineations (based upon the 2020 decennial Census 
data) beginning in FY 2025 for the IRF PPS wage index. Our analysis 
shows that a total of 54 counties (and county equivalents) that are 
currently considered part of an urban CBSA would be considered located 
in a rural area, for IRF PPS payment beginning in FY 2025, if we adopt 
the new OMB delineations. Table 5 lists the 54 urban counties that will 
be rural now that we are finalizing our proposal to implement the new 
OMB delineations.

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[[Page 64294]]


[GRAPHIC] [TIFF OMITTED] TR06AU24.098

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

[[Page 64295]]

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[[Page 64296]]


[GRAPHIC] [TIFF OMITTED] TR06AU24.100

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

[[Page 64297]]

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[[Page 64298]]


[GRAPHIC] [TIFF OMITTED] TR06AU24.111


[[Page 64299]]


    If providers located in these counties move from one CBSA to 
another under the new OMB delineations, there may be impacts, both 
negative and positive, upon their specific wage index values.
    In other cases, adopting the revised OMB delineations would involve 
a change only in CBSA name and/or number, while the CBSA continues to 
encompass the same constituent counties. For example, CBSA 19430 
(Dayton-Kettering, OH) would experience a change to its name and become 
CBSA 19430 (Dayton-Kettering-Beavercreek, OH), while all of its three 
constituent counties would remain the same. We consider these changes 
(where only the CBSA name and/or number would change) to be 
inconsequential changes with respect to the IRF PPS wage index. Table 8 
sets forth a list of such CBSAs where there would be a change in CBSA 
name and/or number only if we adopt the revised OMB delineations.

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[[Page 64302]]


[GRAPHIC] [TIFF OMITTED] TR06AU24.103

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

                                TABLE 9--Connecticut Counties to Planning Regions
----------------------------------------------------------------------------------------------------------------
                                                                                     Proposed
                                                                                 planning region
             FIPS               Current County    Current CBSA        FIPS         area (County        CBSA
                                                                                   Equivalent)
----------------------------------------------------------------------------------------------------------------
9003.........................  Hartford........           25540            9110  Capitol........           25540
9015.........................  Windham.........           49340            9150  Northeastern                  7
                                                                                  Connecticut.
9005.........................  Litchfield......               7            9160  Northwest Hills               7
9001.........................  Fairfield.......           14860            9190  Western                   14860
                                                                                  Connecticut.
9011.........................  New London......           35980            9180  Southeastern              35980
                                                                                  Connecticut.
9013.........................  Tolland.........           25540            9110  Capitol........           25540
9009.........................  New Haven.......           35300            9170  South Central             35300
                                                                                  Connecticut.
9007.........................  Middlesex.......           25540            9130  Lower                     25540
                                                                                  Connecticut
                                                                                  River Valley.
----------------------------------------------------------------------------------------------------------------

3. Transition Policy for FY 2025 Wage Index Changes
    Overall, we believe that implementing the new OMB delineations 
would result in wage index values being more representative of the 
actual costs of labor in a given area. We recognize that some providers 
(10 percent) would have a higher wage index due to our implementation 
of the new labor market area delineations. However, we also recognize 
that more providers (16 percent) would experience decreases in wage 
index values as a result of our implementation of the new labor market 
area delineations. Our analysis for the FY 2025 final rule indicates 
that 16 IRFs will experience a change in either rural or urban 
designations. Of these, 8 facilities designated as rural in FY 2024 
would be designated as urban in FY 2025. Based upon the CBSA 
delineations, those rural IRFs that change from rural to urban would 
lose the 14.9 percent rural adjustment. To mitigate the financial 
impacts of this loss, we proposed a transition for these facilities, as 
discussed further below.
    CMS recognizes that IRFs in certain areas may experience reduced 
payments due to the adoption of the revised OMB delineations and is 
finalizing transition policies to mitigate negative financial impacts 
and provide stability to year-to-year wage index variations. In the FY 
2021 final rule (85 FR 48434), CMS finalized a wage index transition 
policy to apply a 5-percent cap for IRFs that may experience decreases 
in their final wage index from the prior fiscal year. In FY 2023, the 
5-percent cap policy was made permanent. This 5-percent cap on 
reductions policy is discussed in further detail in FY 2023 final rule 
at 87 FR 47054 through 47056. It is CMS' long held opinion that revised 
labor market delineations should be adopted as soon as is possible to 
maintain the integrity of the wage index system. We believe the 5-
percent cap policy will sufficiently mitigate significant disruptive 
financial impacts on hospitals negatively affected by the adoption of 
the revised OMB delineations. Besides the rural adjustment transition 
discussed immediately below, we do not believe any additional 
transition is necessary considering that the current cap on wage index 
decreases, which was not in place when implementing prior decennial 
census updates in FY 2006 and FY 2015, ensures that an IRFs wage index 
would not be less than 95 percent of its final wage index for the prior 
year.
    Consistent with the transition policy adopted in FY 2006 (70 FR 
47923 \4\ through 47927 \5\), we considered the appropriateness of 
applying a 3-year phase-out of the rural adjustment for IRFs located in 
rural counties that would become urban under the new OMB delineations, 
given the potentially significant payment impacts for these facilities. 
We continue to believe, as discussed in the FY 2006 IRF final rule (70 
FR 47880 \6\), that the phase-out of the rural adjustment transition 
period for these facilities specifically is appropriate because, as a 
group, we expect these IRFs would experience a steeper and more abrupt 
reduction in their payments compared to other IRFs. Therefore, we are 
finalizing a budget

[[Page 64303]]

neutral three-year phase-out of the rural adjustment for existing FY 
2024 rural IRFs that will become urban in FY 2025 and that experience a 
loss in payments due to changes from the new CBSA delineations. 
Accordingly, the incremental steps needed to reduce the impact of the 
loss of the FY 2024 rural adjustment of 14.9 percent will be phased out 
over FYs 2025, 2026, and 2027. This policy will allow rural IRFs which 
would be classified as urban in FY 2025 to receive two-thirds of the 
2024 rural adjustment for FY 2025. For FY 2026, these IRFs will receive 
the full FY 2026 wage index and one-third of the FY 2024 rural 
adjustment. For FY 2027, these IRFs will receive the full FY 2027 wage 
index without a rural adjustment. We believe a three-year budget-
neutral phase-out of the rural adjustment for IRFs that transition from 
rural to urban status under the new CBSA delineations would best 
accomplish the goals of mitigating the loss of the rural adjustment for 
existing FY 2024 rural IRFs. The purpose of the gradual phase-out of 
the rural adjustment for these facilities is to alleviate the 
significant payment implications for existing rural IRFs that may need 
time to adjust to the loss of their FY 2024 rural payment adjustment or 
that experience a reduction in payments solely because of this 
redesignation. As stated, this policy is specifically for rural IRFs 
that become urban in FY 2025 and that experience a loss in payments due 
to changes from the new CBSA delineations. Thus, we are not 
implementing a transition policy for urban facilities that become rural 
in FY 2025 because these IRFs will receive the full rural adjustment of 
14.9 percent beginning October 1, 2024.
---------------------------------------------------------------------------

    \4\ https://www.federalregister.gov/citation/70-FR-47923.
    \5\ https://www.federalregister.gov/citation/70-FR-47927.
    \6\ https://www.federalregister.gov/citation/70-FR-47880.
---------------------------------------------------------------------------

    We invited public comment on the proposed implementation of revised 
labor market area delineations and on the proposed transition policy 
for rural IRFs that would be designated as urban under the new CBSA 
delineations.
    The following is a summary of the public comments received on the 
proposed implementation of the revised labor market area delineations 
and the proposed transition policy:
    Comment: Overall, many commenters supported the adoption of OMB's 
CBSA delineation revisions. Several others voiced appreciation for CMS' 
inclusion of a transition policy to reduce the impact of the CBSA 
delineation changes, without voicing any opposition to the adoption of 
the new delineations. However, some commenters specifically opposed the 
adoption of OMB's CBSA delineation revisions. The commenters stated 
that both OMB guidance and the Metropolitan Areas Protection and 
Standardization Act (MAPS) (Public Law 117-219) support that, if CMS 
chooses to adopt new OMB delineations, CMS must fully explain why 
reliance on the updated CBSAs as set forth by OMB is appropriate for 
purposes of the FY 2025 wage index adjustments. The commenters stated 
that CMS has not provided any rationale or explanation for why relying 
on the updated CBSAs is appropriate. Rather than simply adopting the 
OMB CBSAs by default, the commenters stated that CMS must make a fact-
specific determination of those CBSAs' suitability for Medicare 
reimbursement purposes, including whether it would be appropriate to 
use additional data to modify OMB's delineation to ensure that such 
changes are appropriate for purposes of defining regional labor markets 
for IRF workers.
    Response: We appreciate the majority of commenters' support for the 
adoption of OMB's CBSA delineation revisions and recognize others' 
opposition. We do not agree with the commenters' assessment that CMS 
has not provided a rationale for the proposed adoption of the revised 
CBSA delineations for FY 2025. The MAPS Act specifically states that 
``this act limits the automatic application of, and directs the Office 
of Management and Budget (OMB) to provide information about, changes to 
the standards for designating a core-based statistical area (CBSA) . . 
.'' We believe that our proposed rule meets the requirements of the 
MAPS Act because we have not automatically applied the revised CBSAs 
outlined in OMB Bulletin 23-01. Rather, as we noted in the proposed 
rule, we proposed the adoption of the revised CBSA delineations because 
we believe it is important for the IRF 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 also believe that using the most current delineations 
increase the integrity of the IRF PPS wage index system by creating a 
more accurate representation of geographic variations in wage levels.
    With respect to the suggestion that CMS consider whether it would 
be appropriate to use additional data to modify OMB's delineation to 
ensure that such changes are appropriate for purposes of defining 
regional labor markets for IRF workers, we do not believe that the use 
of such additional data is appropriate. As we have previously discussed 
in the FY 2016 final rule (80 FR 47069) and as we noted earlier in this 
final rule, we believe that the labor market area in which the IRF is 
geographically located is most appropriate for determining the wage 
adjustment. Accordingly, we do not believe it would be appropriate to 
use additional data to modify OMB's delineations, for the same reasons 
we previously stated with regard to floors or reclassifications. For 
example, using additional data to modify OMB's CBSA delineations would 
significantly increase administrative burden, both for IRFs and for 
CMS, associated with particular geographical areas or even individual 
IRFs moving from one CBSA to another, and it would significantly 
increase the complexity of the methodology.
    Furthermore, because all CBSA delineation changes would be applied 
budget-neutrally under the wage index, these policies would increase 
the wage index for some IRFs while reducing IRF PPS payments for all 
other IRFs, which would be a departure from our longstanding policies 
that IRFs have relied on for many years. For these reasons, we continue 
to believe it is important for the IRF PPS to use the latest available 
labor market area delineations, based on the latest available CBSA 
delineations established by OMB as soon as is reasonably possible in 
order to maintain a more accurate and up-to-date payment system that 
reflects the reality of population shifts and labor market conditions. 
We further believe that using the delineations reflected in OMB 
Bulletin No. 23-01 would increase the integrity of the IRF PPS wage 
index system by creating a more accurate representation of geographic 
variations in wage levels. Therefore, we believe that it is appropriate 
to implement the new OMB delineations without delay.
    Comment: Public comments generally all supported the phase-out 
policy for IRFs being reclassified from rural to urban CBSAs. 
Commenters expressed that this phase-out policy for loss of the rural 
adjustment is a reasonable way to ensure that no IRF faces a dramatic 
cut to its reimbursement as a result of the new CBSA delineation. A few 
commentors specifically noted that while they appreciate the existing 
permanent 5-percent cap policy, they do not believe that it is 
sufficient to mitigate the impact of the CBSA change, and therefore 
supported the implementation of a 3-year wage index transition period 
to allow for a wage index transition consistent with prior updates to 
the CBSA categorization.
    Response: We appreciate the commenters' support for a 3-year phase-
out of the rural adjustment for FY 2024 rural IRFs that will be 
considered urban

[[Page 64304]]

in FY 2025 and for supporting the CBSA change in conjunction with 
applying the existing permanent 5-percent cap policy. We believe that 
the existing permanent 5-percent cap policy substantially mitigates the 
financial impact on IRFs of the updated CBSA market area delineations, 
and we believe that phasing in these new CBSA market area delineations 
over 3 years would be overly complex to administer and is therefore not 
the best approach. We will continue monitoring the effects of the wage 
index updates to ensure that the permanent 5-percent cap policy is 
adequately mitigating any substantial decreases in wage index values.
    After consideration of the comments we received, we are finalizing 
our proposal to adopt the revised OMB delineations contained in OMB 
Bulletin No. 23-01 as well as our proposal to implement a budget 
neutral three-year phase-out of the rural adjustment for existing FY 
2024 rural IRFs that will become urban in FY 2025.
    The proposed wage index applicable to FY 2025 is set forth in Table 
A and Table B available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/IRF-Rules-and-Related-Files.html.
4. IRF Budget-Neutral Wage Adjustment Factor Methodology
    To calculate the wage-adjusted facility payment for the payment 
rates set forth in this final rule, we multiply the unadjusted Federal 
payment rate for IRFs by the FY 2025 labor-related share based on the 
2021-based IRF market basket relative importance (74.4 percent) to 
determine the labor-related portion of the standard payment amount. (A 
full discussion of the calculation of the labor-related share appears 
in section VI.E. of this final rule.) We then multiply the labor-
related portion by the applicable IRF wage index. The wage index tables 
are available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/IRF-Rules-and-Related-Files.html.
    Adjustments or updates to the IRF wage index made under section 
1886(j)(6) of the Act must be made in a budget-neutral manner. We 
calculate a budget-neutral wage adjustment factor as established in the 
FY 2004 IRF PPS final rule (68 FR 45689) and codified at Sec.  
412.624(e)(1), as described in the steps below. We use the listed steps 
to ensure that the FY 2025 IRF standard payment conversion factor 
reflects the update to the wage indexes (based on the FY 2021 hospital 
cost report data) and the update to the labor-related share, in a 
budget-neutral manner:
    Step 1. Calculate the total amount of estimated IRF PPS payments 
using the labor-related share and the wage indexes from FY 2024 (as 
published in the FY 2024 IRF PPS final rule (88 FR 50956)).
    Step 2. Calculate the total amount of estimated IRF PPS payments 
using the FY 2025 wage index values (based on updated hospital wage 
data and considering the permanent cap on wage index decreases policy) 
and the FY 2025 labor-related share of 74.4 percent.
    Step 3. Divide the amount calculated in Step 1 by the amount 
calculated in Step 2. The resulting quotient is the FY 2025 budget-
neutral wage adjustment factor of 0.9924.
    Step 4. Apply the budget neutrality factor from Step 3 to the FY 
2025 IRF PPS standard payment amount after the application of the 
increase factor to determine the FY 2025 standard payment conversion 
factor.
    We discuss the calculation of the standard payment conversion 
factor for FY 2025 in section VI.G. of this final rule.
    We invited public comment on our proposals regarding the Wage 
Adjustment for FY 2025.
    Comment: Several commentors specified that the wage index cap 
policy should be implemented without applying a budget neutrality 
adjustment.
    Response: We do not believe that the permanent 5-percent cap policy 
for the IRF wage index should be applied in a non-budget-neutral 
manner. As a matter of fact, the statute at section 1886(j)(6) of the 
Act requires that adjustments for geographic variations in labor costs 
for a FY be made in a budget-neutral manner. We refer readers to the FY 
2023 IRF PPS final rule (87 FR 47054 through 47056) for a detailed 
discussion on the wage index cap policy.
    As a result of the public comments, we are finalizing our proposals 
regarding the IRF budget neutral wage adjustment factor methodology for 
FY 2025.

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

    To calculate the standard payment conversion factor for FY 2025, as 
illustrated in Table 10, we begin by applying the finalized increase 
factor for FY 2025, as adjusted in accordance with sections 
1886(j)(3)(C) of the Act, to the standard payment conversion factor for 
FY 2024 ($18,541). Applying the 3.0 productivity-adjusted market basket 
increase factor for FY 2025 to the standard payment conversion factor 
for FY 2024 of $18,541 yields a standard payment amount of $19,097. 
Then, we apply the budget neutrality factor for the FY 2025 wage index 
(taking into account the policy placing a permanent cap on decreases in 
the wage index), and labor-related share of 0.9924, which results in a 
standard payment amount of $18,592. We next apply the budget neutrality 
factor for the CMG relative weights of 0.9976, which results in the 
standard payment conversion factor of $18,907 for FY 2025.
    We invited public comment on the proposed FY 2025 standard payment 
conversion factor.
    We did not receive any comments on our proposed FY 2025 standard 
payment conversion factor, and therefore, we are finalizing the 
revisions as proposed.

    TABLE 10--Calculations to Determine the FY 2025 Standard Payment
                            Conversion Factor
------------------------------------------------------------------------
              Explanation for Adjustment                  Calculations
------------------------------------------------------------------------
FY 2024 Standard Payment Conversion Factor...........            $18,541
Market Basket Increase Factor for FY 2025 (3.5%),                x 1.030
 reduced by 0.5 percentage point for the productivity
 adjustment as required by section
 1886(j)(3)(C)(ii)(I) of the Act.....................
Budget Neutrality Factor for the Updates to the Wage            x 0.9924
 Index and Labor-Related Share.......................
Budget Neutrality Factor for the Revisions to the CMG           x 0.9976
 Relative Weights....................................
FY 2025 Standard Payment Conversion Factor...........          = $18,907
------------------------------------------------------------------------

    We then apply the CMG relative weights described in section IV. of 
this final rule to the FY 2025 standard payment conversion factor 
($18,907), to determine the unadjusted IRF prospective payment rates 
for FY 2025. The unadjusted prospective payment rates for FY 2025 are 
shown in Table 11.

[[Page 64305]]

[GRAPHIC] [TIFF OMITTED] TR06AU24.104


[[Page 64306]]


[GRAPHIC] [TIFF OMITTED] TR06AU24.105

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

    Table 12 illustrates the methodology for adjusting the prospective 
payments (as described in section V. of this final rule). The following 
examples are based on two hypothetical Medicare beneficiaries, both 
classified into CMG 0104 (without comorbidities). The unadjusted 
prospective payment rate for CMG 0104 (without comorbidities) appears 
in Table 11.
    Example: One beneficiary is in Facility A, an IRF located in rural 
Spencer County, Indiana, and another beneficiary is in Facility B, an 
IRF located in urban Harrison County, Indiana. Facility A, a rural non-
teaching hospital has a Disproportionate Share Hospital (DSH) 
percentage of 5 percent (which would result in a LIP adjustment of 
1.0156), a wage index of 0.8657, and a rural adjustment of 14.9 
percent. Facility B, an urban teaching hospital, has a DSH percentage 
of 15 percent (which would result in a LIP adjustment of 1.0454 
percent), a wage index of 0.9068, and a teaching status adjustment of 
0.0784.
    To calculate each IRF's labor and non-labor portion of the 
prospective

[[Page 64307]]

payment, we begin by taking the FY 2025 unadjusted prospective payment 
rate for CMG 0104 (without comorbidities) from Table 11. Then, we 
multiply the labor-related share for FY 2025 (74.4 percent) described 
in section VI. of this final rule by the unadjusted prospective payment 
rate. To determine the non-labor portion of the prospective payment 
rate, we subtract the labor portion of the Federal payment from the 
unadjusted prospective payment.
    To compute the wage-adjusted prospective payment, we multiply the 
labor portion of the Federal payment by the appropriate wage index 
located in the applicable wage index table. This table is available on 
the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/IRF-Rules-and-Related-Files.html.
    The resulting figure is the wage-adjusted labor amount. Next, we 
compute the wage-adjusted Federal payment by adding the wage-adjusted 
labor amount to the non-labor portion of the Federal payment.
    Adjusting the wage-adjusted Federal payment by the facility-level 
adjustments involves several steps. First, we take the wage-adjusted 
prospective payment and multiply it by the appropriate rural and LIP 
adjustments (if applicable). Second, to determine the appropriate 
amount of additional payment for the teaching status adjustment (if 
applicable), we multiply the teaching status adjustment (0.0784, in 
this example) by the wage-adjusted and rural-adjusted amount (if 
applicable). Finally, we add the additional teaching status payments 
(if applicable) to the wage, rural, and LIP-adjusted prospective 
payment rates. Table 12 illustrates the components of the adjusted 
payment calculation.
[GRAPHIC] [TIFF OMITTED] TR06AU24.106

    Thus, the adjusted payment for Facility A would be $30,649.63, and 
the adjusted payment for Facility B would be $30,519.74.

VII. Update to Payments for High-Cost Outliers under the IRF PPS for FY 
2025

A. Update to the Outlier Threshold Amount for FY 2025

    Section 1886(j)(4) of the Act provides the Secretary with the 
authority to make payments in addition to the basic IRF prospective 
payments for cases incurring extraordinarily high costs. A case 
qualifies for an outlier payment if the estimated cost of the case 
exceeds the adjusted outlier threshold. We calculate the adjusted 
outlier threshold by adding the IRF PPS payment for the case (that is, 
the CMG payment adjusted by all of the relevant facility-level 
adjustments) and the adjusted threshold amount (also adjusted by all of 
the relevant facility-level adjustments). Then, we calculate the 
estimated cost of a case by multiplying the IRF's overall Cost-to-
Charge Ratio (CCR) by the Medicare allowable covered charge. If the 
estimated cost of the case is higher than the adjusted outlier 
threshold, we make an outlier payment for the case equal to 80 percent 
of the difference between the estimated cost of the case and the 
outlier threshold.
    In the FY 2002 IRF PPS final rule (66 FR 41362 through 41363), we 
discussed our rationale for setting the outlier threshold amount for 
the IRF PPS so that estimated outlier payments would equal 3 percent of 
total estimated payments. For the FY 2002 IRF PPS final rule, we 
analyzed various outlier policies using 3, 4, and 5 percent of the 
total estimated payments, and we concluded that an outlier policy set 
at 3 percent of total estimated payments would optimize the extent to 
which we could reduce the financial risk to IRFs of caring for high 
cost- patients, while still providing for adequate payments for all 
other (non-high cost outlier) cases.
    Subsequently, we updated the IRF outlier threshold amount in the 
FYs 2006 through 2024 IRF PPS final rules and the FY 2011 and FY 2013 
notices (70 FR 47880, 71 FR 48354, 72 FR 44284, 73 FR 46370, 74 FR 
39762, 75 FR 42836, 76 FR 47836, 76 FR 59256, 77 FR 44618, 78 FR 47860, 
79 FR 45872, 80 FR 47036, 81 FR 52056, 82 FR 36238, 83 FR 38514, 84 FR 
39054, 85 FR 48444, 86 FR 42362, 87 FR 47038, and 88 FR 50956 
respectively) to maintain estimated outlier payments at 3 percent of 
total estimated payments. We also stated in the FY 2009 final rule (73 
FR 46370 at 46385) that we would continue to analyze the estimated 
outlier payments for subsequent years and adjust the outlier threshold 
amount as appropriate to maintain the 3 percent target.

