Medicare Program; Inpatient Rehabilitation Facility Prospective Payment System for Federal Fiscal Year 2014, 26879-26933 [2013-10755]

Agencies

• Centers for Medicare & Medicaid Services
• DEPARTMENT OF HEALTH AND HUMAN SERVICES

[Federal Register Volume 78, Number 89 (Wednesday, May 8, 2013)]
[Proposed Rules]
[Pages 26879-26933]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-10755]



[[Page 26879]]

Vol. 78

Wednesday,

No. 89

May 8, 2013

Part II





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 2014; Proposed Rule

Federal Register / Vol. 78, No. 89 / Wednesday, May 8, 2013 / 
Proposed Rules

[[Page 26880]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 412

[CMS-1448-P]
RIN 0938-AR66


Medicare Program; Inpatient Rehabilitation Facility Prospective 
Payment System for Federal Fiscal Year 2014

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would update the prospective payment rates 
for inpatient rehabilitation facilities (IRFs) for federal fiscal year 
(FY) 2014 (for discharges occurring on or after October 1, 2013 and on 
or before September 30, 2014) as required by the statute. We are also 
proposing to revise the list of diagnosis codes that are used to 
determine presumptive compliance under the ``60 percent rule,'' update 
the IRF facility-level adjustment factors, revise sections of the 
Inpatient Rehabilitation Facility-Patient Assessment Instrument, revise 
requirements for acute care hospitals that have IRF units, clarify the 
IRF regulation text regarding limitation of review, update references 
to previously changed sections in the regulations text, and revise and 
update quality measures and reporting requirements under the IRF 
quality reporting program.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on July 1, 2013.

ADDRESSES: In commenting, please refer to file code CMS-1448-P. Because 
of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit comments in one of four ways (please choose only one 
of the ways listed):
    1. Electronically. You may submit electronic comments on this 
regulation to https://www.regulations.gov. Follow the ``Submit a 
comment'' instructions.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-1448-P, P.O. Box 8016, 
Baltimore, MD 21244-8016.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address only: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-1448-P, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    4. By hand or courier. Alternatively, you may deliver (by hand or 
courier) your written comments only to the following addresses prior to 
the close of the comment period:
    a. For delivery in Washington, DC--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, Room 445-G, Hubert 
H. Humphrey Building, 200 Independence Avenue SW., Washington, DC 
20201.
    (Because access to the interior of the Hubert H. Humphrey Building 
is not readily available to persons without Federal government 
identification, commenters are encouraged to leave their comments in 
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing 
by stamping in and retaining an extra copy of the comments being 
filed.)
    b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, 7500 Security 
Boulevard, Baltimore, MD 21244-1850.
    If you intend to deliver your comments to the Baltimore address, 
please call telephone number (410) 786-7195 in advance to schedule your 
arrival with one of our staff members.
    Comments erroneously mailed to the addresses indicated as 
appropriate for hand or courier delivery may be delayed and received 
after the comment period.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Gwendolyn Johnson, (410)786-6954, for 
general information about the proposed rule. Caroline Gallaher, (410) 
786-8705, for information about the quality reporting program. Susanne 
Seagrave, (410) 786-0044 or Kadie Thomas, (410) 786-0468, for 
information about the proposed payment policies and the proposed 
payment rates.

SUPPLEMENTARY INFORMATION: The IRF PPS Addenda along with other 
supporting documents and tables referenced in this proposed rule are 
available through the Internet on the CMS Web site at https://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/.
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following Web 
site as soon as possible after they have been received: https://www.regulations.gov. Follow the search instructions on that Web site to 
view public comments.
    Comments received timely will also be available for public 
inspection as they are received, generally beginning approximately 3 
weeks after publication of a document, at the headquarters of the 
Centers for Medicare & Medicaid Services, 7500 Security Boulevard, 
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 
a.m. to 4 p.m. To schedule an appointment to view public comments, 
phone 1-800-743-3951.

Executive Summary

A. Purpose

    This proposed rule updates the payment rates for inpatient 
rehabilitation facilities (IRFs) for federal fiscal year (FY) 2014 (for 
discharges occurring on or after October 1, 2013 and on or before 
September 30, 2014) as required under section 1886(j)(3)(C) of the 
Social Security Act (the Act). Section 1886(j)(5) of the Act requires 
the Secretary to publish in the Federal Register on or before the 
August 1 that precedes the start of each fiscal year, the 
classification and weighting factors for the IRF prospective payment 
system's (PPS) case-mix groups and a description of the methodology and 
data used in computing the prospective payment rates for that fiscal 
year.

B. Summary of Major Provisions

    In this proposed rule, we use the methods described in the FY 2013 
IRF PPS notice (77 FR 44618) to update the Federal prospective payment 
rates for FY 2014 using updated FY 2012 IRF claims and the most recent 
available IRF cost report data. We are also proposing to revise the 
list of diagnosis codes that are used to determine presumptive 
compliance under the ``60 percent rule,'' update the IRF facility-level 
adjustment factors using an enhanced estimation methodology, revise 
sections of the Inpatient Rehabilitation Facility-Patient Assessment 
Instrument, revise requirements for acute care hospitals that have IRF 
units, clarify the IRF regulation text regarding limitation of review, 
update references to previously changed sections in the regulations 
text, and revise and update quality measures

[[Page 26881]]

and reporting requirements under the IRF quality reporting program.

C. Summary of Costs, Benefits and Transfers

------------------------------------------------------------------------
    Provision description                   Total transfers
------------------------------------------------------------------------
FY 2014 IRF PPS payment rate   The overall economic impact of this
 update.                        proposed rule is an estimated $150
                                million in increased payments from the
                                Federal government to IRFs during FY
                                2014.
------------------------------------------------------------------------

    To assist readers in referencing sections contained in this 
document, we are providing the following Table of Contents.

Table of Contents

I. Background
    A. Historical Overview of the Inpatient Rehabilitation Facility 
Prospective Payment System (IRF PPS)
    B. Provisions of the Affordable Care Act Affecting the IRF PPS 
in FY 2012 and Beyond
    C. Operational Overview of the Current IRF PPS
II. Summary of Provisions of the Proposed Rule
    A. Proposed Updates to the IRF Federal Prospective Payment Rates 
for Federal Fiscal Year (FY) 2014
    B. Proposed Revisions to Existing Regulation Text
III. Proposed Update to the Case-Mix Group (CMG) Relative Weights 
and Average Length of Stay Values for FY 2014
IV. Proposed Updates to the Facility-Level Adjustment Factors for FY 
2014
    A. Background on Facility-Level Adjustments
    B. Proposed Updates to the IRF Facility-Level Adjustment Factors
    C. Budget Neutrality Methodology for the Updates to the IRF 
Facility-Level Adjustment Factors
V. Proposed FY 2014 IRF PPS Federal Prospective Payment Rates
    A. Proposed Market Basket Increase Factor, Productivity 
Adjustment, Other Adjustment, and Secretary's Recommendation for FY 
2014
    B. Secretary's Proposed Recommendation
    C. Proposed Labor-Related Share for FY 2014
    D. Proposed Area Wage Adjustment
    E. Description of the Proposed IRF Standard Conversion Factor 
and Payment Rates for FY 2014
    F. Example of the Methodology for Adjusting the Proposed Federal 
Prospective Payment Rates
VI. Proposed Update to Payments for High-Cost Outliers Under the IRF 
PPS
    A. Proposed Update to the Outlier Threshold Amount for FY 2014
    B. Proposed Update to the IRF Cost-to-Charge Ratio Urban and 
Rural Ceilings
VII. Proposed Refinements to the Presumptive Compliance Criteria 
Methodology
    A. Background on the Compliance Percentage
    B. Proposed Changes to the ICD-Q-CM-Codes that Meet the 
Presumptive Compliance Criteria
VIII. Proposed Non-Quality Related Revisions to IRF-PAI Sections
    A. Proposed Updates
    B. Proposed Additions
    C. Proposed Deletions
    D. Proposed Changes
IX. Proposed Technical Corrections to the Regulations at Sec.  
412.130
X. Proposed Revisions to the Conditions of Payment for IRF Units 
Under the IRF PPS
XI. Proposed Clarification of the Regulations at Sec.  412.630
XII. Proposed Revision to the Regulations at Sec.  412.29
XIII. Proposed Revisions and Updates to the Quality Reporting 
Program for IRFs
    A. Background and Statutory Authority
    B. Quality Measures Previously Finalized and Currently in Use 
for the IRF Quality Reporting Program
    C. Proposed New IRF QRP Quality Measures Affecting the FY 2016 
and FY 2017 IRF PPS Annual Increase Factor, and Subsequent Year 
Increase Factors
    D. Proposed Changes to the IRF-PAI That Are Related to the IRF 
Quality Reporting Program
    E. Proposed Change in Data Collection and Submission Periods for 
Future Program Years
    F. Proposed Reconsideration and Appeals Process
    G. Proposed Policy for Granting of a Waiver of the IRF QRP Data 
Submission Requirements in Case of Disaster or Extraordinary 
Circumstances
    H. Public Display of Data Quality Measures for the IRF QRP 
Program
    I. Method for Applying the Reduction to the FY 2014 IRF Increase 
Factor for IRFs that Fail to Meet the Quality Reporting Requirements
XIV. Collection of Information Requirements
    A. ICRs Regarding IRF QRP
    B. ICRs Regarding Non-Quality Related Proposed Changes to the 
IRF-PAI
XV. Response to Public Comments
XVI. Regulatory Impact Analysis
    A. Statement of Need
    B. Overall Impacts
    C. Detailed Economic Analysis
    D. Alternatives Considered
    E. Accounting Statement
    F. Conclusion
    Regulation Text

I. Background

A. Historical Overview of the Inpatient Rehabilitation Facility 
Prospective Payment System (IRF PPS)

    Section 1886(j) of the Act provides for the implementation of a per 
discharge prospective payment system (PPS) for inpatient rehabilitation 
hospitals and inpatient rehabilitation units of a hospital (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. Although 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), we are providing below a 
general description of the IRF PPS for fiscal years (FYs) 2002 through 
2013.
    Under the IRF PPS from FY 2002 through FY 2005, as described in the 
FY 2002 IRF PPS final rule (66 FR 41316), the federal prospective 
payment rates were computed across 100 distinct case-mix groups (CMGs). 
We constructed 95 CMGs using rehabilitation impairment categories 
(RICs), functional status (both motor and cognitive), and age (in some 
cases, cognitive status and age may not be a factor in defining a CMG). 
In addition, we constructed five special CMGs to account for very short 
stays and for patients who expire in the IRF.
    For each of the CMGs, we developed relative weighting factors to 
account for a patient's clinical characteristics and expected resource 
needs. Thus, the weighting factors accounted for the relative 
difference in resource use across all CMGs. Within each CMG, we created 
tiers based on the estimated effects that certain comorbidities would 
have on resource use.
    We established the federal PPS rates using a standardized payment 
conversion factor (formerly referred to as the budget neutral 
conversion factor). For a detailed discussion of the budget neutral 
conversion factor, please refer to our FY 2004 IRF PPS final rule (68 
FR 45684 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 federal prospective payment 
rates under the IRF PPS from FYs 2002 through 2005. Within the 
structure of the payment system, we then made

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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 IRF's unadjusted Federal 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 IRF 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.
    We established a CMS Web site as a primary information resource for 
the IRF PPS. The Web site is: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/?redirect=/
InpatientRehabFacPPS/ and may be accessed to download or view 
publications, software, data specifications, educational materials, and 
other information pertinent to the IRF PPS.
    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) that we published on September 
30, 2005, we finalized a number of refinements to the IRF PPS case-mix 
classification system (the CMGs and the corresponding relative weights) 
and the case-level and facility-level adjustments. These refinements 
included the adoption of the Office of Management and Budget's (OMB) 
Core-Based Statistical Area (CBSA) market definitions, modifications to 
the CMGs, tier comorbidities, and CMG relative weights, implementation 
of a new teaching status adjustment for IRFs, revision and rebasing of 
the market basket index 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 index used to update IRF payments is a market 
basket reflecting the operating and capital cost structures for 
freestanding IRFs, freestanding inpatient psychiatric facilities 
(IPFs), and long-term care hospitals (LTCHs) (hereafter referred to as 
the rehabilitation, psychiatric, and long-term care (RPL) market 
basket). Any reference to the FY 2006 IRF PPS final rule in this 
proposed rule also includes the provisions effective in the correcting 
amendments. For a detailed discussion of the final key policy changes 
for FY 2006, please refer to the FY 2006 IRF PPS final rule (70 FR 
47880 and 70 FR 57166).
    In the FY 2007 IRF PPS final rule (71 FR 48354), we further refined 
the IRF PPS case-mix classification system (the CMG relative weights) 
and the case-level adjustments, to ensure that IRF PPS payments would 
continue to reflect as accurately as possible the costs of care. For a 
detailed discussion of the FY 2007 policy revisions, please refer to 
the FY 2007 IRF PPS final rule (71 FR 48354).
    In the FY 2008 IRF PPS final rule (72 FR 44284), we updated the 
federal prospective payment rates and the outlier threshold, revised 
the IRF wage index policy, and clarified how we determine high-cost 
outlier payments for transfer cases. For more information on the policy 
changes implemented for FY 2008, please refer to the FY 2008 IRF PPS 
final rule (72 FR 44284), in which we published the final FY 2008 IRF 
federal prospective payment rates.
    After publication of the FY 2008 IRF PPS final rule (72 FR 44284), 
section 115 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 
(Pub. L. 110-173, enacted on December 29, 2007) (MMSEA), amended 
section 1886(j)(3)(C) of the Act to apply a zero percent increase 
factor for FYs 2008 and 2009, effective for IRF discharges occurring on 
or after April 1, 2008. Section 1886(j)(3)(C) of the Act required the 
Secretary to develop an increase factor to update the IRF federal 
prospective payment rates for each FY. Based on the legislative change 
to the increase factor, we revised the FY 2008 federal prospective 
payment rates for IRF discharges occurring on or after April 1, 2008. 
Thus, the final FY 2008 IRF Federal prospective payment rates that were 
published in the FY 2008 IRF PPS final rule (72 FR 44284) were 
effective for discharges occurring on or after October 1, 2007 and on 
or before March 31, 2008; and the revised FY 2008 IRF Federal 
prospective payment rates were effective for discharges occurring on or 
after April 1, 2008 and on or before September 30, 2008. The revised FY 
2008 federal prospective payment rates are available on the CMS Web 
site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Data-Files.html.
    In the FY 2009 IRF PPS final rule (73 FR 46370), we updated the CMG 
relative weights, the average length of stay values, and the outlier 
threshold; clarified IRF wage index policies regarding the treatment of 
``New England deemed'' counties and multi-campus hospitals; and revised 
the regulation text in response to section 115 of the MMSEA to set the 
IRF compliance percentage at 60 percent (``the 60 percent rule'') and 
continue the practice of including comorbidities in the calculation of 
compliance percentages. We also applied a zero percent market basket 
increase factor for FY 2009 in accordance with section 115 of the 
MMSEA. For more information on the policy changes implemented for FY 
2009, please refer to the FY 2009 IRF PPS final rule (73 FR 46370), in 
which we published the final FY 2009 IRF federal prospective payment 
rates.
    In the FY 2010 IRF PPS final rule (74 FR 39762) and in correcting 
amendments to the FY 2010 IRF PPS final rule (74 FR 50712) that we 
published on October 1, 2009, we updated the federal prospective 
payment rates, the CMG relative weights, the average length of stay 
values, the rural, LIP, and teaching status adjustment factors, and the 
outlier threshold; implemented new IRF coverage requirements for 
determining whether an IRF claim is reasonable and necessary; and 
revised the regulation text to require IRFs to submit patient 
assessments on Medicare Advantage (MA) (Medicare Part C) patients for 
use in the 60 percent rule calculations. Any reference to the FY 2010 
IRF PPS final rule in this proposed rule also includes the provisions 
effective in the correcting amendments. For more information on the 
policy changes implemented for FY 2010, please refer to the FY 2010 IRF 
PPS final rule (74 FR 39762 and 74 FR 50712), in which we published the 
final FY 2010 IRF federal prospective payment rates.
    After publication of the FY 2010 IRF PPS final rule (74 FR 39762), 
section 3401(d) of the Patient Protection and Affordable Care Act (Pub. 
L. 111-148, enacted on March 23, 2010) as amended by section 10319 of 
the same Act and by section 1105 of the Health Care and Education 
Reconciliation Act of 2010 (Pub. L. 111-152, enacted on March 30, 2010) 
(collectively, hereafter referred to

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as ``The Affordable Care Act''), amended section 1886(j)(3)(C) of the 
Act and added section 1886(j)(3)(D) of the Act. Section 1886(j)(3)(C) 
of the Act requires the Secretary to estimate a multi-factor 
productivity adjustment to the market basket increase factor, and to 
apply other adjustments as defined by the Act. The productivity 
adjustment applies to FYs from 2012 forward. The other adjustments 
apply to FYs 2010 to 2019.
    Sections 1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(i) of the Act 
defined the adjustments that were to be applied to the market basket 
increase factors in FYs 2010 and 2011. Under these provisions, the 
Secretary was required to reduce the market basket increase factor in 
FY 2010 by a 0.25 percentage point adjustment. Notwithstanding this 
provision, in accordance with section 3401(p) of the Affordable Care 
Act, the adjusted FY 2010 rate was only to be applied to discharges 
occurring on or after April 1, 2010. Based on the self-implementing 
legislative changes to section 1886(j)(3) of the Act, we adjusted the 
FY 2010 Federal prospective payment rates as required, and applied 
these rates to IRF discharges occurring on or after April 1, 2010 and 
on or before September 30, 2010. Thus, the final FY 2010 IRF federal 
prospective payment rates that were published in the FY 2010 IRF PPS 
final rule (74 FR 39762) were used for discharges occurring on or after 
October 1, 2009 and on or before March 31, 2010; and the adjusted FY 
2010 IRF federal prospective payment rates applied to discharges 
occurring on or after April 1, 2010 and on or before September 30, 
2010. The adjusted FY 2010 federal prospective payment rates are 
available on the CMS Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Data-Files.html.
    In addition, sections 1886(j)(3)(C) and (D) of the Act also 
affected the FY 2010 IRF outlier threshold amount because they required 
an adjustment to the FY 2010 RPL market basket increase factor, which 
changed the standard payment conversion factor for FY 2010. 
Specifically, the original FY 2010 IRF outlier threshold amount was 
determined based on the original estimated FY 2010 RPL market basket 
increase factor of 2.5 percent and the standard payment conversion 
factor of $13,661. However, as adjusted, the IRF prospective payments 
are based on the adjusted RPL market basket increase factor of 2.25 
percent and the revised standard payment conversion factor of $13,627. 
To maintain estimated outlier payments for FY 2010 equal to the 
established standard of 3 percent of total estimated IRF PPS payments 
for FY 2010, we revised the IRF outlier threshold amount for FY 2010 
for discharges occurring on or after April 1, 2010 and on or before 
September 30, 2010. The revised IRF outlier threshold amount for FY 
2010 was $10,721.
    Sections 1886(j)(3)(c)(ii)(II) and 1886(j)(3)(D)(i) also required 
the Secretary to reduce the market basket increase factor in FY 2011 by 
a 0.25 percentage point adjustment. The FY 2011 IRF PPS notice (75 FR 
42836) and the correcting amendments to the FY 2011 IRF PPS notice (75 
FR 70013, November 16, 2010) described the required adjustments to the 
FY 2011 and FY 2010 IRF PPS Federal prospective payment rates and 
outlier threshold amount for IRF discharges occurring on or after April 
1, 2010 and on or before September 30, 2011. It also updated the FY 
2011 Federal prospective payment rates, the CMG relative weights, and 
the average length of stay values. Any reference to the FY 2011 IRF PPS 
notice in this proposed rule also includes the provisions effective in 
the correcting amendments. For more information on the FY 2010 and FY 
2011 adjustments or the updates for FY 2011, please refer to the FY 
2011 IRF PPS notice (75 FR 42836 and 75 FR 70013).
    In the FY 2012 IRF PPS final rule (76 FR 47836), we updated the IRF 
federal prospective payment rates, rebased and revised the RPL market 
basket, and established a new quality reporting program for IRFs in 
accordance with section 1886(j)(7) of the Act. We also revised 
regulations text for the purpose of updating and providing greater 
clarity. For more information on the policy changes implemented for FY 
2012, please refer to the FY 2012 IRF PPS final rule (76 FR 47836), in 
which we published the final FY 2012 IRF federal prospective payment 
rates.
    The FY 2013 IRF PPS notice (77 FR 44618) described the required 
adjustments to the FY 2013 federal prospective payment rates and 
outlier threshold amount for IRF discharges occurring on or after 
October 1, 2012 and on or before September 30, 2013. It also updated 
the FY 2013 federal prospective payment rates, the CMG relative 
weights, and the average length of stay values. For more information on 
the updates for FY 2013, please refer to the FY 2013 IRF PPS notice (77 
FR 44618).

B. Provisions of the Affordable Care Act Affecting the IRF PPS in FY 
2012 and Beyond

    The Affordable Care Act included several provisions that affect the 
IRF PPS in FYs 2012 and beyond. In addition to what was discussed 
above, section 3401(d) of the Affordable Care Act also added section 
1886(j)(3)(C)(ii)(I) (providing for a ``productivity'' adjustment'' for 
fiscal year 2012 and each subsequent fiscal year). The proposed 
productivity adjustment for FY 2014 is discussed in section V.A. of 
this proposed rule. Section 3401(d) of the Affordable Care Act requires 
an additional 0.3 percentage point adjustment to the IRF increase 
factor for FY 2014, as discussed in section V.A. of this proposed rule. 
Section 1886(j)(3)(C)(ii)(II) of the Act notes that the application of 
these adjustments to the market basket update may result in an update 
that is less than 0.0 for a fiscal year and in payment rates for a 
fiscal year being less than such payment rates for the preceding fiscal 
year.
    Section 3004(b) of the Affordable Care Act also addressed the IRF 
PPS program. It reassigned the previously-designated section 1886(j)(7) 
of the Act to section 1886(j)(8) and inserted a new section 1886(j)(7), 
which contains new requirements for the Secretary to establish a 
quality reporting program 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) will require 
application of a 2 percentage point reduction of the applicable market 
basket increase factor for IRFs that fail to comply with the quality 
data submission requirements. Application of the 2 percentage point 
reduction may result in an update that is less than 0.0 for a fiscal 
year and in payment rates for a fiscal year being less than such 
payment rates for the preceding fiscal year. Reporting-based reductions 
to the market basket increase factor will not be cumulative; they will 
only apply for the FY involved.
    Under section 1886(j)(7)(D)(i) and (ii) of the Act, the Secretary 
is generally required to select quality measures for the IRF quality 
reporting program from those that have been endorsed by the consensus-
based entity which holds a performance measurement contract under 
section 1890(a) of the Act. This contract is currently held by the 
National Quality Forum (NQF). So long as due consideration is given to 
measures that have been endorsed or adopted by a consensus-based 
organization, section 1886(j)(7)(D)(ii) of the Act authorizes the 
Secretary to select non-endorsed measures for specified areas or 
medical topics when there are no feasible or practical endorsed 
measure(s). Under section 1886(j)(7)(D)(iii) of the Act, the

[[Page 26884]]

Secretary is required to publish the measures that will be used in FY 
2014 no later than October 1, 2012.
    Section 1886(j)(7)(E) of the Act requires the Secretary to 
establish procedures for making the IRF PPS quality reporting data 
available to the public. In so doing, the Secretary must ensure that 
IRFs have the opportunity to review any such data prior to its release 
to the public. Future rulemaking will address these public reporting 
obligations.

C. Operational Overview of the Current IRF PPS

    As described in the FY 2002 IRF PPS final rule, upon the admission 
and discharge of a Medicare Part A fee-for-service patient, the IRF is 
required to complete the appropriate sections of a patient assessment 
instrument (PAI), designated as the Inpatient Rehabilitation Facility-
Patient Assessment Instrument (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 Part C (Medicare Advantage) 
patient, as described in the FY 2010 IRF PPS final rule. 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 5-digit CMG number. The first digit 
is an alpha-character that indicates the comorbidity tier. The last 4 
digits represent the distinct CMG number. Free downloads of the 
Inpatient Rehabilitation Validation and Entry (IRVEN) software product, 
including the GROUPER software, are available on the CMS Web site at 
https://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Software.html.
    Once a Medicare fee-for-service Part A patient is discharged, the 
IRF submits a Medicare claim as a Health Insurance Portability and 
Accountability Act of 1996 (Pub. L. 104-191, enacted on August 21, 
1996) (HIPAA), compliant electronic claim or, if the Administrative 
Simplification Compliance Act of 2002 (Pub. L. 107-105, enacted on 
December 27, 2002) (ASCA) permits, a paper claim (a UB-04 or a CMS-1450 
as appropriate) using the five-digit CMG number and sends it to the 
appropriate Medicare fiscal intermediary (FI) or Medicare 
Administrative Contractor (MAC). In addition, once a Medicare Advantage 
patient is discharged, in accordance with the Medicare Claims 
Processing Manual chapter 3 section 20.3 (Pub. 100-04), hospitals 
(including IRFs) must submit an informational only bill (TOB 111) which 
includes Condition Code 04 to their Medicare contractor. This will 
ensure that the Medicare Advantage days are included in the hospital's 
Supplemental Security Income (SSI) ratio (used in calculating the IRF 
low-income percentage adjustment) for Fiscal Year 2007 and beyond. 
Claims submitted to Medicare must comply with both ASCA and HIPAA.
    Section 3 of the ASCA amends 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, 
November 25, 2005). CMS 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, parts 160 and 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 Medicare FI or 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).

II. Summary of Provisions of the Proposed Rule

    In this proposed rule, we are proposing to update the IRF Federal 
prospective payment rates, to revise the list of eligible International 
Classification of Diseases, Ninth Revision, Clinical Modification (ICD-
9-CM) diagnosis codes that are eligible under the ``60 percent rule,'' 
to update the IRF facility-level adjustment factors, to revise the 
Inpatient Rehabilitation Facility-Patient Assessment Instrument (IRF-
PAI), to revise requirements for acute care hospitals that have IRF 
units, clarify the IRF regulation text regarding limitation of review, 
and to revise and update quality measures and reporting requirements 
under the quality reporting program for IRFs. We are also proposing to 
revise existing regulations text for the purpose of updating and 
providing greater clarity. These proposals are as follows:

A. Proposed Updates to the IRF Federal Prospective Payment Rates for 
Federal Fiscal Year (FY) 2014

    The proposed updates to the IRF federal prospective payment rates 
for FY 2014 are as follows:
     Update the FY 2014 IRF PPS relative weights and average 
length of stay values using the most current and complete Medicare 
claims and cost report data in a budget neutral manner, as discussed in 
section III. of this proposed rule.
     Update the FY 2014 IRF PPS facility-level adjustment 
factors, using the most current and complete Medicare claims and cost 
report data with an enhanced estimation methodology, in a budget 
neutral manner, as discussed in section IV. of this proposed rule.
     Update the FY 2014 IRF PPS payment rates by the proposed 
market basket increase factor, based upon the most current data 
available, with a 0.3 percentage point reduction as required by 
sections 1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(iii) of the Act and a

[[Page 26885]]

proposed productivity adjustment required by section 
1886(j)(3)(C)(ii)(I) of the Act, as described in section V. of this 
proposed rule.
     Discuss the Secretary's Proposed Recommendation for 
updating IRF PPS payments for FY 2014, in accordance with the statutory 
requirements, as described in section V. of this proposed rule.
     Update the FY 2014 IRF PPS payment rates by the FY 2014 
wage index and the labor-related share in a budget neutral manner, as 
discussed in section V. of this proposed rule.
     Describe the calculation of the IRF Standard Payment 
Conversion Factor for FY 2014, as discussed in section V. of this 
proposed rule.
     Update the outlier threshold amount for FY 2014, as 
discussed in section VI. of this proposed rule.
     Update the cost-to-charge ratio (CCR) ceiling and urban/
rural average CCRs for FY 2014, as discussed in section VI. of this 
proposed rule.
     Describe proposed revisions to the list of eligible ICD-9-
CM diagnosis codes that meet the presumptive compliance criteria in 
section VII. of this proposed rule.
     Describe proposed non-quality-related revisions to IRF-PAI 
sections in section VIII. of this proposed rule.
     Describe proposed revisions and updates to quality 
measures and reporting requirements under the quality reporting program 
for IRFs in accordance with section 1886(j)(7) of the Act, as discussed 
in section XIII. of this proposed rule.

B. Proposed Revisions to Existing Regulation Text

    In this proposed rule, we are also proposing the following 
revisions to the existing regulations:
     Revisions to Sec.  412.25(a)(1)(iii) to specify a minimum 
required number of beds that are not excluded from the inpatient 
prospective payment system (IPPS) for a hospital that has an IRF unit, 
as described in section X. of this proposed rule.
     Technical corrections to Sec.  412.130, to reflect prior 
changes to the regulations at Sec.  412.29 and Sec.  412.30 that we 
made in the FY 2012 IRF PPS final rule (76 FR 47836), as described in 
section IX. of this proposed rule.
     Clarifications to Sec.  412.630, to reflect the scope of 
section 1886(j)(8) of the Act, as described in section XI. of this 
proposed rule.
     Revision to Sec.  412.29(d), to clarify that Medicare 
requires the rehabilitation physician's review and concurrence on the 
preadmission screening for Medicare Part A fee-for-service patients 
only, as described in section XII. of this proposed rule.

III. Proposed Update to the Case-Mix Group (CMG) Relative Weights and 
Average Length of Stay Values for FY 2014

    As specified in Sec.  412.620(b)(1), we calculate a relative weight 
for each CMG that is proportional to the resources needed by an average 
inpatient rehabilitation case in that CMG. For example, cases in a CMG 
with a relative weight of 2, on average, will cost twice as much as 
cases in a CMG with a relative weight of 1. Relative weights account 
for the variance in cost per discharge due to the variance in resource 
utilization among the payment groups, and their use helps to ensure 
that IRF PPS payments support beneficiary access to care, as well as 
provider efficiency.
    In this proposed rule, we propose to update the CMG relative 
weights and average length of stay values for FY 2014. As required by 
statute, we always use the most recent available data to update the CMG 
relative weights and average lengths of stay. For FY 2014, we are 
proposing to use the FY 2012 IRF claims and FY 2011 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 2012 IRF cost 
report data are available for analysis, but the majority of the FY 2012 
IRF claims data are available for analysis.
    In this proposed rule, we propose to apply these data using the 
same methodologies that we have used to update the CMG relative weights 
and average length of stay values in the FY 2011 notice (75 FR 42836), 
the FY 2012 final rule (76 FR 47836), and the FY 2013 notice (77 FR 
44618). 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 used to 
calculate the CMG relative weights for this proposed rule is as 
follows:
    Step 1. We estimate the effects that comorbidities have on costs.
    Step 2. We adjust the cost of each Medicare discharge (case) to 
reflect the effects found in the first step.
    Step 3. We use the adjusted costs from the second step to calculate 
CMG relative weights, using the hospital-specific relative value 
method.
    Step 4. We normalize the FY 2014 CMG relative weights to the same 
average CMG relative weight from the CMG relative weights implemented 
in the FY 2013 IRF PPS notice (77 FR 44618).
    Consistent with the methodology that we have used to update the IRF 
classification system in each instance in the past, we are proposing to 
update the CMG relative weights for FY 2014 in such a way that total 
estimated aggregate payments to IRFs for FY 2014 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 proposed budget neutrality factor for use in updating 
the FY 2014 CMG relative weights, we propose to use the following 
steps:
    Step 1. Calculate the estimated total amount of IRF PPS payments 
for FY 2014 (with no proposed changes to the CMG relative weights).
    Step 2. Calculate the estimated total amount of IRF PPS payments 
for FY 2014 by applying the proposed changes to the CMG relative 
weights (as discussed above).
    Step 3. Divide the amount calculated in step 1 by the amount 
calculated in step 2 to determine the proposed budget neutrality factor 
(1.0000) that would maintain the same total estimated aggregate 
payments in FY 2014 with and without the proposed changes to the CMG 
relative weights.
    Step 4. Apply the proposed budget neutrality factor (1.0000) to the 
FY 2013 IRF PPS standard payment amount after the application of the 
budget-neutral wage adjustment factor.
    In section V.E. of this proposed rule, we discuss the proposed use 
of the existing methodology to calculate the standard payment 
conversion factor for FY 2014.
    Table 1, ``Proposed Relative Weights and Average Length of Stay 
Values for Case-Mix Groups,'' presents the CMGs, the comorbidity tiers, 
the proposed corresponding relative weights, and the proposed average 
length of stay values for each CMG and tier for FY 2014. The average 
length of stay 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. The proposed relative weights and average 
length of stay values shown in Table 1 are subject to change for the 
final rule if more recent data become available for use in these 
analyses.

[[Page 26886]]



                                Table 1--Proposed Relative Weights and Average Length of Stay Values for Case-Mix Groups
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Relative weight                         Average length of stay
              CMG                   CMG Description (M=motor,    ---------------------------------------------------------------------------------------
                                       C=cognitive, A=age)          Tier1      Tier2      Tier3       None      Tier1      Tier2      Tier3       None
--------------------------------------------------------------------------------------------------------------------------------------------------------
0101..........................  Stroke M>51.05..................     0.8001     0.7122     0.6556     0.6248          9          9          9          8
0102..........................  Stroke M>44.45 and M<51.05 and       0.9921     0.8831     0.8129     0.7748         11         12         10         10
                                 C>18.5.
0103..........................  Stroke M>44.45 and M<51.05 and       1.1613     1.0337     0.9516     0.9069         13         13         12         11
                                 C<18.5.
0104..........................  Stroke M>38.85 and M<44.45......     1.2210     1.0869     1.0006     0.9536         14         12         12         12
0105..........................  Stroke M>34.25 and M<38.85......     1.4283     1.2715     1.1704     1.1154         15         14         14         14
0106..........................  Stroke M>30.05 and M<34.25......     1.6327     1.4534     1.3379     1.2751         16         17         16         15
0107..........................  Stroke M>26.15 and M<30.05......     1.8413     1.6391     1.5088     1.4380         19         20         17         17
0108..........................  Stroke M<26.15 and A>84.5.......     2.3160     2.0616     1.8978     1.8087         23         24         22         21
0109..........................  Stroke M>22.35 and M<26.15 and       2.1034     1.8724     1.7236     1.6426         21         21         19         20
                                 A<84.5.
0110..........................  Stroke M<22.35 and A<84.5.......     2.7387     2.4380     2.2443     2.1388         28         28         25         25
0201..........................  Traumatic brain injury M>53.35       0.8068     0.6835     0.6059     0.5641         10         10          8          8
                                 and C>23.5.
0202..........................  Traumatic brain injury M>44.25       1.0536     0.8926     0.7912     0.7366         12         10         10         10
                                 and M<53.35 and C>23.5.
0203..........................  Traumatic brain injury M>44.25       1.2422     1.0524     0.9329     0.8685         14         13         12         11
                                 and C<23.5.
0204..........................  Traumatic brain injury M>40.65       1.3000     1.1013     0.9762     0.9089         12         13         12         12
                                 and M<44.25.
0205..........................  Traumatic brain injury M>28.75       1.5755     1.3347     1.1831     1.1015         17         16         14         14
                                 and M<40.65.
0206..........................  Traumatic brain injury M>22.05       1.9459     1.6485     1.4613     1.3605         18         19         17         16
                                 and M<28.75.
0207..........................  Traumatic brain injury M<22.05..     2.5684     2.1759     1.9287     1.7957         33         26         21         20
0301..........................  Non-traumatic brain injury           1.0992     0.9462     0.8502     0.7859         10         11         11         10
                                 M>41.05.
0302..........................  Non-traumatic brain injury           1.3735     1.1824     1.0625     0.9820         13         14         12         12
                                 M>35.05 and M<41.05.
0303..........................  Non-traumatic brain injury           1.6221     1.3964     1.2548     1.1597         16         16         14         14
                                 M>26.15 and M<35.05.
0304..........................  Non-traumatic brain injury           2.1731     1.8708     1.6810     1.5537         24         21         19         18
                                 M<26.15.
0401..........................  Traumatic spinal cord injury         1.1451     0.9494     0.8847     0.7923         13         13         11         10
                                 M>48.45.
0402..........................  Traumatic spinal cord injury         1.4139     1.1724     1.0924     0.9784         17         14         14         12
                                 M>30.35 and M<48.45.
0403..........................  Traumatic spinal cord injury         2.3069     1.9128     1.7823     1.5963         26         23         20         20
                                 M>16.05 and M<30.35.
0404..........................  Traumatic spinal cord injury         4.2117     3.4921     3.2539     2.9142         46         41         35         34
                                 M<16.05 and A>63.5.
0405..........................  Traumatic spinal cord injury         3.4483     2.8592     2.6642     2.3861         37         32         31         27
                                 M<16.05 and A<63.5.
0501..........................  Non-traumatic spinal cord injury     0.8500     0.6729     0.6328     0.5761          9          9          8          8
                                 M>51.35.
0502..........................  Non-traumatic spinal cord injury     1.1064     0.8759     0.8237     0.7500         12         11         10         10
                                 M>40.15 and M<51.35.
0503..........................  Non-traumatic spinal cord injury     1.4276     1.1302     1.0628     0.9677         15         13         13         12
                                 M>31.25 and M<40.15.
0504..........................  Non-traumatic spinal cord injury     1.6534     1.3089     1.2309     1.1207         14         16         14         14
                                 M>29.25 and M<31.25.
0505..........................  Non-traumatic spinal cord injury     1.9495     1.5433     1.4514     1.3214         21         18         17         16
                                 M>23.75 and M<29.25.
0506..........................  Non-traumatic spinal cord injury     2.7308     2.1619     2.0330     1.8510         30         25         23         21
                                 M<23.75.
0601..........................  Neurological M>47.75............     0.9661     0.7875     0.7272     0.6589         10         10          9          9
0602..........................  Neurological M>37.35 and M<47.75     1.2904     1.0518     0.9713     0.8801         12         12         11         11
0603..........................  Neurological M>25.85 and M<37.35     1.6184     1.3191     1.2182     1.1038         15         15         14         13
0604..........................  Neurological M<25.85............     2.1563     1.7575     1.6231     1.4706         22         19         18         17
0701..........................  Fracture of lower extremity          0.9445     0.8052     0.7712     0.6996         10         10         10          9
                                 M>42.15.
0702..........................  Fracture of lower extremity          1.2149     1.0357     0.9920     0.8999         12         12         12         11
                                 M>34.15 and M<42.15.
0703..........................  Fracture of lower extremity          1.4770     1.2591     1.2060     1.0940         15         15         14         13
                                 M>28.15 and M<34.15.
0704..........................  Fracture of lower extremity          1.8753     1.5987     1.5312     1.3891         18         18         18         17
                                 M<28.15.

