The FAA invites you to send any written relevant data, views, or arguments about this proposal. Send your comments using a method listed under ADDRESSES . Include “Docket No. FAA-2026-3474; Project Identifier MCAI-2025-01807-A” at the beginning of your comments. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. The FAA will consider all comments received by the closing date and may amend the proposal because of those comments.

Except for Confidential Business Information (CBI) as described in the following paragraph, and other information as described in 14 CFR 11.35, the FAA will post all comments received, without change, to regulations.gov , including any personal information you provide. The agency will also post a report summarizing each substantive verbal contact received about this NPRM.

CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this NPRM contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this NPRM, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this NPRM. Submissions containing CBI should be sent to Doug Rudolph, Aviation Safety Engineer, FAA, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590. Any commentary that the FAA receives which is not specifically designated as CBI will be placed in the public docket for this rulemaking.

The FAA issued AD 2021-11-08, Amendment 39-21570 (86 FR 30155, June 7, 2021), (AD 2021-11-08), for all Pilatus Model PC-6, PC-6-H1, PC-6-H2, PC-6/350, PC-6/350-H1, PC-6/350-H2, PC-6/A, PC-6/A-H1, PC-6/A-H2, PC-6/B-H2, PC-6/B1-H2, PC-6/B2-H2, PC-6/B2-H4, PC-6/C-H2, and PC-6/C1-H2 airplanes. AD 2021-11-08 was prompted by an MCAI originated by EASA, which is the Technical Agent for the Member States of the European Union. EASA issued EASA AD 2007-0241R4, dated August 31, 2010, (EASA AD 2007-0241R4) to correct an unsafe condition identified as corrosion, wear, and cracks in the upper wing strut fittings on some PC-6 airplanes. EASA also issued EASA AD 2020-0278, dated December 14, 2020, (EASA AD 2020-0278) to correct an unsafe condition identified as a failure to revise the ALS of the existing AMM by introducing new or more restrictive tasks and limitations, including corrected material which includes installing certain bushes using grease instead of a bonding agent and an additional one-time eddy current inspection of the fuselage wing fittings and wing-to-fuselage fittings if the last inspection was performed using an earlier version of the material. EASA AD 2020-0278 states that these instructions have been identified as mandatory for continued airworthiness, and failure to accomplish them could result in an unsafe condition.

AD 2021-11-08 requires revising the ALS of the existing AMM or ICA to incorporate new airworthiness limitations and adding an additional eddy current inspection of the fuselage wing fittings and wing-to-fuselage fittings if the last inspection was performed using an earlier version of the material. The FAA issued AD 2021-11-08 to address reduced airplane controllability due to possible loss of structural integrity of certain parts.

Since the FAA issued AD 2021-11-08, EASA superseded EASA AD 2007-0241R4 and EASA AD 2020-0278 and issued EASA AD 2025-0281, dated December 11, 2025 (EASA AD 2025-0281) (also referred to as the MCAI), for all Pilatus Model PC-6 airplanes. The MCAI states that new or more restrictive tasks and limitations have been developed. These include adding life limits for the control column pitch trim relay. The MCAI also states that failure to accomplish these instructions could result in an unsafe condition. The FAA is issuing this AD to address failure of certain parts, which could result in loss of control of the airplane.

Additionally, the actions required to address the unsafe condition in AD 2021-11-08 are included in “the applicable ALS,” as defined in EASA AD 2025-0281.

You may examine the MCAI in the AD docket at regulations.gov under Docket No. FAA-2026-3474.

The FAA reviewed EASA AD 2025-0281, which specifies procedures for revising the aircraft maintenance program (AMP) by incorporating airworthiness limitations, tasks, and associated thresholds and intervals, including life limits and maintenance tasks. EASA AD 2025-0281 also specifies performing corrective actions if any discrepancy is found during accomplishment of any task in paragraph (1) of EASA AD 2025-0281 and revising the AMP by incorporating the limitations, tasks, and associated thresholds and intervals described in “the applicable ALS” as defined in EASA AD 2025-0281.

This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

These products have been approved by the civil aviation authority (CAA) of another country and are approved for operation in the United States. Pursuant to the FAA's bilateral agreement with this State of Design Authority, that authority has notified the FAA of the unsafe condition described in the MCAI referenced above. The FAA is issuing this NPRM after determining that the unsafe condition described previously is likely to exist or develop on other products of the same type design.

This proposed AD would require revising the ALS of the existing AMM or ICA for the airplane and the existing approved maintenance or inspection program, as applicable, by incorporating new or more restrictive actions and associated thresholds and intervals, including any life limits, specified in EASA AD 2025-0281, described previously, as incorporated by reference, except for any differences identified as exceptions in the regulatory text of this proposed AD. See “Differences Between this NPRM and the MCAI” for a discussion of the general differences included in this proposed AD.

The owner/operator (pilot) holding at least a private pilot certificate may revise the ALS of the existing AMM or ICA for the airplane, and performance of this incorporation must be entered into the aircraft records showing compliance with this AD in accordance with 14 CFR 43.9(a) and 14 CFR 91.417(a)(2)(v). The record must be maintained as required by 14 CFR 91.417, 121.380, or 135.439.

Where EASA AD 2025-0281 specifies revising the approved AMP within 12 months after the effective date of EASA AD 2025-0281, this proposed AD would require revising the ALS of the existing approved maintenance or inspection program, as applicable, within 30 days after the effective date of this proposed AD.

In the FAA's ongoing efforts to improve the efficiency of the AD process, the FAA developed a process to use some CAA ADs as the primary source of information for compliance with requirements for corresponding FAA ADs. The FAA has been coordinating this process with manufacturers and CAAs. As a result, the FAA proposes to incorporate EASA AD 2025-0281 by reference in the FAA final rule. This proposed AD would, therefore, require compliance with EASA AD 2025-0281 in its entirety through that incorporation, except for any differences identified as exceptions in the regulatory text of this proposed AD. Using common terms that are the same as the heading of a particular section in EASA AD 2025-0281 does not mean that operators need comply only with that section. For example, where the AD requirement refers to “all required actions and compliance times,” compliance with this AD requirement is not limited to the section titled “Required Action(s) and Compliance Time(s)” in EASA AD 2025-0281. Material required by EASA AD 2025-0281 for compliance will be available at regulations.gov under Docket No. FAA-2026-3474 after the FAA final rule is published.

The FAA estimates that this AD, if adopted as proposed, would affect 30 airplanes of U.S. registry.

The FAA estimates the following costs to comply with this proposed AD:

Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the Agency's authority.

The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: General requirements. Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.

The FAA determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify that the proposed regulation:

(1) Is not a “significant regulatory action” under Executive Order 12866,

(2) Would not affect intrastate aviation in Alaska, and

(3) Would not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it would establish Class E airspace extending upward from 700 feet above the surface at Cleveland Clinic, Union Hospital Heliport, Dover, OH, to support IFR operations at this airport.

The FAA invites interested persons to participate in this rulemaking by submitting written comments, data, or views. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. To ensure the docket does not contain duplicate comments, commenters should submit only one time if comments are filed electronically, or commenters should send only one copy of written comments if comments are filed in writing.

The FAA will file in the docket all comments it receives, as well as a report summarizing each substantive public contact with FAA personnel concerning this proposed rulemaking. Before acting on this proposal, the FAA will consider all comments it received on or before the closing date for comments. The FAA will consider comments filed after the comment period has closed if it is possible to do so without incurring expense or delay. The FAA may change this proposal in light of the comments it receives.

Privacy: In accordance with 5 U.S.C. 553(c), DOT solicits comments from the public to better inform its rulemaking process. DOT posts these comments, without edit, including any personal information the commenter provides, to www.regulations.gov as described in the system of records notice (DOT/ALL-14FDMS), which can be reviewed at www.dot.gov/privacy .

An electronic copy of this document may be downloaded through the internet at www.regulations.gov . Recently published rulemaking documents can also be accessed through the FAA's web page at www.faa.gov/air_traffic/publications/airspace_amendments/ .

You may review the public docket containing the proposal, any comments received, and any final disposition in person in the Dockets Office (see the ADDRESSES section for the address, phone number, and hours of operation). An informal docket may also be examined during normal business hours at the Federal Aviation Administration, Air Traffic Organization, Central Service Center, Operations Support Group, 10101 Hillwood Parkway, Fort Worth, TX 76177.

Class E airspace is published in paragraph 6005 of FAA Order JO 7400.11, Airspace Designations and Reporting Points, which is incorporated by reference in 14 CFR 71.1 on an annual basis. This document proposes to amend the current version of that order, FAA Order JO 7400.11K, dated August 4, 2025, and effective September 15, 2025. These updates would be published subsequently in the next update to FAA Order JO 7400.11. FAA Order JO 7400.11K, which lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points, is publicly available as listed in the ADDRESSES section of this document.

The FAA is proposing an amendment to 14 CFR part 71 that would establish Class E airspace extending upward from 700 feet above the surface to within an 8.1-mile radius of Cleveland Clinic, Union Hospital Heliport, Dover, OH.

This action is the result of instrument procedures being developed for this airport to support IFR operations.

The FAA has determined that this proposed regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore: (1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Order 2100.6B, “Policies and Procedures for Rulemakings” (March 10, 2025); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this proposed rule, when promulgated, will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

This proposal will be subject to an environmental analysis in accordance with FAA Order 1050.1G, “FAA National Environmental Policy Act Implementing Procedures” prior to any FAA final regulatory action.

In consideration of the foregoing, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:

This proposed rule is intended to provide greater compliance flexibility for employers subject to the requirements in OSHA's Walking-Working Surfaces standard (29 CFR, Subpart D). OSHA is proposing to remove a provision that sets a deadline (November 18, 2036) for the installation of personal fall arrest systems or ladder safety systems on all fixed ladders that extend more than 24 feet above a lower level. This change is based on the agency's reassessment of certain assumptions in the 2016 final rule (81 FR 82494) that established this deadline. The requirement to ensure that any new or replacement fixed ladders are equipped with a personal fall arrest system or ladder safety system would be maintained. Consistent with the agency's original intent for this provision, this change will allow employers to update their ladders when the ladders reach the end of their service lives, accommodating the lengthy service life of fixed ladders while significantly reducing costs and offering greater flexibility.

The purpose of the Occupational Safety and Health Act (29 U.S.C. 651 et seq. ) (“the Act” or “the OSH Act”) is “to assure so far as possible every working man and woman in the Nation safe and healthful working conditions and to preserve our human resources” (29 U.S.C. 651(b)). To achieve this goal, Congress authorized the Secretary of Labor (“the Secretary”) to promulgate standards to protect workers, including the authority “to set mandatory occupational safety and health standards applicable to businesses affecting interstate commerce” (29 U.S.C. 651(b)(3); see also 29 U.S.C. 654(a)(2) (requiring employers to comply with OSHA standards), 29 U.S.C. 655(a) (authorizing summary adoption of existing consensus and established federal standards within two years of the Act's enactment), 29 U.S.C. 655(b) (authorizing promulgation, modification or revocation of standards pursuant to notice and comment)). An occupational safety and health standard is “. . . a standard which requires conditions, or the adoption or use of one or more practices, means, methods, operations, or processes, reasonably necessary or appropriate to provide safe or healthful employment and places of employment” (29 U.S.C. 652(8)).

Before OSHA may promulgate a health or safety standard, it must find that a standard is reasonably necessary or appropriate within the meaning of section 652(8) of the OSH Act. As required by the OSH Act, OSHA determined when promulgating the Walking-Working Surfaces standard that the standard would substantially reduce a significant risk of material harm (see 81 FR 82494, 82497 (November 18, 2016)). When, as here, OSHA has previously determined that its standard substantially reduces a significant risk, it is unnecessary for the agency to make additional findings on risk for every provision of that standard ( see, e.g., Pub. Citizen Health Research Grp. v. Tyson, 796 F.2d 1479, 1502 n.16 (D.C. Cir. 1986) (rejecting the argument that OSHA must “find that each and every aspect of its standard eliminates a significant risk”)). Rather, once OSHA makes a general significant risk finding in support of a standard, the next question is whether a particular requirement is reasonably related to the purpose of the standard as a whole ( see Asbestos Info. Ass'n/N. Am. v. Reich, 117 F.3d 891, 894 (5th Cir. 1997); Forging Indus. Ass'n v. Sec'y of Labor, 773 F.2d 1436, 1447 (4th Cir. 1985); United Steelworkers of Am., AFL-CIO-CLC v. Marshall, 647 F.2d 1189, 1237-38 (D.C. Cir. 1980) (“ Lead I ”)). The revision proposed here does not affect the agency's previous determination that the fixed ladder requirements in 29 CFR 1910.28(b)(9) are reasonably related to the purpose of the Walking-Working Surfaces standard.

A standard is technologically feasible if the protective measures it requires already exist, can be brought into existence with available technology, or can be created with technology that is reasonably expected to be developed (see Am. Iron and Steel Inst. v. OSHA, 939 F.2d 975, 980 (D.C. Cir. 1991)). Courts have also interpreted technological feasibility to mean that a typical firm in each affected industry or application group will reasonably be able to implement the requirements of the standard in most operations most of the time (see, e.g., Public Citizen v. OSHA, 557 F.3d 165, 170-71 (3d Cir. 2009) (citing Lead I at 1272)).

In the 2016 final rule, OSHA determined that the fixed ladder requirements in 29 CFR 1910.28(b)(9) are technologically feasible (see 81 FR 82801). OSHA is not revisiting that finding. Because this proposed rule would merely remove a deadline for compliance with the existing requirement, OSHA preliminarily finds that this proposal would present no technological feasibility issues for employers.

In determining economic feasibility, OSHA must consider the cost of compliance in an industry rather than for individual employers. In its economic analyses, OSHA “must construct a reasonable estimate of compliance costs and demonstrate a reasonable likelihood that these costs will not threaten the existence or competitive structure of an industry, even if it does portend disaster for some marginal firms” ( Am. Iron and Steel Inst., 939 F.2d at 980, quoting Lead I 647 F.2d at 1272). OSHA has preliminarily determined that this proposal is economically feasible because this action is deregulatory and imposes no additional costs. OSHA's economic analysis is presented in Section V.

The Administrative Procedures Act directs agencies to include in each rule adopted “a concise general statement of [the rule's] basis and purpose” (5 U.S.C. 553(c)); cf. 29 U.S.C. 655(e) (requiring the Secretary to publish a “statement of reasons” for any standard promulgated). This notice satisfies this concise statement requirement.

OSHA first promulgated the Walking-Working Surfaces standard in 1971 (36 FR 10466). OSHA finalized the current Walking-Working Surfaces standard in 2016 (81 FR 82494). The standard contains fall protection requirements for fixed ladders that extend more than 24 feet above a lower level, among other provisions. In the 2016 final rule, OSHA noted that the revised standard reflected advances in technology and made the standard consistent with more recent OSHA standards and national consensus standards (81 FR 82494).

On July 28, 2025, OSHA received a letter on behalf of member companies of the American Fuel & Petrochemical Manufacturers (AFPM), American Chemistry Council (ACC), and American Petroleum Institute (API) (the “industry petition”), petitioning the agency to initiate rulemaking that would repeal the requirement to use personal fall arrest systems on all fixed ladders that extend more than 24 feet above a lower level and allow employers to continue to use cages and wells or, alternatively, that would allow the use of cages and wells on these ladders and require installation of personal fall arrest systems or ladder safety systems only on the ladders installed or modified after a new final rule (Ex. OSHA-2025-0072-0002). The letter states that retrofitting existing fixed ladders with personal fall arrest systems or ladder safety systems imposes extraordinary costs on the industry with “very little, if any, safety enhancement.” The member companies contend that these expenses are unjustified, as there have been very few incidents involving fixed ladders.

This rulemaking proposes removing the fixed deadline from 29 CFR 1910.28(b)(9)(i). For the reasons discussed below and consistent with Executive Order (E.O.) 14219, “Ensuring Lawful Governance and Implementing the President's `Department of Government Efficiency' Deregulatory Initiative,” E.O. 14192, “Unleashing Prosperity Through Deregulation,” and the goal of significantly reducing the private expenditures required to comply with Federal regulations to secure American's economic prosperity and national security and the highest possible quality of life for each citizen, OSHA preliminarily concludes that removing the fixed deadline from 29 CFR 1910.28(b)(9)(i) will reduce the compliance burden on the regulated community while effectuating OSHA's original intent for this provision. OSHA seeks comment on the proposed change and this preliminary conclusion.

OSHA is proposing to revise paragraph (b)(9) of its general industry Walking-Working Surfaces fall protection standard (29 CFR 1910.28) by removing the deadline for employers to install a personal fall arrest system or ladder safety system on fixed ladders (that extend more than 24 feet above a lower level) by November 18, 2036 (29 CFR 1910.28(b)(9)(i)(D)). Removing this deadline will allow fixed ladders with cages or wells to remain in use until the end of their service lives without an installed personal fall arrest or ladder safety system. Once these fixed ladders, cages, or wells are replaced, including due to reaching the end of their service lives, a personal fall arrest system or ladder safety system would need to be installed in at least that replaced section of the fixed ladder, cage, or well pursuant to existing paragraph (b)(9)(i)(C). Similarly, the requirement in existing paragraph (b)(9)(i)(B) that any new fixed ladders must be equipped with a personal fall arrest system or ladder safety system would remain unchanged.

In explaining its decision to adopt a 20-year compliance deadline, OSHA stated in the 2016 final rule that it “set the extended phase-out period to take into account normal replacement and average useful life of fixed ladders, cages, and wells” (81 FR 82494). The agency estimated that, within 20 years, “the large majority of fixed ladders will have been replaced or in need of replacement.” In selecting a compliance date subsequent to the replacement or service duration of the “vast majority” of fixed ladders, OSHA sought to avoid undue burdens for employers by providing them “ample time to plan and carry out this transition as part of their normal business and replacement cycles, instead of retrofitting fixed ladders” (81 FR 82603). Indeed, OSHA's assessment of the economic feasibility of the requirement relied on this assumption (81 FR 82611).

The concerns raised by the industry petition draw into question OSHA's assumption in the 2016 final rule that 20 years is sufficient to ensure that most employers can come into compliance with the fixed ladder fall protection requirements through their normal business and replacement cycles. By removing the fixed deadline in paragraph (b)(9)(i)(D) while maintaining the replacement requirements in existing paragraph (b)(9)(i)(C), this proposed revision would accomplish OSHA's original intent while reducing future economic burdens by avoiding costly retrofitting of currently compliant fixed ladders that have cages and wells, are in good repair, and that are not at the end of their service lives.

As an alternative to removing the compliance deadline as discussed above, the petitioners requested the repeal of the requirement that employers use personal fall arrest systems on all fixed ladders over 24 feet tall and that OSHA permit them to continue to use ladder cages or wells. OSHA therefore requests comment on whether it should remove the requirement that employers use personal fall arrest systems on all fixed ladders over 24 feet tall. OSHA welcomes additional evidence regarding the costs and benefits of cages, wells, and personal fall arrest systems, and ladder safety systems, and whether cages and wells provide equivalent safety outcomes compared to personal fall arrest systems or ladder safety systems across relevant industries and ladder configurations. Employers must continue to ensure fixed ladders meet all applicable ladder requirements in 29 CFR 1910.23, Ladders, and the general requirements for all walking-working surfaces in section 1910.22, which sets requirements for safe loads, safe access and egress, inspection, general maintenance, and good repair.

The agency preliminarily concludes that the proposed revision to 29 CFR 1910.28(b)(9)(i) would best effectuate the agency's intent in the 2016 final rule while also serving the goals of reducing undue burden and improving compliance with OSHA's fall protection requirements. OSHA does not have evidence to suggest that removal of the deadline in section 1910.28(b)(9)(i)(D) will significantly impact the safety benefits identified in the 2016 final rule. In the final rule, OSHA estimated the rule would prevent 11.4 ladder-related fatalities and 2,161 ladder-related lost-workday injuries per year across all ladder types and all covered employers (81 FR at 82674). This includes fatalities and injuries prevented by all ladder-related provisions of the final rule, including the portable and fixed ladder design and use requirements in section 1910.23 and the fall protection requirements in section 1910.28. OSHA expects this proposed rule to only impact a small subset of affected ladders: fixed ladders between 24 and 30 feet in length  1 that do not currently have a ladder safety system or personal fall arrest system installed and that would not be replaced by November 2036.

OSHA is unable to determine whether any of the potential fatalities or injuries avoided due to the 2016 final rule would be associated with the limited scope of this proposal; that is, whether any of those fatalities or injuries would occur among this subset of ladders in the time between 2036 and the later date at which these ladders will now be replaced. However, OSHA expects the impact of this proposal to be small. One reason is that many if not most fixed ladders covered by the 2016 final rule are still likely to be replaced by 2036. Another is that this proposal merely extends the time provided for employers to come into compliance with the fall protection requirements of section 1910.28(b)(9), it does not eliminate the requirement. Finally, OSHA anticipates that most workplaces with affected ladders are likely to have at least some ladders with personal fall arrest systems or ladder safety systems installed and employees of those employers will therefore have been trained to recognize fall hazards related to these ladders. As explained in the 2016 final rule, OSHA expects that the increased level of worker training on personal fall arrest systems and ladder safety systems required by the final rule, and the heightened recognition of related fall hazards resulting from this training, will contribute to the prevention of injuries and fatalities from falls from ladders (81 FR at 82784-82785). Based on this, the agency preliminarily determines that this proposal is not likely to result in a meaningful increase in risk to workers and the standard as a whole would remain highly protective. OSHA requests comments regarding these changes including any relevant scientific studies or other evidence.

This proposed rule would allow employers more time to come into compliance with 29 CFR 1910.28(b)(9)(i), and therefore OSHA has preliminarily concluded that there would be no additional costs imposed by these proposed revisions. OSHA also anticipates that there would be significant cost savings associated with this rule, based on employers being able to avoid retrofitting or replacing current fixed ladders equipped with cages and wells while those fixed ladders are still within their useful service life. Because this rule would impose no new costs, OSHA has made a preliminary determination that the rule would be economically feasible.

In the industry petition cited earlier, the petitioners state that a survey of their member companies indicated these companies have “incurred significant costs before the physical work of retrofitting has begun”; that one company alone “has spent thousands of hours over the last two years conducting fixed ladder assessments in anticipation of the work . . . $1.2 million just to identify which ladders are affected”; and that another “company estimates that it will spend $5 million to do the same” (Ex. OSHA-2025-0072-0002).

The petitioners further state that their members, if made to comply with the ladder safety/personal fall arrest system requirements, would spend more than $1.2 billion to bring more than 22,000 ladders into compliance. They further noted that their member survey “represents just over one-third of the petroleum refineries in the country and a tiny fraction of other chemical manufacturing facilities.” Extrapolating from these results, petitioners suggest that this requirement could cost more than $3 billion across the U.S. refining industry (Ex. OSHA-2025-0072-0002). Based on the limited information provided by the petitioners, OSHA is unable to ascertain whether there are unique aspects of the industries represented by the petitioners that would drive costs higher than OSHA's 2016 estimate. The agency welcomes comment on whether the petitioner's estimates are representative of costs in other industries.

In the 2016 final economic analysis, OSHA estimated that annualized costs of the final rule would total $305 million (81 FR 82847). Of those total costs, OSHA estimated that retrofitting fixed ladders between 24 feet and 30 feet in height with ladder safety and personal fall arrest systems would total $8.5 million in multi-year aggregated costs, or $1.2 million in annualized costs, for the approximately 109,200 fixed ladders affected by the requirement (29 CFR 1910.28(b)(9)) mandating replacement of cages and wells after November 2036 (81 FR 82841). This estimate accounted for the costs of new equipment and time for installation (2 hours per ladder) and relied on the assumptions regarding the useful life of fixed ladders that the agency is now reconsidering. If OSHA underestimated the useful life of affected ladders, then a larger percentage of affected employers would need to retrofit existing ladders to comply with the November 2036 deadline, resulting in higher costs than originally estimated.

Based on petitioners' data, OSHA calculates a compliance cost of $55,000 per ladder ($1.2 billion divided by 22,000 ladders rounded to the nearest thousand); however, other entities in the petitioners' industry not surveyed could indicate different potential cost savings associated with the other two-thirds of this industry's ladders, thus the $55,000 estimate may not reflect the true average. By applying these per-ladder compliance costs to an estimated 66,000 ladders in this industry sector (extrapolating the petitioner's report of 22,000 ladders in one third of the industry to the whole industry), OSHA estimates cost savings over $3.6 billion could be achieved in this sector alone by eliminating the compliance deadline. OSHA seeks public comment on these estimates.

OSHA requests comments and data on whether and to what extent the agency underestimated the number of ladders in other covered industries that would need to be retrofitted or replaced to comply with the deadline in 29 CFR 1910.28(b)(9)(i)(D). If OSHA also underestimated the number of affected ladders in other industries, the total cost savings of this proposal could be significantly higher.

To assist OSHA in evaluating the potential costs or cost savings that would result from this proposed rule, the agency requests comments, data, and information on the following:

1. OSHA requests public comments on the service life of fixed ladders that extend more than 24 feet above a lower level. Additionally, OSHA requests details used to evaluate factors affecting remaining service of these ladders.

2. OSHA requests public comments on what other assumptions might be driving the difference between the 2016 cost estimates and the costs claimed in the industry petition, including assumptions regarding the extent to which ladder safety and personal fall arrest systems are already installed on fixed ladders above 24 feet.

3. OSHA requests public comments on the petitioners' compliance cost estimates noted above for identifying, assessing, and retrofitting fixed ladders affected by paragraph 1910.28(b)(9).

4. OSHA requests public comments on the agency's estimate of cost savings that would result from eliminating the need for employers to retrofit existing fixed ladders in the petitioners' industry sector to meet paragraph 1910.28(b)(9)'s November 18, 2036, deadline.

5. OSHA requests data and information on the installation costs of ladder safety systems and personal fall arrest systems on fixed ladders over 24 feet in height in other industries. The agency requests that the commenters elaborate on the resource inputs that contribute to the estimate of total costs, where possible, with specific details on facility type, the operational use (function) of the ladder, frequency of climbs, the type and components of the fall safety system currently installed, the cost of replacing a fixed ladder (on a per-foot or per-section basis if appropriate), the timing of a retrofit (proximity to 2036) if the 2016 rule were to remain in place without revision, and the type of fall safety system projected for retrofitting affected fixed ladders. The petitioners identified 22,000 ladders that would be affected by the 2016 final rule's deadline for replacement in portions of two industries. OSHA requests additional information on the number of fixed ladders in petroleum refineries, chemical manufacturing, and other industries that might be affected by this proposed rule.

6. OSHA requests data from all interested parties on current (baseline) practices for the provision of fall protection on fixed ladders, including survey data on the extent of existing practices among affected employers for assessing the performance and effectiveness of fall prevention systems on fixed ladders, as well as survey data on current, baseline administrative controls such as manager familiarization, training, and recordkeeping.

7. If employers have already incurred costs or cost savings as a result of implementing paragraph 1910.28(b)(9)(i), please describe in detail (for example, cost or cost savings per worker, per process unit, or per production operation) the size and scope of the costs or cost savings, and the size and scope of any benefits that have been achieved from the changes in the use of fall safety systems on fixed ladders.

8. OSHA invites all stakeholders to comment on any technological, economic, and safety-related impacts of the proposed removal of paragraph 1910.28(b)(9)(i)(D).

9. OSHA requests comment on whether it should repeal or revise the requirement that employers use personal fall arrest systems on all fixed ladders over 24 feet. OSHA welcomes additional evidence regarding whether cages and wells provide equivalent safety outcomes compared to personal fall arrest systems or ladder safety systems across relevant industries and ladder configurations.

The Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) requires preparation of an initial regulatory flexibility analysis (IRFA) and a final regulatory flexibility analysis (FRFA) for any rule that by law must be proposed for public comment, unless the agency certifies that the rule, if promulgated, will not have a significant economic impact on a substantial number of small entities. The Act requires each IRFA to describe regulatory alternatives that would “minimize any significant economic impact of the proposed rule on small entities.” 5 U.S.C. 603(c). Each FRFA must describe “steps the agency has taken to minimize the significant economic impact on small entities.” Id. § 604(a)(6). The term “significant economic impact,” as used in the Act to trigger IRFA and FRFA requirements, thus refers to adverse economic impacts that should be minimized.

OSHA reviewed this proposed rule under the provisions of the Regulatory Flexibility Act. This rule would eliminate a regulatory requirement and reduce compliance burdens on both small and large employers. Therefore, OSHA certifies that the revision would not have a “significant economic impact on a substantial number of small entities,” and that the preparation of an IRFA is not warranted. OSHA will transmit this certification and supporting statement of factual basis to the Chief Counsel for Advocacy of the Small Business Administration for review under 5 U.S.C. 605(b).

E.O. 12866, “Regulatory Planning and Review” (58 FR 51735 (Oct. 4, 1993)), requires agencies, to the extent permitted by law, to (1) propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs (recognizing that some benefits and costs are difficult to quantify); (2) tailor regulations to impose the least burden on society, consistent with obtaining regulatory objectives, taking into account, among other things, and to the extent practicable, the costs of cumulative regulations; (3) select, in choosing among alternative regulatory approaches, those approaches that maximize net benefits; (4) to the extent feasible, specify performance objectives, rather than specifying the behavior or manner of compliance that regulated entities must adopt; and (5) identify and assess available alternatives to direct regulation, including providing economic incentives to encourage the desired behavior, such as user fees or marketable permits, or providing information upon which choices can be made by the public.

Section 6(a) of E.O. 12866 also requires agencies to submit “significant regulatory actions” to the Office of Information and Regulatory Affairs (OIRA) for review. OIRA has determined that this proposed rule is a “significant regulatory action” under the criteria in section 3(f) of E.O. 12866. Accordingly, this proposed rule was submitted to OIRA for review under E.O. 12866.