[[Page 64308]]

    To update the IRF outlier threshold amount for FY 2025, we proposed 
to use FY 2023 claims data and the same methodology that we used to set 
the initial outlier threshold amount in the FY 2002 IRF PPS final rule 
(66 FR 41362 through 41363), which is also the same methodology that we 
used to update the outlier threshold amounts for FYs 2006 through 2024. 
The outlier threshold is calculated by simulating aggregate payments 
and using an iterative process to determine a threshold that results in 
outlier payments being equal to 3 percent of total payments under the 
simulation. To determine the outlier threshold for FY 2025, we 
estimated the amount of FY 2025 IRF PPS aggregate and outlier payments 
using the most recent claims available (FY 2023) and the FY 2025 
standard payment conversion factor, labor-related share, and wage 
indexes, incorporating any applicable budget-neutrality adjustment 
factors. The outlier threshold is adjusted either up or down in this 
simulation until the estimated outlier payments equal 3 percent of the 
estimated aggregate payments. Based on an analysis of the preliminary 
data used for the proposed rule, we estimated that IRF outlier payments 
as a percentage of total estimated payments would be approximately 3.2 
percent in FY 2024. Therefore, we proposed to update the outlier 
threshold amount from $10,423 for FY 2024 to $12,158 for FY 2025 to 
maintain estimated outlier payments at approximately 3 percent of total 
estimated aggregate IRF payments for FY 2025.
    We note that, as we typically do, we will update our data between 
the FY 2025 IRF PPS proposed and final rules to ensure that we use the 
most recent available data in calculating IRF PPS payments. This 
updated data includes a more complete set of claims for FY 2023. Based 
on our analysis using this updated data, we estimate that IRF outlier 
payments as a percentage of total estimated payments are approximately 
3.2 percent in FY 2024. Therefore, we will update the outlier threshold 
amount from $10,423 for FY 2024 to $12,043 for FY 2025 to account for 
the increases in IRF PPS payments and estimated costs and to maintain 
estimated outlier payments at approximately 3 percent of total 
estimated aggregate IRF payments for FY 2025.
    We invited public comment on the proposed update to the IRF outlier 
threshold for FY 2025. The following is a summary of the public 
comments received on our proposed update to the IRF outlier threshold:
    Comment: Commenters were mixed in their support of the proposed 
high-cost outlier threshold, although more commentors supported the 
proposed threshold than opposed it. Those that supported the proposed 
threshold indicated support of CMS' policy to keep the outlier payments 
at 3 percent of total payments. However, these supporters also 
expressed concern over the lack of stability and predictability in the 
threshold, stating that the lack of stability makes it difficult for 
facilities to budget and poses challenges to IRFs that treat a large 
number of complex patients. One commenter expressed concern over the 
reduction in outlier payments during a time when increasing costs are 
outside of the hospital's control. Many suggested modifications to the 
outlier threshold methodology.
    Response: We appreciate the commenters' support of the current 3 
percent outlier threshold policy and recognize the commenters' concern 
regarding a reduction in outlier payments this year, and the 
commenters' desire for increased stability and predictability in the 
threshold from year-to-year. It has been our long-standing practice to 
utilize the most recent full fiscal year of data to update the 
prospective payment rates and determine the outlier threshold amount, 
as this data is generally considered to be the best overall predictor 
of experience in the upcoming fiscal year. Additionally, we continue to 
believe that maintaining the outlier pool at 3 percent of aggregate IRF 
payments optimizes the extent to which we can reduce financial risk to 
IRFs of caring for highest-cost patients, while still providing for 
adequate payments for all other non-outlier cases.
    Although we recognize commenters' concerns about increasing IRF 
costs, we do not believe that it would be appropriate to address these 
concerns through the outlier payment policy. The outlier payment policy 
is designed to compensate IRFs for treating unusually high-cost 
patients, not for addressing overall inflationary pressures that 
increase the costs of caring for all IRF patients.
    We will continue to examine ways of enhancing the stability and 
predictability of the outlier threshold from year to year. However, 
since 3 percent was deducted from IRF payments in the beginning of the 
IRF PPS to fund the outlier pool, we do not believe that it would be 
appropriate to deliberately pay more than 3 percent in outlier payments 
to IRFs in a given year, as that additional funding would increase 
overall payments to IRFs. Thus, we believe that any changes to the 
outlier threshold methodology to make it more stable and predictable 
would still need to maintain the integrity of the outlier pool, which 
is currently set at 3 percent. CMS will continue to monitor year-to-
year changes in the outlier threshold and the impact of these changes 
on payment.
    Comment: Several commenters expressed concerns that outlier 
payments may not be consistently targeted towards patients who require 
more intensive or complex services with related higher costs. Some of 
the commenters believed that factors other than patient complexity and 
case mix may be driving these payments. One commenter presented 
analysis to support their claim that inefficient cost structures, 
rather than highly complex patients, appear to be driving the 
distribution of overall IRF outlier payments, potentially resulting in 
patients at IRFs that warrant an outlier payment not receiving one. 
Moreover, many commenters expressed concern that outlier payments are 
being concentrated among an increasingly small number of providers. 
Several of these comments urged CMS to analyze the increasing 
concentration of outlier payments and make such analysis publicly 
accessible.
    Response: We acknowledge commenters' concerns that outlier payments 
may be concentrated among a small subset of providers and may not be 
consistently targeted towards patients with intensive or complex needs. 
As most recently discussed in the FY 2024 IRF PPS Final Rule (88 FR 
68494), our outlier policy is intended to reimburse IRFs for treating 
extraordinarily costly cases. Any future consideration given to 
imposing a limit on outlier payments or adjusting the outlier threshold 
to account for historical outlier reconciliation dollars would need to 
be carefully assessed and take into consideration the effect on access 
to IRF care for certain high-cost populations. We continue to believe 
that maintaining the outlier pool at 3 percent of aggregate IRF 
payments optimizes the extent to which we can reduce financial risk to 
IRFs caring for highest-cost patients, while still providing for 
adequate payments for all other non-outlier cases. We appreciate the 
commenters' suggestions for additional analysis on our methodology and 
will take them into consideration as we continue to assess our outlier 
threshold.
    Comment: Many commenters provided suggestions to improve the high-
cost outlier threshold methodology. By far the most frequent suggestion 
was for CMS to consider

[[Page 64309]]

implementing a 3-year rolling average as a stabilizing factor for the 
outlier threshold, similar to the method used for the facility-level 
adjustments in the past. Commenters suggested that this methodology 
could reduce the annual outlier changes and provide greater 
predictability for the field. Several comments also suggested that CMS 
consider developing and implementing an outlier reconciliation policy 
for the IRF PPS, similar to the one used in IPPS. Other, less frequent 
suggestions that commenters offered were the following: establishing an 
outlier baseline and then increasing the outlier threshold each year by 
the approved market basket percentage increase, capping the overall 
outlier payments an IRF can receive, and reducing the overall 3 percent 
outlier pool.
    Response: We thank the commenters for their suggestions regarding 
the outlier threshold. We appreciate the suggestion to modify the 
outlier threshold methodology to use a 3-year average; however, it has 
been our practice to utilize the most recent full fiscal year of data 
to update the prospective payment rates and determine the outlier 
threshold amount, as this data is generally considered to be the best 
overall predictor of experience in the upcoming fiscal year. 
Additionally, utilizing a 3-year rolling average approach would not be 
setting outlier payments at the 3 percent target and could potentially 
exceed or reduce the 3 percent outlier pool objective. We appreciate 
the commenters' suggestions and will take them into consideration as we 
continue to consider revisions to our outlier threshold methodology in 
future rulemaking.
    As most recently discussed in the FY 2023 IRF PPS final rule (87 FR 
47038), our outlier policy is intended to reimburse IRFs for treating 
extraordinarily costly cases. Any future consideration given to 
adjusting the outlier threshold to account for historical outlier 
reconciliation dollars or imposing a limit on outlier payments would 
need to be carefully assessed and take into consideration the effect on 
access to IRF care for certain high-cost populations. We continue to 
believe that maintaining the outlier pool at 3 percent of aggregate IRF 
payments optimizes the extent to which we can reduce financial risk to 
IRFs of caring for highest-cost patients, while still providing for 
adequate payments for all other non-outlier cases.
    Additionally, we do not believe it would be appropriate to limit 
changes in the outlier threshold to changes in the market basket 
percentage as constraining adjustments to the outlier threshold may 
result in a threshold that generates outlier payments above or below 
the 3 percent target.
    We appreciate the commenters' suggestions for refinements to the 
outlier methodology as well as the suggested areas of analysis and will 
take them into consideration as we continue to assess our outlier 
threshold methodology. We will continue to monitor our outlier policy 
to ensure it continues to compensate IRFs appropriately.
    After consideration of the comments received and considering the 
most recent available data, we are finalizing the outlier threshold 
amount of $12,043 to maintain estimated outlier payments at 
approximately 3 percent of total estimated aggregate IRF payments for 
FY 2025.

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

    CCRs are used to adjust charges from Medicare claims to costs and 
are computed annually from facility-specific data obtained from MCRs. 
IRF-specific CCRs are used in the development of the CMG relative 
weights and the calculation of outlier payments under the IRF PPS. In 
accordance with the methodology stated in the FY 2004 IRF PPS final 
rule (68 FR45692 through 45694), we proposed to apply a ceiling to 
IRFs' CCRs. Using the methodology described in that final rule, we 
proposed to update the national urban and rural CCRs for IRFs, as well 
as the national CCR ceiling for FY 2025, based on analysis of the most 
recent data available. We apply the national urban and rural CCRs to:
     New IRFs that have not yet submitted their first MCR.
     IRFs with an overall CCR that exceeds the national CCR 
ceiling for FY 2025, as discussed below in this section.
     Other IRFs for which accurate data to calculate an overall 
CCR are not available.
    Specifically, for FY 2025, we proposed to estimate a national 
average CCR of 0.492 for rural IRFs, which we calculated by taking an 
average of the CCRs for all rural IRFs using their most recently 
submitted cost report data. Similarly, we proposed to estimate a 
national average CCR of 0.406 for urban IRFs, which we calculated by 
taking an average of the CCRs for all urban IRFs using their most 
recently submitted cost report data. We apply weights to both of these 
averages using the IRFs' estimated costs, meaning that the CCRs of IRFs 
with higher total costs factor more heavily into the averages than the 
CCRs of IRFs with lower total costs. For this final rule, we have used 
the most recent available cost report data (FY 2022). This includes all 
IRFs whose cost reporting periods begin on or after October 1, 2021, 
and before October 1, 2022. If, for any IRF, the FY 2022 cost report 
was missing or had an ``as submitted'' status, we used data from a 
previous FY's (that is, FY 2004 through FY 2021) settled cost report 
for that IRF. We do not use cost report data from before FY 2004 for 
any IRF because changes in IRF utilization since FY 2004 resulting from 
the 60 percent rule and IRF medical review activities suggest that 
these older data do not adequately reflect the current cost of care. 
Using updated FY 2022 cost report data for this final rule, we estimate 
a national average CCR of 0.485 for rural IRFs, and a national average 
CCR of 0.405 for urban IRFs.
    In accordance with past practice, we proposed to set the national 
CCR ceiling at 3 standard deviations above the mean CCR. Using this 
method, we proposed a national CCR ceiling of 1.52 for FY 2025. This 
means that, if an individual IRF's CCR were to exceed this ceiling of 
1.52 for FY 2025, we will replace the IRF's CCR with the appropriate 
national average CCR (either rural or urban, depending on the 
geographic location of the IRF). We calculated the national CCR ceiling 
by:
    Step 1. Taking the national average CCR (weighted by each IRF's 
total costs, as previously discussed) of all IRFs for which we have 
sufficient cost report data (both rural and urban IRFs combined).
    Step 2. Estimating the standard deviation of the national average 
CCR computed in Step 1.
    Step 3. Multiplying the standard deviation of the national average 
CCR computed in Step 2 by a factor of 3 to compute a statistically 
significant reliable ceiling.
    Step 4. Adding the result from Step 3 to the national average CCR 
of all IRFs for which we have sufficient cost report data, from Step 1.
    We also proposed that if more recent data become available after 
the publication of the proposed rule and before the publication of this 
final rule, we would use such data to determine the FY 2025 national 
average rural and urban CCRs and the national CCR ceiling in the final 
rule. Using the FY 2022 cost report data for this final rule, we 
estimate a national average CCR ceiling of 1.50, using the same 
methodology.
    We invited public comment on the proposed update to the IRF CCR 
ceiling and the urban/rural averages for FY 2025.

[[Page 64310]]

    We did not receive any comments on the proposed update to the IRF 
CCR ceiling and the urban/rural averages for FY 2025. Consistent with 
the methodology outlined in the proposed rule, and using the most 
recent cost report data, we are finalizing a national average urban CCR 
at 0.405, the national average rural CCR at 0.485, and the national 
average CCR ceiling at 1.50 for FY 2025.

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

A. Background and Statutory Authority

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

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

    For a detailed discussion of the considerations we use for the 
selection of IRF QRP quality, resource use, or other measures, we refer 
readers to the FY 2016 IRF PPS final rule (80 FR 47083 and 47084).
1. Quality Measures Currently Adopted for the IRF QRP
    The IRF QRP currently has 18 adopted measures, which are listed in 
Table 13. For a discussion of the factors used to evaluate whether a 
measure should be removed from the IRF QRP, we refer readers to Sec.  
412.634(b)(2).

      Table 13--Quality Measures Currently Adopted for the IRF QRP
------------------------------------------------------------------------
          Short name                   Measure name & data source
------------------------------------------------------------------------
 Inpatient Rehabilitation Facility--Patient Assessment Instrument (IRF-
                     PAI) Assessment-Based Measures
------------------------------------------------------------------------
Pressure Ulcer/Injury........  Changes in Skin Integrity Post-Acute
                                Care: Pressure Ulcer/Injury.
Application of Falls.........  Application of Percent of Residents
                                Experiencing One or More Falls with
                                Major Injury (Long Stay).
Discharge Mobility Score.....  IRF Functional Outcome Measure: Discharge
                                Mobility Score for Medical
                                Rehabilitation Patients.
Discharge Self-Care Score....  IRF Functional Outcome Measure: Discharge
                                Self-Care Score for Medical
                                Rehabilitation Patients.
DRR..........................  Drug Regimen Review Conducted with Follow-
                                Up for Identified Issues--Post Acute
                                Care (PAC) Inpatient Rehabilitation
                                Facility (IRF) Quality Reporting Program
                                (QRP).
TOH-Provider.................  Transfer of Health Information to the
                                Provider--Post-Acute Care (PAC).
TOH-Patient..................  Transfer of Health Information to the
                                Patient--Post-Acute Care (PAC).
DC Function..................  Discharge Function Score.
Patient/Resident COVID-19      COVID-19 Vaccine: Percent of Patients/
 Vaccine.                       Residents Who Are Up to Date.
------------------------------------------------------------------------
                   National Healthcare Safety Network
------------------------------------------------------------------------
CAUTI........................  National Healthcare Safety Network (NHSN)
                                Catheter-Associated Urinary Tract
                                Infection Outcome Measure.
CDI..........................  National Healthcare Safety Network (NHSN)
                                Facility-wide Inpatient Hospital-onset
                                Clostridium difficile Infection (CDI)
                                Outcome Measure.
HCP Influenza Vaccine........  Influenza Vaccination Coverage among
                                Healthcare Personnel.
HCP COVID-19 Vaccine.........  COVID-19 Vaccination Coverage among
                                Healthcare Personnel (HCP).
------------------------------------------------------------------------
                              Claims-Based
------------------------------------------------------------------------
MSPB IRF.....................  Medicare Spending Per Beneficiary (MSPB)--
                                Post Acute Care (PAC) IRF QRP.
DTC..........................  Discharge to Community--PAC IRF QRP.
PPR 30 day...................  Potentially Preventable 30-Day Post-
                                Discharge Readmission Measure for IRF
                                QRP.
PPR Within Stay..............  Potentially Preventable Within Stay
                                Readmission Measure for IRFs.
------------------------------------------------------------------------

    We did not propose to adopt any new measures for the IRF QRP.

C. Collection of Four New Items as Standardized Patient Assessment Data 
Elements and Modification of One Item Collected as a Standardized 
Patient Assessment Data Element Beginning With the FY 2028 IRF QRP

    In the proposed rule, we proposed to require IRFs to report the 
following four new items \7\ as standardized patient assessment data 
elements under the social determinants of health (SDOH) category: one 
item for Living Situation; two items for Food; and one item for 
Utilities. We also proposed to modify one of the current items 
collected as standardized patient assessment data under the SDOH 
category (the Transportation item), as described in section VII.C.5. of 
the proposed rule.\8\
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    \7\ Items may also be referred to as ``data elements.''
    \8\ As noted in section VII.C of the proposed rule and section 
VIII.C of this final rule, hospitals are required to report whether 
they have screened patients for five standardized SDOH categories: 
housing instability, food insecurity, utility difficulties, 
transportation needs, and interpersonal safety.
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1. Definition of Standardized Patient Assessment Data
    Section 1886(j)(7)(F)(ii) of the Act requires IRFs to submit 
standardized patient assessment data required under section 1899B(b)(1) 
of the Act. Section 1899B(b)(1)(A) of the Act requires post-acute care 
(PAC) providers to submit standardized patient assessment data under 
applicable reporting provisions (which, for IRFs, is the IRF QRP) with

[[Page 64311]]

respect to the admission and discharge of an individual (and more 
frequently as the Secretary deems appropriate) using a standardized 
patient assessment instrument. Section 1899B(a)(1)(C) of the Act 
requires, in part, the Secretary to modify the PAC assessment 
instruments in order for PAC providers, including IRFs, to submit 
standardized patient assessment data under the Medicare program. IRFs 
are currently required to report standardized patient assessment data 
through the patient assessment instrument, referred to as the Inpatient 
Rehabilitation Facility-Patient Assessment Instrument (IRF-PAI). 
Section 1899B(b)(1)(B) of the Act describes standardized patient 
assessment data as data required for at least the quality measures 
described in section 1899B(c)(1) of the Act and that is with respect to 
the following categories: (1) functional status, such as mobility and 
self-care at admission to a PAC provider and before discharge from a 
PAC provider; (2) cognitive function, such as ability to express ideas 
and to understand, and mental status, such as depression and dementia; 
(3) special services, treatments, and interventions, such as need for 
ventilator use, dialysis, chemotherapy, central line placement, and 
total parenteral nutrition; (4) medical conditions and comorbidities, 
such as diabetes, congestive heart failure, and pressure ulcers; (5) 
impairments, such as incontinence and an impaired ability to hear, see, 
or swallow; and (6) other categories deemed necessary and appropriate 
by the Secretary.
2. Social Determinants of Health Collected as Standardized Patient 
Assessment Data Elements
    Section 1899B(b)(1)(B)(vi) of the Act authorizes the Secretary to 
collect standardized patient assessment data elements with respect to 
other categories deemed necessary and appropriate. Accordingly, we 
finalized the creation of the SDOH category of standardized patient 
assessment data elements in the FY 2020 IRF PPS final rule (84 FR 39149 
through 39161), and defined SDOH as the socioeconomic, cultural, and 
environmental circumstances in which individuals live that impact their 
health.\9\ According to the World Health Organization, research shows 
that the SDOH can be more important than health care or lifestyle 
choices in influencing health, accounting for between 30-55% of health 
outcomes.\10\ This is a part of a growing body of research that 
highlights the importance of SDOH on health outcomes. Subsequent to the 
FY 2020 IRF PPS final rule, we expanded our definition of SDOH: SDOH 
are the conditions in the environments where people are born, live, 
learn, work, play, worship, and age that affect a wide range of health, 
functioning, and quality-of-life outcomes and risks.11 12 13 
This update will align our definition of SDOH with the definition used 
by HHS agencies, including OASH, the Centers for Disease Control and 
Prevention (CDC), and the White House Office of Science and Technology 
Policy.14 15 We currently collect seven items in this SDOH 
category of standardized patient assessment data elements: ethnicity, 
race, preferred language, interpreter services, health literacy, 
transportation, and social isolation (84 FR 39149 through 39161).\16\
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    \9\ Office of the Assistant Secretary for Planning and 
Evaluation (ASPE). Second Report to Congress on Social Risk and 
Medicare's Value-Based Purchasing Programs. June 28, 2020. Available 
at: https://aspe.hhs.gov/reports/second-report-congress-social-risk-medicares-value-based-purchasing-programs.
    \10\ World Health Organization. Social determinants of health. 
Available at: https://www.who.int/health-topics/social-determinants-of-health#tab=tab_1.
    \11\ Using Z Codes: The Social Determinants of Health (SDOH). 
Data Journey to Better Outcomes. https://www.cms.gov/files/document/zcodes-infographic.pdf.
    \12\ Improving the Collection of Social Determinants of Health 
(SDOH) Data with ICD-10-CM Z Codes. https://www.cms.gov/files/document/cms-2023-omh-z-code-resource.pdf.
    \13\ CMS.gov. Measures Management System (MMS). CMS Focus on 
Health Equity. Health Equity Terminology and Quality Measures. 
https://mmshub.cms.gov/about-quality/quality-at-CMS/goals/cms-focus-on-health-equity/health-equity-terminology.
    \14\ Centers for Disease Control and Prevention. Social 
Determinants of Health (SDOH) and PLACES Data. https://www.cdc.gov/places/social-determinants-of-health-and-places-data/.
    \15\ ``U.S. Playbook To Address Social Determinants Of Health'' 
from the White House Office Of Science And Technology Policy 
(November 2023).
    \16\ These SDOH data are also collected for purposes outlined in 
section 2(d)(2)(B) of the Improving Medicare Post-Acute Care 
Transitions Act (IMPACT Act). For a detailed discussion on SDOH data 
collection under section 2(d)(2)(B) of the IMPACT Act, see the FY 
2020 IRF PPS final rule (84 FR 39149 through 39161).
---------------------------------------------------------------------------

    In accordance with our authority under section 1899B(b)(1)(B)(vi) 
of the Act, we similarly finalized the creation of the SDOH category of 
standardized patient assessment data elements for Skilled Nursing 
Facilities (SNFs) in the FY 2020 SNF PPS final rule (84 FR 38805 
through 38817), for Long-Term Care Hospitals (LTCHs) in the FY 2020 
Inpatient Prospective Payment System (IPPS)/LTCH PPS final rule (84 FR 
42577 through 42588), and for Home Health Agencies (HHAs) in the 
Calendar Year (CY) 2020 HH PPS final rule (84 FR 60597 through 60608). 
We also collect the same seven SDOH items in these PAC providers' 
respective patient/resident assessment instruments (84 FR 38817, 84 FR 
42590, and 84 FR 60610, respectively).
    Access to standardized data relating to SDOH on a national level 
permits us to conduct periodic analyses, and to assess their 
appropriateness as risk adjustors or in future quality measures. Our 
ability to perform these analyses and to make adjustments relies on 
existing data collection of SDOH items from PAC settings. We adopted 
these SDOH items using common standards and definitions across the four 
PAC providers to promote interoperable exchange of longitudinal 
information among these PAC providers, including IRFs, and other 
providers. We believe this information may facilitate coordinated care, 
continuity in care planning, and the discharge planning process from 
PAC settings.
    We noted in the FY 2020 IRF PPS final rule that each of the items 
was identified in the 2016 National Academies of Sciences, Engineering, 
and Medicine (NASEM) report as impacting care use, cost, and outcomes 
for Medicare beneficiaries (84 FR 39150 through 39151). At that time, 
we acknowledged that other items may also be useful to understand. The 
SDOH items we proposed to adopt as standardized patient assessment data 
elements under the SDOH category in this proposed rule were also 
identified in the 2016 NASEM report \17\ or the 2020 NASEM report \18\ 
as impacting care use, cost, and outcomes for Medicare beneficiaries. 
The items have the capacity to take into account treatment preferences 
and care goals of patients and their caregivers, to inform our 
understanding of patient complexity and SDOH that may affect care 
outcomes and ensure that IRFs are in a position to impact through the 
provision of services and supports, such as connecting patients and 
their caregivers with identified needs with social support programs.
---------------------------------------------------------------------------

    \17\ Social Determinants of Health. Healthy People 2020. https://www.healthypeople.gov/2020/topics-objectives/topic/social-determinants-of-health. (February 2019).
    \18\ National Academies of Sciences, Engineering, and Medicine. 
2020. Leading Health Indicators 2030: Advancing Health, Equity, and 
Well-Being. Washington, DC: The National Academies Press. https://doi.org/10.17226/25682.
---------------------------------------------------------------------------

    Health-related social needs (HRSNs) are the resulting effects of 
SDOH, which are individual-level, adverse social conditions that 
negatively impact a person's health or health care.\19\

[[Page 64312]]

Examples of HRSNs include lack of access to food, housing, or 
transportation, and have been associated with poorer health outcomes, 
greater use of emergency departments and hospitals, and higher health 
care costs.\20\ Certain HRSNs can lead to unmet social needs that 
directly influence an individual's physical, psychosocial, and 
functional status. This is particularly true for food security, housing 
stability, utilities security, and access to transportation.\21\
---------------------------------------------------------------------------

    \19\ Centers for Medicare & Medicaid Services. ``A Guide to 
Using the Accountable Health Communities Health-Related Social Needs 
Screening Tool: Promising Practices and Key Insights.'' August 2022. 
Available at: https://www.cms.gov/priorities/innovation/media/document/ahcm-screeningtool-companion.
    \20\ Berkowitz, S.A., T.P. Baggett, and S.T. Edwards, 
``Addressing Health-Related Social Needs: Value-Based Care or 
Values-Based Care?'' Journal of General Internal Medicine, vol. 34, 
no. 9, 2019, pp. 1916-1918, https://doi.org/10.1007/s11606-019-05087-3.
    \21\ Hugh Alderwick and Laura M. Gottlieb, ``Meanings and 
Misunderstandings: A Social Determinants of Health Lexicon for 
Health Care Systems: Milbank Quarterly,'' Milbank Memorial Fund, 
November 18, 2019, https://www.milbank.org/quarterly/articles/meanings-and-misunderstandings-a-social-determinants-of-health-lexicon-for-health-care-systems/.
---------------------------------------------------------------------------

    We proposed to require IRFs to collect and submit four new items in 
the IRF-PAI as standardized patient assessment data elements under the 
SDOH category because these items would collect information not already 
captured by the current SDOH items. Specifically, we believe the 
ongoing identification of SDOH would have three significant benefits. 
First, promoting screening for SDOH could serve as evidence-based 
building blocks for supporting healthcare providers in actualizing 
their commitment to address disparities that disproportionately impact 
underserved communities. Second, screening for SDOH improves health 
equity through identifying potential social needs so the IRF may 
address those with the patient, their caregivers, and community 
partners during the discharge planning process, if indicated.\22\ 
Third, these SDOH items could support our ongoing IRF QRP initiatives 
by providing data with which to stratify IRFs' performance on measures 
and in future quality measures.
---------------------------------------------------------------------------

    \22\ American Hospital Association. (2020). Health Equity, 
Diversity & Inclusion Measures for Hospitals and Health System 
Dashboards. December 2020. Accessed: January 18, 2022. Available at: 
https://ifdhe.aha.org/system/files/media/file/2020/12/ifdhe_inclusion_dashboard.pdf.
---------------------------------------------------------------------------

    Collection of additional SDOH items would permit us to continue 
developing the statistical tools necessary to maximize the value of 
Medicare data and improve the quality of care for all beneficiaries. 
For example, we recently developed and released the Health Equity 
Confidential Feedback Reports, which provided data to IRFs on whether 
differences in quality measure outcomes are present for their patients 
by dual-enrollment status and race and ethnicity.\23\ We note that 
advancing health equity by addressing the health disparities that 
underlie the country's health system is one of our strategic pillars 
\24\ and a Biden-Harris Administration priority.\25\
---------------------------------------------------------------------------

    \23\ In October 2023, we released two new annual Health Equity 
Confidential Feedback Reports to IRFs: The Discharge to Community 
(DTC) Health Equity Confidential Feedback Report and the Medicare 
Spending Per Beneficiary (MSPB) Health Equity Confidential Feedback 
Report. The PAC Health Equity Confidential Feedback Reports 
stratified the DTC and MSPB measures by dual-enrollment status and 
race/ethnicity. For more information on the Health Equity 
Confidential Feedback Reports, please refer to the Education and 
Outreach materials available on the IRF QRP Training web page at 
https://www.cms.gov/medicare/quality-initiatives-patient-assessment-instruments/irf-quality-reporting/irf-quality-reporting-training.
    \24\ Brooks-LaSure, C. (2021). My First 100 Days and Where We Go 
from Here: A Strategic Vision for CMS. Centers for Medicare & 
Medicaid. Available at: https://www.cms.gov/blog/my-first-100-days-and-where-we-go-here-strategic-vision-cms.
    \25\ The Biden-Harris Administration's strategic approach to 
addressing health related social needs can be found in The U.S. 
Playbook to Address Social Determinants of Health (SDOH) (2023): 
https://www.whitehouse.gov/wp-content/uploads/2023/11/SDOH-Playbook-3.pdf.
---------------------------------------------------------------------------

3. Collection of Four New Items as Standardized Patient Assessment Data 
Elements Beginning With the FY 2028 IRF QRP
    We proposed to require IRFs to collect and submit four new items as 
standardized patient assessment data elements under the SDOH category 
using the IRF-PAI: one item for Living Situation, as described in 
section VIII.3.(a) of this final rule; two items for Food, as described 
in section VIII.3.(b) of this final rule; and one item for Utilities, 
as described in VIII.3.(c) of this final rule.
    We selected the SDOH items from the Accountable Health Communities 
(AHC) Health-Related Social Needs (HRSN) Screening Tool developed for 
the AHC Model.\26\ The AHC HRSN Screening Tool is a universal, 
comprehensive screening for HRSNs that addresses five core domains as 
follows: (1) housing instability (for example, homelessness, poor 
housing quality), (2) food insecurity, (3) transportation difficulties, 
(4) utility assistance needs, and (5) interpersonal safety concerns 
(for example, intimate-partner violence, elder abuse, child 
maltreatment).\27\
---------------------------------------------------------------------------