[[Page 26887]]

 
0801..........................  Replacement of lower extremity       0.7009     0.6238     0.5675     0.5200          7          8          7          7
                                 joint M>49.55.
0802..........................  Replacement of lower extremity       0.9206     0.8193     0.7453     0.6830         10         10          9          9
                                 joint M>37.05 and M<49.55.
0803..........................  Replacement of lower extremity       1.2478     1.1105     1.0103     0.9257         12         13         13         12
                                 joint M>28.65 and M<37.05 and
                                 A>83.5.
0804..........................  Replacement of lower extremity       1.1083     0.9863     0.8973     0.8222         11         12         11         10
                                 joint M>28.65 and M<37.05 and
                                 A<83.5.
0805..........................  Replacement of lower extremity       1.3678     1.2173     1.1075     1.0148         15         15         13         12
                                 joint M>22.05 and M<28.65.
0806..........................  Replacement of lower extremity       1.6590     1.4765     1.3433     1.2308         17         17         15         15
                                 joint M<22.05.
0901..........................  Other orthopedic M>44.75........     0.9026     0.7480     0.6895     0.6254         11          9          9          8
0902..........................  Other orthopedic M>34.35 and         1.2051     0.9987     0.9206     0.8350         12         12         11         11
                                 M<44.75.
0903..........................  Other orthopedic M>24.15 and         1.5094     1.2509     1.1530     1.0459         15         15         14         13
                                 M<34.35.
0904..........................  Other orthopedic M<24.15........     1.9660     1.6293     1.5019     1.3623         19         18         17         16
1001..........................  Amputation, lower extremity          1.0372     0.9443     0.8131     0.7478         12         11         10         10
                                 M>47.65.
1002..........................  Amputation, lower extremity          1.3081     1.1909     1.0255     0.9431         13         13         12         12
                                 M>36.25 and M<47.65.
1003..........................  Amputation, lower extremity          1.9330     1.7599     1.5154     1.3936         19         20         17         16
                                 M<36.25.
1101..........................  Amputation, non-lower extremity      1.2388     1.1334     1.0487     1.0147         13         13         12         12
                                 M>36.35.
1102..........................  Amputation, non-lower extremity      1.7069     1.5618     1.4450     1.3981         16         17         16         16
                                 M<36.35.
1201..........................  Osteoarthritis M>37.65..........     0.9482     0.9350     0.8467     0.7752          9         11         10         10
1202..........................  Osteoarthritis M>30.75 and           1.1813     1.1649     1.0549     0.9659         14         14         13         12
                                 M<37.65.
1203..........................  Osteoarthritis M<30.75..........     1.4671     1.4468     1.3101     1.1995         13         17         15         14
1301..........................  Rheumatoid, other arthritis          1.1815     0.9991     0.9005     0.8171         12         10         11         10
                                 M>36.35.
1302..........................  Rheumatoid, other arthritis          1.5305     1.2942     1.1666     1.0585         16         15         14         13
                                 M>26.15 and M<36.35.
1303..........................  Rheumatoid, other arthritis          1.9677     1.6639     1.4998     1.3608         18         19         17         16
                                 M<26.15.
1401..........................  Cardiac M>48.85.................     0.8864     0.7216     0.6539     0.5919          9          9          9          8
1402..........................  Cardiac M>38.55 and M<48.85.....     1.1973     0.9747     0.8832     0.7995         12         11         11         10
1403..........................  Cardiac M>31.15 and M<38.55.....     1.4604     1.1889     1.0773     0.9752         14         14         12         12
1404..........................  Cardiac M<31.15.................     1.8618     1.5157     1.3734     1.2433         19         17         15         14
1501..........................  Pulmonary M>49.25...............     1.0003     0.8590     0.7747     0.7436         10          9          9          9
1502..........................  Pulmonary M>39.05 and M<49.25...     1.2590     1.0812     0.9751     0.9359         12         12         11         11
1503..........................  Pulmonary M>29.15 and M<39.05...     1.5224     1.3074     1.1791     1.1318         15         14         13         13
1504..........................  Pulmonary M<29.15...............     1.8896     1.6227     1.4634     1.4047         21         17         16         15
1601..........................  Pain syndrome M>37.15...........     1.0309     0.8817     0.8282     0.7568          9         10         10          9
1602..........................  Pain syndrome M>26.75 and            1.3536     1.1577     1.0874     0.9937         12         14         13         12
                                 M<37.15.
1603..........................  Pain syndrome M<26.75...........     1.7052     1.4584     1.3699     1.2518         18         17         15         15
1701..........................  Major multiple trauma without        1.0875     0.9493     0.8541     0.7718         11         12         11         10
                                 brain or spinal cord injury
                                 M>39.25.
1702..........................  Major multiple trauma without        1.3611     1.1881     1.0689     0.9659         13         14         13         12
                                 brain or spinal cord injury
                                 M>31.05 and M<39.25.
1703..........................  Major multiple trauma without        1.6427     1.4339     1.2901     1.1658         17         16         14         14
                                 brain or spinal cord injury
                                 M>25.55 and M<31.05.
1704..........................  Major multiple trauma without        2.0841     1.8193     1.6368     1.4790         24         20         18         18
                                 brain or spinal cord injury
                                 M<25.55.
1801..........................  Major multiple trauma with brain     1.1476     1.0623     0.9340     0.7874         14         13         12         10
                                 or spinal cord injury M>40.85.

[[Page 26888]]

 
1802..........................  Major multiple trauma with brain     1.7108     1.5837     1.3924     1.1739         18         19         17         14
                                 or spinal cord injury M>23.05
                                 and M<40.85.
1803..........................  Major multiple trauma with brain     2.7350     2.5317     2.2259     1.8766         32         28         23         22
                                 or spinal cord injury M<23.05.
1901..........................  Guillain Barre M>35.95..........     1.0958     0.9305     0.9064     0.8886         13         10         11         11
1902..........................  Guillain Barre M>18.05 and           2.1340     1.8120     1.7652     1.7305         23         21         18         20
                                 M<35.95.
1903..........................  Guillain Barre M<18.05..........     3.5000     2.9719     2.8951     2.8382         41         32         31         30
2001..........................  Miscellaneous M>49.15...........     0.8897     0.7304     0.6716     0.6138          9          9          8          8
2002..........................  Miscellaneous M>38.75 and            1.1865     0.9741     0.8956     0.8186         12         11         11         10
                                 M<49.15.
2003..........................  Miscellaneous M>27.85 and            1.4910     1.2241     1.1254     1.0286         14         14         13         12
                                 M<38.75.
2004..........................  Miscellaneous M<27.85...........     1.9537     1.6039     1.4746     1.3478         20         18         17         15
2101..........................  Burns M>0.......................     2.1782     1.5737     1.4885     1.4056         24         21         17         16
5001..........................  Short-stay cases, length of stay  .........  .........  .........     0.1541  .........  .........  .........          3
                                 is 3 days or fewer.
5101..........................  Expired, orthopedic, length of    .........  .........  .........     0.6604  .........  .........  .........          8
                                 stay is 13 days or fewer.
5102..........................  Expired, orthopedic, length of    .........  .........  .........     1.4552  .........  .........  .........         17
                                 stay is 14 days or more.
5103..........................  Expired, not orthopedic, length   .........  .........  .........     0.7653  .........  .........  .........          9
                                 of stay is 15 days or fewer.
5104..........................  Expired, not orthopedic, length   .........  .........  .........     1.9930  .........  .........  .........         22
                                 of stay is 16 days or more.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Generally, updates to the CMG relative weights result in some 
increases and some decreases to the CMG relative weight values. Table 2 
shows how the application of the proposed revisions for FY 2014 would 
affect particular CMG relative weight values, which affect the overall 
distribution of payments within CMGs and tiers. Note that, because we 
propose to implement the CMG relative weight revisions in a budget 
neutral manner (as described above), total estimated aggregate payments 
to IRFs for FY 2014 would not be affected as a result of the CMG 
relative weight revisions. However, the proposed revisions would affect 
the distribution of payments within CMGs and tiers.

   Table 2--Distributional Effects of the Proposed Changes to the CMG
                            Relative Weights
              [FY 2013 Values Compared With FY 2014 Values]
------------------------------------------------------------------------
                                     Number of cases     Percentage of
         Percentage change               affected        cases affected
------------------------------------------------------------------------
Increased by 15% or more..........                  0                0.0
Increased by between 5% and 15%...              2,325                0.7
Changed by less than 5%...........            340,496               98.7
Decreased by between 5% and 15%...              1,939                0.6
Decreased by 15% or more..........                 92                0.0
------------------------------------------------------------------------

    As Table 2 shows, almost 99 percent of all IRF cases are in CMGs 
and tiers that would experience less than a 5 percent change (either 
increase or decrease) in the CMG relative weight value as a result of 
the proposed revisions for FY 2014. The largest increase in the 
proposed CMG relative weight values that affects a particularly large 
number of IRF discharges is a 0.9 percent increase in the CMG relative 
weight value for CMG 0704--Fracture of Lower Extremity, with a motor 
score less than 28.15--in the ``no comorbidity'' tier. In the FY 2012 
data, 18,770 IRF discharges (5.4 percent of all IRF discharges) were 
classified into this CMG and tier.
    The largest decrease in a CMG relative weight value affecting the 
most cases is a 2.0 percent decrease in the CMG relative weight for CMG 
0903--Other Orthopedic with a motor score between 24.15 and 34.35--in 
the no comorbidity tier. In the FY 2012 IRF claims data, this change 
affects 6,605 cases (1.9 percent of all IRF cases).
    The changes in the average length of stay values for FY 2014, 
compared with the FY 2013 average length of stay values, are small and 
do not show any particular trends in IRF length of stay patterns.

IV. Proposed Updates to the Facility-Level Adjustment Factors for FY 
2014

A. Background on Facility-Level Adjustments

    Section 1886(j)(3)(A)(v) of the Act confers broad authority upon 
the Secretary to adjust the per unit payment rate ``by such . . . 
factors as the Secretary determines are necessary to properly reflect 
variations in necessary costs of treatment among rehabilitation 
facilities.'' For example, we adjust the federal prospective payment 
amount associated with a CMG to account for facility-level 
characteristics such as an IRF's LIP, teaching status, and location

[[Page 26889]]

in a rural area, if applicable, as described in Sec.  412.624(e).
    In the FY 2010 IRF PPS final rule (74 FR 39762), we updated the 
adjustment factors for calculating the rural, LIP, and teaching status 
adjustments based on the most recent three consecutive years' worth of 
IRF claims data (at that time, FY 2006, FY 2007, and FY 2008) and the 
most recent available corresponding IRF cost report data. As discussed 
in the FY 2010 IRF PPS proposed rule (74 FR 21060 through 21061), we 
observed relatively large year-to-year fluctuations in the underlying 
data used to compute the adjustment factors, especially the teaching 
status adjustment factor. Therefore, we implemented a 3-year moving 
average approach to updating the facility-level adjustment factors in 
the FY 2010 IRF PPS final rule (74 FR 39762) to provide greater 
stability and predictability of Medicare payments for IRFs.
    Each year, we review the major components of the IRF PPS to 
maintain and enhance the accuracy of the payment system. For FY 2010, 
we implemented a change to our methodology that was designed to 
decrease the IRF PPS volatility by using a 3-year moving average to 
calculate the facility-level adjustment factors. For FY 2011, we issued 
a notice to update the payment rates, which did not include any policy 
changes or changes to the IRF facility-level adjustments. As we found 
that the implementation of the 3-year moving average did not fully 
address year-to-year fluctuations, in the FY 2012 IRF PPS proposed rule 
(76 FR 24214 at 24225 through 24226) we analyzed the effects of having 
used a weighting methodology. The methodology assigned greater weight 
to some facilities than to others in the regression analysis used to 
estimate the facility-level adjustment factors. As we found that this 
weighting methodology inappropriately exaggerated the cost differences 
among different types of IRF facilities, we proposed to remove the 
weighting factor from our analysis and update the IRF facility-level 
adjustment factors for FY 2012 using an un-weighted regression 
analysis. However, after carefully considering all of the comments that 
we received on the proposed FY 2012 updates to the facility-level 
adjustment factors, we decided to hold the facility-level adjustment 
factors at FY 2011 levels for FY 2012 to conduct further research on 
the underlying data and the best methodology for calculating the 
facility-level adjustment factors. We based this decision, in part, on 
comments we received about the financial hardships that the proposed 
updates would create for facilities with teaching programs and a higher 
disproportionate share of low-income patients.

B. Proposed Updates to the IRF Facility-Level Adjustment Factors

    Since the FY 2012 final rule (76 FR 47836), we have conducted 
further research into the best methodology to use to estimate the IRF 
facility-level adjustment factors, to ensure that the adjustment 
factors reflect as accurately as possible the costs of providing IRF 
care across the full spectrum of IRF providers. Our recent research 
efforts have shown that significant differences exist between the cost 
structures of freestanding IRFs and the cost structures of IRF units of 
acute care hospitals (and critical access hospitals, otherwise known as 
``CAHs''). We have found that these cost structure differences 
substantially influence the estimates of the adjustment factors. 
Therefore, we believe that it is important to control for these cost 
structure differences between hospital-based and freestanding IRFs in 
our regression analysis, so that these differences do not 
inappropriately influence the adjustment factor estimates. In 
Medicare's payment system for the treatment of end-stage renal disease 
(ESRD), we already control for the cost structure differences between 
hospital-based and freestanding facilities in the regression analyses 
that are used to set payment rates. Also, we received comments from an 
IRF industry association on the FY 2012 IRF PPS proposed rule 
suggesting that the addition of this particular control variable to the 
model could improve the methodology for estimating the IRF facility-
level adjustment factors.
    Thus, we propose to add an indicator variable to our 3-year moving 
average methodology for updating the IRF facility-level adjustments 
that would have an assigned value of ``1'' if the facility is a 
freestanding IRF hospital and have an assigned value of ``0'' if the 
facility is an IRF unit of an acute care hospital (or CAH). Adding this 
variable to the regression analysis enables us to control for the 
differences in costs that are primarily due to the differences in cost 
structures between freestanding and hospital-based IRFs, so that those 
differences do not become inappropriately intertwined with our 
estimates of the differences in costs between rural and urban 
facilities, high LIP percentage and low LIP percentage facilities, and 
teaching and non-teaching facilities. Further, by including this 
variable in the regression analysis, we greatly improve our ability to 
predict an IRF's average cost per case (that is, the R-squared of the 
regression model increases from about 11 percent to 41 percent). In 
this way, it enhances the precision with which we can estimate the IRF 
facility-level adjustments.
    Therefore, in this proposed rule, we propose to use the same 
methodology used in the FY 2010 IRF PPS final rule (74 FR 39762), 
including the 3-year moving average approach, with the addition of this 
new control variable, which equals ``1'' if the facility is a 
freestanding IRF hospital and ``0'' if it is an IRF unit of an acute 
care hospital (or a CAH). We propose to update the adjustment factors 
using the most recent three years' worth of IRF claims data (FY 2010, 
FY 2011, and FY 2012) and the most recent available corresponding IRF 
cost report data. As we did in the FY 2010 IRF PPS final rule (74 FR 
39762), we propose to use the cost report data that corresponds with 
each IRF claim, when available. In the rare instances in which the 
corresponding year's cost report data are not available, we propose to 
use the most recent available cost report data, as we also did in the 
FY 2010 IRF PPS final rule (74 FR 39762).
    To calculate the proposed updates to the rural, LIP, and teaching 
status adjustment factors for FY 2014, we propose to use the following 
steps:
    [Steps 1 and 2 are performed independently for each of three years 
of IRF claims data: FY 2010, FY 2011, and FY 2012.]
    Step 1. Calculate the average cost per case for each IRF in the IRF 
claims data.
    Step 2. Use logarithmic regression analysis on average cost per 
case to compute the coefficients for the rural, LIP, and teaching 
status adjustments. We are also proposing to incorporate an additional 
indicator variable to account for whether a facility is a freestanding 
IRF hospital or a unit of an acute care hospital (or a CAH).
    Step 3. Calculate a simple mean for each of the coefficients across 
the three years of data (using logarithms for the LIP and teaching 
status adjustment coefficients (because they are continuous variables), 
but not for the rural adjustment coefficient (because the rural 
variable is either zero (if not rural) or 1 (if rural)). To compute the 
LIP and teaching status adjustment factors, we convert these factors 
back out of the logarithmic form.
    Based on this methodology, we propose to update the rural 
adjustment factor for FY 2014 from 18.4 percent to 14.28 percent. We 
propose to update the LIP adjustment factor for FY 2014 from 0.4613 to 
0.3158 and the teaching status adjustment factor for FY 2014 from 
0.6876 to 0.9859. The proposed adjustment factors are subject to change

[[Page 26890]]

for the final rule if more data become available for use in these 
analyses.
    Further, although we believe that updating the facility-level 
adjustment factors with the proposed methodology will enhance the 
accuracy and fairness of the IRF PPS payment rates, we recognize that 
this would result in significant financial impacts for IRF providers. 
Thus, we welcome comments from the industry on whether updating the 
adjustment factors at this time or freezing them at the current levels 
for an additional year would be a better approach.

C. Budget Neutrality Methodology for the Updates to the IRF Facility-
Level Adjustment Factors

    Consistent with the way that we implemented changes to the IRF 
facility-level adjustment factors (the rural, LIP, and teaching status 
adjustments factors) in the FY 2006 IRF PPS final rule (70 FR 47880 and 
70 FR 57166), which was the only year in which we updated these 
adjustment factors, we propose to make changes to the rural, LIP, and 
teaching status adjustment factors for FY 2014 in such a way that total 
estimated aggregate payments to IRFs for FY 2014 would be the same with 
or without the proposed changes (that is, in a budget neutral manner) 
by applying budget neutrality factors for each of these three changes 
to the standard payment amount. To calculate the proposed budget 
neutrality factors used to update the rural, LIP, and teaching status 
adjustment factors, we propose to use the following steps:
    Step 1. Using the most recent available data (currently FY 2011), 
calculate the estimated total amount of IRF PPS payments that would be 
made in FY 2014 (without applying the proposed changes to the rural, 
LIP, or teaching status adjustment factors).
    Step 2. Calculate the estimated total amount of IRF PPS payments 
that would be made in FY 2014 if the proposed update to the rural 
adjustment factor were applied.
    Step 3. Divide the amount calculated in step 1 by the amount 
calculated in step 2 to determine the proposed budget neutrality factor 
(1.0030) that would maintain the same total estimated aggregate 
payments in FY 2014 with and without the proposed change to the rural 
adjustment factor.
    Step 4. Calculate the estimated total amount of IRF PPS payments 
that would be made in FY 2014 if the proposed update to the LIP 
adjustment factor were applied.
    Step 5. Divide the amount calculated in step 1 by the amount 
calculated in step 4 to determine the proposed budget neutrality factor 
(1.0174) that would maintain the same total estimated aggregate 
payments in FY 2014 with and without the proposed change to the LIP 
adjustment factor.
    Step 6. Calculate the estimated total amount of IRF PPS payments 
that would be made in FY 2014 if the proposed update to the teaching 
status adjustment factor were applied.
    Step 7. Divide the amount calculated in step 1 by the amount 
calculated in step 6 to determine the proposed budget neutrality factor 
(0.9966) that would maintain the same total estimated aggregate 
payments in FY 2014 with and without the proposed change to the 
teaching status adjustment factor.
    Step 8. Apply the proposed budget neutrality factors for the 
updates to the rural, LIP, and teaching status adjustment factors to 
the FY 2013 IRF PPS standard payment amount after the application of 
the proposed budget neutrality factors for the wage adjustment and the 
CMG relative weights.
    The proposed budget neutrality factors for the proposed changes to 
the rural, LIP, and teaching status adjustment factors are subject to 
change in the final rule if more recent data become available for use 
in these analyses or if the proposed payment policies associated with 
the proposed budget neutrality factors change. In section V.E of this 
proposed rule, we discuss the proposed methodology for calculating the 
standard payment conversion factor for FY 2014.

V. Proposed FY 2014 IRF PPS Federal Prospective Payment Rates

A. Proposed Market Basket Increase Factor, Productivity Adjustment, 
Other Adjustment, and Secretary's Recommendation for FY 2014

    Section 1886(j)(3)(C) of the Act requires the Secretary to 
establish an increase factor that reflects changes over time in the 
prices of an appropriate mix of goods and services included in the 
covered IRF services, which is referred to as a market basket index. 
According to section 1886(j)(3)(A)(i) of the Act, the increase factor 
shall be used to update the IRF federal prospective payment rates for 
each FY. Sections 1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(iii) of the 
Act required the application of a 0.3 percentage point reduction to the 
market basket increase factor for FY 2014. In addition, section 
1886(j)(3)(C)(ii)(I) of the Act requires the application of a 
productivity adjustment, as described below. Thus, in this proposed 
rule, we are proposing to update the IRF PPS payments for FY 2014 by a 
market basket increase factor based upon the most current data 
available, with a productivity adjustment as required by section 
1886(j)(3)(C)(ii)(I) of the Act as described below and a 0.3 percentage 
point reduction as required by sections 1886(j)(3)(C)(ii)(II) and 
1886(j)(3)(D)(iii) of the Act.
    For this proposed rule, we propose to use the same methodology 
described in the FY 2012 IRF PPS final rule (76 FR 47836 at 47848 
through 47863) to compute the FY 2014 market basket increase factor and 
labor-related share. In that final rule, we rebased the RPL market 
basket from a 2002 base year to a 2008 base year. Based on IHS Global 
Insight's first quarter 2013 forecast, the most recent estimate of the 
2008-based RPL market basket increase factor for FY 2014 is 2.5 
percent. IHS Global Insight (IGI) is an economic and financial 
forecasting firm that contracts with CMS to forecast the components of 
providers' market baskets.
    In accordance with section 1886(j)(3)(C)(ii)(I) of the Act, and 
using the methodology described in the FY 2012 IRF PPS final rule (76 
FR 47836, 47858 through 47859), we propose to apply a productivity 
adjustment to the FY 2014 RPL market basket increase factor. 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 (MFP) (as projected by the Secretary 
for the 10-year period ending with the applicable FY cost reporting 
period, or other annual period) (the ``MFP adjustment''). The Bureau of 
Labor Statistics (BLS) is the agency that publishes the official 
measure of private nonfarm business MFP. We refer readers to the BLS 
Web site at https://www.bls.gov/mfp to obtain the historical BLS-
published MFP data. The projection of MFP is currently produced by IGI, 
using the methodology described in the FY 2012 IRF PPS final rule (76 
FR 47836, 47859). The most recent estimate of the MFP adjustment for FY 
2014 (the 10-year moving average of MFP for the period ending FY 2014) 
is 0.4 percent, which was calculated using the methodology described in 
the FY 2012 IRF PPS final rule (76 FR 47836, 47858 through 47859) and 
is based on IGI's first quarter 2013 forecast.
    Thus, in accordance with section 1886(j)(3)(C) of the Act, we 
propose to base the FY 2014 market basket update, which is used to 
determine the applicable percentage increase for the IRF payments, on 
the most recent estimate of the FY 2008-based RPL market basket 
(currently estimated to be

[[Page 26891]]

2.5 percent based on IGI's first quarter 2013 forecast). We propose to 
then reduce this percentage increase by the current estimate of the MFP 
adjustment for FY 2014 of 0.4 percentage point (the 10-year moving 
average of MFP for the period ending FY 2014 based on IGI's first 
quarter 2013 forecast), which was calculated as described in the FY 
2012 IRF PPS final rule (76 FR 47836, 47859). Following application of 
the productivity adjustment, we propose to further reduce the 
applicable percentage increase by 0.3 percentage point, as required by 
sections 1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(iii) of the Act. 
Therefore, the current estimate of the proposed FY 2014 IRF update is 
1.8 percent (2.5 percent market basket update less 0.4 percentage point 
MFP adjustment less 0.3 percentage point legislative adjustment). 
Furthermore, we also are proposing that if more recent data are 
subsequently available (for example, a more recent estimate of the 
market basket and MFP adjustment), we would use such data, if 
appropriate, to determine the FY 2014 market basket update and MFP 
adjustment in the final rule.

B. Secretary's Proposed Recommendation

    For FY 2014, the Medicare Payment Advisory Commission (MedPAC) 
recommends that a 0 percent update be applied to IRF PPS payment rates 
for FY 2013. As discussed above, and in accordance with sections 
1886(j)(3)(C) and 1886(j)(3)(D) of the Act, the Secretary is proposing 
to update IRF PPS payment rates for FY 2014 by an adjusted market 
basket increase factor of 1.8 percent because 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 2014.

C. Proposed Labor-Related Share for FY 2014

    The proposed labor-related share for FY 2014 is updated using the 
methodology described in the FY 2012 IRF PPS final rule (76 FR 47836, 
47860 through 47863). Using this method and IGI's first quarter 2013 
forecast of the 2008-based RPL market basket, the proposed IRF labor-
related share for FY 2014 is the sum of the FY 2014 relative importance 
of each labor-related cost category. This figure reflects the different 
rates of price change for these cost categories between the base year 
(FY 2008) and FY 2014. As shown in Table 3, the proposed FY 2014 labor-
related share is 69.658 percent. We propose that if a more recent 
estimate of the FY 2014 labor-related share is subsequently available, 
we would use such data, if appropriate, to determine the FY 2014 labor-
related share in the final rule.

     Table 3--Proposed FY 2014 IRF RPL Labor-Related Share Relative
                               Importance
------------------------------------------------------------------------
                                                     Proposed FY 2014
                                                   Relative Importance
                                                   Labor-Related Share
------------------------------------------------------------------------
Wages and Salaries.............................                   48.491
Employee Benefits..............................                   13.019
Professional Fees: Labor-Related...............                    2.069
Administrative and Business Support Services...                    0.417
All Other: Labor-Related Services..............                    2.086
Subtotal.......................................                   66.082
Labor-Related Portion of Capital Costs (.46)...                    3.576
                                                ------------------------
    Total Labor-Related Share..................                   69.658
------------------------------------------------------------------------
Source: IHS Global Insight, Inc. 1st quarter 2013 forecast; Historical
  Data through 4th quarter, 2012.

D. Proposed Area Wage Adjustment

    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 2009 IRF PPS final rule (73 FR 46378), we maintained the 
methodology described in the FY 2006 IRF PPS final rule to determine 
the wage index, labor market area definitions and hold harmless policy 
consistent with the rationale outlined in the FY 2006 IRF PPS final 
rule (70 FR 47880, 47917 through 47926).
    For FY 2014, we are maintaining the policies and methodologies 
described in the FY 2012 IRF PPS final rule (76 FR 47836, at 47863 
through 47865) relating to the labor market area definitions and the 
wage index methodology for areas with wage data. Thus, we are using the 
CBSA labor market area definitions and the FY 2013 pre-reclassification 
and pre-floor hospital wage index data. In accordance with section 
1886(d)(3)(E) of the Act, the FY 2013 pre-reclassification and pre-
floor hospital wage index is based on data submitted for hospital cost 
reporting periods beginning on or after October 1, 2008, and before 
October 1, 2009 (that is, FY 2009 cost report data).
    The labor market designations made by the 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 propose to 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 in which to base the calculation for the FY 2014 IRF 
PPS wage index.
    In accordance with our established methodology, we have 
historically adopted any CBSA changes that are published in the OMB 
bulletin that corresponds with the hospital wage data used to determine 
the IRF PPS wage index. The OMB bulletins are available at https://www.whitehouse.gov/omb/bulletins/.
    In keeping with the established IRF PPS wage index policy, we 
propose to use the prior year's (FY 2013) pre-floor, pre-reclassified 
hospital wage index data to derive the FY 2014 applicable IRF PPS wage 
index. We anticipate using the FY 2014 pre-floor, pre-reclassified 
hospital wage index data to

[[Page 26892]]

derive the applicable IRF PPS wage index for FY 2015. We note, however, 
that the proposed FY 2014 pre-floor, pre-reclassified hospital wage 
index does not use OMB's new 2010 Census-based area delineations, which 
were outlined in the February 28, 2013 OMB Bulletin 13-01. This 
bulletin contains a number of significant changes. For example, there 
are new CBSAs, counties that change from urban to rural, counties that 
change from rural to urban, and existing CBSAs that are being split 
apart. The OMB Bulletin with these changes was not published in time 
for us to incorporate these changes into the FY 2014 pre-floor, pre-
reclassified hospital wage index, since the proposed rule was already 
in the advanced stages of development at that time and the changes and 
their ramifications would need to be extensively reviewed and verified 
prior to their inclusion in the rule. We therefore intend to propose 
the incorporation of these CBSA changes in our FY 2015 hospital wage 
index. Assuming that we would continue to follow our established 
methodology for the IRF PPS wage index, this means that the 2010 
Census-based CBSA changes would not be reflected in the IRF PPS wage 
index until FY 2016.
    To calculate the wage-adjusted facility payment for the payment 
rates set forth in this proposed rule, we multiply the unadjusted 
Federal payment rate for IRFs by the proposed FY 2014 labor-related 
share based on the FY 2008-based RPL market basket (69.658 percent) to 
determine the labor-related portion of the standard payment amount. We 
then multiply the labor-related portion by the applicable IRF wage 
index from the tables in the addendum to this proposed rule. These 
tables are available through the Internet on the CMS Web site at https://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/. Table A is for urban areas and Table B is for 
rural areas.
    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 proposed budget neutral wage adjustment factor as 
established in the FY 2004 IRF PPS final rule (68 FR 45689), codified 
at Sec.  412.624(e)(1), as described in the steps below. We use the 
listed steps to ensure that the proposed FY 2014 IRF standard payment 
conversion factor reflects the update to the wage indexes (based on the 
FY 2009 hospital cost report data) and the proposed labor-related share 
in a budget neutral manner:
    Step 1. Determine the total amount of the estimated FY 2013 IRF PPS 
rates, using the FY 2013 standard payment conversion factor and the 
labor-related share and the wage indexes from FY 2013 (as published in 
the FY 2013 IRF PPS notice (77 FR 44618)).
    Step 2. Calculate the total amount of estimated IRF PPS payments 
using the FY 2013 standard payment conversion factor and the proposed 
FY 2014 labor-related share and CBSA urban and rural wage indexes.
    Step 3. Divide the amount calculated in step 1 by the amount 
calculated in step 2. The resulting quotient is the proposed FY 2014 
budget neutral wage adjustment factor of 1.0011.
    Step 4. Apply the proposed FY 2014 budget neutral wage adjustment 
factor from step 3 to the FY 2013 IRF PPS standard payment conversion 
factor after the application of the adjusted market basket update to 
determine the proposed FY 2014 standard payment conversion factor.
    We discuss the calculation of the proposed standard payment 
conversion factor for FY 2014 in section V.E. of this proposed rule.

E. Description of the Proposed IRF Standard Conversion Factor and 
Payment Rates for FY 2014

    To calculate the proposed standard payment conversion factor for FY 
2014, as illustrated in Table 4, we begin by applying the proposed 
adjusted market basket increase factor for FY 2014 that was adjusted in 
accordance with sections 1886(j)(3)(C) and (D) of the Act, to the 
standard payment conversion factor for FY 2013 ($14,343). Applying the 
proposed 1.8 percent adjusted market basket increase factor for FY 2014 
to the revised standard payment conversion factor for FY 2013 of 
$14,343 yields a standard payment amount of $14,601. Then, we apply the 
proposed budget neutrality factor for the FY 2014 wage index and labor-
related share of 1.0011, which results in a standard payment amount of 
$14,617. We next apply the proposed budget neutrality factors for the 
revised CMG relative weights of 1.0000, which results in a standard 
payment conversion factor of $14,617 for FY 2014.
    We then apply the proposed budget neutrality factors for the 
facility adjustments. Applying the budget neutrality factor for the 
revised rural adjustment of 1.0030 results in a standard payment 
conversion factor of $14,661. We then apply the budget neutrality 
factor for the revised LIP adjustment of 1.0174 resulting in a standard 
payment conversion factor of $14,916. Lastly, we apply the budget 
neutrality factor for the revised teaching adjustment of 0.9966 which 
results in a final standard payment conversion factor of $14,865.

Table 4--Calculations To Determine the Proposed FY 2014 Standard Payment
                            Conversion Factor
------------------------------------------------------------------------
              Explanation for adjustment                  Calculations
------------------------------------------------------------------------
Standard Payment Conversion Factor for FY 2013........           $14,343
Market Basket Increase Factor for FY 2014 (2.5                   x 1.018
 percent), reduced by 0.3 percentage point in
 accordance with sections 1886(j)(3)(C) and (D) of the
 Act and a 0.4 percentage point reduction for the
 productivity adjustment as required by section
 1886(j)(3)(C)(ii)(I) of the Act......................
Budget Neutrality Factor for the Wage Index and Labor-          x 1.0011
 Related Share........................................
Budget Neutrality Factor for the Revisions to the CMG           x 1.0000
 Relative Weights.....................................
Budget Neutrality Factor for the Update to the Rural            x 1.0030
 Adjustment Factor....................................
Budget Neutrality Factor for the Update to the LIP              x 1.0174
 Adjustment Factor....................................
Budget Neutrality Factor for the Update to the                  x 0.9966
 Teaching Status Adjustment Factor....................
    Proposed FY 2014 Standard Payment Conversion                = 14,865
     Factor...........................................
------------------------------------------------------------------------

    After the application of the CMG relative weights described in 
Section III of this proposed rule, to the proposed FY 2014 standard 
payment conversion factor ($14,865), the resulting proposed unadjusted 
IRF prospective payment rates for FY 2014 are shown in Table 5.

[[Page 26893]]



                                     Table 5--Proposed FY 2014 Payment Rates
----------------------------------------------------------------------------------------------------------------
                                                   Payment rate    Payment rate    Payment rate    Payment rate
                       CMG                            tier 1          tier 2          tier 3      no comorbidity
----------------------------------------------------------------------------------------------------------------
0101............................................     $ 11,893.49     $ 10,586.85      $ 9,745.49      $ 9,287.65
0102............................................       14,747.57       13,127.28       12,083.76       11,517.40
0103............................................       17,262.72       15,365.95       14,145.53       13,481.07
0104............................................       18,150.17       16,156.77       14,873.92       14,175.26
0105............................................       21,231.68       18,900.85       17,398.00       16,580.42
0106............................................       24,270.09       21,604.79       19,887.88       18,954.36
0107............................................       27,370.92       24,365.22       22,428.31       21,375.87
0108............................................       34,427.34       30,645.68       28,210.80       26,886.33
0109............................................       31,267.04       27,833.23       25,621.31       24,417.25
0110............................................       40,710.78       36,240.87       33,361.52       31,793.26
0201............................................       11,993.08       10,160.23        9,006.70        8,385.35
0202............................................       15,661.76       13,268.50       11,761.19       10,949.56
0203............................................       18,465.30       15,643.93       13,867.56       12,910.25
0204............................................       19,324.50       16,370.82       14,511.21       13,510.80
0205............................................       23,419.81       19,840.32       17,586.78       16,373.80
0206............................................       28,925.80       24,504.95       21,722.22       20,223.83
0207............................................       38,179.27       32,344.75       28,670.13       26,693.08
0301............................................       16,339.61       14,065.26       12,638.22       11,682.40
0302............................................       20,417.08       17,576.38       15,794.06       14,597.43
0303............................................       24,112.52       20,757.49       18,652.60       17,238.94
0304............................................       32,303.13       27,809.44       24,988.07       23,095.75
0401............................................       17,021.91       14,112.83       13,151.07       11,777.54
0402............................................       21,017.62       17,427.73       16,238.53       14,543.92
0403............................................       34,292.07       28,433.77       26,493.89       23,729.00
0404............................................       62,606.92       51,910.07       48,369.22       43,319.58
0405............................................       51,258.98       42,502.01       39,603.33       35,469.38
0501............................................       12,635.25       10,002.66        9,406.57        8,563.73
0502............................................       16,446.64       13,020.25       12,244.30       11,148.75
0503............................................       21,221.27       16,800.42       15,798.52       14,384.86
0504............................................       24,577.79       19,456.80       18,297.33       16,659.21
0505............................................       28,979.32       22,941.15       21,575.06       19,642.61
0506............................................       40,593.34       32,136.64       30,220.55       27,515.12
0601............................................       14,361.08       11,706.19       10,809.83        9,794.55
0602............................................       19,181.80       15,635.01       14,438.37       13,082.69
0603............................................       24,057.52       19,608.42       18,108.54       16,407.99
0604............................................       32,053.40       26,125.24       24,127.38       21,860.47
0701............................................       14,039.99       11,969.30       11,463.89       10,399.55
0702............................................       18,059.49       15,395.68       14,746.08       13,377.01
0703............................................       21,955.61       18,716.52       17,927.19       16,262.31
0704............................................       27,876.33       23,764.68       22,761.29       20,648.97
0801............................................       10,418.88        9,272.79        8,435.89        7,729.80
0802............................................       13,684.72       12,178.89       11,078.88       10,152.80
0803............................................       18,548.55       16,507.58       15,018.11       13,760.53
0804............................................       16,474.88       14,661.35       13,338.36       12,222.00
0805............................................       20,332.35       18,095.16       16,462.99       15,085.00
0806............................................       24,661.04       21,948.17       19,968.15       18,295.84
0901............................................       13,417.15       11,119.02       10,249.42        9,296.57
0902............................................       17,913.81       14,845.68       13,684.72       12,412.28
0903............................................       22,437.23       18,594.63       17,139.35       15,547.30
0904............................................       29,224.59       24,219.54       22,325.74       20,250.59
1001............................................       15,417.98       14,037.02       12,086.73       11,116.05
1002............................................       19,444.91       17,702.73       15,244.06       14,019.18
1003............................................       28,734.05       26,160.91       22,526.42       20,715.86
1101............................................       18,414.76       16,847.99       15,588.93       15,083.52
1102............................................       25,373.07       23,216.16       21,479.93       20,782.76
1201............................................       14,094.99       13,898.78       12,586.20       11,523.35
1202............................................       17,560.02       17,316.24       15,681.09       14,358.10
1203............................................       21,808.44       21,506.68       19,474.64       17,830.57
1301............................................       17,563.00       14,851.62       13,385.93       12,146.19
1302............................................       22,750.88       19,238.28       17,341.51       15,734.60
1303............................................       29,249.86       24,733.87       22,294.53       20,228.29
1401............................................       13,176.34       10,726.58        9,720.22        8,798.59
1402............................................       17,797.86       14,488.92       13,128.77       11,884.57
1403............................................       21,708.85       17,673.00       16,014.06       14,496.35
1404............................................       27,675.66       22,530.88       20,415.59       18,481.65
1501............................................       14,869.46       12,769.04       11,515.92       11,053.61
1502............................................       18,715.04       16,072.04       14,494.86       13,912.15
1503............................................       22,630.48       19,434.50       17,527.32       16,824.21
1504............................................       28,088.90       24,121.44       21,753.44       20,880.87
1601............................................       15,324.33       13,106.47       12,311.19       11,249.83
1602............................................       20,121.26       17,209.21       16,164.20       14,771.35

[[Page 26894]]

 
1603............................................       25,347.80       21,679.12       20,363.56       18,608.01
1701............................................       16,165.69       14,111.34       12,696.20       11,472.81
1702............................................       20,232.75       17,661.11       15,889.20       14,358.10
1703............................................       24,418.74       21,314.92       19,177.34       17,329.62
1704............................................       30,980.15       27,043.89       24,331.03       21,985.34
1801............................................       17,059.07       15,791.09       13,883.91       11,704.70
1802............................................       25,431.04       23,541.70       20,698.03       17,450.02
1803............................................       40,655.78       37,633.72       33,088.00       27,895.66
1901............................................       16,289.07       13,831.88       13,473.64       13,209.04
1902............................................       31,721.91       26,935.38       26,239.70       25,723.88
1903............................................       52,027.50       44,177.29       43,035.66       42,189.84
2001............................................       13,225.39       10,857.40        9,983.33        9,124.14
2002............................................       17,637.32       14,480.00       13,313.09       12,168.49
2003............................................       22,163.72       18,196.25       16,729.07       15,290.14
2004............................................       29,041.75       23,841.97       21,919.93       20,035.05
2101............................................       32,378.94       23,393.05       22,126.55       20,894.24
5001............................................  ..............  ..............  ..............        2,290.70
5101............................................  ..............  ..............  ..............        9,816.85
5102............................................  ..............  ..............  ..............       21,631.55
5103............................................  ..............  ..............  ..............       11,376.18
5104............................................  ..............  ..............  ..............       29,625.95
----------------------------------------------------------------------------------------------------------------

F. Example of the Methodology for Adjusting the Proposed Federal 
Prospective Payment Rates

    Table 6 illustrates the methodology for adjusting the proposed 
federal prospective payments (as described in sections V.A. through 
V.C. of this proposed rule). The following examples are based on two 
hypothetical Medicare beneficiaries, both classified into CMG 0110 
(without comorbidities). The proposed unadjusted federal prospective 
payment rate for CMG 0110 (without comorbidities) appears in Table 5.