Under section 18 of the OSH Act (29 U.S.C. 651 et seq. ), Congress expressly provides that States may adopt, with Federal approval, a plan for the development and enforcement of occupational safety and health standards that are “at least as effective” as the Federal standards in providing safe and healthful employment and places of employment (29 U.S.C. 667). OSHA refers to these OSHA-approved, State-administered occupational safety and health programs as “State Plans.”  2

When Federal OSHA promulgates a new standard or a more stringent amendment to an existing standard, State Plans must either amend their standards to be identical to, or “at least as effective as,” the new Federal standard or amendment, or show that an existing State Plan standard covering this issue is “at least as effective” as the new Federal standard or amendment (29 CFR 1953.5(a)). However, when OSHA promulgates a new standard or amendment that does not impose additional or more stringent requirements than an existing standard, State Plans do not have to amend their standards, although they may opt to do so. OSHA has preliminarily determined this proposed rule does not impose additional or more stringent requirements than the existing standard, and therefore State Plans are not required to amend their standards. OSHA seeks comment on this assessment of its proposal.

The Paperwork Reduction Act (PRA) defines “collection of information” to mean “the obtaining, causing to be obtained, soliciting, or requiring the disclosure to third parties or the public, of facts or opinions by or for an agency, regardless of form or format” (44 U.S.C. 3502(3)(A)). Under the PRA, a federal agency cannot conduct or sponsor a collection of information unless it is approved by OMB under the PRA and the agency displays a currently valid OMB control number (44 U.S.C. 3507). Also, notwithstanding any other provisions of law, no person shall be subject to penalty for failing to comply with a collection of information if the collection of information does not display a currently valid OMB control number (44 U.S.C. 3512(a)(1)). The process for OMB approval is found in 5 CFR part 1320. This proposed rule would impose no new information collection requirements. Because the proposed revisions do not affect the currently approved information collections, OMB approval is not required for this proposed rule.

OSHA has reviewed this proposed rule according to the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321 et seq. ), as amended by the Fiscal Responsibility Act of 2023 (Pub. L. 118-5, 321, 137 Stat. 10), and the Department of Labor's NEPA procedures (29 CFR part 11). Under the Department's regulations, the “[p]romulgation, modification or revocation of any [OSHA] safety standard” is categorically excluded from the requirement to prepare an environmental assessment absent extraordinary circumstances indicating the potential for significant environmental effects (29 CFR 11.10(a)(1)). OSHA has preliminarily determined that no such extraordinary circumstances exist, and that this proposal would have no impact on the quality of the human environment.

OSHA has considered its obligations under the Unfunded Mandates Reform Act (UMRA) (2 U.S.C. 1501 et seq. ) and the Executive Orders on Consultation and Coordination With Indian Tribal Governments (E.O. 13175, 65 FR 67249 (Nov. 6, 2000)), Federalism (E.O. 13132, 64 FR 43255 (Aug. 10, 1999)), and Protection of Children From Environmental Health Risks and Safety Risks (E.O. 13045, 62 FR 19885 (Apr. 23, 1997)). Given that this is a proposed deregulatory action that involves the removal of requirements, does not result in any Federal mandates, and does not constitute a policy that has federalism or tribal implications, OSHA has determined that no further agency action or analysis is required to comply with these statutes and executive orders. Furthermore, OSHA has determined that this proposal is consistent with the policies and directives outlined in E.O. 14192, “Unleashing Prosperity Through Deregulation.” If finalized as proposed, this NPRM is expected to be an E.O. 14192 deregulatory action.

This document was prepared under the direction of David Keeling, Assistant Secretary of Labor for Occupational Safety and Health. It is issued under the authority of sections 4, 6, and 8 of the Occupational Safety and Health Act of 1970 (29 U.S.C. 653, 655, and 657), 5 U.S.C. 553, Secretary of Labor's Order No. 8-2020 (85 FR 58393), and 29 CFR part 1911.

For the reasons set forth in the preamble, OSHA is amending 29 CFR part 1910 as follows:

Macy's has hosted an annual 4th of July fireworks display in New York harbor since 1976 in varying locations. In 2022, the Coast Guard established a permanent special local regulation (SLR) for the event, codified at 33 CFR 100.110.

However, the locations of the barge-based fireworks launch sites and the number of barges used have varied each year since then. On October 23, 2025, the Coast Guard received an updated Application for Marine Event, Form CG-4423, in which Macy's proposed to launch fireworks from multiple locations in a significantly larger event in 2026 than in past years. On January 16, 2026, Macy's updated their fireworks launch location to five barges on the East River south of Roosevelt Island, NY, three barges on the East River southwest of the Brooklyn Bridge near Manhattan, NY, and one land-based location from the deck of the Brooklyn Bridge over the East River. As such, the Coast Guard is proposing a temporary rule for Macy's 2026 fireworks display. Additionally, this year's proposed display would take place concurrently with an International Naval Review and Sail 4th 250 event in New York Harbor. Refer to Notice of Proposed Rulemaking (NPRM) published in the Federal Register on December 19, 2025, titled “Special Local Regulation, Temporary Anchorage Ground Suspension, and Security Zones: Sail 4th 250, International Naval Review 250; Port of New York and New Jersey” (90 FR 59422). Any waterway restrictions established as a result of the temporary final rule for that regulatory project would also apply to any Special Local Regulation established under this regulatory project. The comment period for that regulatory project has closed. The Coast Guard is not accepting any comments on that rulemaking and is evaluating all comments already received.

Hazards from fireworks displays include accidental discharge of fireworks, dangerous projectiles, and falling hot embers or other debris. The COTP has therefore determined that potential hazards associated with fireworks are a safety concern for anyone within exclusion areas Charlie and Echo. In addition, when large numbers of vessels operate in close proximity to one another, the potential for other hazards, such as collisions and allisions with persons, vessels, and infrastructure is also heightened. The COTP has determined the high volume of commercial and recreational vessels expected to be operating in close proximity to one another in addition to the hazard areas around the fireworks displays warrant additional regulation to ensure the safety of participant and non-participant vessels. This rule also proposes to prohibit the operation of all personal watercraft within the regulated areas during the enforcement period of the rule. Due to their high speed and maneuverability, coupled with a history of incursions into exclusion zones within New York harbor, personal watercraft pose a significant safety risk in congested waterways and are considered a risk to the safety and security of this event.

The COTP is proposing this rule under the authority of 46 U.S.C. 70041 to ensure the safety of participants, spectators, non-participants, and other transiting vessels by establishing multiple zones for viewing the event and ensuring a safe distance from the fireworks launch sites. The proposed regulatory text appears at the end of this document.

This proposed rule would establish a special local regulation from 5:30 p.m. on July 4, 2026, until 11:30 p.m. on July 5, 2026. It would only be enforced from 5:30 p.m. until 11:30 p.m. on July 4, 2026, unless the event is delayed because of weather conditions, in which case it will be subject to enforcement during those same hours on July 5, 2026. The duration of the enforcement times is intended to ensure the safety of vessels, participants, spectators and non-participants, and other vessels transiting the area immediately before, during, and after the fireworks display.

The regulated area would cover all navigable waters within 50 yards of the eight fireworks barges during their transit from their respective staging area to their respective launch location. This proposed rule would also create seven stationary regulated areas: an exclusion area around the Brooklyn Bridge area fireworks launch locations, an exclusion area around the Roosevelt Island area fireworks launch locations, and five spectator viewing areas. As shown in Figure 1 below, the exclusion areas, CHARLIE (“C”) and ECHO (“E”), would exclude all non-participant vessels, including spectator vessels, from the area surrounding the fireworks launch locations immediately before, during, and after the fireworks display. The five separate spectator viewing areas, ALPHA (“A”), BRAVO (“B”), DELTA (“D”), FOXTROT (“F”) and GOLF (“G)”, would be available to vessels based on the vessel's length and the timing of its entry into each zone. This proposed rule is based on the best available planning information at this time. It is important to note that, due to ongoing discussions regarding navigational safety and security concerns, spectator area DELTA (“D”) may ultimately be designated as an exclusion area rather than a spectator area in the temporary final rule. However, at this stage, the rule is being proposed with DELTA (“D”) included as a spectator area. We welcome and encourage all comments on this topic to help us understand the complex competing demands within this area.

Spectator area DELTA (“D”) would be open to all vessels. Any vessel desiring to utilize spectator area DELTA (“D”) would have to enter the regulated area by 7:30 p.m. and would not be permitted to exit the area through either exclusion area, CHARLIE (“C”) or ECHO (“E”), until those areas are disestablished, or until spectator and other non-participant vessels are released from area Delta (“D”) by the COTP or their designated representative. Spectator areas ALPHA (“A”) and FOXTROT (“F”) would be open to vessels greater than 65.6 feet (20 meters) in length. Spectator areas BRAVO (“B”) and GOLF (“G)” would be open to vessels 65.6 feet (20 meters) or less in length. Vessels desiring to utilize areas ALPHA (“A”), BRAVO (“B”), FOXTROT (“F”) and GOLF (“G)” would be able to begin entering their designated viewing area at 8:00 p.m. Additionally, vessels desiring to utilize area FOXTROT (“F”) would have to be in a holding position no later than 9:00 p.m. and would be required to depart the area without delay following the conclusion of the fireworks display to enable the safe and timely resumption of ferry services. The conclusion of the fireworks display will be announced via a Broadcast Notice to Mariners on VHF-FM Channel 16 or on-scene by the COTP or their designated representative. The waters to the west, north, and south of spectator area Foxtrot (“F”) will be immediately available for these purposes while the waters to the east within exclusion area ECHO (“E”) will remain closed to unauthorized traffic until the “cooling off” period for the fireworks barges has expired.

Some of the areas regulated by this proposed rule overlap with areas covered by the proposed rule, “Special Local Regulation, Temporary Anchorage Ground Suspension, and Security Zones: Sail 4th 250, International Naval Review 250; Port of New York and New Jersey,” published in the Federal Register on December 19, 2025 (90 FR 59422). Only vessels authorized under the Sail 4th 250 and International Naval Review 250 proposed rule would be allowed to operate in the regulated areas proposed in this rulemaking during the enforcement period.

Navigation rules, 33 CFR part 83, which are now in force, would continue to apply at all times within the regulated areas. The Coast Guard would provide notice of the special local regulation by Local Notice to Mariners, Broadcast Notice to Mariners, and on-scene designated representatives. The regulatory text we are proposing appears at the end of this document.

We developed this proposed rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders.

The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this proposed rule would not have a significant economic impact on a substantial number of small entities for the following reasons.

Vessel traffic would be able to safely transit around this regulated area using the Hudson River and Harlem River. Vessel traffic would only be restricted in the regulated area for approximately six hours on either July 4, 2026, or July 5, 2026. In addition, the Coast Guard would make advance public notification through a Broadcast Notice to Mariners (BNM) via VHF FM marine channel 16, a Local Notice to Mariners (LNM), a Marine Safety Information Bulletin (MSIB), and/or a Coast Guard Advisory Notice (CGAN) which would allow small entities to adjust their transit plans and operations. The proposed rule would also allow vessels to request permission to enter the regulated area from the COTP.

If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this proposed rule would have a significant economic impact on it, please submit a comment (see ADDRESSES ) explaining why you think it qualifies and how and to what degree this proposed rule would economically affect it.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), if this proposed rule will affect your small business, organization, or governmental jurisdiction and you have questions, contact the person listed in the FOR FURTHER INFORMATION CONTACT section. Small businesses may send comments to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards by calling 1-888-REG-FAIR (1-888-734-3247).

This proposed rule does not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

We have analyzed this proposed rule under Executive Order 13132, Federalism, and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in that Order.

Also, this proposed rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.

As required by The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538), the Coast Guard certifies that this proposed rule would not result in an annual expenditure of $100,000,000 or more (adjusted for inflation) by a State, local, or tribal government, in the aggregate, or by the private sector.

We have analyzed this proposed rule under Department of Homeland Security Directive 023-01, Rev. 1, associated implementing instructions, and Environmental Planning COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321, et seq. ), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment.

This proposed rule is a special local regulation. It is categorically excluded from further review under paragraph L61.

We view public participation as essential to effective rulemaking and will consider all comments and material received during the comment period. Your comment can help shape the outcome of this rulemaking. If you submit a comment, please include the docket number for this rulemaking, indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation.

Submitting comments. We encourage you to submit comments at https://www.regulations.gov. To do so, go to https://www.regulations.gov, type USCG-2025-1120 in the search box and click “Search.” Next, look for this document in the Search Results column, and click on it. Then click on the Comment option. If you cannot submit your material by using https://www.regulations.gov, call or email the person in the FOR FURTHER INFORMATION CONTACT section of this proposed rule for alternate instructions.

Viewing material in the docket. To view available documents, find the docket as described in the previous paragraph, and then select “Supporting & Related Material” in the Document Type column. We will post public comments in our online docket. Additional information is on the https://www.regulations.gov Frequently Asked Questions web page.

Personal information. We accept anonymous comments. Comments we post to https://www.regulations.gov will include any personal information you have provided. For more about privacy and submissions to the docket in response to this document, see DHS's eRulemaking System of Records notice (85 FR 14226, March 11, 2020).

For the reasons discussed in the preamble, the Coast Guard is proposing to amend 33 CFR part 100 as follows:

Preamble acronyms and abbreviations. Throughout this preamble the use of “we,” “us,” or “our” is intended to refer to the EPA. We use multiple acronyms and terms in this preamble. While this list may not be exhaustive, to ease the reading of this preamble and for reference purposes, the EPA defines the following terms and acronyms here:

The EPA is proposing a new listing after our evaluation of human health and environmental information for one substitute under Clean Air Act (CAA) section 612, Significant New Alternatives Policy (SNAP) program. The Agency is proposing this new listing in the refrigeration and air conditioning (AC) sector based on the information the EPA included in the docket. This supplemental notice of proposed rulemaking, hereafter referred to as the “supplemental proposal” or “supplemental action,” would provide a new refrigerant option in specific uses, thereby increasing flexibility for industry. The EPA is also supplementing the Agency's November 10, 2025, Notice of Proposed Rulemaking (NPRM), hereafter referred to as the “2025 NPRM,” to clarify the intended scope of that proposal. 1

This action proposes to list 2,3,3,3-tetrafluoropropene, 2 also known as hydrofluoroolefin (HFO)-1234yf or R-1234yf, hereafter referred to as “HFO-1234yf,” as acceptable, subject to use conditions, in the motor vehicle air conditioning (MVAC) end-use for retrofit of heavy-duty (HD) pickup trucks and complete HD vans. This proposal supplements the 2025 NPRM with respect to the proposed listings in the MVAC end-use for retrofit of HD pickup trucks and HD vans (both complete and incomplete vans). In the 2025 NPRM, the EPA proposed to list three other substitutes as acceptable, subject to use conditions, for similar end-uses. The EPA is supplementing the 2025 NPRM to clarify the intended scope of that proposal for R-444A as acceptable, subject to use conditions, in the MVAC end-use. In the 2025 NPRM, the EPA proposed a listing for R-444A in the MVAC end-use for retrofit of HD pickup trucks and HD vans (both complete and incomplete). The Agency included incomplete HD vans in error and is clarifying that we intended for this proposed listing to apply to HD pickup trucks and complete HD vans only. The scope of the proposals in the 2025 NPRM for the two other substitutes proposed in this end-use, R-456A and R-480A, are not affected by this supplemental proposal and thus remain unchanged.

The proposed new listing for HFO-1234yf would appear as a change to appendix B of 40 Code of Federal Regulations (CFR) part 82, subpart G, within row 12 in the table titled “Refrigerants—Acceptable Subject to Use Conditions.” The clarification of the intended scope of the 2025 NPRM listing for R-444A in the MVAC end-use discussed in section V of this supplemental proposal would appear as a change to appendix B of 40 CFR part 82, subpart G, within row 10 in the same table titled “Refrigerants—Acceptable Subject to Use Conditions.” In this supplemental proposal, the EPA is not proposing changes beyond these. The specific proposed regulatory changes to appendix B are available in a document in the docket under the title “Proposed Changes to Appendix B for SNAP 27 Supplemental Proposal.”  3

Submit your comments, identified by Docket ID No. EPA-HQ-OAR-2024-0503 at https://www.regulations.gov (our preferred method), or the other methods identified in the ADDRESSES section. Once submitted, comments cannot be edited or removed from the docket. The EPA may publish any comment received in the public docket. Do not submit to the EPA's docket at https://www.regulations.gov any information you consider to be Confidential Business Information (CBI), Proprietary Business Information (PBI), or other information whose disclosure is restricted by statute. Multimedia submissions (audio, video, etc.) must be accompanied by a written comment. The written comment is considered the official comment and should include discussion of all points you wish to make. The EPA will generally not consider comments or comment contents located outside of the primary submission ( i.e., on the web, cloud, or other file sharing system). Please visit https://www.epa.gov/dockets/commenting-epa-dockets for additional submission methods; the full EPA public comment policy; information about CBI, PBI, or multimedia submissions; and general guidance on making effective comments.

The EPA may hold a virtual public hearing if the Agency receives a request to hold one. Any party requesting a public hearing must notify the contact listed in the FOR FURTHER INFORMATION CONTACT section, which is Emily Maruyama at email address: maruyama.emily@epa.gov by 5 p.m. Eastern Daylight Time on or before April 13, 2026. If a virtual public hearing is held, it will take place on or around April 21, 2026 and further information will be provided on the EPA's Stratospheric Ozone website at https://www.epa.gov/snap.

The EPA will make every effort to follow the schedule as closely as possible on the day of the hearing; however, please plan for the hearings to run either ahead of schedule or behind schedule. Each commenter will have three to five minutes to provide oral testimony. The EPA encourages commenters to provide a copy of their oral testimony electronically by emailing it to maruyama.emily@epa.gov. The EPA also recommends submitting the text of your oral comments as written comments to the rulemaking docket EPA-HQ-OAR-2024-0503. Written statements and supporting information submitted during the comment period will be considered with the same weight as oral comments and supporting information presented at the public hearing. The EPA may ask clarifying questions during the oral presentations but will not respond to the presentations at that time.

Please note that any updates made to any aspect of the hearing will be posted online at https://www.epa.gov/snap. While the EPA expects the hearing to go forward as set forth above, please monitor our website or contact Emily Maruyama, 202-564-2809, maruyama.emily@epa.gov to determine if there are any updates. The EPA does not intend to publish a document in the Federal Register (FR) announcing updates.

The following list identifies regulated entities that may be affected by this rulemaking and their respective North American Industrial Classification System (NAICS) codes:

• All Other Basic Organic Chemical Manufacturing (325199).

• Motor Vehicle Manufacturing (3361).

• Motor Vehicle Parts Manufacturing (3363).

• Recyclable Material Merchant Wholesalers (423930).

• General Automotive Repair (811111).

This list is not intended to be exhaustive, but rather to provide a guide for readers regarding entities likely to be affected by this action. To determine whether your facility, company, business, or organization could be affected by this action, you should carefully examine the regulations at 40 CFR part 82, subpart G, and the proposed revisions. If you have questions regarding the applicability of this action to a particular entity, consult the person listed in the FOR FURTHER INFORMATION CONTACT section.

The EPA is proposing to list HFO-1234yf as acceptable, subject to use conditions, in the MVAC end-use for retrofit of HD pickup trucks and complete HD vans. The EPA is also supplementing the 2025 NPRM to clarify the intended scope of that proposal. Specifically, in the 2025 NPRM, the EPA proposed to list R-444A as acceptable, subject to use conditions, in the MVAC end-use for retrofit of complete and incomplete HD vans. This supplemental action is clarifying that the EPA intended for this proposed listing to apply only to complete HD vans.

This proposal supplements the 2025 NPRM. See the 2025 NPRM for a full discussion of the Agency's authority for taking this action.

This proposal supplements the 2025 NPRM. See the 2025 NPRM for a full discussion of the guiding principles of the SNAP program and the SNAP criteria for evaluating substitutes.

This action is subject to the EPA's Policy on Children's Health ( https://www.epa.gov/children/childrens-health-policy-and-plan ) because the rule has considerations for human health. Accordingly, we have evaluated the environmental health effects of HFO-1234yf to general population exposure.

In summary, the risk screen for the use of HFO-1234yf in the MVAC end-use for retrofit of HD pickup trucks and complete HD vans found that this substitute is not expected to cause a significant risk to human health in the general population when manufactured for use and used as a refrigerant in HD pickup truck and complete HD van AC systems. Additionally, the EPA found that the toxicity risks of using HFO-1234yf in the MVAC end-use for retrofit of HD pickup trucks and complete HD vans are comparable to or lower than that of other available substitutes in the same end-use. The risk screen found that HFO-1234yf can be used without exceeding the recommended occupational exposure limit (OEL) of 500 ppm (8-hr OEL); thus, the toxicity risks of this refrigerant are comparable to those of other acceptable substitutes in MVACs, which also are used without exceeding their OELs. The risk screen also found that HFO-1234yf in HD pickup trucks and complete HD vans does not pose a significant risk of end-use exposure, provided systems are installed in appropriate spaces with proper engineering controls, emergency response plans, and according to guidelines from the manufacturer, standards, and the safety data sheet. While the EPA has not conducted a separate analysis of risks to infants and children associated with this rule, the rule does contain use conditions that would reduce exposure risks to the general population, with the reduction of exposure being most important to the most sensitive individuals.

The results of this evaluation are contained in section IV.D. of this preamble and in the risk screen titled “Risk Screen on Substitutes in Motor Vehicle Air Conditioning (Heavy-Duty Pickup Trucks and Complete Heavy-Duty Vans) (Retrofit Equipment); Substitute: HFO-1234yf (Solstice® yf or Solstice® 1234yf).” A copy of this document is available in the public docket for this action at Docket ID No. EPA-HQ-OAR-2024-0503.

This action is consistent with the EPA's Policy on Children Health because it provides an additional retrofit option and would not pose additional adverse effects to human health when used in accordance with existing and proposed requirements and as intended by the submitter.

Furthermore, Executive Order 13045 (“ Protection of Children from Environmental Health Risks and Safety Risks” ) applies to this action. Information on how this action is subject to this Executive Order is available in a section of this preamble under the same name.

The EPA is proposing to list HFO-1234yf as acceptable, subject to use conditions, in the MVAC end-use for retrofit of HD pickup trucks and complete HD vans. In the 2025 NPRM, the EPA proposed to list three substitutes, R-444A, R-456A, and R-480A as acceptable, subject to use conditions, in the MVAC end-use for retrofit of HD pickup trucks and complete and incomplete HD vans. During the public comment period, the EPA received comments and feedback from stakeholders highlighting that the proposal did not include a listing of HFO-1234yf in the MVAC end-use for retrofit of HD pickup trucks and HD vans. The EPA reviewed these comments and agrees that the Agency should have included all four refrigerants for this end-use consistent with other MVAC listings in the 2025 NPRM and is issuing this supplemental proposal to add this listing. To support this listing, the Agency has provided in the docket the risk screen for HFO-1234yf for this end-use and proposes to find HFO-1234yf acceptable, subject to use conditions, in the MVAC end-use for retrofit of HD pickup trucks and complete HD vans.

The 2025 NPRM proposed to list HFO-1234yf as acceptable, subject to use conditions, in the MVAC end-use for retrofit of light- and medium-duty vehicles (LMDVs). HFO-1234yf has not otherwise been listed as acceptable for other MVAC retrofit applications. The proposed listing for HFO-1234yf in this supplemental action would allow for retrofits of chlorofluorocarbon (CFC)-12 MVACs as well as for retrofits of MVACs using any of the refrigerants the SNAP program lists as acceptable or acceptable, subject to use conditions, in this end-use.

The SNAP program uses the term MVAC broadly to describe a wide variety of non-stationary AC systems that provide passenger comfort cooling for LMDVs, HD vehicles, nonroad vehicles, buses, and trains. The SNAP MVAC end-use includes systems that may also be subject to other CAA regulatory programs, including for example, where those systems fit within the regulatory definition of “MVAC” under 40 CFR 82.32, 4 or the definition of an “MVAC-like appliance”  5 or “appliance” under 40 CFR 82.152, or both.

To appropriately evaluate human health and environmental risks, the SNAP program considers the type of vehicle in which the proposed alternative would be used. The vehicle types within the MVAC end-use addressed in this supplemental proposal to list HFO-1234yf as acceptable, subject to use conditions, include limited types of vehicles, specifically, HD pickup trucks and complete HD vans ( e.g., large passenger vehicles such as large pickup trucks or vans). In this supplemental action, the EPA is not making any changes to the proposed MVAC acceptability listings for HFO-1234yf included in the 2025 NPRM ( e.g., retrofit LMDVs, new HD on-highway vehicles, and new buses) and is not reopening the comment period for those proposed listings.

HD vehicles are often subdivided by vehicle weight classifications, as defined by the vehicle's gross vehicle weight rating (GVWR), which is a measure of the combined curb (empty) weight and cargo carrying capacity of the truck. HD vehicles have GVWRs above 8,500 pounds. HD pickup trucks and HD vans are Class 2b and 3 vehicles with GVWRs between 8,501 and 14,000 pounds.

The types of vehicles for which the EPA is proposing to list HFO-1234yf for retrofit use as acceptable, subject to use conditions, in this supplemental action, are in many ways more similar to light-duty (LD) or medium-duty (MD) vehicles than they are to the HD vehicles with a higher GVWR classification. These vehicle types are similar to LD vehicles technologically and most are manufactured by companies with major LD markets in the United States and in a similar manner to LD vehicles. 6 In many cases, these types of HD vehicles are versions of their LD counterparts. 7 The primary difference between HD pickup trucks and HD vans and their LD counterpart vehicles is that HD pickup trucks and HD vans are occupational or work vehicles that are designed for much higher towing and payload capabilities than are LD pickup trucks and LD vans. HD pickup trucks and HD vans share many design similarities with their lighter counterparts. For example, MVAC systems in HD pickup trucks and HD vans generally have a similar configuration and use similar components as their lighter counterparts. Differences may exist in terms of cooling capacity ( e.g., based on cabin volume), system layout ( e.g., the number of evaporators), and the durability requirements due to longer truck life. 8

All types of HD vehicles can be sold as “complete” or “incomplete” vehicles. 9 Approximately 90 percent of HD pickup trucks and HD vans are 3/4 -ton and 1-ton pickup trucks, 15-passenger vans, and large work vans that are sold by vehicle manufacturers as complete vehicles. 10 Complete vehicles are sold by vehicle manufacturers to end users with no secondary manufacturer making substantial modifications prior to registration and use. Incomplete vehicles are sold by vehicle manufacturers to secondary manufacturers without the primary load-carrying device or container attached. 11

Examples of modifications by secondary manufacturers to HD pickup trucks are installing a flatbed platform or tool storage bins. The EPA is not aware of any equipment added by a secondary manufacturer to an incomplete HD pickup truck that would result in a secondary manufacturer modifying or adjusting the already installed MVAC system to provide cooling capacity.

Incomplete HD vans are typically sold with no enclosed cabin area behind the driver's seat, and secondary manufacturer modifications could include applications such as conversion to ambulances, shuttle vans, and motor homes. Incomplete HD vans may include original equipment manufacturer (OEM) MVACs that are identical to those installed in the complete HD van on which the incomplete model is based. In some cases, these systems are designed solely for cooling the front driver area, while other systems are manufactured by the OEM with additional capability to provide cooling behind the driver area to the cabin after modification.

MVACs across all vehicle types are typically charged during vehicle manufacture. Incomplete HD vehicles are modified by secondary manufacturers and that modification may or may not involve the installation of additional AC or refrigeration equipment. 12 While some secondary manufacturers use the OEM MVAC system with no modification to the contained refrigerant system (hoses, connections, heat exchangers, compressor, etc.), this is not a uniform practice. At the time of this supplemental action, the EPA does not have sufficient information on the potential for modifications to OEM-installed MVAC systems of incomplete HD vans by secondary manufacturers and the impact of those modifications on the safe use of HFO-1234yf. For this reason, the EPA is not proposing to find HFO-1234yf acceptable, subject to use conditions, in the MVAC end-use for retrofit of incomplete HD vans in this supplemental proposal.

Historically, the class I ozone-depleting substances (ODS) refrigerant CFC-12 was the primary refrigerant used in MVACs for passenger vehicles and trucks. In the initial 1994 SNAP rulemaking, hydrofluorocarbon (HFC)-134a, amongst other substitutes, was listed as acceptable for use in new and retrofit MVACs, including HD pickup trucks and HD vans. 13 Since then, the EPA has listed additional alternatives for MVACs as acceptable, subject to use conditions, for use in new HD pickup trucks and complete HD vans, including HFO-1234yf, HFC-152a, and carbon dioxide (R-744).

The EPA previously listed HFO-1234yf as acceptable, subject to use conditions, in newly manufactured HD pickup trucks and complete HD vans. 14 As of model year (MY) 2026, both HFO-1234yf and HFC-134a are used in new HD pickup trucks that are manufactured and imported in the United States. New complete HD vans continue to primarily use HFC-134a. 15

The EPA considers other relevant regulatory programs when developing listing decisions and use conditions. For example, CAA section 609 and implementing regulations in 40 CFR part 82, subpart B address the repair and servicing of MVACs as well as technician training and certification. CAA section 608 and implementing regulations in 40 CFR part 82, subpart F restrict the sale of refrigerant and address disposal and other activities involving MVACs that are not regulated under CAA section 609.

By considering the regulatory requirements that already exist, consistent with the SNAP program's guiding principles, the EPA has been able to limit the use conditions the Agency would have otherwise considered, particularly for retrofits. See the 2025 NPRM for a full discussion of the EPA's regulatory approach under CAA sections 609 and 612 regarding the repair and servicing of MVACs and recovery, recycling, and recharging equipment.

American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) Standard 34-2024 assigns a safety group for each refrigerant, which consists of two to three alphanumeric characters ( e.g., A2L or B1). 16 The initial character indicates the toxicity, and the numeral, with or without suffix letter, denotes the flammability. HFO-1234yf is in the A2L Safety Group. ASHRAE classifies Class A refrigerants as refrigerants for which toxicity has not been identified at concentrations less than or equal to 400 parts per million (ppm) by volume, based on data used to determine threshold limit value-time-weighted average (TLV-TWA) or consistent indices. Throughout this document, refrigerants in the flammability class of “2L” are referred to as lower flammability refrigerants. See the 2025 NPRM for a full discussion of the ASHRAE classifications for refrigerant flammability and toxicity.

The EPA is proposing to list HFO-1234yf as acceptable, subject to use conditions, in the MVAC end-use for retrofit of HD pickup trucks and complete HD vans.