    \26\ The AHC Model was a five-year demonstration project run by 
the Centers for Medicare & Medicaid Innovation between May 1, 2017 
and April 30, 2023. For more information go to https://www.cms.gov/priorities/innovation/innovation-models/ahcm.
    \27\ More information about the AHC HRSN Screening Tool is 
available on the website at https://innovation.cms.gov/Files/worksheets/ahcm-screeningtool.pdf.
---------------------------------------------------------------------------

    We believe that requiring IRFs to report new items that are 
included in the AHC HRSN Screening Tool will further standardize the 
screening of SDOH across quality programs. For example, as outlined in 
the proposed rule, our proposal will align, in part, with the 
requirements of the Hospital Inpatient Quality Reporting (IQR) Program 
and the Inpatient Psychiatric Facility Quality Reporting (IPFQR) 
Program. As of January 2024, hospitals are required to report whether 
they have screened patients for the standardized SDOH categories of 
housing instability, food insecurity, utility difficulties, 
transportation needs, and interpersonal safety to meet the Hospital IQR 
Program requirements.\28\ Additionally, beginning January 2025, IPFs 
will also be required to report whether they have screened patients for 
the same set of SDOH categories.\29\ As we continue to standardize data 
collection across settings, we believe using common standards and 
definitions for new items is important to promote interoperable 
exchange of longitudinal information between IRFs and other providers 
to facilitate coordinated care, continuity in care planning, and the 
discharge planning process.
---------------------------------------------------------------------------

    \28\ Centers for Medicare & Medicaid Services, FY2023 IPPS/LTCH 
PPS final rule (87 FR 49191 through 49194).
    \29\ Centers for Medicare & Medicaid Services, FY2024 Inpatient 
Psychiatric Prospective Payment System--Rate Update (88 FR 51107 
through 51121).
---------------------------------------------------------------------------

    Below we describe each of the four proposed items in more detail.
(a) Living Situation
    Healthy People 2030 prioritizes economic stability as a key SDOH, 
of which housing stability is a component.30 31 Lack of 
housing stability encompasses several challenges, such as having 
trouble paying rent, overcrowding, moving frequently, or spending the 
bulk of household income on housing.\32\ These experiences may 
negatively affect one's physical health and access to health

[[Page 64313]]

care. Housing instability can also lead to homelessness, which is 
housing deprivation in its most severe form.\33\ On a single night in 
2023, roughly 653,100 people, or 20 out of every 10,000 people in the 
United States, were experiencing homelessness.\34\ Studies also found 
that people who are homeless have an increased risk of premature death 
and experience chronic disease more often than among the general 
population.\35\
---------------------------------------------------------------------------

    \30\ https://health.gov/healthypeople/priority-areas/social-determinants-health.
    \31\ Healthy People 2030 is a long-term, evidence-based effort 
led by the U.S. Department of Health and Human Services (HHS) that 
aims to identify nationwide health improvement priorities and 
improve the health of all Americans.
    \32\ Kushel, M.B., Gupta, R., Gee, L., & Haas, J.S. (2006). 
Housing instability and food insecurity as barriers to health care 
among low-income Americans. Journal of General Internal Medicine, 
21(1), 71-77. doi: https://doi.org/10.1111/j.1525-1497.2005.00278.x.
    \33\ Homelessness is defined as ``lacking a regular nighttime 
residence or having a primary nighttime residence that is a 
temporary shelter or other place not designed for sleeping.'' 
Crowley, S. (2003). The affordable housing crisis: Residential 
mobility of poor families and school mobility of poor children. 
Journal of Negro Education, 72(1), 22-38. doi: https://doi.org/10.2307/3211288.
    \34\ The 2023 Annual Homeless Assessment Report (AHAR) to 
Congress. The U.S. Department of Housing and Urban Development 2023. 
https://www.huduser.gov/portal/sites/default/files/pdf/2023-AHAR-Part-1.pdf.
    \35\ Baggett, T.P., Hwang, S.W., O'Connell, J.J., Porneala, 
B.C., Stringfellow, E.J., Orav, E.J., Singer, D.E., & Rigotti, N.A. 
(2013). Mortality among homeless adults in Boston: Shifts in causes 
of death over a 15-year period. JAMA Internal Medicine, 173(3), 189-
195. doi: https://doi.org/10.1001/jamainternmed.2013.1604. Schanzer, 
B., Dominguez, B., Shrout, P.E., & Caton, C.L. (2007). Homelessness, 
health status, and health care use. American Journal of Public 
Health, 97(3), 464-469. doi: https://doi.org/10.2105/ajph.2005.076190.
---------------------------------------------------------------------------

    We believe that IRFs can use information obtained from the Living 
Situation item during a patient's discharge planning. For example, IRFs 
could work in partnership with community care hubs and community-based 
organizations to establish new care transition workflows, including 
referral pathways, contracting mechanisms, data sharing strategies, and 
implementation training that can track HRSNs to ensure unmet needs, 
such as housing, are successfully addressed through closed loop 
referrals and follow-up.\36\ IRFs could also take action to help 
alleviate a patient's other related costs of living, like food, by 
referring the patient to community-based organizations that would allow 
the patient's additional resources to be allocated towards housing 
without sacrificing other needs.\37\ Finally, IRFs could use the 
information obtained from the Living Situation item to better 
coordinate with other healthcare providers, facilities, and agencies 
during transitions of care, so that referrals to address a patient's 
housing stability are not lost during vulnerable transition periods.
---------------------------------------------------------------------------

    \36\ U.S. Department of Health & Human Services (HHS), Call to 
Action, ``Addressing Health Related Social Needs in Communities 
Across the Nation.'' November 2023. https://aspe.hhs.gov/sites/default/files/documents/3e2f6140d0087435cc6832bf8cf32618/hhs-call-to-action-health-related-social-needs.pdf.
    \37\ Henderson, K.A., Manian, N., Rog, D.J., Robison, E., Jorge, 
E., AlAbdulmunem, M. ``Addressing Homelessness Among Older Adults'' 
(Final Report). Washington, DC: Office of the Assistant Secretary 
for Planning and Evaluation, U.S. Department of Health and Human 
Services. October 26, 2023.
---------------------------------------------------------------------------

    Due to the potential negative impacts housing instability can have 
on a patient's health, we proposed to adopt the Living Situation item 
as a new standardized patient assessment data element under the SDOH 
category. This proposed Living Situation item is based on the Living 
Situation item collected in the AHC HRSN Screening 
Tool,38 39 and was adapted from the Protocol for Responding 
to and Assessing Patients' Assets, Risks, and Experiences (PRAPARE) 
tool.\40\ The proposed Living Situation item asks, ``What is your 
living situation today?'' The proposed response options are: (1) I have 
a steady place to live; (2) I have a place to live today, but I am 
worried about losing it in the future; (3) I do not have a steady place 
to live; (7) Patient declines to respond; and (8) Patient unable to 
respond. A draft of the Living Situation item proposed to be adopted as 
a standardized patient assessment data element under the SDOH category 
can be found in the Downloads section of the IRF-PAI and IRF-PAI Manual 
web page at https://www.cms.gov/medicare/quality/inpatient-rehabilitation-facility/irf-pai-and-irf-qrp-manual.
---------------------------------------------------------------------------

    \38\ More information about the AHC HRSN Screening Tool is 
available on the website at https://innovation.cms.gov/Files/worksheets/ahcm-screeningtool.pdf.
    \39\ The AHC HRSN Screening Tool Living Situation item includes 
two questions. In an effort to limit IRF burden, we are only 
proposing the first question.
    \40\ National Association of Community Health Centers and 
Partners, National Association of Community Health Centers, 
Association of Asian Pacific Community Health Organizations, 
Association OPC, Institute for Alternative Futures. ``PRAPARE.'' 
2017. https://prapare.org/the-prapare-screening-tool/.
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(b) Food
    The U.S. Department of Agriculture, Economic Research Service 
defines a lack of food security as a household-level economic and 
social condition of limited or uncertain access to adequate food.\41\ 
Adults who are food insecure may be at an increased risk for a variety 
of negative health outcomes and health disparities. For example, a 
study found that food-insecure adults may be at an increased risk for 
obesity.\42\ Another study found that food-insecure adults have a 
significantly higher probability of death from any cause or 
cardiovascular disease in long-term follow-up care, in comparison to 
adults that are food secure.\43\
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    \41\ U.S. Department of Agriculture, Economic Research Service. 
(n.d.). Definitions of food security. Retrieved March 10, 2022, from 
https://www.ers.usda.gov/topics/food-nutrition-assistance/food-security-in-the-u-s/definitions-of-food-security/.
    \42\ Hernandez, D.C., Reesor, L.M., & Murillo, R. (2017). Food 
insecurity and adult overweight/obesity: Gender and race/ethnic 
disparities. Appetite, 117, 373-378.
    \43\ Banerjee, S., Radak, T., Khubchandani, J., & Dunn, P. 
(2021). Food Insecurity and Mortality in American Adults: Results 
From the NHANES-Linked Mortality Study. Health promotion practice, 
22(2), 204-214. https://doi.org/10.1177/1524839920945927.
---------------------------------------------------------------------------

    While having enough food is one of many predictors for health 
outcomes, a diet low in nutritious foods is also a factor.\44\ The 
United States Department of Agriculture (USDA) defines nutrition 
security as ``consistent and equitable access to healthy, safe, 
affordable foods essential to optimal health and well-being.'' \45\ 
Nutrition security builds on and complements long standing efforts to 
advance food security. Studies have shown that older adults struggling 
with food insecurity consume fewer calories and nutrients and have 
lower overall dietary quality than those who are food secure, which can 
put them at nutritional risk.\46\ Older adults are also at a higher 
risk of developing malnutrition, which is considered a state of 
deficit, excess, or imbalance in protein, energy, or other nutrients 
that adversely impacts an individual's own body form, function, and 
clinical outcomes.\47\ Up to 50 percent of older adults are affected by 
or at risk for malnutrition, which is further aggravated by a lack of 
food security and poverty.\48\ These facts highlight why the Biden-
Harris Administration launched the White House Challenge to End

[[Page 64314]]

Hunger and Build Healthy Communities.\49\
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    \44\ National Center for Health Statistics. (2022, September 6). 
Exercise or Physical Activity. Retrieved from Centers for Disease 
Control and Prevention: https://www.cdc.gov/nchs/fastats/exercise.htm.
    \45\ Ziliak, J.P., & Gundersen, C. (2019). The State of Senior 
Hunger in America 2017: An Annual Report. Prepared for Feeding 
America. Available at https://www.feedingamerica.org/research/senior-hunger-research/senior.
    \46\ Ziliak, J.P., & Gundersen, C. (2019). The State of Senior 
Hunger in America 2017: An Annual Report. Prepared for Feeding 
America. Available at: https://www.feedingamerica.org/research/senior-hunger-research/senior.
    \47\ The Malnutrition Quality Collaborative. (2020). National 
Blueprint: Achieving Quality Malnutrition Care for Older Adults, 
2020 Update. Washington, DC: Avalere Health and Defeat Malnutrition 
Today. Available at: https://defeatmalnutrition.today/advocacy/blueprint/.
    \48\ Food Research & Action Center (FRAC). ``Hunger is a Health 
Issue for Older Adults: Food Security, Health, and the Federal 
Nutrition Programs.'' December 2019. https://frac.org/wp-content/uploads/hunger-is-a-health-issue-for-older-adults-1.pdf.
    \49\ The White House Challenge to End Hunger and Build Health 
Communities (Challenge) was a nationwide call-to-action released on 
March 24, 2023, to stakeholders across all of society to make 
commitments to advance President Biden's goal to end hunger and 
reduce diet-related diseases by 2030--all while reducing 
disparities. More information on the White House Challenge to End 
Hunger and Build Health Communities can be found: https://www.whitehouse.gov/briefing-room/statements-releases/2023/03/24/fact-sheet-biden-harris-administration-launches-the-white-house-challenge-to-end-hunger-and-build-healthy-communities-announces-new-public-private-sector-actions-to-continue-momentum-from-hist/.
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    We believe that adopting items to collect and analyze information 
about a patient's food security at home could provide additional 
insight to their health complexity and help facilitate coordination 
with other healthcare providers, facilities, and agencies during 
transitions of care, so that referrals to address a patient's food 
security are not lost during vulnerable transition periods. For 
example, an IRF's dietitian or other clinically qualified nutrition 
professional could work with the patient and their caregiver to plan 
healthy, affordable food choices prior to discharge.\50\ IRFs could 
also refer a patient that indicates lack of food security to government 
initiatives such as the Supplemental Nutrition Assistance Program 
(SNAP) and food pharmacies (programs to increase access to healthful 
foods by making them affordable), two initiatives that have been 
associated with lower health care costs and reduced hospitalization and 
emergency department visits.\51\
---------------------------------------------------------------------------

    \50\ Schroeder K, Smaldone A. Food Insecurity: A Concept 
Analysis. Nurse Forum. 2015 Oct-Dec;50(4):274-84. doi: 10.1111/
nuf.12118. Epub 2015 Jan 21. PMID: 25612146; PMCID: PMC4510041.
    \51\ Tsega M, Lewis C, McCarthy D, Shah T, Coutts K. Review of 
Evidence for Health-Related Social Needs Interventions. July 2019. 
The Commonwealth Fund. https://www.commonwealthfund.org/sites/default/files/2019-07/COMBINED_ROI_EVIDENCE_REVIEW_7.15.19.pdf.
---------------------------------------------------------------------------

    We proposed to adopt two Food items as new standardized patient 
assessment data elements under the SDOH Category. These proposed items 
are based on the Food items collected in the AHC HRSN Screening Tool 
and were adapted from the USDA 18-item Household Food Security Survey 
(HFSS).\52\ The first proposed Food item states, ``Within the past 12 
months, you worried that your food would run out before you got money 
to buy more.'' The second proposed Food item states, ``Within the past 
12 months, the food you bought just didn't last and you didn't have 
money to get more.'' We proposed the same response options for both 
items: (1) Often true; (2) Sometimes true; (3) Never True; (7) Patient 
declines to respond; and (8) Patient unable to respond. A draft of the 
proposed Food items proposed to be adopted as standardized patient 
assessment data elements under the SDOH category can be found in the 
Downloads section of the IRF-PAI and IRF-PAI Manual web page at https://www.cms.gov/medicare/quality/inpatient-rehabilitation-facility/irf-pai-and-irf-qrp-manual.
---------------------------------------------------------------------------

    \52\ More information about the HFSS tool can be found at 
https://www.ers.usda.gov/topics/food-nutrition-assistance/food-security-in-the-u-s/survey-tools/.
---------------------------------------------------------------------------

(c) Utilities
    A lack of energy (utility) security can be defined as an inability 
to adequately meet basic household energy needs.\53\ According to the 
United States Department of Energy, one in three households in the U.S. 
are unable to adequately meet basic household energy needs.\54\ The 
consequences associated with a lack of utility security are represented 
by three primary dimensions: economic, physical, and behavioral. 
Patients with low incomes are disproportionately affected by high 
energy costs, and they may be forced to prioritize paying for housing 
and food over utilities.\55\ Some patients may face limited housing 
options and therefore are at increased risk of living in lower-quality 
physical conditions with malfunctioning heating and cooling systems, 
poor lighting, and outdated plumbing and electrical systems.\56\ 
Patients with a lack of utility security may use negative behavioral 
approaches to cope, such as using stoves and space heaters for 
heat.\57\ In addition, data from the Department of Energy's U.S. Energy 
Information Administration confirm that a lack of energy security 
disproportionately affects certain populations, such as low-income and 
African American households.\58\ The effects of a lack of utility 
security include vulnerability to environmental exposures such as 
dampness, mold, and thermal discomfort in the home, which have a direct 
impact on a person's health.\59\ For example, research has shown 
associations between a lack of energy security and respiratory 
conditions as well as mental health-related disparities and poor sleep 
quality in vulnerable populations such as the elderly, children, the 
socioeconomically disadvantaged, and the medically vulnerable.\60\
---------------------------------------------------------------------------

    \53\ Hern[aacute]ndez D. Understanding `energy insecurity' and 
why it matters to health. Soc Sci Med. 2016 Oct; 167:1-10. Doi: 
10.1016/j.socscimed.2016.08.029. Epub 2016 Aug 21. PMID: 27592003; 
PMCID: PMC5114037.
    \54\ US Energy Information Administration. ``One in Three U.S. 
Households Faced Challenges in Paying Energy Bills in 2015.'' 2017 
Oct 13. https://www.eia.gov/consumption/residential/reports/2015/energybills/.
    \55\ Hern[aacute]ndez D. ``Understanding `energy insecurity' and 
why it matters to health.'' Soc Sci Med. 2016; 167:1-10.
    \56\ Hern[aacute]ndez D. Understanding `energy insecurity' and 
why it matters to health. Soc Sci Med. 2016 Oct; 167:1-10. doi: 
10.1016/j.socscimed.2016.08.029. Epub 2016 Aug 21. PMID: 27592003; 
PMCID: PMC5114037.
    \57\ Hern[aacute]ndez D. ``What `Merle' Taught Me About Energy 
Insecurity and Health.'' Health Affairs, VOL.37, NO.3: Advancing 
Health Equity Narrative Matters. March 2018. https://doi.org/10.1377/hlthaff.2017.1413.
    \58\ US Energy Information Administration. ``One in Three U.S. 
Households Faced Challenges in Paying Energy Bills in 2015.'' 2017 
Oct 13. https://www.eia.gov/consumption/residential/reports/2015/energybills/.
    \59\ Hern[aacute]ndez D. Understanding `energy insecurity' and 
why it matters to health. Soc Sci Med. 2016 Oct; 167:1-10. doi: 
10.1016/j.socscimed.2016.08.029. Epub 2016 Aug 21. PMID: 27592003; 
PMCID: PMC5114037.
    \60\ Hern[aacute]ndez D, Siegel E. Energy insecurity and its ill 
health effects: A community perspective on the energy-health nexus 
in New York City. Energy Res Soc Sci. 2019 Jan; 47:78-83. doi: 
10.1016/j.erss.2018.08.011. Epub 2018 Sep 8. PMID: 32280598; PMCID: 
PMC7147484.
---------------------------------------------------------------------------

    We believe adopting an item to collect information upon a patient's 
admission to an IRF about their utility security would facilitate the 
identification of patients who may not have utility security and who 
may benefit from engagement efforts. For example, IRFs may be able to 
use the information on utility security to help connect some patients 
in need to programs that can help older adults pay for their home 
energy (heating/cooling) costs, like the Low-Income Home Energy 
Assistance Program (LIHEAP).\61\ IRFs may also be able to partner with 
community care hubs and community-based organizations to assist the 
patient in applying for these and other local utility assistance 
programs, as well as helping them navigate the enrollment process.\62\
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    \61\ https://www.fcc.gov/broadbandbenefit.
    \62\ National Council on Aging (NCOA). ``How to Make It Easier 
for Older Adults to Get Energy and Utility Assistance.'' Promising 
Practices Clearinghouse for Professionals. Jan 13, 2022. https://www.ncoa.org/article/how-to-make-it-easier-for-older-adults-to-get-energy-and-utility-assistance.
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    We proposed to adopt a new item, Utilities, as a new standardized 
patient assessment data element under the SDOH category. This proposed 
item is based on the Utilities item collected in the AHC HRSN Screening 
Tool and was adapted from the Children's Sentinel Nutrition Assessment 
Program (C-SNAP) survey.\63\ The proposed Utilities

[[Page 64315]]

item asks, ``In the past 12 months, has the electric, gas, oil, or 
water company threatened to shut off services in your home?'' The 
proposed response options are: (1) Yes; (2) No; (3) Already shut off; 
(7) Patient declines to respond; and (8) Patient unable to respond. A 
draft of the proposed Utilities item to be adopted as a standardized 
patient assessment data element under the SDOH category can be found in 
the Downloads section of the IRF-PAI and IRF-PAI Manual web page at 
https://www.cms.gov/medicare/quality/inpatient-rehabilitation-facility/irf-pai-and-irf-qrp-manual.
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    \63\ This validated survey was developed as a clinical indicator 
of household energy security among pediatric caregivers. Cook, J.T., 
D.A. Frank., P.H. Casey, R. Rose-Jacobs, M.M. Black, M. Chilton, S. 
Ettinger de Cuba, et al. ``A Brief Indicator of Household Energy 
Security: Associations with Food Security, Child Health, and Child 
Development in US Infants and Toddlers.'' Pediatrics, vol. 122, no. 
4, 2008, pp. e874-e875. https://doi.org/10.1542/peds.2008-0286.
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4. Interested Party Input
    We developed our updates to add these items after considering 
feedback we received in response to our Health Equity Update in the FY 
2024 IRF PPS final rule. While there were commenters who urged CMS to 
balance reporting requirements so as not to create undue administrative 
burden and avoid making generalizations about differences in health and 
health care on certain data elements, it was also suggested CMS 
incentivize collection of data on SDOH such as housing stability and 
food security. Two commenters emphasized that any additional 
stratification of quality measures, including social risk factors and 
SDOH, would be of value to PAC providers, including IRFs. The FY 2024 
IRF PPS final rule (88 FR 51037 through 51039) includes a summary of 
the public comments that we received in response to the Health Equity 
Update and our responses to those comments.
    Additionally, we considered feedback we received when we proposed 
the creation of the SDOH category of standardized patient assessment 
data elements in the FY 2020 IRF PPS proposed rule (84 FR 17319 through 
17326). Commenters were generally in favor of the concept of collecting 
SDOH items and stated that if implemented appropriately the data could 
be useful in identifying and addressing health care disparities, as 
well as refining the risk adjustment of outcome measures. One commenter 
specifically recommended CMS consider including data collection of 
housing status, since unmet housing needs can put patients at higher 
risk for readmission. The FY 2020 IRF PPS final rule (84 FR 39149 
through 39161) includes a summary of the public comments that we 
received and our responses to those comments. We incorporated this 
input into the development of this proposal.
    We solicited comment on the proposal to adopt four new items as 
standardized patient assessment data elements in the IRF-PAI under the 
SDOH category beginning with the FY 2028 IRF QRP: one Living Situation 
item; two Food items; and one Utilities item (89 FR 22279).
    The following is a summary of the public comments received on the 
proposal and our responses:
    Comment: Many commenters expressed support for the proposed new 
SDOH assessment items, viewing this as an important step towards 
identifying health disparities, improving health outcomes, 
understanding diverse patient needs, improving discharge planning and 
care coordination, and fostering continuous quality improvement. One of 
these commenters also emphasized the importance of collecting SDOH data 
in helping recognize areas of need and enhancing efforts to improve 
patient outcomes across healthcare settings, and another commenter 
emphasized the importance of identifying, documenting, and addressing 
SDOH in order to provide equitable, high-quality, holistic, patient-
centered care.
    Several commenters noted the importance of the proposed new SDOH 
assessment items in facilitating discharge planning strategies that can 
account for a person's housing, food, utilities, and transportation 
needs. Three of these commenters noted that the information obtained 
from these proposed new SDOH assessment items will provide data that 
can be used to better address identified needs with the patient, their 
caregivers, and community partners during the discharge planning 
process. These commenters also mentioned that addressing non-medical 
factors during patient visits can help connect patients to the 
resources they need and lead to successful discharges to the community 
or improved health outcomes. Another one of these commenters noted that 
the direct value to providers in the inpatient rehabilitation space is 
the insight into the home life and resources available to the patient 
once discharged. Finally, one of these commenters noted that these 
proposed SDOH assessment items support a culture of engaging with and 
advancing equity in IRFs by reflecting a proactive approach towards 
addressing the multifaceted determinants of health.
    Response: We appreciate the support. We agree that the collection 
of the proposed SDOH assessment items will support IRFs that wish to 
understand the health disparities that affect their populations, 
facilitate coordinated care, foster continuity in care planning, and 
assist with the discharge planning process from the IRF setting.
    Comment: Several commenters appreciated CMS' efforts at 
standardizing collection of patient assessment data elements related to 
SDOH by proposing to adopt the four new assessment items, Living 
Situation, Food, and Utilities, in the IRF-PAI. One of these commenters 
supported CMS' decision to align and standardize new SDOH data 
collection in the IRF QRP with data already being collected in other 
settings, such as the Hospital Inpatient Quality Reporting (IQR) 
Program and the Inpatient Psychiatric Facility Quality Reporting 
(IPFQR) Program. Another one of these commenters noted that the 
utilization of the AHC HRSN Screening Tool will help fill the existing 
gap of standardized SDOH data collection for CMS programs, which will 
reduce the administrative burden with collecting SDOH data. In 
addition, three commenters noted their support of the proposed new SDOH 
assessment items because they are similar to questions many IRFs 
already ask for discharge planning purposes, minimizing additional 
burden.
    Response: We thank the commenter for recognizing that our proposal 
aligns, in part, with the requirements of the Hospital IQR Program and 
the IPFQR Program. As we continue to standardize data collection across 
settings, we believe using common standards and definitions for new 
assessment items is important to promote interoperable exchange of 
longitudinal information between IRFs and other providers. We heard 
from many IRFs that they are already collecting similar information and 
integrating it into their admission and discharge processes in order to 
facilitate coordinated care and continuity in care planning. We believe 
collecting this information in all IRFs may facilitate coordinated 
care, continuity in care planning, and IRFs' discharge planning process 
in accordance with our regulation at Sec.  482.43(a).
    Comment: Several commenters agreed with the importance of 
collecting SDOH assessment items through the IRF-PAI but also expressed 
concerns about the additional administrative burden associated with 
collecting the new SDOH data. Several of these commenters noted that 
data collection is overburdening the workforce, and one noted that it 
will take away resources from patient care while another commenter 
urged CMS to ensure the additional burden on providers provides