    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 1.0155), a wage index of 0.8472, and a rural 
adjustment of 14.28 percent. Facility B, an urban teaching hospital, 
has a DSH percentage of 15 percent (which would result in a LIP 
adjustment of 1.0451 percent), a wage index of 0.8862, and a 
teaching status adjustment of 0.0610.
    To calculate each IRF's labor and non-labor portion of the 
proposed Federal prospective payment, we begin by taking the 
proposed unadjusted Federal prospective payment rate for CMG 0110 
(without comorbidities) from Table 5. Then, we multiply the proposed 
labor-related share for FY 2014 (69.658 percent) described in 
section V.C. of this proposed rule by the proposed unadjusted 
federal prospective payment rate. To determine the non-labor portion 
of the proposed federal prospective payment rate, we subtract the 
labor portion of the proposed federal payment from the proposed 
unadjusted Federal prospective payment.
    To compute the proposed wage-adjusted federal prospective 
payment, we multiply the labor portion of the proposed federal 
payment by the appropriate wage index found in tables A and B. These 
tables are available through the Internet on the CMS Web site at 
https://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/. The resulting figure is the wage-adjusted 
labor amount. Next, we compute the proposed wage-adjusted federal 
payment by adding the wage-adjusted labor amount to the non-labor 
portion.
    Adjusting the proposed wage-adjusted federal payment by the 
facility-level adjustments involves several steps. First, we take 
the wage-adjusted Federal 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 (0.0610, 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 federal prospective payment rates. Table 6 
illustrates the components of the adjusted payment calculation.

    Table 6--Example of Computing the IRF FY 2014 Federal Prospective
                                 Payment
------------------------------------------------------------------------
 
------------------------------------------------------------------------
      Steps                          Rural facility A
                                    (Spencer Co., IN)
                    Urban facility B
                      (Harrison Co.,
                           IN)
------------------------------------------------------------------------
1................  Unadjusted       .     $ 31,793.26  .     $ 31,793.26
                    Federal
                    Prospective
                    Payment.
2................  Labor Share....  x         0.69658  x         0.69658
3................  Labor Portion    =       22,146.55  =       22,146.55
                    of Federal
                    Payment.
4................  CBSA Based Wage  x          0.8472  x          0.8862
                    Index (shown
                    in the
                    Addendum ,
                    Tables 1 and
                    2).
5................  Wage-Adjusted            18,762.56          19,626.27
                    Amount.         =                  =
6................  Nonlabor Amount           9,646.71           9,646.71
                                    +                  +
7................  Wage-Adjusted            28,409.27          29,272.98
                    Federal         =                  =
                    Payment.
8................  Rural            x          1.1428  x           1.000
                    Adjustment.
9................  Wage- and Rural-         32,466.11          29,272.98
                     Adjusted       =                  =
                    Federal
                    Payment.
10...............  LIP Adjustment.             1.0155             1.0451
                                    x                  x
11...............  FY 2014 Wage-,           32,969.33          30,593.19
                    Rural- and LIP- =                  =
                     Adjusted
                    Federal
                    Prospective
                    Payment Rate.
12...............  FY 2014 Wage-    .       32,466.11  .       29,272.98
                    and Rural-
                    Adjusted
                    Federal
                    Prospective
                    Payment.
13...............  Teaching Status  x               0  x          0.0610
                    Adjustment.
14...............  Teaching Status  =            0.00  =        1,785.65
                    Adjustment
                    Amount.
15...............  FY 2014 Wage-,           32,969.33          30,593.19
                    Rural-, and     +                  +
                    LIP-Adjusted
                    Federal
                    Prospective
                    Payment Rate.

[[Page 26895]]

 
16...............  Total FY 2014    =       32,969.33  =       32,378.84
                    Adjusted
                    Federal
                    Prospective
                    Payment.
------------------------------------------------------------------------

    Thus, the proposed adjusted payment for Facility A would be 
$32,969.33 and the proposed adjusted payment for Facility B would be 
$32,378.84.

VI. Proposed Update to Payments for High-Cost Outliers Under the IRF 
PPS

A. Proposed Update to the Outlier Threshold Amount for FY 2014

    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 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 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 2012 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, and 77 FR 44618, 
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.
    To update the IRF outlier threshold amount for FY 2014, we propose 
to use FY 2012 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 41316 and 41362 through 41363), which is also the same 
methodology that we used to update the outlier threshold amounts for 
FYs 2006 through 2013. Based on an analysis of this updated data, we 
estimate that IRF outlier payments as a percentage of total estimated 
payments are approximately 2.8 percent in FY 2014. Therefore, we 
propose to update the outlier threshold amount to $10,111 to maintain 
estimated outlier payments at approximately 3 percent of total 
estimated aggregate IRF payments for FY 2014.

B. Proposed Update to the IRF Cost-to-Charge Ratio Urban and Rural 
Ceilings

    In accordance with the methodology stated in the FY 2004 IRF PPS 
final rule (68 FR 45674, 45692 through 45694), we apply a ceiling to 
IRFs' CCRs. Using the methodology described in that final rule, we 
propose to update the national urban and rural CCRs for IRFs, as well 
as the national CCR ceiling for FY 2014, based on analysis of the most 
recent data that is available. We apply the national urban and rural 
CCRs in the following situations:
     New IRFs that have not yet submitted their first Medicare 
cost report.
     IRFs whose overall CCR is in excess of the national CCR 
ceiling for FY 2014, as discussed below.
     Other IRFs for which accurate data to calculate an overall 
CCR are not available.
    Specifically, for FY 2014, we estimate a proposed national average 
CCR of 0.638 for rural IRFs, which we calculate by taking an average of 
the CCRs for all rural IRFs using their most recently submitted cost 
report data. Similarly, we estimate a national average CCR of 0.511 for 
urban IRFs, which we calculate 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 costs factor more 
heavily into the averages than the CCRs of IRFs with lower costs. For 
this proposed rule, we have used the most recent available cost report 
data (FY 2011). This includes all IRFs whose cost reporting periods 
begin on or after October 1, 2010, and before October 1, 2011. If, for 
any IRF, the FY 2011 cost report was missing or had an ``as submitted'' 
status, we used data from a previous fiscal year's (that is, FY 2004 
through FY 2010) 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.
    In accordance with past practice, we propose to set the national 
CCR ceiling at 3 standard deviations above the mean CCR. Using this 
method, the national CCR ceiling is set at 1.43 for FY 2014. This means 
that, if an individual IRF's CCR exceeds this ceiling of 1.43 for FY 
2014, we would replace the IRF's CCR with the appropriate national 
average CCR (either rural or urban, depending on the geographic 
location of the IRF). We estimate the national CCR ceiling by:
    Step 1. Taking the national average CCR (weighted by each IRF's 
total costs, as discussed above) 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 note that the proposed national average rural and urban CCRs and 
our estimate of the national CCR ceiling in this section are subject to 
change in the final rule if more recent data become available for use 
in these analyses.

VII. Proposed Refinements to the Presumptive Compliance Criteria 
Methodology

A. Background on the Compliance Percentage

    The compliance percentage has been part of the criteria for 
defining IRFs

[[Page 26896]]

since implementation of the IPPS in 1983. In the September 1, 1983 
interim final rule with comment period (48 FR 39752) which allowed IRFs 
to be paid separately from the IPPS, the initial compliance percentage 
was set at 75 percent. The 1983 interim rule stipulated that in 
accordance with sections 1886(d)(1)(B) and 1886(d)(1)(B)(ii) of the 
Act, a rehabilitation hospital and a rehabilitation unit were excluded 
from the IPPS. Sections 1886(d)(1)(B) and 1886(d)(1)(B)(ii) of the Act 
also give the Secretary the discretion to define a rehabilitation 
hospital and unit.
    A hospital or unit deemed excluded from the IPPS and paid under the 
IRF PPS must meet the general requirements in subpart B and subpart P 
of part 412. Subject to the special payment provisions of Sec.  
412.22(c), a hospital or unit must meet the general criteria set forth 
in Sec.  412.22 and in the regulations at Sec.  412.23(b), Sec.  
412.25, and Sec.  412.29 that specify the criteria for a provider to be 
classified as a rehabilitation hospital or unit. Hospitals and units 
meeting these criteria are eligible to be paid on a prospective payment 
basis as an IRF under the IRF PPS.
    The 1983 interim final rule stipulated that one of the criteria for 
being classified as an IRF was that, during the facility's most 
recently completed 12-month cost reporting period, the hospital must be 
primarily engaged in furnishing intensive rehabilitation services, as 
demonstrated by patient medical records, indicating that at least 75 
percent of the IRF's patient population were treated for one or more of 
the 10 medical conditions specified in the regulation that typically 
required the intensive inpatient rehabilitation treatment provided in 
an IRF. These criteria, along with other related criteria, 
distinguished an inpatient rehabilitation hospital or unit from a 
hospital that furnished general medical or surgical services, as well 
as rehabilitation services. We believed then, as we do now, that by 
examining the types of conditions for which a hospital's inpatients are 
treated, and the proportion of patients treated for conditions that 
typically require intensive inpatient rehabilitation, we would be able 
to distinguish those hospitals in which the provision of rehabilitation 
services was primary rather than secondary. Thus, Medicare pays for 
rehabilitation services at IRFs at a higher rate than other hospitals 
because IRFs are designed to offer specialized inpatient rehabilitation 
care to patients with intensive needs.
    The original medical conditions specified under the compliance 
percentage, or ``75 percent rule,'' were stroke, spinal cord injury, 
congenital deformity, amputation, major multiple trauma, fracture of 
femur (hip fracture), brain injury, and polyarthritis (including 
rheumatoid arthritis). In the January 3, 1984 final rule (49 FR 234), 
we expanded the list of eligible medical conditions to include 
neurological disorders (including multiple sclerosis, motor neuron 
diseases, polyneuropathy, muscular dystrophy, and Parkinson's disease) 
and burns. In the May 7, 2004 final rule (69 FR 25752), we modified and 
expanded the list of eligible medical conditions by removing 
polyarthritis and substituting three more clearly defined arthritis-
related conditions. The three conditions that replaced polyarthritis 
included the following:
     Active, polyarticular rheumatoid arthritis, psoriatic 
arthritis, and seronegative arthropathies resulting in significant 
functional impairment of ambulation and other activities of daily 
living, which has not improved after an appropriate, aggressive, and 
sustained course of outpatient therapy services or services in other 
less intensive rehabilitation settings immediately preceding the 
inpatient rehabilitation admission or which results from a systemic 
disease activation immediately before admission, but has the potential 
to improve with more intensive rehabilitation.
     Systemic vasculidities with joint inflammation, resulting 
in significant functional impairment of ambulation and other activities 
of daily living, which has not improved after an appropriate, 
aggressive, and sustained course of outpatient therapy services or 
services in other less intensive rehabilitation settings immediately 
preceding the inpatient rehabilitation admission or which results from 
a systemic disease activation immediately before admission, but has the 
potential to improve with more intensive rehabilitation.
     Severe or advanced osteoarthritis (osteoarthrosis or 
degenerative joint disease) involving three or more major joints 
(elbow, shoulders, hips, or knees) with joint deformity and substantial 
loss of range of motion, atrophy, significant functional impairment of 
ambulation and other activities of daily living, which has not improved 
after an appropriate, aggressive, and sustained course of outpatient 
therapy services or services in other less intensive rehabilitation 
settings immediately preceding the inpatient rehabilitation admission 
but has the potential to improve with more intensive rehabilitation. (A 
joint replaced by a prosthesis is no longer considered to have 
osteoarthritis, or other arthritis, even though this condition was the 
reason for the joint replacement.)
    In the May 7, 2004 final rule (69 FR 25752), a 13th condition was 
also added to include patients who undergo knee and/or hip joint 
replacement during an acute hospitalization immediately preceding the 
inpatient rehabilitation stay and also meet at least one of the 
following specific criteria:
     Underwent bilateral knee or hip joint replacement surgery 
during the acute hospitalization immediately preceding the IRF 
admission.
     Are extremely obese patients as measured by the patient's 
Body Mass Index (BMI) of at least 50, at the time of admission to the 
IRF.
     Are patients considered to be''frail elderly,'' as 
determined by a patient's age of 85 or older, at the time of admission 
to the IRF (the provision currently states only that the patients be 
age 85 or older at the time of admission to the IRF.)
    In 2002, we surveyed Medicare fiscal intermediaries to determine 
how they were enforcing the 75 percent rule. Although the 75 percent 
rule was one of the criteria that was used to distinguish an IRF from 
an acute care hospital from 1983 to 2004, we found evidence that 
different fiscal intermediaries were enforcing the rule differently. We 
found fiscal intermediaries were using inconsistent methods to 
determine whether IRFs were in compliance with the regulation, and that 
some IRFs were not being reviewed for compliance at all. This led to 
concerns that some IRFs might have been out of compliance with the 
regulation and inappropriately classified as IRFs, while other IRFs may 
have been held to overly high standards. Because of these concerns we 
sought to establish a more uniform enforcement of the 75 percent rule.
    In the May 16, 2003 IRF PPS proposed rule (68 FR 26786), we 
solicited comments on the regulatory requirements of the 75 percent 
rule. Though we did not, at that time, propose amending the regulatory 
requirements for the 75 percent rule located in then Sec.  
412.23(b)(2), we did propose to amend these requirements in the 
September 9, 2003 proposed rule titled, ``Medicare Program; Changes to 
the Criteria for Being Classified as an Inpatient Rehabilitation 
Facility'' (68 FR 53266). In that rule, we proposed some revisions to 
the 75 percent rule, including lowering the compliance percentage to 65 
percent during a 3-year transition period for cost reporting periods 
between January 1, 2004 and January 1, 2007. Also, in response to

[[Page 26897]]

comments on the September 9, 2003 proposed rule and as stated above, 
the May 7, 2004 final rule (69 FR 25752) expanded the number of medical 
conditions that would meet the compliance percentage from 10 to 13 and 
provided that patient comorbidities may also be included in determining 
an IRF's compliance with the requirements during the transition period.
    In the September 9, 2003 proposed rule, we defined a 
``comorbidity'' as a specific patient condition that is secondary to 
the patient's principal diagnosis or impairment that is the primary 
reason for the inpatient rehabilitation stay. In the May 7, 2004 rule, 
we adopted the provision to use a patient with a comorbidity counting 
towards the compliance threshold during the transition period. In the 
determination of the compliance percentage, a patient comorbidity 
counts toward the percentage if the comorbidity falls in one of the 
conditions specified at Sec.  412.29(b)(2) and has caused significant 
decline in functional ability in the individual that even in the 
absence of the admitting condition, the individual would require the 
intensive rehabilitation treatment that is unique to IRFs.
    Anticipating that IRFs needed some time to adjust and adapt their 
processes to the changes in the enforcement of the 75 percent rule, in 
the May 7, 2004 final rule, we provided IRFs with a 3-year phase-in 
period (cost reporting periods beginning on or after July 1, 2004 
through July 1, 2007) to establish the compliance threshold of 75 
percent of the IRF's total patient population. The 3-year phase-in 
period was intended to begin with cost reporting periods on or after 
July 1, 2004 with the threshold at 50 percent of the IRF's population 
and gradually increase to 60 percent, then to 65 percent, and then to 
expire with cost reporting periods beginning on or after July 1, 2007, 
when the compliance percentage would once again be at 75 percent.
    Section 5005 of the Deficit Reduction Act of 2005 (DRA, Pub. L. 
109-171, enacted February 8, 2006) and section 1886(d)(1)(B) of the Act 
modified the provisions of the 75 percent rule originally specified in 
the May 7, 2004 final rule. To reflect these statutory changes, in the 
August 7, 2007 final rule (72 FR 44284), we revised the regulations to 
prolong the overall duration of the phased transition to the full 75 
percent threshold by stipulating that an IRF must meet the full 75 
percent compliance threshold as of its first cost reporting period that 
starts on or after July 1, 2008. We also extended the policy of using a 
patient's comorbidities to the extent they met the conditions as 
outlined in the regulations to determine compliance with the 
classification criteria at then Sec.  412.23(b)(2)(1) to the first cost 
reporting period that starts on or after July 1, 2008.
    Subsequently, section 115 of the MMSEA amended section 5005 of the 
DRA to revise elements of the 75 percent rule that are used to classify 
IRFs. In accordance with the statute, in the August 8, 2008 final rule 
(73 FR 46370), we revised the compliance rate that IRFs must meet to be 
excluded from the IPPS and be paid under the IRF PPS to 60 percent for 
cost reporting periods beginning in or after July 1, 2006. Also, in 
accordance with the statute, we required that patient comorbidities 
that satisfy the criteria as specified at then Sec.  412.23(b)(2)(i) 
[now located at Sec.  412.29(b)(1) and Sec.  412.29(b)(2)] be included 
in calculations used to determine whether an IRF meets the 60 percent 
compliance percentage for cost reporting periods beginning on or after 
July 1, 2007. As a result of these changes, the requirements started 
being referred to as the ``60 percent rule,'' instead of the ``75 
percent rule.'' The regulations finalized in the FY 2009 IRF PPS Final 
Rule (73 FR 46370) continue to be in effect.
    Though an IRF must serve an inpatient population of whom at least 
60 percent meet the compliance percentage criteria specified at Sec.  
412.29(b), the existing regulation allows for 40 percent of reasonable 
and necessary admissions to an IRF to fall outside of the 13 qualifying 
medical conditions. Still, the ``60 percent rule'' is one of the 
primary ways we distinguish an IRF from an acute care hospital. As 
Medicare payments for IRF services are generally significantly higher 
than Medicare payments for similar services provided in acute care 
hospital settings, we believe that it is important to maintain and 
enforce the 60 percent rule compliance criteria to ensure that the 
higher Medicare payments are appropriately allocated to those providers 
that are providing IRF-level services.

B. Proposed Changes to the ICD-9-CM Codes That Meet the Presumptive 
Compliance Criteria

    The presumptive methodology is one of two ways that contractors may 
evaluate an IRF's compliance with the 60 percent rule compliance 
criteria (the other methodology is called the medical review 
methodology). IRFs may be evaluated using the presumptive methodology 
only if their Medicare fee-for-service and Medicare Advantage 
populations combined make-up over half of their total patient 
populations, so that the Medicare populations can be presumed to be 
representative of the IRF's total patient population. Thus, if an IRF 
is eligible to use the presumptive methodology to evaluate its 
compliance with the IRF 60 percent rule, all of its IRF-PAI assessments 
from the most recently completed 12 month compliance review period are 
examined (with the use of a computer program) to determine whether they 
contain any of the codes listed on the presumptive methodology list. 
Under the rule, each IRF is given the option of whether the Medicare 
contractor reviews all IRF discharges from that period, or all 
admissions from that period. Each selected assessment is presumptively 
categorized as either meeting or not meeting the IRF 60 percent rule 
requirements based upon the primary reason for the patient to be 
treated in the IRF (the impairment group) and the ICD-9-CM codes listed 
as either the etiologic diagnosis (the etiologic problem that led to 
the condition for which the patient is receiving rehabilitation) or one 
of 10 comorbidities on the assessment. An impairment group code is not 
an ICD-9-CM code, but part of a separate unique set of codes 
specifically developed for the IRF PPS for assigning the primary reason 
for admission to an IRF. The ICD-9-CM diagnosis codes that may be used 
to categorize a patient as meeting the 60 percent rule criteria if 
those codes appear on the patient's IRF-PAI assessment as either the 
etiologic diagnosis or as a comorbid condition are listed in ``Appendix 
C: ICD-9-CM Codes That Meet Presumptive Compliance Criteria.'' This 
list can be downloaded from the October 1, 2007 IRF Compliance Rule 
Specification Files on the Medicare IRF PPS Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Criteria.html.
    The underlying premise of the presumptive methodology ICD-9-CM code 
list is that it represents those codes that would be expected to 
``presumptively'' meet the 60 percent rule compliance criteria. That 
is, it reflects those particular diagnosis codes that, if a patient is 
coded using one of those codes, would more than likely be expected to 
meet the requirement either that the patient required intensive 
rehabilitation services for treatment of one or more of the conditions 
specified at Sec.  412.29(b)(2) or had a comorbidity that caused 
significant decline in functional ability such that, even in the

[[Page 26898]]

absence of the admitting condition, the patient would require the 
intensive rehabilitation treatment that is unique to inpatient 
rehabilitation facilities and cannot be appropriately performed in 
another care setting.
    Recently, we began a close examination of the list of ICD-9-CM 
codes that are currently deemed to meet the 60 percent rule under the 
presumptive method to begin the process of converting this code list to 
ICD-10-CM. Upon this examination, we found that changes over time 
(including changes in the use of the individual codes, changes in 
clinical practice, changes in the frequency of various types of illness 
and disability, and changes to the application of 60 percent rule 
itself) supported our updating the ICD-9-CM codes that are deemed to 
count toward a facility's 60 percent rule compliance. Such updates 
would ensure that the codes better reflect the regulations at Sec.  
412.29(b).
    Our review included taking a fresh look at the regulations in Sec.  
412.29(b), which revealed that the following parts of the regulation 
were not being adequately addressed in the current application of the 
presumptive method of calculating compliance with the IRF 60 percent 
rule:
     The details of the requirements in paragraph Sec.  
412.29(b)(1), which specify that the IRF must serve ``an inpatient 
population of whom at least 60 percent required intensive 
rehabilitation services for treatment of one or more of the conditions 
specified . . .'', and
     The details of the requirements regarding the specific 
conditions under which a patient's comorbidity may be used to show that 
a patient meets the 60 percent rule criteria, specifically that, ``The 
comorbidity has caused significant decline in functional ability in the 
individual that, even in the absence of the admitting condition, the 
individual would require the intensive rehabilitation treatment that is 
unique to inpatient rehabilitation facilities . . . and that cannot be 
appropriately performed in another care setting . . .''
    These requirements must be met in conjunction with a patient having 
one of the 13 conditions listed in Sec.  412.29(b)(2) for the case to 
meet the 60 percent rule compliance criteria. It is not enough for the 
patient to just have one of the 13 conditions. Mindful of these 
requirements, we took a fresh look at the ICD-9-CM codes on the 
presumptive methodology list.
    Further, the regulations in Sec.  412.29 also specify that the 
arthritis conditions only meet the 60 percent rule compliance criteria 
if certain severity and prior treatment criteria are met. It is 
impossible to discern from the ICD-9-CM codes themselves whether or not 
the required severity and prior treatment criteria are met for those 
patients being treated for arthritis conditions. This type of 
information can only be assessed on medical review. Thus, we found that 
the presence of the ICD-9-CM code, by itself, cannot allow us to 
presume that patients meet all of the requirements for being counted 
toward a facility's meeting the 60 percent rule requirements. As such, 
we believe that certain ICD-9-CM codes currently on the presumptive 
methodology list do not necessarily demonstrate a patient's meeting the 
requirements for inclusion in a facility's 60 percent compliance 
threshold, and, as such, should be removed from the list to better 
reflect the regulations.
    Therefore, we performed a clinical analysis of the ICD-9-CM code 
list to determine the clinical appropriateness of each individual ICD-
9-CM code's inclusion on the list, and a statistical analysis of the 
ICD-9-CM diagnoses code list to enhance our understanding of how 
individual ICD-9-CM codes are being used by IRFs. Based on these 
analyses, we are proposing specific revisions to the ICD-9-CM code list 
that are described below in sections VII.B.1 through VII.B.6 of this 
proposed rule.
    We encourage stakeholders comment on the following proposals. All 
such public comment(s) will be addressed in the final rule.
1. Non-Specific Diagnosis Codes
    We believe that highly descriptive codes provide the best and 
clearest way to ensure the appropriateness of a given patient's 
inclusion in the presumptive method of calculating a facility's 
compliance percentage. Therefore, whenever possible, we believe that 
the most specific code that describes a medical disease, condition, or 
injury should be documented on the IRF-PAI. Generally, ``unspecified'' 
codes are used when there is lack of information about location or 
severity of medical conditions in the medical record. However, site 
and/or severity of condition is an important determinant in assessing 
whether a patient's principal or secondary diagnosis falls into the 13 
qualifying conditions and, as such, should count toward the facility's 
compliance with the 60 percent rule. For this reason, and in accordance 
with ICD-9-CM coding guidelines, we believe that specific diagnosis 
codes that narrowly identify anatomical sites where disease, injury, or 
condition exist should be required when coding patients' conditions on 
the IRF-PAI whenever such codes are available. Furthermore, on the same 
note, we believe that one should also include on the IRF-PAI the more 
descriptive ICD-9-CM code that indicates the degree of injury in 
instances of burns. In accordance with these principles, we propose to 
remove non-specific codes from Appendix C whenever more specific codes 
are available as we believe imprecise codes would inappropriately 
categorize an overly broad segment of the patient population as having 
the conditions required for inclusion in a facility's compliance 
percentage. If the IRF does not have enough information about the 
patient's condition to code the more specific codes on the IRF-PAI, we 
would expect the IRF to seek out additional information from the 
patient's acute care hospital medical record to determine the 
appropriate, more specific code to use.
    For example, the current ICD-9-CM codes 820.8 ``Unspecified part of 
neck of femur, closed'' and 820.9 ``Unspecified part of neck of femur, 
open'', which indicate hip fractures, could be replaced with more 
specific codes (820.01-820.09, 820.11-820.19, 820.21-820.22, or 820.31-
820.32). We believe that the proposed removal of the unspecified codes 
listed in Table 7, ``Proposed ICD-9-CM Codes To Be Removed From the 
Appendix C: ICD-9-CM Codes That Meet Presumptive Compliance Criteria,'' 
would not negatively impact a provider's ability to meet the compliance 
percentage threshold because these diagnoses could be coded under the 
aforementioned more specific codes. More specific codes will aid us in 
determining (by the nature of the site, severity, degree of injury, 
etc.) whether a patient's principal or secondary diagnosis falls into 
the 13 qualifying conditions and should count toward the 60 percent 
rule.
2. Arthritis Codes
    Our analysis of the list of ICD-9-CM codes that are currently 
deemed to meet the 60 percent rule required us to reexamine the overall 
application of the compliance criteria in regards to the arthritis 
codes. Utilization patterns for the arthritis codes indicated that some 
of the codes in this category are coded far more frequently than we had 
anticipated, given the severity and prior treatment requirements 
outlined in regulation. When we adopted the arthritis conditions in the 
FY 2004 final rule (69 FR 25752), we did so because we believed that 
these conditions were appropriate for treatment in an IRF. However, we 
limited the arthritis conditions to those that were sufficiently severe 
and in which

[[Page 26899]]

intensive inpatient rehabilitation would be an appropriate modality of 
treatment. We anticipated that less severe arthritic conditions could 
be satisfactorily managed outside of IRFs since these cases would not 
require the intensive therapy provided in the inpatient rehabilitation 
setting. Likewise, we expected that even in cases where patients with 
arthritis conditions severe enough to require intensive inpatient 
rehabilitation, some patients would improve after an appropriate, 
aggressive, and sustained course of treatment in an outpatient setting. 
``An appropriated, aggressive, and sustained course of treatment in an 
outpatient setting'' is defined in Chapter 3, section 140.1.1.C of the 
Medicare Claims Processing Manual (Pub. 100-04). We believe that there 
may be arthritis ICD-9-CM codes entered on the IRF-PAI for cases that 
do not meet the severity and prior treatment requirements outlined in 
regulation. Thus, after reexamining our application of the compliance 
criteria in regards to the arthritis codes, we determined that factors 
beyond the ICD-9-CM code should be reviewed to establish whether these 
IRF patients should be included in the IRF's compliance percentage.
    In the regulations at Sec.  412.29(b)(2)(x) through Sec.  
412.29(b)(2)(xii), we describe 3 medical conditions that, if present, 
make a patient eligible for inclusion in the calculation of the 
compliance percentage if additional circumstances are met. The 3 
medical conditions are as follows:
     Active, polyarticular rheumatoid arthritis, psoriatic 
arthritis, and seronegative arthropathies resulting in significant 
functional impairment of ambulation and other activities of daily 
living that have not improved after an appropriate, aggressive, and 
sustained course of outpatient therapy services or services in other 
less intensive rehabilitation settings immediately preceding the 
inpatient rehabilitation admission or that result from a systemic 
disease activation immediately before admission, but have the potential 
to improve with more intensive rehabilitation.
     Systemic vasculidities with joint inflammation, resulting 
in significant functional impairment of ambulation and other activities 
of daily living that have not improved after an appropriate, 
aggressive, and sustained course of outpatient therapy services or 
services in other less intensive rehabilitation settings immediately 
preceding the inpatient rehabilitation admission or that result from a 
systemic disease activation immediately before admission, but have the 
potential to improve with more intensive rehabilitation.
     Severe or advanced osteoarthritis (osteoarthrosis or 
degenerative joint disease) involving two or more major weight bearing 
joints (elbow, shoulders, hips, or knees, but not counting a joint with 
a prosthesis) with joint deformity and substantial loss of range of 
motion, atrophy of muscles surrounding the joint, significant 
functional impairment of ambulation and other activities of daily 
living that have not improved after the patient has participated in an 
appropriate, aggressive, and sustained course of outpatient therapy 
services or services in other less intensive rehabilitation settings 
immediately preceding the inpatient rehabilitation admission but have 
the potential to improve with more intensive rehabilitation. (A joint 
replaced by a prosthesis no longer is considered to have 
osteoarthritis, or other arthritis, even though this condition was the 
reason for the joint replacement.)
    As stated above, the inclusion of patients with these medical 
conditions in the compliance percentage is conditioned on those 
patients meeting certain severity and prior treatment requirements. 
However, the ICD-9-CM diagnosis codes that reflect these arthritis and 
arthropathy conditions do not provide any information about whether or 
not these additional eligibility requirements were met. We believe that 
a qualitative assessment (such as a medical review) is necessary to 
determine if the medical record would support inclusion of individuals 
with the arthritis and arthropathy conditions outlined in our 
regulations at Sec.  412.29(b)(2)(x) through Sec.  412.29(b)(2)(xii) in 
a facility's compliance percentage. Thus, we propose to remove the ICD-
9-CM diagnosis codes associated with the medical conditions outlined in 
our regulations at Sec.  412.29(b)(2)(x) through Sec.  
412.29(b)(2)(xii) from the presumptive method ICD-9-CM code list in 
Appendix C.
    We expect that the FI/MAC will be able, upon medical review, to 
include those patients in a facility's 60 percent rule compliance 
percentage in accordance with chapter 3, Sec.  140.1.4 of the Medicare 
Claims Processing Manual (Pub. 100-04) after it has confirmed the 
severity and prior treatment requirements. So IRFs will continue to be 
able to include these individuals in their compliance percentages. In 
Table 7, we list the ICD-9-CM codes associated with the medical 
conditions listed at Sec.  412.29(b)(2)(x) through Sec.  
412.29(b)(2)(xii) that we propose to remove from Appendix C.
3. Some Congenital Anomaly Diagnosis Codes
    Though congenital deformity is one of the 13 medical conditions 
that may generally qualify for inclusion in the presumptive method for 
calculating compliance with the 60 percent rule, we find that some of 
the specific ICD-9-CM diagnosis codes in Appendix C for congenital 
anomalies represent such serious conditions that a patient with one of 
these conditions would be unlikely to be able to meaningfully 
participate in an intensive rehabilitation therapy program. For 
example, Craniorachischisis (ICD-9-CM code 740.1) is a congenital 
malformation where the neural tube from the midbrain down to the upper 
sacral region of the spinal cord remains open. The neural tube is the 
embryo's precursor to the central nervous system, which comprises the 
brain and spinal cord. Similarly, Iniencephaly (ICD-9-CD code 740.2) is 
a congenital malformation in which parts of the brain do not form and 
the patient does not have a neck. If a patient with one of these 
conditions were able to participate in the intensive rehabilitation 
services provided in an IRF, then the FI/MAC would be able to count 
that case toward an IRF's 60 percent rule compliance calculation upon 
medical review. However, because beneficiaries with these diagnoses 
likely would not be able to actively participate in an intensive 
rehabilitation program, we do not believe that we can presumptively 
include such cases in an IRF's compliance percentage. Thus, we propose 
to remove these congenital deformity codes, and others like them, from 
Appendix C. All of the congenital anomaly diagnosis codes that we 
propose to remove from appendix C are listed in Table 7.
4. Unilateral Upper Extremity Amputations Diagnosis Codes
    Though amputation is generally one of the 13 medical conditions 
that qualify for inclusion in the presumptive method for calculating 
compliance with the 60 percent rule, we propose the removal of certain 
ICD-9-CM codes for unilateral upper extremity amputations from Appendix 
C because we believe that it is impossible to determine, from the 
presence of such ICD-9-CM codes alone, whether a patient with such a 
unilateral upper extremity amputation has a condition for which he or 
she would qualify for treatment in an IRF. Some patients with upper 
extremity amputations will not require close medical supervision by a 
physician or weekly interdisciplinary team

[[Page 26900]]

conferences to achieve their goals, while others may require these 
services. We believe that rehabilitation associated with unilateral 
upper extremity amputations does not necessarily need to be accompanied 
by the close medical management provided in IRFs, as long as the 
patient does not have any additional comorbidities that have caused 
significant decline in his or her functional ability that, in the 
absence of the unilateral upper extremity amputation, would necessitate 
treatment in an IRF. That is to say, a patient's need for intensive 
rehabilitation services provided in an IRF may depend on other 
conditions which cannot be solely identified through the presence of a 
unilateral upper extremity amputation ICD-9-CM code. If the patient has 
comorbidities that would necessitate treatment in an IRF, then those 
comorbidities could qualify the patient for inclusion in the 
presumptive method of calculating compliance with the 60 percent rule 
requirements. If the codes for such a patient's comorbidities do not 
appear in Appendix C, they could be found on medical review to meet the 
criteria for inclusion in the IRF's 60 percent rule compliance rate. 
Thus, we propose to remove the unilateral upper extremity amputation 
ICD-9-CM codes listed in Table 7.
5. Miscellaneous Diagnosis Codes That Do Not Require Intensive 
Rehabilitation Services For Treatment
    We have identified additional ICD-9-CM diagnosis codes in Appendix 
C that should not be included in the listing because as single 
conditions, they do not serve as an indication of a patient qualifying 
for inclusion in an IRF's compliance percentage under the presumptive 
method for calculating compliance with the 60 percent rule. These 
patients generally do not require intensive rehabilitation services or 
cannot be shown to have undergone appropriate diagnostic testing based 
on the ICD-9-CM code alone. For the reasons discussed below, we propose 
to remove the following ICD-9-CM codes from Appendix C. (These ICD-9-CM 
codes are also listed in Table 7):
     Tuberculous (abscess, meningitis, and encephalitis or 
myelitis) and Tuberculoma (of the meninges, brain, or spinal cord) 
where a bacterial or histological examination was not done (see Table 7 
for specific codes)--Appropriate patient care dictates that the IRF 
physician must document the means by which the organism, whether it be 
bacteriologic or histologic, was tested. We are proposing to remove 
these codes from the list in Appendix C because the subclassification 
indicates that a bacteriologic or histologic examination has not been 
performed.
     Postherpetic polyneuropathy (053.13)--This is a condition 
characterized by severe pain, which typically requires pain medication 
or other pain control therapies but does not typically require the 
intensive inpatient rehabilitation services of an IRF. In fact, the 
prescriptive hands-on therapeutic interventions provided in an IRF 
could exacerbate the patient's pain. For these reasons, we are 
proposing to remove this code from Appendix C.
     Louping ill (063.1)--This ICD-9-CM code refers to an acute 
viral disease primarily of sheep that is not endemic to the United 
States. Louping ill disease has been recognized in Scotland for 
centuries, but only 39 cases of human infection have been described and 
none of these cases have been observed in the United States. Louping 
ill is a disease which has many manifestations, not all requiring 
inpatient rehabilitation hospital services. We believe that the ICD-9-
CM code for this diagnosis does not provide the information necessary 
for us to determine presumptively if the patient should count toward 
the IRF's compliance threshold. However, as with all of the codes that 
we are proposing to remove from appendix C, if someone with this 
diagnosis were to be admitted to an IRF, where appropriate, it could be 
found by an FI/MAC to meet the 60 percent rule requirements on medical 
review.
     Brain death (348.82)--We believe that it is unlikely that 
a patient with this condition would require the intensive inpatient 
rehabilitation services provided in an IRF. For this reason, we propose 
to remove this code from Appendix C.
     Myasthenia gravis without (acute) exacerbation (358.00)--
Although we believe that a patient experiencing an acute attack of 
Myasthenia Gravis could potentially require the services of an IRF (see 
ICD-9 code 358.01 ``Myasthenia gravis with (acute) exacerbation''), the 
ICD-9-CM code that we propose to remove from appendix C is used for 
patients who are not experiencing an acute exacerbation of the 
condition and most likely do not require the intensive inpatient 
rehabilitation services provided in an IRF.
     Other specified myotonic disorder (359.29)--Myotonia 
fluctuans, myotonia permanens, and paramyotonia congenital reflect 
conditions that are exacerbated by exercise. Therefore, these 
conditions would not likely require the intensive inpatient 
rehabilitation services of an IRF. Therefore, we are proposing to 
remove it from the list in appendix C.
     Periodic paralysis (359.3)--The treatment for periodic 
paralysis involves pharmaceutical interventions and lifestyle changes 
that control exercise and activity, but patients with this condition do 
not generally require the intensive inpatient rehabilitation services 
of an IRF. In fact, it is unclear how the intensive inpatient 
rehabilitation services provided in an IRF would effectively treat this 
condition. Thus, we propose to remove this code from the list in 
Appendix C.
     Brachial plexus lesions (353.0)--Care and treatment for 
this condition affecting an upper extremity do not typically require 
close medical supervision by a physician or weekly interdisciplinary 
team meetings to reach the patient's goals. Thus, patients with this 
condition do not typically require the intensive inpatient 
rehabilitation services provided in an IRF. Therefore, we propose to 
remove this code from the list in appendix C.
     Neuralgic amyothrophy (353.5)--This condition is also 
known as Parsonage-Turner syndrome or brachial plexus neuritis. It is a 
distinct peripheral nervous system disorder characterized by attacks of 
extreme neuropathic pain and rapid multifocal weakness and atrophy in 
the upper limbs. Patients with this condition do not typically require 
close medical supervision by a physician or weekly interdisciplinary 
team meetings to reach the patient's therapy goals. Thus, patients with 
this condition do not typically require the intensive inpatient 
rehabilitation services provided in an IRF. Therefore, we propose to 
remove this code from the list Appendix C.
     Other nerve root and plexus disorders (353.8)--More 
descriptive codes provide the clearest way to ensure the 
appropriateness of a patient's inclusion in the compliance percentage. 
For example, Lumbosacral plexus lesions (353.1) could substitute for 
Other nerve root and plexus disorders (353.8). Thus, patients with this 
condition do not typically require the intensive inpatient 
rehabilitation services provided in an IRF. Therefore, we propose to 
remove this code from the list in Appendix C.
6. Additional Diagnosis Codes
    During our review of the diagnosis codes that meet the 60 percent 
compliance criteria, we did not identify any ICD-9-CM codes that would 
be appropriate to add to the list. However, we welcome public comment 
regarding ICD-9-CM diagnosis codes that are not currently on the 
presumptive

[[Page 26901]]

methodology list of codes that stakeholders believe should be added to 
the list and that specifically identify one of the conditions listed at 
Sec.  412.29(b)(2), that require intensive inpatient rehabilitation, 
and can be presumptively identified by a ICD-9-CM code.

