Federal Register, Volume 89 Issue 151 (Tuesday, August 6, 2024)

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

[[Page 64275]]

Vol. 89

Tuesday,

No. 151

August 6, 2024

Part V

Department of Health and Human Services

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Centers for Medicare & Medicaid Services

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42 CFR Part 412

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

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

[[Page 64276]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 412

[CMS-1804-F]
RIN 0938-AV31

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

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

ACTION: Final action.

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

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

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

I. Executive Summary

A. Purpose

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

B. Summary of Major Provisions

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

C. Summary of Impact

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

II. Background

A. Statutory Basis and Scope for IRF PPS Provisions

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

[[Page 64277]]

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

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

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

[[Page 64278]]

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

C. Operational Overview of the Current IRF PPS

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

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III. Summary of Provisions of the Final Rule

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

IV. Analysis of and Responses to Public Comments

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

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

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

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

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

[[Page 64280]]

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

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[GRAPHIC] [TIFF OMITTED] TR06AU24.095

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[GRAPHIC] [TIFF OMITTED] TR06AU24.096

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

[[Page 64284]]

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

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

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

VI. FY 2025 IRF PPS Payment Update

A. Background

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

[[Page 64285]]

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

B. FY 2025 Market Basket Update and Productivity Adjustment

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

[[Page 64286]]

FY 2025.\3\ As discussed, and in accordance with sections 1886(j)(3)(C)
and 1886(j)(3)(D) of the Act, the Secretary proposed to update the IRF
PPS payment rates for FY 2025 by the proposed productivity-adjusted IRF
market basket increase factor of 2.8 percent.
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\3\ https://www.medpac.gov/wp-content/uploads/2025/03/Mar25_MedPAC_ReportToCongress_SEC.pdf.
---------------------------------------------------------------------------

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

[[Page 64287]]

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

[[Page 64288]]

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

C. Labor-Related Share for FY 2025

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

[[Page 64289]]

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

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

D. Wage Adjustment for FY 2025

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

[[Page 64290]]

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

[[Page 64291]]

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

[[Page 64292]]

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

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

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[[Page 64296]]

[GRAPHIC] [TIFF OMITTED] TR06AU24.100

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

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[[Page 64298]]

[GRAPHIC] [TIFF OMITTED] TR06AU24.111

[[Page 64299]]

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

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[[Page 64302]]

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

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

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

[[Page 64303]]

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

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

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

[[Page 64304]]

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

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

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

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

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

[[Page 64305]]

[GRAPHIC] [TIFF OMITTED] TR06AU24.104

[[Page 64306]]

[GRAPHIC] [TIFF OMITTED] TR06AU24.105

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

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

[[Page 64307]]

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

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

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

A. Update to the Outlier Threshold Amount for FY 2025

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

[[Page 64308]]

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

[[Page 64309]]

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

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

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

[[Page 64310]]

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

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

A. Background and Statutory Authority

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

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

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

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

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

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

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

[[Page 64311]]

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

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

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

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

[[Page 64312]]

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

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

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

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

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

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

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

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

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

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

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

[[Page 64313]]