[[Page 64316]]

meaningful benefit to rehab patients. One of these commenters requested 
additional funding for the increased costs associated with what they 
believe are tasks outside the normal day-to-day operations of the 
facilities.
    Response: Although the addition of four new SDOH assessment items 
to the IRF-PAI will increase the burden associated with completing the 
IRF-PAI, we carefully considered this increased burden of collecting 
new assessment items against the benefits of adopting those assessment 
items for the IRF-PAI. Collection of additional SDOH assessment items 
will permit us to continue developing the statistical tools necessary 
to maximize the value of Medicare data and improve the quality of care 
for all beneficiaries. As noted in section VII.C.2 of the proposed rule 
(89 FR 22276) and section VIII.C.2. of this final rule, we recently 
developed and released the Health Equity Confidential Feedback Reports, 
which provided data to IRFs on whether differences in quality measure 
outcomes are present for their patients by dual-enrollment status and 
race and ethnicity.\64\ In balancing the reporting burden for IRFs, we 
prioritized our policy objective to collect additional SDOH 
standardized patient assessment data elements that will inform care 
planning and coordination and quality improvement across care settings.
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    \64\ In October 2023, we released two new annual Health Equity 
Confidential Feedback Reports to IRFs: The Discharge to Community 
(DTC) Health Equity Confidential Feedback Report and the Medicare 
Spending Per Beneficiary (MSPB) Health Equity Confidential Feedback 
Report. The PAC Health Equity Confidential Feedback Reports 
stratified the DTC and MSPB measures by dual-enrollment status and 
race/ethnicity. For more information on the Health Equity 
Confidential Feedback Reports, please refer to the Education and 
Outreach materials available on the IRF QRP Training web page at 
https://www.cms.gov/medicare/quality-initiatives-patient-assessment-instruments/irf-quality-reporting/irf-quality-reporting-training.
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    In response to the commenters who believe this policy, if 
finalized, would take time away from patient care, we believe the 
proposed assessment items (Living Situation, Food, and Utilities) are 
all important pieces of information to developing and administering a 
comprehensive plan of care in accordance with our regulation at Sec.  
412.606. A comprehensive plan of care includes the initiation of a 
discharge plan. Given the relatively short length of stay in IRFs, 
discharge planning generally begins at the time of admission and this 
information would inform the comprehensive plan of care. Using this 
information, IRFs have an opportunity to implement interventions to 
address these SDOH, if appropriate. For example, IRFs may determine 
that educating patients about transportation resources, teaching them 
how to use adaptive transportation if their condition now requires it, 
educating patients about safe choices for utilities, or begin the 
process of finding resources for patients is appropriate for the 
patient's comprehensive plan of care. Rather than taking time away from 
patient care, providers will be documenting information they are likely 
already collecting through the course of providing care to the 
patients.
    Regarding the comment requesting additional funding for the 
increased costs associated with collecting data on these new assessment 
items, we find the comment unclear. We interpret the commenter to mean 
that they do not believe that current IRF PPS payments are sufficient 
to cover the increased burden (specifically, costs) associated with 
collection of this additional data for the proposed new SDOH assessment 
items. As discussed previously, we carefully considered the increased 
burden associated with collection of these four new SDOH assessment 
items against the benefits of adopting these items for the IRF-PAI. We 
believe the collection of these items is within the normal day-to-day 
operations of the facilities. For instance, IRFs are required by 
regulation at Sec.  482.43(a) to identify, at an early stage of 
hospitalization, those patients who are likely to suffer adverse health 
consequences upon discharge in the absence of adequate discharge 
planning and must provide a discharge planning evaluation for those 
patients. The proposed new SDOH assessment items were identified in 
either the 2016 NASEM report \65\ or the 2020 NASEM report \66\ as 
impacting care use, cost, and outcomes for Medicare beneficiaries. We 
believe the proposed new SDOH assessment items have the potential to 
generate actionable data IRFs can use to implement effective discharge 
planning processes that can reduce the risk for negative outcomes such 
as hospital readmissions and admission to a nursing facility for long-
term care. Given that IRFs must develop and implement an effective 
discharge planning process that ensures the discharge needs of each 
patient are identified, we believe IRFs are likely collecting some of 
this data already. Collection of these new SDOH items will provide key 
information to IRFs to support effective discharge planning.
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    \65\ National Academies of Sciences, Engineering, and Medicine. 
2016. Accounting for Social Risk Factors in Medicare Payment: 
Identifying Social Risk Factors. Washington, DC: The National 
Academies Press. https://doi.org/10.17226/21858.
    \66\ National Academies of Sciences, Engineering, and Medicine. 
2020. Leading Health Indicators 2030: Advancing Health, Equity, and 
Well-Being. Washington, DC: The National Academies Press. https://doi.org/10.17226/25682.
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    Finally, we also plan to provide training resources in advance of 
the initial collection of the new SDOH assessment items to ensure that 
IRFs have the tools necessary to administer these new items and reduce 
the burden to IRFs having to create their own training resources. These 
training resources may include online learning modules, tip sheets, 
questions and answers documents, and recorded webinars and videos. We 
anticipate that we will make these materials available to IRFs in mid-
2025, which will give IRFs several months prior to required collection 
and reporting to take advantage of the learning opportunities.
    Comment: One commenter who supported the proposal to collect the 
new and modified SDOH assessment items also encouraged CMS to ensure 
the new assessment items are valid and reliable. Several commenters who 
did not support the proposal noted concerns with the validity and 
reliability of the proposed new and modified SDOH assessment items, and 
several of these commenters recommended further testing of these 
assessment items for the IRF population. In addition, one commenter 
noted that most hospitals in their network reported they do not use the 
AHC tool for screening for social services as they find the tool 
suboptimal for its ability to gather accurate information and get 
patients the services they need.
    Response: We disagree that the proposed new and modified SDOH 
assessment items require further testing prior to collecting them on 
the IRF-PAI for the IRF QRP. The AHC HRSN Screening Tool is evidence-
based and informed by practical experience. With input from a panel of 
national experts convened by our contractor, we developed the tool 
under the Center for Medicare and Medicaid Innovation (CMMI) by 
conducting a review of existing screening tools and questions focused 
on core and supplemental HRSN domains, including housing instability, 
food insecurity, transportation difficulties, utility assistance needs, 
and interpersonal safety concerns.\67\ These domains were chosen based 
upon literature review and expert consensus utilizing the following 
criteria: (1) availability of high-quality scientific evidence linking 
a given HRSN to adverse health outcomes and

[[Page 64317]]

increased healthcare utilization, including hospitalizations and 
associated costs; (2) ability for a given HRSN to be screened and 
identified in the inpatient setting prior to discharge, addressed by 
community-based services, and potentially improve healthcare outcomes, 
including reduced readmissions; and (3) evidence that a given HRSN is 
not systematically addressed by healthcare providers.\68\ In addition 
to established evidence of their association with health status, risk, 
and outcomes, these domains were selected because they can be assessed 
across the broadest spectrum of individuals in a variety of 
settings.69 70
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    \67\ https://nam.edu/standardized-screening-for-health-related-social-needs-in-clinical-settings-the-accountable-health-communities-screening-tool/.
    \68\ Billioux, A., Verlander, K., Anthony, S., & Alley, D. 
(2017). Standardized Screening for Health-Related Social Needs in 
Clinical Settings: The Accountable Health Communities Screening 
Tool. NAM Perspectives, 7(5). Available at: https://doi.org/10.31478/201705b. Accessed on June 9, 2024.
    \69\ Billioux, A., Verlander, K., Anthony, S., & Alley, D. 
(2017). Standardized Screening for Health-Related Social Needs in 
Clinical Settings: The Accountable Health Communities Screening 
Tool. NAM Perspectives, 7(5). Available at: https://doi.org/10.31478/201705b. Accessed on June 9, 2024.
    \70\ Centers for Medicare & Medicaid Services. (2021). 
Accountable Health Communities Model. Accountable Health Communities 
Model [verbar] CMS Innovation Center. Available at: https://innovation.cms.gov/innovation-models/ahcm. Accessed on February 20, 
2023.
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    Through this process, over 50 screening tools totaling more than 
200 questions were compiled. In order to refine this list, CMS' 
contractor consulted a technical expert panel (TEP) consisting of a 
diverse group of tool developers, public health and clinical 
researchers, clinicians, population health and health systems 
executives, community-based organization leaders, and Federal partners. 
Over the course of several meetings, this TEP met to discuss 
opportunities and challenges involved in screening for HRSNs; consider 
and pare down CMS' list of evidence-based screening questions; and 
recommend a short list of questions for inclusion in the final tool. 
The AHC HRSN Screening Tool was tested across many care delivery sites 
in diverse geographic locations across the United States. More than one 
million Medicare and Medicaid beneficiaries have been screened using 
the AHC HRSN Screening Tool, which was evaluated psychometrically and 
demonstrated evidence of both reliability and validity, including 
inter-rater reliability and concurrent and predictive validity. 
Moreover, the AHC HRSN Screening Tool can be implemented in a variety 
of places where individuals seek healthcare, including IRFs.
    We selected these proposed assessment items for the IRF QRP from 
the AHC HRSN Screening Tool because we believe that collecting 
information on living situation, food, utilities, and transportation 
could have a direct and positive impact on patient care in IRFs. 
Specifically, collecting the information provides an opportunity for 
the IRF to identify patients' potential HRSNs, and if indicated, to 
those with the patient, their caregivers, and community partners during 
the discharge planning process, potentially resulting in improvements 
in patient outcomes.
    Comment: Three of these commenters referenced CMS' second 
evaluation of the AHC model from 2018 through 2021.\71\ These 
commenters interpret the Findings at a Glance to conclude that the AHC 
HRSN Screening Tool ``did not appear to increase beneficiaries' 
connection to community services or HRSN resolution.''
---------------------------------------------------------------------------

    \71\ https://www.cms.gov/priorities/innovation/data-and-reports/2023/ahc-second-eval-rpt-fg.
---------------------------------------------------------------------------

    Response: This two-page summary of the AHC Model 2018-2021 \72\ 
describes the results of testing whether systematically identifying and 
connecting beneficiaries to community resources for their HRSNs 
improved health care utilization outcomes and reduced costs. To ensure 
consistency in the screening offered to beneficiaries across both an 
individual community's clinical delivery sites and across all the 
communities in the model, CMS developed a standardized HRSN screening 
tool. This AHC HRSN Screening Tool was used to screen Medicare and 
Medicaid beneficiaries for core HRSNs to determine their eligibility 
for inclusion in the AHC Model. If a Medicare or Medicaid beneficiary 
was eligible for the AHC Model, they were randomly assigned to one of 
two tracks: (1) Assistance; or (2) Alignment. The Assistance Track 
tested whether navigation assistance that connects navigation-eligible 
beneficiaries with community services results in increased HRSN 
resolution, reduced health care expenditures, and unnecessary 
utilization. The Alignment Track tested whether navigation assistance, 
combined with engaging key stakeholders in continuous quality 
improvement (CQI) to align community service capacity with 
beneficiaries' HRSNs, results in greater increases in HRSN resolution 
and greater reductions in health expenditures and utilization than 
navigation assistance alone. Regardless of assigned track, all 
beneficiaries received HRSN screening, community referrals, and 
navigation to community services.\73\
---------------------------------------------------------------------------

    \72\ https://www.cms.gov/priorities/innovation/data-and-reports/2023/ahc-second-eval-rpt-fg.
    \73\ Accountable Health Communities (AHC) Model Evaluation, 
Second Evaluation Report. May 2023. This project was funded by the 
Centers for Medicare & Medicaid Services under contract no. HHSM-
500-2014-000371, Task Order75FCMC18F0002. https://www.cms.gov/priorities/innovation/data-and-reports/2023/ahc-second-eval-rpt.
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    We believe the commenter inadvertently misinterpreted the findings, 
believing these findings were with respect to the effectiveness and 
scientific validity of the AHC HRSN Screening Tool itself. The findings 
section of this two-page summary described six key findings from the 
AHC Model, which examined whether the Assistance Track or the Alignment 
Track resulted in greater increases in HRSN resolution and greater 
reductions in health expenditures and utilization. Particularly, the 
AHC Model reduced emergency department visits among Medicaid and FFS 
Medicare beneficiaries in the Assistance Track, which was suggestive 
that navigation may help patients use the health care system more 
effectively. We acknowledge that navigation alone did not increase 
beneficiaries' connection to community services or HRSN resolution, and 
this was attributed to gaps between community resource availability and 
beneficiary needs. The AHC HRSN Screening Tool used in the AHC Model 
was limited to identifying Medicare and Medicaid beneficiaries with at 
least one core HRSN who could be eligible to participate in the AHC 
Model. Our review of the AHC Model did not identify any issues with the 
validity and scientific reliability of the AHC HRSN Screening Tool.
    Finally, as part of our routine item and measure monitoring work, 
we continually assess the implementation of new assessment items, 
including the four new proposed SDOH assessment items.
    Comment: Three commenters requested that CMS articulate the vision 
for how CMS plans to use the data collected from the proposed SDOH 
standardized patient assessment data elements in quality and payment 
programs. These commenters noted concern that CMS may use the SDOH 
assessment data to develop an IRF QRP measure that would hold IRFs 
solely accountable for social drivers of health that require resources 
and engagement across an entire community to address.
    Response: We proposed the four new SDOH assessment items because 
collection of additional SDOH items would permit us to continue 
developing the statistical tools necessary to

[[Page 64318]]

maximize the value of Medicare data and improve the quality of care for 
all beneficiaries. For example, we recently developed and released the 
Health Equity Confidential Feedback Reports, which provided data to 
IRFs on whether differences in quality measure outcomes are present for 
their patients by dual-enrollment status and race and ethnicity.\74\ We 
note that advancing health equity by addressing the health disparities 
that underlie the country's health system is one of our strategic 
pillars \75\ and a Biden-Harris Administration priority.\76\ 
Furthermore, any updates to the IRF QRP measure set or payment system 
would be addressed through future notice-and-comment rulemaking, as 
necessary.
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    \74\ In October 2023, we released two new annual Health Equity 
Confidential Feedback Reports to IRFs: The Discharge to Community 
(DTC) Health Equity Confidential Feedback Report and the Medicare 
Spending Per Beneficiary (MSPB) Health Equity Confidential Feedback 
Report. The PAC Health Equity Confidential Feedback Reports 
stratified the DTC and MSPB measures by dual-enrollment status and 
race/ethnicity. For more information on the Health Equity 
Confidential Feedback Reports, please refer to the Education and 
Outreach materials available on the IRF QRP Training web page at 
https://www.cms.gov/medicare/quality-initiatives-patient-assessment-instruments/irf-quality-reporting/irf-quality-reporting-training.
    \75\ Brooks-LaSure, C. (2021). My First 100 Days and Where We Go 
from Here: A Strategic Vision for CMS. Centers for Medicare & 
Medicaid. Available at https://www.cms.gov/blog/my-first-100-days-and-where-we-go-here-strategic-vision-cms.
    \76\ The Biden-Harris Administration's strategic approach to 
addressing health related social needs can be found in The U.S. 
Playbook to Address Social Determinants of Health (SDOH) (2023): 
https://www.whitehouse.gov/wp-content/uploads/2023/11/SDOH-Playbook-3.pdf.
---------------------------------------------------------------------------

    Comment: Several commenters did not agree with CMS that the 
proposed SDOH assessment items would produce interoperable data within 
the CMS quality programs because the proposed requirements for IRF are 
not standardized with the SDOH collection requirements in the Hospital 
IQR Program and IPFQR Programs. This commenter noted that the Screening 
for SDOH measures in the Hospital IQR and IPFQR Programs do not specify 
when a patient is screened (for example, at admission) and how the 
screening questions are asked (in other words, specific wording and 
responses). Instead, providers reporting these measures under the 
Hospital IQR and IPFQR Programs are only asked to document that a 
patient was screened for the following domains: housing instability, 
food insecurity, transportation difficulties, utility assistance needs, 
and interpersonal safety concerns.
    Response: We disagree that the proposed collection of four new SDOH 
Assessment items and one modified SDOH assessment item for the IRF QRP 
and the requirements for the Hospital IQR and IPFQR Programs do not 
promote standardization and interoperability. Although hospitals and 
IPFs participating in these programs can use a self-selected SDOH 
screening tool, the Screening for SDOH and Screen Positive Rate for 
SDOH measures we have adopted for the Hospital IQR and IPFQR Programs 
address same SDOH domains that we have proposed to collect as 
standardized patient assessment data under the IRF QRP: housing 
instability, food insecurity, utility difficulties, transportation 
needs. We believe that this partial alignment will facilitate 
longitudinal data collection on the same topics across healthcare 
settings. As we continue to standardize data collection, we believe 
using common standards and definitions for new assessment items is 
important to promote interoperable exchange of longitudinal information 
between IRFs and other providers to facilitate coordinated care, 
continuity in care planning, and the discharge planning process. This 
is evidenced by our recent proposals to add these four SDOH assessment 
items and one modified SDOH assessment item in the SNF QRP (89 FR 23462 
through 23468), LTCH QRP (89 FR 36345 through 36350), and Home Health 
QRP (89 FR 55383 through 55388).
    Comment: One commenter recommended the inclusion of assessment 
items to improve the overall patient care among those with 
disabilities, such as: disability-status, caregiver availability, 
patients' independent living status, and ability to return to work.
    Response: We appreciate the comments and suggestions provided by 
the commenters, and we agree that it is important to understand the 
needs of patients with disabilities. As we continue to evaluate SDOH 
standardized patient assessment data elements and future policy 
options, we will consider this feedback. We note that although we 
proposed to require the collection of the Living Situation, Food, and 
Utilities items for the IRF QRP, our proposals would not preclude IRFs 
from choosing to screen their patients for additional SDOH they believe 
are relevant to their patient population and the community they serve, 
including screening for disability-status, caregiver availability, 
patients' independent living status, and ability to return to work.
(a) Comments on the Living Situation Assessment Item
    Comment: Several commenters supported the proposal to adopt the 
Living Situation assessment item as a standardized patient assessment 
data element in the IRF-PAI. One of these commenters noted that having 
information about a patient's living situation enables better care 
coordination, identifies support gaps, and allows IRFs to develop 
tailored care plans. Another one of these commenters noted that this 
information helps them to improve facility operations and develop 
internal quality improvement efforts and population health initiatives. 
Finally, another one of these commenters noted that understanding a 
person's living situation can ensure the appropriate provision of 
necessary adaptive equipment and engagement with community partners to 
address patients' needs.
    Response: We thank the commenters for their support and agree that 
information on a person's living situation can be used to develop 
tailored care plans, assist with quality improvement efforts, and 
collaborate with partners such as community care hubs and community-
based organizations during transitions of care.
    Comment: Two commenters recommended that the Living Situation 
assessment item incorporate information on whether a patient's living 
situation is suitable for potentially new complex care needs. One of 
these commenters highlighted the changing nature of IRF patients' needs 
and noted that some patients may have been housing secure prior to 
their condition, but that prior living situation may no longer be 
suitable for their current needs. The other commenter noted that in 
some cases, a patient's prior living situation may no longer be 
appropriate for them following their injury or illness, due to 
requirements such as mobility equipment, ramps, and other accessible 
modifications.
    Response: While we proposed to require the collection of the Living 
Situation item at admission only, the collection could potentially 
prompt the IRF to initiate additional conversations with their patients 
about their living situation needs throughout their stay. As the 
commenter pointed out, it is important to think about the patient's 
living situation in the context of their new care needs, and collecting 
the Living Situation assessment item at admission would be an important 
first step to that process. Additionally, IRFs may seek to collect any 
additional information that they believe may be

[[Page 64319]]

relevant to their patient population in order to inform their care and 
discharge planning process.
    Comment: Two commenters expressed concerns with the time frame of 
the response options for the proposed the Living Situation item. One of 
these commenters suggested that adding a look back period of one year 
or less to the response options would allow healthcare providers to 
promptly intervene and mitigate any eminent negative housing 
situations. This commenter was concerned that, if left open-ended, 
patients may respond yes, thinking about many possible scenarios that 
may occur in the distant future. The other commenter encouraged CMS to 
consider a shorter look back period for the Living Situation assessment 
item, as a 12-month look back could capture circumstances that are no 
longer accurate.
    Response: We interpret the comments to be suggesting that a time 
frame be added to two of the Living Situation response options, 
specifically: (1) I have a place to live today, but I am worried about 
losing it in the future; and (2) I do not have a steady place to live. 
We want to clarify that the proposed Living Situation item frames the 
question as, ``What is your living situation today?'' The question 
establishes the look back period (the present) the patient should 
consider in responding to the item.
    Comment: Three commenters expressed concerns with utilizing the 
proposed Living Situation assessment item as currently worded. 
Specifically, commenters believe that asking about patients' living 
situation ``today'' may be difficult for IRF patients who are receiving 
treatment for a traumatic injury or serious medical event to answer 
accurately.
    Response: We acknowledge the complex medical conditions of most IRF 
patients. However, there are other patient interview assessment items 
that IRFs currently collect that address this concern, and we believe 
IRFs have experience in managing these complex scenarios successfully 
in order to obtain the information required. We would also like to 
remind the commenter that we proposed response options for patients 
that are unable to respond or decline to respond.
    We also plan to provide training resources in advance of the 
initial collection of the assessment items to ensure that IRFs have the 
tools necessary to administer the new SDOH assessment items and reduce 
the burden to IRFs in creating their own training resources. These 
training resources may include online learning modules, tip sheets, 
questions and answers documents, and recorded webinars and videos, and 
would be available to providers as soon as technically feasible.
    Comment: One commenter recommended that CMS simplify the responses 
for the Living Situation assessment item because they are likely to 
lead to confusion. This commenter suggested CMS align the responses for 
the Living Situation assessment item with the proposed Food assessment 
item that has an ``Often true,'' ``Sometimes true,'' and ``Never true'' 
response option or with the modified Transportation assessment item 
that has a ``Yes'' or ``No'' response. They believe this would be 
simpler for patients to answer and be easier on the IRF staff to 
collect the information.
    Response: We agree that standardized patient assessment data 
elements should be easy to understand and have clear response options. 
However, we believe that including the specific distinction in the 
Living Situation response options is needed. Specifically, we believe 
that additional response options to indicate whether a patient is 
worried about their living situation in the future helps reduce 
ambiguity for patients who may only have temporary housing. For 
example, having a ``Yes'' and ``No'' response and eliminating an option 
for ``I have a place to live today, but I am worried about losing it in 
the future'' would not capture those patients that may be at risk of 
losing their place to live due to lost income resulting from the 
traumatic injury or event precipitating their admission to the IRF. 
Identifying these patients who are worried about losing their housing 
in the future may help IRFs facilitate discharge planning and make 
appropriate community referrals.
    Comment: One commenter stated they did not support the proposal to 
add the proposed new Living Situation assessment item to the IRF-PAI 
because a patient's ability to be discharged to home is a variable IRFs 
use when considering whether admission to IRF is appropriate. This 
commenter noted that patients who do not have a location they can be 
discharged to are not good candidates for IRFs, and as a result, the 
addition of the proposed Living Situation assessment item will increase 
burden without providing data to drive outcomes. Two commenters also 
noted that CMS could collect a patient's living status through 
assessment items already collected in the IRF-PAI, such as Discharge 
Living Setting and Discharge Living With.
    Response: We disagree with the commenter's suggestions that the 
collection of the proposed Living Situation assessment item will 
increase burden without providing data to drive outcomes or that 
patients who do not have a location they can be discharged to are not 
good candidates for IRFs. A comprehensive preadmission screening 
includes anticipated discharge destination, since this information 
would be important to developing the interdisciplinary plan of care. 
However, the decision whether a patient is or is not appropriate for 
IRF admission is generally based on whether the patient requires the 
interdisciplinary services offered by IRFs. Specifically IRF admission 
is based on whether: the patient requires the active and ongoing 
therapeutic intervention of multiple therapy disciplines, one of which 
must be physical or occupational therapy; the patient generally 
requires and can reasonably be expected to actively participate in, and 
benefit from, an intensive rehabilitation therapy program; the patient 
is sufficiently stable at the time of admission to the IRF to be able 
to actively participate in the intensive rehabilitation therapy 
program; and the patient requires physician supervision by a 
rehabilitation physician.\77\ As with all new assessment items, we will 
monitor all aspects of data collection and submission under the IRF 
QRP, and should we identify changes in provider behavior, we will take 
the appropriate administrative action.
---------------------------------------------------------------------------

    \77\ Medicare Benefit Policy Manual (100-2). Chapter 1, Section 
110.2. Available at: https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/bp102c01.pdf.
---------------------------------------------------------------------------

    Regarding the comment that we ascertain a patient's living status 
through assessment items already collected in the IRF-PAI, such as item 
44D. Patient's Discharge Destination/Living Setting and item 45. 
Discharge to Living With, we disagree with the suggestion since these 
items are not collected until the patient is discharged. As discussed 
in section VII.C.4(a) of the proposed rule, we proposed the Living 
Situation assessment item for collection at admission, rather than at 
discharge. The primary purpose of collecting this information at 
admission is to facilitate coordinated care, continuity in care 
planning, and the discharge planning process from IRF settings. As we 
stated in section VIII.C.2 of this final rule, according to the World 
Health Organization, research shows that SDOH can be more important 
than health care or lifestyle choices in influencing health, accounting 
for between 30 to 55 percent of health

[[Page 64320]]

outcomes.\78\ This is part of a growing body of research that 
highlights the importance of SDOH on health outcomes. We believe that 
having information on patients' living situation at admission will help 
IRFs better understand and address the broader needs of their patients. 
We also believe this information is essential for comprehensive patient 
care, potentially leading to improved health outcomes and more 
effective discharge planning.
---------------------------------------------------------------------------

    \78\ World Health Organization. Social determinants of health. 
Available at https://www.who.int/health-topics/social-determinants-of-health#tab=tab_1.
---------------------------------------------------------------------------