Table 7--Proposed ICD-9-CM Codes To Be Removed From Appendix C: ICD-9-CM
             Codes That Meet Presumptive Compliance Criteria
------------------------------------------------------------------------
      ICD-9-CM Code                          Diagnosis
------------------------------------------------------------------------
013.00...................  Tuberculous meningitis, unspecified.
013.01...................  Tuberculous meningitis, bacteriological or
                            histological examination not done.
013.10...................  Tuberculoma of meninges, unspecified.
013.11...................  Tuberculoma of meninges, bacteriological or
                            histological examination not done.
013.20...................  Tuberculoma of brain, unspecified.
013.21...................  Tuberculoma of brain, bacteriological or
                            histological examination not done.
013.30...................  Tuberculous abscess of brain, unspecified.
013.31...................  Tuberculous abscess of brain, bacteriological
                            or histological examination not done.
013.40...................  Tuberculoma of spinal cord, unspecified.
013.41...................  Tuberculoma of spinal cord, bacteriological
                            or histological examination not done.
013.50...................  Tuberculous abscess of spinal cord,
                            unspecified.
013.51...................  Tuberculous abscess of spinal cord,
                            bacteriological or histological examination
                            not done.
013.60...................  Tuberculous encephalitis or myelitis,
                            unspecified.
013.61...................  Tuberculous encephalitis or myelitis,
                            bacteriological or histological examination
                            not done.
047.9....................  Unspecified viral meningitis.
049.9....................  Unspecified non-arthropod-borne viral
                            diseases of central nervous system.
053.13...................  Postherpetic polyneuropathy.
062.9....................  Mosquito-borne viral encephalitis,
                            unspecified.
063.1....................  Louping ill.
063.9....................  Tick-borne viral encephalitis, unspecified.
320.9....................  Meningitis due to unspecified bacterium.
322.9....................  Meningitis, unspecified.
323.9....................  Unspecified causes of encephalitis, myelitis,
                            and encephalomyelitis.
324.9....................  Intracranial and intraspinal abscess of
                            unspecified site.
335.10...................  Spinal muscular atrophy, unspecified.
335.9....................  Anterior horn cell disease, unspecified.
336.9....................  Unspecified disease of spinal cord.
341.9....................  Demyelinating disease of central nervous
                            system, unspecified.
342.00...................  Flaccid hemiplegia and hemiparesis affecting
                            unspecified side.
342.10...................  Spastic hemiplegia and hemiparesis affecting
                            unspecified side.
342.80...................  Other specified hemiplegia and hemiparesis
                            affecting unspecified side.
342.90...................  Hemiplegia, unspecified, affecting
                            unspecified side.
342.91...................  Hemiplegia, unspecified, affecting dominant
                            side.
342.92...................  Hemiplegia, unspecified, affecting
                            nondominant side.
343.3....................  Congenital monoplegia.
343.9....................  Infantile cerebral palsy, unspecified.
344.00...................  Quadriplegia, unspecified.
344.5....................  Unspecified monoplegia.
348.82...................  Brain death.
353.0....................  Brachial plexus lesions.
353.2....................  Cervical root lesions, not elsewhere
                            classified.
353.3....................  Thoracic root lesions, not elsewhere
                            classified.
353.4....................  Lumbosacral root lesions, not elsewhere
                            classified.
353.5....................  Neuralgic amyotrophy.
353.8....................  Other nerve root and plexus disorders.
354.5....................  Mononeuritis multiplex.
356.9....................  Unspecified hereditary and idiopathic
                            peripheral neuropathy.
358.00...................  Myasthenia gravis without (acute)
                            exacerbation.
359.29...................  Other specified myotonic disorder.
359.3....................  Periodic paralysis.
432.9....................  Unspecified intracranial hemorrhage.
438.20...................  Late effects of cerebrovascular disease,
                            hemiplegia affecting unspecified side.
438.30...................  Late effects of cerebrovascular disease,
                            monoplegia of upper limb affecting
                            unspecified side.
438.31...................  Late effects of cerebrovascular disease,
                            monoplegia of upper limb affecting dominant
                            side.
438.32...................  Late effects of cerebrovascular disease,
                            monoplegia of upper limb affecting
                            nondominant side.
438.40...................  Late effects of cerebrovascular disease,
                            monoplegia of lower limb affecting
                            unspecified side.
438.50...................  Late effects of cerebrovascular disease,
                            other paralytic syndrome affecting
                            unspecified side.
433.91...................  Occlusion and stenosis of unspecified
                            precerebral artery with cerebral infarction.
434.91...................  Cerebral artery occlusion, unspecified with
                            cerebral infarction.
446.0....................  Polyarteritis nodosa.
711.20...................  Arthropathy in Behcet's syndrome, site
                            unspecified.
711.21...................  Arthropathy in Behcet's syndrome, shoulder
                            region.
711.22...................  Arthropathy in Behcet's syndrome, upper arm.
711.23...................  Arthropathy in Behcet's syndrome, forearm.
711.24...................  Arthropathy in Behcet's syndrome, hand.
711.25...................  Arthropathy in Behcet's syndrome, pelvic
                            region and thigh.

[[Page 26902]]

 
711.26...................  Arthropathy in Behcet's syndrome, lower leg.
711.27...................  Arthropathy in Behcet's syndrome, ankle and
                            foot.
711.28...................  Arthropathy in Behcet's syndrome, other
                            specified sites.
711.29...................  Arthropathy in Behcet's syndrome, multiple
                            sites.
713.0....................  Arthropathy associated with other endocrine
                            and metabolic disorders.
713.1....................  Arthropathy associated with gastrointestinal
                            conditions other than infections.
713.2....................  Arthropathy associated with hematological
                            disorders.
713.3....................  Arthropathy associated with dermatological
                            disorders.
713.4....................  Arthropathy associated with respiratory
                            disorders.
713.6....................  Arthropathy associated with hypersensitivity
                            reaction.
713.7....................  Other general diseases with articular
                            involvement.
714.0....................  Rheumatoid arthritis.
714.1....................  Felty's syndrome.
714.2....................  Other rheumatoid arthritis with visceral or
                            systemic involvement.
714.32...................  Pauciarticular juvenile rheumatoid arthritis.
714.81...................  Rheumatoid lung.
714.89...................  Other specified inflammatory
                            polyarthropathies.
714.9....................  Unspecified inflammatory polyarthropathy.
715.11...................  Osteoarthrosis, localized, primary, shoulder
                            region.
715.12...................  Osteoarthrosis, localized, primary, upper
                            arm.
715.15...................  Osteoarthrosis, localized, primary, pelvic
                            region and thigh.
715.16...................  Osteoarthrosis, localized, primary, lower
                            leg.
715.21...................  Osteoarthrosis, localized, secondary,
                            shoulder region.
715.22...................  Osteoarthrosis, localized, secondary, upper
                            arm.
715.25...................  Osteoarthrosis, localized, secondary, pelvic
                            region and thigh.
715.26...................  Osteoarthrosis, localized, secondary, lower
                            leg.
715.31...................  Osteoarthrosis, localized, not specified
                            whether primary or secondary, shoulder
                            region.
715.32...................  Osteoarthrosis, localized, not specified
                            whether primary or secondary, upper arm.
715.35...................  Osteoarthrosis, localized, not specified
                            whether primary or secondary, pelvic region
                            and thigh.
715.36...................  Osteoarthrosis, localized, not specified
                            whether primary or secondary, lower leg.
716.01...................  Kaschin-Beck disease, shoulder region.
716.02...................  Kaschin-Beck disease, upper arm.
716.05...................  Kaschin-Beck disease, pelvic region and
                            thigh.
716.06...................  Kaschin-Beck disease, lower leg.
716.11...................  Traumatic arthropathy, shoulder region.
716.12...................  Traumatic arthropathy, upper arm.
716.15...................  Traumatic arthropathy, pelvic region and
                            thigh.
716.16...................  Traumatic arthropathy, lower leg.
716.21...................  Allergic arthritis, shoulder region.
716.22...................  Allergic arthritis, upper arm.
716.25...................  Allergic arthritis, pelvic region and thigh.
716.26...................  Allergic arthritis, lower leg.
716.51...................  Unspecified polyarthropathy or polyarthritis,
                            shoulder region.
716.52...................  Unspecified polyarthropathy or polyarthritis,
                            upper arm.
716.55...................  Unspecified polyarthropathy or polyarthritis,
                            pelvic region and thigh.
716.56...................  Unspecified polyarthropathy or polyarthritis,
                            lower leg.
719.30...................  Palindromic rheumatism, site unspecified.
719.31...................  Palindromic rheumatism, shoulder region.
719.32...................  Palindromic rheumatism, upper arm.
719.33...................  Palindromic rheumatism, forearm.
719.34...................  Palindromic rheumatism, hand.
719.35...................  Palindromic rheumatism, pelvic region and
                            thigh.
719.36...................  Palindromic rheumatism, lower leg.
719.37...................  Palindromic rheumatism, ankle and foot.
719.38...................  Palindromic rheumatism, other specified
                            sites.
719.39...................  Palindromic rheumatism, multiple sites.
720.0....................  Ankylosing spondylitis.
720.81...................  Inflammatory spondylopathies in diseases
                            classified elsewhere.
720.89...................  Other inflammatory spondylopathies.
721.91...................  Spondylosis of unspecified site, with
                            myelopathy.
722.70...................  Intervertebral disc disorder with myelopathy,
                            unspecified region.
740.1....................  Craniorachischisis.
740.2....................  Iniencephaly.
741.00...................  Spina bifida with hydrocephalus, unspecified
                            region.
741.90...................  Spina bifida without mention of
                            hydrocephalus, unspecified region.
742.1....................  Microcephalus.
754.30...................  Congenital dislocation of hip, unilateral.
754.31...................  Congenital dislocation of hip, bilateral.
754.32...................  Congenital subluxation of hip, unilateral.
755.20...................  Unspecified reduction deformity of upper
                            limb.

[[Page 26903]]

 
755.21...................  Transverse deficiency of upper limb.
755.22...................  Longitudinal deficiency of upper limb, not
                            elsewhere classified.
755.23...................  Longitudinal deficiency, combined, involving
                            humerus, radius, and ulna (complete or
                            incomplete).
755.24...................  Longitudinal deficiency, humeral, complete or
                            partial (with or without distal
                            deficiencies, incomplete).
755.25...................  Longitudinal deficiency, radioulnar, complete
                            or partial (with or without distal
                            deficiencies, incomplete).
755.26...................  Longitudinal deficiency, radial, complete or
                            partial (with or without distal
                            deficiencies, incomplete).
755.27...................  Longitudinal deficiency, ulnar, complete or
                            partial (with or without distal
                            deficiencies, incomplete).
755.28...................  Longitudinal deficiency, carpals or
                            metacarpals, complete or partial (with or
                            without incomplete phalangeal deficiency).
755.30...................  Unspecified reduction deformity of lower
                            limb.
755.4....................  Reduction deformities, unspecified limb.
755.51...................  Congenital deformity of clavicle.
755.53...................  Radioulnar synostosis.
755.61...................  Coxa valga, congenital.
755.62...................  Coxa vara, congenital.
755.63...................  Other congenital deformity of hip (joint).
756.50...................  Congenital osteodystrophy, unspecified.
800.00...................  Closed fracture of vault of skull without
                            mention of intracranial injury, unspecified
                            state of consciousness.
800.09...................  Closed fracture of vault of skull without
                            mention of intracranial injury, with
                            concussion, unspecified.
800.10...................  Closed fracture of vault of skull with
                            cerebral laceration and contusion,
                            unspecified state of consciousness.
800.19...................  Closed fracture of vault of skull with
                            cerebral laceration and contusion, with
                            concussion, unspecified.
800.20...................  Closed fracture of vault of skull with
                            subarachnoid, subdural, and extradural
                            hemorrhage, unspecified state of
                            consciousness.
800.29...................  Closed fracture of vault of skull with
                            subarachnoid, subdural, and extradural
                            hemorrhage, with concussion, unspecified.
800.30...................  Closed fracture of vault of skull with other
                            and unspecified intracranial hemorrhage,
                            unspecified state of consciousness.
800.39...................  Closed fracture of vault of skull with other
                            and unspecified intracranial hemorrhage,
                            with concussion, unspecified.
800.40...................  Closed fracture of vault of skull with
                            intracranial injury of other and unspecified
                            nature, unspecified state of consciousness.
800.49...................  Closed fracture of vault of skull with
                            intracranial injury of other and unspecified
                            nature, with concussion, unspecified.
800.50...................  Open fracture of vault of skull without
                            mention of intracranial injury, unspecified
                            state of consciousness.
800.59...................  Open fracture of vault of skull without
                            mention of intracranial injury, with
                            concussion, unspecified.
800.60...................  Open fracture of vault of skull with cerebral
                            laceration and contusion, unspecified state
                            of consciousness.
800.69...................  Open fracture of vault of skull with cerebral
                            laceration and contusion, with concussion,
                            unspecified.
800.70...................  Open fracture of vault of skull with
                            subarachnoid, subdural, and extradural
                            hemorrhage, unspecified state of
                            consciousness.
800.79...................  Open fracture of vault of skull with
                            subarachnoid, subdural, and extradural
                            hemorrhage, with concussion, unspecified.
800.80...................  Open fracture of vault of skull with other
                            and unspecified intracranial hemorrhage,
                            unspecified state of consciousness.
800.89...................  Open fracture of vault of skull with other
                            and unspecified intracranial hemorrhage,
                            with concussion, unspecified.
800.90...................  Open fracture of vault of skull with
                            intracranial injury of other and unspecified
                            nature, unspecified state of consciousness.
800.99...................  Open fracture of vault of skull with
                            intracranial injury of other and unspecified
                            nature, with concussion, unspecified.
801.00...................  Closed fracture of base of skull without
                            mention of intracranial injury, unspecified
                            state of consciousness.
801.09...................  Closed fracture of base of skull without
                            mention of intracranial injury, with
                            concussion, unspecified.
801.10...................  Closed fracture of base of skull with
                            cerebral laceration and contusion,
                            unspecified state of consciousness.
801.19...................  Closed fracture of base of skull with
                            cerebral laceration and contusion, with
                            concussion, unspecified.
801.20...................  Closed fracture of base of skull with
                            subarachnoid, subdural, and extradural
                            hemorrhage, unspecified state of
                            consciousness.
801.29...................  Closed fracture of base of skull with
                            subarachnoid, subdural, and extradural
                            hemorrhage, with concussion, unspecified.
801.30...................  Closed fracture of base of skull with other
                            and unspecified intracranial hemorrhage,
                            unspecified state of consciousness.
801.39...................  Closed fracture of base of skull with other
                            and unspecified intracranial hemorrhage,
                            with concussion, unspecified.
801.40...................  Closed fracture of base of skull with
                            intracranial injury of other and unspecified
                            nature, unspecified state of consciousness.
801.49...................  Closed fracture of base of skull with
                            intracranial injury of other and unspecified
                            nature, with concussion, unspecified.
801.50...................  Open fracture of base of skull without
                            mention of intracranial injury, unspecified
                            state of consciousness.
801.59...................  Open fracture of base of skull without
                            mention of intracranial injury, with
                            concussion, unspecified.
801.60...................  Open fracture of base of skull with cerebral
                            laceration and contusion, unspecified state
                            of consciousness.
801.69...................  Open fracture of base of skull with cerebral
                            laceration and contusion, with concussion,
                            unspecified.
801.70...................  Open fracture of base of skull with
                            subarachnoid, subdural, and extradural
                            hemorrhage, unspecified state of
                            consciousness.
801.79...................  Open fracture of base of skull with
                            subarachnoid, subdural, and extradural
                            hemorrhage, with concussion, unspecified.
801.80...................  Open fracture of base of skull with other and
                            unspecified intracranial hemorrhage,
                            unspecified state of consciousness.
801.89...................  Open fracture of base of skull with other and
                            unspecified intracranial hemorrhage, with
                            concussion, unspecified.
801.90...................  Open fracture of base of skull with
                            intracranial injury of other and unspecified
                            nature, unspecified state of consciousness.
801.99...................  Open fracture of base of skull with
                            intracranial injury of other and unspecified
                            nature, with concussion, unspecified.
803.00...................  Other closed skull fracture without mention
                            of intracranial injury, unspecified state of
                            consciousness.
803.09...................  Other closed skull fracture without mention
                            of intracranial injury, with concussion,
                            unspecified.
803.10...................  Other closed skull fracture with cerebral
                            laceration and contusion, unspecified state
                            of consciousness.
803.19...................  Other closed skull fracture with cerebral
                            laceration and contusion, with concussion,
                            unspecified.
803.20...................  Other closed skull fracture with
                            subarachnoid, subdural, and extradural
                            hemorrhage, unspecified state of
                            consciousness.
803.29...................  Other closed skull fracture with
                            subarachnoid, subdural, and extradural
                            hemorrhage, with concussion, unspecified.
803.30...................  Other closed skull fracture with other and
                            unspecified intracranial hemorrhage,
                            unspecified state of unconsciousness.
803.39...................  Other closed skull fracture with other and
                            unspecified intracranial hemorrhage, with
                            concussion, unspecified.
803.40...................  Other closed skull fracture with intracranial
                            injury of other and unspecified nature,
                            unspecified state of consciousness.
803.49...................  Other closed skull fracture with intracranial
                            injury of other and unspecified nature, with
                            concussion, unspecified.
803.50...................  Other open skull fracture without mention of
                            injury, unspecified state of consciousness.
803.59...................  Other open skull fracture without mention of
                            intracranial injury, with concussion,
                            unspecified.
803.60...................  Other open skull fracture with cerebral
                            laceration and contusion, unspecified state
                            of consciousness.
803.69...................  Other open skull fracture with cerebral
                            laceration and contusion, with concussion,
                            unspecified.

[[Page 26904]]

 
803.70...................  Other open skull fracture with subarachnoid,
                            subdural, and extradural hemorrhage,
                            unspecified state of consciousness.
803.79...................  Other open skull fracture with subarachnoid,
                            subdural, and extradural hemorrhage, with
                            concussion, unspecified.
803.80...................  Other open skull fracture with other and
                            unspecified intracranial hemorrhage,
                            unspecified state of consciousness.
803.89...................  Other open skull fracture with other and
                            unspecified intracranial hemorrhage, with
                            concussion, unspecified.
803.90...................  Other open skull fracture with intracranial
                            injury of other and unspecified nature,
                            unspecified state of consciousness.
803.99...................  Other open skull fracture with intracranial
                            injury of other and unspecified nature, with
                            concussion, unspecified.
804.00...................  Closed fractures involving skull or face with
                            other bones, without mention of intracranial
                            injury, unspecified state of consciousness.
804.09...................  Closed fractures involving skull of face with
                            other bones, without mention of intracranial
                            injury, with concussion, unspecified.
804.10...................  Closed fractures involving skull or face with
                            other bones, with cerebral laceration and
                            contusion, unspecified state of
                            consciousness.
804.19...................  Closed fractures involving skull or face with
                            other bones, with cerebral laceration and
                            contusion, with concussion, unspecified.
804.20...................  Closed fractures involving skull or face with
                            other bones with subarachnoid, subdural, and
                            extradural hemorrhage, unspecified state of
                            consciousness.
804.29...................  Closed fractures involving skull or face with
                            other bones with subarachnoid, subdural, and
                            extradural hemorrhage, with concussion,
                            unspecified.
804.30...................  Closed fractures involving skull or face with
                            other bones, with other and unspecified
                            intracranial hemorrhage, unspecified state
                            of consciousness.
804.39...................  Closed fractures involving skull or face with
                            other bones, with other and unspecified
                            intracranial hemorrhage, with concussion,
                            unspecified.
804.40...................  Closed fractures involving skull or face with
                            other bones, with intracranial injury of
                            other and unspecified nature, unspecified
                            state of consciousness.
804.49...................  Closed fractures involving skull or face with
                            other bones, with intracranial injury of
                            other and unspecified nature, with
                            concussion, unspecified.
804.60...................  Open fractures involving skull or face with
                            other bones, with cerebral laceration and
                            contusion, unspecified state of
                            consciousness.
804.69...................  Open fractures involving skull or face with
                            other bones, with cerebral laceration and
                            contusion, with concussion, unspecified.
804.70...................  Open fractures involving skull or face with
                            other bones with subarachnoid, subdural, and
                            extradural hemorrhage, unspecified state of
                            consciousness.
804.79...................  Open fractures involving skull or face with
                            other bones with subarachnoid, subdural, and
                            extradural hemorrhage, with concussion,
                            unspecified.
804.80...................  Open fractures involving skull or face with
                            other bones, with other and unspecified
                            intracranial hemorrhage, unspecified state
                            of consciousness.
804.89...................  Open fractures involving skull or face with
                            other bones, with other and unspecified
                            intracranial hemorrhage, with concussion,
                            unspecified.
804.90...................  Open fractures involving skull or face with
                            other bones, with intracranial injury of
                            other and unspecified nature, unspecified
                            state of consciousness.
804.99...................  Open fractures involving skull or face with
                            other bones, with intracranial injury of
                            other and unspecified nature, with
                            concussion, unspecified.
806.00...................  Closed fracture of C1-C4 level with
                            unspecified spinal cord injury.
806.05...................  Closed fracture of C5-C7 level with
                            unspecified spinal cord injury.
806.10...................  Open fracture of C1-C4 level with unspecified
                            spinal cord injury.
806.15...................  Open fracture of C5-C7 level with unspecified
                            spinal cord injury.
806.20...................  Closed fracture of T1-T6 level with
                            unspecified spinal cord injury.
806.25...................  Closed fracture of T7-T12 level with
                            unspecified spinal cord injury.
806.30...................  Open fracture of T1-T6 level with unspecified
                            spinal cord injury.
806.35...................  Open fracture of T7-T12 level with
                            unspecified spinal cord injury.
806.60...................  Closed fracture of sacrum and coccyx with
                            unspecified spinal cord injury.
806.70...................  Open fracture of sacrum and coccyx with
                            unspecified spinal cord injury.
820.00...................  Closed fracture of intracapsular section of
                            neck of femur, unspecified.
820.10...................  Open fracture of intracapsular section of
                            neck of femur, unspecified.
820.30...................  Open fracture of trochanteric section of neck
                            of femur, unspecified.
820.8....................  Closed fracture of unspecified part of neck
                            of femur.
820.9....................  Open fracture of unspecified part of neck of
                            femur.
839.10...................  Open dislocation, cervical vertebra,
                            unspecified.
850.5....................  Concussion with loss of consciousness of
                            unspecified duration.
851.00...................  Cortex (cerebral) contusion without mention
                            of open intracranial wound, unspecified
                            state of consciousness.
851.09...................  Cortex (cerebral) contusion without mention
                            of open intracranial wound, with concussion,
                            unspecified.
851.10...................  Cortex (cerebral) contusion with open
                            intracranial wound, unspecified state of
                            consciousness.
851.19...................  Cortex (cerebral) contusion with open
                            intracranial wound, with concussion,
                            unspecified.
851.20...................  Cortex (cerebral) laceration without mention
                            of open intracranial wound, unspecified
                            state of consciousness.
851.29...................  Cortex (cerebral) laceration without mention
                            of open intracranial wound, with concussion,
                            unspecified.
851.30...................  Cortex (cerebral) laceration with open
                            intracranial wound, unspecified state of
                            consciousness.
851.39...................  Cortex (cerebral) laceration with open
                            intracranial wound, with concussion,
                            unspecified.
851.40...................  Cerebellar or brain stem contusion without
                            mention of open intracranial wound,
                            unspecified state of consciousness.
851.49...................  Cerebellar or brain stem contusion without
                            mention of open intracranial wound, with
                            concussion, unspecified.
851.50...................  Cerebellar or brain stem contusion with open
                            intracranial wound, unspecified state of
                            consciousness.
851.59...................  Cerebellar or brain stem contusion with open
                            intracranial wound, with concussion,
                            unspecified.
851.60...................  Cerebellar or brain stem laceration without
                            mention of open intracranial wound,
                            unspecified state of consciousness.
851.69...................  Cerebellar or brain stem laceration without
                            mention of open intracranial wound, with
                            concussion, unspecified.

[[Page 26905]]

 
851.70...................  Cerebellar or brain stem laceration with open
                            intracranial wound, unspecified state of
                            consciousness.
851.79...................  Cerebellar or brain stem laceration with open
                            intracranial wound, with concussion,
                            unspecified.
851.80...................  Other and unspecified cerebral laceration and
                            contusion, without mention of open
                            intracranial wound, unspecified state of
                            consciousness.
851.89...................  Other and unspecified cerebral laceration and
                            contusion, without mention of open
                            intracranial wound, with concussion,
                            unspecified.
851.90...................  Other and unspecified cerebral laceration and
                            contusion, with open intracranial wound,
                            unspecified state of consciousness.
851.99...................  Other and unspecified cerebral laceration and
                            contusion, with open intracranial wound,
                            with concussion, unspecified.
852.00...................  Subarachnoid hemorrhage following injury
                            without mention of open intracranial wound,
                            unspecified state of consciousness.
852.09...................  Subarachnoid hemorrhage following injury
                            without mention of open intracranial wound,
                            with concussion, unspecified.
852.10...................  Subarachnoid hemorrhage following injury with
                            open intracranial wound, unspecified state
                            of consciousness.
852.19...................  Subarachnoid hemorrhage following injury with
                            open intracranial wound, with concussion,
                            unspecified.
852.20...................  Subdural hemorrhage following injury without
                            mention of open intracranial wound,
                            unspecified state of consciousness.
852.29...................  Subdural hemorrhage following injury without
                            mention of open intracranial wound, with
                            concussion, unspecified.
852.30...................  Subdural hemorrhage following injury with
                            open intracranial wound, unspecified state
                            of consciousness.
852.39...................  Subdural hemorrhage following injury with
                            open intracranial wound, with concussion,
                            unspecified.
852.40...................  Extradural hemorrhage following injury
                            without mention of open intracranial wound,
                            unspecified state of consciousness.
852.49...................  Extradural hemorrhage following injury
                            without mention of open intracranial wound,
                            with concussion, unspecified.
852.50...................  Extradural hemorrhage following injury with
                            open intracranial wound, unspecified state
                            of consciousness.
852.59...................  Extradural hemorrhage following injury with
                            open intracranial wound, with concussion,
                            unspecified.
853.00...................  Other and unspecified intracranial hemorrhage
                            following injury without mention of open
                            intracranial wound, unspecified state of
                            consciousness.
853.09...................  Other and unspecified intracranial hemorrhage
                            following injury without mention of open
                            intracranial wound, with concussion,
                            unspecified.
853.10...................  Other and unspecified intracranial hemorrhage
                            following injury with open intracranial
                            wound, unspecified state of consciousness.
853.19...................  Other and unspecified intracranial hemorrhage
                            following injury with open intracranial
                            wound, with concussion, unspecified.
854.00...................  Intracranial injury of other and unspecified
                            nature without mention of open intracranial
                            wound, unspecified state of consciousness.
854.09...................  Intracranial injury of other and unspecified
                            nature without mention of open intracranial
                            wound, with concussion, unspecified.
854.10...................  Intracranial injury of other and unspecified
                            nature with open intracranial wound,
                            unspecified state of consciousness.
854.19...................  Intracranial injury of other and unspecified
                            nature with open intracranial wound, with
                            concussion, unspecified.
887.0....................  Traumatic amputation of arm and hand
                            (complete) (partial), unilateral, below
                            elbow, without mention of complication.
887.1....................  Traumatic amputation of arm and hand
                            (complete) (partial), unilateral, below
                            elbow, complicated.
887.2....................  Traumatic amputation of arm and hand
                            (complete) (partial), unilateral, at or
                            above elbow, without mention of
                            complication.
887.3....................  Traumatic amputation of arm and hand
                            (complete) (partial), unilateral, at or
                            above elbow, complicated.
887.4....................  Traumatic amputation of arm and hand
                            (complete) (partial), unilateral, level not
                            specified, without mention of complication.
887.5....................  Traumatic amputation of arm and hand
                            (complete) (partial), unilateral, level not
                            specified, complicated.
941.00...................  Burn of unspecified degree of face and head,
                            unspecified site.
941.02...................  Burn of unspecified degree of eye (with other
                            parts of face, head, and neck).
941.09...................  Burn of unspecified degree of multiple sites
                            [except with eye] of face, head, and neck.
942.00...................  Burn of unspecified degree of trunk,
                            unspecified site.
942.01...................  Burn of unspecified degree of breast.
942.02...................  Burn of unspecified degree of chest wall,
                            excluding breast and nipple.
942.03...................  Burn of unspecified degree of abdominal wall.
942.04...................  Burn of unspecified degree of back [any
                            part].
942.05...................  Burn of unspecified degree of genitalia.
942.09...................  Burn of unspecified degree of other and
                            multiple sites of trunk.
943.00...................  Burn of unspecified degree of upper limb,
                            except wrist and hand, unspecified site.
943.01...................  Burn of unspecified degree of forearm.
943.02...................  Burn of unspecified degree of elbow.
943.03...................  Burn of unspecified degree of upper arm.
943.04...................  Burn of unspecified degree of axilla.
943.05...................  Burn of unspecified degree of shoulder.
943.06...................  Burn of unspecified degree of scapular
                            region.
943.09...................  Burn of unspecified degree of multiple sites
                            of upper limb, except wrist and hand.
943.30...................  Full-thickness skin [third degree, not
                            otherwise specified] of upper limb,
                            unspecified site.
943.40...................  Deep necrosis of underlying tissues [deep
                            third degree] without mention of loss of a
                            body part, of upper limb, unspecified site.
943.50...................  Deep necrosis of underlying tissues [deep
                            third degree] with loss of a body part, of
                            upper limb, unspecified site.
944.30...................  Full-thickness skin loss [third degree, not
                            otherwise specified] of hand, unspecified
                            site.
944.40...................  Deep necrosis of underlying tissues [deep
                            third degree] without mention of loss of a
                            body part, hand, unspecified site.
944.50...................  Deep necrosis of underlying tissues [deep
                            third degree] with loss of a body part, of
                            hand, unspecified site.
945.00...................  Burn of unspecified degree of lower limb
                            [leg], unspecified site.
945.01...................  Burn of unspecified degree of toe(s) (nail).
945.02...................  Burn of unspecified degree of foot.
945.03...................  Burn of unspecified degree of ankle.
945.04...................  Burn of unspecified degree of lower leg.
945.05...................  Burn of unspecified degree of knee.
945.06...................  Burn of unspecified degree of thigh [any
                            part].
945.09...................  Burn of unspecified degree of multiple sites
                            of lower limb(s).

[[Page 26906]]

 
945.20...................  Blisters, epidermal loss [second degree] of
                            lower limb [leg], unspecified site.
945.40...................  Deep necrosis of underlying tissues [deep
                            third degree] without mention of loss of a
                            body part, lower limb [leg], unspecified
                            site.
945.50...................  Deep necrosis of underlying tissues [deep
                            third degree] with loss of a body part, of
                            lower limb [leg], unspecified site.
949.4....................  Deep necrosis of underlying tissue [deep
                            third degree] without mention of loss of a
                            body part, unspecified.
949.5....................  Deep necrosis of underlying tissues [deep
                            third degree] with loss of a body part,
                            unspecified.
997.60...................  Unspecified complication of amputation stump.
------------------------------------------------------------------------

VIII. Proposed Non-Quality Related Revisions to IRF-PAI Sections

    Under section 1886(j)(2)(D) of the Act, the Secretary is authorized 
to require rehabilitation facilities that provide inpatient hospital 
services to submit such data as the Secretary deems necessary to 
establish and administer the prospective payment system under 
subsection P. The collection of patient data is indispensable for the 
successful development and implementation of the IRF payment system. In 
the August 7, 2001 final rule, the inpatient rehabilitation facility 
patient assessment instrument (IRF-PAI) was adopted as the standardized 
patient assessment instrument under the IRF prospective payment system 
(PPS). The IRF-PAI was established for, and is still used to gather 
data to classify patients for payment under the IRF PPS. As discussed 
in section XII. of this proposed rule, it is also now used to collect 
certain data for the IRF Quality Reporting Program. IRFs are currently 
required to complete an IRF-PAI for every Medicare Part A, B or C 
patient who is admitted to, or discharged from an IRF.
    Although there have been significant advancements in the industry, 
no IRF PPS payment-related changes have been made to the IRF-PAI form 
since its implementation--in FY 2002. We are proposing to amend certain 
response options, add additional data points, remove certain outdated 
items and change certain references to ensure that our policies reflect 
the current data needs of the IRF PPS program.

A. Proposed Updates

    We propose to amend the response codes on the following items in 
the IRF-PAI:
     Item 15A: Admit From (Formerly item 15)
     Item 16A: Pre-Hospital Living Situation (Formerly item 16)
     Item 44D: Patient's Discharge Destination/Living Setting 
(Formerly item 44A)
    To minimize possible confusion due to the use of different sets of 
status codes on the IRF-PAI and the CMS-1450 (also referred to as the 
UB-04) claim form, we believe that the IRF-PAI status codes should be 
changed to mirror those used on the CMS-1450 claim form. We believe 
this proposed update would help decrease the rate of coding errors on 
CMS-1450 claim forms. We believe this proposal would provide response 
options that mirror another commonly used instrument in the Medicare 
context allowing providers to use only one common set of response 
codes. We propose to amend the response options for the three items 
listed above to:
     01--Home (private home/apt., board/care, assisted living, 
group home)
     02--Short-term General Hospital
     03--Skilled Nursing Facility (SNF)
     50--Hospice
     62--Another Inpatient Rehabilitation Facility
     63--Long-Term Care Hospital (LTCH)
     64--Medicaid Nursing Facility
     65--Inpatient Psychiatric Facility
     66--Critical Access Hospital
     99--Not Listed
    We also propose to update the options for responding to item 20B: 
Secondary Source. We find that the current response options for this 
data element exceed what we need to operate IRF PPS. Therefore, to 
decrease burden on IRFs through the implementation of simplified 
response options, we propose to limit secondary source response options 
to the following:
     02--Medicare--Fee for Service
     51--Medicare--Medicare Advantage
     99--Not Listed

B. Proposed Additions

    Further, we propose to add (or expand) the following items to the 
IRF-PAI:
     Item 25A: Height
     Item 26A: Weight
     Item 24: Comorbid Conditions (15 additional spaces)
     Item 44C: Was the patient discharged alive?
     Signature of Persons Completing the IRF-PAI
    Items ``25A: Height'' and ``26A: Weight,'' are important items to 
collect for use in the classification of facilities for payment under 
the IRF-PPS as well as for the risk adjustment of quality measures (as 
described in section XII. of this proposed rule). In the regulations at 
Sec.  412.29(b)(2), we specify a list of comorbid conditions that, if 
certain conditions are met, may qualify a patient for inclusion in an 
IRF's 60 percent rule compliance percentage. For example, a patient 
with a lower-extremity joint replacement comorbidity would qualify if 
the patient had a bilateral joint replacement, is over the age of 85, 
and/or has a BMI greater than 50. BMI is calculated using height and 
weight. As such, by adding a patients' height and weight information to 
the IRF-PAI we expect that the FI/MAC will be able, upon medical 
review, to include these patients in a facilities' 60 percent rule 
compliance percentage in accordance with chapter 3, Sec.  140.14 of the 
Medicare Claims Processing Manual (Pub. 100.4), after it has confirmed 
any other severity and prior treatment requirements that may apply.
    We also propose adding 15 additional spaces for providers to 
document patients' comorbid medical conditions at item 24: Comorbid 
Conditions (located in the medical information section of the IRF-PAI). 
The IRF-PAI currently has ten spaces available for providers to enter 
ICD codes for comorbid conditions. If finalized, the IRF-PAI would have 
a total of 25 spaces. Such expansion would support IRFs as they seek to 
code with greater specificity to support presumptive compliance 
percentage findings, and would be in keeping with recent industry-
driven changes.
    In response to the industry's request to update the claim form to 
allow for better accounting for patients comorbidities, added 15 
additional spaces were added to the claim form for

[[Page 26907]]

providers to document ICD codes. We believe that the number of data 
elements allowed on the IRF-PAI should mirror the number allowed on the 
claim. Additionally, the ICD-10 coding scheme, which will be used 
beginning on October 1, 2014 is much more specific than the current 
ICD-9 coding. Therefore, when the agency moves from ICD-9 to ICD-10 
coding, providers may need the additional spaces to code because of the 
greater specificity under ICD-10.
    Furthermore, we propose to add a new item 44C: ``Was the patient 
discharged alive?'' to the discharge information section on the IRF-
PAI. Adding this item as a standalone item would allow facilities that 
reply ``no'' to 44C to skip items 44D, 44E, and 45, which describe a 
living patient's discharge destination. This will reduce the burden on 
the time it takes to complete the IRF-PAI. Facilities that respond 
``yes'' to item 44C will complete items 44D, 44E and 45 as they apply 
to the patient. We believe that adding this question as a standalone 
item would provide greater clarity for providers when documenting 
patient information on the IRF-PAI.
    We propose adding a page to the IRF-PAI dedicated as the signature 
page for persons completing the IRF-PAI. As of the effective date of 
the IRF Coverage Requirements, see the August 7, 2009 FY 2010 IRF PPS 
final rule (74 FR 39762), the IRF-PAI forms must be maintained in the 
patient's medical record at the IRF (either in electronic or paper 
format), and information in the IRF-PAI must correspond with all of the 
information provided in the patient's IRF medical record. We received 
multiple public comments on the FY 2010 IRF PPS proposed rule regarding 
the requirement to include that IRF-PAI in the medical record 
questioning whether IRFs would need to adhere to the conditions of 
participation in Sec.  482.24(c)(1) that require all patient medical 
record entries must be legible, complete, dated, timed, and 
authenticated in written or electronic form by the person responsible 
for providing or evaluating the service provided, consistent with 
hospital policies and procedures. When CMS responded (at https://cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Downloads/IRF-Training-call_version_1.pdf) that IRFs would need to 
adhere to Sec.  482.24(c)(1), providers responded by asking for a place 
on the IRF-PAI where they would be able to document the required 
authentication. The proposed addition of a page for signatures of 
persons completing the IRF-PAI would fulfill providers' request to have 
an organized way to document who in the IRF has completed the 
assessment of the patient and when that assessment took place. We also 
believe that having a signature page for those completing the IRF-PAI 
will ensure that providers are satisfying both the IRF coverage 
requirements and the conditions of participation requirements.