care. Housing instability can also lead to homelessness, which is
housing deprivation in its most severe form.\33\ On a single night in
2023, roughly 653,100 people, or 20 out of every 10,000 people in the
United States, were experiencing homelessness.\34\ Studies also found
that people who are homeless have an increased risk of premature death
and experience chronic disease more often than among the general
population.\35\
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\30\ https://health.gov/healthypeople/priority-areas/social-determinants-health.
\31\ Healthy People 2030 is a long-term, evidence-based effort
led by the U.S. Department of Health and Human Services (HHS) that
aims to identify nationwide health improvement priorities and
improve the health of all Americans.
\32\ Kushel, M.B., Gupta, R., Gee, L., & Haas, J.S. (2006).
Housing instability and food insecurity as barriers to health care
among low-income Americans. Journal of General Internal Medicine,
21(1), 71-77. doi: https://doi.org/10.1111/j.1525-1497.2005.00278.x.
\33\ Homelessness is defined as ``lacking a regular nighttime
residence or having a primary nighttime residence that is a
temporary shelter or other place not designed for sleeping.''
Crowley, S. (2003). The affordable housing crisis: Residential
mobility of poor families and school mobility of poor children.
Journal of Negro Education, 72(1), 22-38. doi: https://doi.org/10.2307/3211288.
\34\ The 2023 Annual Homeless Assessment Report (AHAR) to
Congress. The U.S. Department of Housing and Urban Development 2023.
https://www.huduser.gov/portal/sites/default/files/pdf/2023-AHAR-Part-1.pdf.
\35\ Baggett, T.P., Hwang, S.W., O'Connell, J.J., Porneala,
B.C., Stringfellow, E.J., Orav, E.J., Singer, D.E., & Rigotti, N.A.
(2013). Mortality among homeless adults in Boston: Shifts in causes
of death over a 15-year period. JAMA Internal Medicine, 173(3), 189-
195. doi: https://doi.org/10.1001/jamainternmed.2013.1604. Schanzer,
B., Dominguez, B., Shrout, P.E., & Caton, C.L. (2007). Homelessness,
health status, and health care use. American Journal of Public
Health, 97(3), 464-469. doi: https://doi.org/10.2105/ajph.2005.076190.
---------------------------------------------------------------------------

We believe that IRFs can use information obtained from the Living
Situation item during a patient's discharge planning. For example, IRFs
could work in partnership with community care hubs and community-based
organizations to establish new care transition workflows, including
referral pathways, contracting mechanisms, data sharing strategies, and
implementation training that can track HRSNs to ensure unmet needs,
such as housing, are successfully addressed through closed loop
referrals and follow-up.\36\ IRFs could also take action to help
alleviate a patient's other related costs of living, like food, by
referring the patient to community-based organizations that would allow
the patient's additional resources to be allocated towards housing
without sacrificing other needs.\37\ Finally, IRFs could use the
information obtained from the Living Situation item to better
coordinate with other healthcare providers, facilities, and agencies
during transitions of care, so that referrals to address a patient's
housing stability are not lost during vulnerable transition periods.
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\36\ U.S. Department of Health & Human Services (HHS), Call to
Action, ``Addressing Health Related Social Needs in Communities
Across the Nation.'' November 2023. https://aspe.hhs.gov/sites/default/files/documents/3e2f6140d0087435cc6832bf8cf32618/hhs-call-to-action-health-related-social-needs.pdf.
\37\ Henderson, K.A., Manian, N., Rog, D.J., Robison, E., Jorge,
E., AlAbdulmunem, M. ``Addressing Homelessness Among Older Adults''
(Final Report). Washington, DC: Office of the Assistant Secretary
for Planning and Evaluation, U.S. Department of Health and Human
Services. October 26, 2023.
---------------------------------------------------------------------------