(b) Comments on the Food Assessment Items
    Comment: We received several comments supporting the collection of 
the two proposed Food assessment items because of the importance of 
nutrition and food access to IRF patients' health outcomes, and the 
usefulness of this information for treatment and discharge planning. 
Specifically, two commenters highlighted the association between a lack 
of access to food and low-nutrient diets with negative health outcomes. 
Moreover, one of these commenters noted that information from the two 
proposed Food assessment items can give healthcare professionals a 
greater understanding of a patient's complex needs and improve 
coordination with other healthcare providers during transitions of 
care. Further, one commenter noted that the responses to the proposed 
Food assessment items would help providers incorporate treatment 
strategies that address patients' food access. Finally, another 
commenter acknowledged the intersection between these proposed SDOH 
assessment items, highlighting the important relationship between 
transportation and a person's ability to access food. This commenter 
provided the example that a person may have enough funds to purchase 
food, but not have access to transportation to obtain food.
    Response: We agree that a person's access to food affects their 
health outcomes and risk for adverse events. Understanding the 
potential needs of patients admitted to IRF through the collection of 
the two proposed Food assessment items can help IRFs facilitate 
resources for IRF patients, if indicated, when discharged.
    Comment: Two commenters were concerned that the proposed Food 
assessment items ask patients to rate the frequency of their food 
shortage using a three-point scale, which is inconsistent with other 
questions on the IRF-PAI such as the patient mood, behavioral symptoms, 
and daily preference assessment items, which use a four-point scale to 
determine frequency. This commenter suggested this inconsistency may 
lead to confusion for staff and patients.
    Response: We clarify that the proposed Food assessment items 
include three frequency responses in addition to response options in 
the event the patient declines to respond or is unable to respond: (0) 
Often true; (1) Sometimes true; (2) Never True; (7) Patient declines to 
respond; and (8) Patient unable to respond. We acknowledge there are a 
number of patient interview assessment items on the IRF-PAI that use a 
four-point scale, but there are also assessment items on the IRF-PAI 
that do not use a four-point scale. For example, the Health Literacy 
(B1300) and Social Isolation (D0700) assessment items currently use a 
five-point scale and the Pain Interference with Therapy Activities 
(J0520) assessment item currently uses a five-point scale. We chose the 
proposed Food assessment items from the AHC HRSN Screening Tool, and it 
was tested and validated using a three-point response scale. Since the 
IRF-PAI currently includes assessment items that use varying response 
scales, we do not believe staff and patients will be confused. We plan 
to develop resources IRF staff can use to ensure patients understand 
the proposed assessment item questions and response options. For 
example, CMS developed cue cards to assist IRFs in conducting the Brief 
Interview for Mental Status (BIMS) in Writing, the Patient Mood 
Interview (PHQ-2 to 9), the Pain Assessment Interview, and the 
Interview for Daily and Activity Preference.\79\
---------------------------------------------------------------------------

    \79\ These cue cards are currently available on the IRF QRP 
Training web page at https://www.cms.gov/medicare/quality/inpatient-rehabilitation-facility/irf-quality-reporting-training.
---------------------------------------------------------------------------

    Comment: Several commenters were concerned with the 12-month look 
back period of the proposed Food assessment items, noting that this 
broad look back period may capture needs that occurred in the past that 
have already been resolved. These commenters recommended a 3-month look 
back period instead, to capture true concerns that should inform IRFs' 
care and discharge planning.
    Response: We disagree that the 12-month look back period for the 
proposed Food assessment items is too long and will not result in 
reliable responses. We believe the proposed 12-month look back is more 
appropriate than a shorter, 3-month look back period, because a 
person's Food situation may fluctuate over time. One study of Medicare 
Advantage beneficiaries found that approximately half of U.S. adults 
report one or more HRSNs over four quarters. However, at the individual 
level, participants had substantial fluctuations: 47.4 percent of the 
participants fluctuated between zero and one or more HRSNs over the 
four quarters, and 21.7 percent of participants fluctuated between one, 
two, three, or four or more HRSNs over the four quarters.\80\ The 
researchers noted that the dynamic nature of individual-level HRSNs 
requires consideration by healthcare providers screening for HRSNs.
---------------------------------------------------------------------------

    \80\ Haff, N, Choudhry, N.K., Bhatkhande, G., Li, Y., Antol, D., 
Renda, A., Laufffenburger, J. Frequency of Quarterly Self-reported 
Health-Related Social Needs Among Older Adults, 2020. JAMA Network 
Open. 2022;5(6):e2219645. Doi:101001/jamanetworkopen.2022.19645. 
Accessed June 9, 2024.
---------------------------------------------------------------------------

    To account for potentially changing Food needs over time, we 
believe it is important to use a longer lookback window to 
comprehensively capture any Food needs a person may have had, so that 
IRFs may consider them in their care and discharge planning. However, 
as we develop coding guidance for these proposed new assessment items, 
we will utilize the feedback received in these comments.
    Comment: One commenter recognized the importance of collecting 
patients' food access through a streamlined data collection process but 
urged CMS to combine the two proposed Food assessment items into a 
singular comprehensive assessment item to enhance efficiency and reduce 
respondent burden, while still capturing the nuanced aspects of food 
insecurity crucial for care planning and recourse allocation.
    Response: While we appreciate the commenters' recommendation, past 
testing of the items found that the item sensitivity was higher when 
using both Food assessment items, as opposed to just one. Specifically, 
analyses found that an affirmative response to just one of the 
questions provided a sensitivity of 93 percent or 82 percent, depending 
on the item, whereas collecting both items, and evaluating whether 
there is an affirmative response to the first and/or second item 
yielded a sensitivity of 97 percent.\81\ This means that only 3

[[Page 64321]]

percent of respondents who have food needs were likely to be 
misclassified. Therefore, we believe it is important to include both 
proposed Food assessment items.
---------------------------------------------------------------------------

    \81\ Gundersen C, Engelhard E, Crumbaugh A, Seligman, H.K. Brief 
assessment of Food insecurity Accurately Identifies High0Risk US 
Adults. Public Health Nutrition, 2017. Doi: 10.1017/
S1368980017000180. https://childrenshealthwatch.org/wp-content/uploads/brief-assessment-of-food-insecurity-accurately-identifies-high-risk-us-adults.pdf. Accessed July 2, 2024.
---------------------------------------------------------------------------

    Comment: One commenter urged CMS to recommend that IRFs complete 
the proposed Food assessment items in the IRF-PAI as soon as applicable 
for the patient after admission. This commenter highlighted that timely 
diagnoses of nutrition insecurity allows for immediate planning of 
future post-discharge plans. Because referrals and enrollment in public 
programs like the Supplemental Nutrition Assistance Program (SNAP) 
often have wait times that delay access to necessary interventions, 
they suggested CMS encourage IRFs to minimize delays in the delivery of 
adequate nutrition assistance and malnutrition intervention.
    Response: We appreciate the commenter's input on timely collection 
of the proposed Food assessment items, and we note that in section 
VIII.C.3.(b) of this final rule, we proposed to collect these 
assessment items at admission only. Admission information on the IRF-
PAI is collected as close to the time of admission as possible. As we 
develop coding guidance for the proposed new Food assessment item, we 
will utilize the feedback received in these comments.
(c) Comments on the Utilities Assessment Item
    Comment: One commenter supported the proposal to add a new 
Utilities assessment item to the IRF-PAI and highlighted that a 
patient's access to utilities, similar to a patient's living situation, 
is crucial for maintaining good health. Specifically, they pointed out 
that access to clean water is essential, particularly for patients who 
are unable to drive or have the funds to purchase bottled water. 
Additionally, this commenter highlighted that IRF patients are often 
discharged with equipment requiring constant, consistent electricity 
(for example, supplemental oxygen, vents, continuous positive airway 
pressure (CPAP), bilevel positive airway pressure (BiPAP), continuous 
ambulatory delivery device (CADD) pumps for Dobutamine and left 
ventricular assist device (LVAD)). If a patient does not have access to 
a reliable power source for these critical supports, they are at risk 
of not using the equipment as prescribed or dying.
    Response: We thank the commenters for their support and agree that 
patients' utilities needs can affect IRF patients' health outcomes, and 
the collection of the proposed Utilities assessment item can equip IRFs 
with the information to inform care plans and discharge planning.
    Comment: A few commenters were concerned with the 12-month look 
back period of the proposed Utilities assessment item. Two of these 
commenters noted that the 12-month look back period may not result in 
reliable responses because patients may have difficulty remembering if 
a relevant event, such as a utility shut-off threat, occurred within 
such a long period, especially for patients that may be recovering from 
a stroke or traumatic brain injury. Three of these commenters 
recommended a 3-month look back period instead, to provide more 
reliable, valid, timely, and actionable information as part of the 
transition of care. These commenters also recommended against the 
inclusion of all utilities (electric, gas, oil, or water) in the 
assessment item as well as the use of the term ``threatened'' in the 
proposed Utilities assessment item because they are concerned these 
all-encompassing and vague terms may lead to inconsistent, unreliable, 
or invalid responses.
    Response: We disagree that the 12-month look back period for the 
proposed Utilities assessment item is too long and that it will not 
result in reliable responses. We believe a 12-month look back is more 
appropriate than a shorter, 3-month look back period, because a 
person's Utilities situation may fluctuate over time. One study of 
Medicare Advantage beneficiaries found that approximately half of U.S. 
adults report one or more HRSNs over four quarters. However, at the 
individual level, participants had substantial fluctuations: 47.4 
percent of the participants fluctuated between zero and one or more 
over the four quarters, and 21.7 percent of participants fluctuated 
between one, two, three, or four or more over the four quarters.\82\ 
The researchers noted that the dynamic nature of individual-level HRSNs 
requires consideration by healthcare providers screening for HRSNs. In 
order to account for potentially changing Utilities needs over time, we 
believe it is important to use a longer lookback window to 
comprehensively capture any Utilities needs a person may have had, so 
that IRFs may consider them in their care and discharge planning.
---------------------------------------------------------------------------

    \82\ Haff, N, Choudhry, N.K., Bhatkhande, G., Li, Y., Antol, D., 
Renda, A., Laufffenburger, J. Frequency of Quarterly Self-reported 
Health-Related Social Needs Among Older Adults, 2020. JAMA Network 
Open. 2022;5(6):e2219645. Doi:101001/jamanetworkopen.2022.19645. 
Accessed June 9, 2024.
---------------------------------------------------------------------------

    We also acknowledge that IRFs are accustomed to working with 
patients with very complex medical conditions, including traumatic 
brain injury, stroke, and others, and we are confident in their ability 
to collect this data in a consistent manner. There are currently 
several patient interview assessment items on the IRF-PAI, and IRFs are 
accustomed to administering these questions to impaired patients. We 
remind IRFs we proposed response options for the Utilities item that 
address when a patient declines to respond or when a patient is unable 
to respond.
    We also believe it is important to capture utility needs across 
electric, gas, oil, and water services, in order to comprehensively 
understand patients' access to necessary utility services, especially 
since patients' needs for utilities may vary depending on their 
equipment needs at discharge. We note that while the IRF-PAI requires 
the collection of certain HRSNs, IRFs may screen for additional HRSNs 
that they believe are relevant for their patient population and the 
community in which they serve. For example, if it is useful to 
understand patients' access to a specific type of utility service, such 
as access to water or voltage capacity, IRFs may seek to collect any 
additional information they believe relevant for their patient 
population in order to inform their care and discharge planning 
process. However, as we develop coding guidance for the proposed new 
Utilities assessment item, we will utilize the feedback received in 
these comments.
    After careful consideration of public comments we received, we are 
finalizing our proposal to adopt four new items as standardized patient 
assessment data elements under the SDOH category beginning with the FY 
2028 IRF QRP: one Living Situation item; two Food items; and one 
Utilities item.
5. Modification of the Transportation Item Beginning With the FY 2028 
IRF QRP
    Beginning October 1, 2022, IRFs began collecting seven items 
adopted as standardized patient assessment data elements under the SDOH 
category on the IRF-PAI.\83\ One of these items, Item A1250. 
Transportation collects data on whether a lack of transportation has

[[Page 64322]]

kept a patient from getting to and from medical appointments, meetings, 
work, or from getting things they need for daily living. This item was 
adopted as a standardized patient assessment data element under the 
SDOH category in the FY 2020 IRF PPS final rule (84 FR 39158 and 
39159). As we discussed in the FY 2020 IRF PPS final rule (84 FR 
39158), we continue to believe that access to transportation for 
ongoing health care and medication access needs, particularly for those 
with chronic diseases, is essential to successful chronic disease 
management and the collection of a Transportation item would facilitate 
the connection to programs that can address identified needs.
---------------------------------------------------------------------------

    \83\ The seven SDOH items are ethnicity, race, preferred 
language, interpreter services, health literacy, transportation, and 
social isolation (84 FR 39149 through 39161).
---------------------------------------------------------------------------

    As part of our routine item and measure monitoring work, we 
continually assess the implementation of the new SDOH items. We have 
identified an opportunity to improve the data collection for A1250. 
Transportation in the IRF-PAI by aligning it with the Transportation 
category collected in our other programs.84 85 Specifically, 
we proposed to modify the current Transportation item in the IRF-PAI so 
that it aligns with a Transportation item collected on the AHC HRSN 
Screening Tool available to the IPFQR and Hospital IQR Programs.
---------------------------------------------------------------------------

    \84\ Centers for Medicare & Medicaid Services, FY2024 Inpatient 
Psychiatric Prospective Payment System--Rate Update (88 FR 51107 
through 51121).
    \85\ Centers for Medicare & Medicaid Services, FY2023 IPPS/LTCH 
PPS final rule (87 FR 49202 through 49215).
---------------------------------------------------------------------------

    A1250. Transportation collected in the IRF-PAI asks: ``Has lack of 
transportation kept you from medical appointments, meetings, work, or 
from getting things needed for daily living?'' The response options 
are: (A) Yes, it has kept me from medical appointments or from getting 
my medications; (B) Yes, it has kept me from non-medical meetings, 
appointments, work, or from getting things that I need; (C) No; (X) 
Patient unable to respond; and (Y) Patient declines to respond. The 
Transportation item collected in the AHC HRSN Screening Tool asks, ``In 
the past 12 months, has lack of reliable transportation kept you from 
medical appointments, meetings, work or from getting things needed for 
daily living?'' The two response options are: (1) Yes; and (2) No. 
Consistent with the AHC HRSN Screening Tool, we proposed to modify the 
A1250. Transportation item collected in the IRF-PAI in two ways: (1) 
revise the look back period for when the patient experienced lack of 
reliable transportation; and (2) simplify the response options.
    First, the proposed modification of the Transportation item would 
use a defined 12-month look back period, while the current 
Transportation item uses a look back period of six to 12 months. We 
believe the distinction of a 12-month look back period would reduce 
ambiguity for both patients and clinicians, and therefore improve the 
validity of the data collected. Second, we proposed to simplify the 
response options. Currently, IRFs separately collect information on 
whether a lack of transportation has kept the patient from medical 
appointments or from getting medications, and whether a lack of 
transportation has kept the patient from non-medical meetings, 
appointments, work, or from getting things they need. Although 
transportation barriers can directly affect a person's ability to 
attend medical appointments and obtain medications, a lack of 
transportation can also affect a person's health in other ways, 
including accessing goods and services, obtaining adequate food and 
clothing, and social activities.\86\ The proposed modified 
Transportation item would collect information on whether a lack of 
reliable transportation has kept the patient from medical appointments, 
meetings, work, or from getting things needed for daily living, rather 
than collecting the information separately. As discussed previously, we 
believe reliable transportation services are fundamental to a person's 
overall health, and as a result, the burden of collecting this 
information separately outweighs its potential benefit.
---------------------------------------------------------------------------

    \86\ Centers for Medicare & Medicaid Services, FY2024 Inpatient 
Psychiatric Prospective Payment System--Rate Update (88 FR 51107 
through 51121).
---------------------------------------------------------------------------

    For the reasons stated previously, we proposed to modify A1250. 
Transportation based on the Transportation item adopted for use in the 
AHC HRSN Screening Tool and adapted from the PRAPARE tool. The proposed 
Transportation item asks, ``In the past 12 months, has a lack of 
reliable transportation kept you from medical appointments, meetings, 
work or from getting things needed for daily living?'' The proposed 
response options are: (0) Yes; (1) No; (7) Patient declines to respond; 
and (8) Patient unable to respond. A draft of the proposed modified 
Transportation item can be found in the Downloads section of the IRF-
PAI and IRF-PAI Manual web page at https://www.cms.gov/medicare/quality/inpatient-rehabilitation-facility/irf-pai-and-irf-qrp-manual.
    We solicited comment on the proposal to modify the current 
Transportation item previously adopted as a standardized patient 
assessment data element under the SDOH category beginning with the FY 
2028 IRF QRP.
    The following is a summary of the public comments received on the 
proposal and our responses:
    Comment: Several commenters supported the proposal to modify the 
Transportation assessment item. One of these commenters stated that 
knowing this information will allow the IRF to connect patients, 
particularly those who are dependent on a wheelchair or other assisted 
device for mobility, with reliable transportation services. Four of 
these commenters supported the simplified response options, noting it 
would make it easier for patients to answer the question and reduce the 
administrative burden associated with the transportation assessment 
item. Three of these commenters also expressed support for the new 12-
month look back period because it would help clarify the question, 
improve patient comprehension of the proposed Transportation assessment 
item, and reduce provider burden. One of these commenters agreed with 
CMS' proposal to no longer require separate response options for 
difficulty with transportation to medical appointments and 
transportation to non-medical appointments.
    Response: We thank the commenters for their support of the proposed 
modification of the Transportation assessment item. We agree that the 
proposed changes will help streamline the data collection process by 
simplifying the item for both patients and IRF staff collecting the 
data. The use of a 12-month look back period will reduce ambiguity for 
both patients and staff, and therefore, improve the validity of the 
data collected.
    Comment: Several commenters did not support the proposal to modify 
the Transportation assessment item due to the retention of the 12-month 
look back period. These commenters noted that the 12-month look back 
period is too broad and long for effective care coordination and 
discharge planning, and some of these commenters recommended a three-
month look back period instead. Four of these commenters also noted 
concerns with the response options, suggesting they may not provide 
reliable and valid information. These commenters explained that the 
responses do not collect information about the frequency of the 
patient's concern, the reasons why they do not have reliable 
transportation, and consideration for patients with a disability that 
requires special accommodations for transportation, such as wheelchair 
accessibility. Finally, one commenter

[[Page 64323]]

highlighted their concern about the utility of continuing to collect 
data on the current Transportation assessment item through September 
30, 2025, if finalized.
    Response: We disagree that the 12-month look back period for the 
proposed modification to the Transportation assessment item is too long 
and that it will not result in reliable responses. We believe a 12-
month look back is more appropriate than a shorter, 3-month look back 
period, because a person's Transportation needs may fluctuate over 
time. As we have noted in an earlier response, a study of Medicare 
Advantage beneficiaries found that approximately half of U.S. adults 
report one or more HRSNs over four quarters. However, at the individual 
level, participants had substantial fluctuations: 47.4 percent of the 
participants fluctuated between zero and one or more HRSNs over the 
four quarters, and 21.7 percent of participants fluctuated between one, 
two, three, or four or more HRSNs over the four quarters.\87\ The 
researchers noted that the dynamic nature of individual-level HRSNs 
requires consideration by healthcare providers screening for HRSNs. In 
order to account for potentially changing Transportation needs over 
time, we believe it is important to use a longer look back period to 
comprehensively capture any Transportation needs an IRF patient may 
have had, so that IRFs may consider them in their care and discharge 
planning.
---------------------------------------------------------------------------

    \87\ Haff, N, Choudhry, N.K., Bhatkhande, G., Li, Y., Antol, D., 
Renda, A., Laufffenburger, J. Frequency of Quarterly Self-reported 
Health-Related Social Needs Among Older Adults, 2020. JAMA Network 
Open. 2022;5(6):e2219645. Doi:101001/jamanetworkopen.2022.19645. 
Accessed June 9, 2024.
---------------------------------------------------------------------------

    Regarding the comment stating the responses do not allow for 
nuanced understanding of the patient's transportation needs (the 
frequency of the concern, the reasons why reliable transportation is 
not available, or the special accommodations a person may need for 
transportation), we note that although the proposal would require the 
collection of the Transportation assessment item at admission only, the 
collection could potentially prompt the IRF to initiate conversations 
with its patients about their specific Transportation needs. 
Additionally, IRFs may seek to collect any additional information that 
they believe may be relevant to their patient population in order to 
inform their care and discharge planning process. However, as we 
develop coding guidance for this Transportation assessment item, we 
will utilize all the feedback received in these comments.
    Regarding the comment about the utility of continuing to collect an 
assessment item that CMS has proposed to replace, we acknowledge the 
commenter's concern. Although we have proposed to change the assessment 
item in order to improve standardization across programs, we still 
believe collecting the information in the interim is necessary for care 
coordination and discharge planning purposes in accordance with CFR 
482.43(a).
    After careful consideration of public comments we received, we are 
finalizing our proposal to modify the current Transportation item 
previously adopted as a standardized patient assessment data element 
under the SDOH category beginning with the FY 2028 IRF QRP.

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

    In the proposed rule, we sought input on the importance, relevance, 
appropriateness, and applicability of each of the concepts under 
consideration listed in Table 14 for future years in the IRF QRP. The 
FY 2024 IRF PPS proposed rule (88 FR 21000 through 21003) included a 
request for information (RFI) on a set of principles for selecting and 
prioritizing IRF QRP measures, identifying measurement gaps, and 
suitable measures for filling these gaps. Within the FY 2024 IRF PPS 
proposed rule, we also sought input on data available to develop 
measures, approaches for data collection, perceived challenges or 
barriers, and approaches for addressing identified challenges. We refer 
readers to the FY 2024 IRF PPS final rule (88 FR 51036 and 51037) for a 
summary of the public comments we received in response to the RFI.
    Subsequently, our measure development contractor convened a 
Technical Expert Panel (TEP) on December 15, 2023, to obtain expert 
input on the future measure concepts that could fill the measurement 
gaps identified in our FY 2024 RFI.\88\ The TEP discussed the alignment 
of PAC and Hospice measures with CMS' ``Universal Foundation'' of 
quality measures.\89\
---------------------------------------------------------------------------

    \88\ The Post-Acute Care (PAC) and Hospice Quality Reporting 
Program Cross-Setting TEP summary report will be published in early 
summer or as soon as technically feasible. IRFs can monitor the 
Partnership for Quality Measurement website at https://mmshub.cms.gov/get-involved/technical-expert-panel/updates for 
updates.
    \89\ Centers for Medicare & Medicaid Services. Aligning Quality 
Measures Across CMS--the Universal Foundation. November 17, 2023. 
https://www.cms.gov/aligning-quality-measures-across-cms-universal-foundation.
---------------------------------------------------------------------------

    In consideration of the feedback we have received through these 
activities, we solicited input on three concepts for the IRF QRP (See 
Table 14). One is a composite of vaccinations,\90\ which could 
represent overall immunization status of patients such as the Adult 
Immunization Status (AIS) measure \91\ in the Universal Foundation. A 
second concept on which we sought feedback is the concept of depression 
for the IRF QRP, which may be similar to the Clinical Screening for 
Depression and Follow-up measure \92\ in the Universal Foundation. 
Finally, we sought feedback on the concept of pain management.
---------------------------------------------------------------------------

    \90\ A composite measure can summarize multiple measures through 
the use of one value or piece of information. More information can 
be found at https://www.cms.gov/medicare/quality-initiatives-patient-assessment-instruments/mms/downloads/composite-measures.pdf.
    \91\ CMS Measures Inventory Tool. Adult immunization status 
measure found at https://cmit.cms.gov/cmit/#/FamilyView?familyId=26.
    \92\ CMS Measures Inventory Tool. Clinical Depression Screening 
and Follow-Up measure found at https://cmit.cms.gov/cmit/#/FamilyView?familyId=672.

  TABLE 14--Future Measure Concepts Under Consideration for the IRF QRP
------------------------------------------------------------------------
                        Quality Measure Concepts
-------------------------------------------------------------------------
Vaccination Composite.
Pain Management.
Depression.
------------------------------------------------------------------------

    We received public comments on this RFI. The following is a summary 
of the comments we received:
1. Vaccination Composite
    Comments: Several commenters supported the idea of adding a 
composite vaccination measure like the AIS measure into the IRF QRP. 
These commenters noted that a composite vaccination measure could 
improve vaccination rates for those vaccines recommended by the 
Advisory Committee on Immunization Practices (ACIP), as well as reduce 
administrative burden through alignment with the Universal Foundation. 
One of these commenters noted that immunization rates in PAC settings 
are suboptimal and believes a measure such as the Adult Immunization 
Status measure would improve immunization rates in PAC settings, 
including IRFs.

