FY 2023 Medicare Inpatient Rehabilitation Facility Prospective Payment System Final Rule Summary

On July 27, 2022, CMS placed on public display a final rule on the Medicare inpatient rehabilitation facility prospective payment system (IRF PPS) for federal fiscal year (FY) 2023.  In addition to provisions that would update the IRF PPS payment rates and outlier threshold for FY 2023, this rule establishes a permanent cap policy to smooth year-to-year changes in the IRF wage index by applying a cap on negative wage index changes greater than a 5 percent decrease from the prior year. It also codifies its longstanding IRF teaching status adjustment policy in regulation and updates its IRF teaching policy on IRF program closures and displaced residents. The rule adopts one policy change to the IRF Quality Reporting Program that will require quality data reporting for all IRF admissions regardless of payer. In response to comments, CMS delays the start of reporting from FY 2023 to FY 2024. The final rule will be published in the August 1, 2022, issue of the Federal Register. These regulations are effective on October 1, 2022, unless otherwise noted.  CMS estimates that the Medicare IRF PPS payments in FY 2023 will be about $275 million higher than in FY 2022.