Due to the potential negative impacts housing instability can have
on a patient's health, we proposed to adopt the Living Situation item
as a new standardized patient assessment data element under the SDOH
category. This proposed Living Situation item is based on the Living
Situation item collected in the AHC HRSN Screening
Tool,^{38 39} and was adapted from the Protocol for Responding
to and Assessing Patients' Assets, Risks, and Experiences (PRAPARE)
tool.\40\ The proposed Living Situation item asks, ``What is your
living situation today?'' The proposed response options are: (1) I have
a steady place to live; (2) I have a place to live today, but I am
worried about losing it in the future; (3) I do not have a steady place
to live; (7) Patient declines to respond; and (8) Patient unable to
respond. A draft of the Living Situation item proposed to be adopted as
a standardized patient assessment data element under the SDOH category
can be found in the Downloads section of the IRF-PAI and IRF-PAI Manual
web page at https://www.cms.gov/medicare/quality/inpatient-rehabilitation-facility/irf-pai-and-irf-qrp-manual.
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\38\ More information about the AHC HRSN Screening Tool is
available on the website at https://innovation.cms.gov/Files/worksheets/ahcm-screeningtool.pdf.
\39\ The AHC HRSN Screening Tool Living Situation item includes
two questions. In an effort to limit IRF burden, we are only
proposing the first question.
\40\ National Association of Community Health Centers and
Partners, National Association of Community Health Centers,
Association of Asian Pacific Community Health Organizations,
Association OPC, Institute for Alternative Futures. ``PRAPARE.''
2017. https://prapare.org/the-prapare-screening-tool/.
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(b) Food
The U.S. Department of Agriculture, Economic Research Service
defines a lack of food security as a household-level economic and
social condition of limited or uncertain access to adequate food.\41\
Adults who are food insecure may be at an increased risk for a variety
of negative health outcomes and health disparities. For example, a
study found that food-insecure adults may be at an increased risk for
obesity.\42\ Another study found that food-insecure adults have a
significantly higher probability of death from any cause or
cardiovascular disease in long-term follow-up care, in comparison to
adults that are food secure.\43\
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\41\ U.S. Department of Agriculture, Economic Research Service.
(n.d.). Definitions of food security. Retrieved March 10, 2022, from
https://www.ers.usda.gov/topics/food-nutrition-assistance/food-security-in-the-u-s/definitions-of-food-security/.
\42\ Hernandez, D.C., Reesor, L.M., & Murillo, R. (2017). Food
insecurity and adult overweight/obesity: Gender and race/ethnic
disparities. Appetite, 117, 373-378.
\43\ Banerjee, S., Radak, T., Khubchandani, J., & Dunn, P.
(2021). Food Insecurity and Mortality in American Adults: Results
From the NHANES-Linked Mortality Study. Health promotion practice,
22(2), 204-214. https://doi.org/10.1177/1524839920945927.
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While having enough food is one of many predictors for health
outcomes, a diet low in nutritious foods is also a factor.\44\ The
United States Department of Agriculture (USDA) defines nutrition
security as ``consistent and equitable access to healthy, safe,
affordable foods essential to optimal health and well-being.'' \45\
Nutrition security builds on and complements long standing efforts to
advance food security. Studies have shown that older adults struggling
with food insecurity consume fewer calories and nutrients and have
lower overall dietary quality than those who are food secure, which can
put them at nutritional risk.\46\ Older adults are also at a higher
risk of developing malnutrition, which is considered a state of
deficit, excess, or imbalance in protein, energy, or other nutrients
that adversely impacts an individual's own body form, function, and
clinical outcomes.\47\ Up to 50 percent of older adults are affected by
or at risk for malnutrition, which is further aggravated by a lack of
food security and poverty.\48\ These facts highlight why the Biden-
Harris Administration launched the White House Challenge to End

[[Page 64314]]