C. Proposed Deletions

    We propose to delete the following items from the IRF-PAI:
     Item 18: Pre-Hospital Vocational Category
     Item 19: Pre-Hospital Vocational Effort
     Item 25: Is patient comatose at admission?
     Item 26: Is patient delirious at admission?
     Item 28: Clinical signs of dehydration
    We no longer believe that these items are necessary and in the 
interest of reducing burden on providers we would like to delete them.
    Items 18: Pre-Hospital Vocational Category and 19: Pre-Hospital 
Vocational Effort (which are currently located in the admission 
identification section on the IRF-PAI) are not used for payment or 
quality purposes. While these items will, if finalized, be dropped from 
the IRF-PAI form, however, we would note that these data elements could 
be significant in a treatment context, in which case we would expect 
them to appear in the patient's medical record. For example, we believe 
that these data elements could be relevant during the care planning/
discharge process as well as during interdisciplinary team meetings.
    We also note, that items 25: Is patient comatose at admission, 26: 
Is patient delirious at admission, and 28: Clinical signs of 
dehydration (which are currently located in the medical information 
section on the IRF-PAI) are voluntary items that are not used for our 
payment or quality program purposes. Therefore, we do not believe it is 
necessary to collect this information on the IRF-PAI. Furthermore, to 
the extent such information would be relevant to the provision of 
patient care; this information should be captured in either the 
transfer documentation from the referring physician, or the patients' 
initial assessment documentation. As such, continuing to require this 
information on the IRF-PAI would be duplicative since the items should 
be well documented in the patients' medical record from their stay at 
the facility.

D. Proposed Changes

    We are proposing to replace all references to the ICD-9-CM code(s) 
in the IRF-PAI with references to ICD code(s). This change would allow 
CMS to forgo making additional changes to the IRF-PAI when the adopted 
ICD code(s) change.
Proposed Technical Correction
    We are proposing a technical correction at items 44D, 44E and 45 to 
conform to the additions proposed above. We believe that adding 
language to these items indicating that the question can be skipped 
depending upon how item 44C is answered, will help reduce submission 
errors for providers when filling out the IRF-PAI.
    A draft of the IRF-PAI, with the proposed revisions discussed 
throughout this proposed rule is available for download on the IRF PPS 
Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/IRFPAI.html.

IX. Proposed Technical Corrections to the Regulations at Sec.  412.130

    In the FY 2012 IRF PPS final rule (76 FR 47869 through 47873), we 
revised the regulations for inpatient rehabilitation facilities at 
Sec.  412.23(b), Sec.  412.25(b), Sec.  412.29, and Sec.  412.30 to 
update and simplify the policies, to eliminate unnecessary repetition 
and confusion, and to enhance consistency with the IRF coverage 
requirements. Among other revisions, we removed the regulations that 
were formerly in Sec.  412.30, and revised and consolidated the 
requirements regarding ``new'' IRFs and ``new'' IRF beds that 
previously existed in Sec.  412.30 into the revised regulations at 
Sec.  412.29(c). However, we have recently discovered that Sec.  
412.130, which outlines the policies regarding retroactive adjustments 
for incorrectly excluded hospitals and units, was not updated to 
reflect the changes to Sec.  412.30 and Sec.  412.29. Specifically, 
Sec.  412.130 still references regulations in Sec.  412.30 that were 
revised and consolidated into Sec.  412.29(c). Further, it still 
references regulations that were formerly in Sec.  412.23(b)(2), but 
were moved into Sec.  412.29(b) in the FY 2012 IRF PPS final rule (76 
FR 47869 through 47873).
    Thus, in this proposed rule, we propose to make the following 
technical corrections to the regulations in Sec.  412.130 to conform 
with the revisions to the regulations in Sec.  412.23(b), Sec.  412.29, 
and Sec.  412.30 that were implemented in the FY 2012 IRF PPS final 
rule (76 FR 47869 through 47873):

[[Page 26908]]

     Replace the current reference to ``Sec.  412.23(b)(8)'' in 
Sec.  412.130(a)(1) with the new reference to Sec.  412.29(c),
     Replace all of the current references to ``Sec.  
412.23(b)(2)'' in Sec.  412.130(a)(1), (2), and (3) with the new 
reference to Sec.  412.29(b),
     Replace the current reference to ``Sec.  412.30(a)'' in 
Sec.  412.130(a)(2) with the new reference to Sec.  412.29(c), and
     Replace the current reference to ``Sec.  412.30(c)'' in 
Sec.  412.130(a)(3) with the new reference to Sec.  412.29(c).

X. Proposed Revisions to the Conditions of Payment for IRF Units Under 
the IRF PPS

    The regulations at Sec.  412.25 specify the requirements for an IRF 
unit to be excluded from the inpatient prospective payment system 
(IPPS) specified in Sec.  412.1(a)(1) and to instead be paid under the 
IRF PPS specified in Sec.  412.1(a)(3). The requirements at Sec.  
412.25 are unique to IRF units of hospitals, whereas the requirements 
at Sec.  412.29 apply to both freestanding IRF hospitals and IRF units 
of hospitals. Among the requirements at Sec.  412.25 is the requirement 
(at Sec.  412.25(a)(1)(iii)) that the institution of which the IRF unit 
is a part must have ``enough beds that are not excluded from the 
prospective payment systems to permit the provision of adequate cost 
information, as required by Sec.  413.24(c) of this chapter.'' We have 
not previously specified how many such beds the hospital, of which the 
IRF unit is a part, must have to meet this requirement. However, we 
have recently received questions from providers about whether one or 
two hospital beds that are certified for payment under the IPPS, in 
some cases beds that are rarely used for patient care, would meet the 
requirement at Sec.  412.25(a)(1)(iii). We believe this does not meet 
the requirement at Sec.  412.25(a)(1)(iii), which provides for the 
hospital of which the IRF unit is a part to be an IPPS hospital, which 
we believe is not demonstrated by the presence of just one or two 
hospital beds.
    Further, we are unclear how the IRF unit that is part of a hospital 
with only one or two beds would be able to meet another requirement, at 
Sec.  412.25(a)(7), that specifies that an IRF unit must have beds that 
are ``physically separate from (that is, not commingled with) the 
hospital's other beds.'' The requirement at Sec.  412.25(a)(7) means 
that there is some sort of physical separation (such as a different 
floor, a different wing, and different building, etc.) that separates 
the IRF unit from the rest of the hospital beds. We believe that it is 
unlikely that this requirement would be met in the situation in which 
the hospital of which the IRF unit is a part only has one or two beds, 
in some cases beds that are rarely used for patient care.
    Thus, we propose to specify at Sec.  412.25(a)(1)(iii) a minimum 
number of hospital beds that the IPPS hospital must have to meet the 
requirements at Sec.  412.25(a)(1)(iii) for having an IRF unit. We note 
that, though Sec.  412.25(a)(1)(iii) also applies to inpatient 
psychiatric facilities (IPFs), these facilities have their own 
requirements at Sec.  412.27 for payment under the IPF PPS that we are 
not proposing to change in this proposed rule. IPFs should continue 
following the regulations at Sec.  412.27.
    We propose to specify in Sec.  412.25(a)(1)(iii) that the 
institution of which the IRF unit is a part must have at least 10 
staffed and maintained hospital beds that are not excluded from the 
IPPS, or at least 1 staffed and maintained hospital bed for every 10 
certified IRF beds, whichever number is greater. If the institution is 
not able to meet this proposed requirement, then we propose that the 
IRF unit should instead be classified as an IRF hospital. We also 
propose to exclude CAHs that have IRF units from these requirements, as 
CAHs already have very specific bed size restrictions. We welcome 
stakeholder comments on the specific minimum hospital bed requirements 
for IRFs that we are proposing in this rule.

XI. Proposed Clarification of the Regulations at Sec.  412.630

    In the original rule establishing a prospective payment system for 
Medicare payment of inpatient hospital services provided by a 
rehabilitation hospital or by a rehabilitation unit of a hospital, we 
stated that that there would be no administrative or judicial review, 
under sections 1869 and 1878 of the Act or otherwise, of the 
establishment of case-mix groups, the methodology for the 
classification of patients within these groups, the weighting factors, 
the prospective payment rates, outlier and special payments and area 
wage adjustments. See 66 FR 41316, 41319 (August 7, 2001). Our intent 
was to honor the full breadth of the preclusion of administrative or 
judicial review provided by section 1886(j)(8) of the Act. However, the 
regulatory text reflecting the preclusion of review has been at times 
improperly interpreted to allow review of adjustments authorized under 
section 1886(j)(3)(v) of the Act. Because we interpret the preclusion 
of review at section 1886(j)(8) of the Act to apply to all payments 
authorized under section 1886(j)(3) of the Act, we do not believe that 
there should be administrative or judicial review of any part of the 
prospective rate. Accordingly, we are proposing to clarify our 
regulation at Sec.  412.630 by deleting the word ``unadjusted'' so that 
the regulation would clearly preclude review of ``the Federal per 
discharge payment rates.'' This clarification will better conform the 
regulation to the statutory language.
    As such, in accordance with sections 1886(j)(7)(A), (B), and (C) of 
the Act, we are proposing to revise the regulations at Sec.  412.630 to 
clarify that administrative or judicial review under sections 1869 or 
1878 of the Act, or otherwise, is prohibited with regard to the 
establishment of the methodology to classify a patient into the case-
mix groups and the associated weighting factors, the federal per 
discharge payment rates, additional payments for outliers and special 
payments, and the area wage index.

XII. Proposed Revision to the Regulations at Sec.  412.29

    According to the regulations at Sec.  412.29(d), to be excluded 
from the inpatient prospective payment system (IPPS) and instead be 
paid under the IRF PPS, a facility must ``have in effect a preadmission 
screening procedure under which each prospective patient's condition 
and medical history are reviewed to determine whether the patient is 
likely to benefit significantly from an intensive inpatient hospital 
program. This procedure must ensure that the preadmission screening is 
reviewed and approved by a rehabilitation physician prior to the 
patient's admission to the IRF.'' The latter sentence of this 
regulation is based on the preadmission screening requirement for 
Medicare coverage of IRF services in Sec.  412.622(a)(4)(i)(D). The 
requirement was repeated in both places for consistency.
    However, in Sec.  412.622(a)(4)(i)(D), we specify that this 
requirement applies to patients ``for whom the IRF seeks payment'' from 
Medicare. We believe that the analogous requirement in Sec.  412.29(d) 
should also clearly state that it applies only to patients for whom the 
IRF is seeking payment directly from Medicare. Other payer sources, 
such as private insurance, have their own IRF admission requirements, 
and we do not believe that it would be appropriate to interfere with or 
duplicate the requirements that other payer sources may already have in 
place. Thus, we propose to amend Sec.  412.29(d) to clarify that the 
IRF's preadmission screening procedure must ensure that the 
preadmission screening for a Medicare Part A fee-for-service patient is 
reviewed and approved by a

[[Page 26909]]

rehabilitation physician prior to the patient's admission to the IRF. 
We continue to believe that the basic preadmission screening procedure 
itself is an important element of providing quality IRF care to all 
patients and, thus, we propose to require that the basic preadmission 
screening procedure requirement remain in place for all patients 
regardless.

XIII. Proposed Revisions and Updates to the Quality Reporting Program 
for IRFs

A. Background and Statutory Authority

    Section 3004(b) of the Affordable Care Act added section 1886(j)(7) 
to the Act, which requires the Secretary to implement a quality 
reporting program (QRP) for IRFs. This program applies to freestanding 
IRF hospitals, IRF units that are affiliated with an acute care 
facility, and IRF units affiliated with a critical access hospital 
(CAH).
    Beginning in FY 2014, section 1886(j)(7)(A)(i) of the Act requires 
the reduction of the applicable IRF PPS annual increase factor, as 
previously modified under section 1886(j)(3)(D) of the Act, by 2 
percentage points for any IRFs that fail to submit data to the 
Secretary in accordance with requirements established by the Secretary 
for that fiscal year. Section 1886(j)(7)(A)(ii) of the Act notes that 
this reduction may result in the increase factor being less than 0.0 
for a fiscal year, and in payment rates under this subsection for a 
fiscal year being less than the payment rates for the preceding fiscal 
year. Any reduction based on failure to comply with the reporting 
requirements is, in accordance with section 1886(j)(7)(B) of the Act, 
limited to the particular fiscal year involved. The reductions are not 
to be cumulative and will not be taken into account in computing the 
payment amount under subsection (j) for a subsequent fiscal year.
    Section 1886(j)(7)(C) of the Act requires that each IRF submit data 
to the Secretary on quality measures specified by the Secretary. The 
required quality measure data must be submitted to the Secretary in a 
form, manner and time, specified by the Secretary.
    The Secretary is generally required to specify measures that have 
been endorsed by the entity with a contract under section 1890(a) of 
the Act. This contract is currently held by the National Quality Forum 
(NQF), which is a voluntary consensus standard-setting organization. 
The NQF was established to standardize health care quality measurement 
and reporting through its consensus development process.
    We have generally adopted NQF-endorsed measures in our reporting 
programs. However, section 1886(j)(7)(D)(ii) of the Act provides that 
``in the case of a specified area or medical topic determined 
appropriate by the Secretary for which a feasible and practical measure 
has not been endorsed by the entity with a contract under section 
1890(a) of the Act, the Secretary may specify a measure that is not so 
endorsed, so long as due consideration is given to measures that have 
been endorsed or adopted by a consensus-based organization identified 
by the Secretary.'' Under section 1886(j)(7)(D)(iii) of the Act, the 
Secretary was required to publish the selected measures that will be 
applicable to the FY 2014 IRF PPS no later than October 1, 2012.
    Section 1886(j)(7)(E) of the Act requires the Secretary to 
establish procedures for making data submitted under the IRF QRP 
available to the public. The Secretary must ensure that each IRF is 
given the opportunity to review the data that is to be made public 
prior to the publication or posting of this data.
    We seek to promote higher quality and more efficient health care 
for all patients who receive care in acute and post-acute care 
settings. Our efforts are, in part, effectuated by quality reporting 
programs coupled with the public reporting of data collected under 
those programs. The initial framework of the IRF QRP was established in 
the FY 2012 IRF PPS final rule (76 FR 47873).

B. Quality Measures Previously Finalized and Currently in Use for the 
IRF Quality Reporting Program

1. Background
    In the FY 2012 IRF PPS final rule, we adopted applications of 2 
quality measures for use in the first data reporting cycle of the IRF 
QRP: (1) An application of ``Catheter-Associated Urinary Tract 
Infection [CAUTI] for Intensive Care Unit Patients'' \1\ 
(NQF0138); and (2) an application of ``Percent of Residents 
with Pressure Ulcers that Are New or Worsened (short-stay)'' (NQF 
0678). We adopted applications of these two measures because 
neither of them, at the time, was endorsed by the NQF for the IRF 
setting. We also discussed our plans to propose a 30-Day All Cause Risk 
Standardized Post IRF Discharge Hospital Readmission Measure at a later 
date (76 FR 47874 through 47878).
---------------------------------------------------------------------------

    \1\ The version of the CAUTI measure that was adopted in the FY 
2012 IRF PPS final rule (76 FR 47874 through 47876) was titled 
``Catheter-Associated Urinary Tract Infection [CAUTI] Rate Per 1,000 
Urinary Catheter Days for ICU patients. However, shortly after the 
FY 2012 IRF PPS final rule was published, this measure was submitted 
by the CDC (measure steward) to the NQF for a measure maintenance 
review, The CDC asked for changes to the measure, including 
expansion of the scope of the measure to non-ICU patient care 
locations and additional healthcare facility settings, including 
IRFs. The name of the measure was changed to reflect the character 
of the revised CAUTI measure. This measure is now titled ``National 
Health Safety Network (NHSN) Catheter Associated Urinary Tract 
Infection (CAUTI) Outcome Measure.''
---------------------------------------------------------------------------

    In the CY 2013 OPPS/ASC proposed rule (77 FR 45193 through 45196), 
we proposed: (1) To adopt updates to the CAUTI measure that had been 
adopted by NQF after we had adopted an application of the prior version 
of the measure for the IRF QRP; (2) to adopt a policy that would allow 
any measure adopted for use in the IRF QRP to remain in effect until 
the measure was actively removed, suspended, or replaced (we also 
proposed to apply this proposal to the CAUTI and pressure ulcer 
measures that had already been adopted for use in the IRF QRP); and (3) 
to utilize a subregulatory process to incorporate NQF updates to IRF 
quality measure specifications that do not substantively change the 
nature of the measure. We also informed stakeholders that CMS had 
submitted an ad hoc request for NQF review of the pressure ulcer 
measure with a request to endorse the measure's use in two additional 
care settings--Long-Term Care Hospitals (LTCHs) and IRFs. Assuming that 
the review resulted in no substantive changes to the pressure ulcer 
measure, we noted that, if adopted, we would use the proposed 
subregulatory process to incorporate any NQF updates and revisions to 
the pressure ulcer measure specifications for the IRF QRP Program (77 
FR 45196).
    In the CY 2013 OPPS/ASC final rule (77 FR 68500 through 68507), we 
adopted the policies and measures as proposed, with one exception. At 
the time of the CY 2013 OPPS/ASC final rule, the NQF had endorsed the 
pressure ulcer measure for the IRF setting, and re-titled it to cover 
both residents and patients within LTCH and IRF settings, in addition 
to the Nursing Home/Skilled Nursing Facility setting. Although the 
measure had been expanded to the IRF setting, we concluded that it was 
not possible to adopt the NQF endorsed measure ``Percent of Residents 
or Patients with Pressure Ulcers That Are New or Worsened (short-
stay)'' (NQF 0678). Public comments revealed that the 
``Quality Indicator'' section of the IRF-PAI did not contain the data 
elements that would be needed to calculate a risk-adjusted measure. As 
a result, we decided to: (1) Adopt an application of NQF 0678 
that was a

[[Page 26910]]

non-risk-adjusted pressure ulcer measure (numerator and denominator 
data only); (2) collect the data required for the numerator and the 
denominator using the current version of the IRF-PAI; (3) delay public 
reporting of pressure ulcer measure results until we could amend the 
IRF-PAI to add the data elements necessary for risk-adjusting NQF 
0678, and then (4) adopt the NQF-endorsed version of the 
measure covering the IRF setting through rulemaking (77 FR 68507).
2. Previously Finalized IRF QRP Quality Measures
i. National Healthcare Safety Network (NHSN) Catheter Associated 
Urinary Tract Infection (CAUTI) Outcome Measure (NQF 0138)
    In the FY 2013 OPPS/ASC final rule we adopted the current version 
of NQF 0138 NHSN Catheter Associated Urinary Tract Infection 
(CAUTI) Outcome Measure (replacing an application of this measure which 
we initially adopted in the FY 2012 IRF PPS (76 FR 47874 through 
47886)). The NQF endorsed measure applies to the FY 2015 IRF PPS annual 
increase factor and all subsequent payment determinations (77 FR 68504 
through 68505).
    Since the publication of the FY 2013 OPPS/ASC final rule, the NHSN 
CAUTI measure has not changed. Furthermore, we have not removed, 
suspended, or replaced this measure and it remains an active part of 
the IRF QRP. Additional information about this measure can be found at 
https://www.qualityforum.org/QPS/0138. Our procedures for data 
submission for this measure have also remained the same. IRFs should 
continue to submit their CAUTI measure data to the Centers for Disease 
Control and Prevention (CDC) NHSN. Details regarding submission of IRF 
CAUTI data to NHSN can be found at the NHSN Web site at https://www.cdc.gov/nhsn/inpatient-rehab/.
ii. Application of Percent of Residents or Patients With Pressure 
Ulcers That Are New or Worsened (short-stay) (NQF 0678)
    In the CY 2103 OPPS/ASC final rule (77 FR 68500 through 68507) we 
finalized adoption of a non-risk-adjusted application of this measure 
using the current version of the IRF-PAI. We also stated that we would 
not begin public reporting of this measure until we had adopted the 
NQF-endorsed version of this measure. To adopt the NQF-endorsed version 
of this measure, we had to update the existing IRF-PAI to include the 
additional data elements necessary to risk adjust this measure. We also 
delayed public reporting of pressure ulcer measure results until we 
could use notice and comment rulemaking to amend the IRF-PAI to add the 
data elements necessary for risk adjusting NQF 0678 (77 FR 
68507). We are not proposing any changes to the application of measure 
0678 finalized in the FY 2013 OPPS/ASC final rule for the FY 
2015 and FY 2016 IRF PPS annual increase factor. Furthermore, we have 
not removed, suspended, or replaced this measure and it remains an 
active part of the IRF QRP. Additional information about this measure 
can be found at https://www.qualityforum.org/QPS/0678. Our procedures 
for data submission for this measure also have remained the same. IRFs 
should continue to collect and submit pressure ulcer measure data 
during CY 2013 using the IRF-PAI released on October 1, 2012 for the FY 
2015 IRF PPS annual increase factor. Further, IRFs should continue to 
collect and submit pressure ulcer measure data during the first three 
quarters of CY 2014 using the IRF-PAI released on October 1, 2012 for 
the FY 2016 IRF PPS annual increase factor.
    However, we propose to adopt a revised version of the IRF-PAI 
starting October 1, 2014. This revised version of the IRF-PAI would 
allow collection of data elements necessary for risk adjustment of NQF 
0678; therefore, we are proposing to adopt the NQF 
0678 as specified (for example, including risk-adjustment) for 
the FY 2017 payment determination and subsequent fiscal year payment 
determinations.

 Table 8--Quality Measures Finalized in the CY 2013 OPPS/ASC Final Rule
  Affecting the FY 2015 IRF Annual Increase Factor and Subsequent Year
                            Increase Factors
------------------------------------------------------------------------
             NQF Measure ID                       Measure title
------------------------------------------------------------------------
NQF 0138......................  National Health Safety Network
                                          (NHSN) Catheter-associated
                                          Urinary Tract Infection
                                          (CAUTI) Outcome Measure +
Application of NQF 0678.......  Percent of Residents or
                                          Patients with Pressure Ulcers
                                          That are New or Worsened
                                          (Short-Stay) *
------------------------------------------------------------------------
+ Using CDC/NHSN.
* Using October 1, 2012 release of IRF-PAI.

C. Proposed New IRF QRP Quality Measures Affecting the FY 2016 and FY 
2017 IRF PPS Annual Increase Factor, and Subsequent Year Increase 
Factors

1. General Considerations Used For Selection of Quality Measures for 
the IRF QRP
    The successful development of an IRF quality reporting program that 
promotes the delivery of high quality healthcare services in IRFs is 
our paramount concern. We seek to adopt measures for the IRF QRP that 
promote better, safer, and more efficient care. Our measure selection 
activities for the IRF QRP must take into consideration input we 
receive from a multi-stakeholder group, the Measure Applications 
Partnership (MAP), which is convened by the NQF as part of a pre-
rulemaking process that we have established and are required to follow 
under section 1890A of the Act. The MAP is a public-private partnership 
comprised of multi-stakeholder groups convened by the NQF for the 
primary purpose of providing input to CMS on the selection of certain 
categories of quality and efficiency measures, as required by section 
1890A(a)(3) of the Act. By February 1st of each year, the NQF must 
provide MAP input to CMS. We have taken the MAP's input into 
consideration in selecting measures for this proposed rule. Input from 
the MAP is located at https://www.qualityforum.org/Setting_Priorities/Partnership/Measure_Applications_Partnership.aspx. For more details 
about the pre-rulemaking process, see the FY 2013 IPPS/LTCH PPS final 
rule (77 FR 53376).
    We also take into account national priorities, such as those 
established by the National Priorities Partnership (NPP) at https://www.qualityforum.org/npp/, the HHS Strategic Plan https://www.hhs.gov/secretary/about/priorities/priorities.html and the National Strategy 
for Quality Improvement in Healthcare located at (https://www.healthcare.gov/news/reports/nationalqualitystrategy032011.pdf).

[[Page 26911]]

    To the extent practicable, we have sought to adopt measures that 
have been endorsed by a national consensus organization, recommended by 
multi-stakeholder organizations, and developed with the input of 
providers, purchasers/payers, and other stakeholders.
    For the FY 2016 IRF PPS annual increase factor, in addition to 
retaining the previously discussed CAUTI and Pressure Ulcer measures, 
we are proposing to adopt one new measure: Influenza Vaccination 
Coverage among Healthcare Personnel Measure (NQF 0431). For 
the FY 2017 IRF PPS annual increase factor we are proposing to adopt 
three quality measures: (1) All-Cause Unplanned Readmission Measure for 
30 Days Post Discharge from Inpatient Rehabilitation Facilities, (2) 
Percent of Residents or Patients Who Were Assessed and Appropriately 
Given the Seasonal Influenza Vaccine (Short-Stay) (NQF 0680), 
and (3) the NQF endorsed version of Percent of Residents or Patients 
with Pressure Ulcers that are New or Worsened (Short-Stay) (NQF 
0678). We discuss each in turn below.
2. New Quality Measures Proposed for Quality Data Reporting Affecting 
the FY 2016 IRF PPS Annual Increase Factor
    i. Proposed IRF QRP Measure 1: Influenza Vaccination 
Coverage Among Healthcare Personnel (NQF 0431)
    We propose to adopt the CDC developed Influenza Vaccination 
Coverage among Healthcare Personnel (NQF 0431) measure that is 
currently collected by the CDC via the NHSN. This measure reports on 
the percentage of health care personnel who receive the influenza 
vaccination. This measure was included on the CMS' List of Measures 
under Consideration for December 1, 2012 that CMS made publicly 
available. The measure was reviewed by the MAP and was included in the 
MAP input that was transmitted to CMS on February 1, 2013, as required 
by section 1890A(a)(3) of the Act. The MAP fully supported the use of 
this measure in the IRF setting, indicating it promotes alignment 
across quality reporting programs (for example, with Long-Term Care 
Hospital Quality Reporting Program (LTCHQR Program) and Hospital 
Inpatient Quality Reporting Program (Hospital IQR)) and addresses a 
core measure concept.
    Health care personnel are at risk for both acquiring influenza from 
patients and transmitting it to patients, and health care personnel 
often come to work when ill.\2\ One early report of health care 
personnel influenza infections during the 2009 H1N1 influenza pandemic 
estimated 50 percent of infected health care personnel had contracted 
the influenza virus from patients or coworkers in the healthcare 
setting.\3\
---------------------------------------------------------------------------

    \2\ Wilde JA, McMillan JA, Serwint J, et al. Effectiveness of 
influenza vaccine in healthcare professionals: A randomized trial. 
JAMA. 1999; 281:
    908-913.
    \3\ Harriman K, Rosenberg J, Robinson S, et al. Novel influenza 
A (H1N1) virus infections among health-care personnel--United 
States, April-May 2009. MMWR Morb Mortal Wkly Rep. 2009; 58(23): 
641-645.
---------------------------------------------------------------------------

    The CDC Advisory Committee on Immunization Practices (ACIP) 
guidelines recommend that all health care personnel get an influenza 
vaccine every year to protect themselves and patients.\4\ Even though 
levels of influenza vaccination among health care personnel have slowly 
increased over the past 10 years, less than 50 percent of health care 
personnel each year received the influenza vaccination until the 2009 
and 2010 seasons, when an estimated 62 percent of health care personnel 
got a seasonal influenza vaccination. In the 2010 and 2011 season, 63.5 
percent of health care personnel reported influenza vaccination. 
Increased influenza vaccination coverage among health care personnel is 
expected to result in reduced morbidity and mortality related to 
influenza virus infection among patients, aligning with the NQS's aims 
of better care and healthy people/communities. This measure has been 
finalized for reporting in the Hospital IQR Program, LTCHQR Program, 
and the Ambulatory Surgical Center Quality Reporting Program (ASCQR 
Program).
---------------------------------------------------------------------------

    \4\ Fiore AE, Uyeki TM, Broder K, et al. Prevention and control 
of influenza with vaccines: Recommendations of the Advisory 
Committee on Immunization Practices (ACIP), 2010. MMWR Recomm Rep. 
2010. 59(08): 1-62.
---------------------------------------------------------------------------

    We refer readers to the NHSN Manual, Healthcare Personnel Safety 
Component Protocol Module, Influenza Vaccination and Exposure 
Management Modules, which is available at the CDC Web site at https://www.cdc.gov/nhsn/inpatient-rehab/hcp-vacc/ for measure 
specifications and additional details.
    We propose that, for the IRF QRP, the Influenza Vaccination 
Coverage Among Healthcare Personnel measure (NQF 0431) have 
its own reporting period to align with the influenza vaccination 
season, which is defined by the CDC as October 1st (or when the vaccine 
becomes available) through March 31st. IRFs will submit their data for 
this measure to the NHSN (https://www.cdc.gov/nhsn/). It is a secure 
Internet based surveillance system maintained by the CDC, and can be 
utilized by all types of health care facilities in the United States, 
including IRFs. NHSN collects data via a web based tool hosted by the 
CDC. Information on the NHSN system, including protocols, report forms, 
and guidance documents can be found at the provided web link: https://www.cdc.gov/nhsn/. NHSN will submit data to CMS on behalf of the 
facility.
    For the FY 2016 IRF PPS annual increase factor, we propose that the 
data collection will cover the period from October 1, 2014 (or when the 
vaccine becomes available) through March 31, 2015. Details related to 
the use of NHSN for data submission and information on definitions, 
numerator data, denominator data, data analyses, and measure 
specifications for the Influenza Vaccination Coverage among Healthcare 
Personnel (NQF 0431) measure can be found at https://www.cdc.gov/nhsn/inpatient-rehab/hcp-vacc/. Because IRFs are 
already using the NHSN for the submission of CAUTI data, the 
administrative burden related to data collection and submission for 
this measure under the IRF QRP should be minimal.
    While IRFs can enter information in NHSN at any point during the 
influenza season for NQF 0431, data submission is only 
required once per influenza season, unlike the other measure finalized 
for the IRF QRP that utilizes NHSN (CAUTI measure NQF 0138). 
For example, IRFs can choose to submit influenza vaccination data on a 
monthly basis. However, each time an IRF submits these data, it will be 
asked to provide a cumulative total of vaccinations for the ``current'' 
influenza season. Thus, entering this information at the end of the 
influenza season would yield the same total number of vaccinations. The 
NHSN system will not track the individual number of vaccinations on a 
monthly basis, but, rather, will track the cumulative total of 
vaccinations for the ``current'' influenza season. We propose that the 
final deadline associated with this measure align with another CMS 
deadline for IRF HAI reporting into NHSN, which is May 15th. IRF QRP 
data collection timelines and submission deadlines are discussed below.
    Also, we note that data collection for this measure is not 12 
months, as with other measures, but is approximately 6 months (October 
1 (or when the vaccine becomes available) through March 31 of the 
following year). We note that this data collection period is applicable 
only to NQF 0431 Influenza Vaccination Coverage Among 
Healthcare Personnel, and not applicable to any other IRF QRP

[[Page 26912]]

measures, proposed or adopted, unless explicitly stated. The measure 
specifications for this measure can be found at https://www.cdc.gov/nhsn/inpatient-rehab/hcp-vacc/ and at https://www.qualityforum.org/QPS/0431.
    We are seeking comments on the proposed use of the Influenza 
Vaccination Coverage among Healthcare Personnel (NQF 0431) 
measure for the FY 2016 IRF PPS annual increase factor and subsequent 
years.

       Table 9--Summary of FY 2016 IRF PPS Annual Increase Factor
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Continued Data Collection:
     NQF 0138: National Health Safety Network (NHSN)
     Catheter-associated Urinary Tract Infection (CAUTI) Outcome Measure
     +
     Application of NQF 0678: Percent of Residents with
     Pressure Ulcers That are New or Worsened (Short-Stay) *
Proposed New IRF QRP Measures Affecting the FY 2016 IRF PPS Annual
 Increase Factor and Subsequent Year Increase Factors:
     NQF 0431: Influenza Vaccination Coverage among
     Healthcare Personnel +
------------------------------------------------------------------------
+ Using CDC NHSN.
* Using October 1, 2012 release of IRF-PAI.

3. Quality Measures Proposed for Quality Data Reporting Affecting the 
FY 2017 IRF PPS Annual Increase Factor and Subsequent Years
    We are proposing to adopt two additional quality measures, and 
replace an existing quality measure for the IRF QRP for the FY 2017 
payment determination and subsequent payment determinations. The new 
measures being proposed are (1) All-Cause Unplanned Readmission Measure 
for 30 Days Post Discharge from Inpatient Rehabilitation Facilities, 
and (2) Percent of Residents or Patients Who Were Assessed and 
Appropriately Given the Seasonal Influenza Vaccine (Short-Stay) (NQF 
0680). In addition, we propose to replace the application of 
Percent of Residents or Patients with Pressure Ulcers That Are New or 
Worsened (short-stay) (NQF 0678), with adoption of the NQF 
endorsed version of this measure. We discuss each in turn below.
i. Proposed IRF QRP Measure 1: All-Cause Unplanned Readmission 
Measure for 30 Days Post Discharge From Inpatient Rehabilitation 
Facilities
    We propose to adopt the All-Cause Unplanned Readmission Measure for 
30 Days Post Discharge from Inpatient Rehabilitation Facilities. This 
measure estimates the risk-standardized rate of unplanned, all-cause 
hospital readmissions for cases discharged from an IRF who were 
readmitted to a short-stay acute care hospital or LTCH, within 30 days 
of an IRF discharge. This is a claims-based measure not requiring 
reporting of new data by IRFs, and hence, will not be used to determine 
IRF reporting compliance for the IRF QRP.
    Addressing unplanned hospital readmissions is a high priority for 
HHS and CMS as our focus continues on promoting patient safety, 
eliminating healthcare associated infections, improving care 
transitions, and reducing the cost of healthcare. Readmissions are 
costly to the Medicare program and have been cited as sensitive to 
improvements in coordination of care and discharge planning for 
patients.\5\ Although the literature on readmissions is mainly 
concerned with discharges from short-term acute hospitals, the same 
issues of discharge planning, communications and coordination arise at 
discharge from other inpatient facilities.
---------------------------------------------------------------------------

    \5\ Federal Register/Vol. 76, No. 160/Thursday, August 18, 2011/
Rules and Regulations, C1a.
---------------------------------------------------------------------------

    IRFs provide intensive rehabilitation services to patients after an 
injury, illness, or surgery. According to MedPAC, the average length of 
stay for most patients in an IRF is 13.1 days.\6\ In 2010, almost 
360,000 Medicare fee-for-service (FFS) beneficiaries received care in 
IRFs and cost the Medicare FFS program over $6 billion dollars. The 
unadjusted readmission rate to an IPPS hospital in the 30 days 
following an IRF discharge was about 15 percent.\7\ With such a large 
proportion of patients being readmitted to a hospital level of care, we 
are proposing a risk-adjusted measure of readmission rate, the All-
Cause Unplanned Readmission Measure for 30 Days Post Discharge from 
Inpatient Rehabilitation Facilities. An IRF's readmission rate is 
affected by complex and critical aspects of care such as communication 
between providers or between providers and patients; prevention of, and 
response to, complications; patient safety; and coordinated transitions 
to the community or a less intense level of care. While disease-
specific measures of readmission are useful in identifying deficiencies 
in care for specific groups of patients, they account for only a small 
minority of total readmissions. By contrast, a facility-wide, all-cause 
readmission reflects a broader assessment of the quality of care in 
IRFs, and may consequently better promote quality improvement and 
inform consumers about quality.
---------------------------------------------------------------------------

    \6\ MedPAC, Report to Congress, Medicare Payment Policy, March, 
2012. https://www.medpac.gov/chapters/Mar12_Ch09.pdf.
    \7\ Bernard SL, Dalton K, Lenfestey NF, Jarrett NM, Nguyen KH, 
Sorensen AV, Thaker S, West ND. Study to support a CMS Report to 
Congress: Assess feasibility of extending the hospital-acquired 
conditions--present on admission IPPS payment policy to non-IPPS 
payment environments. Prepared for the Centers for Medicare & 
Medicaid Services (CMS Contract No. HHSM-500-T00007). 2011.
---------------------------------------------------------------------------

    While some readmissions are unavoidable, such as those resulting 
from the inevitable progression of disease or worsening of chronic 
conditions, readmissions may also result from poor quality of care or 
inadequate transitions between care settings. Randomized controlled 
trials in short-stay acute care hospitals have shown that improvement 
in the following areas can directly reduce hospital readmission rates: 
quality of care during the initial admission; improvement in 
communication with patients, their caregivers and their clinicians; 
patient education; pre-discharge assessment; and coordination of care 
after discharge. Successful randomized trials have reduced 30-day 
readmission rates by 20-40 percent.\8\ \9\ \10\ \11\ \12\ \13\ \14\ and 
a 2011 meta-analysis of randomized clinical trials found evidence that 
interventions associated with discharge planning helped to reduce 
readmission rates,\15\

[[Page 26913]]

illustrating how hospitals may influence readmission rates through best 
practices.
---------------------------------------------------------------------------

    \8\ Jack BW, Chetty VK, Anthony D, Greenwald JL, Sanchez GM, 
Johnson AE, et al. A reengineered hospital discharge program to 
decrease rehospitalization: a randomized trial. Ann Intern Med 
2009;150(3):178-87.
    \9\ Coleman EA, Smith JD, Frank JC, Min SJ, Parry C, Kramer AM. 
Preparing patients and caregivers to participate in care delivered 
across settings: the Care Transitions Intervention. J Am Geriatr Soc 
2004;52(11):1817-25.
    \10\ Courtney M, Edwards H, Chang A, Parker A, Finlayson K, 
Hamilton K. Fewer emergency readmissions and better quality of life 
for older adults at risk of hospital readmission: a randomized 
controlled trial to determine the effectiveness of a 24-week 
exercise and telephone follow-up program. J Am Geriatr Soc 
2009;57(3):395-402.
    \11\ Garasen H, Windspoll R, Johnsen R. Intermediate care at a 
community hospital as an alternative to prolonged general hospital 
care for elderly patients: a randomized controlled trial. BMC Public 
Health 2007;7:68.
    \12\ Koehler BE, Richter KM, Youngblood L, Cohen BA, Prengler 
ID, Cheng D, et al. Reduction of 30-day post discharge hospital 
readmission or emergency department (ED) visit rates in high-risk 
elderly medical patients through delivery of a targeted care bundle. 
J Hosp Med 2009;4(4):211- 218.
    \13\ Naylor M, Brooten D, Jones R, Lavizzo-Mourey R, Mezey M, 
Pauly M. Comprehensive discharge planning for the hospitalized 
elderly. A randomized clinical trial. Ann Intern Med 
1994;120(12):999- 1006.
    \14\ Naylor MD, Brooten D, Campbell R, Jacobsen BS, Mezey MD, 
Pauly MV, et al. Comprehensive discharge planning and home follow-up 
of hospitalized elders: a randomized clinical trial. Jama 
1999;281(7):613-20.
    \15\ Naylor MD, Aiken LH, Kurtzman ET, Olds DM, Hirschman KB.The 
Importance of Transitional Care in Achieving Health Reform. Health 
Affairs 2011; 30(4):746-754.
---------------------------------------------------------------------------