The redacted submission and supporting documentation for this proposed refrigerant are in the docket. 17 The EPA performed a risk screening assessment to examine the human health and environmental risks of this substitute, also available in the docket. 18 The EPA notes that the environmental, flammability, and toxicity information in this section is similar to the information provided in the 2025 NPRM related to the proposed listing of HFO-1234yf in the MVAC end-use for retrofit of LMDVs. As mentioned in the 2025 NPRM, the environmental, flammability, and toxicity information about this proposed substitute does not differ between LMDV MVACs and HD pickup truck and complete HD van MVACs.

Environmental information: The specific atmospheric effects values can be found in the risk screen developed for HFO-1234yf for the proposed listing in this supplemental action. These were determined consistent with the source information noted in section III.D. of the 2025 NPRM.

HFO-1234yf is excluded from the EPA's regulatory definition of volatile organic compounds (VOCs), which is used for addressing the development of state implementation plans (SIPs) to attain and maintain the National Ambient Air Quality Standard (NAAQS). 19

HFO-1234yf can break down into trifluoroacetic acid (TFA) in the atmosphere. HFO-1234yf is almost completely transformed into TFA. 20 For more information on TFA, see the response to comments section of SNAP Rule 26. 21

Flammability information: HFO-1234yf is a lower flammability refrigerant (ASHRAE flammability classification 2L). HFO-1234yf may pose a greater flammability risk than nonflammable substitutes in the MVAC end-use for retrofit of HD pickup trucks and complete HD vans. The flammability risk, determined by the likelihood of exceeding the lower flammability limit (LFL), is evaluated in the risk screen referenced in this section. The EPA is proposing to determine that HFO-1234yf may be used safely since flammability risk can be mitigated by use consistent with the proposed labeling requirements in appendix D of 40 CFR part 82, subpart G, recommendations in the manufacturers' safety data sheet (SDS), and other safety precautions common in the refrigeration and AC industry. The flammability characteristics of HFO-1234yf make the risk of ignition low. HFO-1234yf requires an open flame to ignite, such as a match or lighter, because of its relatively high minimum ignition energy of greater than 5,000 millijoules (mJ). 22 HFO-1234yf has an LFL of 62,000 ppm, 23 and has a low burning velocity  24 compared to refrigerants with flammability classification of 2 such as HFC-152a  25 or with flammability classification of 3 such as hydrocarbon refrigerants. 26 As a result of these flammability characteristics, HFO-1234yf is difficult to ignite, and is generally unable to propagate a flame once ignited ( i.e., flames resulting from HFO-1234yf put themselves out).

Consistent with the other proposed listings in the 2025 NPRM, under this supplemental action, HFO-1234yf could be used to retrofit MVACs originally designed for an A1 refrigerant. The EPA considered if this could create additional flammability risk distinct from its use in a new MVAC that is specifically designed with mitigation measures to use a flammable refrigerant. The original submission for HFO-1234yf in new vehicles included analyses that evaluated the flammability and toxicity risks of HFO-1234yf in MVACs that were originally designed for HFC-134a. These analyses consist of reports published in 2008, 2009, and 2013 from the SAE International, previously known as the Society of Automotive Engineers (SAE), Cooperative Research Program (CRP). The vehicles in these analyses did not feature any design changes to address potential flammability. In this way, MVACs used in the original analyses were analogous to vehicles that would be retrofit under this supplemental proposal, because they could be originally designed for an A1 refrigerant. 27 The 2008 report found that the increased flammability risk of HFO-1234yf in a vehicle designed for use with HFC-134a is well below those commonly accepted by the general public. 28 A revised 2009 report found that the risks of HFO-1234yf were low overall, and somewhat less than the toxicity risks posed by R-744. 29 The submitter of HFO-1234yf provided these analyses to the EPA to support the Agency's original consideration of HFO-1234yf in new vehicles, and the Agency based its listing of acceptability in part on the findings of these analyses. The EPA concluded that the risks of HFO-1234yf are comparable to or less than the risks from other available or potentially available alternatives in this end-use that the Agency had already listed or proposed as acceptable ( e.g., HFC-152a, HFC-134a, and R-744). 30

SAE revised its assessment of HFO-1234yf and released a supplemental report in 2013 that contained two new fault tree analyses that included additional “worst-case scenarios.”  31 The report revised the probability of a vehicle fire due to ignition of HFO-1234yf in a system featuring no design changes compared to an HFC-134a system to about 3 × 10 −12 events per hour of vehicle operation.

The submitter of HFO-1234yf in the MVAC end-use for retrofit of LMDVs and HD pickup trucks and complete HD vans provided an updated fault tree analysis that evaluated the additional risk associated with use of HFO-1234yf specifically in retrofit applications and the EPA considered this new analysis in our review of HFO-1234yf. 32 The analysis only considered scenarios that increased the flammability risk in a retrofit (such as increased risk of mechanical fan failure and electrical fires and less consistent presence and deployment of airbags) and did not consider scenarios that reduced the flammability risk in a retrofit (such as the larger cabin size in older vehicles that would be retrofit). The overall estimated risk was about 8 × 10 −12 events per operating hour, which is similar to the risk of vehicle fire due to HFO-1234yf ignition in new MVAC equipment (5 × 10 −12 events per operating hour). 33 The actual increased risk is likely lower than this, as the evaluation only considered circumstances that would increase the probability of a vehicle fire and did not consider circumstances that would reduce the probability.

The MVAC systems, vehicle designs, and the potential for exposure for the HD vehicle types for which the EPA is proposing HFO-1234yf for retrofit use as acceptable, subject to use conditions, in this supplemental action are identical or very similar to those of LD vehicles. 34 In 2016, the EPA evaluated how the risks of using HFO-1234yf in new HD pickup trucks and complete HD vans compare to the risks of using HFO-1234yf in new LD vehicles. 35 The EPA presented information on the highest refrigerant charge to passenger compartment volume ratios for different vehicle types and the highest ratio for all HD pickup truck and HD van vehicle types was 410 g/m 3 in HD pickup trucks, which was less than the maximum ratio identified in the analysis for HFO-1234yf in LD vehicles in two seaters, which was 641 g/m 3 . 36 The EPA concluded that the available assessments on the use of HFO-1234yf in LD vehicles were sufficiently conservative to account for all possible flammability risks from the use of HFO-1234yf in HD pickup trucks and complete HD vans. 37 Consistent with the approach taken in SNAP Rule 21 when the EPA listed HFO-1234yf in new HD pickup trucks and complete HD vans and relied on analysis for the use of HFO-1234yf in LD vehicles, the EPA proposes to find it appropriate to rely on the same analysis included in this section related to the use of HFO-1234yf in LD vehicle types. 38

The EPA conducted a risk screen in 2026 for HFO-1234yf in the MVAC end-use for retrofit of HD pickup trucks and complete HD vans to support the proposed listing in this supplemental action. The risk screen found that concentrations of HFO-1234yf did exceed the LFL in the passenger compartment of a HD pickup truck under the modeled worst-case scenario. For the HD pickup truck and HD van vehicle types evaluated in this risk screen, the highest refrigerant charge to passenger compartment ratio was 390 g/m 3 in HD pickup trucks. 39 This ratio is substantially less than the maximum ratio identified for many vehicle types mentioned in the risk screen for HFO-1234yf use in retrofit LMDVs including two seaters (640.75 g/m 3 ), small pickup trucks (633.27 g/m 3 ), sport utility vehicles (414.96 g/m 3 ), and standard pickup trucks (397.84 g/m 3 ). 40 The lower ratio indicates a relatively lower risk.

As discussed in the 2025 NPRM, the risk screen for HFO-1234yf use for retrofit of LMDVs found that concentrations of HFO-1234yf did exceed the LFL in the passenger compartment under certain worst-case scenarios but remained well below the LFL in more realistic industry consortium field testing. For example, using a simple box model, combining the highest ratio of refrigerant charge to observed passenger compartment size with a catastrophic release of 60 percent of the charge in 60 seconds, resulted in a maximum instantaneous charge of 172,000 ppm, compared to an LFL of 62,000 ppm. However, analysis using the more accurate technique of computational fluid dynamics modeling found the instantaneous concentration of HFO-1234yf to vary from 65,000 ppm to 34,000 ppm. The industry consortium field testing found a maximum instantaneous concentration of HFO-1234yf of 29,774 ppm when a vehicle's full charge was released. 41

The EPA's original 2009 risk analysis of HFO-1234yf for use in new LMDVs also identified scenarios in which concentrations exceeded the LFL. 42 The EPA listed HFO-1234yf as acceptable, subject to use conditions, in new LMDVs leveraging this risk analysis. In the EPA's original listing, the Agency stated that it found that the use of HFO-1234yf in the MVAC end-use for new passenger vehicle and LD trucks, subject to the use conditions adopted in that listing, does not present a greater overall risk to human health and the environment compared to the currently approved MVAC alternatives or as compared to R-744. 43 The EPA has also subsequently listed R-744 as acceptable, subject to use conditions, in new LMDVs. Finally, HFO-1234yf in new LMDVs has been widely adopted since being listed in 2012. In MY2023, the share of new LMDVs sold in the United States with HFO-1234yf reached 97 percent. 44 HFO-1234yf has also been adopted for use in new HD pickup trucks and complete HD vans. Even with its broad use, the EPA is not aware of any real-world instances in which HFO-1234yf has ignited and caused a vehicle fire, which further augments the record for this refrigerant.

SAE J1660 currently provides guidance on how to retrofit a vehicle originally charged with CFC-12 to HFC-134a. The EPA anticipates that SAE would develop an analogous standard or revise this standard for retrofitting vehicles using newer refrigerants, including HFO-1234yf. Following such standards may further reduce the flammability risk associated with retrofitting MVACs, which is already expected to be extremely small in magnitude.

Given the findings of the evaluation materials available in the docket, that the environmental, flammability, and toxicity information about HFO-1234yf does not differ between MVAC end-use for LMDVs and HD pickup trucks and complete HD vans, that the MVACs used in the original analysis for HFO-1234yf in new vehicles were analogous to vehicles that would be retrofit, and the widespread adoption of HFO-1234yf without documented flammability issues, the EPA is proposing that HFO-1234yf may be safely used in the MVAC end-use for retrofit of HD pickup trucks and complete HD vans.

Toxicity information: Toxicity risk, determined by the likelihood of exceeding the exposure limits in these end-uses, are evaluated in the previously referenced risk screen. HFO-1234yf is a lower toxicity (ASHRAE toxicity group A) refrigerant. ASHRAE has adopted an OEL for this refrigerant of 500 ppm. The toxicity risks of using HFO-1234yf in the MVAC end-use for retrofit of HD pickup trucks and complete HD vans are comparable to or lower than that of other available substitutes in the same end-use, including HFC-134a. 45 Toxicity risks of the proposed refrigerant can be mitigated by use consistent with applicable industry safety standards, recommendations in the manufacturers' SDS, and other safety precautions common in the refrigeration and AC industry.

HFO-1234yf is subject to a significant new use rule (SNUR) under 40 CFR 721.10182(a). Significant new uses under this requirement include: use other than as a refrigerant: in MVAC systems in new passenger cars and vehicles (as defined in 40 CFR 82.32(c) and (d)), in stationary and transport refrigeration, or in stationary AC, commercial use other than in passenger cars and vehicles in which the original charging of MVAC systems with the pre-manufacture notice (PMN) substance was done by the motor vehicle original equipment manufacturer (OEM), in stationary and transport refrigeration, or in stationary AC., and use in consumer products other than products used to recharge the MVAC systems in passenger cars and vehicles in which the original charging of MVAC systems with the PMN substance was done by the motor vehicle OEM.

Use in all MVAC end-uses, except for when originally charged with HFO-1234yf, would fall under (B) or (C) as commercial or consumer use to recharge an MVAC in which the original charging of the MVAC was with a substance other than HFO-1234yf. The EPA considers retrofitting a vehicle to use HFO-1234yf that was not originally charged by the OEM with HFO-1234yf to be a significant new use of HFO-1234yf under this SNUR. Significant new uses require the chemical producer to submit a significant new use notice to the EPA for review of a substance before introducing the substance into interstate commerce in the significant new use.

Comparison to other substitutes in these end-uses: The Agency understands that this substitute will be marketed as a retrofit option for different refrigerants, including HFC-134a. HFC-134a is the only available refrigerant listed as acceptable for retrofit of MVACs in HD pickup trucks and complete HD vans.

The specific atmospheric effects values can be found in the individual risk screen for HFO-1234yf. These were determined consistent with the source information noted in section III.D. of the 2025 NPRM. The atmospheric effects for HFO-1234yf are overall better than or comparable to many of the substitutes currently listed as acceptable in this end-use, such as HFC-134a. The EPA acknowledges that the atmospheric effects of HFO-1234yf are relatively lower than the three blends, R-444A, R-456A, and R-480A, that were proposed as acceptable, subject use conditions, in the MVAC end-use for retrofit of HD pickup trucks and HD vans in the 2025 NPRM. The EPA's analysis found that the effects on human health and the environment associated with retrofitting HD pickup trucks and complete HD vans with HFO-1234yf are comparable to the other alternatives proposed for this use in the 2025 NPRM, and lower than that of HFC-134a. 46

The EPA's risk screen for HFO-1234yf in the MVAC end-use for retrofit of HD pickup trucks and complete HD vans found that this substitute can be used without exceeding the recommended OEL of 500 ppm (8-hr OEL); thus, the toxicity risks of this refrigerant are comparable to those of other acceptable substitutes in MVACs, which also are used without exceeding their OELs. 47

The flammability of HFO-1234yf may be greater than that of other available substitutes in the same end-use that have an ASHRAE flammability classification of 1. The EPA's analysis of the flammability risks of HFO-1234yf found that when used in accordance with the proposed use conditions, this A2L refrigerant may be safely used in this end-use without presenting additional adverse effects to human health and the environment than other alternatives. HFO-1234yf was listed as acceptable, subject to use conditions, in MVAC end-use for new HD pickup trucks and complete HD vans in 2016. Since then, no reports of harm or incidences of fire were recorded. We note that flammability risk can be minimized by use consistent with applicable industry safety standards as well as recommendations in the manufacturers' SDS and other safety precautions common in the MVAC industry and any difference in flammability can be addressed by the existing labeling requirements in appendix D of 40 CFR part 82, subpart G. 48

This proposed refrigerant provides an additional retrofit option and would not pose additional adverse effects to human health or the environment when used in accordance with existing and proposed requirements and as intended by the submitter. To provide additional options for the full range of MVACs, the EPA is proposing this listing for HFO-1234yf as acceptable, subject to use conditions, in the MVAC end-use for retrofit of HD pickup trucks and complete HD vans.

The EPA is proposing the use condition that unique service port fittings specific to HFO-1234yf must be used in retrofit applications for this end-use. Service port fittings for HFO-1234yf were previously established and are identified in appendix B of 40 CFR part 82, subpart G.

Appendix D of 40 CFR part 82, subpart G specifies requirements for unique fittings for new and retrofit MVAC listings and specifies information that must appear on a new label when a retrofit is performed, and outlines requirements for how the retrofit is completed including specifications for how unique fittings must be applied when performing a retrofit. The requirements for labeling, unique fittings, and the performance of the retrofit would apply to this proposed acceptability listing for MVAC retrofits. In the case of HFO-1234yf, the requirement to include a label would mitigate risk by ensuring that technicians are aware that the MVAC refrigerant is flammable. In the 2025 NPRM, the EPA proposed minor adjustments to these retrofit specifications and labeling requirements that would also apply to the proposed listing of HFO-1234yf in this supplemental action. The existing requirements and proposed amendments are described fully in section VIII.G. of the 2025 NPRM. While the proposed changes to section VIII.G. of the 2025 NPRM are relevant to the proposed listing of HFO-1234yf in this supplemental action, the EPA is not reopening comment on the proposed changes since the changes are broadly applicable to all MVAC retrofits, is not specific to this end-use, and is not specific to the proposed listing of HFO-1234yf in this supplemental proposal.

In the 2025 NRPM, the EPA also proposed to amend appendix B of 40 CFR part 82, subpart G. This provision currently states that flammable refrigerants in MVACs, both new and retrofit are unacceptable, except for HFO-1234yf and HFC-152a when used in new MVAC equipment. The 2025 NPRM proposed to amend this provision so that unacceptability also would not apply to HFO-1234yf used in retrofit MVACs. This proposed amendment is described fully in section VIII.F. of the 2025 NPRM and this supplemental proposal does not adjust or change those proposed revisions. However, the proposed revisions are relevant to this listing in that they would allow for use of HFO-1234yf in retrofits not only in LMDVs but also in HD pickup trucks and complete HD vans.

The EPA's SNAP program has a longstanding approach of requiring unique fittings for use with each refrigerant in MVACs. Appendix D of 40 CFR part 82, subpart G requires that each refrigerant be used with a set of fittings that is unique to that refrigerant. This is intended to prevent cross contamination of different refrigerants, preserve the purity of recycled refrigerants, and ultimately to avoid venting of refrigerant consistent with requirements under CAA section 608(c). 49 In the 1996 SNAP Rule requiring the use of unique fittings on all refrigerants submitted for use in MVACs, the EPA urged industry to develop mechanisms to ensure that the venting prohibition under CAA section 608(c) and the implementing regulations at 40 CFR 82.154 are observed. 50 The EPA has issued multiple SNAP rules requiring the use of fittings unique to a refrigerant for use on “containers of the refrigerant, on can taps, on recover, recycle, and recharge equipment, and on all [motor vehicle] air conditioning system service ports.”  51

The EPA expects that the companies selling refrigerants intended to be used as retrofits would make appropriate unique fittings and refrigerant labels available to certified technicians and do-it-yourselfers (DIYers) to allow them to conduct a retrofit in a manner that meets requirements under the CAA.

The EPA is supplementing the 2025 NPRM to clarify the intended scope of that proposal. In the 2025 NPRM, the EPA proposed a listing for R-444A as acceptable, subject to use conditions, in the MVAC end-use for retrofit of HD pickup trucks and HD vans (both complete and incomplete). The Agency included incomplete HD vans in error and is clarifying that we intended for this proposed listing to apply to HD pickup trucks and complete HD vans only.

See sections VIII.B., VIII.D., and VIII.E. of the 2025 NPRM for a full discussion of the EPA's basis for proposing to list R-444A in this end-use. This discussion only provided a basis for the proposed listing of R-444A in the MVAC end-use for retrofit of HD pickup trucks and complete HD vans. The EPA's risk screen of R-444A was for HD pickup trucks and complete HD vans. The risk screen did not include a scenario for reviewing risk of R-444A in incomplete HD vans. The SNAP program has thus far not listed any A2L refrigerant as acceptable for either new or retrofit use in incomplete HD vans due to lack of sufficient information on the appropriate risk scenarios for use of flammable refrigerants in incomplete HD vans.

In 2016, when the EPA listed HFO-1234yf as acceptable, subject to use conditions, in the MVAC end-use for new HD pickup trucks and complete HD vans, the EPA did not finalize a listing for HFO-1234yf in any incomplete HD vans, stating that we did not have sufficient information on the potential for modifications to OEM-installed MVAC systems of incomplete HD vans by secondary manufacturers and the impact of those modifications on the safe use of HFO-1234yf. At the time of the 2025 NPRM, the same limitation applied and the EPA did not have sufficient information on the potential for modifications to OEM-installed MVAC systems of incomplete HD vans by secondary manufacturers and the impact of those modifications on the safe use of R-444A. For this reason and to remain consistent with our previous approach in SNAP Rule 21, the EPA is clarifying that the intended scope of the proposed listing for R-444A does not include incomplete HD vans and is requesting comment on the proposed listing as clarified. 52 The Agency will consider the comments received during the comment period for the 2025 NPRM on this proposed listing and will review any additional comments regarding the clarification to the scope of the listing made in this supplemental action.

The clarification in this supplemental action does not impact any of the other MVAC end-uses in the 2025 NPRM where R-444A was proposed as acceptable, subject to use conditions, including as a retrofit in LMDVs, HD pickup trucks, and complete HD vans.

In this supplemental action, the EPA is also clarifying language in the 2025 NPRM and associated proposed regulatory text document related to HD pickup trucks. In the 2025 NPRM, the EPA proposed listings for R-444A, R-456A, and R-480A in the MVAC end-use for retrofit of HD pickup trucks (complete and incomplete). The Agency differentiated between complete and incomplete HD pickup trucks in error and is clarifying that we intended for the proposed listings for R-444A, R-456A, and R-480A to apply to HD pickup trucks generally. In contrast to HD vans, the EPA does not see complete and incomplete HD pickup trucks as two separate applications with unique risk profiles and has previously treated complete and incomplete HD pickup trucks the same. For purposes of consistency, the EPA is clarifying the regulatory language for the proposed listings of R-444A, R-456A, and R-480A to use the term “HD pickup trucks” rather than HD pickup trucks (complete and incomplete). From a practical perspective, this clarification does not change the types of vehicles that the proposed listings apply to; it is simply a clarification of terminology. The proposed regulatory text related to the clarifications addressed in this section may be found in the docket for this rulemaking. 53

1. The EPA is requesting comment on the proposed listing of HFO-1234yf as acceptable, subject to use conditions, in the MVAC end-use for retrofit of HD pickup trucks and complete HD vans. Specifically, retrofitting MVACs designed for a nonflammable refrigerant such as HFC-134a to use a flammable refrigerant may present new risks. The EPA seeks comment on whether additional strategies to mitigate the flammability risk of A2L refrigerants beyond those required by appendix D to part 82, subpart G are necessary and suggestions of what those strategies may be.

2. The EPA is requesting comment on the clarifications described in section V. of this supplemental action, including the clarification of the intended scope of the 2025 NPRM as it relates to the proposed listing of R-444A in the MVAC end-use for retrofit of complete HD vans and the clarification of terminology related to HD pickup trucks.

Additional information about these statutes and Executive Orders can be found at https://www.epa.gov/laws-regulations/laws-and-executive-orders.

This action is not a significant regulatory action and was therefore not submitted to the Office of Management and Budget (OMB) for review.

This action is expected to be an Executive Order 14192 deregulatory action. This proposed rule is expected to provide burden reduction by proposing to list more alternatives that would be available for use by industry.

This action does not impose any new information collection burden under the PRA. OMB has previously approved the information collection activities contained in the existing regulations and has assigned OMB control number 2060-0226. This rule contains no new requirements for reporting or recordkeeping.

I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA. In making this determination, the EPA concludes that the impact of concern for this rule is any significant adverse economic impact on small entities and that the Agency is certifying that this rule will not have a significant economic impact on a substantial number of small entities because the rule has no net burden on the small entities subject to the rule. This action proposes to add the additional options under SNAP of HFO-1234yf in the specified end-uses but does not mandate such use. Thus, if the rule were finalized as proposed, it would not impose new costs on small entities. We have therefore concluded that this action will have no net regulatory burden for all directly regulated small entities.

This action does not contain an unfunded mandate as described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect small governments. The action imposes no enforceable duty on any state, local or Tribal governments or the private sector.

This action does not have federalism implications. It will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government.

This action does not have Tribal implications as specified in Executive Order 13175. It will not have substantial direct effects on Tribal governments, on the relationship between the Federal government and Indian Tribes, or on the distribution of power and responsibilities between the Federal government and Indian Tribes, as specified in Executive Order 13175. Thus, Executive Order 13175 does not apply to this action.

Executive Order 13045 directs Federal agencies to include an evaluation of the health and safety effects of the planned regulation on children in Federal health and safety standards and explains why the regulation is preferable to potentially effective and reasonably feasible alternatives. This action is not subject to Executive Order 13045 because it is not a significant regulatory action under section 3(f)(1) of Executive Order 12866, and because the EPA does not believe the environmental health or safety risks addressed by this action present a disproportionate risk to children. While the EPA has not conducted a separate analysis of risks to infants and children associated with this rule, the rule does contain use conditions that would reduce exposure risks to the general population, with the reduction of exposure being most important to the most sensitive individuals. This action's health and risk assessments are contained in the comparison of toxicity for the proposed substitute in section IV.D. of this supplemental action, as well as in the risk screen for the substitute that is listed in this supplemental proposed rule. The risk screen is in the docket under the title “Risk Screen on Substitutes in Motor Vehicle Air Conditioning (Heavy-Duty Pickup Trucks and Complete Heavy-Duty Vans) (Retrofit Equipment); Substitute: HFO-1234yf (Solstice® yf or Solstice® 1234yf),”at Docket ID No. EPA-HQ-OAR-2024-0503. However, the EPA's Policy on Children's Health applies to this action. Information on how the Policy was applied is available under “Children's Environmental Health” in the General Information section of this preamble.

This action is not subject to Executive Order 13211, because it is not a significant regulatory action under Executive Order 12866.

This supplemental rulemaking does not involve technical standards.

Unless specified otherwise, all documents are available electronically at https://regulations.gov, docket number EPA-HQ-OAR-2024-0503.

The draft CCL 6 and the final CCL 6, when published, will not impose any requirements on regulated entities.

Submit your comments, identified by Docket ID No. EPA-HQ-OW-2022-0946, at https://www.regulations.gov, (our preferred method), or the other methods identified in the ADDRESSES section of this document. Once submitted, comments cannot be edited or removed from the docket. The EPA may publish any comment received to its public docket. Do not submit electronically any information you consider to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Multimedia submissions (audio, video, etc.) must be accompanied by a written comment. The written comment is considered the official comment and should include discussion of all points you wish to make. The EPA will generally not consider comments or comment contents located outside of the primary submission ( i.e., on the web, cloud, or other file sharing system). For additional submission methods, the full EPA public comment policy, information about CBI or multimedia submissions, and general guidance on making effective comments, please visit https://www.epa.gov/dockets/commenting-epa-dockets.

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Make sure to submit your comments by the comment period deadline. To ensure proper receipt by the EPA, identify the appropriate docket identification number in the subject line on the first page of your response. It would also be helpful if you provided the name, date, and Federal Register citation related to your comments.

This section briefly summarizes the purpose of this action, the statutory requirements, previous activities related to the CCL and the approach used to develop the draft CCL 6.

The purpose of this action is to present and seek comment upon the EPA's draft CCL 6 and the selection process used to make the list. When finalized, CCL 6 will be used to prioritize research and data collection efforts for drinking water contaminants. In a future, separate action the EPA will make regulatory determinations on whether to regulate at least five contaminants from the CCL with National Primary Drinking Water Regulations (NPDWRs) under the SDWA, section 1412(b)(1)(B)(ii).

SDWA section 1412(b)(1)(B)(i), as amended in 1996, requires the EPA to publish the CCL every five years. SDWA specifies that the list must include contaminants that are not subject to any proposed or promulgated NPDWRs, are known or anticipated to occur in public water systems (PWSs), and may require regulation under the SDWA. The statute provides that the unregulated contaminants considered for listing shall include, but not be limited to, hazardous substances identified in section 101(14) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) of 1980, and substances registered as pesticides under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA). SDWA section 1412(b)(1)(C) directs the EPA to identify those contaminants that present the greatest public health concern related to exposure from drinking water, and, in making such selection, to take into consideration the human health effects after exposure to a contaminant specifically to sensitive subgroups that comprise a meaningful portion of the general population (such as infants, children, pregnant women, the elderly, and individuals with a history of serious illness or other subpopulations) that are identifiable as being at greater risk of adverse health effects due to exposure to contaminants in drinking water than the general population.

The CCL is the first step in the SDWA regulatory framework, serving as the initial screening of contaminants to identify those which may require regulation under SDWA. The CCL informs future Unregulated Contaminant Monitoring Rules (UCMR) and Regulatory Determinations. The inclusion of a contaminant on the CCL, whether as an individual or in a group, does not mean that any particular contaminant will necessarily be regulated in the future. Rather, the CCL serves as a first level of evaluation for unregulated drinking water contaminants that may need further investigation of potential health effects and the levels at which they are found in drinking water. Contaminants from the CCL with sufficient health effects and occurrence information are considered for regulatory determination and rulemaking under SDWA.

SDWA section 1445(a)(2) as amended in 1996, requires that once every five years the EPA issues a UCMR with a list of no more than 30 unregulated contaminants to be monitored in drinking water by PWSs. The UCMR provides nationally representative occurrence data for unregulated contaminants in drinking water. The UCMR is related to the CCL in two ways. First, EPA considers contaminants from the CCL in selecting contaminants for the UCMR. Second, the contaminant occurrence data collected under the UCMR can inform EPA's consideration of contaminants for future CCLs.

The CCL is also related to the regulatory determinations process. Following the publication of a final CCL, the EPA evaluates those CCL contaminants with sufficient information to make a regulatory determination, using the three statutory criteria listed in SDWA section 1412(b)(1)(A):

1. The contaminant may have an adverse effect on the health of persons;

2. The contaminant is known to occur or there is a substantial likelihood that the contaminant will occur in public water systems with a frequency and at levels of public health concern; and

3. In the sole judgment of the Administrator, regulation of such contaminant presents a meaningful opportunity for health risk reduction for persons served by public water systems.

Based upon this evaluation, the EPA determines whether a regulation is appropriate (positive determination) or not appropriate (negative determination). The EPA is required by SDWA to make regulatory determinations for at least five contaminants listed on the CCL every five years.

The EPA has published five CCLs since 1996. The EPA published its most recent CCL, CCL 5, in the Federal Register (87 FR 68060, USEPA 2022a) on November 14, 2022. The final CCL 5 included 81 contaminants or groups. The list is comprised of 66 chemicals, 3 chemical groups (cyanotoxins, disinfection byproducts (DBPs), and per- and polyfluoroalkyl substances (PFAS)) and 12 microbial contaminants.

The draft CCL 6 includes 88 contaminants (Exhibits 1a, 1b, and 1c of this document). The list is comprised of 75 chemicals, four chemical groups, and nine microbes.

In developing the draft CCL 6, the EPA followed a 3-step process that is illustrated in Exhibit 2 of this document. The EPA applied this process separately to both chemical and microbial contaminants to develop the draft CCL 6. In the first step, the Agency developed the CCL 6 Chemical Universe and the CCL 6 Microbial Universe by compiling available health and occurrence data. In the second step, the EPA developed subsets of the Chemical Universe and Microbial Universe, called the Chemical and Microbial Preliminary Contaminant Candidate Lists (PCCLs), by prioritizing contaminants using a points-based screening system. Finally in the third step, the EPA selected the contaminants from the Chemical and Microbial PCCLs that are most likely to occur in public water systems and that pose the greatest potential public health concern in drinking water. Exhibit 2 of this document lists the number of chemicals, chemical groups and microbes the EPA considered at each step of the process.