Hunger and Build Healthy Communities.\49\
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\44\ National Center for Health Statistics. (2022, September 6).
Exercise or Physical Activity. Retrieved from Centers for Disease
Control and Prevention: https://www.cdc.gov/nchs/fastats/exercise.htm.
\45\ Ziliak, J.P., & Gundersen, C. (2019). The State of Senior
Hunger in America 2017: An Annual Report. Prepared for Feeding
America. Available at https://www.feedingamerica.org/research/senior-hunger-research/senior.
\46\ Ziliak, J.P., & Gundersen, C. (2019). The State of Senior
Hunger in America 2017: An Annual Report. Prepared for Feeding
America. Available at: https://www.feedingamerica.org/research/senior-hunger-research/senior.
\47\ The Malnutrition Quality Collaborative. (2020). National
Blueprint: Achieving Quality Malnutrition Care for Older Adults,
2020 Update. Washington, DC: Avalere Health and Defeat Malnutrition
Today. Available at: https://defeatmalnutrition.today/advocacy/blueprint/.
\48\ Food Research & Action Center (FRAC). ``Hunger is a Health
Issue for Older Adults: Food Security, Health, and the Federal
Nutrition Programs.'' December 2019. https://frac.org/wp-content/uploads/hunger-is-a-health-issue-for-older-adults-1.pdf.
\49\ The White House Challenge to End Hunger and Build Health
Communities (Challenge) was a nationwide call-to-action released on
March 24, 2023, to stakeholders across all of society to make
commitments to advance President Biden's goal to end hunger and
reduce diet-related diseases by 2030--all while reducing
disparities. More information on the White House Challenge to End
Hunger and Build Health Communities can be found: https://www.whitehouse.gov/briefing-room/statements-releases/2023/03/24/fact-sheet-biden-harris-administration-launches-the-white-house-challenge-to-end-hunger-and-build-healthy-communities-announces-new-public-private-sector-actions-to-continue-momentum-from-hist/.
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We believe that adopting items to collect and analyze information
about a patient's food security at home could provide additional
insight to their health complexity and help facilitate coordination
with other healthcare providers, facilities, and agencies during
transitions of care, so that referrals to address a patient's food
security are not lost during vulnerable transition periods. For
example, an IRF's dietitian or other clinically qualified nutrition
professional could work with the patient and their caregiver to plan
healthy, affordable food choices prior to discharge.\50\ IRFs could
also refer a patient that indicates lack of food security to government
initiatives such as the Supplemental Nutrition Assistance Program
(SNAP) and food pharmacies (programs to increase access to healthful
foods by making them affordable), two initiatives that have been
associated with lower health care costs and reduced hospitalization and
emergency department visits.\51\
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\50\ Schroeder K, Smaldone A. Food Insecurity: A Concept
Analysis. Nurse Forum. 2015 Oct-Dec;50(4):274-84. doi: 10.1111/
nuf.12118. Epub 2015 Jan 21. PMID: 25612146; PMCID: PMC4510041.
\51\ Tsega M, Lewis C, McCarthy D, Shah T, Coutts K. Review of
Evidence for Health-Related Social Needs Interventions. July 2019.
The Commonwealth Fund. https://www.commonwealthfund.org/sites/default/files/2019-07/COMBINED_ROI_EVIDENCE_REVIEW_7.15.19.pdf.
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We proposed to adopt two Food items as new standardized patient
assessment data elements under the SDOH Category. These proposed items
are based on the Food items collected in the AHC HRSN Screening Tool
and were adapted from the USDA 18-item Household Food Security Survey
(HFSS).\52\ The first proposed Food item states, ``Within the past 12
months, you worried that your food would run out before you got money
to buy more.'' The second proposed Food item states, ``Within the past
12 months, the food you bought just didn't last and you didn't have
money to get more.'' We proposed the same response options for both
items: (1) Often true; (2) Sometimes true; (3) Never True; (7) Patient
declines to respond; and (8) Patient unable to respond. A draft of the
proposed Food items proposed to be adopted as standardized patient
assessment data elements under the SDOH category can be found in the
Downloads section of the IRF-PAI and IRF-PAI Manual web page at https://www.cms.gov/medicare/quality/inpatient-rehabilitation-facility/irf-pai-and-irf-qrp-manual.
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\52\ More information about the HFSS tool can be found at
https://www.ers.usda.gov/topics/food-nutrition-assistance/food-security-in-the-u-s/survey-tools/.
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(c) Utilities
A lack of energy (utility) security can be defined as an inability