    Because many studies have shown readmissions to be related to 
quality of care, and that interventions have been able to reduce 30-day 
readmission rates, we believe it is appropriate to include an all-
condition readmission rate as a quality measure in the IRF QRP. 
Promoting quality improvements leading to successful transitions of 
care for patients moving from the IRF setting to the community or 
another post-acute care setting, and reducing preventable facility-wide 
readmission rates, is consistent with the National Quality Strategy 
priorities of safer, better coordinated care and lower costs.
    CMS's approach to developing this measure is consistent with NQF-
endorsed Hospital-Wide (HWR) Risk-Adjusted All-Cause Unplanned 
Readmission Measure (NQF 1789) (https://www.qualityforum.org/Publications/2012/07/Patient_Outcomes_All-Cause_Readmissions_Expedited_Review_2011.aspx) finalized for the Hospital IQR Program in 
the FY 2013 IPPS/LTCH PPS Final Rule (FR 77 53521 through 53528). To 
the extent appropriate, the proposed IRF measure is being harmonized 
with the HWR measure and other measures of readmission rates developed 
for post-acute care (PAC) settings, including LTCHs.
    The All-Cause Unplanned Readmission Measure for 30 Days Post 
Discharge from Inpatient Rehabilitation Facilities measure assesses 
returns to short-stay acute care hospitals or LTCHs within 30 days of 
discharge from an IRF to the community or another care setting of 
lesser intensity. Patient readmissions are tracked using Medicare 
claims data for 30 days after discharge, to the date of patient death, 
if the patient dies within 30 days of discharge. Because patients 
differ in complexity and morbidity, the measure is risk-adjusted for 
patient case-mix. The measure also excludes planned readmissions, 
because these are not considered to be indicative of poor quality of 
care on the part of the IRF.
    A model developed by a CMS measure development contractor predicts 
admission rates while accounting for patient demographics, primary 
condition in the prior short stay, comorbidities, and a few other 
patient factors. While estimating the predictive power of the patient 
characteristics, the model also estimates a facility specific effect 
common to patients treated at that facility. Similar to the Hospital 
IQR Program hospital-wide readmission measure, the proposed IRF QRP 
measure is the ratio of the number of risk-adjusted predicted unplanned 
readmissions for each individual IRF, including the estimated facility 
effect, to the average number of risk-adjusted predicted unplanned 
readmissions for the same patients treated across IRFs. A ratio above 
one indicates a higher than expected readmission rate, or lower level 
of quality, while a ratio below one indicates a lower than expected 
readmission rate, or higher level of quality (The methodology report 
detailing the development of the IPPS hospital-wide measure and the NQF 
report may be downloaded from: https://www.qualityforum.org/Publications/2012/07/Patient_Outcomes_All-Cause_Readmissions_Expedited_Review_2011.aspx.)
    The patient population includes IRF patients who:
     Were discharged alive from the IRF
     Had 12 months of Medicare Part A, fee-for-service coverage 
prior to the IRF stay
     Had 30 days of Medicare Part A, fee-for-service coverage 
post discharge.
     Had an IPPS hospital stay within the 30 days prior to the 
IRF stay.
     Were aged 18 years or above when admitted to the IRF.
    As with the Hospital IQR Program hospital-wide readmission measure, 
patients whose principal diagnosis was cancer and whose treatment was 
non-surgical are excluded. Studies of this population that were 
reviewed for the Hospital IQR Program readmission measure showed them 
to have a different trajectory of illness and mortality than other 
patient populations.\16\ The measure also excludes patients who died 
during the IRF stay, IRF patients under the age of 18, or IRF patients 
discharged against medical advice (AMA).
---------------------------------------------------------------------------

    \16\ National Quality Forum. ``Patient Outcomes: All-Cause 
Readmissions Expedited Review 2011''. July 2012. pp12
---------------------------------------------------------------------------

    Readmissions that are not included in the measure are:
     Transfers from an IRF to another IRF or IPPS hospital
     Readmissions within the 30 day window that are usually 
considered planned due to the nature of the procedures and principal 
diagnoses of the readmission.
     IRF stays that are problematic (e.g., with stays that 
overlap wholly or in part)
    The planned readmission list includes the planned procedures 
specified in the Hospital-Wide All-Cause Unplanned Readmission Measure 
(HWR) (NQF 1789) used in the Hospital IQR Program, plus other 
procedures that were determined in consultation with technical expert 
panels. In addition to the list of planned procedures is a list of 
diagnoses which, if found as the principal diagnosis on the readmission 
claim, would indicate that the procedure occurred during an unplanned 
readmission.
    A discharged patient is tracked until one of the following occurs: 
(1) The 30-day period ends; (2) the patient dies; or (3) the patient is 
readmitted to an acute level of care (short or long term). If multiple 
readmissions occur, only the first is considered for this measure. If 
the readmission is unplanned, it is counted as a readmission in the 
measure rate. If the readmission is planned, the readmission is not 
counted in the measure rate. The occurrence of a planned readmission 
ends the 30-day window of the index discharge from the IRF.
    Readmission rates are risk-adjusted for patient case-mix 
characteristics, independent of quality. The risk-adjustment model 
accounts for demographic characteristics, principal diagnosis, co-
morbidities, length of stay in the prior IPPS hospital, critical care 
days in the prior IPPS hospital, number of IPPS hospital stays in the 
prior year, and the occurrence of various surgery types in the prior 
IPPS hospital stay. In modeling IRF readmissions, all patients are 
included in a single model modeling separate patient types separately 
as was done in the IPPS measure, an approach different from the five-
cohort approach of the HWR measure, adapted to account for a 
substantially smaller patient population.
    While the HWR measure used one year of data, the smaller IRF 
patient population leads us to propose merging two years of data for 
the IRF QRP. This approach is similar to that used by the Hospital IQR 
Program condition-specific readmission measures, which use three years 
of claims data. Merging multiple years produces more precise estimates 
of the effects of all the risk adjusters, and increases the sample size 
associated with each facility. Larger patient samples are better to be 
able to meaningfully to distinguish facility performance. Under the 
exception authority in section 1886(m)(5)(D)(ii) of the Act, we are 
proposing to use this measure in the IRF QRP. This section provides 
that in the case of a specified area or medical topic determined 
appropriate by the Secretary for which a feasible and practical measure 
has not been endorsed by the entity with a

[[Page 26914]]

contract under section 1890(a), the Secretary may specify a measure 
that is not so endorsed as long as due consideration is given to 
measures that have been endorsed or adopted by a consensus organization 
identified by the Secretary.
    We were not able to identify an appropriate readmission measure for 
IRFs. In 2012, NQF endorsed two hospital-wide readmission measures, the 
National Committee for Quality Assurance (NCQA) measure intended for 
health plans, Plan All-Cause Readmissions (NQF 1768), and CMS' 
Hospital-Wide All-Cause Unplanned Readmission Measure (HWR) (NQF 
1789), of which the latter is the basis of the All-Cause 
Unplanned Readmission Measure for 30 Days Post Discharge from Inpatient 
Rehabilitation Facilities measure being proposed here. This measure was 
present on CMS's List of Measures Under Consideration, and the most 
recent MAP Pre-Rulemaking Report noted that ``readmission measures are 
also examples of measures that MAP recommends be standardized across 
settings, yet customized to address the unique needs of the 
heterogeneous Post-Acute Care/Long-Term Care (PAC/LTC) population. 
(https://www.qualityforum.org/Publications/2013/02/MAP_Pre-Rulemaking_Report_-February_2013.aspx pp. 177-180). Although supported the 
direction of this measure, they cautioned that required further 
development. MAP has also continually noted the need for care 
transition measures in PAC/LTC performance measurement programs. 
Setting-specific admission and readmission measures under consideration 
would address this need''.\17\
---------------------------------------------------------------------------

    \17\ National Quality Forum. Measure Applications Partnership 
Pre-Rulemaking Report: 2013 Recommendations of Measures Under 
Consideration by HHS: February 2013. Available at https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=72738.
---------------------------------------------------------------------------

    We intend to seek NQF endorsement of the All-Cause Unplanned 
Readmission Measure for 30 Days Post Discharge from Inpatient 
Rehabilitation Facilities measure. As this is a claims-based measure 
not requiring reporting of new data by IRFs, this measure will not be 
used to determine IRF reporting compliance for the IRF QRP. We are 
proposing to begin reporting feedback to IRFs on performance of this 
measure in CY 2016. The initial provider feedback will be based on CY 
2013 and CY 2014 Medicare FFS claims data related to IRF readmissions. 
The readmission measure will be part of the IRF public reporting 
program once public reporting is instated. Additional Details 
pertaining to this measure can be found on the IRF Quality Reporting 
Program Web site at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/. We 
intend to provide details pertaining to the public reporting, such as 
provider preview of performance results, of this measure in our 
upcoming rules.
    We seek public comment on our proposal to adopt the All-Cause 
Unplanned Readmission Measure for 30 Days Post Discharge from Inpatient 
Rehabilitation Facilities.
ii. Proposed IRF QRP Quality Measure 2: Percent of Residents 
or Patients Who Were Assessed and Appropriately Given the Seasonal 
Influenza Vaccine (Short-Stay) (NQF 0680)
    We are proposing to add the NQF 0680 Percent of Residents 
or Patients who were assessed and Appropriately Given the Seasonal 
Influenza Vaccination (Short-Stay) measure to the IRF QRP, and we 
propose to collect the data for this measure through the addition of 
data items to the Quality Indicator section of the IRF-PAI. This 
measure was on CMS's list of measures under consideration that were 
reviewed by the MAP and was included in the MAP input that was 
transmitted to CMS, as required by the pre-rulemaking process in 
section 1890A(a)(3) of the Act. The MAP panel supported the use of this 
measure in the IRF setting, noting that it promotes alignment across 
settings and addresses a core measure concept. A MAP finding of 
``supported'' indicates the measure is appropriate for immediate 
inclusion in the program measure set. (MAP Pre-Rulemaking Report: 2013 
Recommendations on Measures Under Consideration by HHS, Pages 20 and 
178, February 2013).
    Although influenza is prevalent among all population groups, the 
rates of death and serious complications related to influenza are 
highest among those ages 65 and older and those with medical 
complications that put them at higher risk. The CDC reports that an 
average of 36,000 Americans die annually from influenza and its 
complications, and most of these deaths are among people 65 years of 
age and over.\18\ In 2004, approximately 70,000 deaths were caused by 
influenza and pneumonia, and more than 85 percent of these deaths were 
among the elderly.\19\ Given that many individuals receiving health 
care services in IRFs are elderly and/or have several medical 
conditions, many IRF patients are within the target population for the 
influenza immunization.20 21
---------------------------------------------------------------------------

    \18\ Centers for Medicare & Medicaid Services (2011, May). Adult 
Immunization: Overview. Retrieved from https://www.cms.gov/Immunizations/.
    \19\ Gorina Y, Kelly T, Lubitz J, et al. (2008, February). 
Trends in influenza and pneumonia among older persons in the United 
States. Aging Trends no. 8. Retrieved from https://www.cdc.gov/nchs/data/ahcd/agingtrends/08influenza.pdf.
    \20\ Centers for Disease Control and Prevention. (2008, 
September). Influenza e-brief: 2008-2009 flu facts for policymakers. 
Retrieved from https://www.cdc.gov/washington/pdf/flu_newsletter.pdf.
    \21\ Zorowitz, RD. Stroke Rehabilitation Quality Indicators: 
Raising the Bar in the Inpatient Rehabilitation Facility. Topics in 
Stroke Rehabilitation 2010; 17 (4):294-304.
---------------------------------------------------------------------------

    We propose to add the data elements needed for this measure, as an 
influenza data item set, to the Quality Indicator section of the IRF-
PAI. This item set is described below entitled, ``Proposed Changes to 
the IRF-PAI That Are Related to the IRF Quality Reporting Program.'' We 
are proposing that data for this measure will be collected using a 
revised version of the IRF-PAI that includes a new data item set 
designed to assess patients' influenza vaccination status. The revised 
IRF-PAI would be effective on October 1, 2014. These proposed data set 
items are harmonized with data elements (O0250: Influenza Vaccination 
Status) from the Minimum Data Set (MDS) 3.0 and LTCH CARE Data Set item 
sets.22 23 The specifications and data elements for this 
proposed measure are available in the MDS 3.0 QM User's Manual 
available on our Web site at https://www.cms.gov/NursingHomeQualityInits/Downloads/MDS30QM-Manual.pdf.
---------------------------------------------------------------------------

    \22\ Centers for Medicare & Medicaid Services. MDS 3.0 Item 
Subsets VI.10.4 for the April 1, 2012 Release. Retrieved from 
https://www.cms.gov/NursingHomeQualityInits/30_NHOIMDS30TechnicalInformation.asp.
    \23\ The LTCH CARE Data Set Version 2.00, the data collection 
instrument for the submission of the Percent of Residents or 
Patients with Pressure Ulcers That are New or Worsened (Short-Stay) 
measure and the Percent of Residents or Patients Who Were Assessed 
and Appropriately Given the Seasonal Influenza Vaccine (Short-Stay) 
measure, is currently under review by the Office of Management and 
Budget (OMB) in accordance with the Paperwork Reduction Act (PRA) 
https://www.gpo.gov/fdsys/pkg/FR-2013-02-01/pdf/2013-02155.pdf. The 
LTCH CARE Data Set Version 1.01 was approved on April 24, 2012 by 
OMB in accordance with the PRA. The OMB Control Number is 0938-1163. 
Expiration Date April 30, 2013.
---------------------------------------------------------------------------

    For purposes of this measure, the influenza vaccination season 
consists of October 1st (or when the vaccine becomes available) through 
March 31st each year. We are proposing that while an IRF's compliance 
with reporting quality data for this measure will be based on the 
calendar year, the measure calculation and public reporting of this

[[Page 26915]]

measure (once public reporting is instated) will be based on the 
influenza vaccination season starting on October 1 (or when vaccine 
becomes available) and ending on March 31 of the subsequent year.
    The IRF-PAI Training Manual will indicate how providers should 
complete these items during the time period outside of the vaccination 
season (October 1 (or when vaccine becomes available) through March 
31). The measure specifications for this measure, Percent of Residents 
or Patients Who Were Assessed and Appropriately Given the Seasonal 
Influenza Vaccine (Short-Stay) (NQF 0680), can be found on the 
CMS Web site: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/NHQIQualityMeasures.html. Measure specifications are located in the 
download titled: MDS 3.0 QM User's Manual V6.0. Additional information 
on this measure can also be found at https://www.qualityforum.org/QPS/0680. Additional discussion related to the timing and submission of 
this measure is provided in this proposed rule.
    We invite public comment on our proposal to use the Percent of 
Residents or Patients Who Were Assessed and Appropriately Given the 
Seasonal Influenza Vaccine (Short-Stay) (NQF 0680) measure for 
the FY 2017 IRF PPS annual increase factor and subsequent years.
iii. Proposed IRF QRP Quality Measure 3: Percent of Residents 
or Patients With Pressure Ulcers That Are New or Worsened (Short-Stay) 
(NQF 0678)--Proposal To Adopt the NQF Endorsed Version of This 
Measure
    In the CY 2013 OPPS/ASC final rule (77 FR 68507) we finalized 
adoption of a non-risk-adjusted application of this measure, using the 
IRF-PAI released on October 1, 2012 for data collection. Although the 
measure was expanded to the IRF setting in 2012, the existing IRF-PAI 
needed to be updated to include the additional data elements required 
to risk adjust the measure prior to adopting the NQF measure. We also 
stated that we would not begin public reporting of this measure until 
we had adopted the NQF-endorsed version of this measure, and we would 
use the rulemaking process to solicit public comments on changes made 
to the IRF-PAI to collect elements necessary for risk adjustment of NQF 
0678 (77 FR 68507).
    If these proposed data elements related to risk adjustment data 
element are finalized, we also propose to remove the use of the 
currently adopted non-risk adjusted application of the measure and 
adopt the NQF-endorsed version of NQF 0678 for the FY 2017 IRF 
PPS increase factor. NQF 0678 underwent review for expansion 
to the IRF setting by the NQF Consensus Standards Approval Committee 
(CSAC) on July 11, 2012 and was subsequently ratified by the NQF Board 
of Directors for expansion to IRF settings on August 1, 2012.\24\ \25\ 
The title of the measure was changed to Percent of Residents or 
Patients with Pressure Ulcers that are New or Worsened (short-stay) to 
reflect this expansion. Updated specifications, reflecting the 
expansion, are available on the NQF Web site at https://www.qualityforum.org/QPS/0678. We further propose to collect data for 
this measure using a revised version of the IRF-PAI beginning on 
October 1, 2014 for the FY 2017 IRF PPS annual increase factor. Our 
proposals related to a revised IRF-PAI are discussed in this proposed 
rule. The measure specifications for this NQF endorsed measure, Percent 
of Residents or Patients with Pressure Ulcers That Are New or Worsened 
(short-stay) (NQF 0678) can be found on the CMS Web site: 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/NHQIQualityMeasures.html. Measure 
specifications are located in the download titled: MDS 3.0 QM User 
Manual V6.0. Additional information about the measure can also be found 
at https://www.qualityforum.org/QPS/0678.
---------------------------------------------------------------------------

    \24\ National Quality Forum, Consensus Standards Approval 
Committee Wednesday, July 11, 2012. Transcript. Available: https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=71612.
    \25\ Press Release: NQF Removes Time-Limited Endorsement Status 
for 13 Measures, Measures Now Have Endorsed Status. August 1, 2012. 
Available: https://www.qualityforum.org/News_And_Resources/Press_Releases/2012/NQF_Removes_Time-Limited_Endorsement_for_13_Measures;--Measures--Now--Have--Endorsed--Status.aspx.
---------------------------------------------------------------------------

    In summary, we propose to adopt the NQF-endorsed version of NQF 
0678, with data collection beginning October 1, 2014 using the 
revised version of IRF-PAI, for quality reporting affecting the FY 2017 
IRF PPS annual increase factor. Further, we propose to remove the 
current non-risk adjusted application of this measure when the revised 
IRF-PAI is implemented on October 1, 2014. Note that until September 
30, 2014, IRFs should continue to submit pressure ulcer data using the 
IRF-PAI released on October 1, 2012 for the purposes of data submission 
requirements for the FY 2015 and FY 2016 IRF PPS increase factor. 
Changes to the IRF-PAI and additional information regarding data 
submission are discussed in this proposed rule.
    We invite public comment regarding our proposed removal of the 
currently adopted non-risk adjusted application of the Percent of 
Residents or Patients with Pressure Ulcers That Are New or Worsened 
(short-stay) (NQF 0678) and the adoption of the NQF endorsed 
version of the Percent of Residents or Patients with Pressure Ulcers 
That Are New or Worsened (NQF 0678).

       Table 10--Summary of FY 2017 IRF PPS Annual Increase Factor
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Continued Data Collection:
     NQF 0138: National Health Safety Network (NHSN)
     Catheter-associated Urinary Tract Infection (CAUTI) Outcome Measure
     \+\
Continued Data Collection of Proposed New IRF QRP Measures Affecting the
 FY 2016 IRF PPS Annual Increase Factor:
     NQF 0431: Influenza Vaccination Coverage among
     Healthcare Personnel \+\
Proposed New IRF QRP Measures Affecting the FY 2017 IRF PPS Annual
 Increase Factor:
     All-Cause Unplanned Readmission Measure for 30 Days Post
     Discharge from Inpatient Rehabilitation Facilities [supcaret]
     NQF 0680: Percent of Residents or Patients Who
     Were Assessed and Appropriately Given the Seasonal Influenza
     Vaccine (Short-Stay) *
     NQF 0678: Percent of Residents or Patients with
     Pressure Ulcers That are New or Worsened (Short-Stay) *
------------------------------------------------------------------------
\+\ Using CDC/NHSN.
* Using the IRF-PAI released October 1, 2014.
\[caret]\ Medicare Fee-For-Service claims data.


[[Page 26916]]

D. Proposed Changes to the IRF-PAI That Are Related to the IRF Quality 
Reporting Program

1. General Background
    A version of the IRF-PAI has been in use in the IRF setting since 
January 1, 2002, when IRFs first began receiving payment under the IRF 
PPS. IRFs must submit a completed IRF-PAI for each Medicare Part A, B, 
and C patient that is admitted and discharged from the IRF.
    The IRF PPS utilizes information from the IRF-PAI to classify 
patients into distinct groups based on clinical characteristics and 
expected resource needs. Separate payments are calculated for each 
group, including the application of case and facility level adjustments 
available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/.
    We are proposing to release an updated version of the IRF-PAI on 
October 1, 2014. Proposed revisions include data elements that will (1) 
Allow for risk adjustment of the NQF 0678 Percent of Residents 
or Patients with Pressure Ulcers That Are New or Worsened (Short-Stay), 
(2) allow for more detailed data collection related to NQF 
0678 Percent of Residents or Patients with Pressure Ulcers 
That Are New or Worsened (Short-Stay), and (3) allow for data 
collection for NQF 0680 Percent of Residents or Patients Who 
Were Assessed and Appropriately Given the Seasonal Influenza Vaccine 
(Short-Stay). We also propose to adopt a new numbering schema for the 
IRF-PAI.
    Note that we are proposing both mandatory and voluntary additions 
to the IRF-PAI. Collection of voluntary data elements by IRFs will have 
no impact on measure calculations or on our determination of whether 
the IRF has met the reporting requirements under the IRF QRP. In 
contrast, failure to complete any adopted mandatory data elements may 
result in non-compliance with the IRF QRP requirements and subject the 
facility to a 2 percentage point reduction in its annual increase 
factor. In addition to clearly indicating which items are mandatory and 
which are voluntary in this proposal, we will post on our Web site at 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/ a detailed matrix that 
identifies which data elements will be required, and which will be 
voluntary.
    The October 1, 2012 release of the IRF-PAI, the proposed October 1, 
2014 release of the IRF-PAI, inclusive of all the changes proposed 
here, and information about the IRF-PAI submission process can be found 
at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/IRFPAI.html. A PRA package for the revised IRF-PAI 
discussed here has been submitted for the Office of Management and 
Budget's (OMB) review and approval.
2. Background Related To Collection of Pressure Ulcer Data Elements 
Using the IRF-PAI
    In the FY 2012 IRF PPS final rule, we finalized a proposal to adopt 
an application of the NQF 0678 ``Percent of Residents with 
Pressure Ulcers That Are New or Worsened (Short-Stay)'' measure for use 
in the IRF QRP, beginning with the IRF PPS annual increase factor for 
FY 2014. We also finalized our proposal to collect the data for this 
pressure ulcer measure using the IRF-PAI. To do this, we deleted the 
set of voluntary quality questions that had been located in the 
``Quality Indicator'' section of the IRF-PAI and replaced them with a 
new required set of pressure ulcer quality measure data items, numbered 
48A to 50D. These revisions to the IRF-PAI went into effect on October 
1, 2012.
    Since the publication of the FY 2012 IRF PPS final rule we have 
received numerous comments about the current version of the IRF-PAI 
from IRF providers, provider organizations, and advocacy groups. In the 
CY 2013 OPPS/ASC final rule, we discussed a number of specific public 
comments related to pressure ulcer data that we received in response to 
the CY 2013 OPPS/ASC IRF proposed rule (77 FR 68506). Commenters 
expressed specific concerns regarding the ability of the data elements 
in the IRF-PAI to sufficiently risk-adjust the measure. We agreed that 
there were limitations related to the risk adjustment data items that 
are on the IRF-PAI that went into effect on October 1, 2012, impacting 
the ability to calculate the measure using all of the risk adjustment 
related covariates. As a result, the CY 2013 OPPS/ASC final rule 
adopted an application of 0680 without risk-adjustment for FY 
2015 and subsequent years (77 FR 68507).
    In response to the comments and feedback received in previous rules 
discussed above, we propose modifications to the data items in both the 
admission and discharge IRF-PAI assessments.
3. Proposed Revisions to the IRF-PAI To Add Mandatory Risk Adjustment 
Data Items for NQF 0678 Percent of Residents or Patients With 
Pressure Ulcers That Are New or Worsened (Short-Stay)
    We are proposing to update the current IRF-PAI to include data 
elements that are necessary to risk adjust the Percent of Residents or 
Patients with Pressure Ulcers That Are New or Worsened (Short-Stay) 
(NQF 0678). These include the addition of the following 
indicator boxes to the IRF-PAI admission assessment: (1) Peripheral 
Vascular Disease, (2) Peripheral Arterial Disease, and (3) Diabetes. 
The additions would be placed in the Quality Indicators section of the 
revised IRF-PAI.
    We further determined that risk adjustment factors related to 
height and weight had inadvertently been left off of the revised 
version of the IRF-PAI that became effective on October 1, 2012. We are 
now proposing to add height and weight to the IRF-PAI to correct this 
oversight.
    We further propose adding the height and weight items into the 
``Medical Information'' section if the IRF-PAI. As a general rule, we 
would place all data items related to quality reporting and quality 
measures within the Quality Indicator section of the IRF-PAI. However, 
the height and weight items have a dual purpose because they can be 
used for the calculation of Body Mass Index (BMI), which is used as one 
part of the analysis for compliance with the 60 percent rule. Even 
though the height and weight items are placed in the ``Medical 
Information'' section of the IRF-PAI, they are also being added to the 
IRF-PAI for calculating risk adjustment for the pressure ulcer measure. 
Failure to provide height and weight could result in a finding of non-
compliance with the reporting requirements.
    We invite public comment on our proposal to include data elements 
required for risk-adjustment of 0678 Percent of Patients with 
Pressure Ulcers That Are New or Worsened Measure as mandatory data 
collection elements in the revised IRF-PAI.
4. Proposed Revisions to the IRF-PAI To Add Voluntary Data Items 
Related to NQF 0678 Percent of Residents or Patients With 
Pressure Ulcers That Are New or Worsened (Short-Stay)
    The pressure ulcer measure numerator for the NQF 0678 
endorsed version of the ``Percent of Patients with Pressure Ulcers That 
Are New or Worsened'' measure looks at the number

[[Page 26917]]

of patients with a target assessment during the selected time window 
who have one or more Stage 2 through 4 pressure ulcer(s) that are new 
or that have worsened compared with the previous assessment. According 
to the NQF Web site, in its description of NQF 0678, ``Stage 1 
pressure ulcers are excluded from this measure because recent studies 
have identified difficulties in objectively measuring them across 
different populations.'' The measure numerator also does not include 
unstageable pressure ulcers. The data that is mandatory for IRFs to 
report under the IRF QRP are those that meet the requirements of the 
application of NQF 0678 that we finalized in the CY 2013 OPPS/
ASC Final Rule. As noted above, we are proposing to add additional 
mandatory data items to accommodate this. If our proposal to adopt the 
NQF-endorsed version of this measure is finalized, the mandatory data 
would remain the same.
    We are also proposing to add voluntary data items to the IRF-PAI 
Quality Indicators section, designed to address commenters' concerns 
about the adequacy of current pressure ulcer data items. Some 
commenters expressed concern that the current data items would not 
allow for documentation of all relevant categories of pressure ulcers, 
such as unstageable pressure ulcers. As modified, our proposed 
admission assessment consists of 2 main topics: (1) Unhealed Pressure 
Ulcers; and (2) Pressure Ulcer Risk Conditions. Also, the discharge 
assessment consists of 2 main topics: (1) Unhealed Pressure Ulcers; and 
(2) Healed Pressure Ulcers. Within each main topic there are sub-topics 
that contain a set of questions. The provider is asked to document how 
many pressure ulcers, if any, the patient has at each stage upon 
admission. We have added new questions that extend beyond stages 2 
through 4 pressure ulcers, covering the presence of stage 1 pressure 
ulcers, as well as unstageable pressure ulcers that are due to a non-
removable device or dressing, to slough or eschar, or deep tissue 
injury. We note that the discharge assessment differs somewhat from the 
admission assessment with regard to the pressure ulcer questions. A 
copy of the proposed new IRF-PAI can be found at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/IRFPAI.html.
    We have added greater specificity to the pressure ulcer items to 
allow providers to document pressure ulcers in more detail. In 
describing the inadequacy they perceived in the present pressure ulcer 
items, providers described such situations as those in which a patient 
is admitted into an IRF with an unstageable pressure ulcer that is a 
suspected deep tissue injury (DTI). During the course of the IRF stay 
the DTI evolves into a stage 3 and, after several days, worsens to a 
stage 4. On the current version of the IRF-PAI, providers have no 
ability to document the presence of an unstageable pressure ulcer that 
existed when the patient was admitted. Whether or not the IRF believes 
there is an unstageable pressure ulcer, the IRF must document that the 
patient had no pressure ulcers on the admission assessment. However 
later, after the DTI worsens to a stage 3, if the IRF judges from the 
nature of the pressure ulcer that it was extremely likely to have been 
present at admission, the IRF would have to go back and change their 
documentation on the admission assessment to reflect that the patient 
actually had a stage 3 pressure ulcer upon admission. Upon discharge, 
the IRF would document that the patient has a stage 4 pressure ulcer. 
With the new proposed pressure ulcer data items, the IRF would be able 
to document the presence of the unstageable pressure ulcer or suspected 
DTI on the admission assessment. The proposed revisions to the IRF-API 
would allow the IRF to give a more complete and accurate picture of the 
progression of this pressure ulcer when the patient is discharged.
    While Stage 1 and unstageable pressure ulcers are not part of the 
NQF 0678 endorsed version of the ``Percent of Patients with 
Pressure Ulcers That Are New or Worsened,'' and are not mandatory, we 
nonetheless believe that it is appropriate and important for us to 
collect this information. As the measure steward for this measure, CMS 
would like to gather and analyze data regarding Stage 1 and unstageable 
pressure ulcers to help determine if any modification to the existing 
measure should be made. This data could also help us determine if any 
additional pressure ulcer measures should be developed. For example, 
collecting data about Stage 1 pressure ulcers could provide us with 
information that would allow us to assess whether these pressure ulcers 
can now be objectively measured across different populations.
    Additionally, some pressure ulcers that are present on admission 
can become stageable and then worsen to a higher stage during the IRF 
stay. Access to data on this scenario would assist us in determining 
whether including unstageable and Stage 1 measures in the measure 
results may be appropriate in the future. We might accomplish this by 
expanding the current measure or developing an entirely new pressure 
ulcer measure.
    We invite public comment on our proposed revisions to the IRF-PAI 
related to voluntary items for NQF 0678 Percent of Residents 
or Patients with Pressure Ulcers That Are New or Worsened (Short-Stay).
5. Proposed Revisions to the IRF-PAI to Add Mandatory Data Items 
related to NQF 0680 Percent of Residents or Patients Who Were 
Assessed and Appropriately Given the Seasonal Influenza Vaccine (Short-
Stay)
    We are also proposing changes to the IRF-PAI discharge assessment 
to include the addition of the data elements necessary to report the 
data necessary for the proposed measure, Percent of Residents or 
Patients Who Were Assessed and Appropriately Given the Seasonal 
Influenza Vaccine (Short-Stay) (NQF 0680). These items will be 
based on the items from the MDS 3.0 and LTCH CARE Data Set items.\26\ 
\27\ There are three data elements collected in relation to this 
measure: Two are used to calculate the measure and a third is used to 
ensure internal consistency and data accuracy. The items are as 
follows: Did the patient receive the influenza vaccine in this facility 
for this year's influenza vaccination season? Date influenza vaccine 
was received; and, If influenza vaccine not received, state reason. 
These questions allow the IRF to report if and when an influenza 
vaccine was given at the facility. It also allows the IRF to indicate 
why a vaccine was not given if that is the case. Further details on the 
specifications and data elements for this measure are available in the 
MDS 3.0 QM User's Manual available on our Web site at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/NHQIQualityMeasures.html. Measure 
specifications are located in the download titled: MDS 3.0 QM User's

[[Page 26918]]

Manual V6.0. Measure information is also available at https://www.qualityforum.org/QPS/0680.
---------------------------------------------------------------------------

    \26\ Centers for Medicare & Medicaid Services. MDS 3.0 Item 
Subsets V1.10.4 for the April 1, 2012 Release. Retrieved from 
https://www.cms.gov/NursingHomeQualityInits/30_NHQIMDS30TechnicalInformation.asp.
    \27\ The LTCH CARE Data Set Version 2.00, the data collection 
instrument for the submission of the Percent of Residents or 
Patients with Pressure Ulcers That are New or Worsened (Short-Stay) 
measure and the Percent of Residents or Patients Who Were Assessed 
and Appropriately Given the Seasonal Influenza Vaccine (Short-Stay) 
measure, is currently under review by the Office of Management and 
Budget (OMB) in accordance with the Paperwork Reduction Act (PRA) 
https://www.gpo.gov/fdsys/pkg/FR-2013-02-01/pdf/2013-02155.pdf. The 
LTCH CARE Data Set Version 1.01 was approved on April 24, 2012 by 
OMB in accordance with the PRA. The OMB Control Number is 0938-1163. 
Expiration Date April 30, 2013.
---------------------------------------------------------------------------

    We invite public comment on our proposed revisions to the IRF-PAI 
related to NQF 0680 Percent of Residents or Patients Who Were 
Assessed and Appropriately Given the Seasonal Influenza Vaccine (Short-
Stay).
6. Proposed Revisions to the IRF-PAI Related to Numbering of Quality 
Indicator Items.
    Finally, in the revised IRF-PAI, we include changes in the 
numbering scheme used in the Quality Indicator section of the IRF-PAI 
from a ``consecutive numbering scheme'' for numbering assessment items 
to a numbering scheme that allows greater flexibility for item removal 
and insertion. Problems arise with a consecutive numbering scheme when 
items are removed or new ones are inserted because this changes the 
numbers of some or all of the items around them. Other CMS post-acute 
care data collection vehicles, such as the MDS 3.0, and the LTCH CARE 
Data Set, have adopted a more flexible numbering schema that allows 
insertion or removal of items without requiring renumbering of the 
remaining items. We propose adopting a similar numbering schema in the 
revised IRF-PAI. A less flexible numbering system that necessitates 
renumbering items on the IRF-PAI in the event of such changes will 
result in a given item number having very different meanings on 
different versions of the IRF-PAI item set.
    For more details about our plans for changes to the IRF-PAI, see 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/IRFPAI.html.
    We invite public comments about our proposed changes to the 
numbering schema of the IRF-PAI.

E. Proposed Change in Data Collection and Submission Periods for Future 
Program Years

    The FY 2012 IRF PPS final rule included an initial framework for 
the IRF QRP. In that rule we also finalized the initial quality 
measures to be used in the IRF QRP, stated how data for these measures 
would to be collected, and selected the time periods for the data 
collection and reporting of the quality data.
    The FY 2012 IRF PPS final rule finalized the initial IRF QRP data 
reporting cycle, affecting the FY 2014 payment determination, as 
beginning on October 1, 2012 and ending on December 31, 2012. Beginning 
in 2013 for the FY 2015 payment determination, and for subsequent 
years, we finalized that quality reporting cycles be based on a full 
calendar year (CY) cycle (76 FR 47879).
    When there are new measures added to the quality reporting program 
that will be collected on the IRF-PAI, that data collection instrument 
must be updated accordingly. The next update to the IRF-PAI will take 
place on October 1, 2014. Under current policy, the IRF QRP data 
collection cycle for the FY 2016 payment determination will not begin 
until January 1, 2014.
    To accommodate the revised data collection instrument, we are 
proposing to change the IRF-PAI data collection periods for the FY 2016 
and FY 2017 payment determinations in order to align with the release 
of the new version of the IRF-PAI on October 1, 2014. We propose to 
shorten the data collection period impacting the FY 2016 IRF PPS annual 
increase factor to nine months, so that the next reporting period may 
begin on October 1, 2014 using the new version of the IRF-PAI. Under 
this proposal, the next data collection period would run from January 
1, 2014 to September 30, 2014 and affect the IRF PPS annual increase 
factor for FY 2016.
    Starting October 1, 2014, we propose to start fiscal year data 
collection periods, such that data collected for discharges during 
October 1, 2014 to September 30, 2015 will affect the FY 2017 IRF PPS 
annual increase factor. We further propose that data collection 
continue on FY cycles unless there is an event that requires that this 
cycle be amended. We intend to provide public announcements in the 
event the established cycles must be changed.
    Note that, as a result of this proposal, data submitted on the IRF-
PAI and data submitted using the NHSN will have two separate data 
collection and submission schedules. We provide more details on this 
distinction below. We invite public comment on our proposal to alter 
the IRF-PAI data collection periods impacting the FY 2016 and FY 2017 
increase factors in a way that aligns with the release of the next 
version of the IRF-PAI instrument.
1. Proposed Implementation of Quarterly Data Submission Deadlines for 
the IRF QRP
    In the FY 2012 IRF PPS rule we stated that ``details regarding data 
submission and reporting requirements for this measure will be posted 
on the CMS Web site at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/ no later than January 31, 2012'' (FR 76 47879). Further data 
submission details for the IRF QRP were posted on the CMS IRF QRP Web 
site on January 31, 2012, as promised. In addition, data submission 
details were disseminated to IRFs at various times from January 31, 
2012 to December 31, 2012, through an in-person training held on May 2, 
2012, Open Door Forums, list-serve announcements, IRF QRP Web page 
postings and responses to IRF QRP Helpdesk inquiries. In these 
communications, we announced that the final data submission deadline 
for the IRF QRP would be May 15th for all measures finalized for the FY 
2014 payment determination and each subsequent payment determination.
    We realize the value in providing clear submission deadlines for 
the IRF QRP and we believe that we should provide deadlines that 
clearly distinguish between data submitted using the NHSN and data 
submitted using the IRF-PAI. Further, it is important to have distinct 
deadlines at which point data submitted afterward, including data 
modifications and corrections, could not be used for reporting or IRF 
PPS annual increase factor determinations. For purposes of the FY 2016 
and subsequent year IRF PPS annual increase factors, and for the 
purposes of applying quarterly deadlines for public reporting purposes, 
we propose the inclusion of quarterly data submission deadlines in 
addition to the previously finalized deadlines. We believe that this 
will ensure timely submission of data.
2. Quarterly Submission Timelines of Data Reported Using the IRF-PAI
    For the purposes of quality data reported using the IRF-PAI for the 
IRF QRP, we have proposed timeframes described below that we believe 
will provide sufficient time for IRFs and CMS to meet quality reporting 
requirements and allow CMS to harmonize IRF QRP data submission 
deadlines with the LTCHQR Program and Hospital IQR. Beginning with data 
collection and reporting impacting the FY 2016 annual increase factor, 
we propose that IRFs follow the deadlines presented in the tables below 
to complete submission of data for each quarter. For each quarter 
outlined in the tables below during which IRFs are required to collect 
data, we propose a final deadline occurring approximately 135 days 
after the end of each quarter by which all data collected during that 
quarter must be submitted. We believe that this is a reasonable amount 
of time to allow IRFs to submit data and make any necessary 
corrections. We have summarized these deadlines in the tables below.

[[Page 26919]]



 Table 11--Proposed Timelines for Submission of IRF QRP Program Quality Data Using IRF-PAI * for FY 2016 IRF PPS
   Annual Increase Factor \+\: Application of NQF 0678 Percent of Residents or Patients With Pressure
                                  Ulcers That Are New or Worsened (Short-Stay)
----------------------------------------------------------------------------------------------------------------
                                                                          IRF-PAI data submission  deadline for
                Quarter                 IRF-PAI data collection period         corrections  of the IRF QRP
----------------------------------------------------------------------------------------------------------------
                                         FY 2016 Annual Increase Factor
----------------------------------------------------------------------------------------------------------------
Quarter 1.............................  January 1, 2014-March 31, 2014  August 15, 2014.
Quarter 2.............................  April 1, 2014-June 30, 2014...  November 15, 2014.
Quarter 3.............................  July 1, 2014-September 30,      February 15, 2015.
                                         2014.
----------------------------------------------------------------------------------------------------------------
* Using October 1, 2012 release of IRF-PAI.
\+\ FY 2016 APU determination is based on 3 quarters of data submission for the pressure ulcer measure.


