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

On April 6, 2022, CMS published in the Federal Register (87 FR 20218) a proposed rule on the Medicare inpatient rehabilitation facility prospective payment system (IRF PPS) for federal fiscal year (FY) 2023. This rule proposes a permanent approach 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. CMS also solicits comments on the methodology used to update the IRF facility level adjustments (i.e., rural, low-income, and teaching status) and whether to incorporate discharge to home health in the IRF transfer policy. The rule proposes one policy change to the IRF Quality Reporting Program that would require quality data reporting for all IRF admissions regardless of payer. No changes are proposed to the measure set previously finalized for FY 2023. CMS also seeks comment on future measure concepts, adoption of a digital quality measure, and principles for measuring equity and healthcare quality disparities. CMS estimates that the Medicare IRF PPS payments in FY 2023 will be about $170 million higher than in FY 2022. The deadline for comments on the proposed rule is May 31, 2022.