to adequately meet basic household energy needs.\53\ According to the
United States Department of Energy, one in three households in the U.S.
are unable to adequately meet basic household energy needs.\54\ The
consequences associated with a lack of utility security are represented
by three primary dimensions: economic, physical, and behavioral.
Patients with low incomes are disproportionately affected by high
energy costs, and they may be forced to prioritize paying for housing
and food over utilities.\55\ Some patients may face limited housing
options and therefore are at increased risk of living in lower-quality
physical conditions with malfunctioning heating and cooling systems,
poor lighting, and outdated plumbing and electrical systems.\56\
Patients with a lack of utility security may use negative behavioral
approaches to cope, such as using stoves and space heaters for
heat.\57\ In addition, data from the Department of Energy's U.S. Energy
Information Administration confirm that a lack of energy security
disproportionately affects certain populations, such as low-income and
African American households.\58\ The effects of a lack of utility
security include vulnerability to environmental exposures such as
dampness, mold, and thermal discomfort in the home, which have a direct
impact on a person's health.\59\ For example, research has shown
associations between a lack of energy security and respiratory
conditions as well as mental health-related disparities and poor sleep
quality in vulnerable populations such as the elderly, children, the
socioeconomically disadvantaged, and the medically vulnerable.\60\
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\53\ Hern[aacute]ndez D. Understanding `energy insecurity' and
why it matters to health. Soc Sci Med. 2016 Oct; 167:1-10. Doi:
10.1016/j.socscimed.2016.08.029. Epub 2016 Aug 21. PMID: 27592003;
PMCID: PMC5114037.
\54\ US Energy Information Administration. ``One in Three U.S.
Households Faced Challenges in Paying Energy Bills in 2015.'' 2017
Oct 13. https://www.eia.gov/consumption/residential/reports/2015/energybills/.
\55\ Hern[aacute]ndez D. ``Understanding `energy insecurity' and
why it matters to health.'' Soc Sci Med. 2016; 167:1-10.
\56\ Hern[aacute]ndez D. Understanding `energy insecurity' and
why it matters to health. Soc Sci Med. 2016 Oct; 167:1-10. doi:
10.1016/j.socscimed.2016.08.029. Epub 2016 Aug 21. PMID: 27592003;
PMCID: PMC5114037.
\57\ Hern[aacute]ndez D. ``What `Merle' Taught Me About Energy
Insecurity and Health.'' Health Affairs, VOL.37, NO.3: Advancing
Health Equity Narrative Matters. March 2018. https://doi.org/10.1377/hlthaff.2017.1413.
\58\ US Energy Information Administration. ``One in Three U.S.
Households Faced Challenges in Paying Energy Bills in 2015.'' 2017
Oct 13. https://www.eia.gov/consumption/residential/reports/2015/energybills/.
\59\ Hern[aacute]ndez D. Understanding `energy insecurity' and
why it matters to health. Soc Sci Med. 2016 Oct; 167:1-10. doi:
10.1016/j.socscimed.2016.08.029. Epub 2016 Aug 21. PMID: 27592003;
PMCID: PMC5114037.
\60\ Hern[aacute]ndez D, Siegel E. Energy insecurity and its ill
health effects: A community perspective on the energy-health nexus
in New York City. Energy Res Soc Sci. 2019 Jan; 47:78-83. doi:
10.1016/j.erss.2018.08.011. Epub 2018 Sep 8. PMID: 32280598; PMCID:
PMC7147484.
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We believe adopting an item to collect information upon a patient's
admission to an IRF about their utility security would facilitate the
identification of patients who may not have utility security and who
may benefit from engagement efforts. For example, IRFs may be able to
use the information on utility security to help connect some patients
in need to programs that can help older adults pay for their home
energy (heating/cooling) costs, like the Low-Income Home Energy
Assistance Program (LIHEAP).\61\ IRFs may also be able to partner with
community care hubs and community-based organizations to assist the
patient in applying for these and other local utility assistance
programs, as well as helping them navigate the enrollment process.\62\
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\61\ https://www.fcc.gov/broadbandbenefit.
\62\ National Council on Aging (NCOA). ``How to Make It Easier
for Older Adults to Get Energy and Utility Assistance.'' Promising
Practices Clearinghouse for Professionals. Jan 13, 2022. https://www.ncoa.org/article/how-to-make-it-easier-for-older-adults-to-get-energy-and-utility-assistance.
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We proposed to adopt a new item, Utilities, as a new standardized
patient assessment data element under the SDOH category. This proposed
item is based on the Utilities item collected in the AHC HRSN Screening
Tool and was adapted from the Children's Sentinel Nutrition Assessment
Program (C-SNAP) survey.\63\ The proposed Utilities