 Table 12--Proposed Timelines for Submission of IRF QRP Program Quality Data Using IRF-PAI * for FY 2017 IRF PPS
 Annual Increase Factor: NQF 0678 Percent of Residents or Patients With Pressure Ulcers That Are New or
       Worsened (Short-Stay), and NQF 0680 Percent of Residents or Patients Who Were Assessed and
                         Appropriately Given the Seasonal Influenza Vaccine (Short-Stay)
----------------------------------------------------------------------------------------------------------------
                                                                          IRF-PAI data submission  deadline for
                Quarter                 IRF-PAI data collection period         corrections  of the IRF QRP
----------------------------------------------------------------------------------------------------------------
                                         FY 2017 Annual Increase Factor
----------------------------------------------------------------------------------------------------------------
Quarter 1.............................  October 1, 2014-December 31,    May 15, 2015.
                                         2014.
Quarter 2.............................  January 1, 2015-March 31, 2015  August 15, 2015.
Quarter 3.............................  April 1, 2015-June 30, 2015...  November 15, 2015.
Quarter 4.............................  July 1, 2015-September 30,      February 15, 2016.
                                         2015.
----------------------------------------------------------------------------------------------------------------
* Using October 1, 2014 release of IRF-PAI.

3. Quarterly Submission Timelines of Data Reported Using NHSN
    For the purposes of reporting quality data using the NHSN, 
specifically CAUTI reporting and reporting of the staff influenza 
immunization measure, we are specifically proposing to align with CMS's 
established submission deadlines in the Hospital IQR and the LTCHQR 
Programs. The CDC recommends that a facility report Healthcare Acquired 
Infection (HAI) events such as CAUTI, as close to the time of the event 
as is possible, and certainly within 30 days. CMS recommends adherence 
to this approach. In addition, we propose that IRFs report CAUTI 
events, including null events, on a monthly level using the NHSN.
    For the purposes of continuity, we propose to continue the calendar 
year basis of reporting CAUTI, using quarterly deadlines as established 
by the Hospital IQR program. Final submission deadlines for measures 
collected through the NHSN are shown in the tables below.

  Table 13--Proposed Timelines for Submission of IRF QRP Program Quality Data Using CDC/NSHN For FY 2016 and FY
  2017 IRF PPS Annual Increase Factor: National Health Safety Network (NHSN) Catheter-Associated Urinary Tract
                                        Infection (CAUTI) Outcome Measure
----------------------------------------------------------------------------------------------------------------
                                           CDC/NHSN data collection
                Quarter                             period                  CDC/NHSN data submission deadline
----------------------------------------------------------------------------------------------------------------
                                         FY 2016 Annual Increase Factor
----------------------------------------------------------------------------------------------------------------
Quarter 1.............................  January 1, 2014-March 31, 2014  August 15, 2014.
Quarter 2.............................  April 1, 2014-June 30, 2014...  November 15, 2014.
Quarter 3.............................  July 1, 2014-September 30,      February 15, 2015.
                                         2014.
Quarter 4.............................  October 1, 2014-December 31,    May 15, 2015.
                                         2014.
----------------------------------------------------------------------------------------------------------------
                                         FY 2017 Annual Increase Factor
----------------------------------------------------------------------------------------------------------------
Quarter 1.............................  January 1, 2015-March 31, 2015  August 15, 2015.
Quarter 2.............................  April 1, 2015-June 30, 2015...  November 15, 2015.
Quarter 3.............................  July 1, 2015-September 30,      February 15, 2016.
                                         2015.
Quarter 4.............................  October 1, 2015-December 31,    May 15, 2016.
                                         2015.
----------------------------------------------------------------------------------------------------------------

    Further, we propose to apply to IRF QRP the same deadlines 
established for the reporting of the Influenza Vaccination Coverage 
Among Health Personnel (NQF 0431) measure in the Hospital IQR 
Program and proposed in the LTCH QRP.

[[Page 26920]]



 Table 14--Proposed Timelines for Submission of IRF QRP Program Quality
   Data Using CDC/NSHN for FY 2016 and FY 2017 IRF PPS Annual Increase
     Factor: NQF 0431 Influenza Vaccination Coverage Among
                          Healthcare Personnel
------------------------------------------------------------------------
     Data collection timeframe        CDC/NHSN Data submission  deadline
------------------------------------------------------------------------
                     FY 2016 Annual Increase Factor
------------------------------------------------------------------------
October 1, 2014 (or when the         May 15, 2015.
 influenza vaccine becomes
 available)--March 31, 2015.
------------------------------------------------------------------------
                     FY 2017 Annual Increase Factor
------------------------------------------------------------------------
October 1, 2015 (or when the         May 15, 2016.
 influenza vaccine becomes
 available)--March 31, 2016.
------------------------------------------------------------------------

    We invite public comment on the proposed data submission quarterly 
and final deadlines for the purposes of reporting data using the IRFPAI 
and for the purposes of reporting data using the NHSN.

F. Proposed Reconsideration and Appeals Process

    At the conclusion of any given data reporting period, we will 
review the data received from each IRF during that reporting period to 
determine if the IRF has reported the required amount and type of data. 
IRFs that are found to be non-compliant with the reporting requirements 
set forth for that reporting cycle could receive a reduction in the 
amount of 2 percentage points to their IRF PPS increase factor for the 
upcoming payment year.
    We are aware that there may be situations in which an IRF provider 
has evidence to dispute a finding of non-compliance. We further 
understand that there may be times when a provider may be prevented 
from submitting quality data due to the occurrence of extraordinary 
circumstances beyond their control (for example, natural disasters). It 
is our goal not to penalize IRF providers in these circumstances or to 
unduly increase their burden during these times.
    We are also aware, for the purposes of the IRF Quality Reporting 
Program, that we will be making compliance determinations for the FY 
2014 payment determination in the coming months and believe that 
providers should have the opportunity to request a reconsideration if 
the circumstances warrant. In addition, adding a reconsideration 
process to the IRF Quality Reporting program will make it consistent 
with other established quality reporting programs, a number of which 
already offer this opportunity. We are therefore providing a mechanism 
that will allow IRFs to request reconsiderations pertaining to their FY 
2014 payment determinations and that of subsequent fiscal years.
    Specifically, as part of the mechanism to allow for IRFs to request 
a reconsideration, IRFs found to be non-compliant with the reporting 
requirements during a given reporting cycle will be notified of that 
finding. IRFs will be informed: (1) That they have been identified as 
being non-compliant with the IRF Quality Reporting Program's reporting 
requirements for the reporting cycle in question; (2) that they will be 
scheduled to receive a reduction in the amount of 2 percentage points 
to their PPS increase factor for the upcoming payment year; (3) that 
they may file a request for reconsideration if they believe that the 
finding of non-compliance is erroneous, or that if they were non-
compliant, they have a valid and justifiable excuse for this non-
compliance; and (4) that they must follow a defined process on how to 
file a request for reconsideration, which will be described in the 
notification.
    Upon the conclusion of our review of each request for 
reconsideration, we will render a decision. We may reverse our initial 
finding of non-compliance if: (1) The IRF provides proof of full 
compliance with all requirements during the reporting period; or (2) 
the IRF provides adequate proof of a valid or justifiable excuse for 
non-compliance if the IRF was not able to comply with requirements 
during the reporting period. We will uphold our initial finding of non-
compliance if the IRF cannot show any justification for non-compliance.
    We intend to provide details pertaining to the reconsideration 
process, and the mechanisms related to provider requests for 
reconsideration of their payment determinations, such as filing 
requests, required content, supporting documentation, and mechanisms of 
notification and final determinations on the IRF QRP Web site this 
spring at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/. We invite 
public comment on the proposed procedures for reconsideration and 
appeals.

G. Proposed Policy for Granting of a Waiver of the IRF QRP Data 
Submission Requirements in Case of Disaster or Extraordinary 
Circumstances

    Our experience with other quality reporting programs has shown that 
there are times when providers are unable to submit quality data due to 
the occurrence of extraordinary circumstances beyond their control (for 
example, natural or man-made disasters). We define a ``disaster'' as 
any natural or man-made catastrophe which causes damages of sufficient 
severity and magnitude to partially or completely destroy or delay 
access to medical records and associated documentation. Natural 
disasters could include events such as hurricanes, tornadoes, 
earthquakes, volcanic eruptions, fires, mudslides, snowstorms, and 
tsunamis. Man-made disasters could include such events as terrorist 
attacks, bombings, floods caused by man-made actions, civil disorders, 
and explosions. A disaster may be widespread or impact multiple 
structures or be isolated and impact a single site only.
    In certain instances of either natural or man-made disasters, an 
IRF may have the ability to conduct a full patient assessment, and 
record and save the associated data either during or before the 
occurrence of an extraordinary event. In this case, the extraordinary 
event has not caused the facility's data files to be destroyed, but it 
could hinder the IRF's ability to meet the quality reporting program's 
data submission deadlines. In this scenario, the IRF would potentially 
have the ability to report the data at a later date, after the 
emergency circumstances have subsided. In such cases, a temporary

[[Page 26921]]

waiver of the IRF duty to report quality measure data may be 
appropriate.
    In other circumstances of natural or man-made disaster, an IRF may 
not have had the ability to conduct a full patient assessment, and 
record and save the associated data before the occurrence of an 
extraordinary event. In such a scenario, the facility does not have 
data to submit to CMS as a result of the extraordinary event. We 
believe that it is appropriate, in these situations, to grant a full 
waiver of the reporting requirements.
    It is our goal not to penalize IRF providers in these circumstances 
or to unduly increase their burden during these times. Therefore, we 
are proposing a process, for payment year 2015 and subsequent years, 
for IRF providers to request and for CMS to grant waivers with respect 
to the reporting of quality data when there are extraordinary 
circumstances beyond the control of the provider. When a waiver is 
granted, an IRF will not incur payment reduction penalties for failure 
to comply with the requirements of the IRF QRP.
    We are proposing a process that, in the event that an IRF seeks to 
request a waiver for quality reporting purposes for payment year 2015 
and subsequent payment years, the IRF may request a waiver for one or 
more quarters by submitting a written request to CMS. We are proposing 
that IRFs compose a letter to CMS that documents the waiver request, 
with the information described below, and submit the letter to CMS via 
email to the IRF Help Desk at IRFQualityQuestions@cms.hhs.gov. IRFs 
that have filed a request for an IRF QRP disaster waiver with an IRF-
PAI waiver request using the procedure that is described under our 
regulations at 42 CFR 412.614 can indicate this in their letter to CMS 
for their request for a waiver for quality reporting purposes.\28\
---------------------------------------------------------------------------

    \28\ https://www.gpo.gov/fdsys/pkg/CFR-2011-title42-vol2/pdf/CFR-2011-title42-vol2-sec412-614.pdf.
---------------------------------------------------------------------------

    Note that the subject of the email must read ``Disaster Waiver 
Request'' and the letter must contain the following information:
     IRF CCN;
     IRF name;
     CEO or CEO-designated personnel contact information 
including name, telephone number, email address, and mailing address 
(the address must be a physical address, not a post office box);
     IRF's reason for requesting a waiver;
     Evidence of the impact of extraordinary circumstances, 
including but not limited to photographs, newspaper and other media 
articles; and
     A date when the IRF believes that it will again be able to 
submit IRF QRP data and a justification for the proposed date.
    We propose that the letter documenting the disaster waiver request 
be signed by the IRF's CEO, and must be submitted within 30 days of the 
date that the extraordinary circumstances occurred. Following receipt 
of the letter, we would: (1) Provide a written acknowledgement, using 
the contact information provided in the letter, to the CEO or 
designated contact person, notifying them that the request has been 
received, and (2) after CMS has made a decision as to whether to grant 
to waiver request, provide a formal response to the CEO, or designated 
contact person notifying them of our decision.
    This proposal does not preclude CMS from granting waivers to IRFs 
that have not requested them when we determine that an extraordinary 
circumstance, such as an act of nature, affects an entire region or 
locale. If we make the determination to grant a waiver to IRFs in a 
region or locale, we propose to communicate this decision through 
routine communication channels to IRFs and vendors, including but not 
limited to issuing memos, emails, and notices on https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/.
    We invite public comment on this proposal.

H. Public Display of Data Quality Measures for the IRF QRP Program

    Under section 1886(j)(7)(E) of the Act, the Secretary is required 
to establish procedures for making data submitted under the IRF QRP 
available to the public. Section 1886(j)(7)(E) also requires procedures 
to ensure that each IRF provider has the opportunity to review that 
data that is to be made public with respect to its facility, prior to 
such data being made public. Section 1886(j)(7)(E) of the Act requires 
CMS to report quality measures that relate to services furnished in 
IRFs on CMS' Web site.
    Currently, the Agency is developing plans regarding the 
implementation of these provisions. We appreciate the need for 
transparency into the processes and procedures that will be implemented 
to allow for the public reporting of the IRF QRP data and to afford 
providers the opportunity to preview that data before it is made 
public. At this time, we have not established procedures or timelines 
for public reporting of data, but we intend to include related 
proposals in future rule making. We welcome public comments on what we 
should consider when developing future proposals related to public 
reporting.

I. Method for Applying the Reduction to the FY 2014 IRF Increase Factor 
for IRFs That Fail To Meet the Quality Reporting Requirements

    As previously noted, section 1886(j)(7)(A)(i) of the Act requires 
application of a 2 percentage point reduction of the applicable market 
basket increase factor for IRFs that fail to comply with the quality 
data submission requirements. FY 2014 is to be the first year that the 
mandated reduction will be applied for IRFs that failed to comply with 
the data submission requirements during the data collection period 
October 1, 2012 through December 31, 2012. Thus, in compliance with 
1886(j)(7)(A)(i) of the Act, we will apply a 2 percentage point 
reduction to the applicable FY 2014 market basket increase factor (1.7 
percent) in calculating an adjusted FY 2014 standard payment conversion 
factor to apply to payments for only those IRFs that failed to comply 
with the data submission requirements. As noted previously, application 
of the 2 percentage point reduction may result in an update that is 
less than 0.0 for a fiscal year and in payment rates for a fiscal year 
being less than such payment rates for the preceding fiscal year. Also, 
reporting-based reductions to the market basket increase factor will 
not be cumulative; they will only apply for the FY involved. Table 15 
shows the calculation of the adjusted FY 2014 standard payment 
conversion factor that will be used to compute IRF PPS payment rates 
for any IRF that failed to meet the quality reporting requirements for 
the period from October 1, 2012 through December 31, 2012.

[[Page 26922]]



    Table 15--Calculations To Determine the Proposed Adjusted FY 2014
   Standard Payment Conversion Factor for IRFs That Failed To Meet the
                      Quality Reporting Requirement
------------------------------------------------------------------------
 
------------------------------------------------------------------------
              Explanation for adjustment                  Calculations
------------------------------------------------------------------------
Standard Payment Conversion Factor for FY 2013.......            $14,343
------------------------------------------------------------------------
Adjusted Market Basket Increase Factor for FY 2014     x         0.99800
 (2.5 percent), reduced by 0.3 percentage point in
 accordance with sections 1886(j)(3)(C) and (D) of
 the Act and a 0.4 percentage point reduction for the
 productivity adjustment as required by section
 1886(j)(3)(C)(ii)(I) of the Act, further reduced by
 2 percentage points for IRFs that failed to meet the
 quality reporting requirement.......................
Budget Neutrality Factor for the Wage Index and Labor- x          1.0011
 Related Share.......................................
Budget Neutrality Factor for the Revisions to the CMG  x          1.0000
 Relative Weights....................................
Budget Neutrality Factor for the Update to the Rural   x          1.0030
 Adjustment Factor...................................
Budget Neutrality Factor for the Update to the LIP     x          1.0174
 Adjustment Factor...................................
Budget Neutrality Factor for the Update to the         x          0.9966
 Teaching Status Adjustment Factor...................
Proposed Adjusted FY 2014 Standard Payment Conversion  =         $14,573
 Factor..............................................
------------------------------------------------------------------------

XIV. 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. 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 proposed rule does not impose any new information collection 
requirements as outlined in the regulation text. However, this proposed 
rule does make reference to associated information collections that are 
not discussed in the regulation text contained in this document. The 
following is a discussion of these information collections, some of 
which have already received OMB approval.
    We are soliciting public comment on each of these issues for the 
following sections of this document that contain information collection 
requirements (ICRs).

A. ICRs Regarding IRF QRP

    As stated in section XIII. of the preamble of this proposed rule, 
we have proposed to introduce one new measure for use in the IRF QRP 
that will require IRF providers to submit new data beginning on October 
1, 2014 and which will affect the increase factor for FY 2016. This 
quality measure is: Influenza Vaccination Coverage among Healthcare 
Personnel (NQF 0431). We have also proposed to introduce for 
FY 2017 an All-Cause Unplanned Readmission Measure for 30 Days Post 
Discharge from Inpatient Rehabilitation Facilities. This measure is a 
claims-based measure that does not require submission of data by IRF 
providers. For FY 2017, we have proposed to adopt the Percent of 
Resident or Patients Who Were Assessed and Appropriately Given the 
Seasonal Influenza Vaccine (Short-Stay) (NQF0680) measure. We 
have also proposed for FY 2017 to change from the use of a non-risk 
adjusted pressure ulcer measure, in which only numerator and 
denominator data is collected, to use of the NQF endorsed measure 
``Percent of Residents or Patients with Pressure Ulcers That Are New or 
Worsened (Short-Stay)'' (NQF 0678), which is a risk-adjusted 
measure. Each of these measures will be collected in the manner 
described below:
1. Influenza Vaccination Coverage Among Healthcare Personnel (NQF 
0431)
    In section XIII. of this proposed rule, we are proposing to add the 
new measure, Influenza Vaccination Coverage among Healthcare Personnel 
(NQF 0431) to the IRF QRP. IRFs will be required to collect 
data related to the number of healthcare personnel working at a 
facility who have been vaccinated against the influenza virus during a 
given influenza vaccination season. The CDC has determined that the 
influenza vaccination season begins on October 1st (or when the vaccine 
becomes available) and ends on the following March 31st each year. This 
measure requires that the provider submit only one report to NHSN after 
the close of the data collection period each year.
    We believe that it has become a common practice for healthcare 
facilities, including IRFs, to promote vaccination of employees for the 
influenza virus and to keep records of which of their staff members 
received this vaccination each year. Therefore, we do not believe that 
IRFs will incur any additional burden related to the collection of the 
data for this measure.
    We anticipate that it will take approximately 15 minutes to prepare 
and transmit the required data for this measure to the CDC each year. 
The reporting of the data for this measure can be done while the 
provider is logged onto NHSN for the purpose of entering their CAUTI 
measure data. We believe that this task can be completed by an 
administrative person such as a Medical Secretary Medical Data Entry 
Clerk. The average hourly wage for Medical Records or Health 
Information Technicians is $15.55.\29\ We estimate that the annual cost 
to each IRF for the reporting of the staff influenza measure will be 
$3.98.\30\ The annual cost across the 1161 IRFs in the U.S. that are 
reporting data to CMS is estimated to be $4,621.\31\
---------------------------------------------------------------------------

    \29\ According to the U.S. Bureau of Labor Statistics, the mean 
hourly wage for a Medical Records & Health Information Technician is 
$15.55. See: https://www.bls.gov/ooh/healthcare/medical-records-and-health-information-technicians.htm.
    \30\ 15 minutes administrative staff time to collect and report 
staff influenza measure @ $15.55 per hour = $3.98 per IRF per year
    \31\ At the time of the writing of this rule, there were 1161 
IRFs reporting quality data to CMS. ($3.98 per IRF per year x 1161 
IRFs in U.S.= $4,621).
---------------------------------------------------------------------------

2. All-Cause Unplanned Readmission Measure for 30 Days Post Discharge 
From Inpatient Rehabilitation Facilities
    As stated in section XIII. of this proposed rule, data for this 
measure will be collected from Medicare claims and therefore will not 
add any additional reporting burden for IRFs.

[[Page 26923]]

1. Percent of Residents or Patients With Pressure Ulcers That Are New 
or Have Worsened (Short-Stay) (NQF 0678)

    In section XIII of this proposed rule, we proposed to adopt the NQF 
endorsed version of the measure titled ``Percent of Residents or 
Patients with Pressure Ulcers That Are New or Worsened (Short-Stay)'' 
(NQF 0678). To support the standardized collection and 
calculation of this quality measure, we have proposed to modify the 
current Inpatient Rehabilitation Facility-Patient Assessment Instrument 
(IRF-PAI) by replacing the current pressure ulcer items with data 
elements similar or identical to those collected through the Minimum 
Data Set 3.0 (MDS 3.0) used in nursing homes. By building upon 
preexisting resources for data collection and submission, we intend to 
reduce administrative burden related to data collection and submission. 
We anticipate that the initial setup and acclimation to pressure ulcer 
data collection will have already occurred with the adoption of the 
Pressure Ulcer measure for the IRF QRP for the FY 2014 payment 
determination. Therefore, we believe the transition to reporting 
additional data elements for this measure will be less burdensome.
    We expect that the admission and discharge pressure ulcer data will 
be collected by a clinician such as an RN because the assessment and 
staging of pressure ulcers requires a high degree of clinical judgment 
and experience. We estimate that it will take approximately 10 minutes 
of time by the RN to perform the admission pressure ulcer assessment. 
We further estimate that it will take an additional 15 minutes of time 
to complete the discharge pressure ulcer assessment. We expect that 
during these time periods, the RN would be engaged in the collection of 
data for the purpose of the IRF QRP and would not be engaged in the 
performance of routine patient care.
    We estimate that there are 359,000 IRF-PAI submissions per year 
\32\ and that there are 1161 IRFs in the U.S. reporting quality data to 
CMS. Based on these figures, we estimate that each IRF will submit 
approximately 309 IRF-PAIs per year or 26 IRF-PAIs per 
month.\33\Assuming that each IRF-PAI submission requires 25 minutes of 
time by an RN at an average hourly wage of $33.23,\34\ the yearly cost 
to each IRF would be $4,278.36 \35\ and the annualized cost across all 
IRFs would be $4,967,176.\36\
---------------------------------------------------------------------------

    \32\ MedPAC, A Data Book: Health Care Spending and the Medicare 
Program (June 2012), https://www.medpac.gov/chapters/Jun12DataBookSec8.pdf.
    \33\ 359,000 IRF-PAIs per all IRFs per year/1161 IRFs in U.S. = 
309 IRF-PAIs per each IRF per year.
    309 IRF-PAI reports per IRF per year/12 months per year = 26 
IRF-PAI reports per each IRF per year.
    \34\ According to the U.S. Bureau of Labor Statistics, the mean 
hourly wage for a Registered Nurse is $33.23. (See https://www.bls.gov/oes/2011/may/oes291111.htm) .
    \35\ 25 minutes x 309 IRF-PAI assessments per each IRF per year 
= 7,725 minutes per each IRF per year.
    7,725 minutes per each IRF per year/60 minutes per hour = 128.75 
hours per each IRF per year.
    128.75 hours per year x $33.23 per hour = $4,278.36 nursing 
wages per each IRF per year.
    \36\ $4,278.36 x 1161 IRF providers = $4,967,176 per all IRFs 
per year.
---------------------------------------------------------------------------

    We also expect that most IRFs will use administrative personnel, 
such as a medical secretary or medical data entry clerk, to perform the 
task of entering the IRF-PAI pressure ulcer assessment data into their 
electronic health record (EHR) system and/or the CMS JIRVEN program. We 
estimate that this data entry task will take no more than 3 minutes per 
each IRF-PAI record or 15.45 hours per each IRF annually or 17,937 
hours across all IRFs. As noted above, the average hourly wage for a 
Medical Records & Health Information Technician is $15.55. As we noted 
above, there are approximately 359,000 IRF-PAI submissions per year and 
1161 IRFs reporting quality data to CMS. Given this wage information, 
the estimated total annual cost across all reporting IRFs for the time 
required for entry of pressure ulcer data into the IRF-PAI record is 
$278,930. We further estimate the average yearly cost to each 
individual IRF to be $240.25.
    We estimate that the combined annualized time burden related to the 
pressure ulcer data item set for work performed, by the both clinical 
and administrative staff will be 144.20 hours for each individual IRF 
and 167,416 hours across all IRFs. The total estimated annualized cost 
for collection and submission of pressure ulcer data is $4,518.61 for 
each IRF and $5,246,106 across all IRFs. We estimate the cost for each 
pressure ulcer submission to be $14.61.
    We are proposing to revise the IRF-PAI instrument to include the 
data set associated with this measure.
2. Percent of Residents or Patients Who Were Assessed and Appropriately 
Given the Seasonal Influenza Vaccine (Short-Stay) (NQF 0680)
    In section XIII. of the of this proposed rule, we have proposed to 
add the measure, Percent of Residents or Patients Who Were Assessed and 
Appropriately Given the Seasonal Influenza Vaccine (Short-Stay) (NQF 
0680) to the IRF QRP. We have further proposed to add a new 
set of standardized data elements now used in the MDS 3.0 to the IRF-
PAI to collect the data required for this measure.
    As noted above, IRFs are already required to complete and transmit 
certain IRF-PAI data on all Medicare Part A fee-for-service and 
Medicare Part C (Medicare Advantage) patients to receive payment from 
Medicare. By building upon preexisting resources for data collection 
and submission, we intend to reduce administrative burden related to 
data collection and submission. We anticipate that the initial setup 
and acclimation to data collection through the IRF-PAI for purposes of 
reporting of IRF quality measure data will have already occurred with 
the adoption of the Pressure Ulcer measure for the IRF QRP for the FY 
2014 payment determination. Therefore, we believe the transition to 
reporting an additional measure via the IRF-PAI may be less burdensome.
    We estimate that completion of the patient influenza measure item 
set will take approximately 5 minutes to complete. The patient 
influenza item set consists of three items (questions). Each item is 
straightforward and does not require physical assessment for 
completion. We estimate that it will take approximately 0.7 minutes to 
complete each item, or 2.1 minutes to complete the entire item set. 
However, in some cases, the person completing this item set may need to 
consult the patient's medical record to obtain data about the patient's 
influenza vaccination. Therefore, we have allotted 1.6 minutes per 
items or a total of 5 minutes to complete the item set.
    IRF staff will be required to perform a full influenza assessment 
only during the influenza vaccination season. The CDC defines that 
influenza vaccination season as the time period from October 1st (or 
when the vaccine becomes available) through March 31 each year. From 
April 1st through September 30th, IRFs are not required to perform full 
influenza screening and may skip to the next item set after checking 
the selection which indicates that the patient's IRF stay occurred 
outside of the influenza vaccination season. Our time estimate reflects 
the averaged amount of time necessary to complete the influenza item 
set both during and outside the influenza vaccination season.
    We anticipate that the patient influenza item set will be completed 
by a clinician such an RN, while completing the Quality indicator 
section of the IRF-PAI. It is most appropriate for an RN to complete 
the influenza item set because it involves performing

[[Page 26924]]

a skilled assessment to determine, from a patient' records, whether the 
patient has received a vaccination and, if not, to discuss with the 
patient any medications or other related topics such as medication 
allergies, other vaccinations that the patient may have had, and any 
contraindications that might exist for receiving the influenza 
vaccination. The nurse has knowledge and experience to determine the 
relevance of this information to the patient influenza items and also 
determine if the patient should be given the influenza vaccination.
    As noted above, we estimate that it will take approximately 5 
minutes to complete the patient influenza measure item set. We have 
noted above that there are approximately 359,000IRF-PAIs completed 
annually across all 1161 IRFs that report IRF quality data to CMS. This 
breaks down to approximately 309 IRF-PAIs completed by each IRF 
yearly.\37\ We estimate that the annual time burden for reporting the 
patient influenza vaccination measure data is 29,896 hours across all 
IRFs in the U.S. and 26 hours for each individual IRF. According to the 
U.S. Bureau of Labor, the hourly wage for a Registered Nurse is $33.23. 
Taking all of the above information into consideration, we estimate the 
annual cost across all IRFs for the submission of the patient influenza 
measure data to be $993,433. We further estimate the cost for each 
individual IRF to be $855.67.
---------------------------------------------------------------------------

    \37\ 359,000 IRF-PAI reports per all IRFs per year/1161 IRFs in 
U.S. = 309 IRF-PAI reports per each IRF per year.
---------------------------------------------------------------------------

B. ICRs Regarding Non-Quality Related Proposed Changes to the IRF-PAI

    We propose to revise several items on the IRF-PAI to provide 
greater clarity for providers. The proposed changes include updating 
several items regarding the response options available to providers. 
Additionally, we are proposing to remove several items that we believe 
are unnecessary for providers to continue documenting on the IRF-PAI 
since those items are already being documented in the patients' medical 
record. We are also proposing to add several items, such as a signature 
page, to fulfill providers' request to have an organized way to 
document who has assessed the patient and when that assessment took 
place. We do not estimate any additional burden for IRFs to complete 
the IRF-PAI as a result of these proposals. We estimate the time that 
will be needed to complete the new non-quality related proposed items, 
equals the time that was needed to complete the previous non-quality 
related items. When the original burden estimates were completed for 
the IRF-PAI, we estimated that the proposed deletion of the non-quality 
related items would take approximately 3 minutes to complete. Thus, 
removing these items the IRF-PAI would decrease the total estimated 
burden of completing the non-quality related portions of the IRF-PAI by 
3 minutes. However, we estimate that it will take about 3 minutes to 
complete the new non-quality related items that we are proposing to 
add. Therefore, we estimate no net change in the amount of time 
associated with completing the non-quality related portions of the IRF-
PAI and that the burden for completing these portions of the IRF-PAI 
will not change.
    We will be submitting a revision to the current IRF-PAI collection 
of information approval under (OMB control number 0938-0842) for OMB 
review and approval.
    If you comment on these information collection and recordkeeping 
requirements, please do either of the following:
    1. Submit your comments electronically as specified in the 
ADDRESSES section of this proposed rule; or
    2. Submit your comments to the Office of Information and Regulatory 
Affairs, Office of Management and Budget,
    Attention: CMS Desk Officer, CMS-1448-P,
    Fax: (202) 395-6974; or
    Email: OIRA_submission@omb.eop.gov.

XV. Response to Public Comments

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

XV. Response to Comments

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

XVI. Regulatory Impact Analysis

A. Statement of Need

    This proposed rule updates the IRF prospective payment rates for FY 
2014 as required under section 1886(j)(3)(C) of the Act. It responds to 
section 1886(j)(5) of the Act, which requires the Secretary to publish 
in the Federal Register on or before the August 1 that precedes the 
start of each fiscal year, the classification and weighting factors for 
the IRF PPS's case-mix groups and a description of the methodology and 
data used in computing the prospective payment rates for that fiscal 
year.
    This rule implements sections 1886(j)(3)(C) and (D) of the Act. 
Section 1886(j)(3)(C)(ii)(I) of the Act requires the Secretary to apply 
a multi-factor productivity adjustment to the market basket increase 
factor, and to apply other adjustments as defined by the Act. The 
productivity adjustment applies to FYs from 2012 forward. The other 
adjustments apply to FYs 2010 through 2019.
    This rule also proposes some policy changes within the statutory 
discretion afforded to the Secretary under section 1886(j) of the Act. 
We propose to revise the list of diagnosis codes that are eligible 
under the ``60 percent rule,'' update the IRF facility-level adjustment 
factors, revise sections of the Inpatient Rehabilitation Facility-
Patient Assessment Instrument, revise requirements for acute care 
hospitals that have IRF units, clarify the IRF regulation text 
regarding limitation of review, and revise and update quality measures 
under the IRF quality reporting program. We believe that the proposed 
policy changes would enhance the clarity, accuracy, and fairness of the 
IRF PPS.

B. Overall Impacts

    We have examined the impacts of this proposed rule as required by 
Executive Order 12866 (September 30, 1993, Regulatory Planning and 
Review), Executive Order 13563 on Improving Regulation and Regulatory 
Review (January 18, 2011), the Regulatory Flexibility Act (September 
19, 1980, Pub. L. 96-354)(RFA), section 1102(b) of the Act, section 202 
of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), 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

[[Page 26925]]

(including potential economic, environmental, public health and safety 
effects, distributive impacts, and equity). Executive Order 13563 
emphasizes the importance of quantifying both costs and benefits, of 
reducing costs, of harmonizing rules, and of promoting flexibility. A 
regulatory impact analysis (RIA) must be prepared for a major proposed 
rule with economically significant effects ($100 million or more in any 
one year). We estimate the total impact of the proposed policy updates 
described in this proposed rule by comparing the estimated payments in 
FY 2014 with those in FY 2013. This analysis results in an estimated 
$150 million increase for FY 2014 IRF PPS payments. As a result, this 
proposed rule is designated as economically ``significant'' under 
section 3(f)(1) of Executive Order 12866, and hence a major rule under 
the Congressional Review Act.
    The Regulatory Flexibility Act (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 $7 million to $34.5 million in any 1 year, 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 
https://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf, effective March 26, 2012.) 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 1,200 IRFs, of which approximately 60 percent are 
nonprofit facilities) are considered small entities and that Medicare 
payment constitutes the majority of their revenues. The Department of 
Health and Human Services generally uses a revenue impact of 3 to 5 
percent as a significance threshold under the RFA. As shown in Table 
16, we estimate that the net revenue impact of this proposed rule on 
all IRFs is to increase estimated payments by approximately 2.0 
percent. However, we find that certain categories of IRF providers 
would be expected to experience revenue impacts in the 3 to 5 percent 
range. We estimate a 4.3 percent overall impact for teaching IRFs with 
resident to average daily census ratios of 10 to 19 percent, a 9.3 
percent overall impact for teaching IRFs with a resident to average 
daily census ratio greater than 19 percent, and a 3.5 percent overall 
impact for IRFs with a DSH patient percentage of 0 percent. As a 
result, we anticipate this proposed rule would have a positive impact 
on a substantial number of small entities. Medicare fiscal 
intermediaries, Medicare Administrative Contractors, and carriers 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 a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 603 of the RFA. For 
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 discussed in detail 
below, the rates and policies set forth in this proposed rule would not 
have a significant impact (not greater than 3 percent) on rural 
hospitals based on the data of the 167 rural units and 18 rural 
hospitals in our database of 1,132 IRFs for which data were available.
    Section 202 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 
104-04, enacted on March 22, 1995) also requires that agencies assess 
anticipated costs and benefits before issuing any rule whose mandates 
require spending in any one year of $100 million in 1995 dollars, 
updated annually for inflation. In 2013, that threshold level is 
approximately $141 million. This proposed rule will not impose spending 
costs on State, local, or tribal governments, in the aggregate, or by 
the private sector, of greater than $141 million.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a final rule that imposes 
substantial direct requirement costs on state and local governments, 
preempts state law, or otherwise has federalism implications. As stated 
above, this proposed rule will not have a substantial effect on State 
and local governments, preempt state law, or otherwise have a 
federalism implication.

C. Detailed Economic Analysis

1. Basis and Methodology of Estimates
    This proposed rule sets forth proposed policy changes and updates 
to the IRF PPS rates contained in the FY 2013 notice (77 FR 44618). 
Specifically, this proposed rule proposes updates to the CMG relative 
weights and average length of stay values, the facility-level 
adjustment factors, the wage index, and the outlier threshold for high-
cost cases. This proposed rule also applies a productivity adjustment 
to the FY 2014 RPL market basket increase factor in accordance with 
section 1886(j)(3)(C)(ii)(I) of the Act, and a 0.3 percentage point 
reduction to the FY 2014 RPL market basket increase factor in 
accordance with sections 1886(j)(3)(C)(ii)(II) and (D)(ii) of the Act. 
Further, this proposed rule contains proposed changes to the list of 
ICD-9-CM codes that are used in the 60 percent rule presumptive 
methodology and, in section XII of this rule. discusses the first 
implementation (in FY 2014) of the required 2 percentage point 
reduction of the market basket increase factor for any IRF that fails 
to meet the IRF quality reporting requirements, in accordance with 
section 1886(j)(7) of the Act.
    We estimate that the impact of the proposed changes and updates 
described in this proposed rule would be a net estimated increase of 
$150 million in payments to IRF providers. This estimate does not 
include the estimated impacts of the proposed changes to the list of 
ICD-9-CM codes that are used in the 60 percent rule presumptive 
compliance (as discussed below) or the estimated impacts of the 
implementation (in FY 2014) of the required 2 percentage point 
reduction of the market basket increase factor for any IRF that fails 
to meet the IRF quality reporting requirements (as discussed in below). 
The impact analysis in Table 16 of this proposed rule represents the 
projected effects of the proposed updates to IRF PPS payments for FY 
2014 compared with the estimated IRF PPS payments in FY 2013. We 
determine the effects by estimating payments while holding all other 
payment variables constant. We use the best data available, but we do 
not attempt to predict behavioral responses to these changes, and we do 
not make adjustments for future changes in such variables as number of 
discharges or case-mix.
    We note that certain events may combine to limit the scope or 
accuracy of our impact analysis, because such an analysis is future-
oriented and, thus, susceptible to forecasting errors because

[[Page 26926]]

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 2014, we are proposing standard annual 
revisions described in this proposed rule (for example, the update to 
the wage and market basket indexes used to adjust the Federal rates). 
We are also implementing a productivity adjustment to the FY 2014 RPL 
market basket increase factor in accordance with section 
1886(j)(3)(C)(ii)(I) of the Act, and a 0.3 percentage point reduction 
to the FY 2014 RPL market basket increase factor in accordance with 
sections 1886(j)(3)(C)(ii)(II) and (D)(ii) of the Act. We estimate the 
total increase in payments to IRFs in FY 2014, relative to FY 2013, 
would be approximately $150 million.
    This estimate is derived from the application of the FY 2014 RPL 
market basket increase factor, as reduced by a productivity adjustment 
in accordance with section 1886(j)(3)(C)(ii)(I) of the Act, and a 0.3 
percentage point reduction in accordance with sections 
1886(j)(3)(C)(ii)(II) and (D)(ii) of the Act, which yields an estimated 
increase in aggregate payments to IRFs of $135 million. Furthermore, 
there is an additional estimated $15 million increase in aggregate 
payments to IRFs due to the proposed update to the outlier threshold 
amount. Outlier payments are estimated to increase under this proposal 
from approximately 2.8 percent in FY 2013 to 3.0 percent in FY 2014. 
Therefore, summed together, we estimate that these updates will result 
in a net increase in estimated payments of $150 million from FY 2013 to 
FY 2014.
    The effects of the proposed updates that impact IRF PPS payment 
rates are shown in Table 16. The following proposed updates that affect 
the IRF PPS payment rates are discussed separately below:
     The effects of the proposed update to the outlier 
threshold amount, from approximately 2.8 percent to 3.0 percent of 
total estimated payments for FY 2014, consistent with section 
1886(j)(4) of the Act.
     The effects of the proposed annual market basket update 
(using the RPL market basket) to IRF PPS payment rates, as required by 
section 1886(j)(3)(A)(i) and sections 1886(j)(3)(C) and (D) of the Act, 
including a productivity adjustment in accordance with section 
1886(j)(3)(C)(i)(I) of the Act, and a 0.3 percentage point reduction in 
accordance with sections 1886(j)(3)(C) and (D) of the Act.
     The effects of applying the proposed budget-neutral labor-
related share and wage index adjustment, as required under section 
1886(j)(6) of the Act.
     The effects of the proposed budget-neutral changes to the 
CMG relative weights and average length of stay values, under the 
authority of section 1886(j)(2)(C)(i) of the Act.
     The effects of the proposed updates to the Rural, LIP, and 
Teaching Status adjustment factors, using an updated methodology.
     The total change in estimated payments based on the 
proposed FY 2014 payment changes relative to the estimated FY 2013 
payments.
2. Description of Table 16
    Table 16 categorizes IRFs by geographic location, including urban 
or rural location, and location with respect to CMS's 9 census 
divisions (as defined on the cost report) of the country. In addition, 
the table divides IRFs into those that are separate rehabilitation 
hospitals (otherwise called freestanding hospitals in this section), 
those that are rehabilitation units of a hospital (otherwise called 
hospital units in this section), rural or urban facilities, ownership 
(otherwise called for-profit, non-profit, and government), by teaching 
status, and by disproportionate share patient percentage (DSH PP). The 
top row of Table 16 shows the overall impact on the 1,132 IRFs included 
in the analysis.
    The next 12 rows of Table 16 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 
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 947 IRFs located in 
urban areas included in our analysis. Among these, there are 731 IRF 
units of hospitals located in urban areas and 216 freestanding IRF 
hospitals located in urban areas. There are 185 IRFs located in rural 
areas included in our analysis. Among these, there are 167 IRF units of 
hospitals located in rural areas and 18 freestanding IRF hospitals 
located in rural areas. There are 299 for-profit IRFs. Among these, 
there are 260 IRFs in urban areas and 39 IRFs in rural areas. There are 
685 non-profit IRFs. Among these, there are 570 urban IRFs and 115 
rural IRFs. There are 148 government-owned IRFs. Among these, there are 
117 urban IRFs and 31 rural IRFs.
    The remaining four parts of Table 16 show IRFs grouped by their 
geographic location within a region, by teaching status, and by DSH PP. 
First, IRFs located in urban areas are categorized with respect to 
their location within a particular one of the nine Census geographic 
regions. Second, IRFs located in rural areas are categorized with 
respect to 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 proposed policy described in this 
proposed rule to the facility categories listed above are shown in the 
columns of Table 16. The description of each column is as follows:
     Column (1) shows the facility classification categories 
described above.
     Column (2) shows the number of IRFs in each category in 
our FY 2012 analysis file.
     Column (3) shows the number of cases in each category in 
our FY 2012 analysis file.
     Column (4) shows the estimated effect of the proposed 
adjustment to the outlier threshold amount.
     Column (5) shows the estimated effect of the proposed 
update to the IRF PPS payment rates, which includes a productivity 
adjustment in accordance with section 1886(j)(3)(C)(ii)(I) of the Act, 
and a 0.3 percentage point reduction in accordance with sections 
1886(j)(3)(C)(ii)(II) and (D)(ii) of the Act.