The draft CCL 6 technical support documents provide comprehensive details about the draft CCL 6 chemical and microbial processes: Technical Support Document for the Draft Sixth Contaminant Candidate List (CCL 6)—Chemical Contaminants (USEPA, 2026a) and the Technical Support Document for the Draft Sixth Contaminant Candidate List (CCL 6)—Microbial Contaminants (USEPA, 2026c), hereafter referred to as the Chemical Technical Support Document and Microbial Technical Support Document, respectively.

In the first step of the CCL 6 development process for chemical candidates, the EPA identified a broad universe of potential drinking water contaminants. The EPA began the development process by compiling data sources to identify chemicals for inclusion in the CCL 6 Chemical Universe. The EPA identified data sources from previous CCLs, the Science Advisory Board (SAB), and scientific literature searches.

The EPA assessed data sources for their potential use in the CCL 6 development process based on four assessment factors; relevancy, completeness, redundancy, and retrievability. The EPA identified 20 sources of health effects data and 41 sources of occurrence data, including 18 new data sources. In total, 25,305 chemicals were identified from the main data sources and comprise the CCL 6 Chemical Universe. This is the largest universe of chemicals and the greatest number of data sources that the EPA has evaluated for any CCL. For more information about building the CCL 6 Chemical Universe and data sources used, see Chapter 2 of the Chemical Technical Support Document (USEPA, 2026a).

In the second step of the CCL 6 development process, the EPA screened chemicals from the CCL 6 Chemical Universe to identify the list of chemicals that should be further evaluated, namely the PCCL 6. The EPA applied a points-based screening system to determine which contaminants are placed onto the PCCL. The EPA assigned cumulative points to contaminants across health effects and occurrence data elements. The scoring is described in Section 3.2 of the Chemical Technical Support Document (USEPA, 2026a). The EPA used these screening scores, along with statistical models and analyses described in Section 4.6 of the Chemical Technical Support Document (USEPA, 2026a), to prioritize chemicals to inform the PCCL 6.

The EPA identified the highest scoring chemicals for inclusion on the PCCL 6 and validated the selection of the top scoring chemicals and the screening score framework using a statistical modeling approach. As a result of screening the CCL 6 Chemical Universe, the PCCL 6 started with 274 chemicals. From this pool, the protocol excluded 34 chemicals from the PCCL: nine chemicals were excluded due to recent regulatory determinations made for contaminants on CCL 5 (90 FR 3830, USEPA, 2025) or a pending Agency action. An additional 25 chemicals were excluded because they were canceled pesticides with no reported alternative uses that break down quickly in the environment and are therefore not anticipated to occur in public water systems.

The EPA also excluded chemicals from the base PCCL 6 that were within chemical groups that the Agency had determined to list (see Exhibit 1b and section III.A.3.d of this document). Eight chemicals were excluded because EPA had determined to include them in the DBP group, 15 chemicals were excluded because EPA had identified them for inclusion under the pharmaceutical group, and four other chemicals were excluded because EPA found they met the structural definition requirements for inclusion within the PFAS group (see Exhibit 1b for more details). In total, 213 chemicals remained on the PCCL 6 to be evaluated individually in the classification step. A more detailed summary of the PCCL 6 is included in Section 3.8 of the Chemical Technical Support Document (USEPA, 2026a).

In the third step of the CCL process, the EPA narrowed down the PCCL 6 to determine the draft CCL 6 through a classification process. For the purposes of CCL 6, classification refers to the process by which, first, the Agency incorporated the knowledge and evaluation by the EPA scientists, referred to as “chemical evaluators,” to recommend contaminants for listing for the draft CCL. To facilitate the classification process, the EPA conducted literature and assessment searches to gather supplemental health and occurrence data for the PCCL 6 chemicals. The main and supplemental data were compiled by chemical, and relevant health effects and occurrence data metrics were imported into a standardized document format, called the Contaminant Information Sheet (CIS) that are provided in the Technical Support Document for the Draft Sixth Contaminant Candidate List (CCL 6)—Contaminant Information Sheets (USEPA, 2026b). The chemical evaluators reviewed the health effects and occurrence information provided on the CISs to inform consensus listing recommendations for the PCCL chemicals.

During classification, the EPA gathered supplemental data to better evaluate the PCCL 6 chemicals and determine which contaminants were more likely to be present in drinking water at levels that may require regulation. These supplemental data were used to inform more specific evaluations of the PCCL 6 chemicals. For example, supplemental health data was gathered to calculate health concentrations, which are non-regulatory health-based toxicity values at or below which no adverse effects are expected to occur. The EPA compares occurrence data to the health concentrations to characterize the likelihood that the contaminant may be in drinking water at levels of health concern that may require regulation. Information on supplemental data used in the draft CCL 6 is in Section 4.2 of the Chemical Technical Support Document (USEPA, 2026a).

Chemical evaluators reviewed the health effects and occurrence data on the CIS for each chemical, and the evaluation teams provided consensus listing recommendations. A detailed description of the chemical evaluation team listing process can be found in Section 4.5 of the Chemical Technical Support Document (USEPA, 2026a).

The Agency developed an additional step for the CCL 6 process to further analyze a subset of the chemicals recommended for listing by the evaluators that had previous negative regulatory determinations. This was done to provide clarity regarding chemicals that have previously received decisions not to regulate under SDWA as well as to be consistent with the purpose of CCL as an iterative process that aims to improve each time. The CCL 6 chemical evaluators recommended twelve chemicals for listing that EPA had previously determined not to regulate under the separate SDWA regulatory determination process, which like CCL, occurs in 5-year cycles. For this subset of chemicals, the EPA examined whether any new health and/or occurrence information available since the time of the original determinations indicate the contaminant is of greater public health concern now and could potentially result in a different ( i.e., positive) decision under a future cycle of regulatory determination. For nine of these contaminants the currently available data do not indicate a greater public health concern at this time and these chemicals were consequently removed from consideration for the draft CCL 6. A description of the refinement can be found in Section 4.7 of the Chemical Technical Support Document (USEPA, 2026a).

In addition to the 75 chemicals proposed for listing on the draft CCL 6, the EPA proposes listing four chemical groups (disinfection byproducts, microplastics, PFAS, and pharmaceuticals) (see Exhibit 1b). These chemical groups have been identified as Agency priorities and contaminants of concern for drinking water by public stakeholders and under other EPA actions. Listing these four chemical groups on the draft CCL 6 does not mean that the EPA will make subsequent regulatory decisions for the entire group. The EPA will evaluate available scientific data on the listed groups, subgroups, and individual contaminants, as appropriate, included in the group to inform any regulatory determinations for the group, subgroup, or individual contaminants in the group.

DBPs are formed when disinfectants, used for purposes of antimicrobial treatment in drinking water, react with naturally occurring or man-made materials in water. The EPA is proposing to list DBPs as a group on the draft CCL 6, acknowledging this as an Agency priority for drinking water. The DBP group includes 27 unregulated DBPs, twenty-three of these were listed under the DBP chemical group published under the CCL 5 process (87 FR 68060, USEPA, 2022a); the other four unregulated DBPs (bromochloroacetonitrile, chloral hydrate, chloronitramide anion, and trichloroacetonitrile) are being added to the group based on consultation with the Agency microbial and disinfection byproduct subject matter experts.

The EPA acknowledges the concern for microplastics in sources of drinking water and also received a public nomination for including microplastics on CCL 6 that was accompanied by three data sources (Miller et al., 2021; Ragusa et al., 2021; and Zarus et al., 2021), all indicating potential concern for exposure to microplastics. In the Science Advisory Board's recommendations for the draft CCL 5, the SAB also encouraged the EPA to consider the assessment and inclusion of microplastics on future CCLs (USEPA, 2022b). Therefore, the Agency is including microplastics as a group on the draft CCL 6 as a first step toward defining and better understanding potential public health risk from exposure via drinking water.

As of the publication of the draft CCL 6, there remain significant data gaps for microplastics that will require further research before the Agency can fully understand the risks associated with microplastics in drinking water. The known data gaps requiring further research include (but are not limited to) the following:

1. A health-based definition: the need to determine the characteristics of the microplastics ( i.e., colors, polymers, shapes, sizes, etc.) most associated with adverse health effects in humans from exposure in drinking water.

2. Detection technology: the need for a validated analytical method with the proper quality control data, accuracy, and precision that will allow the EPA to be able to detect and analyze the concentrations of microplastics occurring in drinking water reliably.

3. Microplastics combined with other substances: the need to better understand how microplastics occurring in mixtures may impact detecting specific microplastics and identifying their associated health risks.

4. Sources: the need to better understand all potential sources of plastic pollution that contribute to the formation of microplastics in sources of drinking water.

In summary, research is needed to determine the adverse health effects from ingesting microplastics and to determine the characteristics of the microplastics ( i.e., size, type of plastic, etc.) that are associated with the adverse health effects posing the greatest potential health risk from exposure via drinking water. This research will also assist in the development of robust and validated analytical methods for microplastics in drinking water that may be used to standardize data collection and analysis in the future.

PFAS are a class of synthetic chemicals that are most commonly used to make products resistant to water, heat, and stains and are consequently found in industrial and consumer products like clothing, food packaging, cookware, cosmetics, carpeting, and fire-fighting foam (Cohen, 2020; USEPA, 2018). Over 4,000 PFAS have been manufactured and used globally since the 1940s (USEPA, 2019), and data are scarce for the majority of the PFAS, which would make evaluating PFAS individually for the draft CCL 6 impractical. The Agency is proposing to list a PFAS group to the draft CCL 6 inclusive of all PFAS that meet the structural definition developed for the final CCL 5 (87 FR 68060, USEPA, 2022a), excluding those that are subject to national drinking water regulations at the time of publication of final CCL 6 (National Primary Drinking Water Regulations, 40 CFR part 141 subpart Z—Control of Per- and Polyfluoroalkyl Substances (PFAS), n.d.)). For the purposes of CCL, the structural definition of PFAS remains the same as the definition utilized in CCL 5 and includes chemicals that contain at least one of these three structures:

This proposal to list PFAS as a chemical group is responsive to public nominations and is consistent with the approach taken for CCL 5 and is in keeping with the Agency's commitment to better understand and ultimately reduce the potential risks caused by this broad class of chemicals. Including the group of PFAS on the draft CCL 6 demonstrates the Agency's commitment to prioritizing and building a strong foundation of science on PFAS.

For over a decade, public concern about the presence of pharmaceutical substances in sources of drinking water has been a recurring topic of discussion for the Agency's prioritization of contaminants under SDWA. Since 2012, the EPA has led a Federal workgroup on pharmaceuticals in water alongside USDA, FDA, and USGS to exchange information on pharmaceuticals in the environment and to support the coordination of joint studies.

The EPA committed to understanding contaminants in drinking water and has identified pharmaceuticals as an Agency priority. This priority is further reinforced by feedback received through the public nominations process. For CCL 6, the Agency incorporated new data sources (Schaider et al., 2014 and Battaglin et al., 2018) that provided additional information about the occurrence of pharmaceutical products in water; for health data on pharmaceuticals, the EPA added a source used to help identify chemicals with estrogenic activity (USEPA, 2023b). The Agency also completed the Human Health Benchmarks for Pharmaceuticals (HHB-Rx) in Drinking Water (visit the EPA website for more information at https://www.epa.gov/sdwa/human-health-benchmarks ). Human health benchmarks are non-enforceable drinking water levels that provide information about adverse health effects from drinking water exposure to contaminants that have no drinking water standards or health advisories. The benchmarks, based on potential health effects from exposure via drinking water, informed the screening of pharmaceuticals and identification of the top scoring pharmaceuticals. Furthermore, the application of the benchmarks for pharmaceuticals in the CCL screening process informed the EPA about the current research needs for this broad class of chemicals.

The Agency is proposing the inclusion of a pharmaceuticals group on the draft CCL 6 to further prioritize research and information needed to identify which specific pharmaceuticals are occurring in drinking water and may be of greatest public health concern. For the purposes of the draft CCL 6, the EPA considers pharmaceuticals to include any substances defined as a “drug” under the Federal Food, Drug, And Cosmetic Act (1938).

The EPA defines the CCL Microbial Universe as microbial contaminants known to cause human disease. For CCL 6, the EPA conducted a literature search for newly identified microbes and reviewed the public nominations for additional pathogens to add to the CCL 6 Microbial Universe. The full CCL 6 Microbial Universe list is available in Appendix B of the Microbial Technical Support Document (USEPA, 2026c).

The EPA uses screening criteria to narrow the Microbial Universe to only those pathogens that have the potential to be transmitted through drinking water. The pathogens that are not excluded by any of the screening criteria are moved to the microbial PCCL 6. The screening criteria restricts the microbial PCCL 6 to human pathogens that may cause drinking water-related diseases resulting from ingestion, inhalation, or dermal contact with drinking water. In addition, any pathogen documented to cause disease transmitted through drinking water, regardless of the screening criteria, is also considered for the PCCL.

After applying the screening criteria to the CCL 6 Microbial Universe, 36 pathogens advanced to the PCCL 6. The screening criteria and results of the screening process are discussed in greater detail in Chapter 3 of the Microbial Technical Support Document (USEPA, 2026c).

Each pathogen on the PCCL 6 is evaluated for their occurrence in water and their ability to produce adverse health effects in humans. The EPA used a scoring system to assign a numerical value to each pathogen on the PCCL 6. Each pathogen on the PCCL 6 was scored based upon protocols developed to consider waterborne disease outbreaks, occurrence, and health risks. For details on the three protocols used to score the PCCL 6 microbial contaminants and the process by which the scores are combined see Chapter 4 in the Microbial Support Document (USEPA, 2026c).

For CCL 6, the CCL selection process for listing placed emphasis on the PCCL 6 microbial contaminants with confirmed (versus suspected) outbreak(s) that have occurred in U.S. PWSs during the timeframe evaluated for CCL 6. This approach to select contaminants for the CCL 6 prioritizes the pathogens that provide the best opportunities to advance public health protection through potential regulation.

The EPA sought public nominations in a Federal Register publication on February 17, 2023 for chemicals, microbes, or other substances that are not currently regulated to be considered for possible inclusion in the CCL 6 (88 FR 10316, USEPA, 2023a).

The EPA received nominations for six chemicals and/or chemical groups (lithium, manganese, microplastics, perchlorate, PFAS, pharmaceutical waste (specifically estrogenic compounds)) and five microbes and/or microbial groups ( Legionella pneumophila, Listeria monocytogenes, Nontuberculous Mycobacteria (NTM), pathogenic waterborne mycobacteria group, Pseudomonas aeruginosa). All public nomination letters and supporting information can be viewed in the EPA docket at https://www.regulations.gov (Docket ID No. EPA-HQ-OW-2022-0946). A detailed summary of the nomination process, including how each nominated contaminant was considered for inclusion on the draft CCL 6, is provided in Section 3.6 of the Chemical Technical Support Document (USEPA, 2026a) and in Section 2.2 of the Microbial Technical Support Document (USEPA, 2026c).

In previous CCLs, the SAB and other commenters have recommended additional prioritization of contaminants to communicate research needs and inform future regulatory decision-making. The EPA acknowledges that multiple contaminants on the draft CCL 6 (and considered in the PCCL 6) have data and information needs to fulfill in order for the Agency to make a regulatory determination in accordance with SDWA 1412 (b)(1)(A). By identifying additional research and information needs, the EPA is communicating to stakeholders both research priorities and gaps for these contaminants. The EPA provides summary tables in Chapter 5 of the Chemical Technical Support Document (USEPA, 2026a) and Chapter 6 in the Microbial Technical Support Document (USEPA, 2026c) identifying chemicals and microbial contaminants (respectively) categorized into four groups depending upon the availability of occurrence data and health assessments. This list is a starting point for identifying the data needs of the CCL 6 contaminants.

The EPA is seeking comment and supporting data on the following:

A. The chemical and microbial contaminants selected for the draft CCL 6.

B. The data sources the EPA obtained and evaluated for identifying the CCL 6 Chemical Universe and the CCL 6 Microbial Universe, that are provided in the Chemical Technical Support Document (USEPA, 2026a) and Microbial Technical Support Document (USEPA, 2026c) located in the docket for this document and also on the EPA's website for CCL 6 ( https://www.epa.gov/ccl/draft-contaminant-candidate-list-6-ccl-6 ).

C. The process the EPA used to screen the CCL 6 Chemical Universe and the CCL 6 Microbial Universe and develop the PCCL 6, that are described in the Chemical Technical Support Document (USEPA, 2026a) and Microbial Technical Support Document (USEPA, 2026c).

D. The process and supplemental data sources the EPA used for classification to select individual chemicals and microbes for the CCL 6 from the PCCL 6, that are described in the Chemical Technical Support Document (USEPA, 2026a) and Microbial Technical Support Document (USEPA, 2026c).

E. The listing of the disinfection byproducts group on the draft CCL 6.

F. The listing of the microplastics group on the draft CCL 6.

G. The listing of the PFAS group on the draft CCL 6.

H. The listing of the pharmaceuticals group on the draft CCL 6.

The EPA will evaluate comments received during the public comment period for this document. The EPA also plans to consult with the EPA's SAB. The EPA will consider the public comments and the SAB input to prepare the final CCL 6.

Inspection of Public Comments: All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following website as soon as possible after they have been received: https://www.regulations.gov. Follow the search instructions on that website to view public comments. CMS will not post on Regulations.gov public comments that make threats to individuals or institutions or suggest that the commenter will take actions to harm an individual. CMS continues to encourage individuals not to submit duplicative comments. We will post acceptable comments from multiple unique commenters even if the content is identical or nearly identical to other comments.

Plain Language Summary: In accordance with 5 U.S.C. 553(b)(4), a plain language summary of this rule may be found at https://www.regulations.gov.

The IRF prospective payment system (IRF PPS) Addenda, along with other supporting documents and tables referenced in this proposed rule, are available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS. The technical reports that describe the analyses CMS conducted referenced in the payment reform RFI (Section VIII. of this proposed rule) can be found at https://www.cms.gov/medicare/payment/prospective-payment-systems/inpatient-rehabilitation/research.

We note that prior to 2020, each rule or notice issued under the IRF PPS included a detailed reiteration of the various regulatory provisions that have affected the IRF PPS over the years. That discussion, which has been updated to reflect subsequent years, 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/files/document/irf-regulatory-and-legislative-history.pdf.

This proposed rule would update the prospective payment rates for inpatient rehabilitation facilities (IRFs) for Fiscal Year (FY) 2027 (that is, for discharges occurring on or after October 1, 2026, and on or before September 30, 2027) under section 1886(j)(3)(C) of the Social Security Act (the Act). As required by section 1886(j)(5) of the Act, this proposed rule includes the classification and weighting factors for the IRF prospective payment system (PPS) case-mix groups (CMGs), and a description of the methodologies and data used in computing the prospective payment rates for FY 2027. In addition, the proposed rule includes a solicitation for public comments on alternative data sources for the IRF PPS wage index; proposes requirements by revising § 412.622(a)(3)(ii) to require all therapy treatments and/or therapy evaluations to begin within 36-hours from midnight on the day of admission (hereafter referred to as the 36-hour rule); proposes to revise § 412.622(a)(4)(i)(B) to require documentation of a patient's current functional status in the preadmission screening; proposes requirements for the initial Interdisciplinary Team (IDT) by revising § 412.622(a)(5) to require the meeting to occur by the 4th day of admission to align with the Plan of Care (POC) timeframe; and includes a Request for Information (RFI) on options to modernize and revise the primary diagnosis and comorbidity score methodology under the Skilled Nursing Facility Patient Driven Payment Model (PDPM) for the IRF PPS.

For the IRF Quality Reporting Program (QRP), this proposed rule proposes the revision of the IRF QRP data submission deadlines beginning with the FY 2029 IRF QRP. We are also soliciting public comments through one RFI on future measure concepts for the IRF QRP.

For the Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program (CBP), this rule proposes a higher bid surety bond amount for a bidding entity submitting a bid in Remote Item Delivery (RID) competitive bidding area.

In this proposed rule, we use the methods described in the FY 2026 IRF PPS final rule (90 FR 37678) to update the prospective payment rates for FY 2027 using the most current and complete data available at this time, which is FY 2025 IRF claims and FY 2024 IRF cost report data, as discussed in section VI. of this proposed rule. In addition, the proposed rule includes a proposal to revise the 36-Hour Rule at § 412.622(a)(3)(ii) to require all therapy treatments or therapy evaluations to begin within 36-hours from midnight on the day of admission, proposal to revise § 412.622(a)(4)(i)(B) to require documentation of a patient's current functional status in the preadmission screening and a proposal for an initial IDT meeting policy (§ 412.622(a)(5)(ii)) to occur by the 4th day of admission to align with the POC timeframe.

The IRF proposed rule also provides an RFI on options to modernize the IRF PPS by leveraging and revising the primary diagnosis model and comorbidity score model used under the Skilled Nursing Facility Patient Driven Payment Model (PDPM). Additionally, we are soliciting comments on whether we should consider using alternative data sources to construct an IRF-specific wage index for potential use in future years to align with other CMS payment systems.

For the IRF QRP, this proposed rule would propose a revision to the IRF QRP data submission deadlines beginning with the FY 2029 IRF QRP. We are also soliciting public comments through one RFI on future measure concepts for the IRF QRP.

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 2026, 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/files/document/irf-regulatory-and-legislative-history.pdf.

Under the IRF PPS from FYs 2002 through 2005, the prospective payment rates were computed across 100 distinct CMGs, as described in the FY 2002 IRF PPS final rule (66 FR 41316). We constructed 95 CMGs using rehabilitation impairment categories (RICs), functional status (both motor and cognitive), and age (in some cases, cognitive status and age may not be a factor in defining a CMG). In addition, we constructed five special CMGs to account for very short stays and for patients who expire in the IRF.

For each of the CMGs, we developed relative weighting factors to account for a patient's clinical characteristics and expected resource needs. Thus, the weighting factors accounted for the relative difference in resource use across all CMGs. Within each CMG, we created tiers based on the estimated effects that certain comorbidities would have on resource use.

We established the Federal PPS rates using a standardized payment conversion factor (formerly referred to as the budget-neutral conversion factor). For a detailed discussion of the budget-neutral conversion factor, please refer to our FY 2004 IRF PPS final rule (68 FR 45684 and 45685). In the FY 2006 IRF PPS final rule (70 FR 47880), we discussed in detail the methodology for determining the standard payment conversion factor.

We applied the relative weighting factors to the standard payment conversion factor to compute the unadjusted prospective payment rates under the IRF PPS from FYs 2002 through 2005. Within the structure of the payment system, we then made adjustments to account for interrupted stays, transfers, short stays, and deaths. Finally, we applied the applicable adjustments to account for geographic variations in wages (wage index), the percentage of low- income patients, location in a rural area (if applicable), and outlier payments (if applicable) to the IRFs' unadjusted prospective payment rates.

For cost reporting periods that began on or after January 1, 2002, and before October 1, 2002, we determined the final prospective payment amounts using the transition methodology prescribed in section 1886(j)(1) of the Act. Under this provision, IRFs transitioning into the PPS were paid a blend of the Federal IRF PPS rate and the payment that the IRFs would have received had the IRF PPS not been implemented. This provision also allowed IRFs to elect to bypass this blended payment and immediately be paid 100 percent of the Federal IRF PPS rate. The transition methodology expired as of cost reporting periods beginning on or after October 1, 2002 (FY 2003), and payments for all IRFs now consist of 100 percent of the Federal IRF PPS rate.

Section 1886(j) of the Act confers broad statutory authority upon the Secretary to propose refinements to the IRF PPS. In the FY 2006 IRF PPS final rule (70 FR 47880) and in correcting amendments to the FY 2006 IRF PPS final rule (70 FR 57166), we finalized a number of refinements to the IRF PPS case-mix classification system (the CMGs and the corresponding relative weights) and the case-level and facility-level adjustments. These refinements included the adoption of the Office of Management and Budget's (OMB's) Core-Based Statistical Area 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 proposed rule also includes the provisions effective in the correcting amendments. For a detailed discussion of the final key policy changes for FY 2006, please refer to the FY 2006 IRF PPS final rule.

The regulatory history previously included in each rule or notice issued under the IRF PPS, including a general description of the IRF PPS for FYs 2007 through 2026, is available on the CMS website at https://www.cms.gov/files/document/irf-regulatory-and-legislative-history.pdf.

The Patient Protection and Affordable Care Act (Pub. L. 111-148) was enacted on March 23, 2010. The Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152), which amended and revised several provisions of the Patient Protection and Affordable Care Act, was enacted on March 30, 2010. In this proposed rule, we refer to the two statutes collectively as the “Affordable Care Act” or “ACA”.

The ACA included several provisions that affect the IRF PPS in FYs 2012 and beyond. In addition to what was previously discussed, section 3401(d) of the ACA also added section 1886(j)(3)(C)(ii)(I) of the Act (providing for a “productivity adjustment” for FY 2012 and each subsequent FY). The productivity adjustment for FY 2027 is discussed in section VI. of this proposed rule. Section 1886(j)(3)(C)(ii)(II) of the Act provides that the application of the productivity adjustment to the market basket percentage increase 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 IRF market basket percentage increase 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 IRF market basket percentage increase 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.

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, 110 Stat. 1936 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 an 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).

In this FY 2027 IRF PPS proposed rule, we are proposing to update the IRF PPS for FY 2027 and the IRF QRP for FY 2027 and FY 2029.

The proposed policy changes and updates to the IRF prospective payment rates for FY 2027 will be as follows:

• Update the CMG relative weights and average length of stay values for FY 2027 in a budget neutral manner, as discussed in section IV. of this proposed rule.

• Update the IRF PPS payment rates for FY 2027 by the IRF market basket percentage increase, 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. of this proposed rule.

• Update the FY 2027 IRF PPS payment rates by the FY 2027 wage index, applying the third year of the phase-out of the rural adjustment for IRFs transitioning from rural to urban, and the labor-related share in a budget-neutral manner, as discussed in section V. of this proposed rule.

• Solicit public comments on alternative data sources for the wage index, as discussed in section V. of this proposed rule.

• Describe the calculation of the IRF standard payment conversion factor for FY 2027, as discussed in section V. of this proposed rule.

• Update the outlier threshold amount for FY 2027, as discussed in section VI. of this proposed rule.

• Update the cost-to-charge ratio (CCR) ceiling and urban/rural average CCRs for FY 2027, as discussed in section VI. of this proposed rule.

• Proposal to require all therapy treatments or therapy evaluations to begin within 36-hours from midnight on the day of admission (§ 412.622(a)(3)(ii)), as discussed in section VII. of this proposed rule.

• Proposal to require the patient's current functional status is documented in the preadmission screening (§ 412.622(a)(4)(i)(B)), as discussed in section VII. of this proposed rule.

• Proposal to require the initial IDT meeting to occur by the 4th day of admission and align with the POC timeframe (§ 412.622(a)(5)(ii)), as discussed in section VII. of this proposed rule.

• The RFI on updating the IRF payment system to explore options to modernize the IRF PPS by leveraging the existing clinical classification and comorbidity score methodology used by the Skilled Nursing Facility (SNF) Patient Driven Payment Model (PDPM) to group patients by case mix, as discussed in section VIII. of this proposed rule.

The proposed policy changes and updates to the IRF QRP for FY 2029 are as follows:

• Revise the IRF QRP data submission deadlines.

• Request for information on future measure concepts.

• The proposed policy change and update to the DMEPOS Competitive Bidding Program (CBP) is as follows:

• Update the bid surety bond requirement to require a higher bid surety bond amount for a bidding entity submitting a bid under a Remote Item Delivery competitive bidding program.

As specified in § 412.620(b)(1), we calculate a relative weight for each CMG that is proportional to the resources needed for an average inpatient rehabilitation case in that CMG. For example, cases in a CMG with a relative weight of 2, on average, will cost twice as much as cases in a CMG with a relative weight of 1. Relative weights account for the variance in cost per discharge due to the variance in resource utilization among the payment groups, and their use helps to ensure that IRF PPS payments support beneficiary access to care, as well as provider efficiency.

In this proposed rule, we would update the CMG relative weights and ALOS values for FY 2027. Typically, we use the most recent available data to update the CMG relative weights and ALOS values. For FY 2027, we are using the FY 2025 IRF claims and FY 2024 IRF cost report data (CMS Form 2552-10, OMB No 0938-0050). These data are the most current and complete data available at the time of this proposed rule. Currently, only a small portion of the FY 2025 IRF cost report data is available for analysis, but the majority of the FY 2025 IRF claims data are available for analysis.

In this FY 2027 IRF PPS proposed rule, we are proposing that if more recent data become available after the publication of the proposed rule and before the publication of the final rule, we would use such data to determine the FY 2027 CMG relative weights and ALOS values in the final rule.

We propose 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 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 the operating (routine and ancillary services) and capital costs of IRFs. The process to calculate the CMG relative weights for this proposed rule is as follows:

Step 1. We estimate the effects that comorbidities have on costs.

Step 2. We adjust the cost of each Medicare discharge (case) to reflect the effects found in Step 1.

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 2027 CMG relative weights using a normalization factor that results in the average CMG relative weights in FY 2027 being the same as the average CMG relative weights in the FY 2026 IRF PPS final rule (90 FR 37678).

Consistent with the methodology that we have used to update the IRF classification system in each instance in the past, we are proposing to update the CMG relative weights for FY 2027 in such a way that total estimated aggregate payments to IRFs for FY 2027 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 2027 CMG relative weights, we use the following steps:

Step 1. Calculate the estimated total amount of IRF PPS payments for FY 2027 (with no changes to the CMG relative weights).

Step 2. Calculate the estimated total amount of IRF PPS payments for FY 2027 by applying the proposed changes to the CMG relative weights (as discussed in this proposed rule).

Step 3. Divide the amount calculated in Step 1 by the amount calculated in Step 2 to determine the budget neutrality factor of 0.9990 that would maintain the same total estimated aggregate payments in FY 2027 with and without the proposed changes to the final CMG relative weights.

Step 4. Apply the budget neutrality factor from Step 3 to the FY 2027 IRF PPS standard payment amount after the application of the budget-neutral wage adjustment factor.

In section V. of this proposed rule, we discuss the proposed use of the existing methodology to calculate the proposed standard payment conversion factor for FY 2027.

In Table 2, “Proposed Relative Weights and Average Length of Stay Values for Case -Mix Groups,” we present the proposed CMGs, the comorbidity tiers, the corresponding relative weights, and the ALOS values for each CMG and tier for FY 2027. 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.