[[Page 64324]]

    Some commenters, however, did not support the idea of adding a 
composite vaccination measure into the IRF QRP for a number of reasons. 
They questioned whether a composite vaccination measure for the IRF QRP 
would be suitable and whether it would represent the quality of care 
provided by IRFs, described the administrative challenges a composite 
vaccination measure would impose on IRFs, and noted reliability and 
validity concerns associated with a possible vaccination composite 
measure.
    Most commenters suggested IRFs would have difficulty collecting 
information on patients' vaccination status when a patient may have 
received care from multiple proximal providers and thought a composite 
vaccination measure would be better suited for primary care clinicians 
who usually administer these vaccines as part of their preventative 
care. Several commenters noted that it may be infeasible or 
inappropriate for an IRF to offer vaccination for patients due to 
length of stay, ability to manage side effects and medical 
contraindications. They also noted that a patient's vaccination status 
is dependent on many factors outside an IRF's control, including the 
fact that patients can choose to decline recommended vaccines. Other 
commenters requested that CMS provide more information on the specific 
outcomes CMS expects to collect from this information. One of these 
commenters recommended CMS report on specific vaccination rates, since 
it would provide more actionable data to IRFs.
    Other commenters stated they were concerned about the accuracy and 
reliability of a composite vaccination measure for the IRF QRP since 
IRF patients often experience cognitive deficits related to their 
illness or injury and verification of their vaccination status would be 
difficult. Commenters noted that vaccines are intended for certain age 
groups and have multiple doses and medical contraindications, raising 
questions around data validity. Several commenters also recommended 
that CMS evaluate the reliability, validity, and effectiveness of 
existing vaccination measures before developing a composite vaccination 
measure.
2. Pain Management
    Comments: We received several comments supporting the pain 
management measure concept. One of these commenters stated this was an 
important concept for the IRF QRP and strongly encouraged CMS to move 
forward with measure development and testing. Another one of these 
commenters recommended that these measures reflect the full spectrum of 
recommended pain management interventions, including nonpharmacologic 
pain management.
    Most commenters noted that pain management is a challenging topic 
to address in IRFs where patients are undergoing physical 
rehabilitation for extremely serious conditions or injuries and the 
experience of pain and discomfort is usually an unavoidable reality of 
this process. Several of these commenters were concerned that a pain 
management measure in the IRF QRP focused on an expectation of 
improvement may be misleading and could inadvertently lead to over 
prescribing of pain medication, including opioids. Other commenters 
opposed a patient-reported pain management measure since they believe 
it would be an unrealistic objective for an IRF to manage a patient's 
pain to their expectation. These commenters suggested CMS should 
instead seek feedback from interested parties on the aspects of pain 
management relevant to IRFs and then determine if there is sufficient 
information to develop a meaningful quality measure.
    Several commenters also noted that we are considering this measure 
concept for other post-acute care settings as well, including SNF and 
LTCH, and they believe it would invariably lead to inappropriate 
comparisons in pain management across PAC settings. These commenters 
suggested that if CMS is looking to address whether pain is managed 
adequately, it should seek feedback from multiple interested parties to 
identify what aspects of pain management are of most interest and 
relevance to the IRF population, such as staff responsiveness to pain, 
and determine if there is sufficient available information to develop a 
meaningful quality measure.
    Other commenters stated that a more meaningful pain measure in the 
IRF setting should be designed to assess whether staff are responsive 
to and help manage patients' pain, and that such a measure could rely 
on patient-reported data. These commenters noted that a patient 
reported outcome measure \93\ (PROM) would be significantly more 
meaningful for quality measurement than a process measure collecting 
the existence of pain and could be collected directly from the patient 
without additional measure collection burden to an IRF. Specifically, 
they pointed to the standardized patient assessment data elements on 
the IRF-PAI, including items introduced on October 1, 2022, that 
collect information on the level of pain interference a patient 
experiences with daily activities, sleep, and participation in therapy 
activities in section J of the IRF-PAI. These commenters believe these 
quality indicators in section J of the IRF-PAI could present an 
opportunity to develop a quality measure with no additional data 
collection burden to IRFs.
---------------------------------------------------------------------------

    \93\ Patient reported outcome measures are tools used to collect 
patient-reported outcomes (PRO). CMS defines a PRO as any report of 
the status of a patient's health condition or health behavior coming 
directly from the patient, without interpretation of the patient's 
response by a clinician or anyone else. Available at: https://mmshub.cms.gov/sites/default/files/Patient-Reported-Outcome-Measures.pdf.
---------------------------------------------------------------------------

3. Depression
    Comments: Many commenters supported the concept of depression for a 
future IRF QRP measure, and one of these commenters noted that early 
identification and intervention for a patient's risk of depression can 
improve outcomes and quality of life, since depression can hinder a 
patient's progress and treatment. Two commenters supported a depression 
and follow-up measure, suggesting that the Patient Health Questionnaire 
(PHQ)-2 to -9 (PHQ-2 to -9) screening tool \94\ could be utilized for 
the development of a measure. These commenters also suggested that, if 
a depression measure is developed, there should not be an exclusion for 
patients with a prior depression or bipolar diagnosis since all 
symptoms of depression should be reassessed when a person is recovering 
from life-altering events.
---------------------------------------------------------------------------

    \94\ The Patient Health Questionnaire (PHQ)-2 to -9 (PHQ-2 to -
9) screening tool is used as the initial screening test for 
depression. The items were adopted as standardized patient 
assessment data elements in the FY 2020 IRF PPS final rule (84 FR 
39119 through 39121) and are collected on all patients admitted to 
an IRF.
---------------------------------------------------------------------------

    Other commenters suggested that, since IRFs are already required to 
conduct a screening for depression using the PHQ-2 to -9 on the IRF-
PAI, this screening can be used to monitor and measure the severity of 
depression, an additional quality measure regarding depression 
screening would be redundant. One commenter suggested that a depression 
screening measure for IRF patients would be misguided, since there are 
already detailed questions asked on the IRF-PAI related to depression. 
They also note that most patients admitted to an IRF have experienced a 
life-altering event(s), such as a severe accident, an act of violence, 
or a major injury requiring intensive rehabilitation. These events can 
be extremely distressing and are often accompanied by new chronic 
conditions

[[Page 64325]]

that are difficult to manage. As a result, many of these patients may 
have post-traumatic stress disorder, which is fundamentally different 
from clinical depression.
    Several other commenters were concerned that a depression screening 
measure would result in a requirement for IRFs to have additional 
resources to treat depression, such as a psychiatrist or psychologist. 
They note that IRFs already collect information and use physician 
documentation to identify mental health or other behavioral health 
issues. These commenters stated that adding another screening 
requirement would not improve the quality of care, or better equip 
these facilities to care for rehabilitation needs, and instead was best 
left to behavioral health and primary care providers to address. At the 
same time, commenters noted that such a measure could add cost and 
burden to the IRF clinical team. Two of these commenters recommended 
CMS not implement a depression measure without first determining the 
availability of resources to treat depression within IRFs.
4. Other Suggestions for Future Measure Concepts
    Comments: In addition to comments received on the three measure 
concepts of pain, depression and vaccination, we also received comments 
suggesting other concepts for future measures for the IRF QRP, 
including management of degenerative cognitive conditions, 
effectiveness of disposition planning and care transitions, changes in 
patient function, rates of follow-up care, and patients' access to 
appropriate treatments and medications, including access to a physical 
medicine and rehabilitation physician. One commenter suggested we 
consider measures of cognition and behavior in addition to mobility. 
Another commenter recommended including food and nutrition security and 
other social determinants of health (SDOH) as future IRF QRP quality 
measure concepts. Finally, one commenter recommended the Patient Active 
Measure (PAM[supreg]) \95\ instrument be added to the IRF-PAI or 
required in parallel to the IRF-PAI.
---------------------------------------------------------------------------

    \95\ The Patient Activation Measure (PAM[supreg]) is a 10- or 
13-item survey that assesses an individual's knowledge, skills and 
confidence integral to managing one's own health and healthcare. 
Available at: https://www.insigniahealth.com/pam/.
---------------------------------------------------------------------------

    Response: We thank all the commenters for responding to this RFI. 
We will take this feedback into consideration for future development of 
measures for the IRF QRP.

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

    In the proposed rule, we sought feedback on the development of a 
five-star methodology for IRFs that can meaningfully distinguish 
between quality of care offered by IRFs. Star ratings serve an 
important function for patients, caregivers, and families, helping them 
to more quickly comprehend complex information about a health care 
providers' care quality and to easily assess differences among 
providers. This transparency serves an important educational function, 
while also helping to promote competition in health care markets. 
Informed patients and consumers are more empowered to select among 
health care providers, fostering continued quality improvement. We 
refer readers to the RFI in the proposed rule (89 FR 22281) for more 
information.
    Specifically, we invited public comment on the following questions:
    1. Are there specific criteria CMS should use to select measures 
for an IRF star rating system?
    2. How should CMS present IRF star ratings information in a way 
that it is most useful to consumers?
    We received several comments in response to this RFI, which are 
summarized below.
1. Specific Criteria To Use In Measure Selection
    Comments: We received many comments in response to this RFI 
providing feedback on the criteria we should use for selecting measures 
to include in a potential IRF star ratings system. Many of these 
commenters stated the importance of including measures that are 
patient-centered, and several of these commenters also stated that the 
measures selected for an IRF star rating system should be 
representative of IRFs' emphasis on functional outcomes and treating 
pain. Several of these commenters, as well as other commenters, 
suggested that the IRF star rating system should incorporate measures 
of clinical relevance and effectiveness, such as prevention of adverse 
events or readmissions, discharge to home and weaning patients from 
catheters or other mechanical supports. Other commenters provided more 
general recommendations, such as selecting measures that allow for 
meaningful comparisons among IRFs in order to distinguish performance.
    Several commenters strongly recommended against inclusion of the 
Falls with Major Injury measure because of inconsistency with clinical 
guidelines in the IRF. These commenters also recommended against 
inclusion of the Catheter-Associated Urinary Tract Infection (CAUTI) 
measure, stating that there is a lack of meaningful differences in IRF 
performance.
2. Presentation of IRF Star Ratings Information
    Comments: Commenters provided recommendations on how to engage the 
public in the development and presentation of IRF star ratings. Several 
of these commenters strongly recommended CMS engage with patients, 
caregivers, providers, and specialty societies to inform the 
development and display of the IRF star ratings system. Additionally, 
three commenters emphasized full transparency of the star ratings 
methodology. Finally, one commenter recommended that visualizations of 
the star ratings should be clear, concise, and accompanied with 
contextual information to empower consumers in making informed 
healthcare decisions.
    Several commenters noted concerns about the variation in IRF 
volumes across the nation and raised concerns about reportability. 
Specifically, they believe there will be IRFs that would not have 
enough publicly reported data to report a star rating. Some of these 
commenters also suggested that that due to the limited number of IRF 
quality measures and the fact that many IRFs have low patient volumes, 
the ability to develop an overall star rating will be challenging.
3. Other Comments Received About an IRF Star Ratings System
    Comments: We also received several comments about IRFs' need for 
feedback additional reports to support their efforts at improving 
patient outcomes. Most of these commenters noted that the lack of 
patient-level reports for claims-based measures available to IRFs 
presents barriers to identifying areas for improvement in care. Several 
of these commenters, as well as other commenters, urged CMS to provide 
IRFs timely access to their data submitted for the IRF QRP and 
especially data submitted for measures that may be included in a star 
rating system. Three of these commenters noted that IRFs should receive 
feedback reports for any claims-based measures used in a star rating 
system on a quarterly basis, noting that CMS currently provides this 
level of information to hospitals. Two of these commenters recommended 
shortening the time period between an IRF's data submission on measures 
and the publicly reporting of IRFs' performance on Care Compare.

[[Page 64326]]

    Commenters also provided recommendations on additional aspects of 
care, specific measures to consider, the proposed methodology, and 
insights from other star ratings to help shape the development of an 
IRF star ratings system. A few commenters recommended factoring into 
the star ratings system other indicators of quality such as the 
presence of physical medicine and rehabilitation doctors, staffing 
levels, staff turnover, and using the same standards as IRF 
accreditation bodies, such as the Commission on Accreditation of 
Rehabilitation Facilities (CARF). Additionally, several commenters 
recommended accounting for factors that differentiate IRFs such as case 
mix and payer mix. Another commenter recommended assessing and 
addressing the appropriateness of social determinants of health in and 
IRF star ratings system.
    Finally, several commenters shared their concerns about other CMS 
star rating systems. Many of these commenters urged CMS to delay the 
implementation of an IRF star rating system until these issues with 
existing star ratings systems have been resolved. Another commenter 
recommended CMS should apply lessons learned from the development and 
maintenance of the existing star ratings programs as well as allow 
sufficient time for the development and implementation of a star rating 
system.
    Response: We thank all the commenters for responding to the RFI on 
this important CMS priority. We will take these recommendations into 
consideration in our future star rating development efforts.

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

1. Background
    We refer readers to the regulatory text at Sec.  412.634(b)(1) for 
information regarding the current policies for reporting specified data 
for the IRF QRP.
2. Reporting Schedule for the Proposed New Standardized Patient 
Assessment Data Elements and the Modified Transportation Data Element 
Beginning With the FY 2028 IRF QRP
    As discussed in sections VII.C.3. and VII.C.5. of the proposed 
rule, we proposed to adopt four new items as standardized patient 
assessment data elements under the SDOH category (one Living Situation 
item, two Food items, and one Utilities item) and to modify the 
Transportation standardized patient assessment data element previously 
adopted under the SDOH category beginning with the FY 2028 IRF QRP.
    We proposed that IRFs would be required to report these new items 
and the transportation item using the IRF-PAI beginning with patients 
admitted on October 1, 2026, for purposes of the FY 2028 IRF QRP. 
Starting in CY 2027, IRFs would be required to collect and submit data 
for the entire calendar year with the FY 2029 IRF QRP.
    We also proposed that IRFs that collect and submit the Living 
Situation, Food, and Utilities items with respect to admission only 
would be deemed to have collected and submitted those items with 
respect to both admission and discharge. We proposed that IRFs would be 
required to collect and submit these four items at admission only (and 
not at discharge) because it is unlikely that the assessment of those 
items at admission would differ from the assessment of the same item at 
discharge. This would align the data collection for these proposed 
items with other SDOH items (that is, Race, Ethnicity, Preferred 
Language, and Interpreter Services) which are only collected at 
admission.\96\ A draft of the proposed items is available in the 
Downloads section of the IRF-PAI and IRF-PAI Manual web page at https://www.cms.gov/medicare/quality/inpatient-rehabilitation-facility/irf-pai-and-irf-qrp-manual.
---------------------------------------------------------------------------

    \96\ FY 2020 IRF PPS final rule (84 FR 39161 through 39162).
---------------------------------------------------------------------------

    As we noted in section VIII.C.5. of this final rule, we continually 
assess the implementation of the new SDOH items, including A1250. 
Transportation, as part of our routine item and measure monitoring 
work. We received feedback from interested parties in response to the 
FY 2020 IRF PPS proposed rule (84 FR 39149 through 39161) noting their 
concern with the burden of collecting the Transportation item at 
admission and discharge. Specifically, commenters stated that a 
patient's access to transportation is unlikely to change between 
admission and discharge (84 FR 39159). We analyzed the data IRFs 
reported from October 1, 2022, through June 30, 2023 (Quarter 4 CY 2022 
through Quarter 2 CY 2023) and found that patient responses do not 
significantly change from admission to discharge.\97\ Specifically, the 
proportion of patients \98\ who responded ``Yes'' to the Transportation 
item at admission versus at discharge differed by only 0.19 percentage 
points during this period. We find these results convincing, and 
therefore we proposed to require IRFs to collect and submit the 
proposed modified standardized patient assessment data element, 
Transportation, at admission only.
---------------------------------------------------------------------------

    \97\ Due to data availability of IRF SDOH standardized patient 
assessment data elements, this is based on three quarters of 
Transportation data.
    \98\ The analysis is limited to patients who responded to the 
Transportation item at both admission and discharge.
---------------------------------------------------------------------------

    We invited public comment on our proposal to collect data on the 
following items proposed as standardized patient assessment data 
elements under the SDOH category at admission beginning October 1, 2026 
with the FY 2028 IRF QRP: (1) Living Situation as described in section 
VII.C.3.(a) of the proposed rule; (2) Food as described in section 
VII.C.3.(b) of the proposed rule; and (3) Utilities as described in 
section VII.C.3.(c) of the proposed rule. We also invited comment on 
our proposal to collect and submit the proposed modified standardized 
patient assessment data element, Transportation, at admission only 
beginning October 1, 2026, with the FY 2028 IRF QRP as described in 
section VII.C.5. of the proposed rule.
    We received public comments on these proposals. The following is a 
summary of the comments we received and our responses.
    Comment: Several commenters supported the proposed collection of 
four new SDOH assessment items once, upon admission, noting that this 
could mitigate the administrative burden of data collection and reduce 
redundancy. One of these commenters recommended CMS change the 
collection requirements for all standardized patient assessment data 
elements in the SDOH category to admission only, because they believe 
that for most patients, the response is not going to change between 
admission and discharge.
    In addition, several commenters supported the proposal to collect 
the modified Transportation assessment item at admission only, and one 
of these commenters agreed with CMS that the response to the 
Transportation assessment item is unlikely to change during the IRF 
stay. These commenters noted that removing the Transportation 
assessment item at discharge will reduce redundancy, improve the 
patient experience, and improve and align data collection.
    Response: We appreciate the commenters' support in requiring the 
proposed SDOH assessment items at admission only. We continually assess 
the implementation of the new SDOH assessment items as part of our 
routine assessment item and measure monitoring work, and when we 
identify an opportunity to improve data collection, we want to 
implement it. In the FY 2025 IRF Proposed Rule (89 FR 22281 and 22282), 
we proposed to collect these new and modified

[[Page 64327]]

assessment items at admission only because we believe it is unlikely 
that the assessment of these items at admission would differ from the 
assessment of the same items at discharge. We are mindful of provider 
burden and appreciate the support from several commenters who agreed 
that collection at admission only, rather than at both admission and 
discharge, would mitigate the administrative burden of data collection 
on these new and modified assessment items.
    Comment: Two commenters suggested CMS offer flexibility for IRFs on 
how to collect the proposed SDOH assessment items, and not mandate the 
assessment items on the AHC HRSN Screening Tool. One of the commenters 
stated that they believed CMS' focus should be on whether the 
information is collected and less on the specific vendor or tool used 
for collection. The other commenter noted that flexibility in gathering 
screening information would allow IRFs to use their own methods of 
identifying patients' needs and the best time to collect this 
information.
    Three commenters noted that CMS already collects many of the 
proposed SDOH assessment items from other health care providers, such 
as hospitals or other post-acute providers, prior to an IRF stay. These 
commenters recommended CMS allow IRF-PAI responses to be based upon 
data already collected in other settings of the hospital or health 
system when it is available prior to admission at an IRF to avoid 
unnecessary duplication of screenings and assessments.
    Response: We interpret these commenters to be suggesting that CMS 
should allow IRFs to obtain information collected in previous 
healthcare settings, rather than requiring IRFs to obtain this 
information from the patient upon the patient's admission to the IRF. 
We appreciate that many IRFs may share electronic health record systems 
with referring hospitals. However, we proposed the collection of these 
assessment items through patient interview in an effort to increase the 
patient's voice in the assessment process and the IRF QRP. Obtaining 
information about the Living Situation, Food, Utilities, and 
Transportation assessment items directly from the patient, sometimes 
called ``hearing the patient's voice,'' is more reliable and accurate 
than obtaining it from a health care provider that previously cared for 
the patient for several reasons: the IRF would not know whether it was 
collected from the patient or from a family member or other source; the 
IRF would not know how the SDOH domain was defined--for example, 
whether utilities included electricity, gas, oil, or water or only 
asked about electricity; and the IRF would not be able to determine 
whether the potential problem had been resolved since then. Most 
importantly, we believe that by asking the patient these questions at 
admission, it may prompt further discussion with the patient about 
their needs and help formulate an appropriate discharge care plan.
    We also want to clarify that the proposed SDOH assessment items 
will not require the use of a new collection tool, because the 
assessment items will be collected through the IRF-PAI, in the same way 
other standardized patient assessment data elements are collected. IRFs 
may use different methods to collect the information from the patient, 
as long as they are consistent with the coding guidance and defined 
lookback periods in the IRF-PAI manual. As we develop guidance for 
these new assessment items, we will utilize the feedback received in 
these comments.
    Comment: Several commenters offered suggestions or recommendations 
for guidance related to collecting the proposed SDOH assessment items. 
One commenter recommended that CMS include coding logic to allow 
skipping the Utilities assessment item if a patient indicated that they 
do not have a steady place to live, since it would be inappropriate to 
ask about utilities if a patient has no place to live.
    Response: We appreciate all the comments we received about coding 
these proposed new and modified SDOH assessment items, including the 
Utilities assessment item. We proposed that IRFs would be required to 
collect and submit information on the four new assessment items, in 
order to have complete information. We do not agree that it would be 
inappropriate to ask about utilities just because a patient does not 
have a place to live at the time of the assessment. The patient may be 
living in temporary housing or a shelter, and gathering this 
information would still be important for their discharge planning.
    In response to the commenter who noted that patients may be 
uncomfortable sharing sensitive personal information with facility 
staff, we acknowledge that the proposed SDOH assessment items require 
the patient to be asked potentially sensitive questions. We also note 
that we proposed additional response options for these new and modified 
SDOH items for patients that decline to respond or are unable to 
respond. We encourage IRFs to assess all patients and select the 
appropriate response options for all SDOH assessment items.
    Comment: Some commenters were concerned that the proposed SDOH 
assessment items are not applicable to certain types of patients 
receiving care in the IRF setting, including patients younger than 18 
years old and patients requiring special accommodations. Many 
commenters highlighted that beginning October 1, 2024, IRFs will begin 
collecting IRF-PAI data on all patients regardless of payer and 
recommended that CMS exclude patients under 18 from these assessments 
because the proposed assessment items have not been validated or 
tailored for the pediatric and adolescent populations. One of these 
commenters stated the PRAPARE website Frequently Asked Questions (FAQs) 
stated, ``Currently there is no PRAPARE version that is specifically 
tailored for pediatrics/adolescents. There are health centers who have 
modified PRAPARE to be used with their pediatric and adolescent 
populations, which varies based on their staffing model and engagement 
of family members. The National NACHC team hopes to develop a 
Pediatric/Adolescent version of PRAPARE in the coming years.'' \99\
---------------------------------------------------------------------------

    \99\ https://prapare.org/faq/.
---------------------------------------------------------------------------

    Response: We are uncertain what the commenter's concerns are 
related to collecting the items adapted from the PRAPARE tool, Living 
Situation and Transportation, from patients younger than 18 years old, 
but we interpret the commenter to be concerned that these patients 
would be too young to provide a response or that these patients may be 
too young to own a house or have a driver's license, so the questions 
would not be applicable to them.
    In response to the potential concern that patients would be too 
young to provide a response, we highlight that there is growing 
recognition of the need for effective screening methods for HRSNs in 
all patient populations, including pediatrics and adolescents. Children 
are especially vulnerable to HRSNs, as poverty in childhood correlates 
to poor health outcomes.100 101 102 Although there is no 
standardized protocol for screening in

[[Page 64328]]

pediatric settings,\103\ organizations like the American Academy of 
Pediatrics provide toolkits with suggestions for a screening protocol. 
Housing and transportation have been identified by hospitals and 
clinics 104 105 that care for pediatric and adolescent 
patients as an important area to screen. One hospital system began 
using the AHC HRSN Screening Tool, including the proposed Living 
Situation and Transportation item, during selected well child visits at 
a Federally Qualified Health Center, and found the tool was feasible to 
administer and identified more than a third of patients with one or 
more HRSNs.\106\
---------------------------------------------------------------------------

    \100\ Feltner C WI, Berkman N, et al. Screening for Intimate 
Partner Violence, Elder Abuse, and Abuse of Vulnerable Adults: An 
Evidence Review for the U.S. Preventive Services Task Force Agency 
for Healthcare Research and Quality. 2018. Available at https://www.ncbi.nlm.nih.gov/books/NBK533720/.
    \101\ National Academy of Science EaM. A Roadmap to Reducing 
Child Poverty. The National Academies; 2019.
    \102\ Wise PH. Child poverty and the promise of Human Capacity: 
childhood as a foundation for healthy aging. Acad Pediatr. 
2016;16(suppl 3):S37-S45.
    \103\ Boch S, Keedy H, Chavez L, et al. An integrative review of 
social determinants of health screenings used in primary care 
settings. J Health Care Poor Underserved. 2020;31:603-622.
    \104\ Halpin, K, Colvin, JD, Clements, MA, et al. Outcomes of 
Health-Related Social Needs Screening in a Midwest Pediatric 
Diabetes Clinic Network. Diabetes. 2023; Vol. 72; Iss: Supplement 1.
    \105\ Nerlinger, AL, Kopsombut, G. Social determinants of health 
screening in pediatric healthcare settings. Curr Opin Pediatr. 2023 
Feb 1;35(1):14-21. Doi: 10.1097/MOP.0000000000001191.
    \106\ Gray, T.W., Podewils, L.J., Rasulo, R.M., Weiss, R.P., 
Tomcho M.M. Examining the Implementation of Health-Related Social 
Need (HRSN) Screenings at a Pediatric Community Health Center. 
Journal of Primary Care & Community Health. 2023. Volume 14: 1-8. 
https://doi.org/10.1177/21501319231171519.
---------------------------------------------------------------------------

    In response to the potential concern that the question would not be 
applicable to these patients because they may be too young to own a 
house or have a driver's license, we believe that even if a patient 
younger than 18 years old cannot own a house or drive themselves, they 
may rely on others, or they may live in shelters and use public 
transportation. As a result, they may still have living situation and 
transportation access needs that should be identified.
    Finally, we interpret the second part of the comment to be 
recommending that CMS modify the response options to collect 
information about patients requiring special transportation 
accommodations. We note that although the proposal would require IRFs 
to collect the modified Transportation assessment item as described in 
section VIII.F.2. of this final rule, such collection could potentially 
prompt the IRF to initiate conversations with its patients about their 
potential Transportation needs, such as special accommodations a 
patient may need to access transportation. Additionally, IRFs may seek 
to collect any additional information that they believe may be relevant 
to their patient population in order to inform their care and discharge 
planning process.
    Comment: Several commenters were also concerned that the proposed 
SDOH assessment items will be challenging for IRF patients to respond 
to, considering that many IRF patients have cognitive deficits as a 
result of a traumatic injury or are more severely ill than the average 
Medicare beneficiary for which the screening tool was developed. One of 
these commenters recommended that CMS reassess the wording and response 
options for the SDOH assessment items to account for these patients.
    Response: We interpret the comments to be recommending that CMS 
reassess the wording and response options for the proposed SDOH 
assessment items to account for these patients with cognitive 
impairment. However, we believe IRFs are accustomed to working with 
patients with very complex medical conditions, including traumatic 
brain injury, stroke, and others, and we are confident in their ability 
to collect this data in a consistent manner. There are currently 
several patient interview assessment items on the IRF-PAI, and IRFs are 
accustomed to administering these questions to cognitively impaired 
patients.
    We also plan to provide training resources in advance of the 
initial collection of the assessment items to ensure that IRFs have the 
tools necessary to administer the new SDOH assessment items and reduce 
the burden to IRFs in creating their own training resources. These 
training resources may include online learning modules, tip sheets, 
questions and answers documents, and/or recorded webinars and videos, 
and would be available to providers as soon as technically feasible.
    After careful consideration of public comments we received, we are 
finalizing our proposal to require IRFs to collect and submit data on 
the following items adopted as standardized patient assessment data 
elements under the SDOH category at admission only beginning with the 
FY 2028 IRF QRP: (1) Living Situation as described in section 
VIII.C.3(a) of this final rule; (2) Food as described in section 
VIII.C.3(b) of this final rule; and (3) Utilities as described in 
section VIII.C.3(c) of this final rule. We are also finalizing our 
proposal to require IRFs to collect and submit the modified 
standardized patient assessment data element, Transportation, at 
admission only beginning October 1, 2026, with the FY 2028 IRF QRP as 
described in section VIII.C.5 and VIII.E.2. of this final rule.
3. Removal of the Admission Class Item From the IRF-PAI Beginning 
October 1, 2026.
(a) Background
    In the CY 2002 PPS for IRFs final rule (66 FR 41324 through 41342), 
we finalized the use of the IRF-PAI, through which IRFs are now 
required to collect and electronically submit patient data for all 
Medicare Part A FFS and Medicare Part C (Medicare Advantage) patients 
admitted and discharged from an IRF through September 30, 2024 \107\ 
and for all patients regardless of payer beginning October 1, 
2024.\108\ Item 14-Admission Class has been included on the IRF-PAI 
since the IRF-PAI was first implemented and is completed only at 
admission. The most recent version of the IRF-PAI is available for 
reference on the IRF-PAI and IRF QRP Manual web page at https://www.cms.gov/medicare/quality/inpatient-rehabilitation-facility/irf-pai-and-irf-qrp-manual. Item 14-Admission Class, includes the following 
response options: (i) Initial Rehab; (iii) Readmission; (iv) Unplanned 
Discharge; and (v) Continuing Rehabilitation.
---------------------------------------------------------------------------