[[Page 26927]]

     Column (6) shows the estimated effect of the proposed 
update to the IRF labor-related share and wage index, in a budget 
neutral manner.
     Column (7) shows the estimated effect of the proposed 
update to the CMG relative weights and average length of stay values, 
in a budget neutral manner.
     Column (8) shows the estimated effect of the proposed 
update to the facility adjustment factors using an updated methodology, 
in a budget neutral manner.
     Column (9) compares our estimates of the payments per 
discharge, incorporating all of the proposed policies reflected in this 
proposed rule for FY 2014 to our estimates of payments per discharge in 
FY 2013.
    The average estimated increase for all IRFs is approximately 2.0 
percent. This estimated net increase includes the effects of the 
proposed RPL market basket increase factor for FY 2014 of 2.5 percent, 
reduced by a productivity adjustment of 0.4 percentage point in 
accordance with section 1886(j)(3)(C)(ii)(I) of the Act, and further 
reduced by 0.3 percentage point in accordance with sections 
1886(j)(3)(C)(ii)(II) and (D)(ii) of the Act. It also includes the 
approximate 0.2 percent overall estimated increase in estimated IRF 
outlier payments from the proposed update to the outlier threshold 
amount. Since we are making the proposed updates to the IRF wage index, 
the facility-level adjustments, and the CMG relative weights in a 
budget-neutral manner, they would not be expected to affect total 
estimated IRF payments in the aggregate. However, as described in more 
detail in each section, they would be expected to affect the estimated 
distribution of payments among providers.

                                                         Table 16--IRF Impact Table for FY 2014
                                                                   [Columns 4-9 in %]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                           Adjusted
                                                                                            market      FY 2014
                                                   Number of    Number of                   basket     CBSA wage                  Facility      Total
             Facility classification                  IRFs        cases       Outlier      increase    index and       CMG         adjust      percent
                                                                                          factor for  labor-share                               change
                                                                                         FY 2014 \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
(1)                                                       (2)          (3)          (4)          (5)          (6)          (7)          (8)          (9)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total...........................................        1,132      380,988          0.2          1.8          0.0          0.0          0.0          2.0
Urban unit......................................          731      180,061          0.3          1.8          0.0          0.0          0.2          2.5
Rural unit......................................          167       26,894          0.2          1.8          0.1          0.1         -2.8         -0.7
Urban hospital..................................          216      168,159          0.1          1.8         -0.1          0.0          0.3          2.1
Rural hospital..................................           18        5,874          0.1          1.8         -0.2         -0.1         -3.4         -1.9
Urban For-Profit................................          260      142,026          0.1          1.8         -0.2          0.0          0.3          2.0
Rural For-Profit................................           39        8,184          0.1          1.8          0.0          0.0         -3.3         -1.4
Urban Non-Profit................................          570      177,533          0.3          1.8          0.2          0.0          0.3          2.5
Rural Non-Profit................................          115       19,523          0.2          1.8          0.0          0.0         -2.8         -0.8
Urban Government................................          117       28,661          0.3          1.8         -0.2          0.0          0.3          2.3
Rural Government................................           31        5,061          0.3          1.8          0.1          0.1         -3.0         -0.7
Urban...........................................          947      348,220          0.2          1.8          0.0          0.0          0.3          2.3
Rural...........................................          185       32,768          0.2          1.8          0.0          0.0         -2.9         -0.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Urban by region \2\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Urban New England...............................           31       16,756          0.1          1.8          0.8          0.0          0.1          2.7
Urban Middle Atlantic...........................          140       59,219          0.2          1.8          0.0          0.0          0.7          2.7
Urban South Atlantic............................          130       62,331          0.1          1.8         -0.3          0.0          0.1          1.8
Urban East North Central........................          182       52,383          0.3          1.8          0.2          0.0          0.6          2.9
Urban East South Central........................           49       24,405          0.1          1.8         -0.8          0.0          0.5          1.6
Urban West North Central........................           73       17,946          0.2          1.8          0.5          0.0          0.0          2.5
Urban West South Central........................          171       67,357          0.2          1.8         -0.1          0.0          0.4          2.3
Urban Mountain..................................           72       23,318          0.3          1.8         -0.5          0.0          0.2          1.7
Urban Pacific...................................           99       24,505          0.4          1.8          0.7          0.0         -0.8          2.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Rural by region \2\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rural New England...............................            6        1,395          0.4          1.8         -0.4         -0.1         -2.1         -0.4
Rural Middle Atlantic...........................           15        2,702          0.2          1.8         -0.3          0.0         -2.6         -0.9
Rural South Atlantic............................           24        5,546          0.1          1.8          0.0          0.1         -2.9         -0.9
Rural East North Central........................           32        5,576          0.2          1.8          0.3          0.0         -2.8         -0.5
Rural East South Central........................           22        3,834          0.2          1.8          0.0          0.1         -3.2         -1.2
Rural West North Central........................           27        3,624          0.3          1.8         -0.7          0.0         -2.7         -1.4
Rural West South Central........................           48        9,056          0.2          1.8          0.3          0.0         -3.5         -1.3
Rural Mountain..................................            7          660          0.4          1.8          0.3          0.2         -2.0          0.6
Rural Pacific...................................            4          375          0.8          1.8          0.1         -0.1         -1.3          1.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Teaching Status
--------------------------------------------------------------------------------------------------------------------------------------------------------
Non-teaching....................................        1,015      332,827          0.2          1.8          0.0          0.0         -0.2          1.8
Resident to ADC less than 10%...................           68       32,835          0.2          1.8          0.1          0.0          0.6          2.7
Resident to ADC 10%-19%.........................           37       13,743          0.3          1.8          0.1          0.0          2.1          4.3

[[Page 26928]]

 
Resident to ADC greater than 19%................           12        1,583          0.2          1.8          0.4          0.0          6.7          9.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                   Disproportionate Share Patient Percentage (DSH PP)
--------------------------------------------------------------------------------------------------------------------------------------------------------
DSH PP = 0%.....................................           39        7,929          0.8          1.8          0.2          0.0          0.7          3.5
DSH PP less than 5%.............................          193       64,712          0.2          1.8          0.0          0.0          0.9          2.8
DSH PP 5%-10%...................................          323      122,318          0.1          1.8         -0.1          0.0          0.4          2.3
DSH PP 10%-20%..................................          349      125,863          0.2          1.8          0.1          0.0          0.0          2.0
DSH PP greater than 20%.........................          228       60,166          0.3          1.8          0.0          0.0         -1.3          0.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ This column reflects the impact of the RPL market basket increase factor for FY 2014 of 1.8 percent, which includes a market basket update of 2.5
  percent, a 0.3 percentage point reduction in accordance with sections 1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(ii) of the Act and a 0.4 percentage
  point reduction for the productivity adjustment as required by section 1886(j)(3)(C)(ii)(I) of the Act.
\2\ A map of states that comprise the 9 geographic regions can be found at (https://www.census.gov/geo/www/us_regdiv.pdf.).

3. Impact of the Proposed Update to the Outlier Threshold Amount
    The proposed outlier threshold adjustment is presented in column 4 
of Table 16. In the FY 2013 IRF PPS notice (77 FR 44618), we used FY 
2011 IRF claims data (the best, most complete data available at that 
time) to set the outlier threshold amount for FY 2013 so that estimated 
outlier payments would equal 3 percent of total estimated payments for 
FY 2013.
    For this proposed rule, we are proposing to update our analysis 
using FY 2012 IRF claims data and, based on this updated analysis, we 
estimate that IRF outlier payments as a percentage of total estimated 
IRF payments are 2.8 percent in FY 2013. Thus, we are proposing to 
adjust the outlier threshold amount in this proposed rule to set total 
estimated outlier payments equal to 3 percent of total estimated 
payments in FY 2014. The estimated change in total IRF payments for FY 
2014, therefore, includes an approximate 0.2 percent increase in 
payments because the estimated outlier portion of total payments is 
estimated to increase from approximately 2.8 percent to 3 percent.
    The impact of this proposed outlier adjustment update (as shown in 
column 4 of Table 16) is to increase estimated overall payments to IRFs 
by about 0.2 percent. We estimate the largest increase in payments from 
the update to the outlier threshold amount to be 0.8 percent for rural 
IRFs in the Pacific region. We do not estimate that any group of IRFs 
would experience a decrease in payments from this proposed update.
4. Impact of the Proposed Market Basket Update to the IRF PPS Payment 
Rates
    The proposed market basket update to the IRF PPS payment rates is 
presented in column 5 of Table 16. In the aggregate the proposed update 
would result in a net 1.8 percent increase in overall estimated 
payments to IRFs. This net increase reflects the estimated RPL market 
basket increase factor for FY 2014 of 2.5 percent, reduced by the 0.3 
percentage point in accordance with sections 1886(j)(3)(C)(ii)(II) and 
1886(j)(3)(D)(ii) of the Act, and further reduced by a 0.4 percentage 
point productivity adjustment as required by section 
1886(j)(3)(C)(ii)(I) of the Act.
5. Impact of the Proposed CBSA Wage Index and Labor-Related Share
    In column 6 of Table 16, we present the effects of the proposed 
budget neutral update of the wage index and labor-related share. The 
proposed 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 proposed changes in the two 
have a combined effect on payments to providers. As discussed in 
section V.C. of this proposed rule, we propose to decrease the labor-
related share from 69.881 percent in FY 2013 to 69.658 percent in FY 
2014.
    In the aggregate, since these proposed updates to the wage index 
and the labor-related share are applied in a budget-neutral manner as 
required under section 1886(j)(6) of the Act, we do not estimate that 
these proposed updates would affect overall estimated payments to IRFs. 
However, we estimate that these proposed updates would have small 
distributional effects. For example, we estimate the largest increase 
in payments from the proposed update to the CBSA wage index and labor-
related share of 0.8 percent for urban IRFs in the New England region. 
We estimate the largest decrease in payments from the update to the 
CBSA wage index and labor-related share to be a 0.8 percent decrease 
for urban IRFs in the East South Central region.
6. Impact of the Proposed Update to the CMG Relative Weights and 
Average Length of Stay Values.
    In column 7 of Table 16, we present the effects of the proposed 
budget neutral update of the CMG relative weights and average length of 
stay values. In the aggregate, we do not estimate that these proposed 
updates would affect overall estimated payments to IRFs. However, we 
would expect these proposed update to have small distributional 
effects. Freestanding rural hospitals will see a 0.1 decrease in 
payments as a result of these updates. The rural areas affected are New 
England and Pacific. The largest estimated increase in payments as a 
result of these updates is a 0.2 increase in the Mountain region.
7. Impact of the Proposed Updates to the Facility-Level Adjustments
    In column 8 of Table 16, we present the effects of the proposed 
budget neutral updates to the IRF facility-level adjustment factors 
(the rural, LIP, and teaching status adjustment factors) for FY 2014. 
In the aggregate, we do not estimate that these proposed updates

[[Page 26929]]

would affect overall estimated payments to IRFs. However, we estimate 
that these proposed updates would have distributional effects, as shown 
in Table 16. The largest estimated decrease in payments as a result of 
these proposed updates is a 3.5 percent decrease to rural IRFs in the 
West South Central region. The largest estimated increase in payments 
as a result of these proposed updates is a 6.7 percent increase for 
teaching IRFs with a resident to average daily census ratio greater 
than 19 percent.
8. Impact of the Proposed Refinements to the Presumptive Compliance 
Criteria Methodology
    As discussed in section VII. of this proposed rule, we are 
proposing changes to the list of ICD-9-CM codes available to meet the 
presumptive compliance criteria. We believe that these proposed changes 
would affect all 1,132 IRFs, as these facilities would need to change 
their coding practices to continue to meet the 60 percent compliance 
percentage using the presumptive methodology.
    We estimate that the financial impact, in the absence of any 
behavioral responses to these proposed changes on the part of 
providers, would be a decrease of 6.9 percent (or $520 million) in 
overall estimated payments to IRFs. However, we believe that IRFs will 
be able to improve the specificity of their coding practices, alter 
their admitting practices, meet the 60 percent compliance threshold 
under medical review, and make other modifications to their operations 
to continue to meet the 60 percent compliance threshold.
    For example, we estimate that about 92 percent of the IRF cases 
that would potentially be affected by the proposed revisions to the 
presumptive methodology codes are affected by the removal of the non-
specific codes. However, we have been careful to propose removal only 
of those non-specific codes for which more specific codes for the same 
conditions will remain on the list of codes that meet the presumptive 
methodology. Thus, in all of these cases, we believe that the IRF will 
be able to switch to a more specific code for the same condition, 
leaving the IRF's admission practices and classification status 
unaffected. However, we welcome comments on whether there are any 
particular non-specific codes or situations in which switching to a 
more specific code would be unusually difficult for an IRF.
    Fewer than 1 percent of the cases that we estimate would be 
affected by the proposed revisions are affected by the Unilateral Upper 
Extremity Amputation codes, the Congenital Anomaly codes, and the 
Miscellaneous codes combined. Thus, we do not estimate that the 
proposed removal of these code groups would have a significant effect 
on IRF admission or coding practices, or classification status. 
However, we welcome comments on whether individual IRFs may specialize 
in any of these conditions and might therefore be disproportionately 
affected by these proposed revisions.
    Finally, approximately 7 percent of the cases that we estimate 
would be affected by the proposed revisions involve arthritis 
diagnoses. We estimate that the proposed revisions in this category 
would have the largest potential effects on providers because, by the 
very nature of these revisions, IRFs would not have another arthritis 
code on the list to code instead. We estimate that about 14 percent of 
all IRF cases are coded with the arthritis codes that we propose to 
remove from the list, and in 11 percent of these cases, the arthritis 
code is the only code that would qualify the patient as meeting the 60 
percent rule requirements. However, for the arthritis category of 
codes, we estimate that most of these cases will still be found to meet 
the 60 percent rule requirements under medical review, so we estimate 
that these proposed revisions will lead to few if any IRF 
declassifications. However, we welcome comments on whether there are 
any reasons to believe that the arthritis cases may not generally be 
found to count towards the 60 percent rule requirements under medical 
review.
    Historically, we have seen that IRFs adapt quickly to changes in 
the 60 percent rule, as evidenced by the rapid response to changes over 
time in the compliance threshold. Thus, we have every reason to believe 
that they will adapt quickly to the proposed changes to the presumptive 
methodology list. In addition, the proposed changes would not affect 
how many patients would ultimately be shown to meet the 60 percent rule 
criteria on medical review. For these reasons, we believe that our best 
estimate of the impact on IRFs of these changes is no net change in 
Medicare reimbursement payments. Instead, IRFs will quickly change 
their coding practices, admission practices, meet the 60 percent 
compliance threshold under medical review, and make other changes to 
their business practice to ensure that they continue to meet the 60 
percent rule requirements; although we lack data to more precisely 
characterize the rule-induced costs, benefits and transfers that would 
be experienced by IRFs, their patients and other relevant entities, we 
note that the $520 million estimate appearing earlier in this section 
represents an upper bound (probably an extreme upper bound) on the 
costs that would be borne by IRFs.
    Should these proposed changes to the 60 percent rule be finalized, 
we intend to closely monitor provider coding practices to identify 
whether those patients that we envisioned would be served under the IRF 
PPS are counting toward the presumptive compliance percentage. We will 
also monitor whether these proposed changes are having any unintended 
consequences in terms of limiting access to care.
9. Effects of Proposed Updates to the IRF QRP
    In this rule, we are proposing to continue use of the pressure 
ulcer measure that was adopted in the FY 2012 IRF PPS final rule but 
have proposed to change this measure for the IRF PPS increase factor 
for FY 2017, at which time we are proposing to adopt the NQF-endorsed 
version of this measure. We are further proposing to make revisions to 
the pressure ulcer items on the IRF-PAI that providers will use to 
collect data for this measure.
    IRFs will incur some financial impact from the use of the pressure 
ulcer measure item set that will be incorporated into the IRF-PAI. We 
expect that the admission and discharge pressure ulcer data will be 
collected by a clinician such as a registered nurse (RN) because the 
assessment and staging of pressure ulcers requires a high degree of 
clinical judgment and experience. We estimate that it will take 
approximately 10 minutes of time by the RN to perform the admission 
pressure ulcer assessment. We further estimate that it will take 15 
minutes of time to complete the discharge pressure ulcer assessment. 
During these time periods, the RN would be engaged in the collection of 
data for the purpose of the IRF quality reporting program and would not 
be performing patient care. An RN or clinician of a similar level of 
training and expertise should perform the pressure ulcer assessment and 
record this data on the IRF-PAI.
    We believe use of the NQF endorsed pressure ulcer measure will 
cause IRFs to incur additional annual financial burden in the amount of 
$4,518.61 and across all IRFs, $5,246,106. This burden is comprised of 
the clinical and administrative wages. The clinical wages are based on 
an average hourly

[[Page 26930]]

wage rate of $33.23.\38\ We estimate that there are 359,000 IRF-PAI 
submissions per year \39\ and that there are 1161 IRFs in the U.S. that 
have reported quality data to CMS. Based on these figures, we estimate 
that each IRF will submit approximately 309 IRF-PAIs per year or 25.75 
IRF-PAIs per month.\40\ Assuming that each IRF-PAI submission requires 
25 minutes of time by an RN at an average hourly wage of $33.23, the 
yearly cost to each IRF would be $4,278.36 \41\ and the annualized cost 
across all IRFs would be $4,967,176.\42\ To calculate the total amount 
of administrative staff wages incurred, we estimate that this data 
entry task will take no more than 3 minutes per each IRF-PAI record or 
15.45 hours per each IRF annually or 17,937 hours across all IRFs. 
According to the U.S. Bureau of Labor, the average hourly wage for 
Administrative Assistants is $15.55. As noted above, we have estimated 
that there are approximately 359,000 IRF-PAI submissions per year and 
1161 IRFs in the U.S. that are reporting quality data to CMS. Given 
this wage information, the estimated total annual cost across all IRFs 
for the time required for entry of pressure ulcer data into the IRF-PAI 
record is $278,930. We further estimate the average yearly cost to each 
IRF to be $240.25.
---------------------------------------------------------------------------

    \38\ According to the U.S. Bureau of Labor Statistics, the mean 
hourly wage for a Registered Nurse is $33.23. (See https://www.bls.gov/oes/2011/may/oes291111.htm).
    \39\ MedPAC, A Data Book: Health Care Spending and the Medicare 
Program (June 2012), https://www.medpac.gov/chapters/Jun12DataBookSec8.pdf.
    \40\ 359,000 IRF-PAI reports per all IRFs per year/1161 IRFs in 
U.S. = 309 IRF-PAI reports per each IRF per year. 309 IRF-PAI 
reports per IRF per year/12 months per year = 26 IRF-PAI reports per 
each IRF per year.
    \41\ 25 minutes x 309 IRF-PAI assessments per each IRF per year 
= 7,725 minutes per each IRF per year. 7,725 minutes per each IRF 
per year/60 minutes per hour = 128.75 hours per each IRF per year. 
128.75 hours per year x $33.23 per hour = $4,278.36 nursing wages 
per each IRF per year.
    \42\ $4,278.36 x 1161 IRF providers = $4,967,176 per all IRFs 
per year.
---------------------------------------------------------------------------

    We are also proposing to add 3 new quality measures to the IRF QRP. 
These proposed measures include: (1) Percent of Residents or Patients 
Who Were Assessed and Appropriately Given the Seasonal Influenza 
Vaccine (Short-Stay) (NQF 0680), which will affect the FY 2017 
increase factor; (2) Influenza Vaccination Coverage among Healthcare 
Personnel (NQF 0431), which will affect the FY 2016 increase 
factor; and (3) an All-Cause Unplanned Readmission Measure for 30 Days 
Post Discharge from Inpatient Rehabilitation Facilities, which will 
affect the FY 2017 increase factor. We discuss the impact of each 
measure upon IRFs below.
    We have proposed that IRFs will submit their data for the patient 
influenza measure (NQF 0680) on the IRF-PAI. We have further 
proposed to add a new data item set consisting of 3 items to the IRF-
PAI to collect the data for this measure. IRF staff will be required to 
perform a full influenza assessment only during the influenza 
vaccination season, which has been defined by the CDC as the time 
period from October 1st (or when the vaccine becomes available) through 
March 31 each year. From April 1st through September 30th, IRFs are not 
required to perform a full influenza screening. Our time estimate 
reflects the averaged amount of time necessary to complete the 
influenza item set both during and outside the influenza vaccination 
season.
    We believe that it will be most appropriate for a clinician, such 
as an RN, to complete the influenza items because this assessment 
requires clinical judgment and knowledge of vaccinations. An 
administrative employee, such as a medical data entry clerk or 
administrative assistant would not have this level of knowledge. We do 
not believe that IRFs will require additional time by administrative 
staff to encode and transmit this data to CMS, because submission of an 
IRF-PAI for each patient is already required as a condition for 
payment.
    We estimate that it will take approximately 5 minutes to complete 
the patient influenza measure item set. According to MedPAC, there are 
approximately 359,000 \43\ IRF-PAIs completed annually across 1161 IRFs 
that reported quality data to CMS. This breaks down to approximately 
309 IRF-PAIs completed by each IRF yearly. We estimate that the annual 
time burden for reporting the patient influenza vaccination measure 
data is 29,896 hours across all IRFs in the U.S. and 25.75 hours for 
each individual IRF. According to the U.S. Bureau of Labor, the hourly 
wage for a Registered Nurse is $33.23. The estimated annual cost across 
all IRFs in the U.S. for the submission of the patient influenza 
measure data is $993,433 and $855.67 for each individual IRF.
---------------------------------------------------------------------------

    \43\ MedPAC, A Data Book: Health Care Spending and the Medicare 
Program (June 2012), Page 129 ().(https://www.medpac.gov/chapters/Jun12DataBookSec8.pdf).
---------------------------------------------------------------------------

    IRFs will submit their data for the staff immunization measure (NQF 
0431) to the CDC's healthcare acquired (HAI) surveillance Web 
site known as NHSN. Data collection for this measure is only required 
from October 1st (or when the vaccine becomes available) through March 
31st each year, during which IRFs will be required to keep records of 
which staff members receive the influenza vaccination. However, IRFs 
are required to make one report to NHSN after the close of the 
reporting period on March 31st, by May 15th of each year. We do not 
believe that IRFs will incur any new burden associated with the 
collection of data during the influenza vaccination season. We believe 
that most IRFs already keep records related to the influenza 
vaccination of their staff because this impacts on many aspects of 
their business, including but not limited to staff absences, and 
transmission of illness to other staff and patients.
    We estimate that it will take each IRF approximately 15 minutes of 
time once per year to gather the data that was collected during the 
influenza vaccinations season, and prepare to make their report to 
NHSN. We do not estimate that it will take IRFs additional time to 
input their data into NHSN, once they have logged onto the system for 
the purpose of submitting their monthly CAUTI report. We believe that 
this task can be completed by an administrative person such as a 
Medical Secretary Medical Data Entry Clerk. As noted above, the average 
hourly wage for Medical Records or Health Information Technicians is 
$15.55.\44\ We estimate that the average yearly cost to each IRF for 
the reporting of this measure will be $3.98 \45\ and the cost across 
all IRFs will be $4,621.\46\
---------------------------------------------------------------------------

    \44\ According to the U.S. Bureau of Labor Statistics, the mean 
hourly wage for a Medical Records & Health Information Technician is 
$15.55. See: https://www.bls.gov/ooh/healthcare/medical-records-and-health-information-technicians.htm.
    \45\ 15 minutes Admin staff time to collect and report staff 
influenza measure @ $15.55 per hour = $3.98 per IRF per year.
    \46\ $3.98 per IRF per year x 1161 IRFs in U.S.= $4,621.
---------------------------------------------------------------------------

    The proposed readmission measure is a claims based measure and, 
therefore, IRFs are not required to submit any data for this measure. 
We do not anticipate that IRFs will be impacted by any financial or 
time burdens as a result of the use of this measure for the IRF QRP.
    The IRF QRP was established under section 3004 of the Affordable 
Care Act (which added Section 1886(j)(7)(A)(i) to the Act). Section 
1886(j)(7)(A)(i) requires the reduction of the applicable IRF PPS 
increase factor, as previously modified under section 1886(j)(3)(D) of 
the Act, by 2 percentage points for any IRFs that fail to submit data 
to the Secretary in accordance with

[[Page 26931]]

requirements established by the Secretary for that fiscal year.
    Over the past 18 months, we have received a great deal of positive 
feedback from IRFs about the IRF QRP, and overall, IRFs have been very 
receptive to the introduction of the ACA 3004 IRF QRP into the IRF 
setting. The IRF provider community has shared many suggestions and 
ideas related to the IRF QRP. Outreach activities, such as a one day 
in-person training, and six open door forums were well attended. Given 
the amount of positive feedback and willingness to participate in the 
IRF QRP that has been demonstrated by IRFs, we anticipate that there 
will be a relatively small number of IRFs that fail to report the 
required type and amount of quality data. If finalized, our proposed 
reconsideration process would allow IRFs that receive an initial 
finding of non-compliance an opportunity to file a request for 
reconsideration of this finding.
10. Impact of the Implementation of the 2 Percentage Point Reduction in 
the Increase Factor for Failure to Meet the IRF Quality Reporting 
Requirements
    As discussed in section XIII. of this proposed rule and in 
accordance with section 1886(j)(7) of the Act, we will implement a 2 
percentage point payment reduction in FY 2014 for IRFs that fail to 
report the required quality reporting data to us during the first IRF 
quality reporting period (from October 1, 2012 through December 31, 
2012). In section XIII., we discuss how the 2 percentage point payment 
reduction will be applied. Currently, we cannot estimate the overall 
financial impacts of the application of this reduction on aggregate IRF 
PPS payments or on the distribution of IRF PPS payments among providers 
because we cannot predict the number of or types of IRFs that will fail 
to report the required quality reporting data. IRFs are currently 
required to complete the non-quality portions of the IRF-PAI to receive 
payment for all Medicare fee-for-service admissions. Therefore, we 
estimate that the number of IRFs that would fail to submit the 
additional quality reporting data on the IRF-PAI form is very low. 
Additionally, the Catheter Associated Urinary Tract Infections (CAUTI) 
quality reporting requirement would require IRFs to register with the 
National Healthcare Safety Network (NHSN) to submit the required data. 
At this time, we cannot predict how many IRFs would fail to register.
    The official reporting period end date for the first IRF quality 
reporting period is May 15, 2013. We expect a preliminary report of the 
IRFs that have failed to report the required data during the first 
quality reporting period to be developed by mid-June 2013. However, 
that list could change substantially during the proposed 
reconsideration process (described in section XIII. of this proposed 
rule) that would occur between June 2013 and September 2013. Therefore, 
we intend to closely monitor the effects of this new quality reporting 
program on IRF providers as we cannot predict the number of, or types 
of IRFs that would fail to report the required quality reporting data 
for the first quality reporting period.

D. Alternatives Considered

    As stated in section XV.B. of this proposed rule, we estimate that 
the proposed changes discussed in the rule would result in a 
significant economic impact on IRFs. The overall impact on all IRFs is 
an estimated increase in FY 2014 payments of $150 million (2.0 
percent), relative to FY 2013. The following is a discussion of the 
alternatives considered for the proposed IRF PPS updates contained in 
this proposed rule.
    Section 1886(j)(3)(C) of the Act requires the Secretary to update 
the IRF PPS payment rates by an increase factor that reflects changes 
over time in the prices of an appropriate mix of goods and services 
included in the covered IRF services. Thus, we did not consider 
alternatives to updating payments using the estimated RPL market basket 
increase factor for FY 2014. However, as noted previously in this 
proposed rule, section 1886(j)(3)(C)(ii)(I) requires the Secretary to 
apply a productivity adjustment to the market basket increase factor 
for FY 2014 and sections 1886(j)(3)(C)(ii)(II) and 1886(j)(3)(D)(ii) of 
the Act require the Secretary to apply a 0.3 percentage point reduction 
to the market basket increase factor for FY 2014. Thus, in accordance 
with section 1886(j)(3)(C) of the Act, we proposed to update IRF 
federal prospective payments in this proposed rule by 1.8 percent 
(which equals the 2.5 percent estimated RPL market basket increase 
factor for FY 2014 reduced by 0.3 percentage points, and further 
reduced by a 0.4 percentage point productivity adjustment 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 2014. 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 propose 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 current facility-level adjustment 
factors (that is, the rural factor at 18.4 percent, the LIP factor at 
0.4613, and teaching status adjustment factor at 0.6876) for an 
additional year. However, as discussed in more detail in section IV.B. 
of this proposed rule, our recent research efforts have shown 
significant differences in cost structures between freestanding IRFs 
and IRF units of acute care hospitals (and CAHs). We have found that 
these cost structure differences substantially influence the estimates 
of the adjustment factors. For this reason, our regression analysis 
found that the proposed inclusion of the control variable for a 
facility's status as either a freestanding IRF hospital or an IRF unit 
of an acute care hospital (or a CAH) would greatly enhance the accuracy 
of the adjustment factors for FY 2014, as we incorporate updated data. 
Further, as noted previously, we received comments from an IRF industry 
association on the FY 2012 IRF PPS proposed rule suggesting this 
enhancement to the methodology. Thus, we believe that the best approach 
at this time is to propose to update the facility-level adjustment 
factors for FY 2014 using this proposed enhancement to the methodology. 
However, we welcome comments on this approach and on whether or not the 
facility-level adjustment factors need updating at this time or should 
be frozen at their current levels for an additional year.
    We considered maintaining the existing outlier threshold amount for 
FY 2014. However, analysis of updated FY 2012 data indicates that 
estimated outlier payments would be lower than 3 percent of total 
estimated payments for FY 2013, by approximately 0.2 percent, unless we 
updated the outlier threshold amount. Consequently, we propose 
adjusting the outlier threshold amount in this proposed rule to reflect 
a 0.2 percent increase thereby setting the total outlier payments equal 
to 3 percent, instead of 2.8 percent, of aggregate estimated payments 
in FY 2014.
    Finally, we considered maintaining the current list of ICD-9-CM 
codes used to determine an IRF's compliance with the 60 percent rule 
under the presumptive methodology, or maintaining some of the 
categories of codes that we are proposing to remove from the list in 
this proposed rule. However, we believe that the specific ICD-9-CM code 
removals that we are

[[Page 26932]]

proposing in section VII. of this proposed rule would result in a list 
that better reflects the 60 percent rule regulations. For example, the 
proposed removal of the non-specific diagnosis codes (as discussed in 
section VII. of this proposed rule) is in accordance with the trend 
toward requiring more specific coding in other Medicare payment 
settings, such as the IPPS. We believe that the incentives to use more 
specific codes, whenever possible, will also lead to improvements in 
the quality of care for patients by providing more detailed information 
that medical personnel can use to enhance the specificity of patients' 
care plans. In addition, the proposed removal of the arthritis 
diagnosis codes (as discussed in section VII. of this proposed rule) 
would enable CMS to ensure that we only count patients as meeting the 
60 percent rule requirements if they have met the necessary severity 
and prior treatment requirements, information which is not discernible 
from the ICD-9-CM codes themselves. With respect to the other code 
categories that we are proposing to remove from the presumptive 
methodology list, we do not believe that patients who are coded with 
these codes would typically require treatment in an IRF, as described 
in more detail in section VII. of this proposed rule. However, we 
welcome comments on whether there are any specific reasons that we may 
not have previously considered that would argue for keeping certain of 
these codes on the presumptive methodology list.

E. Accounting Statement

    As required by OMB Circular A-4 (available at https://www.whitehouse.gov/sites/default/files/omb/assets/omb/circulars/a004/a-4.pdf), in Table 17, we have prepared an accounting statement showing 
the classification of the expenditures associated with the provisions 
of this proposed rule. Table 17 provides our best estimate of the 
increase in Medicare payments under the IRF PPS as a result of the 
proposed updates presented in this proposed rule based on the data for 
1,132 IRFs in our database.

       Table 17--Accounting Statement: Classification of Estimated
   Expenditures, From the 2013 IRF PPS Fiscal Year to the 2014 IRF PPS
                               Fiscal Year
------------------------------------------------------------------------
                Category                            Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers.........  $150 million.
From Whom to Whom?.....................  Federal Government to IRF
                                          Medicare Providers.
Estimated annualized cost to the         $2 million. (This cost is
 federal government for the               attributed to various sources,
 administration of the IRF quality        including but not limited to
 reporting program.                       the CCSQ IRF measure developer
                                          contractor and the Division of
                                          National Systems).
------------------------------------------------------------------------

F. Conclusion

    Overall, the estimated payments per discharge for IRFs in FY 2014 
are projected to increase by 2.0 percent, compared with the estimated 
payments in FY 2013, as reflected in column 9 of Table 16. IRF payments 
per discharge are estimated to increase 2.3 percent in urban areas and 
decrease 0.9 percent in rural areas, compared with estimated FY 2013 
payments. Payments per discharge to rehabilitation units are estimated 
to increase 2.5 percent in urban areas and decrease 0.7 percent in 
rural areas. Payments per discharge to freestanding rehabilitation 
hospitals are estimated to increase 2.1 percent in urban areas and 
decrease 1.9 percent in rural areas.
    Overall, IRFs are estimated to experience a net increase in 
payments as a result of the proposed policies in this proposed rule. 
The largest payment increase is estimated to be a 2.9 percent increase 
for urban IRFs located in the East North Central region. This is due to 
the large positive effect of the facility adjustment updates for urban 
IRFs in this region.
    In accordance with the provisions of Executive Order 12866, this 
proposed rule was reviewed by the Office of Management and Budget.

List of Subjects in 42 CFR Part 412

    Administrative practice and procedure, Health facilities, Medicare, 
Puerto Rico, Reporting and recordkeeping requirements.

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

PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL 
SERVICES

0
1. The authority citation for part 412 continues to read as follows:

    Authority:  Sections 1102, 1862, and 1871 of the Social Security 
Act (42 U.S.C. 1302, 1395y, and 1395hh).

0
2. Section 412.25 is amended by revising paragraph (a)(1)(iii) to read 
as follows:


Sec.  412.25  Excluded hospital units: Common requirements.

    (a) * * *
    (1) * * *
    (iii) Unless it is a unit in a critical access hospital, the 
hospital of which an IRF is a unit must have at least 10 staffed and 
maintained hospital beds that are not excluded from the inpatient 
prospective payment system, or at least 1 staffed and maintained 
hospital bed for every 10 certified inpatient rehabilitation facility 
beds, whichever number is greater. Otherwise, the IRF will be 
classified as an IRF hospital, rather than an IRF unit. In the case of 
an IPF unit, the hospital must have enough beds that are not excluded 
from the inpatient prospective payment system to permit the provision 
of adequate cost information, as required by Sec.  413.24(c) of this 
chapter.
* * * * *
0
3. Section 412.29 is amended by revising paragraph (d) to read as 
follows:


Sec.  412.29  Classification criteria for payment under the inpatient 
rehabilitation facility prospective payment system.

* * * * *
    (d) Have in effect a preadmission screening procedure under which 
each prospective patient's condition and medical history are reviewed 
to determine whether the patient is likely to benefit significantly 
from an intensive inpatient hospital program. This procedure must 
ensure that the preadmission screening for each Medicare Part A fee-
for-service patient is reviewed and approved by a rehabilitation 
physician prior to the patient's admission to the IRF.
* * * * *
0
4. Section 412.130 is amended by revising paragraphs (a)(1), (a)(2) and 
(a)(3) to read as follows:


Sec.  412.130  Retroactive adjustments for incorrectly excluded 
hospitals and units.

    (a) * * *
    (1) A hospital that was excluded from the prospective payment 
systems

[[Page 26933]]

specified in Sec.  412.1(a)(1) or paid under the prospective payment 
system specified in Sec.  412.1(a)(3), as a new rehabilitation hospital 
for a cost reporting period beginning on or after October 1, 1991 based 
on a certification under Sec.  412.29(c) of this part regarding the 
inpatient population the hospital planned to treat during that cost 
reporting period, if the inpatient population actually treated in the 
hospital during that cost reporting period did not meet the 
requirements of Sec.  412.29(b).
    (2) A hospital that has a unit excluded from the prospective 
payment systems specified in Sec.  412.1(a)(1) or paid under the 
prospective payment system specified in Sec.  412.1(a)(3), as a new 
rehabilitation unit for a cost reporting period beginning on or after 
October 1, 1991, based on a certification under Sec.  412.29(c) 
regarding the inpatient population the hospital planned to treat in 
that unit during the period, if the inpatient population actually 
treated in the unit during that cost reporting period did not meet the 
requirements of Sec.  412.29(b).
    (3) A hospital that added new beds to its existing rehabilitation 
unit for a cost reporting period beginning on or after October 1, 1991 
based on a certification under Sec.  412.29(c) regarding the inpatient 
population the hospital planned to treat in these new beds during that 
cost reporting period, if the inpatient population actually treated in 
the new beds during that cost reporting period did not meet the 
requirements of Sec.  412.29(b).
* * * * *
0
5. Section 412.630 is revised to read as follows:


Sec.  412.630  Limitation on review.

    Administrative or judicial review under sections 1869 or 1878 of 
the Act, or otherwise, is prohibited with regard to the establishment 
of the methodology to classify a patient into the case-mix groups and 
the associated weighting factors, the Federal per discharge payment 
rates, additional payments for outliers and special payments, and the 
area wage index.

(Catalog of Federal Domestic Assistance Program No. 93.773, 
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)

    Dated: April 16, 2013.
Marilyn Tavenner,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Approved: April 25, 2013.
Kathleen Sebelius,
Secretary.
[FR Doc. 2013-10755 Filed 5-2-13; 4:15 pm]
BILLING CODE 4120-01-P