Generally, updates to the CMG relative weights result in some increases and some decreases to the CMG relative weight values. Table 3 shows how we estimate that the application of the proposed revisions for FY 2027 would affect particular CMG relative weight values, which would affect the overall distribution of payments within CMGs and tiers. We note that, because we propose to implement the CMG relative weight revisions in a budget-neutral manner (as previously described), total estimated aggregate payments to IRFs for FY 2027 would not be affected as a result of the proposed CMG relative weight revisions. However, the proposed revisions will affect the distribution of payments within CMGs and tiers.

As shown in Table 3, 99.4 percent of all IRF cases are in CMGs and tiers that would experience less than a 5 percent change (either increase or decrease) in the CMG relative weight value as a result of the proposed revisions for FY 2027. The proposed changes in the ALOS values for FY 2027, compared with the FY 2026 ALOS values, are small and do not show any particular trends in IRF length of stay patterns.

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 in a budget neutral manner. 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.

Section 1886(j)(3)(C) of the Act requires the Secretary to establish an increase factor that reflects changes over time in the prices of an appropriate mix of goods and services for which payment is made under the IRF PPS. According to section 1886(j)(3)(A)(i) of the Act, the increase factor shall be used to update the IRF prospective payment rates for each FY. Section 1886(j)(3)(C)(ii)(I) of the Act requires the application of the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act. Thus, we propose to update the IRF PPS payments for FY 2027 by a market basket percentage increase 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).

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.

For FY 2027 (that is, beginning October 1, 2026, and ending September 30, 2027), we propose to update the IRF PPS payments by a market basket percentage increase 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 2027, we propose to use the same methodology described in the FY 2026 IRF PPS final rule (90 FR 37687 through 37691).

Consistent with historical practice, we propose to estimate the market basket update for the IRF PPS for FY 2027 based on the most recently available data at the time of rulemaking. For this proposed rule, based on IHS Global Inc.'s (IGI) fourth quarter 2025 forecast with historical data through the third quarter of 2025, the proposed 2021-based IRF market basket percentage increase for FY 2027 is projected to be 3.2 percent. IGI is a nationally recognized economic and financial forecasting firm with which CMS contracts to forecast the components of the market baskets. 1 We also propose that if more recent data become available after the publication of the proposed rule and before the publication of the final rule (for example, a more recent estimate of the market basket percentage increase or productivity adjustment), we would use such data, if appropriate, to determine the FY 2027 IRF market basket update in the final rule.

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. The productivity measure referenced in section 1886(b)(3)(B)(xi)(II) of the Act is published by BLS as private nonfarm business total factor productivity (TFP) previously referred to as multifactor productivity). 2 We refer readers to https://www.bls.gov/productivity/ 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.

For this FY 2027 IRF PPS proposed rule, based on IGI's fourth quarter 2025 forecast, the 10-year moving average growth of TFP for FY 2027 is projected to be 0.8 percent. In accordance with section 1886(j)(3)(C) of the Act, we propose to base the FY 2027 IRF market basket percentage increase, which is used to determine the applicable percentage increase for the IRF payments, on IGI's fourth quarter 2025 forecast of the 2021-based IRF market basket. We propose to then reduce the market basket percentage increase by the proposed productivity adjustment for FY 2027 of 0.8 percentage point (the 10-year moving average growth of TFP for the period ending FY 2027 based on IGI's fourth quarter 2025 forecast). Therefore, the proposed FY 2027 IRF market basket update is 2.4 percent (3.2 percent market basket percentage increase reduced by the 0.8 percentage point productivity adjustment). Furthermore, we propose that if more recent data become available after the publication of the proposed rule and before the publication of the final rule (for example, a more recent estimate of the market basket percentage increase and productivity adjustment), we would use such data, if appropriate, to determine the FY 2027 IRF market basket percentage increase and productivity adjustment in the final rule.

In its March 2026 Report to Congress, MedPAC recommended that Congress should reduce the IRF PPS base payment rate by 7 percent for FY 2027. 3 As discussed, and in accordance with sections 1886(j)(3)(C) and 1886(j)(3)(D) of the Act, the Secretary proposes to update the IRF PPS payment rates for FY 2027 by the proposed IRF market basket update of 2.4 percent. Section 1886(j)(3)(C) of the Act does not provide the Secretary with the authority to apply a different update factor to IRF PPS payment rates for FY 2027.

We invite public comments on our proposals for the FY 2027 market basket percentage increase and productivity adjustment.

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 propose 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 propose to calculate the labor-related share for FY 2027 as the sum of the FY 2027 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 2027. We calculate the labor-related relative importance from the IRF market basket, and it approximates the labor-related portion of the total costs after taking into account historical and projected price changes between the base year and FY 2027. 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 2025 forecast of the 2021-based IRF market basket, the sum of the FY 2027 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 70.8 percent. We propose that the portion of Capital-Related costs that are influenced by the local labor market is 46 percent. Since the relative importance for Capital-Related costs is 8.1 percent of the 2021-based IRF market basket for FY 2027, we propose to take 46 percent of 8.1 percent to determine the labor-related share of Capital-Related costs for FY 2027 which is 3.7 percent. Therefore, we propose a total labor-related share for FY 2027 of 74.5 percent (the sum of 70.8 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 propose that if more recent data subsequently become available after publication of the proposed rule and before the publication of the final rule (for example, a more recent estimate of the labor-related share), we would use such data, if appropriate, to determine the FY 2027 IRF labor-related share in the final rule.

Table 4 shows the current estimate of the proposed FY 2027 labor-related share and the FY 2026 final labor-related share using the 2021-based IRF market basket relative importance.

We invite public comments on the proposed labor-related share for FY 2027.

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 adjustments 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 § 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 2027, we propose to maintain the policies and methodologies described in the FY 2026 IRF PPS final rule (90 FR 37678 related to the labor market area definitions and the wage index methodology for areas with wage data. Thus, we use the core based statistical areas (CBSAs) labor market area definitions and the FY 2027 pre-reclassification and pre-floor hospital wage index data. In accordance with section 1886(d)(3)(E) of the Act, the FY 2027 pre-reclassification and pre-floor hospital wage index is based on data submitted for hospital cost reporting periods beginning on or after October 1, 2022, and before October 1, 2023 (that is, FY 2024 cost report data).

In addition, we will continue to use the same methodology discussed in the FY 2008 IRF PPS final rule (72 FR 44299) to address those geographic areas in which there are no hospitals and, thus, no hospital wage index data on which to base the calculation for the FY 2027 IRF PPS wage index. For FY 2027, the only rural area without wage index data available is in North Dakota. 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 2027, the only urban area without wage index data available is CBSA 25980, Hinesville Fort Stewart, Georgia.

For FY 2027, we are proposing to continue to use the concurrent pre-floor, pre-reclassified IPPS hospital wage index as the basis for the IRF wage index. We continue to consider this an appropriate source of wage index data to estimate costs per day, consistent with our wage index policy at §  412.624(e)(1). At the same time, we routinely assess whether more recent or alternative data sources may further enhance the accuracy and representativeness of our estimates. We note that other payment systems have explored and are exploring alternative wage index methodologies under their specific programmatic and statutory circumstances. For example, CMS finalized changes to the End-Stage Renal Disease (ESRD) PPS wage index using the Bureau of Labor Statistics (BLS) occupation-level wage data in the CY 2025 ESRD PPS final rule (89 FR 89084). While this approach was developed under the specific programmatic and statutory circumstances of the ESRD PPS and may not be directly transferable to the IRF PPS, CMS is interested in exploring whether similar methodologies using publicly available wage data could be adapted to reflect the geographic variation in labor costs for inpatient rehabilitation facilities.

In its 2023 Report to Congress, 4 MedPAC discussed various conceptual approaches to Medicare wage indexes, including the use of county-level wage data from BLS with an occupational mix to construct wage indexes that are more specific to the payment setting. MedPAC has previously written about using all-employer, occupation-level wage data to establish different weights for setting-specific occupational labor mixes as one approach to geographic adjustments.

We are soliciting comments on whether we should consider using alternative data sources to construct an IRF-specific wage index for potential use in future years. CMS seeks feedback to understand the potential advantages and limitations of using alternative data sources, such as BLS data and IRF cost reports, as well as other methodologies that interested parties believe could appropriately reflect the geographic variation in labor costs for IRFs. In addition, as discussed elsewhere in the Federal Register , we note that we are also considering the potential use of alternative data sources in other payment systems including the Inpatient Facilities PPS, Skilled Nursing Facilities PPS, and Hospice PPS. We seek feedback on the unique considerations applicable to IRFs that should inform how CMS considers the potential use of alternative data sources.

We invite public comments on our proposals regarding the Wage Adjustment for FY 2027 and on the potential use of alternative data sources for the IRF PPS Wage index.

The wage index used for the IRF PPS is calculated using the pre-reclassification and pre-floor hospital wage index data and is assigned to the IRF on the basis of the labor market area in which the IRF is geographically located. IRF labor market areas are delineated based on the CBSAs established by the OMB. 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. 1804 (available at https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf ) beginning October 1, 2020, including a 1 year transition for FY 2021 under which we applied a 5-percent cap on any decrease in an IRF's wage index compared to its wage index for the prior fiscal year (FY 2020). The updated OMB delineations more accurately reflect the contemporary urban and rural nature of areas across the country, and the use of such delineations allows us to determine more accurately the appropriate wage index and rate tables to apply under the IRF PPS. OMB issued further revised CBSA delineations in OMB Bulletin No. 20-01, on March 6, 2020 (available on the web at https://www.whitehouse.gov/wp-content/uploads/2020/03/Bulletin-20-01.pdf ). However, we determined that the changes in OMB Bulletin No. 20-01 do not impact the CBSA-based labor market area delineations adopted in FY 2021. Therefore, we did not propose to adopt the revised OMB delineations identified in OMB Bulletin No. 20-01 for FY 2022 through FY 2024.

On July 21, 2023, OMB issued OMB Bulletin No. 23-01 (available at https://www.whitehouse.gov/wp-content/uploads/2023/07/OMB-Bulletin-23-01.pdf ) which updates and supersedes OMB Bulletin No. 20-01 based upon the 2020 Standards for Delineating Core Based Statistical Areas (“the 2020 Standards”) published by OMB on July 16, 2021 (86 FR 37770). OMB Bulletin No. 23-01 revised CBSA delineations that 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). As discussed in the FY 2025 IRF PPS final rule (89 FR 64291 through 64304), we adopted the revised OMB delineations identified in OMB Bulletin No. 23-01.

For FY 2027, CMS is continuing the 3-year budget-neutral phase-out of the rural adjustment for FY 2024 IRFs transitioning from rural to urban status in FY 2025 under the revised CBSA delineations. As stated in the FY 2025 IRF PPS final rule (89 FR 64276), the purpose of this gradual phase-out of the rural adjustment for these facilities is to reduce the potential negative financial impacts associated with this reclassification. In FY 2027, the final year of this phase-out, affected IRFs will receive the full FY 2027 wage index with no further FY 2024 rural adjustment. This final step is part of a gradual reduction of the 14.9 percent rural adjustment over three fiscal years FYs 2025, 2026 and 2027. Furthermore, this policy does not apply to urban IRFs transitioning to rural status, as they will receive the full rural adjustment.

To calculate the wage-adjusted facility payment for the payment rates set forth in this proposed rule, we multiply the unadjusted Federal payment rate for IRFs by the FY 2027 labor-related share based on the 2021-based IRF market basket relative importance (74.5 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. of this proposed 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 § 412.624(e)(1), as described in the steps below. We use the listed steps to ensure that the FY 2027 IRF standard payment conversion factor reflects the update to the wage indexes (based on the FY 2023 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 2026 (as published in the FY 2026 IRF PPS final rule (90 FR 37678).

Step 2. Calculate the total amount of estimated IRF PPS payments using the FY 2027 wage index values (based on updated hospital wage data and taking into account the permanent 5-percent cap on wage index decreases when applicable) and the FY 2027 labor-related share of 74.5 percent.

Step 3. Divide the amount calculated in Step 1 by the amount calculated in Step 2. The resulting quotient is the proposed FY 2027 budget-neutral wage adjustment factor of 1.0033.

Step 4. Apply the budget neutrality factor from Step 3 to the FY 2027 IRF PPS standard payment amount after the application of the market basket percentage increase to determine the FY 2027 standard payment conversion factor.

We discuss the calculation of the standard payment conversion factor for FY 2027 in section VI.E. of this proposed rule.

We invite public comments on our proposals regarding the wage adjustment for FY 2027.

To calculate the proposed IRF standard payment conversion factor for FY 2027, as illustrated in Table 5, we begin by applying the IRF market basket update for FY 2027, as adjusted in accordance with sections 1886(j)(3)(C) of the Act, to the standard payment conversion factor for FY 2026 ($19,371). Applying the 2.4 percent IRF market basket update for FY 2027 to the standard payment conversion factor for FY 2026 of $19,371 yields a FY 2027 standard payment amount of $19,836. Then, we apply the budget neutrality factor for the FY 2027 wage index (taking into account the policy placing a permanent 5-percent cap on decreases to a provider's wage index), and labor-related share of 1.0033, which results in an IRF standard payment amount of $19,901. We next apply the budget neutrality factor for the CMG relative weights of 0.9990, which results in the proposed IRF standard payment conversion factor of $19,881 for FY 2027.

We then apply the CMG relative weights described in section V.E of this rule to the proposed FY 2027 standard payment conversion factor ($19,881), to determine the unadjusted IRF prospective payment rates for FY 2027. The unadjusted IRF prospective payment rates for FY 2027 are shown in Table 6.

Table 7 illustrates the methodology for adjusting the prospective payments (as described in section V. of this proposed rule). The following examples are based on two hypothetical Medicare beneficiaries, both classified as CMG 0104 (without comorbidities). The unadjusted prospective payment rate for CMG 0104 (without comorbidities) appears in Table 6.

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 0.8624, 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), a wage index of 0.9492, and a teaching status adjustment of 0.0784.

To calculate each IRF's labor and non-labor portion of the prospective payment, we begin by taking the FY 2027 unadjusted prospective payment rate for CMG 0104 (without comorbidities) from Table 6. Then, we multiply the labor-related share for FY 2027 (74.5 percent) described in section VI. of this proposed 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 proposed 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 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 7 illustrates the components of the adjusted payment calculation.

Thus, the adjusted payment for Facility A would be $31,798.41 and the adjusted payment for Facility B would be $32,829.76.

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 2026 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, 88 FR 50956, 89 FR 64276 and 90 FR 37678, 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 through 46385) that we would continue to analyze the estimated outlier payments for subsequent years and adjust the outlier threshold amount as appropriate to maintain the 3 percent target.

To update the IRF outlier threshold amount for FY 2027, we propose to use FY 2025 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 2026. 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 2027, we estimate the amount of FY 2027 IRF PPS aggregate and outlier payments using the most recent claims available (FY 2025) and the proposed FY 2027 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 estimate that IRF outlier payments as a percentage of total estimated payments will be approximately 2.6 percent in FY 2026. Therefore, we propose to update the outlier threshold amount from $10,141 for FY 2026 to $8,689 for FY 2027 to maintain estimated outlier payments at approximately 3 percent of total estimated aggregate IRF payments for FY 2027.

We note that, with our longstanding practice when developing previous IRF PPS fiscal year rules, we update our data between the FY 2027 IRF PPS proposed and final rules to ensure that we use the most recent available data in calculating IRF PPS payments. We are proposing the outlier threshold amount of $8,689 to maintain estimated outlier payments at approximately 3 percent of total estimated aggregate IRF payments for FY 2027.

We invite public comments on the proposed update to the IRF outlier threshold for FY 2027.

CCRs are used to adjust charges from Medicare claims to costs and are computed annually from facility-specific data obtained from Medicare Cost Reports (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 described in the FY 2004 IRF PPS final rule (68 FR 45692 through 45694), we proposed to apply a ceiling to IRFs' CCRs. Using that methodology, we propose to update the national urban and rural CCRs for IRFs, as well as the national CCR ceiling for FY 2027, 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 2027, as discussed below in this section.

• Other IRFs for which accurate data to calculate an overall CCR are not available.

Specifically, for FY 2027, we propose to estimate a national average CCR of 0.461 for rural IRFs, which we calculated by taking an average of the CCRs for all rural IRFs using their most recently submitted cost report data. Similarly, we propose to estimate a national average CCR of 0.386 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 applied weights to both of these averages using the IRFs' estimated costs, meaning that the CCRs of IRFs with higher total costs factor more heavily into the averages than the CCRs of IRFs with lower total costs. For this proposed rule, we used the most recent available cost report data (FY 2024). This includes all IRFs whose cost reporting periods begin on or after October 1, 2023, and before October 1, 2024. If, for any IRF, the FY 2024 cost report was missing or had an “as submitted” status, we used the most recent FY for which a settled cost report was available (that is, from a FY between FY 2004 and FY 2023) 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 2024 cost report data for this proposed rule, we estimate a national average CCR of 0.461 for rural IRFs and a national average CCR of 0.386 for urban IRFs.

In accordance with past practice, we propose to set the national CCR ceiling at 3 standard deviations above the mean CCR. Using this method, we propose a national CCR ceiling of 1.54 for FY 2027. This means that, if an individual IRF's CCR were to exceed this ceiling of 1.54 for FY 2027, we will replace the IRF's CCR with the appropriate proposed national average CCR (either rural or urban, depending on the geographic location of the IRF). We calculated the national CCR ceiling by:

Step 1. Taking the national average CCR (weighted by each IRF's total costs, as previously discussed) of all IRFs for which we have sufficient cost report data (both rural and urban IRFs combined).

Step 2. Estimating the standard deviation of the national average CCR computed in Step 1.

Step 3. Multiplying the standard deviation of the national average CCR computed in Step 2 by a factor of 3 to compute a statistically significant reliable ceiling.

Step 4. Adding the result from Step 3 to the national average CCR of all IRFs for which we have sufficient cost report data, from Step 1.

We also propose that if more recent data become available after the publication of the proposed rule and before the publication of the final rule, we will use such data to determine the FY 2027 national average rural and urban CCRs and the national CCR ceiling in the final rule. Using the FY 2024 cost report data for this proposed rule, we estimate a national average CCR ceiling of 1.54, using the same methodology.

We invite public comments on the proposed update to the IRF CCR ceiling and urban/rural averages for FY 2027.

In accordance with 42 CFR 412.622(a)(3)(ii), in order for an IRF claim to be considered reasonable and necessary, the patient's intensive rehabilitation therapy program must consist of at least 3 hours of therapy (physical therapy, occupational therapy, speech-language pathology, or prosthetics/orthotics therapy) per day at least 5 days per week. Under certain conditions, this program might consist of at least 15 hours of intensive rehabilitation therapy provided over 7 days. The required therapy treatments and/or therapy evaluations for IRF patients must begin within 36 hours from midnight of the day of admission to the IRF. Sub-regulatory guidance that was posted by CMS in 2010 may have created ambiguous policy interpretation as to whether only one therapy or all therapies must be initiated within 36 hours from the day of admission to the IRF (hereafter referred to as the 36-hour requirement). Therapy evaluations are generally considered to constitute the beginning of the required therapy services and may count towards meeting the 36-hour requirement. However, all therapies must be initiated, not just one therapy to meet the policy regulation. For example, if a patient is admitted to the IRF at 2:00 p.m. on Tuesday, therapy treatment must be initiated by 12:00 p.m. on Thursday (that is, 36 hours after Tuesday at midnight).

For the purposes of this proposed rule, we are proposing to revise § 416.622(a)(3)(ii) to require all therapy treatments and/or therapy evaluations must begin no later than 36 hours after midnight of the day of admission. An IRF claim will not be considered reasonable and necessary (in accordance with section 1862(a)(1) of the act) if it does not comply with this coverage criteria.

IRFs are required to document a comprehensive preadmission screening in accordance with 42 CFR 412.622(a)(4)(i) in order to indicate a patient meets the requirements for an IRF admission to be considered reasonable and necessary and ultimately, to be reimbursed for an IRF claim. As part of this policy (42 CFR 412.622(a)(4)(i)(B)), the preadmission screening must “include a detailed and comprehensive review of each patient's condition and medical history, including the patient's level of function prior to the event or condition that led to the patient's need for intensive rehabilitation therapy, expected level of improvement, and the expected length of time necessary to achieve that level of improvement; an evaluation of the patient's risk for clinical complications; the conditions that caused the need for rehabilitation; the treatments needed (that is, physical therapy, occupational therapy, speech-language pathology, or prosthetics/orthotics); and anticipated discharge destination.”

While the patient's prior level of function is indicated as a requirement, we believe that in order for an appropriate plan of care to be developed for a patient, a patient's current functional status must also be documented in the preadmission screening. The patient's current level of function provides important information to build a more complete picture of their rehabilitation trajectory and expected level of improvement while in the IRF.

For the purposes of this proposed rule, we are proposing to revise § 412.622(a)(4)(i)(B) to require that the patient's “current functional status” be documented in the patient's preadmission screening in their medical record at admission.

During the IDT meeting, all members of a patient's IRF care team review the patient's progress toward their rehabilitation goals, while making recommendations for therapy changes to support discharge goals (§ 412.622(a)(5)). These goals are part of the patient's POC which collates assessments from each therapy discipline treating the patient and includes the patient's medical prognosis, anticipated interventions, functional outcomes, and discharge destination. Per § 412.622(a)(4)(ii), the POC must be developed by a rehabilitation physician and documented in the patient's medical record or electronic health record by day 4 of the patient's admission to the IRF.

The current IDT meeting policy (42 CFR 412.622(a)(5)) states that IDT meetings must occur “at least once per week throughout the duration of the patient's stay,” with a “week” defined as a period of 7 consecutive calendar days beginning with the date of admission to the IRF” (§ 412.622(c)). However, there has been guidance provided to IRFs that says the initial IDT meeting may occur on day 8 from the day of admission, which is not aligned with the current policy.

Under the current IDT policy (§ 412.622(a)(5)), IRF patients may have only one IDT meeting occur prior to discharge, which raises concern about the level of coordinated interdisciplinary care a patient is receiving. The IDT meeting is a key aspect of the interdisciplinary care of an IRF patient as it provides the opportunity for the care team to review together the patient's care and progress, and to ensure the POC is updated as needed to accurately reflect the patient's needs. For example, and under the current policy, it is possible for an IRF patient to receive up to 7 days of care in an IRF without their full care team coordinating their treatment or discussing progress towards the patient's goals as outlined in the POC. This could be particularly concerning as the patient is likely to experience rapid improvement or decline in functioning within the first 7 days.

By not providing a timely initial IDT meeting with the care team's input on the patient's progress, the team may be providing suboptimal treatment or inadvertently worsening the patient's health outcomes. Also, given the average length of stay in an IRF is typically between 12 to 14 days, for a patient who has their first IDT meeting on day 7, it is likely that the IDT meeting would focus on discharge planning rather than making timely updates to the patient's POC based on his/her progress. Per § 412.622(a)(4)(ii), an individualized overall POC must be developed by a rehabilitation physician with input from the interdisciplinary team within 4 days of the patient's admission to the IRF and documented in the patient's medical record or electronic health record. By not making more timely checks and updates within the IDT meeting on the patient's progress, and related POC updates, patients are at risk for ineffective care that may lead to delayed improvements.

Patient example: A 68-year-old male patient is admitted to an IRF with an ischemic stroke causing mild hemiparesis, mild aphasia, and dysphagia. His admission goals were to increase his mobility, independence with activities of daily living (ADLs), and safety with swallowing in order to be discharged home to his family. The patient's POC includes: a physical therapist (PT) to work on gait training and balance; an occupational therapist (OT) to address his independence with self-care and dressing; and a speech-language pathologist (SLP) to manage the aphasia and swallowing. During the patient's course of stay, the PT, OT and SLP have limited communication with one another. By the time the patient's interdisciplinary team meeting occurs on day 7 of his stay, the PT has noted the patient is steady with transfers using a walker and requires minimal assistance to ambulate with his walker. Despite the PT's notes, the OT is now training the patient on ADL tasks that require him to stand without support. The patient has been steady when performing these tasks for brief periods of time but needs to rest often by sitting down. The SLP is providing the patient with nectar-thick liquids per the swallowing plan but has not communicated the patient's fatigue levels or the patient's need for safety cues when swallowing to the rest of the team. The patient's IDT meeting on Day 7 focuses on his discharge planning with the rehabilitation physician noting the patient can safely ambulate independently with his walker and ADLs as he is unaware of the inconsistencies in the patient's presentation across the OT, SLP, and PT therapy sessions. As such, the patient returns home with his wife after 11 days in the IRF. Within two days, the patient sustains a fall while transferring from the toilet resulting in a hip fracture. He is readmitted to the acute care hospital with aspiration pneumonia due to coughing and choking during meals and hip fracture due to difficulty ambulating with his walker.

In the example, if the initial IDT meeting had occurred earlier than day 7, the patient's POC could have been adjusted to better match his functional progress. Additionally, his care team could have discussed ongoing concerns regarding his fatigue, balance, and swallowing to coordinate treatment. An earlier IDT meeting may have prevented this patient's fall and hospital readmission.

In an effort to continuously improve patient-centered care, we believe the first IDT meeting should occur earlier than day 7 of a patient's stay, which is current policy. This change will ensure patients are receiving coordinated, interdisciplinary care aligned with their POC and tailored in its intensity to the patient's recovery progress. We propose to revise § 412.622(a)(5)(ii) to specify that the first IDT meeting shall occur on or before the fourth day from midnight on the date the patient is admitted to implement appropriate treatment services; establish or review the patient's stated rehabilitation goals; and identify any problems that could impede goals. The initial IDT would be in coordination with the development and timing of the patient's start of therapy (per the 36-hour rule) and the POC. Following the initial IDT meeting, we are proposing that a patient's subsequent IDT meetings occur weekly (for example, within 7 days from the prior IDT meeting). See Figure 1 and Table 8 for examples of when IDT meetings occur based on the date the prior IDT was conducted. In addition to the revisions to § 412.622(a)(5)(ii), we propose to redesignate paragraph (a)(5)(iii) as paragraph (a)(5)(iv) and add a new paragraph (a)(5)(iii) to clarify that the initial IDT meeting shall determine the cadence of patient's subsequent IDT meetings. We also propose to revise the definition of “Week” that appears in § 412.622(c) to specify that, for purposes of § 412.622, a “week” means a period of 7 consecutive calendar days.

In requiring the patient's first IDT meeting to occur by Day 4, we believe the interdisciplinary team can coordinate care and provide treatment updates more frequently than once during a patient's stay, which may lead to improved quality of care and health outcomes. As discussed in the FY 2010 rule (74 FR 39762), conducting the IDT meeting “for each IRF patient within the first 4 days of admission to develop the overall plan of care would be good practice.”

To assess the impact of this proposal, we conducted a simulation exercise. If we assume that IRFs hold a formal IDT meeting on a weekly basis (per the current policy) to address their caseload and the prognoses of their patients, an estimated range of 2.1 to 3.8 percent of IRF patients discharged between FY 2015 through FY 2023 experience zero IDT meetings during their stay. If we account for patients who were admitted on the day of the IDT meeting but too late to be discussed at the meeting, the number of cases with zero IDT meetings during the stay will increase from 4.2 to 4.8 percent. By CMS implementing a policy requiring that the patient's first IDT meeting occurs by Day 4 of their stay, the percentage of cases that did not have an IDT meeting would decrease to 1 percent. After the initial IDT meeting, IRFs will need to conduct subsequent IDT meetings beginning on the 7th day from when the last meeting occurred.

We conducted an estimated impact of the proposed initial IDT policy on IRFs. To determine the resources needed for one IRF meeting, we first identified the salaries of the key personnel who attend IDT meetings using the 2024 Bureau of Labor Statistics' (BLS) national average wages per hour. For conservative estimation purposes, we assumed one of each of the following disciplines attend IDT meetings: rehabilitation physician, PT, OT, SLP, nurse coordinator (filled by an RN), social worker, and rehabilitation unit manager (filled by an NP). If the proposed initial IDT meeting policy is finalized, we assume that most IRFs (depending on the volume of patients) will increase the frequency of meetings to meet this change. For example, if an IRF has a patient admitted on a Tuesday, but the team's usual IDT meetings occur on Mondays, then the IRF will have to meet again by the patient's Day 4 (Friday in this example) to comply with the new policy. We approximated that a 1-hour IDT meeting would cover approximately 12 IRF patients (5 minutes per patient), resulting in $399.06 per 60-minute IDT meeting. Assuming the IDT meetings would be 1-hour in duration, for IRFs that move from once to the twice weekly IDT meeting frequency will face an additional approximate cost of $399.06 per week.

CMS is exploring opportunities to modernize the IRF Prospective Payment System (PPS) established in 2002 (66 FR 41316) to better reflect evolving clinical practice and align more closely with other post-acute care settings. This includes potential refinements to clinical categories and comorbidity groupings. Below, we provide an overview of the current IRF PPS patient classification system and request input on future payment reforms to enhance and modernize the IRF payment structure.

Under the IRF PPS, providers report an Impairment Group Code (IGC) in Item 21A of the IRF Patient Assessment Instrument (IRF-PAI) to identify the primary reason the patient requires IRF care. Each IGC maps to a single Rehabilitation Impairment code (RIC), which serves as the first level of classification in the payment system. The CMS grouper uses the RIC to assign the patient to a CMG based primarily on functional status at admission and, for certain CMGs, age.

Functional status is a key predictor of resource use under the IRF PPS. From FY 2002 through FY 2019, CMG assignment relied on motor and cognitive scores derived from the FIM TM instrument. In the FY 2019 final rule (83 FR 38514), CMS removed the FIM TM instrument and associated Function Modifiers and adopted IRF-PAI Quality Indicator items to reduce provider burden. Beginning in FY 2020, CMGs have been assigned using functional scores derived from these IRF-PAI assessment items.

CMGs are further refined to account for clinical complexity. Patients may be assigned to comorbidity tiers that adjust payment to reflect higher expected resource use. Additional payment adjustments apply for special circumstances, such as very short stays or death.

The IRF PPS currently includes 21 Rehabilitation Impairment Categories and 17 associated Impairment Group Codes, as established in the FY 2002 final rule (66 FR 41316). IGCs are represented by one or two-digit codes, sometimes extended with decimals to identify more specific subgroups.