    \107\ In the FY 2010 IRF PPS final rule (74 FR 39798 through 
39800), CMS revised the regulation text in Sec. Sec.  412.604, 
412.606, 412.610, 412.614, and 412.618 to require that all IRFs 
submit IRF-PAI data on all of their Medicare Part C patients.
    \108\ In the FY 2023 IRF PPS final rule (87 FR 47073 through 
47092), CMS revised the regulation text in Sec. Sec.  412.604, 
412.606, 412.610, 412.614, and 412.618 to require that all IRFs 
submit IRF-PAI data on each patient receiving care in an IRF, 
regardless of payer.
---------------------------------------------------------------------------

(b) Removal of Item
    We routinely review item sets for redundancies and identify 
opportunities to simplify data submission requirements. We proposed to 
remove Item 14-Admission Class entirely from the IRF-PAI, beginning 
October 1, 2026. We identified this item is currently not used in the 
calculation of quality measures already adopted in the IRF QRP. It is 
also not used for previously established purposes unrelated to the IRF 
QRP, such as payment, survey, or care planning.
    We invited public comment on the proposal to remove Item 14-
Admission Class from the IRF-PAI, effective October 1, 2026.
    The following is a summary of the public comments received on the 
proposal and our responses:
    Comment: Most commenters supported the proposal to remove Item 14-
Admission Class from the IRF-PAI, pointing to its lack of value to the 
assessment process. One of these commenters appreciated CMS' review of 
the IRF-PAI to identify potential items for removal. The other 
commenters

[[Page 64329]]

acknowledged that the proposed removal aligns with CMS' commitment to 
reducing administrative burden and agreed that it would result in a 
reduction in administrative burden.
    Response: We thank the commenters for their support of the proposed 
removal of Item 14-Admission Class and agree that the removal of this 
item will reduce administrative burden for IRFs.
    Comment: Four commenters suggested that CMS perform additional 
analysis of the IRF-PAI and other PAC patient assessment tools to 
identify additional items that could be removed.
    Response: As part of our routine item and measure monitoring work, 
we continually assess the implementation of items collected on the IRF-
PAI. We will continue to look for opportunities to improve data 
collection using the IRF-PAI, including considering items to remove 
from the IRF-PAI in order to reduce administrative burden.
    Comment: Three commenters expressed concerns about removing the 
item and its potential impact on data collection requirements. They 
noted that response option (4) Unplanned Discharges is used to activate 
a skip pattern for incomplete stays in the IRF-PAI data specifications. 
These commenters suggested CMS conduct an impact analysis to identify 
the implications of the item removal. Two commenters suggested CMS 
modify the item, instead of removing it, to track incomplete stays and 
use the item to trigger skip patterns across the IRF-PAI in cases of 
unplanned discharges.
    Response: We acknowledge the commenters' concerns about the item's 
use with triggering skip patterns in the data specifications, but the 
data specifications currently include a means to identify incomplete 
stays that does not rely on Item 14-Admission Class. Therefore, this 
item is not necessary. Additionally, as we noted in the proposed rule 
and this section of this final rule, we have identified that this item 
is currently not used in the calculation of quality measures already 
adopted in the IRF QRP, nor is it used for previously established 
purposes unrelated to the IRF QRP, such as payment, survey, or care 
planning. Therefore, its removal will not have an impact in our data, 
such as activation of a skip pattern for incomplete stays. 
Additionally, we conduct regular item monitoring and carefully consider 
the downstream implications of removing any item from the IRF-PAI. 
Accordingly, prior to proposing removal of this item, we analyzed CY 
2023 assessment data and confirmed less than one percent of IRF-PAI 
admission assessments are coded as incomplete stays using Item 14-
Admission Class. CMS will continue to monitor and assess changes 
resulting from removal of this item to ensure there are no unintended 
consequences or added burden to providers.
    Comment: One commenter suggested that CMS remove the item from the 
IRF-PAI beginning October 1, 2024, instead of the proposed October 1, 
2026 date. This commenter noted that delaying the removal of the Item 
14-Admission Class item until October 1, 2026 is unreasonable provided 
IRFs are still required to collect and submit data for the Admission 
Class item even though CMS is not utilizing the information.
    Response: We appreciate the commenter's suggestion, but we proposed 
October 1, 2026, to effectuate this change. Removing an item from the 
IRF-PAI has downstream logistical implications, such as changes to data 
submission specifications, updates to the assessment instruments, 
revisions to the IRF-PAI guidance manual, and provider training, if 
necessary. For example, we finalized and published the IRF-PAI 4.2 item 
set that will be effective October 1, 2024, almost 12 months before the 
October 12, 2023, to allow providers adequate time for preparation. The 
IRF-PAI Manual Version 4.0 was published over 7 months before the 
October 1, 2024 on February 1, and the IRF data specifications V5.00.1 
were published over 4 months before the October 1, 2024 on May 25, 
2024. Additionally, to allow for adequate time to draft, test and 
implement item set changes, we typically follow a 2-year cycle of 
updates to the item sets. Therefore, IRFs will continue to see Item 14-
Admission Class on the IRF-PAI until the next release of the IRF-PAI on 
October 1, 2026.
    However, we acknowledge that there is no longer a need to collect 
this information at admission. Therefore, we are finalizing our 
proposal with modification to reflect that IRFs would no longer be 
required to collect Item 14-Admission Class at admission beginning with 
patients admitted on October 1, 2024. Item 14-Admission Class is not a 
standardized patient assessment data element and therefore its 
completion does not have an impact on an IRF's annual compliance 
determination for the IRF QRP.
    After careful consideration of public comments we received, we are 
finalizing our proposal to remove Item 14-Admission Class from the IRF-
PAI with modification. Specifically, while we are finalizing our 
proposal to remove Item 14-Admission Class from the IRF-PAI effective 
October 1, 2026 as proposed, IRFs will no longer be required to collect 
and submit data on this Item 14-Admission Class beginning with patients 
admitted on October 1, 2024.

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

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

IX. Collection of Information Requirements

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

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

    An IRF that does not meet the requirements of the IRF QRP for a 
fiscal year will receive a 2-percentage point reduction to its 
otherwise applicable annual increase factor for that fiscal year.
    In section VII.C. of the proposed rule, we proposed to adopt four 
items as standardized patient assessment data elements and modify one 
item currently collected and submitted as a standardized patient 
assessment data element beginning with the FY 2028 IRF QRP. In section 
VII.F.3. of the proposed rule, we proposed to remove one item,

[[Page 64330]]

Item 14-Admission Class, from the IRF-PAI.
    As stated in sections VIII.C.3. and VIII.C.5. of this final rule, 
we proposed to adopt four items as standardized patient assessment data 
elements and modify one item currently collected and submitted as a 
standardized patient assessment data element beginning with the FY 2028 
IRF QRP. The four new and modified items would be collected and 
submitted using the IRF-PAI. The IRF-PAI, in its current form, has been 
approved under OMB control number 0938-0842.\109\ Four items will need 
to be added to the IRF-PAI at admission to allow for collection of 
these data, and one item would be modified. Additionally, as stated in 
section VIII.F.2. of this final rule, we proposed that IRFs would 
submit the four new items and one modified item at admission only. The 
net result of collecting and submitting four new items at admission, 
modifying the Transportation item (including the modification that this 
item be collected at admission only, rather than at admission and 
discharge is an increase of 0.9 minutes or 0.015 hour of clinical staff 
time at admission [(4 items x 0.005 hour) minus (1 item x 0.005 hour)]. 
We identified the staff type based on past IRF burden calculations, and 
our assumptions are based on the categories generally necessary to 
perform an assessment. We believe that the items would be completed 
equally by a Registered Nurse (RN) (50 percent of the time) and a 
Licensed Practical and Licensed Vocational Nurse (LPN/LVN) (50 percent 
of the time). However, IRFs determine the staffing resources necessary.
---------------------------------------------------------------------------

    \109\ https://www.reginfo.gov/public/do/DownloadNOA?requestID=494186.
---------------------------------------------------------------------------

    For the purposes of calculating the costs associated with the 
collection of information requirements, we obtained median hourly wages 
for these staff from the U.S. Bureau of Labor Statistics' (BLS) May 
2022 National Occupational Employment and Wage Estimates.\110\ To 
account for other indirect costs and fringe benefits, we doubled the 
hourly wage. These amounts are detailed in Table 15. We established a 
composite cost estimate using our adjusted wage estimates. The 
composite estimate of $65.31/hr was calculated by weighting each 
adjusted hourly wage equally (that is, 50 percent) [($78.10/hr x 0.5) + 
($52.52/hr x 0.5) = $65.31].
---------------------------------------------------------------------------

    \110\ U.S. Bureau of Labor Statistics' (BLS) May 2022 National 
Occupational Employment and Wage Estimates. https://www.bls.gov/oes/current/oes_nat.htm.

   Table 15--U.S. Bureau of Labor and Statistics' May 2022 National Occupational Employment and Wage Estimates
----------------------------------------------------------------------------------------------------------------
                                                                                  Other indirect
                                                    Occupation     Median hourly     costs and       Adjusted
                Occupation title                       code         wage ($/hr)   fringe benefit  hourly wage ($/
                                                                                      ($/hr)            hr)
----------------------------------------------------------------------------------------------------------------
Registered Nurse (RN)...........................         29-1141          $39.05          $39.05          $78.10
Licensed Practical and Licensed Vocational Nurse         29-2061           26.26           26.26           52.52
 (LPN/LVN)......................................
----------------------------------------------------------------------------------------------------------------

    We estimated that the burden and cost for IRFs for complying with 
requirements of the FY 2028 IRF QRP would increase under this proposal. 
Using FY 2023 data, we estimate a total of 571,151 admissions to and 
512,677 planned discharges from 1,160 IRFs annually for an increase of 
8,859.64 hours in burden for all IRFs [(571,151 x 0.02 hour) 
admissions-(512,677 x 0.005 hour) planned discharges]. Given 0.02 hour 
at $65.31 per hour to complete an average of 492 IRF-PAI admission 
assessments per IRF per year minus 0.005 at $65.31 per hour to complete 
an average of 442 IRF-PAI Planned Discharge assessments per IRF per 
year, we estimate the total cost will be increased by $498.81 per IRF 
annually, or $578,622.76 for all IRFs annually.
    In section VIII.F.3. of this final rule, we proposed to remove one 
item, Item 14-Admission Class, from the IRF-PAI beginning October 1, 
2026. We believe that the removal of Item 14-Admission Class will 
result in a decrease of 18 seconds (0.3 minutes or 0.005 hours) of 
clinical staff time at admission beginning with the FY 2028 IRF QRP. We 
believe the IRF-PAI item, Item 14-Admission Class, is completed equally 
by a Registered Nurse (RN) and a Licensed Practical and Licensed 
Vocational Nurse (LPN/LVN). Individual IRFs determine the staffing 
resources necessary.
    We estimated that the burden and cost for IRFs for complying with 
requirements of the FY 2028 IRF QRP will decrease under this proposal 
in section VIII.F.3. Specifically, we believe that there will be a 2.46 
hour decrease in clinical staff time to report data for each IRF-PAI 
completed at admission. Using data from FY 2023, we estimated 571,151 
admission assessments from 1,160 IRFs annually. This equates to a 
decrease of 2,855.76 hours in burden at admission for all IRFs (0.005 
hour x 571,151 admissions). Given 0.005 hour at $65.31 per hour to 
complete an average of 492 IRF-PAI admission assessments per IRF per 
year, we estimated the total cost will be decreased by $160.78 
($186,509.36 total decrease/1,160 IRFs) per IRF annually, or 
$186,509.36 for all IRFs annually, based on the proposal to remove one 
item from the IRF-PAI.
    In summary, under OMB control number 0938-0842, the changes to the 
IRF QRP will result in a burden increase of $338.03 per IRF 
($392,113.40/1,160 IRFs). The total cost increase related to this 
proposed information collection is approximately $392,113.40 and is 
summarized in Table 16.

[[Page 64331]]



                Table 16--Estimated Change in Burden Associated with OMB Control Number 0938-0842
----------------------------------------------------------------------------------------------------------------
                                                           Per IRF                          All IRFs
                                              ------------------------------------------------------------------
                                                  Estimated                       Estimated
                 Requirement                      change in       Estimated       change in     Estimated change
                                                annual burden     change in     annual burden    in annual cost
                                                    hours        annual cost        hours
----------------------------------------------------------------------------------------------------------------
Collection of Four New Items as Standardized            +7.64        +$498.81       +8,859.64       +$578,622.76
 Patient Assessment Data Elements and
 Modification of One Item Collected as a
 Standardized Patient Assessment Data Element
 beginning with the FY 2028 IRF QRP..........
Removal of Item 14-Admission Class item                 -2.46        -$160.78       -2,855.76       -$186,509.36
 effective October 1, 2026...................
Change in burden for the IRF QRP associated              5.18         $338.03        6,003.88        $392,113.40
 with 0938-0842..............................
----------------------------------------------------------------------------------------------------------------

    We invited public comments on the proposed information collection 
requirements. The following is a summary of the public comments 
received on the proposed information collection requirements as well as 
our responses.
    Comment: Three commenters urged CMS to update its estimate of the 
change in burden resulting from these new IRF QRP changes to account 
for the costs associated with training and education, time required to 
administer and reconcile patient assessments, and costs associated with 
software development and other required technical updates. One of these 
commenters specifically noted they do not believe the estimate 
accurately reflects the time to conduct patient interviews and 
reconcile information from the patient nor does it account for the 
costs associated with software development and other technology that 
will make the collection of this information easier and timelier for 
IRFs and other providers.
    Response: We acknowledge that the net effect of our policies 
finalized in this final rule is an increase of $338.03 per IRF per 
year.
    The burden estimate for the proposed SDOH items is based on past 
IRF burden calculations and represents the time it takes to encode the 
IRF-PAI. As the commenter pointed out in their example, the patient 
must be assessed and information gathered. After the patient assessment 
is completed, the IRF-PAI is coded with the information and submitted 
to the internet Quality Improvement and Evaluation System (iQIES), and 
it is these steps (after the patient assessment) that the estimated 
burden and cost captures. This method is consistent with past 
collection of information estimates.\111\
---------------------------------------------------------------------------

    \111\ FY 2016 IRF PPS proposed rule https://www.federalregister.gov/citation/80-FR-23390 (80 FR 23390).
---------------------------------------------------------------------------

    We also note that some IRFs will incur a higher cost than was 
estimated due to their size and volume of admissions, and some IRFs 
will incur a lower cost. Regarding the comments about IRFs' costs 
associated with training and education, time required to administer and 
reconcile patient assessments, and costs associated with software 
development and other required technical updates, CMS continually looks 
for opportunities to minimize burden associated with collection and 
submission of the IRF-PAI for information users through strategies that 
simplify collection and submission requirements. This includes 
standardizing instructions, providing a help desk, hosting a dedicated 
web page, communication strategies, free data specifications, and free 
on-demand reports. We describe each of those below and how they will 
potentially reduce new burden on IRFs collecting and submitting these 
new and modified SDOH assessment items.
    First, we will standardize the collection instructions for the new 
and modified SDOH assessment items across all IRFs, ensuring that all 
instructions and notices are written in plain language, and by 
providing step-by-step examples for completing the IRF-PAI. Second, CMS 
provides a dedicated help desk to support users and respond to 
questions about the data collection, and IRFs can utilize this help 
desk when they have questions about the new and modified SDOH 
assessment items. Third, a dedicated IRF QRP web page houses multiple 
modes of tools, such as instructional videos, case studies, user 
manuals, and frequently asked questions. We plan to update this web 
page with new resources to support IRFs' understanding of the new SDOH 
assessment items and the modified assessment item as soon as 
technically feasible, and these resources will be available to all 
users of the IRF-PAI. Fourth, CMS utilizes a listserv to facilitate 
outreach to users, such as communicating timely and important new 
material(s), and we will use those outreach resources when providing 
training and information about the new and modified SDOH assessment 
items. Fifth, CMS creates data collection and submission specifications 
for IRF electronic health record (EHR) software available free of 
charge to all IRFs and their technology partners, and these will be 
updated to incorporate the new and modified SDOH assessment items. 
Finally, CMS provides IRFs with a free internet-based system through 
which users can access on-demand reports for feedback about the IRFs' 
compliance with collection and submission of the new and modified SDOH 
assessment items associated with their facility.
    Comment: One commenter urged CMS to recognize that administrative 
requirements are already overburdening the IRF workforce and 
incorporating these new standardized patient assessment data elements 
would further decrease resources from patient care. This commenter 
reported that it currently takes an average of 45 minutes per patient 
to pull information and scores and enter them into the IRF-PAI. This 
commenter noted that the 45 minutes of time does not include the time 
it takes their staff to complete their assessments that contribute to 
the IRF-PAI, and completing assessments for patients with cognitive 
deficits takes even longer.
    Response: As the commenter pointed out in their example, the 
patient must be assessed, and information gathered. We disagree that 
this policy, if finalized, will take time away from patient care. The 
new assessment items (Living Situation, Food, and Utilities) are all 
important pieces of information to developing and administering a 
comprehensive plan of care in accordance with Sec.  412.606. Rather 
than taking time away from patient care, providers will be documenting 
information they are likely already collecting through the course of 
providing care to the patients.
    After the patient assessment is completed, the IRF-PAI is coded 
with the information and submitted to the CMS system, and it is these 
steps (after

[[Page 64332]]

the patient assessment) that the estimated burden and cost captures. As 
we stated in section IX.A. of this final rule, our assumptions for 
staff type were based on the categories generally necessary to perform 
an assessment, and subsequently encode it, which is consistent with 
past collection of information estimates.\112\ While we acknowledge 
that some IRFs may train and utilize other personnel, our estimates are 
based on the categories of personnel necessary to complete the IRF-PAI.
---------------------------------------------------------------------------

    \112\ FY 2016 IRF PPS proposed rule (80 FR 23390).
---------------------------------------------------------------------------

    We also note that the commenter's estimate of the time it takes its 
members to code the IRF-PAI (45 minutes) is consistent with the total 
time we report in our Paperwork Reduction Act (PRA) package (0938-
0842). We estimate the next version of the IRF-PAI will take an average 
of 1 hour and 47 minutes per IRF-PAI assessment which includes the time 
to review instructions, search existing data resources, gather the data 
needed, and complete and review the information collection.
    After considering the public comments received, and for the reasons 
outlined in this section of the final rule and our comment responses, 
we are finalizing our proposal to remove Item 14-Admission Class from 
the IRF-PAI with modification. Specifically, while we are finalizing 
our proposal to remove Item 14-Admission Class from the IRF-PAI 
effective October 1, 2026 as proposed, IRFs will no longer be required 
to collect and submit data on this Item 14-Admission Class beginning 
with patients admitted on October 1, 2024. We are also finalizing our 
proposal to collect and submit data on the following items adopted as 
standardized patient assessment data elements under the SDOH category 
at admission only beginning with October 1, 2026 IRF admissions: (1) 
Living Situation as described in section VIII.C.3(a) of this final 
rule; (2) Food as described in section VIII.C.3(b) of this final rule; 
and (3) Utilities as described in section VIII.C.3(c) of this final 
rule. We are also finalizing our proposal to collect and submit the 
modified standardized patient assessment data element, Transportation, 
at admission only beginning with October 1, 2026, IRF admissions as 
described in section VIII.C.5 of this final rule.

X. Regulatory Impact Analysis

A. Statement of Need

    This final rule updates the IRF prospective payment rates for FY 
2025 as required under section 1886(j)(3)(C) of the Act and in 
accordance with section 1886(j)(5) of the Act, which requires the 
Secretary to publish in the Federal Register on or before August 1 
before each FY, the classification and weighting factors for CMGs used 
under the IRF PPS for such FY and a description of the methodology and 
data used in computing the prospective payment rates under the IRF PPS 
for that FY. This final rule will also implement section 1886(j)(3)(C) 
of the Act, which requires the Secretary to apply a productivity 
adjustment to the market basket percentage increase for FY 2012 and 
subsequent years.
    Furthermore, this final rule adopts policy changes to the IRF QRP 
under the statutory discretion afforded to the Secretary under section 
1886(j)(7) of the Act. This rule updates the IRF QRP requirements 
beginning with the FY 2028 IRF QRP.

B. Overall Impact

    We have examined the impacts of this rule as required by Executive 
Order 12866 on Regulatory Planning and Review (September 30, 1993), 
Executive Order 13563 on Improving Regulation and Regulatory Review 
(January 18, 2011), Executive Order 14094 on Modernizing Regulatory 
Review (April 6, 2023), the Regulatory Flexibility Act (RFA) (September 
19, 1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, 
section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 
1995; Pub. L. 104-4), and Executive Order 13132 on Federalism (August 
4, 1999) and the Congressional Review Act (5 U.S.C. 804(2)).
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 14094 (Modernizing Regulatory Review) amends section 3(f)(1) of 
Executive Order 12866 (Regulatory Planning and Review). The amended 
section 3(f) of Executive Order 12866 defines a ``significant 
regulatory action'' as an action that is likely to result in a rule: 
(1) having an annual effect on the economy of $200 million or more in 
any 1 year (adjusted every 3 years by the Administrator of OMB's Office 
of Information and Regulatory Affairs (OIRA) for changes in gross 
domestic product), or adversely affect in a material way the economy, a 
sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local, territorial, or 
Tribal governments or communities; (2) creating a serious inconsistency 
or otherwise interfering with an action taken or planned by another 
agency; (3) materially altering the budgetary impacts of entitlement 
grants, user fees, or loan programs or the rights and obligations of 
recipients thereof; or (4) raise legal or policy issues for which 
centralized review would meaningfully further the President's 
priorities or the principles set forth in the Executive order, as 
specifically authorized in a timely manner by the Administrator of OIRA 
in each case.
    A regulatory impact analysis (RIA) must be prepared for major rules 
with significant regulatory action/s and/or with significant effects as 
per section 3(f)(1) ($200 million or more in any 1 year). We estimate 
the total impact of the policy updates described in this final rule by 
comparing the estimated payments in FY 2025 with those in FY 2024. This 
analysis results in an estimated $280 million increase for FY 2025 IRF 
PPS payments. Additionally, we estimated that costs associated with 
updating the reporting requirements under the IRF QRP result in an 
estimated $392,113.40 additional cost for IRFs in FY 2026 for purposes 
of meeting the FY 2028 IRF QRP. Based on our estimates, OMB's Office of 
Information and Regulatory Affairs has determined this rulemaking is 
significant per section 3(f)(1) as measured by the $200 million or more 
in any 1 year, and hence also a major rule under Subtitle E of the 
Small Business Regulatory Enforcement Fairness Act of 1996 (also known 
as the Congressional Review Act). Accordingly, we have prepared an RIA 
that, to the best of our ability, presents the costs and benefits of 
the rulemaking.