[[Page 64315]]

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

[[Page 64316]]

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

[[Page 64317]]

increased healthcare utilization, including hospitalizations and
associated costs; (2) ability for a given HRSN to be screened and
identified in the inpatient setting prior to discharge, addressed by
community-based services, and potentially improve healthcare outcomes,
including reduced readmissions; and (3) evidence that a given HRSN is
not systematically addressed by healthcare providers.\68\ In addition
to established evidence of their association with health status, risk,
and outcomes, these domains were selected because they can be assessed
across the broadest spectrum of individuals in a variety of
settings.^{69 70}
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\67\ https://nam.edu/standardized-screening-for-health-related-social-needs-in-clinical-settings-the-accountable-health-communities-screening-tool/.
\68\ Billioux, A., Verlander, K., Anthony, S., & Alley, D.
(2017). Standardized Screening for Health-Related Social Needs in
Clinical Settings: The Accountable Health Communities Screening
Tool. NAM Perspectives, 7(5). Available at: https://doi.org/10.31478/201705b. Accessed on June 9, 2024.
\69\ Billioux, A., Verlander, K., Anthony, S., & Alley, D.
(2017). Standardized Screening for Health-Related Social Needs in
Clinical Settings: The Accountable Health Communities Screening
Tool. NAM Perspectives, 7(5). Available at: https://doi.org/10.31478/201705b. Accessed on June 9, 2024.
\70\ Centers for Medicare & Medicaid Services. (2021).
Accountable Health Communities Model. Accountable Health Communities
Model [verbar] CMS Innovation Center. Available at: https://innovation.cms.gov/innovation-models/ahcm. Accessed on February 20,
2023.
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Through this process, over 50 screening tools totaling more than
200 questions were compiled. In order to refine this list, CMS'
contractor consulted a technical expert panel (TEP) consisting of a
diverse group of tool developers, public health and clinical
researchers, clinicians, population health and health systems
executives, community-based organization leaders, and Federal partners.
Over the course of several meetings, this TEP met to discuss
opportunities and challenges involved in screening for HRSNs; consider
and pare down CMS' list of evidence-based screening questions; and
recommend a short list of questions for inclusion in the final tool.
The AHC HRSN Screening Tool was tested across many care delivery sites
in diverse geographic locations across the United States. More than one
million Medicare and Medicaid beneficiaries have been screened using
the AHC HRSN Screening Tool, which was evaluated psychometrically and
demonstrated evidence of both reliability and validity, including
inter-rater reliability and concurrent and predictive validity.
Moreover, the AHC HRSN Screening Tool can be implemented in a variety
of places where individuals seek healthcare, including IRFs.
We selected these proposed assessment items for the IRF QRP from
the AHC HRSN Screening Tool because we believe that collecting
information on living situation, food, utilities, and transportation
could have a direct and positive impact on patient care in IRFs.
Specifically, collecting the information provides an opportunity for
the IRF to identify patients' potential HRSNs, and if indicated, to
those with the patient, their caregivers, and community partners during
the discharge planning process, potentially resulting in improvements
in patient outcomes.
Comment: Three of these commenters referenced CMS' second
evaluation of the AHC model from 2018 through 2021.\71\ These
commenters interpret the Findings at a Glance to conclude that the AHC
HRSN Screening Tool ``did not appear to increase beneficiaries'
connection to community services or HRSN resolution.''
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\71\ https://www.cms.gov/priorities/innovation/data-and-reports/2023/ahc-second-eval-rpt-fg.
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Response: This two-page summary of the AHC Model 2018-2021 \72\
describes the results of testing whether systematically identifying and
connecting beneficiaries to community resources for their HRSNs
improved health care utilization outcomes and reduced costs. To ensure
consistency in the screening offered to beneficiaries across both an
individual community's clinical delivery sites and across all the
communities in the model, CMS developed a standardized HRSN screening
tool. This AHC HRSN Screening Tool was used to screen Medicare and
Medicaid beneficiaries for core HRSNs to determine their eligibility
for inclusion in the AHC Model. If a Medicare or Medicaid beneficiary
was eligible for the AHC Model, they were randomly assigned to one of
two tracks: (1) Assistance; or (2) Alignment. The Assistance Track
tested whether navigation assistance that connects navigation-eligible
beneficiaries with community services results in increased HRSN
resolution, reduced health care expenditures, and unnecessary
utilization. The Alignment Track tested whether navigation assistance,
combined with engaging key stakeholders in continuous quality
improvement (CQI) to align community service capacity with
beneficiaries' HRSNs, results in greater increases in HRSN resolution
and greater reductions in health expenditures and utilization than
navigation assistance alone. Regardless of assigned track, all
beneficiaries received HRSN screening, community referrals, and
navigation to community services.\73\
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\72\ https://www.cms.gov/priorities/innovation/data-and-reports/2023/ahc-second-eval-rpt-fg.
\73\ Accountable Health Communities (AHC) Model Evaluation,
Second Evaluation Report. May 2023. This project was funded by the
Centers for Medicare & Medicaid Services under contract no. HHSM-
500-2014-000371, Task Order75FCMC18F0002. https://www.cms.gov/priorities/innovation/data-and-reports/2023/ahc-second-eval-rpt.
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We believe the commenter inadvertently misinterpreted the findings,
believing these findings were with respect to the effectiveness and
scientific validity of the AHC HRSN Screening Tool itself. The findings
section of this two-page summary described six key findings from the
AHC Model, which examined whether the Assistance Track or the Alignment
Track resulted in greater increases in HRSN resolution and greater
reductions in health expenditures and utilization. Particularly, the
AHC Model reduced emergency department visits among Medicaid and FFS
Medicare beneficiaries in the Assistance Track, which was suggestive
that navigation may help patients use the health care system more
effectively. We acknowledge that navigation alone did not increase
beneficiaries' connection to community services or HRSN resolution, and
this was attributed to gaps between community resource availability and
beneficiary needs. The AHC HRSN Screening Tool used in the AHC Model
was limited to identifying Medicare and Medicaid beneficiaries with at
least one core HRSN who could be eligible to participate in the AHC
Model. Our review of the AHC Model did not identify any issues with the
validity and scientific reliability of the AHC HRSN Screening Tool.
Finally, as part of our routine item and measure monitoring work,
we continually assess the implementation of new assessment items,
including the four new proposed SDOH assessment items.
Comment: Three commenters requested that CMS articulate the vision
for how CMS plans to use the data collected from the proposed SDOH
standardized patient assessment data elements in quality and payment
programs. These commenters noted concern that CMS may use the SDOH
assessment data to develop an IRF QRP measure that would hold IRFs
solely accountable for social drivers of health that require resources
and engagement across an entire community to address.
Response: We proposed the four new SDOH assessment items because
collection of additional SDOH items would permit us to continue
developing the statistical tools necessary to