Additional information is available in the FY 2002 (66 FR 41316), FY 2006 (70 FR 47880), FY 2007 (71 FR 48354), and FY 2021 (85 FR 48424) IRF PPS final rules.

Experience from other Medicare payment reforms demonstrates the importance of aligning payment with patient characteristics and expected resource use, rather than service volume, while maintaining strong safeguards against unintended coding or behavioral responses. These reforms highlight the need for regular recalibration using current data, thoughtful and phased implementation of structural changes, and monitoring to protect beneficiary access. Applying these principles to IRF payment reform supports continued refinement of CMGs, functional scores, and comorbidity adjustments to improve payment accuracy and ensure program integrity.

CMS believes refinements to the IRF clinical categories and comorbidity groupings are necessary to support continued payment reform under section 1886(j) of the Act, which would contribute to overall payment reform. CMS must ensure that the IRF PPS reflects changes in patient complexity and advances in rehabilitation care since the system's implementation in 2002. These refinements are intended to better align payment with patient characteristics and resource use, strengthen the relationship between spending and value, and support CMS's broader goal of a more consistent and coordinated approach to post-acute care (PAC) payment and delivery.

As with any case-mix methodology, shifts in documentation, coding practices, or assessment completion may influence measured case-mix independent of true changes in patient acuity. By adopting more standardized, diagnosis-based classification approaches across PAC settings, CMS aims to improve consistency, support care delivery reform, and position the IRF PPS for future payment reforms that better reflect patient complexity and value. Furthermore, these potential refinements would move the IRF PPS toward diagnosis-driven grouping methods similar to those used in other Medicare payment systems, including the Inpatient Psychiatric Facility PPS (IPF PPS) and the SNF Patient-Driven Payment Model (PDPM) finalized in the FY 2019 SNF PPS final rule (83 FR 39162).

MedPAC's recent analyses further support the need for refinement. In multiple Reports to the Congress on Medicare Payment Policy (March 2023, March 2024, March 2025, and March 2026), MedPAC identified persistent differences in profitability across clinical categories, which could provide incentives for admitting specific diagnoses to improve profitability. MedPAC also found that within RICs, higher patient severity—measured by functional status and comorbidities—is associated with higher payment-to-cost ratios, and that case mix varies meaningfully by IRF ownership and type, particularly for high-volume conditions such as stroke, other neurological conditions, and debility. These findings underscore the importance of refining IRF clinical categories and comorbidity groupings to better reflect patient severity and improve alignment between payments and resource use. In this RFI, we seek interested parties' input on potential approaches to ensure that payments under a revised IRF PPS appropriately reflect underlying patient severity and costs, particularly in the event of systematic changes in coding or documentation that are not accompanied by corresponding changes in clinical complexity or resource utilization.

As previously discussed, the IRF PPS currently relies on 17 major category IGCs, comprising 85 specific IGCs, finalized in the FY 2002 IRF PPS final rule (66 FR 41316) to classify each patient into one of 21 distinct Rehabilitation Impairment Categories (RICs). Under this framework, up to three ICD-10-CM etiologic diagnosis codes are mapped through a multi-step process—from IGCs to RICs to CMGs—to determine payment. Over time, this layered classification approach has created opportunities for misalignment among the patient's primary reason for IRF admission, the clinical care delivered, and the resulting payment, particularly as diagnostic coding practices and patient complexity have evolved.

To address these limitations, CMS is considering a fundamental refinement to IRF patient classification by modifying how primary diagnoses are mapped to clinical categories. Specifically, CMS has leveraged the existing clinical categories recently implemented under the SNF PDPM to develop a preliminary set of IRF-specific clinical categories. These proposed categories would modernize IRF patient classification by replacing the current mapping of etiologic diagnoses to IGCs and RICs with a comprehensive and exhaustive crosswalk from ICD-10-CM diagnosis codes directly to IRF PPS clinical categories. This approach would strengthen alignment between diagnosis, patient severity, and payment; improve consistency across post-acute care settings; and support CMS's broader objectives of payment accuracy, transparency, and value-based care.

Table 9 provides the 15 valid IRF clinical categories for consideration. Using a complete ICD-10-CM to clinical category crosswalk, patients are classified into clinical categories by the ICD-10-CM code reflecting the primary reason for the IRF stay.

We are soliciting public comments on the potential use of these clinical category assignments under the IRF PPS to classify a patient for payment purposes. CMS is exploring alternatives to how primary diagnoses are mapped to clinical categories in the current IRF PPS, which is documented in a technical report available at: https://www.cms.gov/medicare/payment/prospective-payment-systems/inpatient-rehabilitation/research.

Drawing on the comorbidity scoring methodology used by the SNF PDPM Non-Therapy Ancillary (NTA) component, CMS developed a preliminary comorbidity scoring and binning approach for the IRF PPS accounting for both the severity and the number of comorbid conditions. This would also support alignment across post-acute care payment systems. Under this framework, CMS identifies comorbidities associated with higher IRF costs using multiple sources, including Hierarchical Condition Categories (HCCs), Prescription HCCs (RxHCCs), IRF-PAI items, and selected custom conditions. Each comorbidity would contribute to a weighted score reflecting its relative impact on resource use, similar to the methodology applied under the SNF PDPM NTA system.

As shown in Table 10, comorbidity scores would then be grouped into one of 6 comorbidity score bins: a comorbidity score of 0, 1, 2, 3, 4-5, and 6 or higher. Each bin groups IRF stays by corresponding comorbidity score based on estimated similarities in costs. These scoring and grouping refinements would align spending and value through improved accuracy while also aligning IRF PPS more closely with other PAC payment systems.

We are soliciting public comments on the potential use of comorbidity scores and score bins under the IRF PPS to categorize comorbidities for payment purposes. CMS is exploring alternatives to the tier comorbidity methodology of the current IRF PPS and relative performance to the current system, which is documented in a technical report. For more details, including a list of the selected comorbidities and corresponding scores, this technical report is available at https://www.cms.gov/medicare/payment/prospective-payment-systems/inpatient-rehabilitation/research.

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 § 412.634.

In this proposed rule, we are proposing to revise the IRF QRP data submission deadlines beginning with the FY 2029 IRF QRP, as described in section IX.D.2 of this proposed rule. Finally, we are soliciting public comments on one RFI on future measure concepts for the IRF QRP in section IX.C. of this proposed rule.

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).

The IRF QRP currently has 15 adopted measures, which are listed in Table 11.

For a discussion of the factors we use to evaluate whether a measure should be removed from the IRF QRP, we refer readers to our regulations at § 412.634(b)(2). We refer readers to the CY 2013 OPPS/ASC PPS final rule (77 FR 68502 and 68503) for discussion of our policy that allows any quality measure adopted for use in the IRF QRP to remain in effect until the measure is removed, suspended, or replaced; the FY 2018 IRF PPS final rule (82 FR 36276) which applied this policy to standardized patient assessment data we adopt for the IRF QRP; and the FY 2019 IRF PPS final rule (83 FR 38556 and 38557) for more information on the factors we consider for removing measures and standardized patient assessment data.

In the FY 2024 IRF PPS proposed rule (88 FR 21000 through 21003), we included an RFI on a set of principles for selecting and prioritizing IRF QRP measures, identifying measurement gaps and suitable measures for filling these gaps. 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.

We are seeking input on the importance, relevance, appropriateness, and applicability of the quality measure concepts related to advanced care planning. Advance care planning is a continuous process that supports people in understanding and communicating their goals, values, and preferences regarding future medical decisions. 5 The Patient Self Determination Act of 1990  6 supports this process by requiring healthcare facilities to inform patients of their rights regarding medical decisions, including advance directives and end of life care. 7 In-post acute care (PAC) settings, where patients recover from acute illness, injury, or major procedures, their needs and goals may evolve as their condition changes. Factors such as clinical stability, functional status, therapy tolerance, cognition function, prognosis, and personal preferences can all shift during recovery. Regular reassessment and transparent communication are essential to maintaining person-centered care, while advance care planning facilitates shared decision-making by documenting patient preferences and ensuring goal-concordant care throughout care transitions. 8

As we review new measure concepts, we would prioritize evidence-based outcome measures that promote person-centered care practices. We are seeking input on the relevant aspects of advanced care planning and measures appropriate for the IRF setting.

We refer readers to the regulatory text at §  412.634(b)(1) for information regarding the current policies for reporting specified data for the IRF QRP.

Sections 1886(j)(7)(E), and 1899B(f) and (g) of the Act require CMS to provide feedback to IRFs and to publicly report their performance on IRF quality measures specified under section 1899B(c)(1) of the Act and resource use and other measures specified under 1899B(d)(1) of the Act. More specifically, section 1899B(f)(1) of the Act requires the Secretary to provide confidential feedback reports to IRFs on their performance on the quality, resource use, and other measures specified under sections 1899B(c)(1) and (d)(1) of the Act. Section 1899B(f)(2) of the Act provides that, to the extent feasible, the Secretary must make these confidential feedback reports available, not less frequently than on a quarterly basis, except in the case of measures reported on an annual basis, in which case confidential feedback reports may be made available annually. Additionally, sections 1886(j)(7)(E) and 1899B(g)(1) of the Act require the Secretary to provide for the public reporting of each IRF's performance on the quality measures, resource use, and other measures specified under section 1899B(c)(1) and (d)(1) of the Act by establishing procedures for making the performance data available to the public. Section 1899B(g)(2) of the Act specifically requires that such procedures must ensure that IRFs can review and submit corrections to the data and other information before it is made public.

Section 1886(j)(7)(C) of the Act provides the Secretary with discretion to prescribe the form and manner and the timeframes for IRFs to submit data as specified for reporting for the IRF QRP.

For IRF-PAI assessment-based measures, in the FY 2016 IRF PPS final rule (80 FR 47122), we finalized submission deadlines for IRFs to submit their data approximately 4.5 months (135 days) after the end of each quarter. We did not receive any comments on the 4.5-month data submission timeframe at that time. We also finalized data submission deadlines for IRF QRP measures that are submitted via the Centers for Disease Control and Prevention's (CDC) National Healthcare Safety Network (NHSN). In the FY 2014 IRF PPS final rule (78 FR 47917), we finalized that for the NHSN Catheter Associated Urinary Tract Infection (CAUTI) and the Facility-wide Inpatient Hospital-onset Clostridium difficile Infection (CDI) Outcome Measures, each facility's data must be entered into NHSN no later than 4.5 months after the end of the reporting quarter. We also finalized that the data collection period for the Influenza Vaccination Coverage among Healthcare Personnel (HCP) measure would be October 1 through March 31, with a data submission deadline of May 15th for each influenza season (78 FR 47917).

Public reporting of data collected under quality programs, such as the IRF QRP, is designed to provide consumers and their families with the most current information to empower them to make quality-informed decisions about where to receive their care. We have identified that the time between when data on measures is submitted to us and when those data are publicly reported (approximately nine months) may be too long to provide the most accurate and up to date information for the public. For example, we have heard from interested parties that the IRF QRP measure results are not useful for their quality improvement efforts due to the aged data and the delay in when they receive these reports. 9

Currently, the largest contributing factor to the nine-month lag between the end of the data collection period and when measures are publicly reported is the 4.5-month timeframe for data submission. Reducing the data submission timeframe from 4.5 months to require data submission the 15th day of the second month after the end of the calendar quarter could reduce this lag by up to three months, resulting in more timely public reporting of data for consumers and increasing the value of publicly reported data. Additionally, this timeframe provides IRFs with more recent data in support of their quality improvement activities.

In the FY 2026 IRF PPS proposed rule, we included a request for information (RFI) on reducing the assessment data submission deadline from 4.5 months to 45 days (90 FR 18554). We refer readers to the FY 2026 IRF PPS final rule (90 FR 37712) for a full summary of the public comments received.

Beginning with the FY 2029 IRF QRP, we are proposing that IRFs must complete their data submissions and make corrections to their IRF-PAI assessment data where necessary no later than the 15th day of the second month after the end of the calendar quarter. However, if the 15th day of the second month falls on a Friday, weekend, or Federal holiday, the date is delayed until 11:59 p.m. EST on the next business day. We are proposing that IRFs would follow the deadlines presented in Table 12 for the FY 2029 IRF QRP. We are also proposing that similar calendar year data submission deadlines would apply to future years' payment determinations.

We believe that requiring IRFs to submit IRF-PAI assessment data by the 15th day of the second month after the end of the calendar quarter is reasonable. We conducted an analysis on the potential impact of reducing the timeframe by determining how many assessments are currently being submitted by this deadline, which is approximately within 45 days of the end of the quarter. Using 2024 data, we identified that 99.08 percent of all IRF-PAI assessments were submitted to CMS within a 45-day timeframe. Of the remaining 0.92 percent submitted beyond 45 days, 0.20 percent were submitted after the current 4.5-month data submission deadline and would not be further impacted by a change in the data submission deadline. Therefore, only 0.72 percent of IRF-PAI assessments would be impacted by changing the data submission deadline from 4.5 months to require data submission by the 15th day of the second month after the end of the calendar quarter.

Beginning with the FY 2029 IRF QRP, we are proposing that IRFs must complete their data submissions and make corrections to their CDC NHSN data where necessary no later than the 15th day of the second month after the end of the calendar quarter. However, if the 15th day of the second month falls on a Friday, weekend, or Federal holiday, the date is delayed until 11:59 p.m. EST on the next business day. We are proposing that IRFs would follow the deadlines presented in Table 13 for the FY 2029 IRF QRP. We are also proposing that similar calendar year data submission deadlines would apply to future years' payment determinations.

We believe that requiring IRFs to submit CDC NHSN data by the 15th day of the second month after the end of the calendar quarter is a reasonable amount of time. In the FY 2014 IRF PPS final rule (78 FR 47917), we noted that the CDC recommends that a facility report Healthcare Acquired Infection (HAI) events such as CAUTI as close to the time of the event as possible, and certainly within 30 days after the event. We note that there would be no change in the data submission deadline for the Influenza Vaccination Coverage among HCP measure, as the previously finalized data submission date is May 15th for each influenza season.

We conducted an analysis on the potential impact of reducing the timeframe by determining how many IRFs are currently reporting data by this deadline, which is approximately within 45 days of the end of the quarter. Using FY 2025 data, we identified that 88.5 percent of all IRFs submitted CDC NHSN data within a 45-day timeframe.

On these bases, we believe revising the IRF QRP data submission deadline for IRF-PAI and CDC NHSN data to require IRFs to submit CDC NHSN data by the 15th day of the second month after the end of the calendar quarter would improve the timeliness of public reporting by three months, which is beneficial to both consumers and IRFs, with no change in burden to IRFs.

We invite comment on this proposal to require that IRFs complete their data submissions and make corrections to their IRF-PAI assessment and CDC NHSN data where necessary no later than the 15th day of the second month after the end of the calendar quarter beginning with the FY 2029 IRF QRP.

We are not proposing any new policies regarding the public display of measure data in this 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 52128 through 52131).

Section 522(a) of the Medicare Access and CHIP Reauthorization Act of 2015 (Pub. L. 114-10) (MACRA) added a requirement under section 1847(a)(1)(G) of the Act requiring bidding entities to obtain a bid surety bond for each competitive acquisition area in which the entity submits the bid in a form specified by the Secretary and in an amount not less than $50,000 and not more than $100,000. CMS implemented this requirement as part of the final rule titled, “Medicare Program; End-Stage Renal Disease Prospective Payment System, Coverage and Payment for Renal Dialysis Services Furnished to Individuals With Acute Kidney Injury, End-Stage Renal Disease Quality Incentive Program, Durable Medical Equipment, Prosthetics, Orthotics and Supplies Competitive Bidding Program Bid Surety Bonds, State Licensure and Appeals Process for Breach of Contract Actions, Durable Medical Equipment, Prosthetics, Orthotics and Supplies Competitive Bidding Program and Fee Schedule Adjustments, Access to Care Issues for Durable Medical Equipment; and the Comprehensive End-Stage Renal Disease Care Model,” published in the Federal Register on November 4, 2016 (81 FR 77834) (hereinafter referred to as the “2016 ESRD PPS & DMEPOS final rule”). Pursuant to the CY 2016 ESRD PPS and DMEPOS final rule, and as codified at 42 CFR 414.412(g), a bidding entity may not submit a bid(s) and be awarded a contract for a competition unless it obtains, in the amount of $50,000, a bid surety bond for the CBA (as defined at 42 CFR 414.402) from an authorized surety on the Department of the Treasury's Listing of Certified Companies and provides proof of having obtained the bond by submitting a copy to CMS by the deadline for bid submission. These requirements first applied to Round 2021, the first round of competitive bidding following the passage of MACRA.

Section 1847(a)(1)(H)(i) of the Act provides that in the event that a bidding entity is offered a contract for any product category for a CBA, and its composite bid for such product category and area is at or below the median composite bid rate for all bidding entities included in the calculation of the single payment amount (SPA) for the product category and CBA, and the entity does not accept the contract offered, the bid surety bond(s) for the applicable CBA(s) will be forfeited and the Secretary will collect on the bid surety bond(s). As implemented in regulation at § 414.412(g) (redesignated from § 414.412(h) (see 83 FR 57025)), CMS will collect on the bid surety bond via Electronic Funds Transfer from the respective bonding company. In instances where a bidding entity does not meet the bid surety bond forfeiture conditions for any product category for a CBA as specified in section 1847(a)(1)(H)(i) of the Act, section 1847(a)(1)(H)(ii) of the Act requires that the bid surety bond liability submitted by the entity for the CBA will be returned to the bidding entity within 90 days of the public announcement of the contract suppliers for such product category and area.

The bid surety bond requirement deters bidding entities from submitting a low, disingenuous bid amount in order to increase the probability that they will be offered a DMEPOS contract, as they will forfeit the bid surety bond if the bid is at or below the median composite bid rate and the bidding entity does not accept the offered contract.

In the Calendar Year (CY) 2026 Home Health Prospective Payment System (PPS) Final Rule (see 90 FR 55342-55620) published in the Federal Register on December 2, 2025, CMS established the Remote Item Delivery (RID) Competitive Bidding Program (CBP). The term “remote item delivery competitive bidding program” is defined under § 414.402 to mean a competitive bidding program wherein contract suppliers are responsible for furnishing remote item delivery items under a product category to all Medicare beneficiaries regardless of where they live in the CBA. The CBA could be one nationwide CBA that includes all areas (all States, territories, and the District of Columbia) or a CBA covering a specific region of the country.

The term “remote item delivery item is defined under § 414.402 to mean an item falling under a remote item delivery competitive bidding program that may be shipped or delivered to a beneficiary's home, regardless of the method of delivery, or picked up at a local pharmacy or supplier storefront if the beneficiary or caregiver for the beneficiary chooses to pick the item up in person.

In the CY 2026 Home Health PPS Final Rule (see 90 FR 55342-55620), we stated that we plan to implement remote item delivery (RID) competitive bidding programs (CBPs) for certain items designated under the DMEPOS CBP, and further explained that competitions for RID items may involve larger competitive bidding areas (CBAs), including nationwide CBAs. To discourage DMEPOS suppliers from submitting non-serious or disingenuous bids and to ensure genuine commitment from suppliers awarded contracts under a RID CBP, we propose requiring one bid surety bond at the maximum allowable amount of $100,000 for any and all bids submitted by a bidding entity for RID CBAs in a round of the DMEPOS CBP. This maximum bond amount is justified because a RID CBA, even when structured as a regional competition, can span multiple States and serve beneficiaries across a vast geographic footprint, far exceeding the scope of a traditional CBA, which is typically confined to a single metropolitan statistical area (MSA) within one state. The significantly greater scale, complexity, and beneficiary population associated with a RID CBA warrant is the highest available level of financial commitment from bidders. This higher amount would also provide a stronger incentive for suppliers bidding on a RID CBA to submit bona fide bids and accept contract offers, thereby supporting the core objective of the DMEPOS CBP to reduce the amount Medicare pays for competitively bid DMEPOS and bring payment amounts more in line with those of a competitive market. A higher bid surety bond amount is further supported by section 1847(b)(4)(A) of the Act, which directs CMS to consider whether bidders can furnish sufficient items or services to meet the anticipated needs of individuals within the contract's geographic area on a timely basis—a standard that is particularly demanding given the broad, multi-state reach of a RID CBA.

We propose to maintain the bid surety bond amount of $50,000 for all non-RID competitions.

Rather than implementing hundreds of separate local CBPs and CBAs—which would impose unnecessary administrative burden on both the bidding program and suppliers—we believe the most practical approach is to consolidate RID competitions into one nationwide RID CBP or several large regional RID CBPs, covering all areas where a beneficiary resides or receives covered items under the applicable product categories, with limited exceptions as described in the CY 2026 Home Health PPS Final Rule (90 FR 29254). This approach is consistent with longstanding Federal guidance from a September 2004 GAO report (GAO-04-765), which recommended that CMS explore mail delivery as a viable competitive bidding strategy for items provided directly to beneficiaries in the home, and noted that the Medicare Modernization Act (MMA) authorizes CMS to designate the entire country as a single competitive area for select items. The GAO further emphasized that a consolidated nationwide approach would allow CMS to implement competitive bidding more quickly and efficiently than a piecemeal strategy, enabling companies with nationwide mail-order capability to compete for Medicare beneficiaries' business. The maximum bond requirement, combined with this consolidated RID CBP framework, promotes accountability, reduces administrative complexity, and ensures that only capable and committed suppliers participate in RID competitive bidding.

At § 414.412(g)(2)(i)(H), we are proposing that for future rounds of the DMEPOS CBP, the bid surety bond amount would remain at $50,000, and we propose to revise § 412(g)(2)(i)(H) to no longer use the term “bid bond value” and instead use the more common term “bid surety bond amount.” However, to submit a bid(s) and be awarded a contract for a RID CBP, we propose under § 414.412(g)(2)(iii) that the bidding entity must obtain a bid surety bond of $100,000. Additionally, we propose under § 414.412(g)(2)(iii) that if submitting bids for multiple competitions under a RID CBP, only one bid surety bond is required, regardless of whether the RID CBP competitions have different CBAs bid. We are soliciting comments on these proposals.

Under the Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501-3520, we are required to provide 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. To fairly evaluate whether an information collection should be approved by OMB, 44 U.S.C. 3506(c)(2)(A) requires that we solicit comment on the following issues:

• The need for the information collection and its usefulness in carrying out the proper functions of our agency.

• The accuracy of our estimate of the information collection burden.

• The quality, utility, and clarity of the information to be collected.

• Recommendations to minimize the information collection burden on the affected public, including automated collection techniques.

We are soliciting public comments on each of these issues for the following sections of this document that contain information collection requirements (ICRs):

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. We estimate that the burden associated with the IRF QRP is the time and effort associated with complying with the requirements of the IRF QRP. The IRF-PAI, in its current form, has been approved under OMB control number 0938-0842 (expiration 10/31/2027). In section IX.D.2 of this proposed rule, we are proposing to revise the data submission deadlines beginning with the FY 2029 IRF QRP. If finalized, this requirement would not result in additional collection burden for the IRF QRP or revisions to the currently approved IRF-PAI.

If you comment on this information collection, that is, reporting, recordkeeping or third-party disclosure requirements, please submit your comments electronically as specified in the ADDRESSES section of this proposed rule.

Comments must be received by the date and time specified in the DATES section of this rule.

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

This proposed rule would update the IRF prospective payment rates for FY 2027 as required under section 1886(j)(3)(C) of the Act and in accordance with section 1886(j)(5) of the Act, which requires the Secretary to publish in the Federal Register on or before August 1 before each FY, the classification and weighting factors for CMGs used under the IRF PPS for such FY and a description of the methodology and data used in computing the prospective payment rates under the IRF PPS for that FY. This proposed rule would also implement section 1886(j)(3)(C) of the Act, which requires the Secretary to apply a productivity adjustment to the market basket percentage increase for FY 2012 and subsequent years.

Furthermore, this proposed rule proposes to adopt policy changes to the IRF QRP under the statutory discretion afforded to the Secretary under section 1886(j)(7) of the Act.

We have examined the impacts of this rule as required by Executive Order 12866, “Regulatory Planning and Review”; Executive Order 13132, “Federalism”; Executive Order 13563, “Improving Regulation and Regulatory Review”; Executive Order 14192, “Unleashing Prosperity Through Deregulation”; the Regulatory Flexibility Act (RFA) (Pub. L. 96-354); section 1102(b) of the Social Security Act; section 202 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4).

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select those regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; and distributive impacts). Section 3(f) of Executive Order 12866 defines a “significant regulatory action” as any regulatory action that is likely to result in a rule that may: (1) have an annual effect on the economy of $100 million or more 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, or Tribal governments or communities; (2) create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raise novel legal or policy issues arising out of legal mandates, or the President's priorities.

We estimate the total impact of the policy updates described in this proposed rule by comparing the estimated payments in FY 2027 with those in FY 2026. This analysis results in an estimated $355 million increase for FY 2027 IRF PPS payments. Based on our estimates, OMB's Office of Information and Regulatory Affairs has determined this rulemaking is significant per section 3(f)(1) of E.O. 12866 because it will have an effect on the economy of $100 million or more in any 1 year. Accordingly, we have prepared an RIA that, to the best of our ability, presents the costs and benefits of the rulemaking. In accordance with the provisions of Executive Order 12866, this regulation was reviewed by OMB.

Executive Order 14192, entitled “Unleashing Prosperity Through Deregulation” was issued on January 31, 2025, and requires that “any new incremental costs associated with new regulations shall, to the extent permitted by law, be offset by the elimination of existing costs associated with at least 10 prior regulations.” We estimated that this proposed rule would only generate approximately $0.02 million annualized costs at a 7 percent discount rate, discounted relative to year 2024, over a perpetual time horizon. This proposed rule, if finalized as proposed, is not expected to be an E.O. 14192 regulatory action because it would not impose any more than de minimis regulatory costs.

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. The SBA defines small specialty hospitals (except Psychiatric and Substance Abuse) as businesses having less than $47 million in total annual revenue. (For more details, see the Small Business Administration's final rule that set forth size standards for healthcare industries, at 65 FR 69432 and see https://www.sba.gov/sites/default/files/2023-06/Table%20of%20Size%20Standards_Effective%20March%2017%2C%202023%20%282%29.pdf, effective January 1, 2022, and updated on March 17, 2023.) We believe NAICS code 622310 (Specialty Hospitals, except Psychiatric and Substance Abuse) is a reasonable proxy for inpatient rehabilitation facilities (IRFs) for purposes of contextualizing industry structure where 40 percent of entities are small business (127 out of 327 entities) according to SUSB data.

According to the MedPAC 2026 Report to Congress, 10 only 51 percent of IRF stays are Medicare fee-for-service stays. Therefore, we estimate that Medicare constitutes approximately 51 percent of total revenue for all 1,175 IRFs. We invite feedback regarding this assumption.

As shown in Table 14, according to the 2022 Economic Census, all Specialty (except Psychiatric and Substance Abuse) Hospitals earned approximately $59.7 billion, while the small entities earned approximately $1.73 billion in total. The regulatory review cost is $341 per entity. Table 15 presents the distribution of $355 million increase in total annualized monetized transfers from the Federal Government and States to IRF providers in FY2027.

The Department of Health and Human Services' (HHS) uses a change in revenue of more than 3 to 5 percent as a measure of economic significant impact. The agency considers the rule to have a significant impact on a substantial number of small businesses when more than 5 percent of impacted small entities meet the significant impact threshold. This proposed rule, if finalized as proposed, would have impact on a substantial number of small businesses. But the impact should not be significant. Table 15 presents the detailed annual transfer payment change from FY 2026 to FY 2027. Taking into account Medicare revenue accounts for around 51 percent of IRFs revenue, the change would be less than 3 percent. As such, we believe even though substantial number of small businesses might be affected, the impact would not be significant. Finally, the impact implies the increase of payment which is welcomed by small businesses.

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 2026, that threshold was approximately $193 million. This proposed rule does not mandate any requirements for State, local, or Tribal governments, or for the private sector.

Executive Order 13132 establishes certain requirements that an agency must meet when it issues a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has federalism implications. As stated, this proposed rule will not have a substantial effect on State and local governments, preempt State law, or otherwise have a Federalism implication.

Section 1102(b) of the Act requires us to prepare an RIA if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 603 of the RFA. For the 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 15, we estimate that the net revenue impact of this proposed rule on rural IRFs is to increase estimated payments by approximately 3.3 percent based on the data of the 127 rural units and 14 rural hospitals in our database of 1,175 IRFs for which data were available. Considering Medicare revenue accounts for 51 percent of the total revenue, we estimate an overall impact for rural IRFs in all areas between 1.2 percent and 2.8 percent of total revenue. Therefore, the Secretary has determined that this proposed rule will not have a significant impact on the operations of a substantial number of small rural IRFs.

We have estimated the impact of the proposed rule. This proposed rule updates the IRF PPS rates contained in the FY 2026 IRF PPS final rule (90 FR 37678). Specifically, this proposed rule proposes updates to the CMG relative weights and ALOS values, the wage index, and the outlier threshold for high-cost cases. This proposed rule would apply a productivity adjustment to the FY 2027 IRF market basket percentage increase in accordance with section 1886(j)(3)(C)(ii)(I) of the Act.

We estimate that the impact of the changes and updates described in this proposed rule will be a net estimated increase of $355 million in payments to IRFs for FY 2027. The impact analysis in Table 14 of this proposed rule represents the projected effects of the proposed updates to IRF PPS payments for FY 2027 compared with the estimated IRF PPS payments in FY 2026. We determine the effects by estimating payments while holding all other payment variables constant. We use the best data available, but we do not attempt to predict behavioral responses to these changes, and we do not make adjustments for future changes in such variables as number of discharges or case-mix.

We note that certain events may combine to limit the scope or accuracy of our impact analysis, because such an analysis is future-oriented and, thus, susceptible to forecasting errors because of other changes in the forecasted impact time period. Some examples could be legislative changes made by the Congress to the Medicare program that would impact program funding, or changes specifically related to IRFs. Although some of these changes may not necessarily be specific to the IRF PPS, the nature of the Medicare program is such that the changes may interact, and the complexity of the interaction of these changes could make it difficult to predict accurately the full scope of the impact upon IRFs.