C. Anticipated Effects

1. Effects on IRFs
    The RFA requires agencies to analyze options for regulatory relief 
of small entities, if a rule has a significant impact on a substantial 
number of small entities. For purposes of the RFA, small entities 
include small businesses, nonprofit organizations, and small 
governmental jurisdictions. Most IRFs and most other providers and 
suppliers are small entities, either by having revenues of $9.0 million 
to $47.0 million or less in any 1 year depending on industry 
classification, or by being nonprofit organizations that are not 
dominant in their markets. (For details, see the Small Business 
Administration's final rule that set forth size standards for health 
care industries, at 65 FR 69432 at

[[Page 64333]]

https://www.sba.gov/sites/default/files/2019-08/SBA%20Table%20of%20Size%20Standards_Effective%20Aug%2019%2C%202019_Rev.pdf, effective January 1, 2017, and updated on August 19, 2019.) Because 
we lack data on individual hospital receipts, we cannot determine the 
number of small proprietary IRFs or the proportion of IRFs' revenue 
that is derived from Medicare payments. Therefore, we assume that all 
IRFs (an approximate total of 1,160 IRFs, of which approximately 50 
percent are nonprofit facilities) are considered small entities and 
that Medicare payment constitutes the majority of their revenues. HHS 
generally uses a revenue impact of 3 to 5 percent as a significance 
threshold under the RFA. As shown in Table 17, we estimate that the net 
revenue impact of the final rule on all IRFs is to increase estimated 
payments by approximately 2.8 percent. The rates and policies proposed 
in this rule would not have a significant impact (not greater than 5 
percent) on a substantial number of small entities. The estimated 
impact on small entities is shown in Table 17. MACs are not considered 
to be small entities. Individuals and States are not included in the 
definition of a small entity.
    In addition, section 1102(b) of the Act requires us to prepare an 
RIA if a rule may have a significant impact on the operations of a 
substantial number of small rural hospitals. This analysis must conform 
to the provisions of section 604 of the RFA. For purposes of section 
1102(b) of the Act, we define a small rural hospital as a hospital that 
is located outside of a Metropolitan Statistical Area and has fewer 
than 100 beds. As shown in Table 17, we estimate that the net revenue 
impact of this final rule on rural IRFs is to increase estimated 
payments by approximately 4.9 percent based on the data of the 131 
rural units and 13 rural hospitals in our database of 1,160 IRFs for 
which data were available. We estimate an overall impact for rural IRFs 
in all areas between 1.4 percent and 10.7 percent. As a result, we 
anticipate that this final rule will not have a significant negative 
impact on a substantial number of small entities.
    Section 202 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 
104-04, enacted March 22, 1995) (UMRA) also requires that agencies 
assess anticipated costs and benefits before issuing any rule whose 
mandates require spending in any 1 year of $100 million in 1995 
dollars, updated annually for inflation. In 2024, that threshold is 
approximately $183 million. This final rule does not mandate any 
requirements for State, local, or Tribal governments, or for the 
private sector.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it issues a proposed rule (and subsequent final 
rule) that imposes substantial direct requirement costs on State and 
local governments, preempts State law, or otherwise has federalism 
implications. As stated, this final rule will not have a substantial 
effect on State and local governments, preempt State law, or otherwise 
have a federalism implication.
2. Detailed Economic Analysis
    This final rule updates the IRF PPS rates contained in the FY 2024 
IRF PPS final rule (88 FR 50956). Specifically, this final rule updates 
the CMG relative weights and ALOS values, the wage index, and the 
outlier threshold for high-cost cases. This final rule will apply a 
productivity adjustment to the FY 2025 IRF market basket percentage 
increase in accordance with section 1886(j)(3)(C)(ii)(I) of the Act.
    We estimate that the impact of the changes and updates described in 
this final rule will be a net estimated increase of $280 million in 
payments to IRFs. The impact analysis in Table 17 of this final rule 
represents the projected effects of the updates to IRF PPS payments for 
FY 2025 compared with the estimated IRF PPS payments in FY 2024. We 
determined the effects by estimating payments while holding all other 
payment variables constant. We use the best data available, but we do 
not attempt to predict behavioral responses to these changes, and we do 
not make adjustments for future changes in such variables as number of 
discharges or case-mix.
    We note that certain events may combine to limit the scope or 
accuracy of our impact analysis, because such an analysis is future-
oriented and, thus, susceptible to forecasting errors because of other 
changes in the forecasted impact time period. Some examples could be 
legislative changes made by the Congress to the Medicare program that 
would impact program funding, or changes specifically related to IRFs. 
Although some of these changes may not necessarily be specific to the 
IRF PPS, the nature of the Medicare program is such that the changes 
may interact, and the complexity of the interaction of these changes 
could make it difficult to predict accurately the full scope of the 
impact upon IRFs.
    In updating the rates for FY 2025, we are implementing the standard 
annual revisions described in this final rule (for example, the update 
to the wage index and market basket percentage increase used to adjust 
the Federal rates). We are also reducing the FY 2025 IRF market basket 
percentage increase by a productivity adjustment in accordance with 
section 1886(j)(3)(C)(ii)(I) of the Act. We estimate the total increase 
in payments to IRFs in FY 2025, relative to FY 2024, will be 
approximately $280 million.
    This estimate is derived from the application of the FY 2025 IRF 
market basket percentage increase, reduced by a productivity adjustment 
in accordance with section 1886(j)(3)(C)(ii)(I) of the Act, which 
yields an estimated increase in aggregate payments to IRFs of $300 
million. However, there is an estimated $20 million decrease in 
aggregate payments to IRFs due to the update to the outlier threshold 
amount. Therefore, we estimate that these updates will result in a net 
increase in estimated payments of $280 million from FY 2024 to FY 2025.
    The effects of the updates that impact IRF PPS payment rates are 
shown in Table 17. The following updates that affect the IRF PPS 
payment rates are discussed separately below:
     The effects of the update to the outlier threshold amount, 
from approximately 3.2 percent to 3.0 percent of total estimated 
payments for FY 2025, consistent with section 1886(j)(4) of the Act.
     The effects of the annual market basket update (using the 
2021-based IRF market basket) to IRF PPS payment rates, as required by 
sections 1886(j)(3)(A)(i) and (j)(3)(C) of the Act, including a 
productivity adjustment in accordance with section 1886(j)(3)(C)(ii)(I) 
of the Act.
     The effects of applying the budget-neutral labor-related 
share and wage index adjustment, as required under section 1886(j)(6) 
of the Act, accounting for the permanent cap on wage index decreases 
when applicable.
     The effects of the budget-neutral changes to the CMG 
relative weights and ALOS values under the authority of section 
1886(j)(2)(C)(i) of the Act.
     The total change in estimated payments based on the FY 
2025 payment changes relative to the estimated FY 2024 payments.
3. Description of Table 17
    Table 17 shows the overall impact on the 1,160 IRFs included in the 
analysis.
    The next 12 rows of Table 17 contain IRFs categorized according to 
their geographic location, designation as either a freestanding 
hospital or a unit of a hospital, and by type of ownership; all urban, 
which is further divided into urban units of a hospital, urban

[[Page 64334]]

freestanding hospitals, and by type of ownership; and all rural, which 
is further divided into rural units of a hospital, rural freestanding 
hospitals, and by type of ownership. There are 1,016 IRFs located in 
urban areas included in our analysis. Among these, there are 653 IRF 
units of hospitals located in urban areas and 363 freestanding IRF 
hospitals located in urban areas. There are 144 IRFs located in rural 
areas included in our analysis. Among these, there are 131 IRF units of 
hospitals located in rural areas and 13 freestanding IRF hospitals 
located in rural areas. There are 498 for-profit IRFs. Among these, 
there are 463 IRFs in urban areas and 35 IRFs in rural areas. There are 
567 non-profit IRFs. Among these, there are 477 urban IRFs and 90 rural 
IRFs. There are 95 government-owned IRFs. Among these, there are 76 
urban IRFs and 19 rural IRFs.
    The remaining five parts of Table 17 show IRFs grouped by their 
urban or rural status before and after the application of the new CBSA 
delineations, by geographic location within a region, by teaching 
status, and by DSH patient percentage (PP). First, IRFs are categorized 
by their urban or rural designation before and after the updates to the 
OMB CBSA delineations. Second, IRFs located in urban areas are 
categorized for their location within a particular one of the nine 
Census geographic regions. Third, IRFs located in rural areas are 
categorized for their location within a particular one of the nine 
Census geographic regions. In some cases, especially for rural IRFs 
located in the New England, Mountain, and Pacific regions, the number 
of IRFs represented is small. IRFs are then grouped by teaching status, 
including non-teaching IRFs, IRFs with an intern and resident to 
average daily census (ADC) ratio less than 10 percent, IRFs with an 
intern and resident to ADC ratio greater than or equal to 10 percent 
and less than or equal to 19 percent, and IRFs with an intern and 
resident to ADC ratio greater than 19 percent. Finally, IRFs are 
grouped by DSH PP, including IRFs with zero DSH PP, IRFs with a DSH PP 
less than 5 percent, IRFs with a DSH PP between 5 and less than 10 
percent, IRFs with a DSH PP between 10 and 20 percent, and IRFs with a 
DSH PP greater than 20 percent.
    The estimated impacts of each policy described in this final rule 
to the facility categories listed are shown in the columns of Table 17. 
The description of each column is as follows:
     Column (1) shows the facility classification categories.
     Column (2) shows the number of IRFs in each category in 
our FY 2025 analysis file.
     Column (3) shows the number of cases in each category in 
our FY 2025 analysis file.
     Column (4) shows the estimated effect of the adjustment to 
the outlier threshold amount.
     Column (5a) shows the estimated effect of the FY 2025 
update to the IRF labor-related share, FY 2024 CBSA delineations, and 
FY 2025 wage index with the 5-percent cap, in a budget-neutral manner.
     Column (5b) shows the estimated effect of the FY 2025 
update to the IRF labor-related share, FY2025 CBSA delineations and FY 
2025 wage index with the 5-percent cap, in a budget-neutral manner. 
These updates are made without applying the rural adjustment to IRFs 
transitioning from urban to rural status under the new CBSA 
delineations or reducing the rural adjustment or IRFs transitioning 
from rural to urban status.
     Column (5c) shows the estimated effects of the 3-year 
phase-out of the rural adjustment for IRFs transitioning from rural to 
urban status under the new CBSA delineations and the application of the 
standard rural adjustment for IRFs transitioning to rural status.
     Column (6) shows the estimated effect of the update to the 
CMG relative weights and ALOS values, in a budget-neutral manner.
     Column (7) compares our estimates of the payments per 
discharge, incorporating all of the policies reflected in this final 
rule for FY 2025 to our estimates of payments per discharge in FY 2024.
    The average estimated increase for all IRFs is approximately 2.8 
percent. This estimated net increase includes the effects of the IRF 
market basket update for FY 2025 of 3.0 percent, which is based on a 
IRF market basket percentage increase of 3.5 percent, less a 0.5 
percentage point productivity adjustment, as required by section 
1886(j)(3)(C)(ii)(I) of the Act. It also includes the approximate 0.2 
percent overall decrease in estimated IRF outlier payments from the 
update to the outlier threshold amount. Since we are updating the IRF 
wage index, labor-related share and the CMG relative weights in a 
budget-neutral manner, we estimate there is no expected impact to total 
estimated IRF payments in aggregate. However, as described in more 
detail in each section, we estimate there will be expected impacts to 
the estimated distribution of payments among providers.

[[Page 64335]]

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[GRAPHIC] [TIFF OMITTED] TR06AU24.109

4. Impact of the Update to the Outlier Threshold Amount
    The estimated effects of the update to the outlier threshold 
adjustment are presented in column 4 of Table 17.
    For the FY 2025 proposed rule, we used preliminary FY 2023 IRF 
claims data and based on that preliminary analysis, we estimated that 
IRF outlier payments as a percentage of total estimated IRF payments 
would be 3.2 percent in FY 2024. As we typically do between the 
proposed and final rules each year, we updated our FY 2023 IRF claims 
data to ensure that we are using the most recent available data in 
setting IRF payments. Therefore, based on an updated analysis of the 
most recent IRF claims data for this final rule, we estimate that IRF 
outlier payments as a percentage of total estimated IRF payments are 
3.2 percent in FY 2024. Thus, we are adjusting the outlier threshold 
amount in this final rule to maintain total estimated outlier payments 
equal to 3 percent of total estimated payments in FY 2025.
    The estimated change in total IRF payments for FY 2025, therefore, 
includes an approximate 0.2 percentage point decrease in payments 
because the estimated outlier portion of total payments is estimated to 
decrease from approximately 3.2 percent to 3.0 percent.
    The impact of this update to the outlier threshold amount (as shown 
in column 4 of Table 17) is to decrease estimated overall payments to 
IRFs by 0.2 percentage point.
5. Impact of the Wage Index, Labor-Related Share, and Wage Index Cap
    In column 5a of Table 17, we present the effects of the budget-
neutral update of the wage index and labor-related share, taking into 
account the permanent 5-percent cap on wage index decreases when 
applicable, without taking into account the updated FY2025 CBSA 
delineations, which are presented separately in the next column. The 
changes to the wage index and the labor-related share are discussed 
together because the wage index is applied to the labor-related share 
portion of payments, so the changes in the two have a combined effect 
on payments to providers. As discussed in section VI.E. of this final 
rule, we are updating the FY 2025 labor-related share from 74.1 percent 
in FY 2024 to 74.4 percent in FY 2025.
6. Impact of the Updated CBSA Delineations
    In column 5b of Table 17, we present the effects of the revised 
FY2025 CBSA delineations, without applying the rural adjustment to IRFs 
transitioning from urban to rural status under the new CBSA 
delineations or reducing the rural adjustment for IRFs transitioning 
from rural to urban status. In aggregate, we do not estimate that these 
updates will affect overall estimated payments to IRFs. However, we do 
expect these updates to have small distributional effects. We estimate 
the largest decrease in payment from the update to the FY 2025 CBSA 
delineation and wage index and labor-related share (column 5b of Table 
17) to be a 0.5 percent decrease for IRFs in the Rural Middle Atlantic 
region and the largest increase in payment to be a 1.4 percent increase 
for IRFs in the Rural South Atlantic region.
7. Impact of the Phase-Out of the Rural Adjustment for IRFs 
Transitioning From Rural to Urban Designations
    In column 5c of Table 17, we present the effects of the 3-year 
phase-out of the rural adjustment for IRFs transitioning from rural to 
urban status under the new CBSA delineations and the application of the 
standard rural adjustment for IRFs transitioning to rural status. Under 
the IRF PPS, IRFs located in rural areas receive a 14.9 percent 
adjustment to their payment rates to account for the higher costs 
incurred in treating beneficiaries in rural areas. Under the new CBSA 
delineations, we estimate that 8 IRFs will transition from rural to 
urban status for purposes of the IRF PPS wage index adjustment in FY 
2025. Without the phase-out of the rural adjustment, these 8 IRFs would 
experience an automatic 14.9 percent decrease in payments as a result 
of this change from rural to urban status in FY 2025.

[[Page 64338]]

To mitigate the effects of this relatively large decrease in payments, 
we will phase-out the rural adjustment for these providers over a 3-
year period, as discussed in more detail in section VI.D.3 of this 
final rule. Thus, these IRFs would receive two thirds of the rural 
adjustment in FY 2025, one third of the rural adjustment in FY 2026, 
and none of the rural adjustment in FY 2027, thus giving these IRFs 
time to adjust to the reduced payments.
    Column 5c shows the effect on providers of this budget-neutral 
phase-out of the rural adjustment for IRFs transitioning from rural to 
urban status in FY 2025. Under this policy, these providers would only 
experience a reduction in payments of one third of the 14.9 percent 
rural adjustment in FY 2025. While this does not impact aggregate 
payments, there are small effects on the distribution of payments to 
IRFs. The largest decrease as a result of this policy change is a 4.1 
percent decrease in payments to IRFs that transitioned from rural to 
urban status since they will receive only two thirds of the rural 
adjustment in FY 2025. We note that the decrease in payments to these 
providers is substantially lessened from what it otherwise would have 
been as a result of the phase-out of the rural adjustment for these 
IRFs.
8. Impact of the Update to the CMG Relative Weights and ALOS Values
    In column 6 of Table 17, we present the effects of the budget-
neutral update of the CMG relative weights and ALOS values. In the 
aggregate, we do not estimate that these updates will affect overall 
estimated payments of IRFs. However, we do expect these updates to have 
small distributional effects between -0.1 to 0.2.
9. Effects of Requirements for the IRF QRP Beginning With the FY 2028 
IRF QRP
    In accordance with section 1886(j)(7)(A) of the Act, the Secretary 
must reduce by 2 percentage points the annual market basket increase 
factor otherwise applicable to an IRF for a fiscal year if the IRF does 
not comply with the requirements of the IRF QRP for that fiscal year. 
In section IX.A. of the final rule, we discussed the method for 
applying the 2-percentage points reduction to IRFs that fail to meet 
the IRF QRP requirements.
    As discussed in sections VIII.C.3. and VIII.C.5. of this final 
rule, we are finalizing our proposal to collect four new items as 
standardized patient assessment data elements under the SDOH category 
and modify one item collected as a standardized patient assessment data 
element under the SDOH category on the IRF-PAI beginning with the FY 
2028 IRF QRP. Although the increase in burden will be accounted for in 
a revised information collection request under OMB control number 
(0938-0842), we are providing impact information. We believe the items 
would be completed equally by a Registered Nurse (RN) (50 percent of 
the time) and a Licensed Practical and Vocational Nurses (LPN/LVN) (50 
percent of the time). For the purposes of calculating the costs 
associated with the collection of information requirements, we obtained 
median hourly wages for these staff from the U.S. Bureau of Labor 
Statistics' (BLS) May 2022 National Occupational Employment and Wage 
Estimates.\113\ To account for other indirect costs and fringe 
benefits, we doubled the hourly wage. These amounts are detailed in 
Table 18.
---------------------------------------------------------------------------

    \113\ U.S. Bureau of Labor Statistics' (BLS) May 2022 National 
Occupational Employment and Wage Estimates. https://www.bls.gov/oes/current/oes_nat.htm.

   Table 18--U.S. Bureau of Labor and Statistics' May 2022 National Occupational Employment and Wage Estimates
----------------------------------------------------------------------------------------------------------------
                                                                                  Other indirect
                                                    Occupation     Median hourly     costs and       Adjusted
                Occupation title                       code         wage ($/hr)   fringe benefit  hourly wage ($/
                                                                                      ($/hr)            hr)
----------------------------------------------------------------------------------------------------------------
Registered Nurse (RN)...........................         29-1141          $39.05          $39.05          $78.10
Licensed Practical and Licensed Vocational Nurse         29-2061           26.26           26.26           52.52
 (LPN/LVN)......................................
----------------------------------------------------------------------------------------------------------------

    With 571,151 admissions from 1,160 IRFs annually, we estimated an 
annual burden increase of 8,859.64 hours [(571,151 x 0.02 hour) 
admissions--(512,677 x 0.005 hour) planned discharges] and an increase 
of $578,622.76 [8,859.64 hours x $65.31/hr)]. For each IRF, we estimate 
an annual burden increase of 7.64 hours (8,859.64 hours/1,160 IRFs) for 
an annual increase of $498.81 ($578,622.76/1,160 IRFs).
    As discussed in section VII.F.3. of this final rule, we are 
finalizing our proposal to remove Item 14, Admission Class, from the 
IRF-PAI with modification. Specifically, while we are finalizing our 
proposal to remove Item 14--Admission Class from the IRF-PAI effective 
October 1, 2026 as proposed, IRFs will no longer be required to collect 
and submit data on this Item 14--Admission Class beginning with 
patients admitted on October 1, 2024. We estimate the removal of this 
item would result in a decrease of 0.005 hour of clinical staff time 
beginning with admission assessments completed on October 1, 2026. 
Although the decrease in burden will be accounted for in a revised 
information collection request under OMB control number 0938-0842, we 
are providing impact information. We estimate this item is completed 
equally by an RN (50 percent of the time) and by an LPN/LVN (50 percent 
of the time). For the purposes of calculating the costs associated with 
the collection of information requirements, we obtained median hourly 
wages for these staff from the U.S. Bureau of Labor Statistics' (BLS) 
May 2022 National Occupational Employment and Wage Estimates.\114\ To 
account for other indirect costs and fringe benefits, we doubled the 
hourly wage. These amounts are detailed in Table 18. With 571,151 
admissions from 1,160 IRFs annually, we estimate an annual burden 
decrease of 2,855.76 hours (571,151 admissions x 0.005 hour) and a 
decrease of $186,509.36 [2,855.76 hours x $65.31/hr)]. For each IRF we 
estimate an annual burden decrease of 2.46 hours (2,855.76 hours/1,160 
IRFs) for an annual decrease of $160.78 ($186,509.36/1,160 IRFs).
---------------------------------------------------------------------------

    \114\ U.S. Bureau of Labor Statistics' (BLS) May 2022 National 
Occupational Employment and Wage Estimates. https://www.bls.gov/oes/current/oes_nat.htm.
---------------------------------------------------------------------------

    In summary, under OMB control number 0938-0842, the changes we are 
finalizing to the IRF QRP would result in an estimated increase in 
programmatic burden for 1,160 IRFs. The total burden increase is 
approximately $392,113.40 for all IRFs

[[Page 64339]]

and $338.03 per IRF and is summarized in Table 19.

                             Table 19--Estimated IRF QRP Program Impacts for FY 2028
----------------------------------------------------------------------------------------------------------------
                                                             Per IRF                         All IRFs
                                                ----------------------------------------------------------------
                                                    Estimated                       Estimated
                  Requirement                       change in       Estimated       change in       Estimated
                                                  annual burden     change in     annual burden     change in
                                                      hours        annual cost        hours        annual cost
----------------------------------------------------------------------------------------------------------------
Collection of Four New Items as Standardized              +7.64        +$498.81       +8,859.64     +$578,622.76
 Patient Assessment Data Elements and
 Modification of One Item Collected as a
 Standardized Patient Assessment Data Element
 beginning with the FY 2028 IRF QRP............
Removal of the Admission Class item effective             -2.46         -160.78       -2,855.76      -186,509.36
 October 1, 2026...............................
Increase in burden for the IRF QRP.............            5.18          338.03        6,003.88       392,113.40
----------------------------------------------------------------------------------------------------------------

    We invited public comments on the overall impact of the IRF QRP 
proposals for FY 2028. We received several comments on the impact of 
the IRF QRP proposals and responded to those comments in sections 
VIII.C.4, VIII.F.2, and IX.A of this final rule.

D. Alternatives Considered

    The following is a discussion of the alternatives considered for 
the IRF PPS updates contained in the final rule.
    As noted previously, section 1886(j)(3)(C) of the Act requires the 
Secretary to update the IRF PPS payment rates by an increase factor 
that reflects changes over time in the prices of an appropriate mix of 
goods and services included in the covered IRF services and section 
1886(j)(3)(C)(ii)(I) of the Act requires the Secretary to apply a 
productivity adjustment to the market basket percentage increase for FY 
2025. Thus, in accordance with section 1886(j)(3)(C) of the Act, we 
updated the IRF prospective payments in this final rule by 3.0 percent 
(which equals the 3.5 percent IRF market basket percentage increase for 
FY 2025 reduced by a 0.5 percentage point productivity adjustment as 
determined under section 1886(b)(3)(B)(xi)(II) of the Act (as required 
by section 1886(j)(3)(C)(ii)(I) of the Act).
    We considered maintaining the existing CMG relative weights and 
average length of stay values for FY 2025. However, in light of 
recently available data and our desire to ensure that the CMG relative 
weights and average length of stay values are as reflective as possible 
of recent changes in IRF utilization and case mix, we believe that it 
is appropriate to update the CMG relative weights and average length of 
stay values at this time to ensure that IRF PPS payments continue to 
reflect as accurately as possible the current costs of care in IRFs.
    We considered maintaining the existing outlier threshold amount for 
FY 2025. However, analysis of updated FY 2024 data indicates that 
estimated outlier payments would be more than 3 percent of total 
estimated payments for FY 2025, unless we updated the outlier threshold 
amount. Consequently, we are adjusting the outlier threshold amount to 
maintain estimated outlier payments at 3 percent of estimated aggregate 
payments in FY 2025.
    With regard to the proposal to collect and submit four new items as 
standardized patient assessment data elements under the SDOH category 
and modify one item collected and submitted as a standardized patient 
assessment data element under the SDOH category beginning with the FY 
2028 IRF QRP, we believe these proposals would advance the CMS National 
Quality Strategy Goals of equity and engagement. We considered the 
alternative of delaying the proposal to collect and submit these 
assessment items but given the fact they would encourage meaningful 
collaboration among healthcare providers, caregivers, and community-
based organizations to address SDOH prior to discharge from the IRF, we 
believe further delay is unwarranted.
    With regard to the proposal to remove one item, Item 14-Admission 
Class, from the IRF-PAI, we routinely review the IRF-PAI for 
redundancies and opportunities to simplify data submission 
requirements. We have identified that this item is currently not used 
in the calculation of quality measures already adopted in the IRF QRP, 
payment, survey, or care planning, and therefore no alternatives were 
considered.

E. Regulatory Review Costs

    If regulations impose administrative costs on private entities, 
such as the time needed to read and interpret this final rule, we 
should estimate the cost associated with regulatory review. Due to the 
uncertainty involved with accurately quantifying the number of entities 
that will review the rule, we assume that the total number of unique 
commenters on the FY 2025 IRF PPS proposed rule will be the number of 
reviewers of this year's final rule. We acknowledge that this 
assumption may understate or overstate the costs of reviewing this 
final rule. It is possible that not all commenters reviewed the FY 2025 
IRF PPS proposed rule in detail, and it is also possible that some 
reviewers chose not to comment on the FY 2025 proposed rule. For these 
reasons, we believe that the number of commenters would be a fair 
estimate of the number of reviewers of this final rule.
    We also recognize that different types of entities are in many 
cases affected by mutually exclusive sections of this final rule, and 
therefore, for the purposes of our estimate we assume that each 
reviewer reads approximately 50 percent of the rule.
    Using the national mean hourly wage data from the May 2023 BLS for 
Occupational Employment Statistics (OES) for medical and health service 
managers (SOC 11-9111), we estimate that the cost of reviewing this 
rule is $129.28 per hour, including other indirect costs and fringe 
benefits (https://www.bls.gov/oes/current/oes_nat.htm). Assuming an 
average reading speed, we estimate that it will take approximately 3 
hours for the staff to review half of this final rule. For each 
reviewer of the rule, the estimated cost is $387.84 (3 hours x 
$129.28). Therefore, we estimate that the total cost of reviewing this 
regulation is $17,064.96 ($387.84 x 44 reviewers).

F. Accounting Statement and Table

    As required by OMB Circular A-4 (available at https://www.whitehouse.gov/wp-content/uploads/2023/11/CircularA-4.pdf), in 
Table 20 we have prepared an accounting statement showing the

[[Page 64340]]

classification of the expenditures associated with the provisions of 
this final rule. Table 20 provides our best estimate of the increase in 
Medicare payments under the IRF PPS as a result of the updates 
presented in this final rule based on the data for 1,160 IRFs in our 
database.

 TAble 20--Accounting Statement: Classification of Estimated Expenditure
------------------------------------------------------------------------
                                       Category             Transfers
------------------------------------------------------------------------
Change in Estimated Transfers   Annualized Monetized    $280 million.
 from FY 2024 IRF PPS to FY      Transfers.             Federal
 2025 IRF PPS.                  From Whom to Whom?....   Government to
                                                         IRF Medicare
                                                         Providers.
Estimated Costs Associated      Annualized monetized    $392,113.40.
 with the FY 2028 IRF QRP.       cost in FY 2028 due
                                 to proposed data
                                 collection
                                 requirements.
Estimated Costs Associated      Cost associated with    17,064.96.
 with Review Cost for FY 2025    regulatory review
 IRF PPS.                        cost.
------------------------------------------------------------------------

G. Conclusion

    Overall, the estimated payments per discharge for IRFs in FY 2025 
are projected to increase by 2.8 percent, compared with the estimated 
payments in FY 2024, as reflected in column 7 of Table 17.
    IRF payments per discharge are estimated to increase by 2.7 percent 
in urban areas and 4.9 percent in rural areas, compared with estimated 
FY 2024 payments. Payments per discharge to rehabilitation units are 
estimated to increase 2.1 percent in urban areas and 4.8 percent in 
rural areas. Payments per discharge to freestanding rehabilitation 
hospitals are estimated to increase 3.0 percent in urban areas and 5.2 
percent in rural areas.
    Overall, IRFs are estimated to experience a net increase in 
payments as a result of the policies in this final rule. The largest 
payment increase is estimated to be a 21.4 percent increase for IRFs 
transitioning to rural status under the new CBSA delineations, followed 
by a 10.7 percent increase for IRFs located in the Rural Middle 
Atlantic region. The analysis above, together with the remainder of 
this preamble, provides an RIA.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by OMB.
    Chiquita Brooks-LaSure, Administrator of the Centers for Medicare & 
Medicaid Services, approved this document on July 25, 2024.

Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2024-16911 Filed 7-31-24; 4:15 pm]
BILLING CODE 4120-01-P