[[Page 64318]]

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

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

[[Page 64319]]

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

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

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

[[Page 64320]]

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

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

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

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

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

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

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

[[Page 64321]]

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

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

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

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

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

[[Page 64322]]

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

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

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

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

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

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

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

[[Page 64323]]

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

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

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

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

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

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

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

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

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

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

[[Page 64324]]

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

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

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

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

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

[[Page 64325]]

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

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

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

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

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

[[Page 64326]]

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

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

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

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

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

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

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

[[Page 64327]]

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

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

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

[[Page 64328]]

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

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

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

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

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

[[Page 64329]]

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

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

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

IX. Collection of Information Requirements

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

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

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

[[Page 64330]]

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

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

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

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

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

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

[[Page 64331]]

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

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

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

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

[[Page 64332]]

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

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

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

X. Regulatory Impact Analysis

A. Statement of Need

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

B. Overall Impact

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

C. Anticipated Effects

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

[[Page 64333]]

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

[[Page 64334]]

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

[[Page 64335]]

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[[Page 64336]]

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[[Page 64337]]

[GRAPHIC] [TIFF OMITTED] TR06AU24.109

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

[[Page 64338]]

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

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

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

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

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

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

[[Page 64339]]

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

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

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

D. Alternatives Considered

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

E. Regulatory Review Costs

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

F. Accounting Statement and Table

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

[[Page 64340]]

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

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

G. Conclusion

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

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