In updating the rates for FY 2027, we are proposing to implement the standard annual revisions described in this proposed rule (for example, the update to the wage index and market basket percentage increase used to adjust the Federal rates). We are also proposing to reduce the FY 2027 IRF market basket percentage increase by a productivity adjustment in accordance with section 1886(j)(3)(C)(ii)(I) of the Act. We estimate that the total increase in payments to IRFs in FY 2027, relative to FY 2026, will be approximately $355 million.

This estimate is derived from the application of the FY 2027 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. In addition, there is an estimated $55 million increase in aggregate payments to IRFs due to the update to the outlier threshold amount. We estimate that these updates would result in a net increase in estimated payments of $355 million from FY 2026 to FY 2027.

The effects of the proposed updates that impact IRF PPS payment rates are shown in Table 15. The following updates that affect the IRF PPS payment rates are discussed separately below:

• The effects of the proposed update to the outlier threshold amount, from approximately 2.6 percent to 3.0 percent of total estimated payments for FY 2027, consistent with section 1886(j)(4) of the Act.

• The effects of the proposed annual market basket update (using the 2021-based IRF market basket) to IRF PPS payment rates, as required by sections 1886(j)(3)(A)(i) and (j)(3)(C) of the Act, including a productivity adjustment in accordance with section 1886(j)(3)(C)(ii)(I) of the Act.

• The effects of applying the proposed budget-neutral labor-related share and wage index adjustment, as required under section 1886(j)(6) of the Act, accounting for the permanent cap on wage index decreases when applicable.

• The effects of the proposed budget-neutral changes to the CMG relative weights and ALOS values under the authority of section 1886(j)(2)(C)(i) of the Act.

• The total proposed change in estimated payments based on the FY 2027 payment changes relative to the estimated FY 2026 payments.

Table 15 shows the overall impact on the 1,175 IRFs included in the analysis. The next 12 rows of Table 15 contain IRFs categorized according to their geographic location, designated as either a freestanding hospital or a unit of a hospital, and by type of ownership; all urban, which is further divided into urban units of a hospital, urban freestanding hospitals, and by type of ownership; and all rural, which is further divided into rural units of a hospital, rural freestanding hospitals, and by type of ownership. There are 1,034 IRFs located in urban areas included in our analysis. Among these, there are 644 IRF units of hospitals located in urban areas and 390 freestanding IRF hospitals located in urban areas. There are 141 IRFs located in rural areas included in our analysis. Among these, there are 127 IRF units of hospitals located in rural areas and 14 freestanding IRF hospitals located in rural areas. There are 539 for-profit IRFs. Among these, there are 500 IRFs in urban areas and 39 IRFs in rural areas. There are 541 non-profit IRFs. Among these, there are 457 urban IRFs and 84 rural IRFs. There are 95 government-owned IRFs. Among these, there are 77 urban IRFs and 18 rural IRFs.

The remaining four parts of Table 15 show IRFs grouped by geographic location within a region, by teaching status, and by DSH patient percentage (PP). First, IRFs located in urban areas are categorized for their location within a particular one of the nine Census geographic regions. Second, IRFs located in rural areas are categorized for their location within a particular one of the nine Census geographic regions. In some cases, especially for rural IRFs located in the New England, Mountain, and Pacific regions, the number of IRFs represented is small. IRFs are then grouped by teaching status, including non-teaching IRFs, IRFs with an intern and resident to average daily census (ADC) ratio less than 10 percent, IRFs with an intern and resident to ADC ratio greater than or equal to 10 percent and less than or equal to 19 percent, and IRFs with an intern and resident to ADC ratio greater than 19 percent. Finally, IRFs are grouped by DSH PP, including IRFs with zero DSH PP, IRFs with a DSH PP less than 5 percent, IRFs with a DSH PP between 5 and less than 10 percent, IRFs with a DSH PP between 10 and 20 percent, and IRFs with a DSH PP greater than 20 percent.

The estimated impacts of each policy described in this proposed rule to the facility categories listed are shown in the columns of Table 15. 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 2027 analysis file.

• Column (3) shows the number of cases in each category in our FY 2027 analysis file.

• Column (4) shows the estimated effect of the adjustment to the outlier threshold amount.

• Column (5) shows the estimated effect of the FY 2027 update to the IRF labor-related share, wage index with the 5-percent cap on wage index decreases when applicable, and final year of the 3-year phase-out of the rural adjustment finalized in the FY 2026 IRF PPS final rule, in a budget-neutral manner.

• Column (6) shows the estimated effect of the update to the CMG relative weights and ALOS values, in a budget-neutral manner.

• Column (7) compares our estimates of the payments per discharge, incorporating all of the policies reflected in this proposed rule for FY 2027 to our estimated payments per discharge in FY 2026.

The average estimated increase in payments for all IRFs is approximately 2.8 percent. This estimated net increase includes the effects of the IRF market basket update for FY 2027 of 2.4 percent, which is based on an IRF market basket percentage increase of 3.2 percent, less a 0.8 percentage point productivity adjustment, as required by section 1886(j)(3)(C)(ii)(I) of the Act. It also includes the approximate 0.4 percent overall increase in estimated IRF outlier payments from the update to the outlier threshold amount. Since we are 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 from these changes. However, as described in more detail in each section, we estimate there will be expected impacts to the estimated distribution of payments among providers.

The estimated effects of the update to the outlier threshold adjustment from FY 2026 to FY 2027 are presented in column 4 of Table 15.

For this FY 2027 proposed rule, we used preliminary FY 2025 IRF claims data and based on that preliminary analysis, we estimated that IRF outlier payments as a percentage of total estimated IRF payments would be 2.6 percent in FY 2026. Thus, we are adjusting the outlier threshold amount in this proposed rule from $10,141 in FY 2026 to $8,689 in FY 2027 to maintain total estimated outlier payments equal to 3 percent of total estimated payments in FY 2027. The estimated change in total IRF payments for FY 2027, therefore, includes an approximate 0.4 percentage point increase in payments because the estimated outlier portion of total payments is estimated to increase from approximately 2.6 percent to 3.0 percent. The impact of this update to the outlier threshold amount (as shown in column 4 of Table 15) is to increase estimated overall payments to IRFs by 0.4 percentage point.

In column 5 of Table 15, 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. The changes to the wage index and the labor-related share are discussed together because the wage index is applied to the labor-related portion of payments, so the changes in the two have a combined effect on payments to providers. As discussed in section V.C. of this proposed rule, the FY 2027 labor-related share is 74.5 percent, 0.1 percentage point higher than the labor-related share for FY 2026.

In the aggregate, since these proposed updates to the wage index and the labor-related share are applied in a budget-neutral manner as required under section 1886(j)(6) of the Act, we do not estimate that these updates will affect overall estimated payments to IRFs. However, we estimate that these changes will have distributional effects. For example, we estimate the largest increase in payments of 5.6 percent for rural IRFs in the New England region. We estimate the largest decrease in payments from the update to the wage index and labor-related share to be a 0.8 percent decrease for urban IRFs in the East South Central region.

In column 6 of Table 15, we present the effects of the proposed budget-neutral update of the CMG relative weights and ALOS values. In the aggregate, we do not estimate that these proposed updates will affect overall estimated payments of IRFs. However, we do expect these updates to have small distributional effects between -0.3 percent to 0.1 percent.

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 this proposed rule, we discussed the method for applying the 2-percentage points reduction to IRFs that fail to meet the IRF QRP requirements. In section IX.D.2. of this proposed rule, we are proposing to revise the data submission deadlines beginning with the FY 2029 IRF QRP. If finalized, this requirement would not result in additional collection burden for the IRF QRP.

This rule proposes a change to the DMEPOS CBP to further enhance its effectiveness in achieving the objectives of the program as mandated by section 1847(a) of the Act. Specially, we are proposing to increase the bid surety bond amount from $50,000 to $100,000 for any and all bids submitted by a bidding entity for remote item delivery (RID) competitive bidding program areas (CBAs) in a round of the DMEPOS CBP while maintaining $50,000 for all other CBAs. The primary factor for surety bond premiums is the bidder's credit score, with premiums typically ranging from 1 percent to 10 percent of the bid surety bond amount. However, there is no reliable way to estimate how program changes or market conditions because the last round may have impacted bidders' credit profiles. Importantly, the overall financial burden may be reduced for many suppliers because Round 2021 included 130 competitive bidding areas (CBAs) requiring separate bid surety bonds for each CBA, whereas Round 2028 will include a nationwide RID CBA requiring one bid surety bond. While the cost of one RID bid surety bond would increase because of a $50,000 increase in the bid surety bond amount, suppliers that previously bid in multiple CBAs would likely experience net savings by needing only one bid surety bond instead of multiple bid surety bonds. The actual cost impact will vary significantly based on individual credit scores, past performance, and the number of CBAs a supplier would have participated in under a prior round of the DMEPOS CBP. Given these variables, the true impact cannot be precisely quantified and cost estimates should present a range using a 1 percent to 10 percent premium rate framework with caveats about individual variation and the offsetting effect of requiring fewer bid surety bonds.

The following is a discussion of the alternatives considered for the IRF PPS updates contained in this proposed rule. As noted previously in this proposed rule, section 1886(j)(3)(C) of the Act requires the Secretary to update the IRF PPS payment rates by an increase factor that reflects changes over time in the prices of an appropriate mix of goods and services included in the covered IRF services and section 1886(j)(3)(C)(ii)(I) of the Act requires the Secretary to apply a productivity adjustment to the market basket percentage increase for FY 2027. Thus, in accordance with section 1886(j)(3)(C) of the Act, we are proposing to update the IRF prospective payments in this proposed rule by 2.4 percent (which equals the proposed 3.2 percent IRF market basket percentage increase for FY 2027 reduced by a proposed 0.8 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 also considered making no changes to the current IDT meeting policy (42 CFR 412.622(a)(5)) and allow the initial IDT meetings to occur within 7 consecutive calendar days beginning with the date of admission to the IRF (42 CFR 412.622(c)). However, we declined to take this approach given the importance of the IDT meetings for coordinated patient care early in their stay and in shaping revisions to the plan of care if there are problems that could impede the patient's progress toward their rehabilitation goals.

Regarding the proposal to revise the IRF QRP assessment data submission deadline from 4.5 months to no later than the 15th day of the second month after the end of each quarter, we considered keeping the deadline unchanged. We determined that the revised timeframe is a reasonable amount of time for IRFs to submit data and make any necessary corrections, and that the benefits of this shortened timeframe include making the data timelier and more actionable which increases the value of publicly reported data both for consumers and their families and for IRFs to use in their quality improvement activities.

If regulations impose administrative costs on private entities, such as the time needed to read and interpret this proposed rule, we should estimate the cost associated with regulatory review. Due to the uncertainty involved with accurately quantifying the number of entities that will review the rule, we assume at least one staff in IRFs would read the rule. The total number of IRFs would be the proxy of number of reviewers for this rule. We acknowledge that this assumption may understate or overstate the costs of reviewing the proposed rule. We also assume that each reviewer reads 100 percent of the rule.

Using the national median hourly wage data from the May 2024 BLS for Occupational Employment and Wage Statistics (OEWS) for medical and health service managers (SOC 11-9111), we estimate that the cost of reviewing this rule is $113.42 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 the proposed rule. For each reviewer of the rule, the estimated cost is $340.26 (3 hours × $113.42). Therefore, we estimated that the total cost of reviewing this regulation is $399,805.5 ($340.26 × 1,175 reviewers).

Consistent with OMB Circular A-4 (available at https://www.reginfo.gov/public/jsp/Utilities/a-4.pdf ), in Table 16, we have prepared an accounting statement showing the classification of the expenditures associated with the provisions of the proposed rule. Table 15 provides our best estimate of the increase in Medicare payments under the IRF PPS as a result of the updates presented in this proposed rule based on the data for IRFs in our database.

Overall, the estimated payments per discharge for IRFs in FY 2027 are projected to increase by 2.8 percent, compared with the estimated payments in FY 2026, as reflected in column 7 of Table 15.

IRF payments per discharge are estimated to increase by 2.8 percent in urban areas and 3.3 percent in rural areas, compared with estimated FY 2026 payments. Payments per discharge to rehabilitation units are estimated to increase 3.5 percent in urban areas and 3.4 percent in rural areas. Payments per discharge to freestanding rehabilitation hospitals are estimated to increase 2.5 percent in urban areas and 3.2 percent in rural areas.

Overall, IRFs are estimated to experience a net increase in payments as a result of the policies in this proposed rule. The largest payment increase is estimated to be 5.6 percent for IRFs in Rural New England. The analysis above, together with the remainder of this preamble, provides an RIA.

Mehmet Oz, Administrator of the Centers for Medicare & Medicaid Services, approved this document on March 31, 2026.

For the reasons set forth in the preamble, the Centers for Medicare & Medicaid Services proposes to amend 42 CFR chapter IV as set forth below:

The revisions and addition read as follows:

The revision and addition read as follows:

In response to statutory changes in the Fiscal Responsibility Act of 2023 (FRA), ACF is proposing to amend the Temporary Assistance for Needy Families (TANF) program regulations to make changes to the caseload reduction credit and work participation rate calculations. More specifically, the FRA resets the base year for the caseload reduction credit that is part of TANF's work participation rate calculations from FY 2005 to FY 2015, effective October 1, 2025. Second, the FRA requires HHS to exclude from the TANF work participation rate calculations cases that receive assistance payments benefits of less than $35 for a month funded with separate state program (SSP) funds. This statutory provision also takes effect October 1, 2025.

The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 created the TANF program, repealing the Aid to Families with Dependent Children program and related programs. The TANF program provides a fixed block grant of about $16.5 billion annually to states, certain territories (Guam, the Virgin Islands, and Puerto Rico), and the District of Columbia (hereafter “states”). Additionally, federally recognized American Indian tribes and Alaska Native organizations may elect to operate their own TANF programs.

The regulatory changes proposed in this rulemaking are applicable to the TANF programs of states. Tribal TANF programs are not impacted by these proposed changes.

States use federal TANF funds to provide cash assistance to low-income families, as well as to provide a wide range of services ( e.g., work-related activities, child care, and refundable tax credits) designed to accomplish the program's four broad purposes. These statutory purposes are to:

The statute provides some eligibility requirements for families that receive TANF benefits, such as that the benefits can only go to US citizens and certain qualified aliens, that cash assistance in which an adult receives federally funded assistance generally has a five-year time limit, and that families receiving federal cash assistance must assign their child support rights to the state. However, states have flexibility to set economic and other eligibility requirements for their cash assistance and other TANF-funded benefits and services.

In order to receive their full federal block grant, states must meet a maintenance-of-effort (MOE) requirement, which means that, consistent with Subpart A of 45 CFR 263, they must expend state funds on “eligible families” for benefits and services related to TANF purposes in amounts based on historical spending in TANF's predecessor programs. States may spend their MOE funds in three different ways:

• Commingled with federal funds and expended in the state's TANF program. These expenditures are subject to federal funding restrictions, all TANF requirements, and MOE limitations.

• Segregated from federal funds but spent in the state's TANF program. These expenditures are subject to many TANF requirements, but not all.

• Separate State Programs (SSPs) are operated outside of the state's TANF program. These expenditures are somewhat more flexible, although they must be consistent with the goals of the TANF statute and other MOE requirements. Families receiving assistance through SSPs are not subject to federal requirements regarding child support assignment, the federal five-year time limit, and various other federal rules. However, the Deficit Reduction Act of 2005 (DRA) that reauthorized the TANF program extended work participation requirements to SSP families with a work-eligible individual, beginning in FY 2007.

The TANF statute at 42 U.S.C. 607 requires HHS to calculate and issue TANF work participation rates for states. Work participation rates measure the degree to which a state engages families with a work-eligible individual receiving assistance in work activities specified under federal law. Each state must meet both an overall (or “all families”) work participation rate and a separate two-parent work participation rate or face a potential financial penalty to their annual TANF block grant imposed by HHS. The statutorily required work participation rate performance levels are a rate of 50 percent for “all families” and a rate of 90 percent for two-parent families; however, states may receive credits for reducing their caseload of families receiving assistance, and these credits can be applied to a state's target for each of the statutory rates.

A state's caseload reduction credit for a fiscal year equals the percentage point decline in its average monthly caseload of families receiving assistance between the previous fiscal year and a base fiscal year established by Congress. For a caseload reduction credit toward the two-parent work participation rate, the state has the option of using its overall caseload reduction credit or a separate one calculated using the decline in its two-parent caseload. In calculating the caseload reduction credit, HHS excludes any caseload reduction resulting from changes in state or federal eligibility requirements since the base year established by Congress. In addition, TANF regulations allow a state that is investing state MOE funds in excess of the required basic MOE amount to only include the pro rata share of caseloads receiving assistance that is required to meet basic MOE requirements. In other words, it may exclude from its comparison-year caseload the share of cases funded with “excess MOE” in order to reward states for spending their own funds on benefits and services to eligible families beyond what is required.

We also note that some states provide assistance to low-income families through solely state-funded (SSF) programs, which are not funded by either TANF or MOE funds. Families that receive assistance from SSF programs are not subject to any TANF requirements, including federal work participation requirements. Many states serve all two-parent families that apply for assistance through a SSF program so that they do not have to achieve the 90 percent WPR target for those families, which many states find difficult to meet even after reductions from the caseload reduction credit and “excess MOE.”

The FRA changes the base year for the caseload reduction credit calculation and institutes a new requirement for HHS to exclude from the TANF work participation rate calculations cases that receive assistance payments benefits of less than $35 for a month funded with SSP funds.

We publish this notice of proposed rulemaking (NPRM) under the authority granted to the Secretary of Health and Human Services by 42 U.S.C. 607(b)(3)(A) and (i)(1)(A). This proposed rule implements sections 301 and 303 of the FRA. Section 301 recalibrates the caseload reduction base year and the Secretary has authority to prescribe regulations implementing the caseload reduction credit. See 42 U.S.C. 607(b)(3)(A) (providing that the Secretary shall prescribe regulations for reducing the minimum participation rate by the caseload reduction credit). Section 303 of the FRA requires HHS to exclude from the TANF work participation rate calculations certain cases that receive monthly benefits of less than $35. The Secretary has authority to prescribe regulations governing the work participation rate. See 42 U.S.C. 607(i)(A)(1) (providing that the Secretary promulgate regulations for determining whether activities may be counted as work activities, how to count and verify reported hours of work, and determine who is a work-eligible individual).

Note that here and below we use the term “we” in the regulatory text and preamble. The term “we” is synonymous with the Secretary of the Department of Health and Human Services or any of the following individuals or agencies acting on his behalf: the Assistant Secretary for Children and Families, the Department of Health and Human Services (HHS), and the Administration for Children and Families.

As required by section 301 of the FRA, we propose to change the base year for purposes of calculating a state's caseload reduction credit from FY 2005 to the year that has been established by Congress, which as of October 1, 2025, is FY 2015. As described above, the statutory requirement for work participation rates for states are 50 percent for all families (the overall rate) and 90 percent for two-parent families. However, a state's work participation rate targets equal the statutory rates minus a credit for reducing its caseload. A state's caseload reduction credit for a fiscal year equals the percentage point decline in its average monthly caseload between the previous fiscal year (the comparison year) and a base year established by Congress, net of caseload declines due to changes in eligibility criteria. This means that we exclude the impact of eligibility changes made after the base year from the credit calculation.

Section 303 of the FRA requires HHS to exclude from the TANF work participation rate calculations certain cases that receive monthly benefits of less than $35. Specifically, the law provides that we must determine work participation rates “without regard to any individual engaged in work in a family that receives no assistance under this part and less than $35 in assistance funded with qualified State expenditures (as defined in section 409(a)(7)(B)(i) [of the Social Security Act]).” We interpret this wording to mean that we must exclude from both the numerator and denominator of the work participation rate calculation a family receiving a benefit of less than $35 for the month only if it is funded with SSP funds. We come to this conclusion by considering the two types of funding described in the provision, “assistance under this part” and “qualified State expenditures.”

There is a longstanding interpretation of the phrase “under this part” to mean the TANF program, which includes benefits funded with federal funds and with segregated state MOE, i.e., MOE claimed under the TANF program, as well as comingled funds. The preamble discussion of the original TANF final rule made this clear: “Requirements in the statute that use the terms `under the program,' `under the program funded under this part,' and `under the State program funded under this part' apply to the State's TANF program, regardless of the funding source. That is, they apply to segregated Federal programs, commingled State/Federal programs, and segregated State programs.” (64 FR 17816, April 12, 1999)

“Qualified state expenditures” are the state funds expended during a fiscal year that count for MOE purposes. We refer to them as broadly as MOE spending. As discussed above, state expenditures can be part of the TANF program in the form of segregated MOE expenditures or commingled with federal funds, or they can be expended in a SSP, meaning a program operated outside of TANF in which the expenditures of state funds count for MOE purposes. We have already discussed the fact that the term “under this part” covers segregated MOE and commingled funds, therefore the only form of qualified state expenditures not covered by that term is SSP.

Thus, under section 303 of the FRA, we must exclude from the work participation rate calculation a family that receives no assistance funded with TANF—be it from federal, commingled, or segregated MOE funds—and receives less than $35 funded with SSP for a month. Since the work participation rate only includes families receiving assistance, the calculation already excludes families receiving no assistance funded with TANF (unless they receive assistance from SSP funds). That means that the only families the new provision excludes are ones receiving less than $35 in SSP for the month.

The “small checks scheme” noted in the title of Section 303 refers to a strategy some states have used to help meet their work participation rate targets. In this strategy, states provide a very low (around $10) monthly benefit of SSP-funded assistance to families where a work-eligible individual is working full-time in unsubsidized employment. Because of that monthly benefit, the state includes them in the work participation rate calculations. This strategy allows a state to count individuals already in the workforce toward its WPR target, even if they were not previously part of the TANF caseload, thus inflating a state's official work numbers without effectively helping families move toward self-sufficiency.

After October 1, 2025, when Section 303 goes into effect, states using this strategy will have to revise their assistance payment structures or will no longer be able to count the families receiving these “small checks” for work participation rate purposes. Depending on the individual state characteristics and choices, there may be an interaction between how the state response to the provisions of Section 303 and the impact of Section 301 on the state's work participation target. For example, if a state had the “small checks” program prior to FY 2016, and chooses to eliminate it in FY 2026, the elimination would be considered an eligibility change and the state would not receive credit for that caseload decline. If the state created the “small checks” program after FY 2015, these cases would not be in the base year caseload but likely would have increased the caseload over time. If the state chooses to raise the “small checks” payment to $35, there would be no adjustment to caseloads as only the amount of the payment changed, not eligibility.

We propose to implement the requirement of Section 303 of the FRA by adding a provision to the regulatory sections that describe the overall and two-parent work participation rate calculations. The proposed additional paragraph would make clear that cases receiving less than $35 in assistance funded exclusively with SSP funds would not be included in the applicable rate calculation for the month.

The provisions of this proposed rule are intended to be severable, such that, in the event a court were to invalidate any particular provision or deem it to be unenforceable, HHS intends for all other parts of the final rule that are capable of operating in the absence of the specific portion that has been invalidated to remain in effect. None of the provisions in the final rule contained herein are central to an overall intent of the final rule, nor are any provisions dependent on the validity of other, separate provisions. For example, OFA expects that if a court were to invalidate the elimination of the small checks scheme, the recalibration of the caseload reduction credit may continue to operate and should remain operative independently of the invalidated subpart.

We have examined the impacts of this proposed rule under Executive Order 12866, Executive Order 13563, Executive Order 14192, the Regulatory Flexibility Act (5 U.S.C. 601-612), and the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4).

Executive Orders 12866 and 13563 direct us to assess all benefits and costs of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits. This rule was determined to be significant under Section 3(f) of Executive Order 12866. Rules determined to be significant under Section 3(f) of Executive Order 12866 are subject to review by the Office of Management and Budget (OMB). This proposed rule, if finalized as proposed, is not expected to be a regulatory action under Executive Order 14192 because it results in income transfers and does not impose any more than de minimis regulatory costs.

The Unfunded Mandates Reform Act of 1995 (UMRA) generally requires that each agency conduct a cost-benefit analysis; identify and consider a reasonable number of regulatory alternatives; and select the least costly, most cost-effective, or least burdensome alternative that achieves the objectives of the rule before promulgating any proposed or final rule that includes a Federal mandate that may result in expenditures of more than $100 million (adjusted for inflation) in at least one year by State, local, and tribal governments, in the aggregate, or by the private sector. Each agency issuing a rule with relevant effects over that threshold must also seek input from State, local, and tribal governments. The current threshold after adjustment for inflation using the Implicit Price Deflator for the Gross Domestic Product is $187 million, reported in 2024 dollars. The proposed rule would not result in an unfunded mandate in any year that meets or exceeds this amount.

This NPRM would fulfill requirements of statutory provisions in the Fiscal Responsibility Act of 2023.

In a previous analysis of the federal fiscal impacts of policies addressed in this proposed rule, the Congressional Budget Office (CBO) reported the following:

“Title I of division C would set the benchmark year for the caseload reduction to 2015 (rather than 2005) and would prevent people who receive less than $35 in state funding within a period determined by the Secretary of HHS from being included in a state's accounting for the work requirement. CBO estimates that HHS would reduce state grants slightly because some states would not meet the work requirement and would not comply with a corrective plan, and HHS would not approve their reason for not meeting the standard.

CBO estimates that the resulting reduction in block grants would reduce direct spending by $5 million over the 2023-2033 period.”  1

The CBO cost analysis reports economic impacts over a decade that are far below the monetary threshold for significance under section 3(f)(1) of Executive Order 12866. HHS estimates that the economic impacts may be even less than CBO describes. Based on the latest data and assumptions consistent with that data, we do not expect the statutory changes to affect a state's ability to meet its work participation rate target. In other words, we do not expect more states to be subject to a financial penalty as a direct result of these statutory changes. Further, if any state were to be subject to a financial penalty due to failing to meet their WPR target, it may enter corrective compliance and still avoid a penalty if the state meets the terms of its corrective compliance plan. HHS's experience has been that states typically comply with corrective compliance plans: of the approximately 85 instances a penalty was assessed for the period of FY 2013 to FY 2019, fewer than 15 have resulted in a financial penalty for the state to date.

We anticipate most states will continue to meet their work participation rate targets even after these statutory changes take effect. As discussed below, in response to these changes, states may focus on better strategies for engaging WEIs in work, invest more in each case, and/or incur costs to train staff and amend systems, but overall, we expect the impact of implementing any of these changes to be minimal.

The recalibration of the caseload reduction credit's base year may raise work participation rate targets for some states because they will receive a smaller caseload reduction credit, but most states will likely still receive some amount of credit, as there has been a significant decline in TANF/SSP caseloads since FY 2015, and HHS does not have reason to expect current caseload levels to increase. Higher work participation rate targets may encourage states to undertake better strategies for engaging WEIs in work activities.

States do not report on the use of the “small checks” approach directly, but we believe about five states currently use it to meet their WPR target and about a dozen states have used the strategy at one point. States currently relying on this strategy have typically provided nominal payments of less than $35. They may respond to the statutory change by increasing the amount of the “small checks” ( i.e., the cost-per-case) to $35. Alternatively, these states may respond by discontinuing this practice, and instead choosing to focus their efforts on engaging WEIs in work activities. Any of these changes will require minimal adoption costs to train staff on the changes and possibly amend systems.

There is no direct impact on Federal spending.

Some states may report additional MOE expenditures to increase the “excess MOE” component of the caseload reduction credit formula in order to counteract the impact of the change in base year. MOE spending could feasibly increase or decrease in response to the elimination of the “small checks scheme,” depending on whether states opt to eliminate that portion of their caseload or increase their benefit amounts.

The recalibration of the caseload reduction credit's base year will reduce administrative costs for states, as the number of eligibility changes that they have to account for will be reduced. Some of these calculations are extremely complicated and require considerable staff time. By changing the base year, states will no longer have to account for all eligibility changes between FY 2006 and FY 2015, therefore reducing staff time.

There are no regulatory alternatives as the FRA specifically requires the two proposed changes.

The Regulatory Flexibility Act (5 U.S.C. 601-612) requires Agencies to analyze the impact of rulemaking on small entities and consider alternatives that would minimize any significant impacts on a substantial number of small entities. For purposes of the RFA, states and individuals are not considered small entities. As the rule directly and primarily impacts states and indirectly impacts families, it has been determined, and the Secretary certifies that this proposed rule would not have a significant impact on a substantial number of small entities.

Under the Paperwork Reduction Act (44 U.S.C. 3501 et seq., as amended), all Departments are required to submit to OMB for review and approval any reporting or recordkeeping requirements inherent in a proposed or final rule. As required by this Act, we will submit any proposed revised data collection requirements to OMB for review and approval.

Executive Order 13132 requires federal agencies to consult with state and local government officials if they develop regulatory policies with federalism implications. Federalism is rooted in the belief that issues that are not national in scope or significance are most appropriately addressed by the level of government closest to the people. While the Department has not identified this rule to have federalism implications as defined in the Executive Order, consistent with Executive Order 13132, the Department specifically solicits and welcomes comments from state and local government officials on this proposed rule.

Assessment of Federal Regulations and Policies on Families Section 654 of the Treasury and General Government Appropriations Act of 2000 requires Federal agencies to determine whether a policy or regulation may negatively affect family well-being. If the agency determines a policy or regulation negatively affects family well-being, then the agency must prepare an impact assessment addressing seven criteria specified in the law. ACF believes it is not necessary to prepare a family policymaking assessment (see Pub. L. 105-277) because the action it takes in this NPRM would not have any impact on the autonomy or integrity of the family as an institution.

For the reasons set forth in the preamble, we propose to amend 45 CFR subtitle B, chapter II, as follows:

I. Statutory Authority

This proposed NPRM is being issued under the authority granted to the Secretary of Health and Human Services by the Runaway and Homeless Youth Act of 1974, as amended, hereafter referred to as the “Act,” at 34 U.S.C. 11202.

The Runaway and Homeless Youth (RHY) Program, authorized under the Runaway and Homeless Youth Act (34 U.S.C. 11201 et seq. ), enables HHS to provide grants to public and nonprofit private entities to deliver services to runaway and homeless youth and youth at risk of homelessness. The RHY program includes the Basic Center Program, the Transitional Living Program (including the Maternity Group Home Program), and the Street Outreach Program, which together support emergency shelter, transitional housing, outreach, counseling, and related services to promote youth safety, well-being, and long-term stability. The RHY program also funds a national communications system, grants for training and technical assistance, and grants for research, evaluation, training, and service projects. HHS has issued regulations for the RHY Program at 45 CFR part 1351.

HHS initially published regulations for the RHY Program on November 20, 1978. Office of Human Development Services, Department of Health, Education, and Welfare, 43 FR 55634 (Nov. 20, 1978) (codified at 45 CFR pt. 1351). The regulations were most recently amended in 2016. Runaway and Homeless Youth, 81 FR 93030 (Dec. 20, 2016). The most recent revisions added program performance standards and provided additional updates to reflect changes in the RHY Act made through the Reconnecting Homeless Youth Act of 2008 (Pub. L. 110-378). See Runaway and Homeless Youth, 81 FR 93030, 93030 (Dec. 20, 2016). HHS now proposes revisions to 45 CFR part 1351 to clarify program requirements, reduce unnecessary administrative burden, and better align the regulations with current statutory authority and language, while maintaining program operations and effective management of grant funds.

This NPRM proposes to rescind multiple regulation sections that are either duplicative or unnecessary. The regulation sections contained in this NPRM to be removed and reserved can be designated into two categories: those that are duplicative and those that are unnecessary because they are better suited for a different format other than regulation.

The sections of the RHY regulations proposed for removal because they are duplicative are 45 CFR 1351.11, 45 CFR 1351.12, 45 CFR 1351.13, and 45 CFR 1351.20. Duplicative regulations impose no new obligations and offer no new guidance because the authority and requirements are pulled directly from other statutes and regulations.

45 CFR 1351.11 is duplicative because it merely restates RHY grant eligibility requirements articulated in the Act at 34 U.S.C. 11211(a)(1), 34 U.S.C. 11221, and 34 U.S.C. 11261(a). The regulation section offers no information or clarification that is not otherwise found in the statute. Similarly, 45 CFR 1351.12 explains how the Secretary prioritizes awards for RHY grants but does not extend discussion beyond the associated statutory language. 45 CFR 1351.13 addresses grant matching requirements that are also found in the statute; here, the statute includes even more detail than the regulation, leaving the regulation section without purpose. Compare 34 U.S.C. 11274 with 45 CFR 1351.13. Finally, 45 CFR 1351.20 lists Government-wide and HHS-wide regulations that apply to RHY grant programs. The cited regulations apply to grant recipients and subrecipients regardless of whether they are listed in the RHY regulations, so their inclusion in the RHY regulations creates no additional authority. Further, the list of authorities included at 45 CFR 1351.20 is not an exhaustive list of all Federal regulations that apply to grant recipients and subrecipients, making its inclusion in the RHY regulations not merely duplicative but potentially confusing. See Runaway and Homeless Youth, 81 FR 93030, 93044-45 (Dec. 20, 2016).

Several sections of the RHY regulations are proposed for removal because they are unnecessary and better suited for a different format, such as a Notice of Funding Opportunity (NOFO). The RHY regulation sections proposed as unnecessary are 45 CFR 1351.10, 45 CFR 1351.14, 45 CFR 1351.15, 45 CFR 1351.17, 45 CFR 1351.24, 45 CFR 1351.25, and 45 CFR 1351.27.

45 CFR 1351.10 articulates the general purpose of the RHY Program. This section merely summarizes the programs funded by the RHY Act and outlines ACF's goals for the RHY Program. It imposes no obligations on grant recipients or applicants, nor does it give any guidance on how to interpret relevant statutory language. We propose removal because the content in this regulation section could assist grant applicants and recipients more effectively in the introduction to a NOFO or in fact sheets distributed by ACF.

45 CFR 1351.14 is proposed for removal because its sole purpose is to provide RHY grant applicants recipients with information about project periods. NOFOs routinely provide grant applicants and recipients with identical information about grant project periods, making this regulation section unnecessary.

45 CFR 1351.15-16 include descriptions of allowable costs (45 CFR 1351.15) and unallowable costs (45 CFR 1351.16) and are also better suited for NOFOs than for regulations. The language in these sections also appears elsewhere in the RHY regulations, making such content duplicative as well as unnecessary. See, e.g., 45 CFR 1351.16(b) (prohibiting activities already listed as unallowable at 45 CFR 1351.1 under the definition of “counseling services”).

45 CFR 1351.17 purports to address RHY grant application requirements but includes no guidance on application requirements other than referral to NOFO content (referenced as a “funding opportunity announcement” in regulation). This regulation section serves no purpose for grant applicants seeking clarity on application requirements other than to point them to a document that they already understood that they would need to follow. As such, it is unnecessary, and we propose removal.

45 CFR 1351.24, 45 CFR 1351.25, and 45 CFR 1351.27 are unnecessary for the same reasons as the regulation sections described above. These three sections include a list of additional requirements for the Basic Center Program (45 CFR 1351.24), the Transitional Living Program and Maternity Group Home Program (45 CFR 1351.25), and the Street Outreach Program (45 CFR 1351.27). Each section discussed here includes a subsection indicating that the NOFOs (referenced in regulation as “funding opportunity announcement”) will include additional program requirements. See 45 CFR 1351.24(f), 45 CFR 1351.25(b), 45 CFR 1351.27(c). Grant applicants and recipients will therefore need to rely on the NOFO to gain a full understanding of grant requirements already, so removing these sections of the RHY regulations promotes clarity and reduces burdensome materials.

The purpose of this section is to clarify ACF's intent with respect to the severability of the provisions of this NPRM. As explained above, ACF proposes removing sections of the RHY regulations because it is determined that doing so would make the regulations clearer, less burdensome, and more accessible to the public. To the extent that any portion of the proposed removals are declared invalid by a court, ACF intends for all other provisions of this proposed rule to remain in effect to the greatest extent possible to ensure that the RHY regulations remain as concise and accessible as possible. None of the provisions proposed for removal in this NPRM are dependent on the validity of other, separate provisions.

This Section is proposed for removal because it is unnecessary. This Section explains the general purpose of Runaway and Homeless Youth Program grants but provides no instructions to grant applicants or recipients, nor does it impose any new obligations. Thus, this Section is not needed in regulation and would better serve grant applicants and recipients if it were moved into the opening of a Notice of Funding Opportunity (NOFO) and described elsewhere in sub-regulatory guidance.

This Section discusses eligibility for RHY Program grants. It is proposed for removal because it generally duplicates statutory language. This Section is not needed in regulation because the statute that authorizes this Section (Sections 11211(a)(1), 11222, and 11261(a) of the RHY Act) is already prescriptive in terms of eligibility for grant funds and the regulatory language does not provide additional clarification.

This Section discusses which applicants receive priority for the RHY Program grant awards. This Section is proposed for removal because it is largely duplicative of statutory text from the RHY Act. In most cases, the language used in this regulation section is identical to the language describing grant eligibility requirements in the statute. See 34 U.S.C. 11213(b) (priority requirements for the Basic Center Program); 34 U.S.C. 11222(b) (priority requirements for the Transitional Living Program); 34 U.S.C. 11261(b) (priority requirements for the Street Outreach Program); 34 U.S.C. 11231 (priority requirements for the national communications system) 34 U.S.C. 11243(b) (priority requirements for research, evaluation, demonstration and service projects).

Where the regulatory language has modified statutory language slightly, such as at 45 CFR 1351(d) (expanding the statutory requirement for the national communications grant to prioritize applicants with experience providing telephonic services to runaway and homeless youth to prioritize applicants who have experience providing “electronic communication services”), distinctions can be explained via NOFO. NOFOs can likewise appropriately articulate 45 CFR 1351.12(f), which requires the Secretary to incorporate program performance standards listed at 45 CFR 1351.30-32 into grantmaking, monitoring, and evaluation. This subsection already states that NOFOs will include such content.

This Section discusses match requirements for RHY Program grants. This Section is proposed for removal because it duplicates statutory match requirements almost exactly. Compare 34 U.S.C. 11274 with 45 CFR 1351.13. This section adds nothing to assist the public understand the statutory match requirement better than the statute and therefore serves no purpose.

This Section discusses the grant period for RHY Program grants. This Section is proposed for removal because it is unnecessary. Information about grant periods already appears in NOFOs and is better suited there. Furthermore, this Section is ambiguous because it states, “generally the grant will initially be for one year.” Corresponding language in NOFOs is therefore already necessary to inform grant applicants and recipients about the specific period of their grants.

This Section discusses allowable costs for RHY Program grants. This Section is proposed for removal because grant terms and conditions, including allowable expenditures of a grant, are best suited for NOFOs and other grant documents and in most cases, already appear in those documents. Including them in regulation is unnecessary.

This Section discusses non-allowable costs for RHY Program grants. As with 45 CFR 1351.15, this Section is proposed for removal because grant terms and conditions, including lists of unallowable expenditures of a grant, are best suited for NOFOs and other grant documents. NOFOs already include lists of unallowable expenses, including those listed in this Section.

This Section is also duplicative in part. 45 CFR 1351.1 already prohibits the activities described in 45 CFR 1351.16(b); there is no need to include the same expense prohibition twice in the RHY regulations.

This Section discusses the process of applying for RHY Program grants. We propose removal because this section is unnecessary; it merely directs grant applicants to follow the instructions in the NOFO (references in regulation as “funding opportunity announcements”) without further detail or clarification.

This Section is proposed for removal because it is duplicative. The Section restates a list of Federal regulations applicable to RHY grant recipients and subrecipients without explanation of why each regulation is flagged yet excludes other Federal regulations that apply to all grant recipients and subrecipients. See Runaway and Homeless Youth, 81 FR 93030, 93044-45 (Dec. 20, 2016) (“This new list does not attempt to list all of the Federal laws and regulations . . . that pertain to organizations that may be grant awardees.”). The listed regulations apply to RHY grant recipients and subrecipients (and in many cases, all HHS or Federal agency grant recipients and subrecipients) regardless of whether they are included in the RHY regulations, and the arbitrary nature by which the listed regulations were selected for inclusion demonstrates further that this section serves no purpose.

This Section discusses requirements for the Basic Center Program. This Section is proposed for removal because it is unnecessary. Grant requirements are better suited for NOFOs or other grant documents, such as supplemental terms and conditions. Further, this Section already directs grant applicants and recipients to the NOFO (referred to as the “funding opportunity announcement”) for additional requirements, making any guidance provided by the regulation incomplete. See 45 CFR 1351.24(f).

This Section discusses requirements for the Transitional Living Program and Maternity Group Home grant. This Section is proposed for removal because it is unnecessary. Grant requirements are better suited for NOFOs or other grant documents, such as supplemental terms and conditions. Further, this Section already directs grant applicants and recipients to the NOFO (referred to as the “funding opportunity announcement”) for additional requirements, making any guidance provided by the regulation incomplete. See 45 CFR 1351.25(b).

This Section discusses requirements for Street Outreach Program. This Section is proposed for removal because it is unnecessary. Grant requirements are better suited for NOFOs or other grant documents, such as supplemental terms and conditions. Further, this Section already directs grant applicants and recipients to the NOFO (referred to as the “funding opportunity announcement”) for additional requirements, making any guidance provided by the regulation is incomplete. See 45 CFR 1351.27(c).

Under the Paperwork Reduction Act (44 U.S.C. 3501 et seq., as amended) (PRA), all Departments are required to submit to the Office of Management and Budget (OMB) for review and approval any reporting or recordkeeping requirements inherent in a proposed or final rule. This NPRM does not contain any information requiring OMB approval under the PRA and, therefore, will not create any new paperwork burdens or modify existing burdens subject to OMB review.

Executive Order 13132 requires federal agencies to consult with State and local government officials if they develop regulatory policies with federalism implications. Federalism is rooted in the belief that issues that are not national in scope or significance are most appropriately addressed by the level of government close to the people. This proposed rule would not have substantial direct impact on the States, on the relationship between the federal government and the States, or on the distribution of power and responsibilities among the various levels of government. This NPRM would not pre-empt State law. The changes proposed in the NPRM are removing duplicative and unnecessary regulations from the Family and Youth Services Bureau rules. Therefore, in accordance with Section 6 of Executive Order 13132, it is determined that this action does not have sufficient federalism implications to warrant the preparation of a federalism summary impact statement.

Assessment of Federal Regulations and Policies on Families Section 654 of the Treasury and General Government Appropriations Act of 1999 (Pub. L. 105-277) requires federal agencies to determine whether a policy or regulation may negatively affect family well-being. If the agency determines a policy or regulation negatively affects family well-being, then the agency must prepare an impact assessment addressing seven criteria specified in the law. HHS believes it is not necessary to prepare a family policymaking assessment because the actions proposed in this NPRM will not have any impact on the autonomy or integrity of the family as an institution.

We have examined the impacts of the proposed rule under Executive Order 12866, Executive Order 13563, Executive Order 14192, the Regulatory Flexibility Act (5 U.S.C. 601-612), and the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4).

Executive Orders 12866 and 13563 direct us to assess all benefits and costs of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits. Rules are “significant” under Executive Order 12866 Section 3(f)(1) if they “have an annual effect on the economy of $100 million or more; 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 or tribal governments or communities.” Executive Order 14192 requires that any new incremental costs associated with significant new regulations “shall, to the extent permitted by law, be offset by the elimination of existing costs associated with at least ten prior regulations.” The Office of Information and Regulatory Affairs (OIRA) has determined that this proposed rule is not a significant action under Executive Order 12866 Section 3(f). This analysis indicates that the proposed rule, if finalized would be a deregulatory action as defined by Section 3 of Executive Order 14192.

The Regulatory Flexibility Act (RFA) requires agencies to consider the impact of their regulatory proposals on small entities. Because this is simply repealing obsolete and unnecessary language, we propose to certify that the proposed rule would not have a significant economic impact on a substantial number of small entities.

The Unfunded Mandates Reform Act of 1995 (UMRA) generally requires that each agency conduct a cost-benefit analysis; identify and consider a reasonable number of regulatory alternatives; and select the least costly, most cost effective, or least burdensome alternative that achieves the objectives of the rule before promulgating any proposed or final rule that includes a Federal mandate that may result in expenditures of more than $100 million (adjusted for inflation) in at least one year by State, local, and tribal governments, in the aggregate, or by the private sector. Each agency issuing a rule with relevant effects over that threshold must also seek input from State, local, and tribal governments. The current threshold after adjustment for inflation is $193 million, using the most current (2005) Implicit Price Deflator for the Gross Domestic Product. This proposed rule would not result in an expenditure in any year that meets or exceeds this amount.

Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, requires agencies to consult with Indian Tribes when regulations have “substantial direct effects on one or more Indian Tribes, on the relationship between the Federal Government and Indian Tribes, or on the distribution of power and responsibilities between the Federal Government and Indian Tribes.” Similarly, ACF's Tribal Consultation Policy says that consultation is triggered for any legislative proposal, new rule adoption, or other policy change that significantly affects Tribes, meaning there exists a reasonable presumption that it has or may have substantial direct effects on one or more Indian Tribes, on the relationship between the Federal Government and Indian tribes, on the amount or duration of ACF program funding, on the delivery of ACF programs or services to one or more Indian Tribes, or on the distribution of power and responsibilities between the Federal Government and Indian Tribes. However, as this is a deregulatory action, per OMB M-25-36, Streamlining the Review of Deregulatory Actions, this action presumptively does not trigger the Tribal Consultation requirements of Executive Order 13175 nor does it meet ACF's standard for consultation.

For the reasons set forth in the preamble, ACF proposes to amend 45 CFR part 1351 as follows:

This proposed NPRM is being issued under the authority granted to the Secretary of Health and Human Services by the Family Violence Prevention and Services Act (FVPSA) at 42 U.S.C. 10404(a)(4).

45 CFR part 1370, “Family Violence Prevention and Services Programs” is a regulatory package established under FVPSA, as amended (42 U.S.C. 10401 et seq. ), that governs the administration of multiple federal grants implemented for the purposes of increasing public awareness about and preventing family violence, domestic violence, and dating violence; providing immediate shelter and supportive services for victims of family violence, domestic violence, and dating violence and their dependents; providing for technical assistance and training relating to family violence, domestic violence, and dating violence programs; providing for State Domestic Violence Coalitions; providing specialized services for abused parents and their children; and operating a national domestic violence hotline.

The FVPSA regulations were initially published on February 22, 1996 (Family Violence Prevention and Services Programs, 61 FR 6791 (Feb. 22, 1996) (codified at 45 CFR pt. 1370)). They were amended on November 2, 2016. Family Violence and Prevention Services Program, 81 FR 76446 (Nov. 2, 2016) (codified at 45 CFR pt. 1370). The amended regulations reflected FVPSA's most recent reauthorization under the Child Abuse Prevention and Treatment (CAPTA) Reauthorization Act of 2010 (Pub. L. 111-320). See 81 FR 76446, 76446. FVPSA has not been amended since 2010 and the FVPSA regulations have not been amended since 2016.

This NPRM proposes to rescind two Sections of the FVPSA regulations that are duplicative or unnecessary. These rescissions would impact States, Territories, Tribes, and nongovernmental entities. The regulation Sections to be removed and reserved can be designated into two categories: those that are duplicative and those that are unnecessary because they are better suited for a different format other than regulation.

45 CFR 1370.1 is proposed for removal because it is unnecessary. This regulation Section articulates the general purpose of FVPSA grants but merely summarizes the programs funded by the Act. It imposes no obligations on grant recipients or applicants, not does it give any guidance on how to interpret relevant statutory language. We propose removal because the content in this regulation Section could assist grant applicants and recipients more effectively in the introduction to a Notice of Funding Opportunity (“NOFO”) or in fact sheets distributed by ACF.

45 CFR 1370.3 is proposed for removal because it is duplicative. It imposes no new obligations and offers no new guidance because the authority and requirements are pulled directly from other statutes and regulations. 45 CFR 1370.3 lists Government-wide and HHS-wide regulations that apply to FVPSA grant recipients and subrecipients. The cited regulations apply to grant recipients and subrecipients regardless of whether they are listed in the FVPSA regulations, so their inclusion in the FVPSA regulations creates no additional authority. We propose removal of this Section because it serves no purpose other than to repeat requirements that are available elsewhere. Further, the list of authorities included at 45 CFR 1370.3 is not an exhaustive list of all Federal regulations that apply to grant recipients and subrecipients, making its inclusion in the FVPSA regulations not merely duplicative but potentially confusing. See Family Violence Prevention and Services Program, 80 FR 61890, 61896 (proposed Oct. 14, 2015).

45 CFR 1370.6 is proposed for removal because it is unnecessary and better suited to a different format such as sub-regulatory guidance or inclusion in a NOFO. 45 CFR 1370.6 addresses requirements for reports and evaluations for FVPSA formula grants. The first part of the regulation merely restates the reporting requirement listed in the FVPSA statute at 42 U.S.C. 10406(d). The rest of the regulation does not impose an obligation on grant recipients, but rather, clarifies that Territorial governments must also submit a performance report unless they consolidate FVPSA funds with other HHS funds in a Consolidated Block Grant under 45 CFR part 97, in which case they do not need to submit a performance report. ACF initially added this clarifying language to address earlier questions about reporting requirements for Territorial grantees. See Family Violence Prevention and Services Program, 80 FR 61890, 61899 (proposed Oct. 14, 2015). Territories that have consolidated FVPSA funds with other HHS funds in a Consolidated Block Grant are bound by 48 U.S.C. 1469a and 45 CFR part 97 and are already on notice that they do not need to submit a separate performance report for FVPSA compliance. This Section of the regulation is unnecessary because grant recipients and subrecipients are already informed about reporting requirements through existing NOFOs, the FVPSA statute itself, and other applicable law and regulations. Grant documents and sub-regulatory guidance are better suited than regulation to answer questions from any grant recipient, including Territories, about reporting obligations.

45 CFR 1370.30, 45 CFR 1370.31, and 45 CFR 1370.32 are proposed for removal because they are in part duplicative of statutory language and in part unnecessary. These three Sections address requirements for National Resource Center and Training and Technical Assistance grants (45 CFR 1370.30), requirements for specialized services for abused parents and their children (“SSAPC”) grants (45 CFR 1370.31), and requirements for National Domestic Violence Hotline grants (45 CFR 1370.32). Most of the language in these Sections repeats requirements articulated clearly in statute and serves no purpose in regulation. Compare 42 U.S.C. 10410 with 45 CFR 1370.30; 42 U.S.C. 10412 with 45 CFR 1370.32; 42 U.S.C. 10411 with 45 CFR 1370.31.

Although much of the FVPSA regulation restates statutory language in these three Sections, even language that diverges from statutory requirements is not necessary to include in regulation. Conversely, other Sections of the FVPSA regulation restate the authorizing statute in part but also include additional requirements not found in statute that are necessary for program operation. See, e.g., 45 CFR 1370.10 (outlining requirements for State and Indian Tribal grants and describing consultation requirements for Tribes), 45 CFR 1370.20 (describing requirements for State Domestic Violence Coalitions and detailing the process through which ACF designates entities to serve as State Domestic Violence Coalitions). In 45 CFR 1370.30-32, where regulatory language expands on or diverges from statutory language, such as SSAPC grant application requirements listed in 45 CFR 1371.31(b), content can be shifted from regulatory text to NOFOs and other grant documents without negative consequences. Indeed, all NOFOs must include all application requirements already, and agency expectations that differ from those listed in the statute are especially important to explain via grant application documents regardless of whether they are already located in regulation.

The purpose of this Section is to clarify ACF's intent with respect to the severability of the provisions of this NPRM. As explained above, ACF proposes removing Sections of the FVPSA regulations because we determined that doing so would make the regulations clearer, less burdensome, and more accessible to the public. To the extent that any portion of the proposed removals are declared invalid by a court, ACF intends for all other provisions of this proposed rule to remain in effect to the greatest extent possible to ensure that FVPSA regulations remain as concise and accessible as possible. None of the provisions contained herein are central to an overall intent of the proposed rule, nor are any provisions dependent on the validity of other, separate provisions.

This Section is proposed for removal because it is unnecessary. This Section explains the general purpose of FVPSA grants but provides no instructions to grant applicants or recipients, nor does it impose any new obligations. Thus, this Section is not needed in regulation and would better serve grant applicants and recipients if it were moved to the opening of a NOFO and described elsewhere in sub-regulatory guidance.

This Section is proposed for removal because it is duplicative. The Section restates a list of Federal regulations applicable to FVPSA grant recipients and subrecipients without explanation of why each regulation is flagged yet excludes other Federal regulations that apply to all grant recipients and subrecipients. See Family Violence Prevention and Services Program, 80 FR 61890, 61896 (proposed Oct. 14, 2015) (“This new list does not attempt to list all of the Federal laws and regulations . . . that pertain to organizations that may be grant awardees.”). The listed regulations apply to FVPSA grant recipients and subrecipients (and in many cases, all HHS or Federal agency grant recipients and subrecipients) regardless of whether they are included in FVPSA regulations, and the arbitrary nature by which the listed regulations were selected for inclusion demonstrates further that this Section serves no purpose.

This Section is proposed for removal because it is part duplicative and in part unnecessary. This Section merely restates formula grant reporting requirements found in the FVPSA statute at 42 U.S.C. 10406(d) and reporting requirements for Consolidated Block Grants in 45 CFR part 97. While this Section was added to the FVPSA regulations to “clarify requirements that have been questioned in the past,” the FVPSA statute, Standing NOFOs, and existing program instructions are sufficiently clear about reporting requirements to make this Section unnecessary. Any remaining questions about FVPSA performance reports for Territory grant recipients are best addressed in sub-regulatory guidance which would also allow for more detail than the regulatory language includes.

This Section describes national resource center and training and technical assistance grants authorized in the FVPSA Program at 42 U.S.C. 10410 and lists additional requirements for the grants. This Section is proposed for removal because it is unnecessary. Most of this Section merely summarizes the statutory language, which is already prescriptive in its description of available grants, allowable activities, and eligibility requirements. While the terminology in the regulation Section sometimes differs slightly from the statutory language, this Section includes no new obligations or necessary clarifications. Where the regulation Section provides a more detailed description of program requirements than the statute, such description should be relocated to NOFOs. Grant requirements are better suited for NOFOs or other grant documents, such as supplemental terms and conditions. For example, the term “Culturally-Specific Special Issue Resource Centers” appears in the regulation at 45 CFR 1370.30(a)(4) but not in statute, but using this term over the corresponding statutory language at 42 U.S.C. 10410(b)(2)(E) has no impact on grant applicants or recipients. Where the regulation section provides a more detailed description of program requirements than the statute, such description should be relocated to NOFOs. Indeed, this Section already directs grant applicants and recipients to refer to the NOFO (here called a “Funding Opportunity Announcement”) for more information about application requirements, making any guidance provided by this Section incomplete. See 45 CFR 1370.30(b).

This Section is proposed for removal because it is unnecessary. Most of this Section summarizes authorizing statutory language from 42 U.S.C. 10412, which is already prescriptive in its description of available grants, allowable activities, and eligibility requirements. Where the regulation Section provides a more detailed description of program requirements than the statute, such as in 45 CFR 1370.31(b), such description should be relocated to NOFOs. Grant requirements are better suited for NOFOs or other grant documents, such as supplemental terms and conditions. As with 45 CFR 1370.30 cited above, this Section already directs grant applicants and recipients to refer to the NOFO (here called a “Funding Opportunity Announcement”) for more information about application requirements, making any guidance provided by this Section incomplete. See 45 CFR 1370.30(b)(4).

This Section is proposed for removal because it is unnecessary. Most of this Section summarizes the statutory language at 42 U.S.C. 10411, which is already prescriptive in its description of allowable activities, and eligibility requirements for National Domestic Violence Hotline grants. Where the regulation Section provides a more detailed description of program requirements than the statute or differs from the statute, such as including a definition of “telephone” at 45 CFR 1370.32(b) that incorporates a broader use than the term initially held, such clarifications should be relocated to NOFOs. Grant requirements are better suited for NOFOs or other grant documents, such as supplemental terms and conditions. Indeed, this Section already directs grant applicants and recipients to refer to the NOFO (here called a “Funding Opportunity Announcement”) for more information about application requirements, making any guidance provided by this Section incomplete. See 45 CFR 1370.32(c)(7).

Under the Paperwork Reduction Act (44 U.S.C. 3501 et seq., as amended) (PRA), all Departments are required to submit to the Office of Management and Budget (OMB) for review and approval any reporting or recordkeeping requirements inherent in a proposed or final rule. This NPRM does not contain any information requiring OMB approval under the PRA and, therefore, will not create any new paperwork burdens or modify existing burdens subject to OMB review.

Executive Order 13132 requires federal agencies to consult with State and local government officials if they develop regulatory policies with federalism implications. Federalism is rooted in the belief that issues that are not national in scope or significance are most appropriately addressed by the level of government close to the people. This proposed rule would not have substantial direct impact on the States, on the relationship between the federal government and the States, or on the distribution of power and responsibilities among the various levels of government. This NPRM would not pre-empt State law. The changes proposed in the NPRM are removing duplicative and unnecessary regulations from the Office of Family Violence Prevention and Services regulations. Therefore, in accordance with Section 6 of Executive Order 13132, it is determined that this action does not have sufficient federalism implications to warrant the preparation of a federalism summary impact statement.

Assessment of Federal Regulations and Policies on Families Section 654 of the Treasury and General Government Appropriations Act of 1999 (Pub. L. 105-277) requires federal agencies to determine whether a policy or regulation may negatively affect family well-being. If the agency determines a policy or regulation negatively affects family well-being, then the agency must prepare an impact assessment addressing seven criteria specified in the law. HHS believes it is not necessary to prepare a family policymaking assessment because the actions proposed in this NPRM will not have any impact on the autonomy or integrity of the family as an institution.

We have examined the impacts of the proposed rule under Executive Order 12866, Executive Order 13563, Executive Order 14192, the Regulatory Flexibility Act (5 U.S.C. 601-612), and the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4).

Executive Orders 12866 and 13563 direct us to assess all benefits and costs of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits. Rules are “significant” under Executive Order 12866 Section 3(f)(1) if they “have an annual effect on the economy of $100 million or more; 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 or tribal governments or communities.” Executive Order 14192 requires that any new incremental costs associated with significant new regulations “shall, to the extent permitted by law, be offset by the elimination of existing costs associated with at least ten prior regulations.” The Office of Information and Regulatory Affairs (OIRA) has determined that this proposed rule is not a significant action under Executive Order 12866 Section 3(f). This analysis indicates that the proposed rule, if finalized would be a deregulatory action as defined by Section 3 of Executive Order 14192.

The Regulatory Flexibility Act (RFA) requires agencies to consider the impact of their regulatory proposals on small entities. Because this NPRM proposes repealing duplicative and unnecessary language, we propose to certify that the proposed rule would not have a significant economic impact on a substantial number of small entities.

The Unfunded Mandates Reform Act of 1995 (UMRA) generally requires that each agency conduct a cost-benefit analysis; identify and consider a reasonable number of regulatory alternatives; and select the least costly, most cost effective, or least burdensome alternative that achieves the objectives of the rule before promulgating any proposed or final rule that includes a Federal mandate that may result in expenditures of more than $100 million (adjusted for inflation) in at least one year by State, local, and tribal governments, in the aggregate, or by the private sector. Each agency issuing a rule with relevant effects over that threshold must also seek input from State, local, and tribal governments. The current threshold after adjustment for inflation is $193 million, using the most current (2025) Implicit Price Deflator for the Gross Domestic Product. This proposed rule would not result in an expenditure in any year that meets or exceeds this amount.

Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, requires agencies to consult with Indian Tribes when regulations have “substantial direct effects on one or more Indian tribes, on the relationship between the Federal government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian Tribes.” Consultation and Coordination With Indian Tribal Governments, 65 FR 67249. Similarly, ACF's Tribal Consultation Policy says that consultation is triggered for any legislative proposal, new rule adoption, or other policy change that significantly affects Tribes, meaning there exists a reasonable presumption that it has or many have substantial direct effects on one on more Indian tribes, on the relationship between the Federal Government and Indian Tribes, on the amount or duration of ACF program funding, on the delivery of ACF programs or services to one or more Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. However, as this is a deregulatory action, per OMB M-25-36, Streamlining the Review of Deregulatory Actions, this action presumptively does not trigger the consultation requirements of Executive Order 13175. ACF is nevertheless committed to consulting with Indian Tribes and Tribal leadership on this action to the extent practicable and permitted by law.

For the reasons set forth in the preamble, ACF proposes to amend 45 CFR part 1370 as follows: